Ohio Appellate Court Affirms Summary Judgment For Insurance Agent on Fiduciary Duty

Posted on November 11th, 2014 by sutteroconnell

In InfoCision Management Corporation v. Michael D. Sammy Insurance Agency, Inc., 9th Dist. No. 26939, 2014-Ohio-4653, the appellate court affirmed the trial court’s order granting summary judgment for Michael D. Sammy Insurance Agency, Inc. (“Sammy”) and Farmers Insurance Exchange (“Farmers”) in a case brought by the agent’s client, InfoCision Management Corp. (“InfoCision”), for negligence, breach of fiduciary duty, and vicarious liability.

Many InfoCision employees traveled as part of their employment, either using the employee’s own car, a rental car, or one of three company-owned cars.  InfoCision allowed its corporate liability coverage for non-owned cars to lapse.  InfoCision retained Sammy, an agent for Farmers, to explore potential alternative insurance coverage.  InfoCision’s Vice President of Finance and a former insurance agent himself also explored alternatives.  Except for the three company-owned cars, neither InfoCision nor Sammy were able to obtain coverage at a premium satisfactory to InfoCision.  Despite no comprehensive coverage, InfoCision proceeded under this risk management for several years.

Unfortunately, an InfoCision employee while driving home from a work function with her own car struck and killed two individuals.  InfoCision paid over $1.6 million to settle that lawsuit.  Almost two years later, InfoCision sued Sammy for negligence and breach of fiduciary duty and Farmers for vicarious liability.  In granting summary judgment for the defendants, the trial court concluded that the assumption of the risk defense barred InfoCision’s claims, the applicable four-year statute of limitations also barred the claims, and there was no fiduciary relationship between InfoCision and Sammy.  Because Sammy had no liability, the court also concluded that Farmers was not vicariously liable.  The appellate court affirmed.

The appellate court concluded that the assumption of the risk doctrine barred InfoCision’s claims because there was uncontested evidence of extensive travel by InfoCision employees in non-company cars, despite InfoCision’s knowledge of no insurance coverage for these drivers for a four-year period.  Because of the assumption of the risk, Sammy owed no duty to InfoCision.

The appellate court also agreed that the four-year statute of limitations barred InfoCision’s claims.  The statute of limitations required InfoCision to file its lawsuit within four years from the time the disputed action was committed.  InfoCision did not.

Finally, the appellate court was silent on whether under Ohio law the agent/broker and client relationship is a fiduciary relationship as a matter of law.  However, the appellate court concluded that the facts (e.g., InfoCision is a sophisticated entity, InfoCision rejected other coverage options, and its Vice President of Finance was a former insurance agent) did not establish any special relationship, trust, or confidence between Sammy and InfoCision.  Accordingly, InfoCision could not pursue a breach of fiduciary duty claim.

This is a very beneficial case for insurance agents and brokers on the assumption of the risk doctrine and the fiduciary relationship argument.  However, it would have been more beneficial if the appellate court had reiterated Ohio law that there is no fiduciary relationship between a broker/agent and its client as a matter of law.

The full text of the opinion can be found here.