AGA Fishing Group Ltd. v. Brown & Brown, Inc.

United States Court of Appeals
For the First Circuit

No. 07-2408

AGA FISHING GROUP LIMITED,

Plaintiff, Appellant,

v.

BROWN & BROWN, INC., ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Joseph L. Tauro, U.S. District Judge]

Before

Lynch, Chief Judge,
Tashima,* Senior Circuit Judge,
and Lipez, Circuit Judge.

Joseph G. Abromovitz with whom Marsha A. Morello and the Law
Office of Joseph G. Abromovitz, P.C. were on brief for appellant.
Michael J. Stone with whom Terri L. Pastori and Peabody &
Arnold LLP were on brief for appellees.

July 10, 2008

*
Of the Ninth Circuit, sitting by designation.
 TASHIMA, Senior Circuit Judge. Plaintiff AGA Fishing

Group Limited (“AGA”) was forced to sell the Georgie J, a scallop

fishing vessel, and its scallop license to settle claims against

AGA after a crewman suffered debilitating injuries aboard the

vessel and recovered a substantial award under the Jones Act. AGA

was insured through Defendant Flagship Group, Limited (“Flagship”),

but the seaman’s award far exceeded the Protection & Indemnity (“P

& I”) coverage in AGA’s policy, which was sold to AGA by Flagship.

AGA sued Flagship and Defendant Brown & Brown, Inc., Flagship’s

parent company, contending that Flagship owed it a duty to

recommend an adequate level of P & I coverage and breached that

duty when it did not so recommend. The district court granted

Defendants’ motion for summary judgment on all claims. Because AGA

presents no facts evincing a duty on Defendants’ part to ensure

that AGA was adequately covered, we affirm.1

I. Background

Because AGA appeals from a grant of summary judgment, in

reciting the facts, we draw all reasonable inferences in favor of

AGA, the non-moving party. See Ramos-Santiago v. United Parcel

1
AGA also contends that Flagship breached its contract
with AGA by failing adequately to evaluate AGA’s risk. Because AGA
raises this argument for the first time on appeal, we decline to
consider it. See United States v. Taylor, 511 F.3d 87, 91 (1st
Cir. 2007) (“Absent extraordinary circumstances, ‘[i]t is a bedrock
rule that when a party has not presented an argument to the
district court, [he] may not unveil it in the court of appeals.’”)
(alterations in original) (quoting United States v. Slade, 980 F.2d
27, 30 (1st Cir. 1992)).

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Serv., 524 F.3d 120, 122 (1st Cir. 2008). George Jones (“Jones”)

started scallop fishing in New Bedford, Massachusetts, in the early

1960s, when he was fifteen years old. In 1987, he and his wife,

Antonette Jones, formed AGA and purchased a scallop boat, the

Victor, and an accompanying scallop license. Under the previous

owner, the Victor carried $1,000,000 in P & I insurance through

Neptune Mutual. After acquiring the vessel, AGA decided to stay

with the same insurance company and agent, Ronald Walsh (“Walsh”),

and continue the same level of coverage.

Some time later, AGA discontinued its insurance policy

with Neptune Mutual and purchased a policy from Mariners Insurance.

AGA continued the same level of P & I coverage after the switch.

Jones assumed that the new agent would tell him if he needed more

coverage. In the late 1990s, Jones discovered that his original

insurance agent, Walsh, had left Neptune Insurance and was now

working for Flagship. On its website, Flagship advertised itself

as having “the expertise necessary to offer the appropriate

insurance services for the maritime industry” and claimed to

“systematically and comprehensively examine [its clients’] maritime

exposures.” The Joneses, however, never viewed the website.

Rather, Jones liked Walsh and trusted him. Their personal

relationship and the fact that Walsh quoted a lower premium for the

same coverage precipitated AGA’s move from Mariners Insurance to

Flagship in 1999.

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 AGA kept the same level of P & I coverage on the vessel

after moving its insurance business to Flagship, again assuming

that its agent, now Walsh, would recommend additional coverage, if

necessary. According to Walsh, the Joneses “didn’t understand

insurance” and needed a lot of guidance due to their “naive[te].”

