Slaubaugh Farm, Inc. v. Farm Family Cas. Ins. Co. ( 2018 )

SUPERIOR COURT
OFTHE
S'l``ATE OF DFl.AWARE
F.. SCOT'l`` BRADLEY l THE CIRCLE. Sul’rE 2
Jur)GE GHORGETOWN, DF.LAWARE 19947
October 29, 2018
l``~rancis .l. Jones. Jr., Esquire David G. Culley, Esquire
Moi'ris James, LLP Tybout, Redfearn & Pell
803 North Broom Street 750 Shipyard Drive, Suite 400
Wilrnington, Delaware 19806 P.O. Box 2092
Wilmington, DE 19899-2092
Robert D. Schultz, Esquire
14 l\lorth Hanson Street
Haston_ l\/laryland 21601
Re: Slaubaugh Farm, Inc., et al. v. Farm Family Cas. lns. Cl).,
C.A. No. SlGC-06-033 ESB
On Del``endant l\/chowan’s l\/lotion for Summary .ludgment: GRANTED
I)ale Submitted: July 16, 2018
Date Dccided: ()ctober 29, 2018
Dcar Counscl,
This my decision on Defendant Joseph C. l\/IcGowan’s l\/Iotion for Summary
.ludgment on the Plaintil``fs’ claim that he negligently failed to obtain snow-icc
insurance coverage for their two new chicken houses. l``he Plaintiffs built two new
chicken houses and contacted McGoWan, an insurance agent for Defendant Farm
Family Casualty lnsurance Company (“Farm Farnily”), in an effort to Secure
insurance l``rom l"arm Family. Farm Family issued a binder for an insurance pol icy on
June 30, 2015. The binder did not include snow-ice coverage However, McGowan
contacted Farm Family to see if Farm Family would issue that coverage to the
P|ainti t``t``s. ()ne ot``Farm Family’s requirements for such coverage is that it would have
to first inspect the Plaintif``l``s’ new chicken houses. l\/IcGowan asked Farm Family to
do that. Farm Fa,mily acknowledged McGowan’s request and put the Plaintit``t``s’ new
chicken houses on a list to be inspected Despite that, Farm Family never inspected
the Plaintit``l``s’ chicken houses and l\/IcGowan apparently never checked on the status
ol``the inspection During the weekend oflanuary 23 and 24 01``2016, over six months
after 1\/1cGowan had asked Farm Family to inspect the chicken houses, a blizzard
swept through Sussex County, Delaware, causing one of the Plaintit``fs’ new chicken
houses to collapse
l\/IcGowan argues that (1) he had no duty to acquire snow-ice coverage for the
Plaintit``fs, (2) he had no duty to make sure that Farm Family inspected the Plaintiffs’
new chicken houses, and (3) the Plaintit``f``s cannot prove proximate cause because they
have not shown that snow-ice coverage was available to them. l have rejected
Mc(jowan``s first two arguments and accepted his third.
S’I``ATEMENT OF FACTS
Plaintit``t``s liambeit and Sarah Slaubaugh purchased a farm in 1998 located at
13055 Judy Road, Greenwood, Delaware. At approximately the same time, Plaintiffs
purchased a property insurance policy (Policy No. 0703G22l3) from Farm Family
through McGowan, an insurance agent for Farm Family. This policy was initially
issued in the name of the Slaubaughs individually and covered all of the building
structures on their farm including two existing chicken houses.
Farm Family issued a new liability-only insurance policy (Policy No.
0703(}2650) in the name ofSlaubaugh Farm, Inc. on June 15, 2003. Also procured
through l\/chowan, this policy was renewed every year through June 15, 2015.
