Unreported / Non-Citable
Background
ICS Insurance Construction Services, LLC, a property-restoration company, relied on referrals from insurers through third-party administrator Alacrity Solutions. Alacrity required vendors to maintain specified insurance coverage. ICS alleged that it told insurance broker Acrisure, LLC and its employee Susan Ruggles that it needed coverage satisfying Alacrity’s and Allstate Insurance Company’s vendor requirements.
Ruggles obtained a GuideOne Insurance policy after allegedly representing that the quoted coverage would include everything required by Alacrity. An Alacrity employee described the submitted insurance documents as “perfect.” After a tornado damaged customers’ property stored at ICS’s facility, however, GuideOne denied coverage because the policy covered losses for which ICS was liable and the tornado was not ICS’s fault. ICS alleged that the resulting uninsured loss caused Alacrity and Allstate to remove it from their vendor network, producing lost revenue.
The Court’s Holding
The court denied Acrisure and Ruggles’s Rule 12(b)(6) motion in full. Accepting the complaint’s allegations as true, the court held that ICS plausibly pleaded negligence and negligent misrepresentation. The allegations supported a reasonable inference that the defendants failed to use reasonable diligence to procure the requested insurance or disclose their inability to do so, and that ICS justifiably relied on representations about the policy’s adequacy.
The court also held that ICS plausibly pleaded unfair and deceptive insurance practices under Texas Insurance Code § 541.061. It did not resolve whether Federal Rule of Civil Procedure 9(b)’s heightened particularity requirement applied because ICS satisfied that standard regardless: the complaint identified Ruggles as the speaker, described her alleged assurance that the policy would include the coverage and language required by Alacrity, and alleged that the assurance induced ICS to buy the policy. The court treated the alleged assurance as an affirmative misrepresentation about the policy’s adequacy, not merely a failure to disclose.
Key Takeaways
- An insurance broker may face a plausible negligence claim when it allegedly fails to procure specifically requested coverage or promptly disclose that it could not do so.
- A representation that a policy satisfies a third party’s coverage requirements can support negligent-misrepresentation and Texas Insurance Code claims even without a promise of a specific coverage amount.
- The complaint identified the speaker, substance, and circumstances of the alleged misrepresentation with enough particularity to satisfy Rule 9(b), assuming that rule applied.
Why It Matters
The decision shows that policyholders may proceed beyond the pleading stage when they identify the coverage requirements communicated to a broker, the broker’s assurance that those requirements would be met, and a concrete loss allegedly caused by the resulting coverage gap.
The ruling addresses only the sufficiency of ICS’s allegations, not whether Acrisure or Ruggles ultimately breached a duty, made a false representation, or violated the Texas Insurance Code. Those merits questions remain for later proceedings.