The lower court's denial of cross-motions for summary judgment concerning the broker's liability for allegedly procuring inadequate coverage was affirmed. Marcellus Energy Servs. LLC v. Tompkins Ins. Agencies, Inc, 2025 N.Y. App. Div. LEXIS 3032 (N.Y. App. Div. May 15, 2025).
Plaintiff Marcellus Energy Services LLC supplied truck drivers to operate vehicles owned or leased by Schlumberger Technology Corporation, a multistate oil and gas drilling business. In 2014, plaintiff procured a policy from defendant Tompkins Insurance Agencies, Inc. for their business.
In 2019, one of plaintiff's employees caused serious physical damage to a Schlumberger vehicle. Coverage was denied and plaintiff paid for the damages out of pocket. Plaintiff then sued , alleging that defendant was negligent in advising plaintiff with respect to the availability of insurance coverage for Schlumberger's vehicles that were operated by plaintiff's employees. Cross motions for summary judgment were both denied by the Supreme Court. Cross-appeals were filed.
The appellate court noted that an insurance agent had a common-law duty to provide requested coverage within a reasonable time. The agent could be held liable for negligence or breach of contract when a client established that a specific request was made for coverage that was not provided in the policy. Even in the absence of a specific request, an insurance broker could be liable for failing to advise or direct the client to obtain additional coverage where a special relationship had developed between the broker and the client.
Gloria Tubbs, plaintiff's owner, testified at her deposition that she explained the nature of her business to defendant's agent, Eric Toftegaard, and that she was seeking coverage that would extend to Schlumberger's vehicles when operated by plaintiff's employees. Tubbs testified that Toftegaard did not advise her that she did not have coverage for hired drivers until 2015, when one of plaintiff's drivers caused physical damage to a Schlumberger vehicle. Plaintiff ended up paying for the damage out of pocket
In 2019, another accident occurred in a Schlumberger vehicle operated by one of plaintiff's employees caused significant damage. A Schlumberger representative subsequentlyinformed Tubbs that plaintiff needed to get physical damage coverage for Schlumberger's vehicles or risk losing the business. Even though Toftegard said no insurer provided coverage for driving another company's vehicles, other companies that provided the same services for Schlumberger as plaintiff were able to procure the necessary coverage.
At his deposition, Toftegaard said he advised Tubbs that hired driver coverage for the Schlumberger business arrangement was possible, but that defendant could not procure it for plaintiff.
The question of whether negligence of an insurance agent or broker proximately caused a client's losses was generally resolved by the fact-finder. Here, the court found there were issues of material fact precluding summary judgment. The Supreme Court properly determined that the resolution of liability with respect to the existence of a special relationship was dependent on credibility determinations and, accordingly, denied the parties' respective motion for summary judgment.
