Williams v. The Travelers Home and Marine Insurance Company
402 F.Supp.3d 499
E.D. Wis.2019Background
- Plaintiffs David and Kathleen Williams own a home insured by Travelers and allege hail damage from May 2018 to their roof, siding, and sheds.
- Travelers adjusters Rob Gross and Joe O’Grady inspected the property (one inspection allegedly without climbing on the roof; a later drone inspection) and denied coverage, attributing damage to wear and tear and tree limb impacts.
- Plaintiffs demanded appraisal and submitted contractor estimates/photos; Travelers maintained no hail damage and denied appraisal because estimated loss did not exceed the deductible.
- Plaintiffs sued in state court asserting breach of contract (against Travelers), and bad faith, misrepresentation, and breach of fiduciary duty (against Travelers, Gross, and O’Grady); defendants removed to federal court.
- Travelers moved to dismiss Counts III (misrepresentation) and IV (breach of fiduciary duty) and to strike punitive damages; Gross and O’Grady moved to dismiss claims against them, arguing they acted as Travelers’ disclosed agents.
- The court dismissed the misrepresentation and breach-of-fiduciary-duty claims against all defendants, dismissed bad-faith claims as to Gross and O’Grady (agents), denied dismissal of the punitive damages prayer, and dismissed Gross and O’Grady from the action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Misrepresentation (intentional) | Plaintiffs allege adjusters said there was no hail damage (a false factual representation). | Adjusters’ statements were negligent/insufficient inspections, not knowing or reckless misrepresentations; plaintiffs did not rely on the statements. | Dismissed: Plaintiffs failed to allege knowledge/recklessness and detrimental reliance; also failed to meet Rule 9(b). |
| Breach of fiduciary duty | Insurer/agents owed a fiduciary duty arising from the insurance relationship. | Wisconsin law does not recognize a fiduciary duty in first-party insurer-insured relationships; the relationship is contractual. | Dismissed: No fiduciary relationship alleged under Wisconsin law. |
| Bad faith liability of individual adjusters | Plaintiffs assert bad faith against Travelers and its adjusters. | Gross and O’Grady argue they were acting as disclosed agents of Travelers and thus cannot be held personally liable for bad faith. | Dismissed as to Gross and O’Grady: Wisconsin courts unlikely to impose independent bad-faith duties on agents acting for a disclosed principal (following agency principles and persuasive authority). |
| Punitive damages | Plaintiffs seek punitive damages based on alleged outrageous conduct or wanton disregard. | Travelers argues punitive damages not specifically pleaded nor supported beyond bad-faith allegations. | Denied: Prayer for punitive damages survives the pleadings stage; complaint plausibly alleges conduct that could support punitive damages. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must give fair notice and state a plausible claim)
- Kaloti Enters., Inc. v. Kellogg Sales Co., 699 N.W.2d 205 (Wis.) (elements of intentional misrepresentation under Wisconsin law)
- Berner Cheese Corp. v. Krug, 752 N.W.2d 800 (Wis.) (elements for breach of fiduciary duty under Wisconsin law)
- Brethorst v. Allstate Prop. & Cas. Ins. Co., 798 N.W.2d 467 (Wis.) (distinguishing insurer duties in third-party vs first-party claims)
- Lodholtz v. York Risk Servs. Grp., Inc., 778 F.3d 635 (7th Cir.) (adjusters not personally liable for insurer bad-faith under agency principles)
- Trinity Evangelical Lutheran Church v. Tower Ins. Co., 661 N.W.2d 789 (Wis.) (standards for punitive damages in insurance contexts)