Florida insurance agents and brokers can breathe at least a little easier after a state appeals court effectively reversed hefty damages in a case that had threatened to expand agents’ duties to insureds as well as their liability in coverage disputes.
The long-running litigation involved Daytona Beach-based Brown & Brown, one of the largest insurance brokerages in the U.S. The case was deemed so important that attorneys for the Florida Association of Insurance Agents penned a friend-of-the court brief, urging Florida’s 5th District Court of Appeals to overturn a jury’s award of $1 million in damages against Brown & Brown.
The court seemed to agree with much of FAIA’s and Brown & Brown’s arguments, sending the damage award back to Volusia County Circuit Court for reconsideration.
“Brown & Brown is pleased that the Fifth DCA reversed the jury verdict and remanded the matter for a new trial,” Brown & Brown said in a statement released by one of its attorneys in the case, Melissa Murphy of the Porter Wright law firm.
But the nuanced ruling leaves some questions unanswered on the full scope of agents’ and brokers’ responsibilities. The brokerage is now reviewing the opinion and contemplating its next steps.
The case stemmed from Hurricane Matthew, which side-swiped Florida’s east coast in 2016. Houligan’s Pub & Club, and Ormond Wine Co., in Ormond Beach, had relied on a Brown & Brown broker to secure hurricane coverage earlier that year. When the storm hit, the restaurant’s sewage system backed up, causing the pub and store to undergo extensive and expensive cleaning and renovations.
After the disaster, the claim was denied. Houligan’s owners discovered that their Lloyd’s of London wind policy, the only coverage 
available at the time, did not cover losses from sewage and microorganism contamination. The owners blamed its broker for the oversight and filed suit against Brown & Brown for failing to procure adequate insurance, breaching its fiduciary duty and negligently misrepresenting the extent of the policy. In short, Brown’s broker should have known that he was not placing the coverage the client needed, the pub owners claimed.
The Volusia County jury in 2024 found in favor of the brokerage on the question of failing to secure insurance, but against Brown & Brown on the other claims. Brown & Brown appealed. At the crux of the appeal was whether the trial court judge erred in allowing the damages. The court looked to its sister court’s 1998 decision, known as Capell vs. Gamble.
“…The limited issue is whether the analysis of Capell as to causation and damages for a failure to procure insurance claims should extend to breach of fiduciary duty and negligent misrepresentation claims,” the 5th DCA panel of judges noted in the Jan. 2 opinion, available here.
Brown & Brown had shown that in 2016, no coverage was available for sewage backup losses for the restaurant, even though such a policy was procured a year later. And Houligan’s leadership had not requested the sewage/contamination coverage, anyway.
The jury’s $1 million damage award against the brokerage was based in large part on the Lloyd’s policy. But the 5th DCA had already determined, in an earlier phase of the litigation, that the Lloyd’s policy did not provide the sewer coverage.
That was where the trial court went wrong, the appeals court judges said.