harm hamin issued a Notice ofCancellation of the property insurance policy
(Policy No. 0703G2213) on l\/Iay 2, 201 l, because the Plaintiffs had failed to comply
with its request for an inspection of the two existing chicken houses. This notice
followed the 2010 winter season in which the Delaware region experienced two large
snow storms in a matter of days. During this season, Fami Family suffered large
claim losses from collapses due to snow load. AS a result, Farm Family non-renewed
1111 of its chicken business outside ofthe Mid-Atlantic and Northeast region. ln this
latter region Farm Family changed its underwriting guidelines to eliminate snow-ice
coverage (Peril Group 5) for all new customers, but continued to insure certain
buildings owned by existing customers only under Peril Group 4 (which excludes
snow-icc coveragc). harm Family required that these buildings be inspected before
its underwriting department would determine, on a case-by-case basis, whether an
individual building could be insured under Peril Group 5. ln keeping with these
underwriting changes, h``arm Family required an inspection of the Plaintiffs’ two
existing chicken houses Plaintiffs refused to allow the inspection and the property
insurance policy was cancelled. Plaintiffs obtained replacement insurance from the
(``onservative Amish l\/Iennonite (“CAl\/I”) Association.
The Plaintiffs obtained a $900,000 mortgage loan from l\/Iid-Atlantic Farm
Credit to build two new chicken houses on their farm on December 23, 2014.
Subseq uently_, the Plaintiffs entered into a written contact with Kingston Construction
F:quipmcnt, LLC (“Kingston”) to construct the houses. lt was the Plaintiffs’
understanding that during the construction phase the builder would maintain property
insurance on the houses, but that Plaintiffs would have to have their own insurance
in place when the first flock of birds arrived. ln late 2014 or early 2015, l\/lr.
Slaubauin contacted l\/chowan to inform him that he intended to build two new
houses and requested that Farm Family insure them. l\/chowan in turn contacted
Scott Dunkin, an underwriter for Farm Family, to inquire as to Farm Family’s new
underwriting guidelines because this Was l\/chowan’S first experience insuring a
chicken house since the guidelines had changed. Dunkin confirmed that the new
houses could be insured under Peril Group 4 but that an inspection would be needed
before Farm Family could consider coverage under Peril Group 5.
1\/lr. Slaubaugh called McGowan on June 25, 2015 to inform him that the
construction of the two new chicken houses was almost complete I~le further
informed l\/lc(iowan that he needed insurance on the houses and that confirmation of
the insurance coverage had to be sent to the mortgage company. Mr. Slaubaugh did
not request any specific coverage l\/IcGowan prepared an application and submitted
it_ together with the necessary supporting documentation_. to Farm Family. McGowan
submitted a binder request to F arm Family on June 30, 2015 for coverage on the two
new chicken houses and related buildings The binder request was approved by Farm
Family under Peril Group 4 subject to a “truss inspection by BKruse to be considered
for Peril Group 5.” /\ copy of the coverage binder was emailed to the mortgage
company as l\/lr. Slaubaugh had requested
Even though the Plaintiffs never requested any specific coverage for the two
new chicken houses, l\/chowan assumed that they would want Peril Group 5
coverage ifit was available He therefore specifically asked Farm Family to consider
Peril Group 5. At this time, Heidi Hayes, an individual in l\/chowan’s office, was
responsible for scheduling new chicken houses for inspection pursuant to a
Prol``essional Consulting Services Agreement with Farm Family. Under this
independent contractor agreement Ms. Hayes scheduled chicken houses for Farm
I'Family``s cmployee, Brad Kruse, to inspect during his periodic trips to the Mid-
/\tlantic region.l lt is undisputed that authorization had to come from Farm Family’s
underwriting department before a house could be placed on the inspection list.
According to Hayes, she initiated the process for the Slaubaugh houses to be
inspected ln an email to Kruse on July 23, 2015, Hayes confirmed that the
Slaubauin farm was on the list of“new risks” for inspection Kruse responded to the
email by inquiring as to the identity ofthe builder. On July 24, 2015, Kruse sent a
separate cmail on the same subject to Dunkin. Despite these communications, Farm
family never inspected the two new chicken houses prior to the snow storm.
SUMl\/IARY JUDGMENT
This Court will grant summary judgment only when no material issues of fact
exist, and the moving party bears the burden of establishing the non-existence of
material issues of fact.2 Once the moving party meets its burden, the burden shifts to
the non»moving party to establish the existence ofmaterial issues offact.3 The Court
views the evidence in a light most favorable to the nonmoving party.4 Where the
l l\/Is. 1 laycs used her personal cell phone to make these arrangements and submitted
separate invoices to Farm Fami|y``s underwriting department for her time.
l ,=‘i//()()/'e v. Sl``:eml)rc, 405 A.Zd 679`` 680 (Del. 1979).
