A California appellate court has allowed an insured to proceed with a lawsuit against an insurance adjuster for negligent misrepresentation and intentional infliction of emotional distress arising out of the insurance adjuster’s alleged misconduct in handling the insured’s property claim. ( Bock v. Hansen (2014) 225 Cal.App.4th 215)
Facts
A 41-foot long, 7,300 pound tree limb fell onto the home of Michael and Lorie Bock. The Bocks promptly reported the incident to their homeowners’ insurer, Travelers Property and Casualty Insurance Company. Travelers, in turn, assigned one of its employees, Craig Hansen, to adjust the loss.
On Hansen’s first visit to the Bocks’ house, Hansen allegedly performed only a cursory inspection, altered the scene before taking photos of the damage, and spoke rudely and derogatorily to the Bocks. In addition, Hansen allegedly misrepresented that the policy did not cover debris removal, causing the Bocks to perform the clean-up themselves, in the course of which Mrs. Bock suffered an injury. The Bocks allegedly requested that Travelers replace Hansen as the adjuster, but Travelers refused. Subsequently, Hansen allegedly revised an estimate to include false information, conspired with an unlicensed contractor to create a false report, and engaged in various other acts of misconduct.
The Bocks sued both Travelers and Hansen. The Bocks’ complaint included claims against Hansen for “negligent misrepresentation” and “intentional infliction of emotional distress.” The trial court dismissed the Bocks’ claims against Hansen, concluding that the Bocks had not stated, and could not state, claims against Hansen. The Bocks appealed.
Holding
The California Court of Appeal reversed.
The appellate court held that an insured can assert a claim for “negligent misrepresentation” against an insurance adjuster, and that the Bocks had adequately pled such a claim against Hansen in this case. The appellate court distinguished prior cases holding that agents and employees of insurance companies do not owe a duty to the insured as long as the agency relationship was disclosed and the conduct took place within the course and scope of such agency. The appellate court noted that the prior cases involved claims of “negligence” against the insurer and its agent, and that negligence is different from “negligent misrepresentation,” which is a form of deceit. In finding that the Bocks had stated a claim against Hansen for negligent misrepresentation, the appellate court noted that an “agent or employee is always liable for his or her own torts, whether the principal is liable or not, and in spite of the fact that the agent acts in accordance with the principal’s directions.”
The appellate court further held that while the Bocks had not alleged facts sufficient to state a claim for “intentional infliction of emotional distress” against Hansen, the trial court should have given the Bocks leave to amend to attempt to assert such a claim. According to the court, the Bocks might have been able to allege the type of extreme and outrageous conduct which is required for that cause of action.
Comment
California courts have consistently recognized that because agents and employees of insurance companies are not parties to the insurance contract, they cannot be liable for breach of contract or bad faith. However, as the above case illustrates, agents and employees of insurance companies can be liable on other theories, such as misrepresentation, invasion of privacy, intentional infliction of emotional distress, etc. In such event, they can be held personally liable for their tortious conduct, even though they are not parties to the insurance contract.
Having said this, keep in mind that the above Bockdecision is a pleading case in which the appellate court assumed the truth of the insureds’ allegations. Whether the insureds can actually prove their claims against the insurance adjuster is another matter.