R&M MIXED BEVERAGE CONSULTANTS, INC., Appellant, v. SAFE HARBOR BENEFITS, INC., USG INSURANCE SERVICES, INC., RYAN SPECIALTY GROUP SERVICES, LLC, AND/OR RYAN SPECIALTY GROUP, LLC, Appellees.
No. 08-17-00054-CV
COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS
(TC# 2016DCV0374)
Appellant, R&M Mixed Beverage Consultants, Inc. (R&M), is a Texas Corporation that owns and operates several bar and grill establishments including Mavericks Bar & Grill (Mavericks), located in El Paso, Texas. R&M filed third-party petitions against Safe Harbor Benefits, Inc. (Safe Harbor), USG Insurance Services, Inc., (USG), Ryan Specialty Group Services,
FACTUAL AND PROCEDURAL BACKGROUND
The Purchase of the Policy
Richard Chavez and his brother Raymond (“Mike“) Chavez owned and operated R&M with Richard serving as President and Mike serving as vice-president. Along with other duties, Richard assumed responsibility for procuring liquor liability protection for the bar and grills that R&M operated. In 2006, he approached Victoria Weir, an agent for Appellee Safe Harbor, to assist him in obtaining insurance coverage. Although Safe Harbor could not write a policy directly, Weir contacted a wholesale broker, Appellee USG, to assist with procuring a policy for R&M. In December 2006, R&M purchased its first liquor liability policy from First Mercury, a surplus lines company, which it then renewed a year later.
Before the policy expired in December of 2008, R&M asked for a new quote, and at that time, Safe Harbor again contacted USG, which then contacted WKF&C Agency, a managing general underwriter, which then contacted Indemnity Insurance of DC Group (Indemnity) from whom it received a quote for coverage along with financial information and disclosures about the company. The information indicated that Indemnity had received an “A-” rating from A.M. Best, a well-known rating company, which placed Indemnity in the “excellent” category, among other companies rated. The information also described Indemnity as being licensed to operate in various states, including Texas, by respective departments of insurance.
In addition, Safe Harbor provided R&M with written notice that Indemnity was registered with the State as a Risk Retention Group (RRG), which under Texas law, meant it did not participate in the Texas insolvency guaranty fund. Safe Harbor further informed R&M that an RRG is a “non-traditional market,” and R&M needed to be “aware of certain information about this market.” Through a series of transactions involving the Appellees, and formerly owned entities such as WKF&C, R&M purchased a liquor liability policy issued by Indemnity.
On December 18, 2008, Richard Chavez signed an “acknowledgment” stating that he understood that the “coverage written [was] not subject to the protection and benefits of the state guaranty associations,” and that R&M had agreed to hold Safe Harbor and WKF&C harmless with respect to “any future loss, damage, expense, or other financial risk and/or any other dispute that may arise relative” to its placement of coverage with Indemnity.
Thereafter, R&M renewed its policy with Indemnity in 2009 and 2010, through the same series of transactions as before, thereby obtaining coverage through December 2010. With each renewal, R&M received the same information as before about Indemnity‘s rating with A.M. Best and the nature of its operations. At renewal, Indemnity had received an “A-” rating from A.M. Best. Once issued, the policy itself contained a notice that Indemnity continued operating as an RRG in the issuing state.
The Dram Shop Lawsuits and Indemnity‘s Liquidation
In September 2011, two different customers who were served liquor at Mavericks were involved in separate accidents. In July of 2012, victims of the first accident filed a lawsuit against the driver who had been served liquor at Maverick‘s, and against R&M under the Dram Shop Act. A year later, a similar suit was filed by the victims of the second accident. Initially, Indemnity proceeded to defend R&M in both suits by contracting and paying attorneys to enter appearances and defend against all allegations asserted. By April of 2014, however, circumstances changed after Indemnity suffered a precipitously-occurring financial calamity that resulted it its eventual liquidation, not only causing attorneys representing R&M to withdraw and leave R&M to defend itself, but also exposing it to liability without insurance coverage. The record indicates that A.M. Best had downgraded Indemnity‘s rating on September 24, 2013, when it issued a revision indicating that Indemnity had suffered a “precipitous decline” in its capitalization structure. At that time, the rating agency placed Indemnity “under review,” and downgraded its rating to a “B.” The revision stated that it still had faith in Indemnity‘s ability to address its capitalization issue given its history and expertise in the insurance industry, but further warned that another “negative rating action may occur if capital levels do not continue to support the ratings and if compliance does not improve.”