The Joneses were not highly educated. Jones left school after the

sixth grade and Antonette Jones did not complete high school,

although she received a GED years later. Although Walsh testified

that the Joneses required more assistance than his other clients,

Walsh and the Joneses never discussed the amount of P & I coverage

on the vessel or whether or not the coverage was sufficient. The

policy was renewed annually at the same level of coverage.2

In 2000, Walsh told Jones that he planned to leave

Flagship and that Flagship was closing its Massachusetts office.

Jones asked Walsh how to keep the Georgie J covered. Walsh

recommended that AGA stay with Flagship. AGA remained with

Flagship, and Flagship transferred the AGA account to agent John

Devnew (“Devnew”). Jones was concerned that Devnew would not be

able to give him the level of assistance he desired because he was

based in Virginia. Devnew reassured Jones that he would “take care

of them.” Devnew considered Jones “simple and unsophisticated” and

knew that the Joneses’ entire fortune was wrapped up in AGA. Yet

2
Also during this time, the Joneses’ son was killed in an
unrelated incident and the Joneses renamed the Victor the Georgie
J in his honor.

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during the time Devnew worked on the AGA account, he never

discussed P & I coverage levels for the Georgie J with the Joneses

and never recommended increasing the amount of P & I coverage on

the Georgie J.

In or around 2001, New Bedford experienced a boom in the

scallop fishing industry. Gross profits per fishing trip increased

dramatically, which translated into significant pay increases for

crewmen working aboard the scallop vessels. Compensation levels

for individual crew members reached and then exceeded $100,000 a

year. The Georgie J and other scallop vessels carried a five- to

seven-member crew. As a result, vessels that worked out of New

Bedford, including those insured by Flagship, commonly carried

$5,000,000 P & I coverage. It would have cost AGA approximately

$5,000 annually to increase P & I coverage for the Georgie J from

$1,000,000 to $5,000,000. AGA avers that it would have paid the

higher premium had Devnew recommended the higher level of coverage.

During a fishing trip in 2003, a crewman suffered

debilitating injuries while working aboard the Georgie J and

subsequently sued AGA. The $1,000,000 P & I coverage on the

Georgie J was grossly insufficient to cover the damages awarded to

the crewman. The U.S. Marshal seized the Georgie J and its scallop

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license and sold it at auction in partial satisfaction of the

crewman’s judgment.3

AGA sued Flagship and Brown & Brown, Inc., its parent

company. AGA claimed that Flagship breached its duty of care

properly to advise AGA with regard to coverage needed for the

Georgie J (Count I). AGA also alleged negligent misrepresentation

(Count II), intentional misrepresentation (Count III), and

violations of Massachusetts’ unfair or deceptive trade practice

law, Mass. Gen. Laws ch. 93A §§ 2(a), 11 (Counts IV and V). AGA

further alleged that Brown & Brown was vicariously liable for

damages caused by Flagship (Count VI) and that Brown & Brown

negligently failed to supervise Flagship (Count VII).

Defendants moved for summary judgment, which the district

court granted as to all claims. AGA timely appealed.4 We have

jurisdiction over the final judgment under 28 U.S.C. § 1291. In

this diversity of citizenship case, we apply Massachusetts law,

which the parties implicitly agree governs.

3
The Georgie J and the license together sold for
$1,700,000. The proceeds from the sale first went to pay off the
mortgage, and the remainder went to the injured crewman.

4
Nowhere in its briefs in this court does AGA challenge
the district court’s grant of summary judgment on Counts II through
VII. We therefore consider those arguments waived and do not
address those counts.

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 II. Discussion

We review a district court’s grant of summary judgment de

novo. Franceschi v. U.S. Dep’t of Veterans Affairs, 514 F.3d 81,

84 (1st Cir. 2008). Summary judgment “should be rendered if the

pleadings, the discovery and disclosure materials on file, and any

affidavits show that there is no genuine issue as to any material

fact and that the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(c).

“There is no general duty of an insurance agent to ensure

that the insurance policies procured by him provide coverage that

is adequate for the needs of the insured.” Martinonis v. Utica

Nat’l Ins. Group, 840 N.E.2d 994, 996 (Mass. App. Ct. 2006). Such

a duty only arises under “special circumstances of assertion,

representation and reliance.” Baldwin Crane & Equip. Corp. v.

