Broker Not Liable In Professional Liability Case

October 1, 2004

George V. Genzmer, III, Tina Varjian and Pamela J. Marantz successfully defended a professional liability case involving a real estate broker.

Plaintiff was sued by his ex-girlfriend in an underlying action for alleged conversion of monies while acting as her real estate agent. At that time, the plaintiff was employed by defendant, a real estate broker who was also named in the lawsuit. The ex-girlfriend alleged plaintiff was acting in the course and scope of his employment when he converted her monies. Shortly after the underlying action was filed, plaintiff called the broker, his previous employer, acknowledging the underlying lawsuit. The plaintiff stated that the lawsuit had nothing to do with the broker, but involved the personal and business relationship between plaintiff and his ex-girlfriend. During this call, the plaintiff asked when he was employed by the broker and specifically which insurance carrier insured them. The broker stated that the plaintiff had been employed from 1991-1993 and that the insurance carrier at the time plaintiff was employed was Travelers. The insurance company has since left the state and there was no insurance coverage for plaintiff. The broker's current insurance carrier, Fireman's Fund, was defending the broker in the underlying action.

However, Fireman's Fund denied coverage to plaintiff in the underlying action. The plaintiff filed the present action against Fireman's Fund Insurance Company and the broker/client alleging causes of action for conspiracy to defraud, and negligent and intentional misrepresentation. The defense filed motions for summary judgment on behalf of Fireman's Fund Insurance Company and the broker. The Court's tentative was to grant Fireman's Fund Insurance Company's motion based upon finding that the plaintiff was not acting in the course and scope of his employment when he allegedly converted the monies and therefore there was no coverage under the policy terms. After oral argument by both sides the Court granted the broker's motion for summary judgment. Similarly, there was no negligent misrepresentation since plaintiff was not employed by the broker at the time of the subject telephone call and therefore no duty was owed to plaintiff to disclose any information to plaintiff including Fireman's Fund's decision to defend the broker in the underlying lawsuit.