The Agency Checklists article of June 8, 2012, “Court Sinks Endlar Agency Over Certificate of Insurance,” relating to the Appeals Court’s reversing for an agency on a certificate of insurance claim has been a frequently read article on Agency Checklists.
The Legislature, at the urging of MAIA and insurers, codified rules relating to liability on certificates. See Agency Checklists’ March 1, 2015 article: “What You Need To Know About The New Insurance Certificate Law in Massachusetts.”
Notwithstanding the new law on certificates, Agency Checklists believes, as stated in the above article that agencies still have errors and omissions exposures.
On April 6, 2015, Attorney William Rose, of the law firm of Heifitz Rose LLP posted an update on Agency Checklists article regarding the results of the retrial on the Endlar case. Based on the importance of the Judge’s decision in the Endlar case, Agency Checklists asked Attorney Rose to provide Agency Checklists’ readers with his summary of the decision and to make available to its readers a copy of the Judge’s 25 page decision in favor of the agency (copy at the end of post).
Attorney Rose’s summary of the trial and decision of the Superior Court on certificates of insurance and liability under G.L. c. 93A
In Witkowski v. Richard W. Endlar Insurance Agency, Inc., Essex Superior Court C. A. No. 2007-00958-A, (“Endlar”) Judge Feeley rendered a detailed and well-reasoned opinion 25 page decision concerning the issuance and interpretation of certificates of insurance.
In Endlar, the Plaintiff brought claims of common law misrepresentation and under Mass. Gen. L. c. 93A based on that alleged misrepresentation. As is mandated by Massachusetts law, Judge Feeley reserved the c. 93A claim for his own determination. The jury heard, but could not decide, the misrepresentation claim, as it deliberated for several days without being able to reach a verdict. However, this did not affect Judge Feeley’s ability or authority to decide the c. 93A claim.
Issuing certificates may be outside c. 93A
In his decision, Judge Feeley questioned whether Endlar was conducting “trade or commerce” as required for liability to attach under c. 93A when it issued the certificate of insurance. In this regard, Endlar was the broker for a condominium trust, and Witkowski had requested a certificate of insurance to establish that master policies had been issued to the trust, including flood insurance, in connection with his purchase of a unit at this condominium building. In fact, Witkowski had his own broker who procured his unit owner’s policy. Thus, Witkowski was not Endlar’s customer, and Endlar was not paid to issue the certificate. Rather, it issued the certificate as a service to the trust. While expressing his doubts as to whether Endlar was thus engaged in “trade or commerce,” Judge Feeley concluded that he need not decide the case on these grounds. Instead, he found that Endlar did not make any false statements of fact in the certificate and/or did not make any statements knowing them to be false or in reckless disregard of the truth (the first two elements of a viable misrepresentation claim). Thus, he found in favor of Endlar.
Certificate accurate and not misleading
Specifically, Judge Feeley recognized that the certificate was accurate on its face. The certificate indicated that the policies listed had been issued to the trust, which was true. The certificate also stated that Witkowski, as the prospective owner of his unit, would be an insured under the trust’s policies. This too was accurate as Witkowski was an insured to the extent that the flood policy provided some coverage for his unit, and as to his proportionate share of the common areas conveyed to him in his unit deed.
However, the Plaintiff asserted that the certificate provided misleading information that Witkowski and his unit were covered under the trust’s flood policy, when in fact there was limited coverage for his unit because it was located in the basement of the building. (The standard flood insurance policy expressly excludes coverage for most property kept in basements.) Judge Feeley considered this argument to be the Plaintiff’s strongest: that the certificate may have conveyed a “half-truth, by giving misleading partial information about his coverage under the Trust’s flood insurance policy.”
No liability for standard certificate with typical policy information
Even so, Judge Feeley found that the certificate did not contain a misrepresentation, because it was issued in a standard form and with the information typically conveyed by certificates. Judge Feeley recognized that certificates do not disclose policy exclusions or limitations, even dramatic ones. In addition, for the certificate to contain a “half-truth,” Endlar would have had to owe Witkowski a duty to investigate whether there may be exclusions or limitations to coverage for him under the listed policies. Because the standard practice in the industry is not to conduct such coverage investigations when issuing certificates of insurance, Endlar owed no such duty and thus had no obligation to issue a certificate which included the limitation of coverage for property kept in the basement.
Agency had not duty to investigate before issuing certificate
Finally, Judge Feeley concluded that there was no evidence that Witkowski alerted Endlar to the fact that he was buying a basement unit. Thus, there was no evidence or claim that Endlar knew that any representation contained in the certificate was false. In addition, because the broker had no duty to investigate how coverage under the trust’s policies may apply to Witkowski, it did not issue the certificate with reckless disregard for the truth of the statements contained in it. Because Judge Feeley concluded that Witkowski had failed to establish an actionable misrepresentation claim, his c. 93A claim based on this theory must therefore also fail.
About Agency Checklists’ guest author
William Rose, Esq. is a name partner in the law firm of Heifitz Rose LLP. Attorney Rose represented the Endlar Insurance Agency throughout the original summary judgment proceedings in the Superior Court, the subsequent appellate proceedings, as well as the jury trial and 93A proceedings that resulted in Judge Feeley’s decision.
The publisher of Agency Checklists, Owen Gallagher, has had common representation with Attorney Rose on a complex agency authority case as part of his insurance practice and considers Attorney Rose a leading Massachusetts attorney in the defense of professional liability claims brought against insurance agencies.
Attorney Rose contact information is:
Attorney William Rose
175 Highland Avenue, Suite 407
Needham, Massachusetts 02494
Tel: 617-986-4226 (direct)
Tel: 617-986-6210 (main)
The Endlar decision
A copy of the 25 page decision of Judge Feeley on the Endlar case can be accessed by clicking the following document: “Findings of Fact, Rulings of Law, and Order for Judgment.”