Insurance Broker Experts Not Permitted to Opine on What Constitutes a Breach of Fiduciary Duty


Insurance Broker Expert WitnessCourt: United States District Court for the Eastern District of Missouri, Eastern Division
Jurisdiction: Federal
Case Name: J.E. Jones Constr. Co. v. Marsh USA, Inc.
Citation: 2008 U.S. Dist. LEXIS 41956

Facts

The plaintiffs developed a subdivision and appointed one of their employees to serve as a trustee for the subdivision. Several years later, the plaintiffs and the employee were sued by the subdivision’s homeowners’ association for breach of fiduciary duty in connection with failures to correct issues with the subdivision’s man-made lakes. The jury ruled in favor of the homeowners’ association, and judgment was entered in the amount of $987,940.

The defendant served as the plaintiffs’ insurance broker. For 13+ years, the plaintiffs and defendant were parties to annual letter agreements that identified the services to be provided by the defendant. Pursuant to the letter agreements, the defendant agreed to the “negotiation and placement” of certain lines of insurance coverage. None of the letter agreements identified “Director and Officer” coverage among the lines to be negotiated. Rather, the defendant agreed to the “development of proposals for Directors & Officers Liability and Employment Practices Liability coverage”.

The plaintiffs filed this action against the defendant alleging breach of contract, negligence, and breach of fiduciary duty, claiming that the defendant failed to procure “Directors and Officers” insurance coverage. The plaintiffs claim that this forced the plaintiff’s employee to pay a judgment entered against him. The defendant moved for summary judgment and filed this motion to exclude the testimony of the plaintiff’s insurance broker expert witness regarding breach of terms of letter agreements signed by the parties.

The Insurance Broker Expert Witness

The plaintiff retained an insurance broker expert witness to opine as to whether the defendant violated its obligations under the Letter Agreements signed between the parties. The plaintiff’s expert was a retired insurance broker who owned his own insurance brokerage company for almost 30 years.

Discussion

The court noted that the opinions that the plaintiff requested from the insurance broker expert witness invaded the jurisdiction of the jury. Passing judgment as to whether the defendant violated its duties under the Letter Agreements constituted legal conclusions from the expert. The court was of the opinion that the insurance broker expert witness was not in a position, even as an insurance broker with years of experience, to testify to what constituted a breach of duty.

The court was of the view that the legal conclusions of the insurance broker expert witness could only serve to advise the trier of facts as to what conclusion to draw, not help the trier of facts. By testimony as such, the court determined that the testimony would not allow the trier of fact to understand the evidence, but would rather serve to formulate a conclusion for the trier of fact to be reached.

Held

The defendant’s Daubert motion to exclude the testimony of the Plaintiff’s insurance broker expert witness was granted in part and denied in part. After reviewing the proposed expert opinions, the court concluded that the testimony of the insurance broker expert witness was inadmissible. The court noted that, if required, the insurance broker expert witness could be allowed to testify to the substance of the reports and could testify to the nature of the universally recognized language or terminology of art in the insurance sector.

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