Court Holds That Insurers Do Not Generally Owe Fiduciary Duties To Insureds
In Ec & Sm Guerra v. Phila. Indem. Ins. Co., an insured sued its property insurer for breach of fiduciary duty and other claims arising from the insurer’s denying a claim for wind damage and disagreeing with an appraiser’s report. SA-20-CV-00660-XR, 2020 U.S. Dist. LEXIS 196735 (W.D. Tex. October 21, 2020). The insurer filed a motion to dismiss, which the court granted. The court stated:
Under Texas law, “there is no general fiduciary duty between an insurer and its insured.” Wayne Duddlesten, Inc. v. Highland Ins. Co., 110 S.W.3d 85, 96 (Tex. App.—Hou. [1st Dist.] 2003, pet. denied). “Proving the existence of a fiduciary relationship requires more than just evidence of prior dealings between the parties, and subjective trust by one party in another does not establish the requisite confidential relationship.” Id. “To impose an informal fiduciary relationship in a business transaction, the requisite special relationship of trust and confidence must exist prior to, and apart from, the agreement made the basis of the suit.” Id. Plaintiff has not presented facts that establish a duty owed by PIIC prior to, or apart from the issue at suit. Plaintiff’s allegations rely on the fact that the PIIC holds a percentage of funds from the premium to pay out claims. However, even accepting this as true, this does not establish that a relationship existed prior to or part from Plaintiff’s and PIIC’s insurance agreement. The Court cannot reasonably infer that Defendant owed Plaintiff a fiduciary duty because the Amended Complaint does not set forth any facts to establish the existence of an informal relationship with PIIC’s agents outside of the policy. Wayne Duddlesten, Inc., 110 S.W.3d 85 at 96. Even if an insurance contract’s mere existence created a fiduciary duty, the Amended Complaint’s factual allegations do not give the Court any indication of how Defendant allegedly breached this heightened duty. Accordingly, the claim for breach of fiduciary duty must be dismissed.