In Brown v. Carrell, homeowners filed suit against their insurance agent over damages to their home from Hurricane Ike. No. 09-15-00016-CV, 2016 Tex. App. LEXIS 13782 (Tex. App.—Beaumont December 29, 2016, no pet. history). They had purchased windstorm insurance via their agent, and flood insurance via a different person at closing. After the storm damaged their house, they contacted their agent and reported the loss. They assumed he was the agent for both the windstorm and flood policies and that he would submit a claim to both insurance companies. However, the agent only notified the windstorm insurer of the windstorm claim and did not notify the other insurer of the flood claim. Eventually, the homeowners’ flood claim was denied in part because the claim was not timely submitted. The homeowners then filed suit against their agent, alleging a number of causes of action, including breach of fiduciary duty. Ultimately, the trial court granted the agent a no-evidence summary judgment on the homeowners’ claims.

On appeal, the homeowners contended that their fiduciary duty claim was based on the fact that the insurance agent was their “agent” and owed them fiduciary duties. The appellate court held that “there is no presumption of agency; thus, a party who alleges agency has the burden to prove the relationship.” It defined an agency relationship as “a consensual relationship that exists between two parties, in which one party, the agent, acts on behalf of the other party, the principal, subject to the principal’s control.” Further, the court held that “For an agency relationship to exist, there must be (1) a meeting of the minds between the parties to establish the relationship, and (2) some act constituting the appointment of the agent.” The only evidence the homeowners relied upon to show that they had an agency relationship with the insurance agent was the insurance agent’s testimony that he was their insurance agent for obtaining the windstorm policy. The court held:

Even if an agency relationship existed between Carrell and the Browns regarding the windstorm policy, there is no evidence that the scope of that agency, actual or apparent, extended to cover the flood insurance policy. The Browns failed to present any evidence to show a meeting of the minds between them and Carrell for Carrell to act as their agent with regard to the flood insurance policy or other evidence to reasonably show that he had apparent authority to act as an agent for Harleysville. The summary judgment evidence is that the Browns only assumed Carrell would take care of reporting their flood claim. Further, the Browns presented no evidence that Carrell had any authority regarding the Browns’ flood policy or that they had the right to control Carrell’s actions regarding the flood policy, elements necessary to show a principal-agent relationship.

The court concluded that the homeowners failed to meet their burden of producing summary judgment evidence regarding the first element of a breach-of-fiduciary-duty cause of action: that a fiduciary relationship existed between the plaintiff and defendant. The court affirmed the summary judgment dismissing the breach of fiduciary duty claim.

Interesting Note: The court of appeals held that there was no genuine issue of material fact regarding the existence of a fiduciary relationship between the homeowners and the insurance agent. This is generally the rule in Texas as an insurance broker or agent has no fiduciary duty to the insured. See Toka Gen. Contrs. v. Wm. Rigg Co., No. 04-12-00474-CV, 2014 Tex. App. LEXIS 3776 (Tex. App.—San Antonio April 9, 2014, pet. denied) (court held that insurance agent was not a fiduciary of the customer); Envtl. Procedures, Inc. v. Guidry, 282 S.W.3d 602, 626-28 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) (concluding, after reviewing the evidence, that reasonable and fair-minded people could not conclude that a formal fiduciary relationship existed between an insurance broker and an insured); Choucroun v. Sol L. Wisenberg Insurance Agency-Life & Health Division, Inc., No. 01-03-00637-CV, 2004 Tex. App. LEXIS 11097, 2004 WL 2823147, at *4 (Tex. App.—Houston [1st Dist.] Dec. 9, 2004, no pet.) (holding that an insurance agent “owed no duty to explain the terms of the insurance policy to [the insured] or to advise him on other, alternative policy coverages” (citing Critchfield v. Smith, 151 S.W.3d 225, 230 (Tex. App.—Tyler 2004, pet. denied); Moore v. Whitney-Vaky Ins. Agency, 966 S.W.2d 690, 692 (Tex. App.—San Antonio 1998, no pet.); and Pickens v. Tex. Farm Bureau Ins. Cos., 836 S.W.2d 803, 805 (Tex. App.—Amarillo 1992, no writ)). See also Davidson v. W. Heritage Ins. Co., No. 5:13-CV-185-C, 2013 U.S. Dist. LEXIS 194844 (N.D. Tex. December 13, 2013); Lexington Ins. Co. v. N. Am. Interpipe, Inc., Civ. A. H-08-3589, 2009 U.S. Dist. LEXIS 51806, 2009 WL 1750523 at *2 (S.D. Tex. June 19, 2009). Rather, generally, an insurance agent owes his principal, the insurer, a fiduciary duty of good faith and fair dealing in all transactions on the insurer’s behalf. See American Indem. Co. v. Baumgart, 840 S.W.2d 634, 639 (Tex. App.—Corpus Christi 1992, no writ). Additionally, an insurance agent owes the insurer strict integrity, fair and honest dealing, and the duty not to conceal matters which might influence his actions to the insurer’s prejudice. See id. See also Banner Life Ins. Co. v. Pacheco, 154 S.W.3d 822, n. 8 (Tex. App.—Houston [14th Dist.] 2005, no pet.).

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Photo of David Fowler Johnson David Fowler Johnson

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David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law