" /d. at 681.
4 14 ar 680.
moving party produces an affidavit or other evidence sufficient under Superior Court
(_``,ivil Rule 56 in support of its motion and the burden shifts, the non~moving party
may not rest on its own pleadings, but must provide evidence showing a genuine
issue ofmaterial fact for trial.5 lf, after discovery, the non-moving party cannot make
a sufficient showing of the existence of an essential element of the case, then
summary judgment must be granted6 lf, however, material issues of fact exist or if``
the Court determines that it does not have sufficient facts to enable it to apply the law
to the facts before it, then summary judgment is not appropriate7
UQJMO_N
1 . l\/chowan’s Duty to Obtain Snow-lce Coverage
l\/chowan argues that he had no duty to obtain snow-ice coverage for the
Plaintiffs’ chicken houses, stating “that Mr. Slaubaugh asked for ‘insurance’ on the
houses and also that a copy of the binder be sent to the mortgage company.” Put
another way, McGowan argues that the Plaintiffs never asked him for the insurance
coverage they would now like to have. The Plaintiffs argue that McGowan himself
has both admitted and acted in a manner contrary to his argument
§ Super. Ct_ Civ. R. 5()(e); Ce[otex ("r)rp_ v. Catrett, 477 U.S. 317, 322-23 (1986).
" BHrkharI \»'. [)avic’.s', 602 /\.2d 56, 59 (Del. 1991), cei‘l. den., 504 U.S. 912 (1992);
(``r’/r)lc'x ( '())']7., 477 U.S. 317.
7 Ehcrs()[e v. L()wcngl'u/), 180 A.Zd 4()7, 470 (Del. 1962).
7
'l``he Plaintiffs point out that in his deposition when asked ifhe advised Farm
Family that the Plaintif``fs desired Peril Group 5, McGowan stated “correct.” Peril
Group 5 includes snow~ice coverage 'l``he Plaintiffs also point out that I\/IcGowan
asked Farm Family to consider the Plaintiffs’ new chicken houses for snow-ice
coverage l,astly, the Plaintiffs point out that l\/IcGowan directed Hayes to put the
Plaintiffs’ new chicken houses on the list ol``houses to be inspected by Farm Family,
an inspection required before Farm Family would issue snow-ice coverage
An insurance agent “assumes only those duties normally found in an agency
relationship."x This duty includes “the obligation to use reasonable care, diligence
”9 An insurance
and judgment in procuring the insurance requested by the insured
agent must “of``fer coverage in the way that a reasonably competent agent would under
the circumstances.”'“ Generally, an insurance agent does not have a duty to advise a
client with respect to appropriate insurance coveragell This general rule, however,
does not apply il`` the agent voluntarily assumes the responsibility for selecting the
appropriate coverage or ifthe insured makes an ambiguous request for coverage that
x ._S'/``ncx v. W¢l/l/'.\'. 61 1 A.2d 31, 33 (Del. Super. 1991)_
‘) !d.
m Mr)nfgr)mery v. Wi/lium M()r)re Agency, 2015 WL 1056326, at *2 (l)el. Super. Ct. I"eb.
27_ 2015).
" /d.
requires clarification.'2
Viewing McGowan’s statements and actions in the light most favorable to the
Plaintiffs, there is certainly a genuine issue of material fact as to whether l\/IcGowan
had a duty to obtain snow-ice coverage for Plaintiffs, making the granting of
summary judgment in his favor unwarranted Quite frankly, McGowan’s own
statements and actions undermine his argument on this issue.
2. McGowan’s Duty to Ensure That The lnspection OfThe
Chicken Houses Took Place
McGowan argues that it was Farm Family’s responsibility to get the Plaintif``fs’
new chicken houses inspected and that he played no role in getting that done. The
new chicken houses were not inspected before the blizzard The Plaintiffs point out,
and l think correctly, that l\/IcGowan’s role in getting the chicken houses inspected
was not as limited as he argues.
