Construction Planners, Inc. v. Dobax Insurance Agency, Inc.
Docket: No. 90-P-617
Court: Massachusetts Appeals Court; December 18, 1991; Massachusetts; State Appellate Court
The appeal addresses whether special circumstances exist that would impose a duty on Dobax Insurance Agency, Inc. (Dobax) to renew an insurance policy for Construction Planners, Inc. (CPI) absent a specific request. CPI, contracted with the Plymouth Housing Authority, was required to maintain builder's risk insurance for a housing project. The policy purchased from Dobax expired on March 31, 1986, before the project was completed, and a fire on July 24, 1986, resulted in significant damage. Upon discovering the lack of coverage, CPI and its principal, John F. Gamache, sued Dobax for tort, contract, and under G. L. c. 93A.
Dobax moved for summary judgment, arguing it had no duty to renew the policy since Gamache was informed of the expiration and did not request renewal. Additionally, Dobax claimed the plaintiffs’ case was weakened by contributory negligence and a lack of demonstrated damages. In opposition, Gamache detailed their reliance on Dobax for insurance needs, asserting that Dobax typically renewed policies without consulting him and that he assumed the builder's risk policy would similarly be renewed. He had a conversation with Dobax's principal in March 1986, where he mentioned the project’s delay but did not discuss renewal. Gamache also indicated he had received premium bills for renewals after the effective dates in the past.
The judge granted summary judgment to Dobax, stating there was "no contract executed, no damages shown." However, the appellate conclusion identified material factual issues regarding common law liability and damages, although it upheld the dismissal of the G. L. c. 93A claim.
An insurance broker, acting as an agent for a client, is typically required to exercise due care in their duties but generally does not have an obligation to obtain or renew insurance unless specifically requested by the client or if they have undertaken such responsibility. However, special circumstances involving representation and reliance may create such a duty. In this case, the plaintiffs presented enough evidence to suggest that special circumstances existed. The jury could infer that the broker, Dobax, positioned itself as knowledgeable and efficient in managing the insurance needs of a construction company, CPI, which had relied on Dobax for several years, often having policies renewed automatically without consultation.
The context of a mid-March conversation indicated that Dobax was informed that a project would not be completed by the policy's expiration. Dobax argued that the client's failure to explicitly request a renewal negated any obligation to act. Conversely, plaintiffs contended that informing Dobax about the project’s delay constituted an implicit request for renewal, especially given their ongoing coverage and contractual obligation to maintain insurance. A jury could reasonably find that Dobax was negligent in not renewing the policy and that CPI's reliance on Dobax was justified. While there may be questions about CPI's contributory negligence, the extent of it would also be for the jury to decide. The evidence provided is sufficient to warrant a trial, particularly regarding a claim for a final payment due to CPI from the Plymouth Housing Authority, accounting for any outstanding amounts owed to subcontractors.
There is no basis for recovery under G. L. c. 93A regarding unfair or deceptive acts in trade or commerce, as there are no claims of breach of warranty or deception. The facts indicate that Dobax informed the plaintiffs of the impending expiration of their builder’s risk policy, yet the plaintiffs did not request renewal or inquire about the policy for months. The evaluation of unfairness requires consideration of the parties' equities, and the plaintiffs' inaction is relevant. There is no evidence that Dobax sought any advantage by not renewing the policy. Consequently, the court affirms the judgment for the defendant on the G. L. c. 93A claim but vacates the judgment on common law counts, allowing the case to proceed to trial. Testimony confirms that the plaintiffs did not request renewal or discuss it with Dobax, and they were aware of their obligation to maintain insurance under the surety bond.
