Court says suing an insurance broker does not always require an Affidavit of Merit

In a recent opinion, Linda Francese and Rocco R. Giordano v. Narragansett Bay Insurance Company et al., the New Jersey Appellate Division reversed an order dismissing plaintiffs Linda Francese and Rocco R. Giordano’s complaint against their insurance agency and broker, defendants Conover Beyer Associates, Inc. (CBA) and CBA employee Mary Ann McMahon (McMahon), for failure to file an Affidavit of Merit (AOM) in accordance with the Affidavit of Merit Statute (AMS). Plaintiffs Francese and Giordano are the owners of a home located in Brick, New Jersey, who obtained homeowners insurance and flood insurance from CBA and McMahon in 2010, just prior to Hurricanes Irene and Sandy.

The main contention in this case was a purported representation by McMahon that the ground level of the plaintiffs’ home and its contents would be covered under the flood insurance they purchased. In October 2012, Super Storm Sandy damaged the plaintiffs’ home and personal property on the ground floor. Subsequently, the plaintiffs contacted McMahon who advised that the plaintiffs had $100,000 in contents coverage. A week later, the plaintiffs spoke with another agent from CBA who advised them that their ground floor was uninsurable and that they did not have contents coverage for their personal property.

In October 2013, plaintiffs filed a complaint against CBA and McMahon, alleging, (among other claims), a claim for breach of contract. Thereafter, on a motion for summary judgment, the lower court had to decide whether the cause of action for breach of contract was based on professional negligence, which would require an AOM or misrepresentation. The court found in favor of CBA and McMahon due to the absence of an AOM. The plaintiffs appealed.

The plaintiffs argued that their claims against the defendants were premised on misrepresentation not professional negligence. On appeal, the appellate court agreed with the plaintiffs and held that a jury is capable of deciding, without an expert, whether or not McMahon did or did not make such representations as to whether they had flood coverage for the contents of the ground floor of their home.

On cross-appeal, CBA and McMahon argued that even if no AOM was required on the misrepresentation claim, the lower court erred in denying their motion for summary judgment on the misrepresentation claim because plaintiffs’ reliance on defendants’ representations were neither reasonable nor justified. The court found that the defendants failed to cite any case law holding that reliance on the representation of an insurance agent as to coverage available under an insurance policy is in fact unreasonable or unjustified. Finding genuine issues of material fact as to whether or not the insurance broker made representations regarding contents coverage to the plaintiffs, the appellate court affirmed the denial of summary judgment to the defendants on the misrepresentation claim.

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