United States District Court, D. Arizona
Douglas L. Rayes United States District Judge
issue is Defendant Brown & Brown Program Insurance
Services, Inc.'s motion to dismiss, which is fully
briefed. (Docs. 9, 11, 12.) For the following reasons, the
motion is denied.
August 21, 2013, Plaintiff Edward Fink was injured in an
accident caused by non-party Cole Cantreel's negligence.
(Doc. 1-1 at 8.) Cantreel was underinsured to pay
Plaintiff's damages, and Plaintiff's own underinsured
motorist policy also was insufficient. (Id.)
the accident, Plaintiff obtained insurance coverage from
non-party James LaVerdi, an insurance salesman for non-party
All Insurance, LLC, which was owned and operated by non-party
Charles Fritsinger. (Id. at 6-8.) Plaintiff claims
he requested uninsured and underinsured motorist coverage
equal to his liability coverage of two million dollars, but
LaVerdi did not procure such coverage. (Id. at 7.)
August 10, 2015, Plaintiff sued Fritsinger and other
defendants for negligence. (Id. at 9.) He sought
damages in the amount of the underinsured motorist coverage
he would have had but for Fritsinger's negligence in
adequately training, supervising, or instructing LaVerdi.
(Id. at 8-9.)
had purchased an error and omissions (“E&O”)
policy from Defendant, effective December 2012 through
December 2013, and renewed the policy through December 2014.
(Id. at 9.) Defendant, however, did not recommend or
address the need for retroactive coverage when Fritsinger
purchased the policy, nor did Defendant recommend or address
the need for tail coverage when Fritsinger cancelled his
E&O policy in October 2014. (Id. at 10.)
Fritsinger consequently did not have E&O coverage to
defend against Plaintiff's claim because his policy was
effective after the date Plaintiff procured his policy, and
Fritsinger cancelled his E&O policy prior to the date
Plaintiff filed the initial lawsuit. (Id. at 9.)
Fritsinger therefore agreed to assign his right to pursue a
professional negligence claim against Defendant to Plaintiff.
(Id. at 10.)
standing in Fritsinger's shoes, filed this professional
negligence action against Defendant in Arizona state court on
September 15, 2017. The complaint alleges that Defendant
negligently failed to “explain the need for or
recommend” retroactive or tail coverage when Fritsinger
purchased and cancelled his E&O policy. (Id. at
10-11.) Defendant removed the action pursuant to this
Court's diversity jurisdiction, and now moves to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docs.
successful Rule 12(b)(6) motion must show that the complaint
lacks a cognizable legal theory or fails to allege facts
sufficient to support such a theory. See Balistreri v.
Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.
1988). A complaint that sets forth a cognizable legal theory
will survive a motion to dismiss only where it contains
“sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). Although the
court must take “the well-pled factual allegations in
the complaint as true, [it is] ‘not bound to accept as
true a legal conclusion couched as a factual
allegation.'” Id. (quoting
Twombly, 550 U.S. at 555).
asserts that insurance brokers do not have a duty “to
advise insureds about the adequacy or appropriateness of the
insurance coverage they purchase, or to inform them about
optional coverage that might be available.” (Doc. 9 at
4 (quoting BNCCORP, Inc. v. HUB Int'l Ltd., 400
P.3d 157, 166 (Ariz.Ct.App. 2017)). Instead, Defendant
contends that, as a matter of law, insurance brokers need
only provide the insurance coverage that the client requests.
(Id.) Because Plaintiff's complaint at most
alleges that Defendant failed to recommend additional
coverage, Defendant argues that Plaintiff has not pled facts
that establish Defendant breached its duty of care under
argument rests entirely on the Arizona Court of Appeals'
description of the applicable duty in BNCCORP.
Plaintiff asserts that, in relying on BNCCORP,
Defendant improperly conflates duty and breach. (Doc. 11 at
1, 5.) Specifically, in Arizona a licensed insurance agent
owes his or her client a duty “to exercise reasonable
care, skill and diligence in carrying out the agent's
duties in procuring insurance.” Darner Motor Sales,
Inc. v. Universal Underwriters Ins. Co., 682 P.2d 388,
402 (Ariz. 1984). Plaintiff asserts that whether an insurance
agent must explain the need for or recommend retroactive or
tail coverage in order to satisfy this duty is a question of
fact that cannot be resolved on a motion to dismiss. The
establish negligence, Plaintiff must prove: (1) Defendant had
a duty to conform to a certain standard of care; (2)
Defendant breached that standard of care; (3) a causal
connection between Defendant's conduct and the resulting
injury; and (4) actual damages. Gipson v. Kasey, 150
P.3d 228, 230 (Ariz. 2007). “The first element, whether
a duty exists, is a matter of law for the court to ...