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Warren v. Holland

United States District Court, W.D. Arkansas, Harrison Division

November 8, 2016

BYRON C. WARREN, individually and as Trustee of the Warren Family Trust PLAINTIFF
v.
JEANETTE HOLLAND and WILLIS OF ILLINOIS, INC. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

         Currently before the Court are Defendants Jeanette Holland's and Willis of Illinois, Inc.'s ("Willis") joint Motion for Summary Judgment (Doc. 50) and supporting documents (Docs. 51-52); Plaintiff Byron C. Warren's Response in Opposition (Doc. 54) and supporting documents (Docs. 55-56); and Defendants' joint Reply (Doc. 57). Defendants also filed a Motion to Strike (Doc. 58) the affidavits of Mr. Warren and expert witness, Dr. Lawrence S. Powell. Both affidavits were attached to Mr. Warren's Response in Opposition to the Motion for Summary Judgment. For the reasons set forth herein, Defendants' Motion for Summary Judgment (Doc. 50) is GRANTED IN PART AND DENIED IN PART, and their Motion to Strike (Doc. 58) is DENIED.

         I. BACKGROUND

         Byron C. Warren, individually and as Trustee of the Warren Family Trust, [1] filed this lawsuit on June 11, 2015, in the Circuit Court of Baxter County, Arkansas. See Doc. 3. The case was removed to this Court by Defendants on July 17, 2015, due to the presence of complete diversity of citizenship and the satisfaction of the minimum amount in controversy required by 28 U.S.C. § 1332(a). See Doc. 1. The case then proceeded through the initial pleading stage, and on September 30, 2015, Mr. Warren filed an Amended Complaint (Doc. 21), alleging a claim for negligence against both Ms. Holland and Willis, and claims for breach of implied and express contract and breach of implied and express warranty against Willis alone. Ms. Holland, who is employed by Willis, was Mr. Warren's insurance agent. According to the Amended Complaint, Ms. Holland recommended that Mr. Warren purchase a High Value Homeowners Policy from Travelers Home and Marine Insurance Company (the "Travelers Policy") to insure his vacation home in Mountain Home, Arkansas.

         While Mr. Warren was not present in Arkansas, his vacation home there suffered water and mold damage due to a ruptured steam line fitting. The Travelers Policy of insurance contained an exclusion for loss caused by water leakage occurring over a period of 14 days or more ("the 14-day exclusion"). The Travelers Policy also contained an exclusion for loss caused by fungi, other microbes, or rot. Mr. Warren did not discover the water and mold damage until May 20, 2014, which he concedes was more than 14 days after the water leakage began. Travelers ultimately denied coverage, see Doc. 21-2, despite the fact that Defendants, according to the Amended Complaint, "at all times during the period the claim was pending, assured the Plaintiff that the damage was covered under the Travelers policy." (Doc. 21, p. 3).

         Mr. Warren does not dispute Travelers' denial of his insurance claim based on the two exclusions in the Travelers Policy. Instead, he brings his lawsuit against Ms. Holland and Willis on the theory that, due to his approximately 40-year relationship with Willis and its predecessor companies and agents, Defendants were so familiar with his personal insurance needs that they either knew or should have known that Mr. Warren traveled extensively and was away from his residence in Arkansas for extended periods of time. He maintains that in reliance on this special relationship between himself and Defendants, he purchased the Travelers Policy that had been recommended to him by Ms. Holland on or about August 5, 2010, and he allowed the Policy to be renewed annually thereafter. He further maintains that the Travelers Policy was completely inappropriate for a vacation home that was vacant for extended periods of time, a fact that Defendants either knew or should have known based on their long relationship with Mr. Warren and intimate knowledge of his personal and business properties.

         Mr. Warren began procuring policies of insurance for his various properties in the mid-1970s from an agent named Dick Miles, with whom Mr. Warren was personally acquainted. Mr. Miles worked for the Bartlett Agency, which was acquired in 1996 by an insurance brokerage firm called Hilb, Rogal, and Hobbs of Chicago ("HRH"). See Braeke Depo., Doc. 52-4, p. 2. Even after the Bartlett Agency was acquired by HRH, Mr. Miles served as HRH's office president until 1999, and he continued to manage Mr. Warren's insurance needs. Id. at p. 4. At some point, insurance agent Tammy Sullivan, who was first employed at the Bartlett Agency and continued her employment at HRH, took over Mr. Warren's accounts from Mr. Miles, while Mr. Miles served as her supervisor. Ms. Sullivan procured the original policy of insurance that covered the Arkansas home when it was first built or purchased. That policy of insurance was issued through The Hartford ("Hartford Policy"), and it did not contain a 14-day exclusion for water damage. See Powell Depo., Doc. 55-7, p. 5.