In addition, on July 26, 2013, the Insurance Commissioner of the State of Delaware, where Indemnity was incorporated, filed a Liquidation Petition, seeking entry of a Liquidation and Injunction Order, in light of Indemnity‘s financial issues. Following an investigation, the Commissioner determined that Indemnity‘s financial situation had not improved, and that its financial condition was so “unsound” and “impaired” that any further transaction of insurance as a going concern posed a hazard to its policy holders. Therefore, on November 7, 2013, a court of chancery in the State of Delaware issued a Rehabilitation and Injunction Order, enjoining Indemnity from conducting any additional business and appointed the Insurance Commissioner as a receiver to conduct business on behalf of Indemnity and to take control of its assets. On April 10, 2014, the court entered a “Liquidation and Injunction Order,” indicating that the Commissioner had uncovered several areas of “high concern” regarding Indemnity‘s financial viability, and information indicating that Indemnity‘s principal, Jeffrey B. Cohen, had engaged in possible fraudulent conduct.2 The court concluded that Indemnity
The Third-Party Lawsuits and the Motions for Summary Judgment
After Indemnity became insolvent and its lawyers withdrew from the litigation, R&M filed its initial third-party petition, in March of 2015, against Safe Harbor and USG. Months later, in July 2015, R&M supplemented to add WKF&C, and its related entities, Ryan Specialty Group, LLC, and Ryan Specialty Group Services, LLC (collectively, the Ryan Specialty Group).4 In its supplemental petition, R&M alleged that WKF&C was a division, component, or subsidiary of the
Ryan Specialty Group, and these entities provided insurance related services pertaining to the series of transactions that included Safe Harbor and USG, which led to R&M‘s purchase of the Indemnity insurance policy at issue in this case. R&M asserted a variety of allegations against the third-party defendants, contending that they had made misrepresentations and/or had failed to disclose material information with regard to R&M‘s purchase of the Indemnity policy; that they were negligent in their actions or omissions; and that they had engaged in violations of the Texas Deceptive Trade Practices Act (DTPA), and the Texas Insurance Code. After a period of discovery, the Ryan Specialty Group filed motions for summary judgment against all claims asserted by R&M. The trial court subsequently entered an order granting summary judgment in its entirety in favor of Ryan Specialty Group, LLC, and Ryan Specialty Group Services, LLC. Thereafter, USG and Safe Harbor filed traditional and no-evidence motions for summary judgment challenging all claims asserted against it. Issuing a final judgment, the trial court granted the motions for summary judgment filed by USG and Safe Harbor, which effectively disposed of all parties and all claims. This appeal followed.
DISCUSSION
STANDARD OF REVIEW
On appeal, we review a trial court‘s order granting both no-evidence and traditional motions for summary judgment de novo. See Border Demolition & Envtl., Inc. v. Pineda, 535 S.W.3d 140, 151 (Tex. App.—El Paso 2017, no pet.) (citing Valence Operating Company v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); see also Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). When, as here, a party has moved for summary judgment on both no-evidence and traditional grounds, we first review the no-evidence grounds. See Cmty. Health Sys. Prof‘l Services Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017); Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017). If we conclude that the trial court properly granted the no-evidence summary judgment motion, we need not address the traditional motion to the extent
No-evidence motions for summary judgment are governed by
A defendant may move for a traditional summary judgment at any time, with or without supporting affidavits, alleging that the plaintiff does not have evidence to support her claims.
On appeal, whether we are reviewing the granting of a traditional or a no-evidence motion for summary judgment, we review the evidence in the light most favorable to the non-movant, crediting evidence favorable to that party if reasonable jurors could do so, and disregarding contrary evidence unless reasonable jurors could not. Pineda, 535 S.W.3d at 151 (citing Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006); see also Lightning Oil Co., 520 S.W.3d at 45. We further indulge every reasonable inference in favor of the non-movant, and resolve any doubts against the motion. Lightning Oil Co., 520 S.W.3d at 45 (citing City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005)).
