The Hawaii Federal District Court dismissed a purported third party beneficiary’s claim against the insured’s agent. United States Fire Ins. Co. v. Hawaiian Canoe Racing Ass’ns, 2019 U.S. Dist. LEXIS 65829 (D. Haw. April 17, 2019).
This was the third recent decision regarding a boating accident in which the underlying plaintiff was injured by a propeller when entering Mark Stevens’ boat during the Pailolo Challenge Outrigger Canoe Race. [prior posts here and here]. Hawaiian Canoe Racing Association (HCRA) was insured under U.S. Fire’s policy, with other participants in the race named as additional insureds. HCRA’s insurance agent, Servco Pacific Insurance, moved to dismiss Stevens’ third-party complaint. Stevens alleged that Servo “had a legally recognized duty to procure the appropriate insurance for the reasonably foreseeable scope of injuries that could be suffered during an open ocean canoe race . . .” Stevens asserted he would have been a third-party beneficiary of the appropriate insurance that Servco should have obtained for HCRA. Thus, Servco had independent liability to him.
The court noted that under Hawaii law, “[a]n insurance agent owes a duty to the insured to exercise reasonable care, skill and diligence in carrying out the agent’s duties in procuring insurance.” Quality Furniture, Inc. v. Hay, 61 Haw. 89, 93 (1970). Such a duty is owed to “the extent of the responsibilities that the agent had in rendering help and providing advice to the insured.” Macabio v. TIG Ins. Co., 87 Haw. 307, 318 (1998). The nature of the relationship between the agent and the insured had to be scrutinized.
Here, Stevens was not the insured who obtained the policy through Servco and there was no direct relationship between Servco and Stevens. Nor had Stevens adequately pled he was a third-party beneficiary. He alleged he would have been a third-party beneficiary if Servco had obtained a policy that was appropriate for HCRA. Consequently, there was no contract to examine. Further, Stevens did not allege what the terms of the hypothetical policy would have been. Therefore, the third-party complaint failed to plead sufficient factual allegations to support a reasonable inference that Stevens was a third-party beneficiary of any policy that Servo obtained, or could have obtained, on HCRA’s behalf. The third-party complaint therefore failed to state a claim upon which relief could be granted and was dismissed.