Background
Nicholas Galakatos sued Marsh entities that had brokered insurance for him since 2006. He alleged Marsh had agreed to advise him about insurance needed to protect his assets in the United States and Greece and to procure that coverage. Marsh had told him that identifying all property and liability exposures was important to allow it to advise him and eliminate potential coverage gaps.
In 2018, Galakatos’s boat collided with another boat in Greece, producing personal-injury and property-damage claims. Marsh had procured several policies, including AIG excess coverage, Bankers excess coverage, and a Groupama marine policy for the boat. AIG denied coverage because its excess policy had not been added onto the Groupama policy, whose personal-injury coverage was capped at €50,000 per person. Galakatos settled the underlying claims and sued Marsh for breach of contract, negligence, and breach of fiduciary duty.
The Court’s Holding
The First Circuit affirmed dismissal of all claims. Applying Massachusetts law to the contract claim, the court held that Marsh’s undated statement about the importance of disclosing exposures did not establish a definite contractual obligation to obtain $20 million in boat-related liability coverage. The complaint identified no specific promise Marsh made, when it was made, or its duration.
The negligence claim failed because the complaint did not allege that Galakatos made an intelligible request for the relevant insurance or that Marsh promised to procure it. The fiduciary-duty claim likewise failed: the pleaded facts did not establish special circumstances creating an expanded broker-client fiduciary relationship. Although Marsh had served Galakatos for more than a decade, the complaint did not allege particular complexity, frequent contact, payment for advice beyond brokerage services, or specific advice concerning the boat. The court also affirmed denial without prejudice of Galakatos’s motion to strike as moot because the challenged materials did not affect dismissal.
Key Takeaways
- A contract claim against an insurance broker must identify the specific contractual promise allegedly breached.
- A broker generally has no duty to procure coverage absent an intelligible request or a promise to obtain it.
- A longstanding brokerage relationship alone does not establish the special circumstances needed for a fiduciary duty.
Why It Matters
The decision underscores the pleading burden for claims based on an alleged failure to close insurance-coverage gaps. General statements that a broker will advise a client or seek to eliminate gaps do not, without more, establish a binding procurement obligation or a fiduciary relationship.