Riley & Rielly Ins. Agency, Inc., 687 N.E.2d 1267, 1269 (Mass. App.

Ct. 1997) (quoting Rapp v. Lester L. Burdick, Inc., 146 N.E.2d 368,

371 (Mass. 1957)); see also Martinonis, 840 N.E.2d at 996 (“[I]n an

action against the agent for negligence, the insured may show that

special circumstances prevailed that gave rise to a duty on the

part of the agent to ensure that adequate insurance was obtained.”)

(citing Baldwin Crane, 687 N.E.2d at 1269).

AGA alleges special circumstances due to the Joneses’

lack of education, Walsh and Devnew’s knowledge of their

“naive[te]” and “lack of sophistication,” and testimony from the

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Joneses that they relied completely on Walsh and Devnew to tell

them how much coverage they needed for the Georgie J. AGA also

points to its long-term relationship with Walsh and his testimony

that he was aware of the Joneses’ reliance on him. Additionally,

Flagship presented itself to the public as an expert in the field

of maritime insurance and, through its website, attested that it

“systematically and comprehensively” examined its clients’

potential liabilities.

Courts have considered length of relationship a

significant factor when determining the existence of special

circumstances. See McCue v. Prudential Ins. Co., 358 N.E.2d 799,

801 (Mass. 1976) (determining that a jury could find special

circumstances where insurance agents visited the plaintiffs monthly

for twenty-eight years); Martinonis, 840 N.E.2d at 996 (noting the

plaintiff’s “long relationship” with her agent). An insurer’s

public representations of expertise or public promises to provide

specialized counseling, like those found on Flagship’s website,

could also support, based on other facts as well, a finding of

special circumstances. Baldwin Crane, 687 N.E.2d at 1269-70 (“‘An

expanded agency agreement, arrangement or relationship, sufficient

to require a greater duty from the agent than the general duty,

generally exists when the agent holds himself out as an insurance

specialist, consultant or counselor . . . .’”) (quoting Sandbulte

v. Farm Bureau Mut. Ins. Co., 343 N.W.2d 457, 464 (Iowa 1984)).

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 AGA, however, has not presented facts sufficient to

support a finding of special circumstances because neither Walsh

nor Devnew made any representation or assertion that coverage was

sufficient or that AGA could rely on them to recommend sufficient

coverage. A plaintiff must be able to show a specific assertion

and subsequent reliance to establish special circumstances.

Assertions can come in the form of “frequent recommendations,” GE

HFS Holdings, Inc. v. Nat’l Union Fire Ins. Co., 520 F. Supp. 2d

231, 237 (D. Mass. 2007), a recommendation of coverage in a

particular amount, Bicknell, Inc. v. Havlin, 402 N.E.2d 116, 119

(Mass. App. Ct. 1980), or assurances that coverage is sufficient,

Martinonis, 840 N.E.2d at 996.

No agent made any such recommendation or representation

to AGA. Jones testified that Walsh and Devnew never discussed with

him the amount of P & I coverage the Georgie J had or should have

had. No agent even recommended the $1,000,000 P & I coverage. AGA

maintained the $1,000,000 P & I coverage from 1987 to 2003 simply

because that was the level of coverage in place when AGA first

purchased the vessel.

AGA avers that it relied on Walsh and Devnew to recommend

sufficient coverage for the Georgie J and that the agents knew that

they had to do so because the Joneses were “naive” and

“unsophisticated.” The Joneses, however, never asked Walsh or

Devnew if the P & I coverage on the Georgie J was sufficient, never

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asked if they would be told if coverage became insufficient, and

neither Walsh nor Devnew represented that the Joneses would be

informed if at some point the coverage became insufficient.

While Walsh testified that the Joneses relied on him

generally, special circumstances exist only where reliance is based

on an assertion or representation. Additionally, AGA did not rely

on Flagship’s public representations of expertise. The Joneses

never saw Flagship’s website; they chose Flagship because of price

and their relationship with Walsh.

Because AGA has adduced no facts showing the existence of

special circumstances that created a duty of care, the district

court did not err in granting summary judgment in favor of

Defendants on Count I of AGA’s complaint.

III. Conclusion

For the foregoing reasons, the district court’s grant of

summary judgment in favor of Defendants is AFFIRMED.

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