JUDGMENT UPHELD IN FAVOR INSURER & AGENT WHERE INSURED SOUGHT FIRST-PARTY COVERAGE UNDER THIRD-PARTY POLICY

June 20, 2011

The Dallas Court of Appeals affirmed a trial court’s summary judgment against an insured who asserted a number of different claims related to his garage liability insurance policy.  In Marshall Howard d/b/a Four Seasons Automotive v. Burlington Insurance Co., No. 05-09-01324-CV, 2011 WL 2279067 (Tex. App.—Dallas June 10, 2011), the court of appeals rejected the insured’s argument that a quote and binder issued by McClelland & Hine, Inc. (MHI) conferred coverage for personal property and equipment though the Burlington policy did not contain any such coverage.  The court also rejected the insured’s alternative theory that if his policy did not provide first-party coverage, that Burlington and MHI should be held liable under a variety of misrepresentation theories.

The insured owned an auto repair business that was damaged by fire.  Burlington paid the insured’s third- party claims, but denied coverage for the insured’s equipment and personal property.  The insured sued Burlington and MHI, asserting that the quote and binder issued by MHI modified the policy to provide first-party coverage, or, if the policy was not modified, then the quote and binder were material misrepresentations in support of a number of statutory and common-law claims.

The court held, first, that the quote and binder did not state or even suggest that the insured had obtained coverage for his personal and business personal property.  The court further held that even if the quote and binder contained such representations, they could not modify the policy language.  Finally, the court held that the numerous misrepresentation-based claims failed because the quote and binder contain no misrepresentation or actionable omission, and because statements by the independent insurance broker who dealt with MHI on the insured’s behalf could not be attributed to MHI or Burlington.