Timothy L. Merriam, an Individual Justine Merriam, Both Individually and as Next Friend of Christopher Merriam, a Minor, Kayla Merriam, a Minor, and Collin Merriam, a Minor v. Farm Bureau Insurance, a Corporation and/or Farm Bureau Insurance Services, a Corporation and Steven C. Stonehocker, an Individual. , 793 N.W.2d 520 ( 2011 )

IN THE SUPREME COURT OF IOWA
No. 08–1635
Filed February 4, 2011
TIMOTHY L. MERRIAM, An Individual; JUSTINE MERRIAM, Both
Individually and as Next Friend of CHRISTOPHER MERRIAM, A Minor,
KAYLA MERRIAM, A Minor, and COLLIN MERRIAM, A Minor,
Appellants,
vs.
FARM BUREAU INSURANCE, A Corporation and/or FARM BUREAU
INSURANCE SERVICES, A Corporation; and STEVEN C.
STONEHOCKER, An Individual,
Appellees.
Appeal from the Iowa District Court for Polk County, Scott D.
Rosenberg, Judge.
Plaintiffs appeal dismissal of their negligence claim against an
insurance agent and the insurance companies represented by the agent.
AFFIRMED.
Marc A. Humphrey, Urbandale, and Alan O. Olson, Des Moines, for
appellants.
Brian L. Campbell of Whitfield & Eddy, PLC, Des Moines, for
appellees.
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CADY, Chief Justice.
The plaintiffs, Timothy L. Merriam and Justine Merriam,
individually and as next best friends to minors Christopher Merriam,
Kayla Merriam, and Collin Merriam, brought this action against Steven
Stonehocker, their insurance agent, alleging Stonehocker breached his
duty of care to act as a reasonably prudent insurance agent when he
failed to advise and recommend that Timothy Merriam, a self-employed
over-the-road truck driver, procure self-employment workers’
compensation insurance. In addition, the plaintiffs contend defendants
Farm Bureau Insurance and Farm Bureau Insurance Services
(collectively Farm Bureau) are vicariously liable for the actions of
Stonehocker, an independent contractor with Farm Bureau. The district
court granted the defendants’ motion for summary judgment, holding the
evidence established Stonehocker used reasonable care, diligence, and
judgment in procuring the insurance requested by the Merriams and
that, as a matter of law, there was no genuine issue of material fact for
trial. On appeal, we affirm the decision of the district court.
I. Background Facts and Proceedings.
The following facts are undisputed. In 1998 or 1999, Timothy
Merriam became an independent over-the-road truck driver for Landstar
Ranger. As an owner operator, he was self-employed. Prior to that time,
Merriam had always driven a truck as an employee, and any workers’
compensation insurance coverage was handled by his employer.
In August 2004, Steven Stonehocker began selling Farm Bureau
insurance products as an independent contractor. Upon obtaining this
position, Stonehocker was assigned the Merriams as clients, and it was
his responsibility to service the account. At the time he was assigned the
account, Farm Bureau insured the Merriams’ primary residence.
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In early 2005, Justine Merriam contacted Stonehocker about
insuring a second residence the Merriams were purchasing for Timothy’s
mother. The Merriams and Stonehocker had never before met. In March
2005, Stonehocker met with the Merriams at their residence to discuss
their request for additional coverage. During this initial meeting,
Stonehocker suggested the Merriams consider insuring their personal
vehicles with Farm Bureau. Their personal vehicles were currently
insured through a different insurance company. Stonehocker explained
Farm Bureau had a package policy that might be able to provide a better
rate and offered to obtain a quote. At the same time, the Merriams
inquired about obtaining additional coverage on several other items. The
Merriams indicated they were interested in obtaining insurance on their
horses, and Stonehocker agreed to obtain a quote for them. They also
asked Stonehocker whether their current homeowner’s policy covered
Timothy’s guns. When he informed them that it did not, they requested
Stonehocker obtain a quote on insuring the guns. The Merriams also
asked Stonehocker to add their new garage and chicken coop onto their
homeowner’s insurance policy. Finally, the Merriams inquired into
obtaining a life insurance policy on Timothy’s mother.
During this meeting, Stonehocker was aware that Merriam was a
self-employed over-the-road truck driver. Justine also informed
Stonehocker that Timothy “had a million dollar policy which applied if he
was killed in his truck.” There was, however, no discussion of workers’
compensation coverage or of any insurance coverage for Timothy if he
was injured on the job.
Only a few weeks later, on March 29, 2005, Timothy was at his
home in Boone, Iowa. While on duty for work, he severely injured his
arm when, during the process of patching the driveway where he parked
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his work truck, the dump truck he was operating malfunctioned and
crushed his left arm.
Timothy did not have workers’ compensation coverage through
Landstar Ranger. The Merriams allege Stonehocker was negligent in
failing to advise them that, as a self-employed over-the-road truck driver,
Timothy had no workers’ compensation insurance unless he purchased
the additional coverage himself. They claimed Stonehocker was in a
position of superior knowledge pertaining to available insurance products
and was negligent for failing to initiate a conversation with them
regarding this issue. The Merriams allege Farm Bureau was vicariously
liable for Stonehocker’s inaction because he works as its agent.
