By Jerry Carter. In a recent Order in a Washoe County business court matter, the court permitted a Nevada corporation and its sole owner to sue for failure to place proper insurance coverage. The plaintiffs alleged they relied on the services of two insurance brokers to purchase proper workers compensation insurance. However, when the plaintiff owner suffered an injury, he was denied insurance coverage, he and his corporation sued two insurance brokers and others for negligence, negligent misrepresentation, negligent training, supervision, and retention, breach of fiduciary duty, fraud, tortious interference with contract, breach of the covenant of good faith and fair dealing, and breach of contract. They alleged that the un-covered injuries forced the plaintiffs to sell a profitable FedEx route.
The Business Court judge ruled that Nevada’s economic loss rule did not require dismissal of the negligence claims against the insurance brokers. This was because sufficient privity of contract was alleged between the plaintiffs and the insurance brokers.
The court declined to dismiss the breach of fiduciary duty claim against one of the brokers, finding it sufficient that “[t]he Complaint alleges the Mensah, Inc. had trust and confidence in Seabury,” and “that Seabury failed to inform Mensah, Inc. as to the proper coverage that it should obtain to protect its business, and that Mensah, Inc. relied on this misinformation and was damaged as a result.”
The business court judge determined that the complaint alleged fraud with specific particularity against one of the insurance brokers, but not as to other parties. The court said: “The Court finds that the Complaint provides the necessary particularity with respect to Seabury. Specifically, Mensah, Inc. appropriately alleges that a phone call was made in November 2012, by Mr. Mensah to a number provided by FedEx. Mr. Mensah called on behalf of Mensah, Inc. and spoke with an individual who identified himself or herself as the specialist in providing the best coverage for independent service providers. During that conversation, Mensah, Inc. alleges that the coverage provider stated that the insurance plan provided ‘full protection’ and the ”best coverage.’ The Court finds that these details meet the particularity requirements. In contrast, the fraud claims alleged against FedEx and Protective lack the necessary specificity as to time, place and identity of the parties. Instead, those claims are alleged in general language and do not reference conversations with specific individuals, held at specific times, regarding alleged misconduct.”
The court ruled as follows with respect to the claim for tortious interference with a contract: “Mensah, Inc. alleges that there was a valid contract between Mensah, Inc. and FedEx, and that Protective and CorVel knew of the contract, that they intended to disrupt this contract by denying the workers’ compensation benefits, and that the FedEx contract was disturbed. Mensah, Inc. alleges that it suffered damages when it was no longer able to financially support itself and it was forced to sell the FedEx route. The Court finds that Mensah, Inc. has properly alleged a set of facts to establish all necessary elements of claim for relief.”