The Superior Court has held that an insured making a claim against its insurance agent for obtaining inadequate insurance may not recover its attorney's fees from the agent in the absence of a express statutory or contractual provision.
The plaintiffs are several business entities that operate a marina on Block Island. The original defendants were plaintiff's insurance agent which obtained insurance for plaintiffs with co-defendant insurance companies. There was a fire at the marina resulting in substantial property damage. The insurers assessed a "coinsurance penalty" because the property was underinsured. Plaintiffs brought claims against the agents for negligent misrepresentation, negligence, breach of warranty and breach of fiduciary duty alleging the agents had failed to obtain the proper insurance. The claims against the insurers were resolved. The remaining claims were scheduled for trial in September 2013.
In July 2012, plaintiffs filed an expert witness disclosure that identified an attorney who would testify as to the reasonableness of the legal work performed by plainitiffs' attorneys in the lawsuit. The defendants moved to strike the part of the disclosure respecting this expert. The court initially denied this motion without prejudice and ordered plaintiffs to file a disclosure that complied with Rule 26 by February 2013. In February, plaintiffs filed a supplemental disclosure stating the attorney would testify as to the "necessity and reasonableness of the legal work performed on behalf" of plainitffs. Defendant insurance agents renewed their motion to strike arguing there was no basis for a recovery of attorney's fees and the disclosure was still inadequate under Rule 26.
The court held that attorney's fees are not recoverable in the absence of contractual or statutory authorization. Plaintiffs did not identify a contractual or statutory provision by which attorney's fees could be awarded in the case. In addition, the court said there was no summary of the grounds for the attorney's opinion respecting the fees so the disclosure still failed to comply with Rule 26.
Notably, there is a statute that provides for a recovery of attorney's fees in a "bad faith" action against an insurance company issuing a policy. R.I.G.L. 9-1-33. However, nothing in the statute indicates it applies to claims against insurance agents.
Champlin's Realty Associates, Inc. v. Northern Assurance Company of America, W.C. 2007-0396 (R.I. Super. July 8, 2013).
For more information about our practice, please see our webpage: http://www.sfandllaw.com/Practice-Areas/Business-Commercial-Litigation.shtml