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in post-Katrina cases and have
found that because wholesale
brokers do not communicate with
insurance customers, plaintiffs have
no possibility of recovery against
them under Louisiana state law....
Moreover, two sections have reached
the same conclusion with respect to
Burns & Wilcox [i.e., the broker] in
almost identical cases....
Other Louisiana cases which reached
the same conclusion under similar
circumstances include:
1) Bowman v. Lexington Ins. Co.:
...Hull [the wholesale broker] has
shown through sworn testimony
that the nature of its business
precludes any communication
between it and customers. Given
the legal duties of agents outlined
in recent Orders of all Sections
of this Court, the Court finds that
Hull has met its burden in proving
that the Bowmans [the insureds]
have no possibility of recovery
against it under Louisiana state
2) Teamer v. Lexington Ins. Co.:
...[T]he record establishes that
Hull [the wholesale broker]
has no communication between
it and Lexington [the insurer]
customers. Given the legal duties
of agents outlined in recent orders
of all Sections of this Court, the
Court finds that Hull has met its
burden in proving that Teamer
[the insured] has no possibility
of recovery against it under
Louisiana state law.
3) Belmont Commons, LLC v. Axis
Surplus Ins. Co.:
Many sections in this District
have reviewed the liability
question presented here: whether
the intermediary broker who does
not have a direct relationship and
contact with the insured can be
held liable under Louisiana law
for breach of a fiduciary duty.
Those courts hold no duty exists.
A similar holding can also be seen
in Cajun Kitchen of Plaquemines, Inc. v.
Scottsdale Ins. Co., et. al.
The evolution of this defense is
still in its early stages overall, and
close scrutiny of the pro-defense cases
reveals some potential limitations on the
defense's applicability. Specifically, all
of the pro-defense cases were issued by
the Louisiana Federal Eastern District
Court. All are unpublished decisions. All
involve only Hurricane Katrina claims.
Further, the underlying concept of
these rulings appears to be that, without
evidence of direct communication or a
contract between the insured and the
broker, the only legal relationship that
exists with the broker is between the
broker and insurance agent. This implies
that while the insured has no cause of
action against a traditional, intermediary
"broker," the agent may.
With these issues in mind, it is worth
noting that the pro-defense cases were
issued by four different judges (i.e.,
Barbier, Feldman, Fallon and Lemelle),
not just one. This defense, then, appears
to be thoroughly engrained in the
Louisiana Eastern District. This makes
it very likely the defense will at least
be addressed, if not wholly adopted, by
other Louisiana courts in the future.
Against the backdrop of these
decisions are two pre-Katrina cases,
Ronald C. Durham v. McFarland, et. al.
and Alex M. LeGros v. Great American
Ins. Co., et. al.
which seem to go in
the opposite direction. Again, these two
cases were decided before any of the
pro-defense holdings cited above, which
means neither of them directly repudiate
those decisions.
Durham does refer to a
Louisiana Supreme Court decision
in stating that a broker is not a mere
"order taker" and can be liable to
an insured, the "broker" in that case
was communicating directly with the
insured. Further, the ruling seems to
use the terms "broker" and "agent"
interchangeably, casting doubt on the
decision's applicability in light of
the distinction between wholesale
brokers and insurance agents being
considered here.
As to LeGros, that case involved
the denial of a supervisory writ, and
it does not appear from the holding
that the broker ever asserted lack of
communication as a defense. Instead,
the broker simply argued it had no
duty to the insured as a matter of law.
The court responded by finding this
argument was an improper topic for
summary judgment because the presence
or absence of an agency relationship
and whether a breach of duty exists are
factual questions.
Overall, it is still too soon to
anticipate what limitations may
ultimately develop with respect to this
defense's application. At a minimum,
though, there is repeated and consistent
Louisiana case law supporting its
viability. This means that lack of direct
communication is a defense that should
now be considered as part of a broker's
defensive strategy when facing these
types of claims from an insured in
1 2007 WL 196989 (E.D.La.)(unpublished).
2 Id at *1-*2.
3 Id at *2 (citing Frischhertz v. Lexington Ins. Co., 2006
WL 3228385 (E.D.La.)).
4 2007 WL 647307 (E.D.La.)(unpublished).
5 Id at *1 and n.1.
6 Id at *1.
7 Id at *2 (internal citations omitted).
8 2006 WL 3733839, *2 (E.D.La.)(unpublished).
9 2007 WL 609738, *1 (E.D.La.)(unpublished).
10 2008 WL 2945926, *1 (E.D.La.)(unpublished)(citing
11 2007 WL 60999 (E.D.La.)(unpublished).
12 527 So.2d 403 (La.App. 4th Cir. 1988).
13 02-1485 (La.App. 3 Cir. 11/12/03); 865 So.2d 792.