There is no doubt that l\/IcGowan requested Farm Family to consider the
Plaintiffs’ new chicken houses for Peril Group 5 coverage On June 29, 2015,
McGowan requested Farm F amin to consider the Plaintiffs’ new chicken houses for
Peril Group 5 coverage in an email to Dunkin. On the following day, Dunkin
approved the binder request and added the following note that went to McGowan:
‘3 ]d.
Approving addition of 2 new poultry buildings as Peril
Group 4, Rate type #2. Will need full set of approved lBC
complaint Blueprints to be considered for Rate type #1 and
a truss inspection by B[rad] Kruse to be considered for
Peril Group 5.
This note certainly suggests that Dunkin was looking to McGowan to get the
blueprints l\/chowan then instructed Hayes to schedule the Plaintiffs’ new chicken
houses l``or inspection. Hayes then apparently contracted Brad Kruse, a Farm Family
employee with the request to have him inspect the Plaintiffs’ chicken houses ln a
email to Kruse on July 23, 2015, Hayes confirmed that the Plaintiffs’ new chicken
houses were on the list of new risks for inspection Kruse responded to the email by
inquiring as to the identity ofthe builder. On July 24, 2015, Kruse sent a separate
cmail on the same subject to Dunkin. For whatever reason, despite the passage ofsix
months, Kruse never inspected the Plaintiff``s’ new chicken houses and l\/chowan
never did anything about it.
lt is, as the parties agree, well-settled law that an agent has the obligation to use
reasonable care, diligence and judgment in procuring the insurance requested by the
insured " lt is difficult for me to conclude at this time that l\/chowan used reasonable
care, diligence and judgment in procuring the snow-ice coverage for the Plaintiff``s.
"l ./cm'c:ak v. Assur(ml, lnc., 2010 Wl, 445607, at * 2 (Del. Super. Ct. .lan. 21, 2010)
("1\10rmally1 an insurance agent has the obligation to use reasonable care, diligence and judgment
in procuring insurance requested by an insured...”).
10
McGowan was the person who initiated the inspection ofthe Plaintiffs’ new chicken
houses, discussed the matter with Farm Family, and was apparently involved in
getting the blueprints from the Plaintiffs and to F arm Family for that inspection As
such, he was the person who stood between the Plaintiffs and Farm Family. There
are, of course, a number of actions that must be performed in order for a person to
procure insurance The prospective insured must fulfill some obligations The agent
must be proactive. The insurance company must do some legwork. lnformation must
flow back and forth between the parties Conditions must be identified and satisfied
l\/lonics must be paid. An agent certainly has an important role in this process Given
that McGowan got the inspection process started, and his duty was to use reasonable
care, diligence and judgment in procuring snow-ice coverage for the Plaintiffs, l
would have thought, at the very least, that he would have kept track of whether Farm
Family’s inspection of the new chicken houses had been done or not and kept the
Plainti ffs aware of that. lt certainly is not too much to expect ofl\/chowan to, at the
very least, follow-up with Farm Family and to communicate the status ofhis efforts
to get snow-ice coverage to the Plaintiffs. Frankly, ichGowan had inquired about
thc status of the inspection, and communicated that to the Plaintiffs, then the
Plaintit``f``s would have been in the position to continue to work with Farm Family or
pursue snow-ice coverage from another insurance company. lndeed, even if
ll
l\/chowan had inquired, it might have prompted Farm Family to, at least, realize that
it had not inspected the new chicken houses Instead, l\/chowan and Farm Family did
nothing for over six months
The notion that M'cGowan can say, well, l got the inspection process started
and was asked to get the blueprints but never checked with Farm Family to see
whether the inspection was done for over six months hardly seems to me to be the
exercise ofreasonable care, diligence andjudgment in getting the Plaintiffs’ Snow-ice
coverage Given all ofthis, summaryjudgment in favor ofFarm Family on this point
is not appropriate14
3. Proximate Cause
McGowan argues that the Plaintiffs must show that his alleged negligence was
a proximate cause of their injury. More specifically, McGowan argues that the
Plaintiffs must show that there was snow-ice coverage that was commercially
available for their loss. McGoWan argues that it is too speculative to conclude that
Farm Family could have provided such coverage given that (l) Farm Family had
ended such coverage for new customers in 201 1, and (2) the availability of the such
"‘l\/chowan argues that the Plaintif``f``s’ allegations implicate l\/chowan’s affirmative
duties or responsibilities beyond Plaintiffs" request for insurance and, therefore, they should have
offered expert testimony to establish his duty in this regard However. McGowan testified he
sought l’eril Group 5 coverage for Plaintiffs_ l do not believe an expert is necessary to establish
whether l``vlc(iown had a duty to follow up on the process he initiated
12
coverage for the Plaintiffs was contingent upon a satisfactory inspection oftheir new
chicken houses and Farm Family had in the past not received favorable inspection
results for Kingston, the builder ofthe Plaintiffs’ new chicken houses
The Plaintiffs argue that F arm Farnily’s comments about Kingston are so non-
specific as to be meaningless and that, in any event, it was l\/chowan’s and Farm
Family’s fault for not getting the inspection done and that if there is any uncertainty
about whether Farm Family would have approved the new chicken houses for snow-
ice coverage that the uncertainty should be resolved in favor of the Plaintiffs at this
point.
