Aga Fishing Group Ltd. v. Brown & Brown, Inc.

• Decision Date: 10 July 2008
• Docket Number: No. 07-2408.,07-2408.
• Citation: 533 F.3d 20
• Parties: AGA FISHING GROUP LIMITED, Plaintiff, Appellant, v. BROWN & BROWN, INC., et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

533 F.3d 20

AGA FISHING GROUP LIMITED, Plaintiff, Appellant, v. BROWN & BROWN, INC., et al., Defendants, Appellees.

No. 07-2408.

United States Court of Appeals, First Circuit.

Heard February 6, 2008.

Decided July 10, 2008.

Joseph G. Abromovitz with whom Marsha A. Morello and the Law Office of Joseph G. Abromovitz, P.C. were on brief for appellant.

Michael J. Stone with whom Terri L. Pastori and Peabody & Arnold LLP were on brief for appellees.

Before LYNCH, Chief Judge, TASHIMA,^* Senior Circuit Judge, and LIPEZ, Circuit Judge.

TASHIMA, Senior Circuit Judge.

Plaintiff AGA Fishing Group Limited ("AGA") was forced to sell the Georgie J, a scallop fishing vessel, and its scallop license to settle claims against AGA after a crewman suffered debilitating injuries aboard the vessel and recovered a substantial award under the Jones Act. AGA was insured through Defendant Flagship Group, Limited ("Flagship"), but the seaman's award far exceeded the Protection & Indemnity ("P & I") coverage in AGA's policy, which was sold to AGA by Flagship. AGA sued Flagship and Defendant Brown & Brown, Inc., Flagship's parent company, contending that Flagship owed it a duty to recommend an adequate level of P & I coverage and breached that duty when it did not so recommend. The district court granted Defendants' motion for summary judgment on all claims. Because AGA presents no facts evincing a duty on Defendants' part to ensure that AGA was adequately covered, we affirm.¹

I. Background

Because AGA appeals from a grant of summary judgment, in reciting the facts, we draw all reasonable inferences in favor of AGA, the non-moving party. See Ramos-Santiago v. United Parcel Serv., 524 F.3d 120, 122 (1st Cir.2008). George Jones ("Jones") started scallop fishing in New Bedford, Massachusetts, in the early 1960s, when he was fifteen years old. In 1987, he and his wife, Antonette Jones, formed AGA and purchased a scallop boat, the Victor, and an accompanying scallop license. Under the previous owner, the Victor carried $1,000,000 in P & I insurance through Neptune Mutual. After acquiring the vessel, AGA decided to stay with the same insurance company and agent, Ronald Walsh ("Walsh"), and continue the same level of coverage.

Some time later, AGA discontinued its insurance policy with Neptune Mutual and purchased a policy from Mariners Insurance. AGA continued the same level of P & I coverage after the switch. Jones assumed that the new agent would tell him if he needed more coverage. In the late 1990s, Jones discovered that his original insurance agent, Walsh, had left Neptune Insurance and was now working for Flagship. On its website, Flagship advertised itself as having "the expertise necessary to offer the appropriate insurance services for the maritime industry" and claimed to "systematically and comprehensively examine [its clients'] maritime exposures." The Joneses, however, never viewed the website. Rather, Jones liked Walsh and trusted him. Their personal relationship and the fact that Walsh quoted a lower premium for the same coverage precipitated AGA's move from Mariners Insurance to Flagship in 1999.

