Indiana Restorative Dentistry, P.C. v. Laven Insurance Agency Inc.
999 N.E.2d 922
Ind. Ct. App.2013Background
- Indiana Restorative Dentistry, P.C. (IRD) maintained a long (≈30-year) relationship with Laven Insurance Agency (Laven) for IDA-endorsed ProAssurance policies; annual renewals used a Laven questionnaire and declarations page.
- Maureen Lehman (office manager) routinely completed renewal questionnaires requesting coverage increases; Laven sometimes implemented requests but missed at least one 1999 request and failed to increase contents coverage after Maureen’s 2008 request.
- On October 26, 2009 a fire caused $704,894.34 in contents loss; policy limit for contents was ~$204,371, leaving a >$500,000 shortfall.
- IRD sued Laven and ProAssurance for uninsured losses, alleging Laven had a special duty to advise and a duty to procure requested coverage, and that ProAssurance was vicariously liable.
- Trial court granted summary judgment for ProAssurance and denied IRD’s motions; on appeal the court reversed as to Laven’s duties (advise and procure) and found a genuine issue whether Laven was ProAssurance’s agent, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Laven owed a special duty to advise IRD about coverage based on their long-term relationship | Long-term, ritualized renewals, tailored questionnaires, advice on specific coverages, and risk-review materials created an entrustment relationship imposing an advising duty | Long-term relationship alone insufficient; cover letters and renewal process show IRD retained final responsibility and Laven acted at arm’s length | Court held a special relationship existed; Laven had a duty to advise (reversed trial court; summary judgment for IRD on duty to advise) |
| Whether Laven had a contractual duty to procure increased coverage requested by IRD | Past dealings and annual renewal practice created an implied contract to procure coverage when IRD provided the requested increase on renewal forms | No meeting of minds on essential contract terms; agent had limited discretion and could not be bound to procure requested increase | Court found an implied contract to procure arose from past dealings; Laven liable for failing to procure the requested increase (summary judgment for IRD on duty to procure) |
| Whether ProAssurance is vicariously liable for Laven’s actions (i.e., whether Laven was ProAssurance’s agent) | The agency agreement, Laven’s status as an authorized IDA agent, ProAssurance production goals, oversight, and commissions create a factual dispute on agency | The agreement characterizes Laven as an independent contractor; insurer lacked sufficient control to be vicariously liable | Court held a genuine issue of material fact exists as to whether Laven acted as ProAssurance’s agent; remanded for further proceedings |
| Whether trial court properly excluded additional newsletters as newly discovered evidence | IRD argued newsletters showed Laven’s representations and were diligently sought | Trial court denied admission as not meeting newly discovered evidence standard | Appellate court affirmed trial court’s refusal to admit the additional newsletters (no abuse of discretion) |
Key Cases Cited
- Filip v. Block, 879 N.E.2d 1076 (Ind. 2008) (no duty to advise absent an intimate/long-term relationship or other special circumstance)
- Myers v. Yoder, 921 N.E.2d 880 (Ind. Ct. App. 2010) (agent owes reasonable care to procure insurance; advising duty requires special relationship)
- United Farm Bureau Mut. Ins. Co. v. Cook, 468 N.E.2d 522 (Ind. Ct. App. 1984) (longstanding entrustment and agent counseling can create duty to advise and procure)
- Billboards N’ Motion, Inc. v. Saunders-Saunders & Assoc., Inc., 879 N.E.2d 1185 (Ind. Ct. App. 2008) (long-term relationship may create factual dispute on heightened duty to advise)
- Benante v. United Pac. Life Ins. Co., 659 N.E.2d 545 (Ind. 1995) (agency relationship may be found despite independent-contractor label; contract terms and conduct are relevant)
- Estate of Mintz v. Conn. Gen. Life Ins. Co., 905 N.E.2d 994 (Ind. 2009) (distinguishes broker v. agent based on commissions, exclusivity, and insurer control)
- Fidelity & Cas. Co. of N.Y. v. Tillman Corp., 112 F.3d 302 (7th Cir. 1997) (intermediary is agent of insured when shopping and agent of insurer after policy issues; explains rationale for insurer liability)