First Sealord Surety v. Durkin & Devries Insurance Agency
2013 U.S. Dist. LEXIS 7482
| E.D. Pa. | 2013Background
- First Sealord sues Durkin for breach of contract and fiduciary duty arising from an Agency Agreement to solicit and manage surety bonds.
- The Agency Agreement restricted Durkin to reporting adverse information and prohibited adjustments or settlements of claims; it required accurate records and imposed an indemnity provision.
- First Sealord alleges four misrepresentations in Durkin’s pre-appointment Agency Questionnaire regarding sureties, powers of attorney, litigation, and cancellations.
- Durkin’s responses to the Agency Questionnaire are contended to have misrepresented Durkin’s prior relationships with St. Paul and other issues, allegedly inducing the agency relationship.
- Durkin moves to dismiss the negligent misrepresentation claim, to quash a subpoena to St. Paul, and for summary judgment on the contract and fiduciary claims; First Sealord seeks to proceed with discovery and trial evidence.
- The court denied Durkin’s motions to dismiss and to quash, denied summary judgment, and extended discovery for three months.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligent misrepresentation viability | First Sealord contends Durkin’s questionnaire responses were false and misleading | Durkin argues there were no misrepresentations or no proximate causation | Plaintiff’s claim stated; proximate cause shown; not barred by law |
| Economic loss doctrine applicability | Exceptions allow negligent misrepresentation claims against information providers | Economic loss doctrine bars purely economic harms | Bilt-Rite exception applies; not barred |
| Statute of limitations | Discovery rule tolls where injury/cause not known | Limitations expired | Discovery rule tolls; statute not bar to negligent misrepresentation |
| Subpoena to St. Paul (Rule 45) | Documents relevant to alleged misrepresentations and agency relationship | Subpoena untimely and may implicate confidential settlement | Subpoena denied? (Note: Decision states denial of motion to quash; documents to be produced with protective order possible) |
| Breach of contract and fiduciary duty summary judgment | Durkin failed to convey adverse information; records were incomplete; duties beyond contract | No clear breach or causation; duplicative claims | Summary judgment denied; genuine issues of material fact exist; discovery extension granted |
Key Cases Cited
- Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270 (Pa. 2005) (economic loss rule not apply to negligent misrepresentation under Section 552; information-supplier duty in pecuniary gain context)
- Excavation Techs., Inc. v. Columbia Gas Co. of Pa., 985 A.2d 840 (Pa. 2009) (clarifies Bilt-Rite exception scope; information providers with pecuniary gain may be liable)
- Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002) (economic loss doctrine limits; discusses fraudulent inducement and misrepresentation carve-outs)
- Sovereign Bank v. BJ’s Wholesale Club, Inc., 533 F.3d 162 (3d Cir. 2008) (limits of Bilt-Rite exception; context of information providers)
- Summers v. Certainteed Corp., 606 Pa. 294, 997 A.2d 1152 (Pa. 2010) (causation guidance for summary judgment on damages)