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American Southern Insurance Co. v. Assurance Resources, Inc.

United States District Court, S.D. Texas

May 1, 2019

American Southern Insurance Company, Plaintiff,
v.
Assurance Resources, Inc., et al., Defendants.

          OPINION ON PARTIAL DISMISSAL

          Lynn N. Hughes, United States District Judge.

         1. Background.

         JNP Enterprises, LLC, and Itzel Camacho settled a claim brought by Camacho against Enterprises. Camacho brought the claim on behalf of Jesus Hernandez. Hernandez had worked for Enterprises, and he was killed in a accident in a company car on its business. American Southern Insurance Company paid the settlement.

         Assurance Resources, Inc., issued Enterprises a policy with coverage for Enterprises by two companies: American and Companion Life Insurance Company. Assurance was Companion's agent.

         American authorized the settlement after Assurance told it that Companion would not be responsible for the entire settlement. Assurance told American that Companion would pay more than half of the Camacho settlement. Later, Assurance told American that Companion would not contribute to the settlement. Assurance said Companion's policy did not require it to pay. American presumably paid the settlement.

         Assurance and American entered an agency in 2010. The agreement had two parts: general agency and limited agency. Under the general agency, American (a) authorized Assurance to act as its general agent, and (b) Assurance was required to report losses to American within 48-hours.

         Once terminated, if Assurance was current on all payments owed to American, the limited agency would become effective for a year. Under the limited agency, unlike the general agency, Assurance could not manage or settle claims. American does not say it terminated the general agency, so it governs.

         Assurance says American's termination of the general agency became effective in April 2, 013. Camacho filed against Enterprises in October 2013. Assurance did not tell American about Camacho's claim or another claim against it until January 2015. By then, American defaulted on the separate claims. Assurance had accepted service for the claim on behalf of American, but it did not relay this information to American. Enterprises and Camacho settled the Camacho claim no earlier than June 2015.

         American brings a claim against Assurance on nine legal theories:

Breach of contract

Fraud

Breach of fiduciary duty

Fraud by nondisclosure

Negligence

Negligent misrepresentation

Promissory estoppel

Unjust enrichment

Civil conspiracy

         2. Breach of Contract.

         American says Assurance breached its contract by not informing American of the claims against it by Enterprises or Camacho.

         American is entitled to relief for this claim. A valid, enforceable contract existed between the parties. Under the general agency, Assurance must report any losses to American within 48'hours. Assurance waited more than a year to report the Camacho claim.

         3. Breach 0/Fiduciary Duty.

         American alleged that Assurance breached its fiduciary duty by (a) representing false information to American about the Camacho and Enterprises lawsuits, and (b) failing to analyze coverage properly under the Companion policy. American is not entitled to relief for this claim.

         Under the law of economic loss, tort remedies are not available when a party does not perform under a contract.[1] Assurance did not tell American about claims filed against it when it was required to do so. If American paid more than it ...


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