If the trial court‘s order does not specify the grounds on which the summary judgment was granted, “we must affirm the summary judgment if any of the theories presented to the trial court and preserved for appellate review are meritorious.” See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003); see also FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872–73 (Tex. 2000) (citing Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995)).
ISSUE ONE: THE RYAN SPECIALTY GROUP‘S MOTION FOR SUMMARY JUDGMENT
On April 1, 2012, an entity known as the RSG Underwriting Managers, LLC, entered into a purchase agreement, to purchase the assets of WKF&C. Thereafter, WKF&C voluntarily dissolved in 2013. Because of its inability to name WKF&C as a third-party defendant in the underlying lawsuit, R&M ultimately named the Ryan Specialty Group, i.e., Ryan Specialty Group Services, LLC, and Ryan Specialty Group, LLC, as third-party defendants, contending that WKF&C had “merged” into and/or had been “acquired” by the two Ryan Specialty Group Defendants. R&M further contended that WKF&C was a “division, component or subsidiary of the Ryan Specialty Group” entities as referenced in the petition, and/or was an alter ego of the Ryan Specialty Group Defendants, and sought to hold them liable for WKF&C‘s conduct in procuring the Indemnity insurance policy on that basis.
Effective May 1, 2012, by means of an Instrument of Assumption included in the purchase agreement, another entity identified as WKFC Underwriting Managers, (WKFC), a series of RSG Underwriting Managers, LLC, assumed certain liabilities of the WKF&C companies, as assignee of RSG Underwriting Managers, LLC. The Instrument of Assumption, however, also expressly excluded all obligations of WKF&C, and its related entities, unless specifically stated.5
In their traditional motion for summary judgment seeking to dismiss this claim, the Ryan Specialty Group argued that they could not be held liable, as a matter of law, for the actions of WKF&C, as they were not involved in any of the transactions in question, they were not the actual parties to the Purchase Agreement, there was no merger between WKF&C and any of the Ryan Specialty Group entities, and none of the Ryan Specialty Group entities agreed to assume any liabilities for WKF&C‘s actions.
In addition, the Ryan Specialty Group attached excerpts from a deposition given by their attorney, Ian Ackerman, as well as Ackerman‘s affidavit, stating that there was no merger between the various entities—as there was no exchange of shares and that it was instead, an arm‘s length transaction in which WKF&C‘s assets were sold for cash only. In addition, Ackerman stated that the various entities involved in the sale had no common ownership before the purchase, had no commingled funds, and that WKF&C‘s owners remained separate and discrete from any of the Ryan Specialty Group entities throughout the sale. The Ryan Specialty Group therefore argued that they could not be held liable on either an alter ego or a successor liability theory.
In response, R&M argued that a material issue of fact existed on the issue of whether WKF&C could have been held liable for Indemnity‘s fraudulent conduct, as WKF&C was acting as Indemnity‘s agent in the marketplace. R&M further contended that a question of fact existed on whether the Ryan Specialty Group‘s purchase of WKF&C was used as a sham to avoid liability for claims of this nature involving Indemnity. According to R&M, if in fact the acquisition was for the purpose of escaping liability, the Ryan Specialty Group should be held liable on that basis. R&M contended that the transaction described as a sale and acquisition was “nothing more than a shell game in which the assets, key employees, and operations of [WKF&C] were moved as a going concern into a new entity and where the litigation liabilities of [WKF&C] were left in a dormant entity and eventually done away with.” R&M then concluded that for “legal and equitable reasons, the corporate fiction must be disregarded,” and that the court should therefore treat WKFC, as successor of WKF&C, as either a “continuing entity or as having de facto merged” with the Ryan Specialty Group Services, LLC, and with the Ryan Specialty Group LLC, or collectively the “Ryan Defendants.”
In reply, the Ryan Specialty Group supplemented their motion for summary judgment with excerpts from Ackerman‘s deposition testimony, in which he averred that the Ryan Defendants did not acquire WKF&C as part of any fraudulent scheme to defeat R&M‘s interests, stating that WKF&C did not share any concerns about Indemnity‘s financial stability at the time of the sale, and that he did not believe there was any cause for concern at the time of the sale in any event. In addition, the Ryan Specialty Group argued that there was no evidence that the various entities were alter egos of each other.
