ALIENT AGENT: CLIENT/AGENT: THE NEW "SPECIAL RELATIONSHIP" DECISION.

• Author: Kronberg, Howard S.

* On February 10, 2021 the Appellate Division First Department[l], affirmed the dismissal of a failure to procure action against a broker in the case of Trimasa Restaurant Partners[2]. This case is a significant decision in that it narrows, limits and thus clarifies the application of the special relationship doctrine, which has been used by plaintiff's attorneys in E&O lawsuits since 1997 to attempt to hold insurance agents and brokers liable for things that they never agreed to do for their customers, like procuring coverage not specifically requested. Here, we will review the special relationship doctrine and the court's decision in the Trimasa case.

In 1997 the Court of Appeals, the highest court in the New York State, in the Murphy[3] case, reiterated well established law that an insurance broker can only be sued for failing to get coverage specifically requested or where the broker fails to tell the insured that the coverage requested cannot be obtained. But, in Murphy the insured tried a new argument suggesting that based on a long term relationship the broker had a duty to advise them to, in that case, procure higher auto liability limits even though not discussed or requested. Simply, the insured tried to shift the liability to the broker from itself.

While it may seem like a contradiction, the law treats an affirmative duty to speak (advise), as a subset of the existing and well-known negligent misrepresentation cause of action with the same elements. One of those basic, prima facie, elements is a special relationship. Simply, a special relationship means that you have a status with another party that allows them to rely on your statements. An exaggerated example that makes the point is how you have a right to rely on your doctor's advice that you have a medical condition that needs treatment, allowing you to sue the doctor if he or she is wrong and you are injured because of that misrepresentation. But you do not have the right to rely on that same medical statement that is made to you by a friend that you may meet on the street.

In the Murphy case, the Court of Appeals suggested that where there is a special relationship, one party might have a duty to affirmatively speak. Traditionally, a special relationship was limited to professionals such as doctors, lawyers, accountants, etc., and their clients. But, in Murphy the Court set out several criteria where, even in the case of an insurance agent or broker, a special relationship...