Rawlings v. Fruhwirth

• Decision Date: 25 April 1990
• Docket Number: No. 900021,900021
• Citation: 455 N.W.2d 574
• Parties: Donald L. RAWLINGS, for the benefit of himself, Barbara Rawlings, Lisa Rawlings and the North Dakota Workmen's Compensation Bureau, and as assignee of Charles D. Sweeney, Plaintiff and Appellant, v. William FRUHWIRTH, Defendant, and Duane Larson and First American Insurance Company of Larimore, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 574

455 N.W.2d 574

Donald L. RAWLINGS, for the benefit of himself, Barbara

Rawlings, Lisa Rawlings and the North Dakota

Workmen's Compensation Bureau, and as

assignee of Charles D.

Sweeney, Plaintiff and Appellant, v. William FRUHWIRTH, Defendant, and Duane Larson and First American Insurance Company of

Larimore, Defendants and Appellees.

Civ. No. 900021.

Supreme Court of North Dakota.

April 25, 1990.

Stefanson, Landberg & Plambeck, Moorhead, Minn., for plaintiff and appellant; argued by Todd W. Foss.

Vaaler, Gillig, Warcup, Woutat, Zimney & Foster, Grand Forks, for defendants and appellees; argued by Thomas L. Zimney.

ERICKSTAD, Chief Justice.

Donald Rawlings appeals from a summary judgment dismissing his claim for negligence against Duane Larson and First American Agency, Inc. (First American). ¹ We affirm.

This case is a negligence action against two Larimore, North Dakota insurance agents: William Fruhwirth, d/b/a Larimore Insurance Agency and Duane Larson, employed by First American Agency, Inc. It is an offshoot of a wrongful death action entitled Donald L. Rawlings v. Charles D. Sweeney, Grand Forks County District Court, case no. 86131, which ended in a settlement. As part of the settlement, Charles Sweeney assigned his cause of action against Fruhwirth and Larson to Donald Rawlings, the appellant in this case. ²

On July 17, 1985, a motor vehicle accident occurred involving Charles Sweeney and Gerald Rawlings, Donald's son. Gerald died as a result of injuries sustained in the accident. At the time of the accident, Sweeney had automobile liability insurance with General Casualty Company with a limit of $25,000, which had been obtained through Fruhwirth. Sweeney also had an umbrella policy written by St. Paul Fire and Marine which was obtained through Larson. The umbrella policy covered liability from $250,000 to $1,250,000. Thus, on July 17, 1985, when the accident occurred, there was a gap in Sweeney's liability insurance coverage between the $25,000 limit of the auto insurance and the $250,000 of the umbrella policy. ³

Rawlings contends that Larson breached his duties as Sweeney's insurance agent in the following three ways:

"1. Larson breached a duty to procure insurance requested by Sweeney;

"2. Larson breached a duty to protect Sweeney from gaps in coverage; and

"3. Larson made a negligent misrepresentation regarding the availability of insurance."

In the second amended complaint dated October 17, 1988, Rawlings alleged:

"Larson, while acting as the insurance agent for Sweeney, breached certain duties and responsibilities to Sweeney and to third-parties to whom Sweeney might become liable, and failed to exercise such reasonable skill and ordinary diligence as may fairly be expected from a reasonably prudent insurance agent in Larson's situation by exposing Sweeney to personal liability as a result of a gap in coverage."

On March 17, 1989, Larson and First American moved for summary judgment. After considering briefs and oral argument of the parties, the district court, on July 25, 1989, granted the motion for summary judgment. In its memorandum decision, the district court, in pertinent part, said:

"Sweeney specifically requested the umbrella policy from Larson in November 1983 and Larson wrote this policy for Sweeney. Sweeney stated on a number of occasions that he did not ask Larson to procure additional liability insurance to fill the gap between the existing liability policy (written by Fruhwirth) and the umbrella policy written by Larson. There is no question of fact as to whether Larson fulfilled his duty to procure insurance for Sweeney that was expressly requested.

"A duty to procure additional insurance not expressly requested must be based on a special relationship between the agent and the insured. [Born v Medico Life Ins. Co., 428 N.W.2d 585, 589 (Minn.Ct.App.1988) ]. The Plaintiff has not alleged that a special relationship existed. From the facts of this case, no special relationship between Sweeney and Larson can be inferred.

* * * * * *

"Here, even viewing the evidence most favorable to the Plaintiff, there are no facts showing any special relationship between Sweeney and Larson that would impose a greater duty on Larson. Sweeney rarely dealt with Larson. Sweeney maintained his auto insurance with Fruhwirth both before and after contacting Larson. Under these circumstances, Larson had no duty to procure insurance to fill the gap between Sweeney's liability policy and his umbrella policy.