The trial court granted the motion for summary judgment of Ryan Specialty Group and ordered that R&M take nothing on their claims.
Arguments on Appeal
On appeal, R&M argues that the trial court erred in granting the Ryan Defendants’ traditional motion for summary judgment, asserting that there is a genuine issue of material fact as to whether they were WKFC‘s alter ego, and were therefore liable for WKFC‘s alleged “errors and omissions” in procuring the insurance policy through Indemnity.6 R&M contends
the Ryan Defendants used the “corporate structure” as a “sham to avoid liability based on WKFC‘s procurement of ‘worthless’ insurance.” R&M contends that there is a genuine issue of material fact concerning whether WKFC could be considered the alter ego of the Ryan Defendants, and consequently “whether the corporate fiction of a corporate transaction should be disregarded.”
R&M‘s argument fails for several reasons. First, as the Ryan Defendants point out, an entirely different corporate entity, RSG Underwriting Managers, LLC., acquired WKFC‘s assets pursuant to the Purchase Agreement, and the two Ryan Defendants were not named in the purchase agreement and were not involved in the purchase. Further, R&M fails to explain why it did not name Ryan Underwriting as a defendant, and why it instead chose to name the Ryan Specialty Group as defendants, other than to mention in passing that RSG Underwriting Managers is a subsidiary of the Ryan Specialty Group. Similarly, while R&M contends that we should find the Ryan Defendants liable for WKFC‘s actions, their reasoning also appears to be based on the contention that WKFC was a subsidiary of the Ryan Defendants, and/or that the Ryan Defendants and WKFC were operated as a single business enterprise, contending that the evidence demonstrated that they had overlapping finances and operations.
As a matter of law, however, none of these arguments serve as a basis for piercing the corporate veil. The fact that a corporation may be a parent of a subsidiary corporation does not automatically render it liable for the actions of its subsidiaries. For the purpose of legal proceedings, subsidiary corporations and parent corporations are considered “separate and distinct ‘persons’ as a matter of law, and the separate entity of corporations will generally be observed by the courts even where one company may dominate or control the other company, or treats the other company as a mere department, instrumentality, or agency.” See Formosa Plastics Corp., USA v. Kajima Intern., Inc., 216 S.W.3d 436, 459–60 (Tex. App.—Corpus Christi 2006, pet. denied) (citing Valero S. Tex. Processing Co. v. Starr County Appraisal Dist., 954 S.W.2d 863, 866 (Tex. App.—San Antonio 1997, pet. denied)); see also Sitaram v. Aetna U.S. Healthcare of North Texas, Inc., 152 S.W.3d 817, 825 (Tex. App.—Texarkana 2004, no pet.) (courts presume that a parent corporation and its separate corporate subsidiary are distinct legal entities) (citing BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 798 (Tex. 2002)); see also SSP Partners v. Gladstrong Investments (USA) Corp., 275 S.W.3d 444, 455 (Tex. 2008) (recognizing that the “[c]reation of affiliated corporations to limit liability while pursuing common goals lies firmly within the law and is commonplace“). Because a parent corporation generally has no duty to control its subsidiaries, courts will not disregard the corporate fiction and hold a parent corporation liable for the
Thus, as the Texas Supreme Court has stated, it has “never held corporations liable for each other‘s obligations merely because of centralized control, mutual purposes, and shared finances.” SSP Partners, 275 S.W.3d at 455. Instead, there must also be evidence of “abuse, or . . . injustice and inequity” before one corporation may be held liable for another‘s obligations, or in other words, before a court will pierce the corporate veil to hold the parent company liable for its subsidiary‘s actions. Id.; see also Bautista, 484 S.W.3d at 498 (in order to find a parent corporation liable for its subsidiary‘s actions, there must be some basis for piercing the corporate veil and treating the two corporations as one entity); see also Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438, 448 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (courts generally will not disregard the corporate fiction and hold a parent corporation liable for the obligations of a subsidiary unless something more is presented, such as evidence supporting an agency relationship or grounds for piercing the corporate veil); Semperit Technische Produkte Gesellschaft M.B.H. v. Hennessy, 508 S.W.3d 569, 585 (Tex. App.—El Paso 2016, no pet.) (noting that a subsidiary corporation will not be regarded as the alter ego of its parent merely because of stock ownership, a duplication of some or all of the directors or officers, or an exercise of the control that stock ownership gives to stockholders) (citing Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex. 1975)); Cleveland Reg‘l Med. Ctr., L.P., 323 S.W.3d at 350–52.
