Court holds insured cannot sue agent for failing to provide adequate coverage
Continental Rental, Inc. sued Moulthorp-Clift, Inc., Continental's insurance agent, arguing that Moulthorp breached their insurance contract and was professionally negligent in failing to provide employment practices liability insurance (EPLI) coverage for Continental. Continental was sued by an employee alleging violation of his civil rights. The owner of Continental argued that he had an express agreement with the owner of Moulthorp to provide all coverages that the Continental business reasonably required. The agent denied any such conversation. The trial court dismissed Continental's lawsuit on summary disposition and Continental appealed.
The Court of Appeals panel (including Judge Henry Saad, the "insurer's best friend") held that "while a contract may have existed" [the case was dismissed before a decision on the facts was actually made] "the gravamen of Plaintiff's claim is professional negligence" and therefore the two-year statute of limitations, not the six-year contract statute of limitations, must control. On that basis, the case was dismissed with prejudice. The Court distinguished the agent's alleged duty "to know what [coverage] was needed" from an explicit promise to underwrite a particular coverage.