In Brown v. Carrell, homeowners filed suit against their insurance agent over damages to their home from Hurricane Ike. No. 09-15-00016-CV, 2016 Tex. App. LEXIS 13782 (Tex. App.—Beaumont December 29, 2016, no pet. history). They had purchased windstorm insurance via their agent, and flood insurance via a different person at closing. After the storm damaged their house, they contacted their agent and reported the loss. They assumed he was the agent for both the windstorm and flood policies and that he would submit a claim to both insurance companies. However, the agent only notified the windstorm insurer of the windstorm claim and did not notify the other insurer of the flood claim. Eventually, the homeowners’ flood claim was denied in part because the claim was not timely submitted. The homeowners then filed suit against their agent, alleging a number of causes of action, including breach of fiduciary duty. Ultimately, the trial court granted the agent a no-evidence summary judgment on the homeowners’ claims.
On appeal, the homeowners contended that their fiduciary duty claim was based on the fact that the insurance agent was their “agent” and owed them fiduciary duties. The appellate court held that “there is no presumption of agency; thus, a party who alleges agency has the burden to prove the relationship.” It defined an agency relationship as “a consensual relationship that exists between two parties, in which one party, the agent, acts on behalf of the other party, the principal, subject to the principal’s control.” Further, the court held that “For an agency relationship to exist, there must be (1) a meeting of the minds between the parties to establish the relationship, and (2) some act constituting the appointment of the agent.” The only evidence the homeowners relied upon to show that they had an agency relationship with the insurance agent was the insurance agent’s testimony that he was their insurance agent for obtaining the windstorm policy. The court held:
Even if an agency relationship existed between Carrell and the Browns regarding the windstorm policy, there is no evidence that the scope of that agency, actual or apparent, extended to cover the flood insurance policy. The Browns failed to present any evidence to show a meeting of the minds between them and Carrell for Carrell to act as their agent with regard to the flood insurance policy or other evidence to reasonably show that he had apparent authority to act as an agent for Harleysville. The summary judgment evidence is that the Browns only assumed Carrell would take care of reporting their flood claim. Further, the Browns presented no evidence that Carrell had any authority regarding the Browns’ flood policy or that they had the right to control Carrell’s actions regarding the flood policy, elements necessary to show a principal-agent relationship.
The court concluded that the homeowners failed to meet their burden of producing summary judgment evidence regarding the first element of a breach-of-fiduciary-duty cause of action: that a fiduciary relationship existed between the plaintiff and defendant. The court affirmed the summary judgment dismissing the breach of fiduciary duty claim.
Interesting Note: The court of appeals held that there was no genuine issue of material fact regarding the existence of a fiduciary relationship between the homeowners and the insurance agent. This is generally the rule in Texas as an insurance broker or agent has no fiduciary duty to the insured. See Toka Gen. Contrs. v. Wm. Rigg Co., No. 04-12-00474-CV, 2014 Tex. App. LEXIS 3776 (Tex. App.—San Antonio April 9, 2014, pet. denied) (court held that insurance agent was not a fiduciary of the customer); Envtl. Procedures, Inc. v. Guidry, 282 S.W.3d 602, 626-28 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) (concluding, after reviewing the evidence, that reasonable and fair-minded people could not conclude that a formal fiduciary relationship existed between an insurance broker and an insured); Choucroun v. Sol L. Wisenberg Insurance Agency-Life & Health Division, Inc., No. 01-03-00637-CV, 2004 Tex. App. LEXIS 11097, 2004 WL 2823147, at *4 (Tex. App.—Houston [1st Dist.] Dec. 9, 2004, no pet.) (holding that an insurance agent “owed no duty to explain the terms of the insurance policy to [the insured] or to advise him on other, alternative policy coverages” (citing Critchfield v. Smith, 151 S.W.3d 225, 230 (Tex. App.—Tyler 2004, pet. denied); Moore v. Whitney-Vaky Ins. Agency, 966 S.W.2d 690, 692 (Tex. App.—San Antonio 1998, no pet.); and Pickens v. Tex. Farm Bureau Ins. Cos., 836 S.W.2d 803, 805 (Tex. App.—Amarillo 1992, no writ)). See also Davidson v. W. Heritage Ins. Co., No. 5:13-CV-185-C, 2013 U.S. Dist. LEXIS 194844 (N.D. Tex. December 13, 2013); Lexington Ins. Co. v. N. Am. Interpipe, Inc., Civ. A. H-08-3589, 2009 U.S. Dist. LEXIS 51806, 2009 WL 1750523 at *2 (S.D. Tex. June 19, 2009). Rather, generally, an insurance agent owes his principal, the insurer, a fiduciary duty of good faith and fair dealing in all transactions on the insurer’s behalf. See American Indem. Co. v. Baumgart, 840 S.W.2d 634, 639 (Tex. App.—Corpus Christi 1992, no writ). Additionally, an insurance agent owes the insurer strict integrity, fair and honest dealing, and the duty not to conceal matters which might influence his actions to the insurer’s prejudice. See id. See also Banner Life Ins. Co. v. Pacheco, 154 S.W.3d 822, n. 8 (Tex. App.—Houston [14th Dist.] 2005, no pet.).