/\s with other negligence actions “a claim of professional negligence requires
proof of duty, breach, causation, and damages.”15 Jurisdictions differ as to whether
it is the plaintiffs burden to show that, had the defendant acted properly, plaintiff
would not only have had the opportunity to seek, but also could have successfully
procured alternative insurance, or whether causation only becomes an issue ifthe
defendant raises it as an affirmative defense."’ l agree with the rationale adopted by
the Supreme Court of Colorado and others: to treat causation as an affirmative
defense “is inconsistent with that elementary principle oftort law which requires the
'5 ./r)hn.\'r)n & Higgin.s‘ r)fAla.s'ka, Inc. v. Bl()m/‘l``eld, 907 P.2d 1371, 1374 (Alaska 1995').
l“ Sec }’atter_w)n /lgem’y, [nc. v. Tz/mer, 372 A.2d 258, 261-62 (Md. Ct. Spec. App. 1977).
13
plaintiff to establish the elements ofa cause of action.”17 Accordingly, l adopt their
holding herein:
Where... a claim for relief``is predicated on the negligent failure of
an insurance broker or agent to procure a particular type of insurance
coverage sought by the plaintiff, it is incumbent upon the plaintiff to
prove by a preponderance of evidence, as an aspect of causation and
damages that such insurance was generally available in the insurance
industry when the broker or agent obtained insurance coverage for the
plaintiff A plaintiffis not required to show that the particular insurance
company from which the servicing broker or agent procured the
plaintiffs policy would have written such coverage or that the servicing
broker or agent could have obtained such coverage from a specific
company. On the contrary, we hold that a plaintiff satisfies his burden
of proof when he establishes that the type of insurance which he sought
was generally available in the insurance industry when the broker or
agent procured the plaintiffs insurance policy.IX
l conclude that in this regard the Plaintiffs have come up short. lt is far too
speculative to conclude that Farm Family, or any other insurance company, would
have ultimately provided snow-ice coverage to Plaintiffs Even if F arm Family had
completed the inspection, there is no guarantee that they would have offered snow-ice
coverage to the Plaintiffs lf anything, the f``acts, even when viewed in the light most
favorably to the Plaintiffs do not support such a conclusion Farm Family and other
insurance companies had many claims for snow damage following the 2010 winter
ll liuj-'/y`` Marlin & }"uy. lm‘_ v. Pete ``.s' .S``rrti)'e. ]nc., 739 P.2d 239, 244 (Colo. 1987).
18 ]d.
14
season, causing them to cease offering snow-ice coverage to new customers The
only evidence in the record is that Farm Family did not have a favorable view of
Kingston, the Plaintif``fs’ builder. 'fhere are, as McGowan suggests other ways for the
Plaintiffs to meet their burden in this regard The Plaintiffs could have gathered
testimony and information on the availability of such coverage in the area industry
at the timc, but did not do so. Therefore, l have granted McGowan’s Motion for
Summary Judgment on this issue
CONCLUSION
l have GRANTHD Def``endant Joseph C. l\/IcGowan’s l\/Iotion for Summary
Judgment.
IT IS SO ORDEREI).
Very truly yours,
/s/ E. Scc)tt Bradley
E. Seott Bradley
oc: Prothonotary
All Counsel of Record
15