II. Scope of Review.
Rulings on motions for summary judgment are reviewed for the
correction of errors at law. Langwith v. Am. Nat’l Gen. Ins. Co., 793
N.W.2d 215, 218 (Iowa 2010). “ ‘To obtain a grant of summary judgment
on some issue in an action, the moving party must affirmatively establish
the existence of undisputed facts entitling that party to a particular
result under controlling law.’ ” Baker v. City of Iowa City, 750 N.W.2d
93, 97 (Iowa 2008) (quoting Interstate Power Co. v. Ins. Co. of N. Am., 603
N.W.2d 751, 756 (Iowa 1999)); see also Iowa R. Civ. P. 1.981(3)
(authorizing summary judgment when “there is no genuine issue as to
any material fact,” and “the moving party is entitled to a judgment as a
matter of law”). In reviewing a district court’s determination that the
defendants met their burden under this standard, “we view the evidence
in a light most favorable to the nonmoving party.” Langwith, 793 N.W.2d
at 218.
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III. Prior Precedent.
The primary issue in this case is whether Stonehocker had an
affirmative duty to inquire or advise the Merriams on Timothy’s need for
self-employed workers’ compensation insurance coverage. We recently
discussed the scope of the duty owed by an insurance agent to his client
in Langwith. In Langwith, we noted the import of our decisions in two
earlier cases
was to limit an insurance agent’s obligation to procurement
of the coverage requested by the client, relieving the agent of
any duty to advise his client of the kinds and amounts of
insurance that would protect his client’s insurable interests
unless there was evidence of an expanded agency agreement.
Langwith, 793 N.W.2d at 221; see also Sandbulte v. Farm Bureau Mut.
Ins. Co., 343 N.W.2d 457 (Iowa 1984); Collegiate Mfg. Co. v. McDowell’s
Agency, Inc., 200 N.W.2d 854 (Iowa 1972). We further noted that in
Sandbulte we narrowly circumscribed the circumstances under which an
expanded agency agreement could arise to those situations when “ ‘the
[insurance] agent holds himself out as an insurance specialist,
consultant or counselor and is receiving compensation for consultation
and advice apart from premiums paid by the insured [principal].’ ”
Langwith, 793N.W.2d at 219 (quoting Sandbulte, 343 N.W.2d at 464).
Upon further reflection, however, we concluded “the general
principles governing agency relationships [require] a more flexible
method of determining [whether] the undertaking of an insurance agent
is appropriate.” Id. We noted that, under these principles, “ ‘[a]n agent
has a duty to act in accordance with the express and implied terms of
any contract between the agent and principal.’ ” Id. (quoting
Restatement (Third) of Agency § 8.07, at 334 (2006)). We further held
that “it is for the fact finder to determine, based on a consideration of all
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the circumstances, the agreement of the parties with respect to the
service to be rendered by the insurance agent.” Id. (citing Fowler v. Berry
Seed Co., 248 Iowa 1158, 1165, 84 N.W.2d 412, 416 (1957)).
Some of the circumstances that may be considered by the
fact finder in determining the undertaking of the insurance
agent include the nature and content of the discussions
between the agent and the client; the prior dealings of the
parties, if any; the knowledge and sophistication of the
client; whether the agent holds himself out as an insurance
specialist, consultant, or counselor; and whether the agent
receives compensation for additional or specialized services.
Id. (citing Fitzpatrick v. Hayes, 67 Cal Rptr. 2d 445, 452 (Ct. App. 1997)).
Finally, we held that “[t]he client bears the burden of proving an
agreement to render services beyond the general duty to obtain the
coverage requested.” Id.
IV. Application of Summary Judgment Standard.
Viewing the record in the light most favorable to the plaintiffs, we
now consider whether there are facts that would support a finding of an
agreement between the parties, interpreted in light of the circumstances
under which it was made, that obligated Stonehocker to inquire and
advise the Merriams on Timothy’s need for self-employed workers’
compensation insurance protection.
A review of the summary judgment record shows that, at the time
immediately prior to Timothy’s accident, the relationship between
Stonehocker and the Merriams had been one of short duration.
Stonehocker had started employment with Farm Bureau in August 2004.
At that time, the only business the Merriams had with Farm Bureau was
an insurance policy on their primary residence, obtained through
another Farm Bureau agent. Their other insurance needs, including
coverage on personal vehicles, health insurance, life insurance, and
insurance on Timothy’s over-the-road truck were being serviced by other
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companies. Although Stonehocker had been assigned to handle the
Merriams’ insurance account, he did not have any contact with the
insureds until early 2005 when Justine called him to inquire about
coverage for a second residence.