         On October 1, 2008, HRH merged with Willis and began operating out of the Moline, Illinois office. Ms. Holland began working at Willis as a personal lines broker in April of 2008, under the supervision of Ms. Sullivan, and Ms. Holland took over Mr. Warren's accounts.[2] At around that time, the Hartford Policy came up for renewal, and Mr. Warren requested that Willis research the possibility of acquiring different, comparable insurance coverage for his Arkansas residence. Mr. Warren stated in his deposition that, at the time, he was looking for a policy that was competitively priced, met his needs, and at the same time was with "a good, stable company." (Warren Depo., Doc. 52-2, p. 18).

         The parties dispute whether Ms. Holland presented Mr. Warren with any policy recommendation other than the Travelers Policy. Defendants contend that Mr. Warren often ignored Ms. Holland's recommendations concerning homeowner's insurance options. Mr. Warren, on the other hand, testified that Ms. Holland offered him only one option for insuring his Arkansas home once his Hartford Policy came up for renewal: the Travelers Policy. Further, Mr. Warren claims that he trusted Ms. Holland and Willis to understand his insurance needs and offer him a comparable policy of insurance to the one he already had. In Mr. Warren's view, the water damage that his Arkansas home suffered in 2014 would have been covered under the original Hartford Policy, since that Policy did not contain a 14-day reporting exclusion for water damage. The Travelers Policy contained the exclusion, and thus was not comparable to the Hartford Policy and should not have been recommended for purchase. He also argues that, despite the fact that the Bartlett Agency changed hands over the years, the same insurance agents in the same Moline office worked closely together to service his accounts, and they should have been familiar with his properties and business needs after such a long relationship.

         For Ms. Holland's part, she admits she never read Mr. Warren's Hartford Policy, see Holland Depo., Doc. 54-6, p. 6, and she did not compare the terms and exclusions of the Hartford Policy to the Travelers Policy prior to recommending that Mr. Warren purchase the Travelers Policy. Mr. Warren contends that he relied on the relationship between himself, Ms. Holland, and Willis in deciding to take Ms. Holland's advice and purchase the Travelers Policy; and he further contends that if he had known the Travelers Policy contained a 14-day reporting requirement for water damage, he never would have purchased it. See Warren Depo., Doc. 52-2, p. 22.

         Defendants point out in support of their Motion for Summary Judgment that Mr. Warren could not have had a special relationship with Ms. Holland because he never met her in person, and spoke with her only by telephone about once a year in the six years that she was his broker. Moreover, Defendants argue that Mr. Warren had no "reason to believe any other representative of Willis or its predecessors, including HRH, provided information related to the status, occupancy, vacancy, or supervision of the [Arkansas] Property to Ms. Holland when she began assisting him with placements in 2008." (Doc. 56, p. 9 (citing to Mr. Warren's deposition)). Mr. Warren disputes Defendants' contentions and points out that Ms. Holland knew or should have known that his Arkansas home was a vacation home that was not continuously occupied, since Mr. Warren's original broker, Mr. Miles, knew that fact, and Ms. Sullivan, his second broker, also knew that fact and was Ms. Holland's supervisor.

         Mr. Warren also cites to evidence to prove that Ms. Holland and Ms. Sullivan actually knew that the Arkansas home, was, in fact, a secondary home, at or around the time Ms. Holland recommended that Mr. Warren purchase the Travelers Policy. See Doc. 54-8 (email to Ms. Sullivan from May 25, 2004, discussing Arkansas home is a secondary home); Doc. 54-9 (email to Ms. Holland from Willis employee Kim Heald, dated August 16, 2010, noting that Mr. Warren expressed in a telephone conversation that "he wanted his policies the way they were with Hartford[, ] that is his IL home ... as his primary and Arkansas as his secondary"); Doc. 54-10 (notice from Travelers to Mr. Warren and Willis, dated July 29, 2011, and noting that the property insured is a "secondary home"). Attached to the Amended Complaint is an email from Ms. Sullivan, dated March 7, 2005, that indicates she knew that Mr. Warren would leave the country for periods of time. See Doc. 21-4.

