Baldwin Crane & Equipment Corp. v. Riley & Rielly Ins. Agency, Inc.

• Decision Date: 20 February 1998
• Docket Number: No. 95-P-87,95-P-87
• Citation: 687 N.E.2d 1267,44 Mass.App.Ct. 29
• Parties: BALDWIN CRANE & EQUIPMENT CORP. v. RILEY & RIELLY INSURANCE AGENCY, INC., & another. 1
• Court: Appeals Court of Massachusetts

Page 1267

687 N.E.2d 1267

44 Mass.App.Ct. 29

BALDWIN CRANE & EQUIPMENT CORP. v. RILEY & RIELLY INSURANCE AGENCY, INC., & another.

¹

No. 95-P-87.

Appeals Court of Massachusetts,

Middlesex.

Argued Oct. 22, 1996.

Decided Dec. 12, 1997.

Further Appellate Review Denied Feb. 20, 19980.

Geoffrey H. Lewis, Boston, for plaintiff.

Robert P. Powers, Boston (Leigh-Ann Patterson, with him), for defendants.

Before ARMSTRONG, PERRETTA and KASS, JJ.

ARMSTRONG, Justice.

The plaintiff sued its insurance broker ("Riley & Rielly"), not on the relatively familiar ground that the broker failed to procure a policy offering the desired coverage, see, e.g., Rae v. Air-Speed, Inc., 386 Mass. 187, 192, 435 N.E.2d 628 (1982); Howard v. G.H. Dunn Ins. Agency, Inc., 4 Mass.App.Ct. 868, 358 N.E.2d 830 (1976), but on the ground that the policy procured by the broker did not afford the plaintiff a return premium in the event that its sales fell short of the estimate on which the premium had been set. Instead, the premium for the policy, $104,006, was a minimum premium, payable for the full twelve months of coverage whether or not the sales estimate was achieved. (It was, however, as we read the policy, adjustable upward at the rate of $74.29 per $1000 of sales if the estimate were exceeded.) From a judgment in favor of the broker, the plaintiff appeals.

In years previous to the policy year at issue, Riley & Rielly had obtained for the plaintiff return premium policies, wherein the deposited premium calculated on estimated sales would be adjusted upward or downward at year's end depending on sales experience. The expiring policy, issued by National Union Fire Insurance Company, carrying an estimated premium of $166,307, was of the return premium type. National Union offered a renewal policy carrying a premium, based on the $1,400,000 sales estimate, of $147,000; but the renewal policy would be based on a minimum premium, no part of the deposit being refundable if sales fell short of the estimate. The plaintiff asked Riley & Rielly to look for a policy that would cost less.

Riley & Rielly, based on its survey, forwarded to the plaintiff a chart comparing three potential replacement policies with the expiring policy. The chart arranged the four policies in four columns, and the features on which the policies were compared were arranged as crossbars. The "Estimated Premium" (i.e., premium based on the $1,400,000 sales estimate) was $180,900 for the first company ("First State"), $147,000 for the second (National Union), and $104,000 for the third ("Richter Robb"), as compared with $166,307 under the expiring policy with National Union. The next crossbar was for "Minimum Premium": $180,900 for First State, $147,000 for the National Union renewal policy, $109,206 for Richter Robb (including a surplus lines tax and a service fee), and "NONE" for the expiring National Union policy. Other crossbars compared the policies in respect of rates per $1000, deductibles, exclusions, and the like.

Linda Finlayson, office manager for the plaintiff, acknowledged that she received and studied the comparative figures. The president, Richard Baldwin, discussed this and other insurance matters with Donald J. Rielly for the agency, although neither recalls their having talked directly about the return premium of the expiring policy and the minimum premiums of the proposed replacement policies. Finlayson remembered being under the impression during the process that the new premium, like the old, would be of the return type, although she does not contend that anyone from Riley & Rielly made any representation to that effect. Baldwin instructed Riley & Rielly to purchase the Richter Robb policy. Sales fell substantially short of the estimate, only $821,000. The plaintiff sought a refund of $43,000 without success.

The plaintiff based its claims for damages against Riley & Rielly on theories of breach of contract, negligence, and breach of fiduciary duty. The contract theory is predicated on an assertion that the plaintiff hired the agency to procure a replacement policy "on the same terms and conditions as previously obtained"; and that the tender of the new policy carried an implied representation that the terms and conditions were the same. There is absolutely no support for this argument in the record; the comparison chart ticked off numerous variations in the terms and conditions of the proffered replacement policies, comparing each to the expiring policy. In particular, each of the replacement policies carried a "minimum premium," whereas the expiring policy carried "NONE." One need look no further than the dictionary to see "minimum premium" defined as "the smallest single charge for which an insurer will write a particular policy having a specified period." Webster's Third New Intl. Dictionary 1438 (1993). The information supplied was succinct but not inaccurate. Contrast Allston Fin. Co. v. Hanover Ins. Co., 18 Mass.App.Ct. 96, 98-99, 463 N.E.2d 562 (1984).

The negligence and fiduciary duty theories both relied on the assertion that the agency failed to inform the plaintiff that the replacement policy from Richter Robb would carry a minimum premium rather than a refundable premium. ² The evidence being to the contrary, the judge did not err in ordering summary judgment for the defendants. It is not tenable to argue that Riley & Rielly had a duty to ensure that Baldwin...