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Brown & Brown of Tex., Inc. v. Omni Metals, Inc. - 317 S.W.3d 361 (Tex. App. 2010)

Rule:

Whether a duty to disclose exists is a question of law. A duty to disclose may arise in four situations: (1) when there is a fiduciary relationship; (2) when one voluntarily discloses information, the whole truth must be disclosed; (3) when one makes a representation, new information must be disclosed when that new information makes the earlier representation misleading or untrue; and (4) when one makes a partial disclosure and conveys a false impression.

Facts:

The insured processed steel into coils and temporarily stored the finished coils for the customer, appellee plaintiff Omni Metals, Inc. (“Omni”). The insured's warehouse burned down and Omni lost $ 2.6 million in steel. Appellant defendant insurer, Brown & Brown of Texas, Inc. (“Brown & Brown”) denied coverage on the ground that the insured’s "all risk" bailee policy was subject to an exclusion for goods stored at the warehouse for more than 60 days for which the insured received a storage fee. Omni brought an action against Brown & Brown. The trial court awarded damages to Omni.

Issue:

Did a duty to disclose exist on the part of the insurance agent?

Answer:

Yes

Conclusion:

The Court of Appeals of Texas found that the evidence was sufficient to show that the agency was Brown & Brown's local recording agent under Tex. Ins. Code Ann. art. 21.14, § 2 and that it had the actual authority to provide certificates of insurance to the insured and Omni and to make representations about the coverage. Further, the evidence was sufficient under Tex. Bus. & Com. Code Ann. § 17.45(9)to show that an insurance agent knew that his representations to Omni that the policy covered "all risks" was false and misleading and that he knew Omni would rely on the false information to satisfy its own and its secured lender's concerns that the steel be insured. After modifying the judgment to deduct $ 740,000 in attorney fees awarded to the customer from appellants, the Court affirmed the judgment as modified.

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