         Focusing now on the claims in the Amended Complaint, the Court will begin with Count I's charge of negligence. In the Motion for Summary Judgment, Defendants admit that "Arkansas courts recognize a very narrow exception to the limited duties of insurance brokers where there is a 'special relationship between the agent and the insured.'" (Doc. 51, p. 4 (quoting Buelow v. Madlock, 206 S.W.3d 890, 893 (Ark. Ct. App. 2005))). But Defendants attempt to set the start-date of this special relationship in 2008, when Willis merged with HRH and Ms. Holland began managing Mr. Warren's account. By contrast, Mr. Warren sets the start-date of the alleged special relationship in the mid-1970s, when he first started buying policies of insurance from Mr. Miles at the Bartlett Agency.

         Defendants also maintain that Mr. Warren wrongly assumes that Mr. Miles shared relevant details about the nature of Mr. Warren's properties with other agents at the Bartlett Agency/HRH/Willis-including with Ms. Sullivan, who took over the accountfrom Mr. Miles, and with Ms. Holland, who took over the account from Ms. Sullivan. Mr. Warren admitted in his deposition that he never had a direct conversation with Ms. Holland about the fact that his Arkansas home was a vacation home that he only occupied four months out of the year, nor that he left the water on in the home when it was vacant. See Warren Depo., Doc. 52-5, pp. 22-23. Defendants argue that if they owed Mr. Warren a particular duty of care based on a special relationship, their alleged negligent acts were not the proximate cause of Mr. Warren's losses, since Mr. Warren was obligated to read his own policies and educate himself as to its provisions, while Willis "did not have a duty to advise Plaintiff as to the sufficiency of the coverage available under the [Travelers] Policy, and they certainly did not have a duty to advise and secure coverage for every possible contingency." (Doc. 51, p. 8). Finally, Defendants contend that any negligence claim is barred by the three-year statute of limitations, which began to run when Mr. Warren first purchased the Travelers Policy in September of 2010, not when he learned his water-damage claim would be denied by Travelers.

         As for Mr. Warren's causes of action for breach of contract and breach of warranty, which appear in Counts ll-V of the Amended Complaint, Defendants maintain that the "Client Bill of Rights" (Doc. 52-7) that Willis holds out as containing the principles that guide its actions with respect to its clients, is not a true contract or warranty, nor was it incorporated into any other contract brokered by Willis on Mr. Warren's behalf. Mr. Warren admitted that he never saw this Client Bill of Rights before purchasing the Travelers Policy, and he never received the Client Bill of Rights from Willis, along with a copy of any policy of insurance or other document. See Warren Depo., Doc. 52-2, p. 28. He admits instead that he only became aware of the existence of the Client Bill of Rights while he was browsing the Willis website sometime after he purchased the Travelers Policy, although he does not recall the exact date. Id.[3] The Client Bill of Rights was apparently posted on the website for any client-or any interested member of the public-to view. Mr. Warren does not allege that Willis sent the Client Bill of Rights to him by electronic means or discussed the document and its contents with him.

         Considering these undisputed facts, Defendants contend that Mr. Warren cannot rely on the Client Bill of Rights as the basis for either an express or implied contract, or an express or implied warranty, and thus, summary judgment should issue in Defendants' favor on all contract and warranty claims. Mr. Warren responds that he was entitled to rely on the promises set forth in the Client Bill of Rights because Willis posted the document on its website, and therefore must have intended to be bound by the document. In addition, Mr. Warren observes in his Response brief that Ms. Holland in her deposition described her job title at Willis as "Client Advocate or Manager, " which, in Mr. Warren's view, supports his argument that Ms. Holland and her employer intended her to be bound by the Client Bill of Rights.

         As for Defendants' Motion to Strike, they focus on two affidavits that were attached to Mr. Warren's Response to the Motion for Summary Judgment. First, they argue that Dr. Powell's expert-witness affidavit should be stricken because it does not contain facts supported by evidence, but is composed solely of opinions, conjecture, legal conclusions, and speculation, none of which is based on his personal knowledge and observation. See Doc. 58, p. 2. Second, Defendants argue that paragraph 6 of Mr. Warren's affidavit should be stricken because he states a ...


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