United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
August 11, 2006
FOR THE FIFTH CIRCUIT
_____________________ Charles R. Fulbruge III
Clerk
No. 05-51575
_____________________
CIC PROPERTY OWNERS, CIC Property Owners and Managers
Limited LLP,
Plaintiff - Appellant,
versus
MARSH USA INC.,
Defendant - Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:04-CV-658
_________________________________________________________________
Before JOLLY, PRADO, and OWEN, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
In this appeal, we confront issues of res judicata and
fiduciary obligations relating to settlements of adversarial
litigation. Because we hold that the release of liability
contained in the settlement agreement between the parties is
enforceable and disposes of this appeal, we do not reach the issue
of res judicata.
I
CIC Property Owners is a risk-management and insurance
consulting firm that obtains volume discounts on insurance policies
for pooled owners of multi-family dwellings. In 1995, Marsh USA
began providing CIC with brokerage services, from finding insurers
to underwrite coverage to disbursing to the insurers the premiums
collected from CIC. In late 2001, CIC agreed to use Marsh’s
services exclusively, in return for promises that Marsh would
provide CIC with a firm price quote on excess property insurance
and would charge only fees and no commission for its services.
In February 2002, CIC filed two lawsuits against Marsh in
Texas state court. In the first, which was removed to federal
court, CIC accused Marsh of breaching the service agreement by
charging premiums in excess of the firm price quote and by charging
commissions in addition to fees. In the second, which remained in
state court, CIC accused Marsh of breaching the service agreement
by failing to secure adequate insurance coverage. CIC and Marsh
settled both lawsuits in October 2002. Under the Settlement
Agreement, Marsh paid CIC $1.5 million, CIC dismissed its claims
with prejudice, and CIC further agreed to
unconditionally release[], acquit[], forever
discharge[], and covenant[] not to sue,
without limitation, Marsh . . . with respect
to each and every right, claim, complaint,
demand, cause of action, proceedings, and
damages of whatsoever kind or nature which CIC
now has, has had, or might have relating to or
arising out of any act, transaction, or
occurrence between the parties, including
without limitation each and every claim for
any type of relief or remedy whatsoever based
upon any theory whatsoever, whether known or
unknown at this time, and relating to or
arising out of the Placement, the Brokerage
Services, or any claims that have been or
could have been brought in the Federal Lawsuit
or State Lawsuit.
2
After the settlement, however, CIC’s audit of the 2000-2001
policy year revealed that Marsh was in possession of $600,000 of
unearned premiums owed to CIC from Ace Insurance Company. In
response to CIC’s request for the return of that sum, Marsh
informed CIC that it was also in possession of $61,600 of unearned
premiums on a Gulf Insurance Company policy. Marsh wired the
$661,000 to CIC. However, CIC’s further investigation revealed
that Marsh actually owed $83,812 on the Gulf policy. CIC then
contacted other insurance carriers about possible overcharges from
both the 2000-2001 and 2001-2002 policy years and discovered what
it believed to be a pattern of overcharging by Marsh during those
policy years. CIC’s demands for further repayment were rebuffed,
and CIC brought this suit in Texas state court, asserting breach of
contract and violations of Texas Insurance Code Article 21.21.
Marsh removed to federal court, then moved for summary judgment,
arguing that CIC’s suit was barred by res judicata and the release
of liability contained in the Settlement Agreement. The District
Court granted summary judgment on res judicata grounds.
II
This appeal presents two questions: first, whether the
District Court erred in holding that the present litigation is
precluded by the previous litigation between the parties; and, if
so, second, whether summary judgment is nevertheless proper based
on the Settlement Agreement’s release of liability. We affirm the
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grant of summary judgment on the basis of the release.
Consequently, we do not reach the res judicata issue.
The Settlement Agreement disposing of the two previous actions
included the broad release quoted above. CIC “without limitation”
“unconditionally release[d]” and “covenant[ed] . . . not to sue”
Marsh “with respect to each and every right, claim, complaint,
demand, [etc.] . . . which CIC now has, has had, or might have
relating to or arising out of any act, transaction, or occurrence
between the parties . . . whether known or unknown at this time .
. . .” Suffice it to say, the release on its face and in its
substance reaches this suit by CIC.
To undermine the efficacy and enforceability of the release,
CIC contends that Marsh breached a fiduciary obligation to CIC by
securing a release so disadvantageous to CIC. A party owing
fiduciary duties to another must show that an agreement between the
two is fair and reasonable and that the party to whom the duty is
owed was aware of all facts material to the agreement. Keck, Mahin
v. Nat. U.F. Ins., Pittsburgh, P.A., 20 S.W.3d 692, 699 (Tex.
2000). The District Court ruled that Marsh was a fiduciary of CIC
and that a material fact issue existed as to whether Marsh breached
that duty by failing to meet the “fair and reasonable” standard of
Keck.
We believe that the District Court erred in analyzing the
Settlement Agreement under Keck. Even assuming, arguendo, the
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existence of a fiduciary relationship between the parties,1 the
circumstances surrounding the negotiation and execution of the
release fatally undermine CIC’s claim that Marsh owed and breached
a duty to ensure that the Agreement was fair and reasonable to CIC.
Unlike the plaintiff in Keck, CIC here was represented by its own
counsel in a clearly adversarial negotiation. The parties
terminated their business relationship on September 1, 2002, two
months before entering into the Settlement Agreement, and CIC hired
counsel to review the Agreement. The Agreement itself recites that
the parties “had an opportunity to consult with their respective
attorneys concerning . . . th[e] agreement”; the parties
“voluntarily execute[d] the [agreement] after advice of counsel”;
and the agreement was “reviewed by counsel for the parties and
approved as to form and content.” We decline, absent supporting
Texas authority,2 to attach a presumption of unfairness to a
settlement of a formal adversarial proceeding, entered into by two
1
Texas recognizes both formal fiduciary relationships and
informal ones arising from a “moral, social, domestic, or purely
personal relationship of trust and confidence, generally associated
with a confidential relationship.” Associated Indem. Corp. v. CAT
Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998). Marsh argues
that Texas law recognizes no fiduciary relationship between an
insurance broker and its client. CIC argues by analogy to cases in
which the Texas courts have recognized a fiduciary relationship
between a securities broker and its customer. See, e.g., Duzich v.
Marine Office of Am. Corp., 980 S.W.2d 857, 865 (Tex. App. 1998).
2
If anything, Texas Supreme Court dictum favors Marsh. The
Court in Keck specifically stated that no presumption of unfairness
would have arisen regarding the release between the plaintiff and
attorney had the plaintiff severed the attorney-client relationship
and hired new attorneys before agreeing to the release.
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sophisticated parties separately advised by counsel. Consequently,
Keck is inapplicable, and the Settlement Agreement’s fairness to
CIC is irrelevant.
There being no other issue of fact or law raised to contest
the enforceability of the release, we must give full effect to its
terms. Because the 2002 Settlement Agreement bars CIC’s claims,
Marsh is entitled to judgment as a matter of law.
III
In the light of the foregoing, the District Court’s grant of
summary judgment in favor of Marsh is
AFFIRMED.
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