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Illinois Appellate Court Says Broker Owes No Duty to Additional Insured
8/1/23
In a case of first impression, the Illinois Appellate Court, First District has ruled on a motion to dismiss that 1) an insurance broker does not owe a duty to an additional insured in the claims process and 2) the plaintiff did not adequately plead that the broker tortiously interfered in the relationship between the insurers and the named insured.
That is the result in Santa Rosa Mall, LLC v. Aon Risk Services Central, Inc., 2023 IL App (1st) 221352.
Aon brokered a policy for 4,000 Sears and Kmart locations across the world, including at a mall in Puerto Rico owned by the plaintiff. The lease between Sears and the mall required the plaintiff, which was the owner of the mall, to be listed as an additional insured on the policy. The mall suffered $50M in damage in 2017 as a result of Hurricane Maria.
Distinguishing Cleveland Indians Baseball Co., L.P. v. New Hampshire Insurance Co., 727 F.3d 633 (6th Cir. 2013), the court held that the broker owed no duty to the plaintiff because as a broker in procuring insurance, Aon fulfilled its duty in obtaining the requested insurance. However, the allegations of wrongdoing relate “what Aon failed to do to alert Santa Rosa or to convince Sears to pay Santa Rosa after claims were made under the policy” and for that Aon owed no duty even though Santa Rosa was an additional insured on the policy.
Subsequent to the presentation of the claim and the agreement from the insurers to cover the loss, Sears declared bankruptcy and the plaintiff alleged that Aon worked with Sears and its lawyers to assist in placing the funds into a segregated account and to pay Sears only, not the plaintiff.
This is another example of a third-party attempting to bring a claim against a professional that was not directly the client. While this claim was not successful, if the broker had failed to procure adequate coverage or coverage in compliance with the lease, then it might have been possible for a plaintiff to state a claim for professional negligence. Likewise, if the plaintiff had alleged specific facts to support the tortious interference claim, the plaintiff may have been able to get past the motion to dismiss.
For more information, please contact Donald Patrick Eckler or your local FMG attorney.
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