"Sweeney did not rely on Larson to provide him with additional coverage. Larson advised Sweeney to go to Fruhwirth to fill the gap in coverage. Since Sweeney did not expect Larson to get the coverage and went to Fruhwirth for that coverage, it is apparent that there was no reliance on Larson's statement. The Rust affidavit states that Fruhwirth could have provided Sweeney with the coverage. Sweeney has stated he relied on Fruhwirth to procure the additional coverage."

We have previously stated the criteria necessary to determine the propriety of granting a Rule 56, N.D.R.Civ.P., summary judgment as follows:

" 'Summary judgment is appropriate to promptly and expeditiously dispose of controversies without trial when, after viewing the evidence in the light most favorable to the party against whom summary judgment is sought and giving her the benefit of all favorable inferences, only a question of law is involved or there is no genuine dispute over either the material facts or inferences to be found from undisputed facts. [Citations omitted.] Even when a factual dispute exists summary judgment is proper if the law is such that the resolution of the factual dispute will not change the result.' "

Schill v. Langdon Farmers Union Oil Co., 442 N.W.2d 408, 410 (N.D.1989).

We have also previously expressed our reluctance to approve summary judgment in negligence actions. See Heimer v. Privratsky, 434 N.W.2d 357 (N.D.1989); Barsness v. General Diesel & Equipment Co., 383 N.W.2d 840 (N.D.1986); VanVleet v. Pfeifle, 289 N.W.2d 781 (N.D.1980); Kirton v. Williams Elec. Co-op., Inc., 265 N.W.2d 702 (N.D.1978). Nevertheless, summary judgment may be appropriate even in negligence cases. Heimer, supra at 359; See also Benjamin v. Benjamin, 439 N.W.2d 527 (N.D.1989); Morrison v. Grand Forks Housing Auth., 436 N.W.2d 221 (N.D.1989).

Rawlings, in his brief, likens his cause of action to a malpractice claim, which is a professional negligence claim. Accordingly, we have considered this case in that vein. Without concluding that the insurance business is a profession, ⁴ we note that we have held that the elements of a professional negligence action are the existence of a duty or standard of care on the part of the professional to protect another from injury, the failure to discharge that duty, and a resulting injury proximately caused by the breach of duty. Three Affiliated Tribes v. Wold Eng., 419 N.W.2d 920, 921-22 (N.D.1988). While we have never set out a standard of care or duty owed to an insured by an insurance agent, we note that other sources have recognized such standards:

"Ordinarily, of course, an insurance agent assumes only those duties normally found in an agency relationship, including the obligation to deal with his principal in good faith and to carry out instructions, and he assumes no duty to advise the insured merely by such relationship. However, where an agent also holds himself out as a consultant and counselor, he does have a duty to advise the insured as to his insurance needs, particularly where such needs have been brought to the agent's attention. And in so doing, he may be held to a higher standard of care than that required of the ordinary agent since he is acting as a specialist. Accordingly, the agent may be liable to an insured for the damage suffered by his failing to inform him as to a potential source of loss and by his failing to recommend insurance therefor. [Footnotes omitted.]" [Emphasis added.]

16A J. Appleman, Insurance Law and Practice Sec. 8836, at 64-66 (rev. ed. 1981). See Jones v. Grewe, 189 Cal.App.3d 950, 234 Cal.Rptr. 717 (Cal.App. 2 Dist.1987) (ordinarily, insurance agent assumes only those duties normally found in any agency relationship, including the obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured); Sandbulte v. Farm Bureau Mut. Ins. Co., 343 N.W.2d 457 (Iowa 1984) (insurance agent owes general duty to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured); Gabrielson v. Warnemunde, 443 N.W.2d 540 (Minn.1989) (legal duty imposed on insurance agent is to exercise the skill and care which a reasonably prudent person engaged in the insurance business would use under similar circumstances, ordinarily limited to the duties imposed in any agency relationship, to act in good faith and follow instructions).

Other jurisdictions also recognize that an expanded duty or standard of care may arise on the part of an insurance agent on the basis of a "special relationship" between the insurance agent and the insured. See Jones, supra, 234 Cal.Rptr. 717 (an agent may assume additional duties by an express agreement or a holding out); Sandbulte, supra, 343 N.W.2d 457 (an expanded agency agreement, arrangement, or relationship, sufficient to require a greater duty from the agent than the general duty, generally exists when the agent holds himself out as an insurance specialist, consultant, or counselor and is receiving compensation for consultation and advice apart from premiums paid by the insured); Bruner v. League General Ins. Co., 164 Mich.App. 28, 416 N.W.2d 318 (1987) (duty to advise a client regarding the adequacy of a policy's coverage may arise when a "special relationship" exists between the insurance company or its agent and the policyholder); Born v. Medico Life Ins. Co., 428 N.W.2d 585 (Minn.Ct.App.1988) (whether or not an agent has...