The Honorable Judge Daniel T.K. Hurley (United States District Court for the Southern District of Florida) recently issued an opinion that may dramatically expand the duties of a Florida insurance broker in the case of Tiara Condominium Ass’n v. Marsh, USA, Inc. Prior to Judge Hurley’s decision, no Florida court ever imposed a specific duty to advise on a Florida broker. Under the logic of Tiara, if a fact-finder determines that a “special relationship” exists between the broker and client, the broker may have an affirmative duty to recommend the amounts and types of insurance reasonably necessary to protect the client’s interests. Prior Florida decisions suggested that a duty to advise could exist under certain circumstances, however, the unambiguous holding of Tiara may strengthen support for an expansion of this duty.
Marsh, the insurance broker, procured a windstorm policy for the Tiara Condominium Association with limits of nearly $50 million in 2004. During the 2004 hurricane season, several storms caused over $100 million in damage to the condos. The association sued Marsh asserting claims for breach of fiduciary duty and negligence. Judge Hurley’s opinion was issued in response to Marsh’s argument on a dispositive motion that it had no duty to advise the association regarding appropriate limits for the structures. The court considered whether there was an extra-contractual enhanced duty of care to advise a client when a “special relationship” existed between the broker and the client. Judge Hurley ultimately determined that yes, an enhanced duty was present if a “special relationship” was present. This “special relationship” can arise from a myriad of unique factual scenarios i.e. a long relationship with the client, or the broker’s participation in the selection of coverage.
Tiara is the first case in Florida expressly holding that a broker may have an affirmative duty to advise a client when facts suggesting the existence of a “special relationship” are present. Importantly, the opinion, while persuasive, is not binding on any Florida court. While its ultimate impact is yet to be determined it certainly will play a role in the analysis of a broker’s duty going forward.