The Court has noted that these terms are “shorthand references for the kinds of abuse, specifically identified, that the corporate structure should not shield—fraud, evasion of existing obligations, circumvention of statutes, monopolization, criminal conduct, and the like,” and expressly noted that these terms “do not mean a subjective perception of unfairness by an individual judge or juror[.]” SSP Partners, 275 S.W.3d at 455. Further, the Court has explained that “[s]uch abuse is necessary before disregarding the existence of a corporation as a separate entity,” and that any “other rule would seriously compromise what we have called a ‘bedrock principle of corporate law‘“—that a legitimate purpose for forming a corporation is to limit individual liability for the corporation‘s obligations. Id. (citing Willis v. Donnelly, 199 S.W.3d 262, 271 (Tex. 2006) (“A bedrock principle of corporate law is that an individual can incorporate a business and thereby normally shield himself from personal liability for the corporation‘s contractual obligations.“)).
In addition, we note that subsection (a)(2) of the
Further, the Supreme Court has held that the “single business enterprise” liability theory is “fundamentally inconsistent with the approach taken by the Legislature in article 2.21.” SSP Partners, 275 S.W.3d at 456. In other words, the fact that two corporations may have mingled their finances and assets will not be sufficient to pierce the corporate veil; instead, as set forth above, under the statute, there must be evidence that one of the corporations was using the other for the purpose of perpetrating an actual fraud. See Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat‘l Dev. & Research Corp., 299 S.W.3d 106, 116 (Tex. 2009) (one corporation‘s ownership of all or the majority of a second entity does not affect the second entity‘s existence as a distinct, separate legal
In the present case, there is no evidence that the Ryan Defendants sought to utilize either RSG Underwriting Managers and/or WKFC entities to perpetrate an actual fraud on R&M. As explained above, there is no evidence that the Ryan Defendants were aware of Indemnity‘s financial instability at the time RSG purchased WKFC‘s assets, nor that Indemnity would later experience a forced liquidation. To the contrary, the record demonstrates that at the time of the purchase, Indemnity had retained an A- rating and had remedied capitalization concerns raised by regulators and the rating agency. Although issues arose, Indemnity‘s rating was not downgraded until September 24, 2013—a year and a half after the asset purchase of April 2012. Further, the Delaware Insurance Commissioner did not institute proceedings against Indemnity until July 26, 2013, well over a year after that purchase took place. As well, attorney Ackerman testified that WKFC did not share any concerns about the financial stability of Indemnity at the time of the sale, and he did not believe that they had any reason to have any concerns.
The evidence therefore does not support a finding that the Ryan Defendants used WKFC to perpetrate an actual fraud on R&M with respect to Indemnity‘s financial situation, i.e., that the Purchase Agreement was made with the intent to deceive or defeat R&M‘s claims. As such, we find no basis in the record for finding the Ryan Defendants liable for WKFC‘s actions, and we therefore conclude that the trial court properly granted the Ryan Defendants’ motion for summary judgment. See AvenueOne Properties, Inc. v. KP5 Limited Partnership, 540 S.W.3d 643, 650 (Tex. App.—Amarillo 2018, no pet.) (reversing trial court‘s judgment where evidence was legally insufficient to support finding that commercial tenant‘s president caused tenant, a corporation, to be used for purpose of perpetrating and did perpetrate actual fraud on landlord primarily for president‘s direct personal benefit, as was statutorily required to pierce corporate veil). R&M‘s Issue One is overruled.
