SMS Services LLC v. HUB International Northwest, LLC , 540 F. App'x 628 ( 2013 )

FILED
NOT FOR PUBLICATION SEP 18 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SMS SERVICES LLC, a Virginia limited No. 12-35249
liability company,
D.C. No. 2:11-cv-00336-MJP
Plaintiff - Appellant,
v. MEMORANDUM*
HUB INTERNATIONAL NORTHWEST,
LLC, a Washington limited liability
company,
Defendant - Appellee.
Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, Chief District Judge, Presiding
Argued and Submitted August 28, 2013
Seattle, Washington
Before: HAWKINS, McKEOWN, and CLIFTON, Circuit Judges.
In this action for professional negligence and malpractice, SMS Services LLC
(“SMS”) appeals the summary judgment grant in favor of its aviation insurance
broker, HUB International Northwest, LLC (“HUB”). The district court concluded
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
HUB did not owe a duty to SMS to advise it about the amount of insurance required
under certain leases to which SMS was a party. We affirm.
The district court did not err by applying the “special relationship” test to
HUB. Although a broker represents the insured while an agent represents the
insurance company, both are insurance intermediaries paid by commission from
insurance premiums, and no Washington cases have distinguished between the two
in terms of general agency duties. See, e.g., AAS-DMP Mgmt., L.P. v. Acordia
Nw. Inc., 63 P.3d 860, 863 (Wash. Ct. App. 2003). Nor did the district court err in
determining that SMS could not demonstrate the requisite special relationship with
HUB. Even if HUB held itself out as an insurance specialist, it did not receive
compensation for giving consultation and advice “apart from” the commission on the
insurance premiums. See Suter v. Virgil R. Lee & Son, Inc., 754 P.2d 155, 157 (Wash.
Ct. App. 1988).
Moreover, SMS and HUB did not have a “longstanding relationship.” See id.NII Holdings, Inc. (“NII”) had acted as SMS’s agent for only one year and procured
only one prior policy for SMS through HUB at the time of the renewal. Even if we
were to impute to SMS the benefit of NII’s pre-existing relationship with HUB, SMS
cannot show it specifically interacted with HUB on the question of the required
amount of coverage under the leases or that it relied on HUB’s advice to its detriment
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regarding those requirements. See Lipscomb v. Farmers Ins. Co., 174 P.3d 1182,
1186-87 (Wash. Ct. App. 2008).
While a broker or agent’s duty may also be expanded by “a specific promise
by an agent as part of the agency relationship,” it extends only to the additional task
to which the agent specifically agreed. Peterson v. Big Bend Ins. Agency, Inc., 202
P.3d 372, 377-78 (Wash. Ct. App. 2009). Here, HUB agreed in its service plan with
NII to “[r]eview contracts to assure adequacy of coverage in relation to exposures and
contract requirements, as needed.”
Looking at the document as a whole, including the numerous similar provisions
in which HUB indicates services it would be willing to perform if called upon to do
so, the only reasonable construction of this language is that HUB did not promise to
automatically review any and all contracts for the insured, but only when the client
identifies such a need for review and advice. For example, “contracts” is undefined;
only the insured could know which contracts it might have entered into which could
potentially impact insurance coverage and only the insured would be in possession of
such documents.
Indeed, in this case, HUB did not even possess relevant portions of the
documents SMS now contends the broker should have reviewed. In addition, to
construe the provision otherwise would render the clause “as needed” superfluous,
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because there would be no way for HUB to determine if review was “needed” without
performing the very task it offered to perform—reviewing the contracts. The district
court correctly concluded that HUB did not affirmatively agree to expand its duties
to review third-party contracts without some prompt by the client.
Finally, SMS was a party to and had access to the very agreements that required
the higher coverage amount. Nonetheless, SMS chose the lower coverage.
AFFIRMED.
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