The main focus of their initial in-person meeting in March 2005
was property insurance coverage. The Merriams inquired about
additional coverage on a second residence, outbuildings, animals, and
guns. In addition, they also asked about a life insurance policy for
Timothy’s mother. In addressing these needs, Stonehocker testified in
his deposition that he inquired whether the Merriams would be
interested in getting a quote on their personal vehicles to take advantage
of a potentially better rate through Farm Bureau’s packaging of
residential and vehicle insurance products. The Merriams consented,
and Stonehocker was subsequently able to procure additional coverage
for the Merriams on the second residence, many of their personal
vehicles, garage addition, animals, and outbuildings. 1
In his deposition, Stonehocker acknowledged that he knew
Timothy was a self-employed truck driver. He testified this information
was essential in order to provide an accurate quote. Specifically,
Stonehocker testified:
When you’re rating vehicles, you have to find out what the
occupation is, because different ratings apply to where [the
insureds] work and how far it takes to get there. And so
that’s as far as the conversation ever went. He told me he
was a truck driver, and I knew he didn’t commute with these
1Stonehocker was not asked to obtain a quote on the dump truck involved in the
accident that severely injured Timothy, and the truck was not covered under any
insurance policy. Due to health issues, Farm Bureau was unable to provide life
insurance coverage for Timothy’s mother. It is unclear from the record whether the
plaintiffs obtained insurance coverage for their guns. They were, however, able to
obtain liability coverage on the horses.
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specific vehicles. That was the only information I was
asking.
Stonehocker was also advised by Justine that Timothy had coverage of a
million dollars if he were killed in his truck.
The Merriams maintain Stonehocker’s awareness of Timothy’s self-
employment status and his life insurance policy, combined with the
insurance agent’s unsolicited recommendation for other insurance
coverage, supports a conclusion that Stonehocker, a licensed agent with
more knowledge than the plaintiffs, was holding himself out as an
insurance specialist, thus enlarging his duty to make recommendations
to the Merriams regarding workers’ compensation coverage. We do not
agree.
The Merriams made no specific inquiry with respect to self-
employed workers’ compensation insurance and did not expressly or
impliedly seek Stonehocker’s assistance in assessing any of their
insurance needs other than those specifically requested. To the extent
Stonehocker made suggestions regarding personal vehicle coverage, the
record establishes he did so only in an effort to obtain a more favorable
rate for the property the plaintiffs sought to insure, the residences.
Moreover, there was no evidence of any long-standing relationship
between the parties that would support an implied agreement to expand
Stonehocker’s duty to include assessment of the Merriams’ other
insurance needs. There was no evidence Stonehocker advised the
Merriams that he was an insurance specialist, and he did not offer to
consult with them on any additional insurance needs. Finally, aside
from the typical commission, Stonehocker never received any additional
compensation from the insurance products he sold the Merriams. See
id. at 223 (finding that, in the “absence of circumstances indicating the
insurance agent has assumed a duty beyond the procurement of the
9
coverage requested by the client, the insurance agent has no obligation
to advise a client regarding additional coverage or risk management.”).
The plaintiffs contend Stonehocker’s knowledge of Timothy’s self-
employed status and million dollar life insurance policy was sufficient to
trigger a duty of inquiry on Stonehocker’s part. The fact that
Stonehocker was a trained and licensed insurance agent with arguably
“superior knowledge as to what insurance products someone in
[Timothy’s] position would require to be adequately protected from injury
or loss” cannot be the basis to find an implied agreement to expand
Stonehocker’s duty. If that were the case, then every trained and
licensed insurance agent would have a duty to provide an assessment of
all of an insureds’ insurance needs, whether requested or not. As
previously discussed, we have never held this to be the law in this state.
Under the principles set forth in Langwith, the plaintiffs have failed to
establish a genuine issue of material fact exists that there was an
expanded agency agreement requiring Stonehocker to advise the
plaintiffs regarding self-employment workers’ compensation insurance
for Timothy. Because Stonehocker is not liable to the plaintiffs, Farm
Bureau cannot be vicariously liable. The district court’s ruling granting
the defendants’ motion for summary judgment is affirmed. 2
AFFIRMED.
2In their appeal, the Merriams also assert the defendants owed them a fiduciary
duty. This issue was not ruled on by the district court, and the plaintiffs did not file a
motion to enlarge the findings of fact or conclusions of law. Meier v. Senecaut, 641
N.W.2d 532, 537 (Iowa 2002) (“It is a fundamental doctrine of appellate review that
issues must ordinarily be both raised and decided by the district court before we will
decide them on appeal.”). Therefore, it is not preserved for our review. However, even if
properly preserved, we conclude the plaintiffs have failed to present a genuine issue of
material fact that would support an existence of a fiduciary duty. See Kurth v.
Van Horn, 380 N.W.2d 693, 695 (Iowa 1986) (“ ‘A fiduciary relation exists between two
persons when one of them is under a duty to act for or to give advice for the benefit of
another upon matters within the scope of the relation.’ ” (emphasis added) (quoting
Restatement (Second) of Torts § 874, cmt. a, at 300 (1979))).