991 F. Supp. 2d 1271
S.D. Fla.2014Background
- Tiara Condominium (owner/association) retained Marsh as its exclusive insurance broker/risk advisor from 2002–2004; Marsh executives regularly attended Tiara insurance committee meetings.
- Tiara relied on a 2002 Allied appraisal (based on 1998 inspection) to set windstorm policy limits; Allied estimated an additional optional interior exclusion of ~$5.5M.
- In 2004 Marsh proposed/placed a Citizens windstorm policy with a $49,970,350 per-occurrence loss limit (Citizens later disputed whether the policy reset for two occurrences).
- Marsh personnel gave mixed testimony: some written comments suggested no carrier requirement for a new appraisal; depositions indicate Marsh generally recommended appraisals annually and that Hewitt believed Tiara was underinsured but did not consistently document advice.
- Hurricanes caused >$100M in damage; Tiara settled its Citizens suit for $89M. Tiara sued Marsh for negligence and breach of fiduciary duty (among other claims), alleging Marsh failed to advise on adequate coverage and to recommend an updated appraisal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insurance broker can owe an extra‑contractual duty to advise a client about appropriate types/amounts of coverage | Marsh assumed an advisory role and thus owed an enhanced duty to recommend adequate coverage (including updated appraisal) | No general duty to advise on coverage amounts; any duties arise only from contract and written engagement limits | Court: Yes — where broker shares a "special relationship" an enhanced duty to advise exists; question is fact‑dependent and for jury |
| Whether Florida's independent tort / economic‑loss rules bar tort claims based on contract relationship | Tiara: tort claims premised on extra‑contractual duties; not barred | Marsh: independent tort doctrine/economic loss rule precludes tort recovery where duties arise from contract | Court: independent tort rule not dispositive here because tort claims are based on extra‑contractual duties; Tiara II limits economic‑loss rule to product cases |
| Whether a "special relationship" existed between Marsh and Tiara (triggers duty to advise) | Tiara: long relationship, Marsh held itself out as exclusive advisor, attended meetings, provided advisory services — supports special relationship | Marsh: Tiara’s committee was sophisticated, had appraisal info, and chose reduced valuation to save premiums; Marsh merely relayed committee figures | Court: Existence of special relationship is a factual question with competing evidence; summary judgment denied — jury must decide |
| Causation (would Tiara have acted differently and suffered different damages if advised?) | Tiara: would have obtained updated appraisal and higher limits if Marsh had advised on co‑insurance and underinsurance risks | Marsh: Tiara settled with Citizens for $89M and large portions of loss were due to waste/fraud or Citizens’ dry‑out mandate; no causal link to Marsh conduct | Court: Causation is disputed and genuine issues of fact exist; summary judgment denied |
Key Cases Cited
- Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 607 F.3d 742 (11th Cir.) (earlier appellate decision addressing contract claims)
- Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 110 So.3d 399 (Fla. 2013) (Florida Supreme Court limiting economic‑loss rule to products liability)
- Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 714 F.3d 1253 (11th Cir.) (remanding tort claims after Fla. Supreme Court ruling)
- Wachovia Ins. Servs., Inc. v. Toomey, 994 So.2d 980 (Fla. 2008) (brokers owe fiduciary duty; must inform/ explain coverage secured)
- Southern Bell Tel. & Tel. Co. v. Hanft, 436 So.2d 40 (Fla. 1983) (independent tort rule / economic‑loss principles)
- Indem. Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So.2d 532 (Fla. 2004) (economic‑loss rule principles in contractual privity context)
- Fitzpatrick v. Hayes, 57 Cal.App.4th 916 (Cal. Ct. App.) (discussing circumstances giving rise to a broker’s enhanced advisory duty)
- Harts v. Farmers Ins. Exch., 597 N.W.2d 47 (Mich. 1999) (broker may assume responsibility to select appropriate coverage and thereby incur duty)