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Law360 (March 23, 2021, 7:04 PM EDT ) A West Virginia judge shot down a bridal shop's suit alleging its insurance broker acted in bad faith by not getting it COVID-19-related loss coverage, finding that the store failed to show that the broker misrepresented the insurance policy.
U.S. District Judge Robert C. Chambers closed the entire suit Monday, ruling that Rosetree Boutique could not demonstrate any evidence of how AssuredPartners Capital deceived it and breached a fiduciary duty.
According to the suit, AssuredPartners helped the Ceredo, West Virginia-based bridal store obtain a policy that covers business interruption caused by a civil authority order from Sentinel Insurance Co. and Hartford Accident and Indemnity Co.
After the pandemic hit, Rosetree emailed the broker last March claiming lost sales. AssuredPartners then forwarded the store Hartford and Sentinel's response that the policy does not cover COVID-19-related losses. The insurers maintained that the store did not incur physical damage on its property, a precondition for coverage under the policy.
The bridal shop then sued Hartford, Sentinel and AssuredPartners last October. After the court dropped the carriers from the suit, AssuredPartners became the only defendant in the case. Rosetree has alleged bad faith, violation of the West Virginia Unfair Trade Practices Act and breach of fiduciary duty against the broker.
The shop has contended that AssuredPartners did not provide accurate information about its coverage and failed to help it get a policy that can specifically cover business closures caused by a virus such as COVID-19. Yet the broker has argued that the bridal shop cannot bring bad faith claims against it because there is no insurance contract between them.
On Monday, Judge Chambers said Rosetree's complaint did not sufficiently allege bad faith or unfair trade practice claims against the broker.
"Plaintiff alleges very few facts specific to AssuredPartners," the judge said.
Rosetree previously alleged the broker advocated the Hartford policy months before the pandemic and said the policy would cover losses from a disaster requiring the government to shut down their business.
According to the suit, the broker has "represented three different times that Rosetree Boutique would receive insurance proceeds from business loss resulting from the closure of its dress shop from COVID-19 precautions" but later changed course and told the store that those representations were a "mistake."
But Judge Chambers said Monday that the boutique could not point to any facts proving that the alleged conversation and misrepresentations took place.
"Even assuming that Defendant made a 'mistake,' as Plaintiffs allege, neither the tort of bad faith nor the UTPA penalize a person for making a simple mistake in good faith," he said. AssuredPartners did not commit the "unreasonable misconduct that is required to establish bad faith or deception," the judge added.
Representatives for the parties could not be immediately reached for comment.
The store is represented by Abraham J. Saad and Hoyt E. Glazer of Glazer Saad Anderson LC.
The broker is represented by Estelle K. McGrath of Marshall Dennehey Warner Coleman & Goggin PC.
The case is Rosetree Boutique Inc. v. AssuredPartners Capital Inc., case number 3:20-0705, in the U.S. District Court for the Southern District of West Virginia.
--Editing by Andrew Cohen.
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