Houston Partners Obtain and Affirm Summary Judgment in Broker Malpractice Case

El Paso, TX – 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.