In a U.S. District Court action brought against Allstate and one of its insurance agents alleging the negligent underinsurance of a residence destroyed by fire, Allstate filed a Rule 12(b)(6) motion seeking the dismissal of the agent. Allstate contended that the agent was a disclosed Allstate agent acting withing the course and scope of that agency and, accordingly, the agent should be dismissed under Lippert v. Bailey(1966) 241 Cal.App.2d 376, 282. Under Lippert, as a general rule, insurance agents acting in their agency are not individually liable. Rather, liability rests with the insurance company. In opposition, plaintiffs cited a “special duty” exception to Lippert, contending that under Fitzpatrick v. Hayes (1997) 57 Cal.App.4th 916, an agent’s duty may arise when the agent holds himself out as having expertise in given field of insurance being sought by the insured.
Without deciding whether a “special duty” exception to the Lippert rule exists, the court denied summary judgment on the ground that, if the special duty exception were to apply, it was possible that that plaintiffs could prevail on the merits. The basis for this conclusion was that although the plaintiffs admitted not having asked the agent about his expertise, the agent did allegedly set the limits and renew the policy annually without the plaintiffs’ authorization. In reaching this conclusion, it appears that the court was influenced by the fact that the motion was brought early in the proceedings, before much discovery had occurred.
The decision is DeBorde v. Allstate Insurance Company, 2011 U.S. Dist. LEXIS 115633. The action is pending in the U.S. District Court for the Eastern District of California.