AGA kept the same level of P & I coverage on the vessel after moving its insurance business to Flagship, again assuming that its agent, now Walsh, would recommend additional coverage, if necessary. According to Walsh, the Joneses "didn't understand insurance" and needed a lot of guidance due to their "naive[te]." The Joneses were not highly educated. Jones left school after the sixth grade and Antonette Jones did not complete high school, although she received a GED years later. Although Walsh testified that the Joneses required more assistance than his other clients, Walsh and the Joneses never discussed the amount of P & I coverage on the vessel or whether or not the coverage was sufficient. The policy was renewed annually at the same level of coverage.²

In 2000, Walsh told Jones that he planned to leave Flagship and that Flagship was closing its Massachusetts office. Jones asked Walsh how to keep the Georgie J covered. Walsh recommended that AGA stay with Flagship. AGA remained with Flagship, and Flagship transferred the AGA account to agent John Devnew ("Devnew"). Jones was concerned that Devnew would not be able to give him the level of assistance he desired because he was based in Virginia. Devnew reassured Jones that he would "take care of them." Devnew considered Jones "simple and unsophisticated" and knew that the Joneses' entire fortune was wrapped up in AGA. Yet during the time Devnew worked on the AGA account, he never discussed P & I coverage levels for the Georgie J with the Joneses and never recommended increasing the amount of P & I coverage on the Georgie J.

In or around 2001, New Bedford experienced a boom in the scallop fishing industry. Gross profits per fishing trip increased dramatically, which translated into significant pay increases for crewmen working aboard the scallop vessels. Compensation levels for individual crew members reached and then exceeded $100,000 a year. The Georgie J and other scallop vessels carried a five-to seven-member crew. As a result, vessels that worked out of New Bedford, including those insured by Flagship, commonly carried $5,000,000 P & I coverage. It would have cost AGA approximately $5,000 annually to increase P & I coverage for the Georgie J from $1,000,000 to $5,000,000. AGA avers that it would have paid the higher premium had Devnew recommended the higher level of coverage.

During a fishing trip in 2003, a crewman suffered debilitating injuries while working aboard the Georgie J and subsequently sued AGA. The $1,000,000 P & I coverage on the Georgie J was grossly insufficient to cover the damages awarded to the crewman. The U.S. Marshal seized the Georgie J and its scallop license and sold it at auction in partial satisfaction of the crewman's judgment.³

AGA sued Flagship and Brown & Brown, Inc., its parent company. AGA claimed that Flagship breached its duty of care properly to advise AGA with regard to coverage needed for the Georgie J (Count I). AGA also alleged negligent misrepresentation (Count II), intentional misrepresentation (Count III), and violations of Massachusetts' unfair or deceptive trade practice law, Mass. Gen. Laws ch. 93A §§ 2(a), 11 (Counts IV and V). AGA further alleged that Brown & Brown was vicariously liable for damages caused by Flagship (Count VI) and that Brown & Brown negligently failed to supervise Flagship (Count VII).

Defendants moved for summary judgment, which the district court granted as to all claims. AGA timely appealed.⁴ We have jurisdiction over the final judgment under 28 U.S.C. § 1291. In this diversity of citizenship case, we apply Massachusetts law, which the parties implicitly agree governs.

II. Discussion

We review a district court's grant of summary judgment de novo. Franceschi v. U.S. Dep't of Veterans Affairs, 514 F.3d 81, 84 (1st Cir.2008). Summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

"There is no general duty of an insurance agent to ensure that the insurance policies procured by him provide coverage that is adequate for the needs of the insured." Martinonis v. Utica Nat'l Ins. Group, 65 Mass.App.Ct. 418, 840 N.E.2d 994, 996 (Mass.App.Ct.2006). Such a duty only arises under "special circumstances of assertion, representation and reliance." Baldwin Crane & Equip. Corp. v. Riley & Rielly Ins. Agency, Inc., 44 Mass.App.Ct. 29, 687 N.E.2d 1267, 1269 (Mass.App.Ct. 1997) (quoting Rapp v. Lester L. Burdick, Inc., 336 Mass. 438, 146 N.E.2d 368, 371 (Mass.1957)); see also Martinonis, 840 N.E.2d at 996 ("[I]n an action against the agent for negligence, the insured may show that special circumstances prevailed that gave rise to a duty on the part of the agent to ensure that...