ISSUE TWO: THE NEGLIGENCE, DTPA AND INSURANCE CODE CLAIMS AGAINST USG AND SAFE HARBOR
In its second issue on appeal, R&M argues that the trial court erred in granting USG and Safe Harbor‘s motions for summary judgment on its claims for negligence, and for violations of the DTPA and the Insurance Code. We view each of these claims separately.
The elements of a claim for negligence include a duty, a breach of the duty, causation and damages. Praesel v. Johnson, 967 S.W.2d 391, 394 (Tex. 1998) (a cause of action for negligence has three elements: “1) a legal duty; 2) a breach of that duty; and 3) damages proximately resulting from the breach“). If one element of negligence has been conclusively negated, it is proper for a trial court to grant summary judgment in favor of the defendant. Willis v. Marshall, 401 S.W.3d 689, 700 (Tex. App.—El Paso 2013, no pet.) (citing Frost Nat. Bank v. Fernandez, 315 S.W.3d 494, 509 (Tex. 2010). The threshold question in any such case is whether a duty exists, and that question is a question of law for a court to decide. Willis, 401 S.W.3d at 700 (citing Joseph E. Seagram & Sons, Inc. v. McGuire, 814 S.W.2d 385, 387 (Tex. 1991)). If no duty exists, then our
In the present case, R&M contends that both USG and Safe Harbor both owed it an array of important professional duties, which they breached. We review each alleged duty and breach separately.
1. The Duty of Procuring Insurance with an Authorized Insurer
R&M first contends that Safe Harbor and USG owed it a duty to procure insurance with an “authorized insurer,” citing to
The undisputed summary judgment evidence established that when R&M first purchased the liquor liability policy from Indemnity, and after its renewal, Indemnity remained qualified to
act as an RRG in the State of Texas. The evidence submitted includes a letter from the Texas Department of Insurance certifying that Indemnity was “registered as a foreign risk retention group under the laws of2. The Duty to Use Reasonable Diligence in Attempting to Place the Requested Insurance Coverage
R&M next argues that USG and Safe Harbor had a “duty to use reasonable diligence in attempting to place the requested insurance and to inform Mavericks if unable to do so,” which it allegedly breached. The line of cases cited by R&M, however, involve situations in which customers interested in insurance coverage were wrongly led to believe that they were being insured against a particular risk, as3. The Duty to Exercise Due Diligence to Ensure the “Solvency and Legitimacy of the Carrier Offering the Insurance”
R&M‘s next argument appears to be at the heart of its belief that USG and Safe Harbor were negligent in procuring the liquor liability policy from Indemnity. R&M alleges that USG and Safe Harbor had a duty to exercise due diligence in the form of a “basic security review,” to ensure Indemnity‘s “solvency and legitimacy” as an insurance carrier, and that they breached that duty by failing to adequately investigate Indemnity‘s financial condition before recommending that R&M obtain coverage through Indemnity. In support of its argument, R&M cites a line of cases in which customers were told by insurance agents that they were covered under an insurance policy that was issued by companies that were already insolvent at the time the policies were issued, or that became insolvent before the date of the customer‘s loss. See, e.g., Hancock v. Wilson, 173 S.W. 1171 (Tex. App.—Dallas 1915, no writ) (defendant insurance agents, who were operating an unincorporated insurance association which they knew was insolvent could be held personally liable for a loss under a policy they issued to the plaintiff). We of course acknowledge that if an insurance agent procured a policy from a company known by the agent to be insolvent either before the policy‘s procurement or at some point before a loss occurred, and the agent did nothing to try to protect his insured‘s interest, this could render the agent potentially liable to the customer. See, e.g., Diamond v. Duncan, 107 Tex. 256, 172 S.W. 1100 (1915) (upholding agent‘s liability where the agent became aware of the insurance company‘s insolvency shortly after procuring a policy, but did nothing to protect his insured‘s interests);4. Safe Harbor‘s Duty to Inform R&M that Indemnity was an RRG, and to Explain the Risks Associated with Purchasing a Policy from an RRG
R&M next contends that Safe Harbor owed it a duty to inform R&M that Indemnity was an RRG, and to explain the risks associated with purchasing a policy from an RRG, citing primarily toAny policy issued by a risk retention group must contain in 10-point type on the front page and on the declarations page the following notice:
This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.