This appeal is before us following remand in
Humiston Grain Co. v. Rowley Interstate Transportation Co.,
The facts were detailed in Humiston I and will not be repeated here except to identify the parties and frаme the disputed issues. Appellant Rowley Transportation Co. owned the damaged truck trailer which was operated under lease to appellee Humiston Grain Co. Humiston owned the sеmitractor that pulled the trailer and its cargo. The parties stipulated that Humiston’s driver negligently caused the collision. They also stipulated to the amount of Rowley’s damages less set-off for outstanding lease payments owed Humi-ston.
Complicating the picture was a statement made by a Rowley employee, prior to the accident, advising Humiston’s insurance agent, third-party аppellant James Earnest, that Rowley would carry physical damage (collision) insurance on the trailer and Humi-ston would be expected to carry liability insurance only. This statement by Rowley’s employee became the focus of Humiston’s defense in Rowley’s subsequent suit against it on breach of contract and negligence theories, and Humiston’s third-party action against Earnest.
In
Humiston I,
wе affirmed the district court’s finding that Rowley was estopped from recovering under the indemnification clause of the lease agreement because of its employee’s representations regarding insurance coverages.
Humiston,
On remand, the district court еntered an $8000 judgment for Humiston based on Earnest’s failure to thoroughly read the lease agreement and thereby educate himself on Humiston’s insurance needs. Earnest’s appeal claims — amоng other things — that the record is legally and factually insufficient to support such an award. Rowley has cross-appealed, claiming entitlement to attorney fees from Humiston under the leasе agreement. We reverse on the appeal, and affirm on the cross-appeal.
I. Although Earnest advances a number of arguments for reversal, one issue is dispositive: Did the court err, as a matter of law, in permitting recovery on a claim of professional negligence without requiring expert testimony concerning the standard of care for insurance agents? For the reasons that follow, we believe the district court erred and must be reversed.
As a general proposition, Earnest — as Humiston’s agent — was obliged to
*575
exercise reasonable care, diligence, and judgment in the performance of tasks undertaken on behalf of his principal.
Collegiate Mfg. Co. v. McDowell’s Agency, Inc.,
We have not previously addressed the question of whether, or under what circumstances, proof of an insurance agent’s negligence must rest on expert testimony. Because insurance agents are professionally engaged in transactions ranging from simple to complex, the requirement оf expert testimony varies from jurisdiction to jurisdiction depending on the nature of the alleged negligent act. Lori J. Henkel, Annotation,
Necessity of Expert Testimony to Show Standard of Care in Negligence Action Against Insurance Agent or Broker,
At the other end of the spectrum are cases involving the agent’s alleged failure to discern coverage gaps or risks of exрosure in more complex business transactions. In such eases, courts have required expert testimony to establish the applicable standard of care.
Atwater Creamery Co. v. Western Nat’l Mut. Ins. Co.,
We are convinced that the transaction before us required expert testimony to prove Humiston’s claim that Earnest overlookеd Rowley’s subrogation rights and therefore failed the company as an insurance agent. The record reveals that when Humiston’s president, Fred Humiston, showed Earnest the executed “Independеnt Contractor Agreement,” Earnest’s attention was immediately drawn to bold print that stated “OWNER MUST FURNISH LIABILITY INSURANCE. ROWLEY WILL FURNISH CARGO INSURANCE.” It was this observation that led to the call to Rowley to verify the apparent limitation on Humiston’s contractual insurance obligation. The remainder of the contract, however, consisted of twenty-six paragraphs of fine-print boilerplate that Earnest immediately deemed beyond his ability tо decipher. The parties dispute whether Earnest told Fred Humiston so. Earnest claims he advised Fred Humi-ston that he should have the contract examined by an attorney to properly assess thе *576 potential for further exposure. In any event, Fred Humiston acknowledged that he never asked Earnest to read the contract and, in fact, opined that most attorneys would probably bе hard-pressed to understand it. No other evidence was introduced.
Given this record, we believe the district court had no legal basis to fault Earnest for failing to read and interpret the contract without expert testimony that such conduct would be expected of an agent under these circumstances. This is not a case in which Earnest was directed to procure specific insurance and failed to do so. Humiston’s after-the-fact assumption that Earnest would read the contract is insufficient to establish an affirmative duty on Earnest’s part to assess coverage gaps where no request for such an examination has been made.
Atwater Creamery,
Nor is this a case like
Todd
where the standard of care can be established through the agent’s own opinion testimony. At trial Earnest repeatedly disсlaimed any duty to determine what exposures existed for Humi-ston or any other client. He expressed little, if any, familiarity with legal principles governing subrogation rights. He testified that his clients bear the rеsponsibility of knowing their own insurance needs, insisting that his duty is limited to filling their requests. Although Humiston might have tendered evidence to refute this contention, it did not do so. The district court’s tacit assumption that this duty had been delegated to Earnest rests on sheer speculation.
Cf. Collegiate Mfg. Co.,
In summary, we hold thаt where an insurance agent is alleged to have breached a professional duty, if the error or omission extends beyond the agent’s mere failure to procure coverage requested and paid for by the client, proof of the standard of care applicable to the circumstances must be established by expert testimony. Because the record before us is without such proof, the district court’s judgment against Earnest must be reversed.
II. Rowley cross-appeals the district court’s refusal to enter judgment on its sizable claim for attorney fees against Humi-ston. Rowley’s claim rests on a provision in the lease agreement entitling it to attorney fees incurred in pursuit of a claim under the contract. But because Humiston prevailed on its estopрel argument in
Humiston I,
Rowley’s recovery rested on negligence, not contract.
Humiston,
The costs of this appeal should be taxed equally between Humiston and Rowley.
REVERSED ON APPEAL; AFFIRMED ON CROSS-APPEAL.