Emerson Electric Co. v. Marsh & McClennan Companies
2012 Mo. LEXIS 65
| Mo. | 2012Background
- Emerson sued Marsh for breach of fiduciary loyalty and related duties as Emerson's broker, citing undisclosed contingent commissions and interest on premiums.
- Marsh moved for judgment on the pleadings asserting statutory authorization of commissions and no duty to obtain the lowest-cost insurance.
- Missouri law recognizes a broker-insured fiduciary duty limited to procuring insurance with reasonable care, but not a broad obligation to advise insurance needs or obtain the cheapest policy absent agreement.
- Statutes, including § 375.116 and § 375.051, authorize brokers to receive commissions and hold premiums in trust, without mandating disclosure of commissions or interest.
- The trial court granted judgment on the pleadings; Emerson appealed, and the case was remanded for further consideration of contract-based or course-of-dealing duties in a long-standing relationship.
- The court ultimately held that the scope of a broker's fiduciary duties depends on the agreement and relationship over the 20+ year relationship; the judgment on the pleadings was reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of broker's fiduciary duties to insured | Emerson argues loyalty duty extends beyond reasonable care | Marsh argues only reasonable-care duty applies | Duty of loyalty exists but is limited by agency scope and agreements |
| Duty to obtain lowest-cost insurance | Emerson contends broker must secure lowest cost | No such inherent duty absent agreement | No automatic duty to obtain lowest-cost insurance; depends on contract/relationship |
| Disclosure of contingent commissions | Contingent commissions should be disclosed | Statute authorizes commissions; no disclosure implied | Statutorily authorized commissions do not require disclosure absent fraud or agreement |
| Interest on premiums held by broker | Interest earned should belong to insured | Broker's interest arising from dual agency is permissible | Interest on premiums is not a breach; limited dual agency context governs |
| Premature resolution on pleadings | Record shows potential breach beyond duties stated | Record insufficient to determine scope of duties | Reversed and remanded to determine scope of duties based on contract/course of conduct |
Key Cases Cited
- Zeff Dist. Co. v. Aetna Cas. & Surety Co., 389 S.W.2d 789 (Mo. 1965) (broker must exercise reasonable diligence; no automatic lowest-cost requirement)
- Graue v. Missouri Prop. Ins. Placement Facility, 847 S.W.2d 779 (Mo. banc 1993) (distinguishes broker vs. insurer roles; fiduciary duties within scope)
- Gilbert v. Malan, 100 S.W.2d 606 (Mo. App. 1937) (brokers may be insured's agent in some matters and insurer's agent in others)
- Farmers Ins. Co. v. McCarthy, 871 S.W.2d 82 (Mo. App. 1994) (rejects duty to advise insured on coverage needs; no duty to find cheapest)
- Scanwell v. Chan, 162 S.W.3d 477 (Mo. banc 2005) (employee owes loyalty; discusses general loyalty in agency)
- State ex rel. Paine-Webber, Inc. v. Voorhees, 891 S.W.2d 126 (Mo. banc 1995) (stockbrokers owe fiduciary duties including disclosure of self-interest)