Negligence claim against an insurer based on an insurance agency’s conduct; Whether the agency acted as a “dual agent”; Comparing Hajjaj v Hartford Accident & Indem Co; Genesee Foods Servs, Inc v Meadowbrook, Inc; Distinguishing Opera Block Props, Inc v Auto-Owners Ins Co

Concluding that Al-Hajjaj and Genesee Foods governed here, the court held that plaintiffs-insureds did not state a viable negligence claim against defendant-insurer based on alleged improper conduct by an insurance agent. Thus, it affirmed summary disposition for defendant. The court previously decided plaintiffs’ action against the agent (S) and his agency (JLS), who were not parties to this case. Plaintiffs contended here that S’s conduct could be imputed to defendant because S “acted as a ‘dual agent’ of plaintiffs and defendant.” Pursuant to Al-Hajjaj and Genesee Foods, the court held that JLS and S’s “primary fiduciary duty of loyalty was to plaintiffs as the insureds, and plaintiffs failed to establish that the agency agreement between defendant and JLS was materially distinct so as to invest JLS or [S] with the authority to set policy limits or permit the imputation of any alleged misconduct to defendant.” The court noted the “agency agreement granted JLS and its agents the authority to solicit and secure applications and to bind coverage for insurance contracts. [It] did not expressly empower the independent insurance agency or its agents to perform risk assessments, property inspections, calculations of the relevant premium rates, or a determination of the specific” policy terms and conditions. This case was distinguishable from Opera Block, “which concerned whether an independent insurance agency had the authority to bind the defendant insurer to a policy[.]” This case concerned “the actual policy limits set forth in the” policy. While “agreements between insurers and independent insurance agencies commonly authorize such agencies to bind insurers to policies, they generally do not permit [them] to determine the” policy’s terms and conditions, including limits. “Thus, such binding authority does not, without more, render the insurance agency an agent of the insurer for purposes of establishing or altering policy limits.” The court added that in its prior decision, it held that the conduct of JLS and S—their alleged assurances about “the adequacy of coverage—was irrelevant in light of the absence of any policy language guaranteeing that the actual cash value would be sufficient to rebuild according to plaintiffs’ specifications.” It further “ruled that the general no-duty-to-advise rule remained applicable because plaintiff did not establish the existence of a special relationship between the parties.”