Houston Partners Obtain and Affirm Summary Judgment in Broker Malpractice Case

Houston partner Bob McCabe obtained, and Houston appellate partner Andrew Johnson had affirmed, a summary judgment in an insurance broker malpractice case.  This is a significant victory for insurance agents or brokers faced with claims that they had a duty to foresee future solvency issues with an insurer.

The plaintiff, R&M, owned several bars and sought liquor-liability coverage.  R&M’s insurance agent contacted wholesale broker USG, and a policy was put in place with Indemnity, a risk retention group that at the time was rated “excellent.” R&M was later sued in Dram Shop lawsuits for over-serving alcohol to patrons who caused accidents.  Indemnity became insolvent, leaving R&M without defense or coverage.  R&M sued its agent and USG for numerous common-law, DTPA, and Insurance Code claims, alleging that they failed to properly place coverage with a solvent carrier and failed to warn R&M regarding the risks of purchasing coverage from a risk retention group.

In the trial court, Bob McCabe obtained summary judgment for USG, arguing that USG did not breach any duties.  The trial court agreed and also struck R&M’s insurance expert.

R&M appealed, and Andrew Johnson handled the appeal for USG. On June 12, 2019, in a 37-page full opinion, the El Paso Court of Appeals affirmed the summary judgment and expert exclusion.

Andrew Johnson was elected to the 1st Court of Appeals and joined the bench in January 2025.