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Click here for the full text of this decision FACTS:Jesse Pacheco, an insurance agent for Banner Life Insurance Co., met with Linda Cherry to discuss a life insurance policy for her and her husband, Thomas. Thomas filled out an application and had a medical exam, as required by the application, in November 1999. At the time, Thomas was 55 and an avid runner. Pacheco approved the application, and on Dec. 21, 1999, delivered the policy to Linda. Two weeks later, Thomas had a doctor examine what he thought was a boil on the side of his head. He had the “boil” for six weeks, but had been trying to treat it with over-the-counter medicine, to no avail. Another doctor surgically removed the “boil” at the end of January 2000. The “boil” turned out to be a cancerous growth spread from his kidneys and lungs. Thomas died in December of that year. Linda made a claim for benefits under the life insurance policy. Banner investigated the death, since it was a new policy, but eventually paid out the proceeds, because it lacked enough evidence to deny it. Banner then sued Pacheco, seeking to recover from him the amount paid in benefits to Linda. Banner asserted claims of breach of contract, breach of fiduciary duty, negligent misrepresentation and negligence. The insurer’s said Pacheco violated the terms of the agent/broker agreement between Banner and Pacheco by 1. not hand-delivering the life insurance policy to Thomas personally, and 2. not asking Thomas at the time of delivery whether there were any changes in his health. Banner also said Pacheco violated the terms of Thomas’ application for insurance which Pacheco also signed. Pacheco testified at trial that it was his understanding of paragraph 10 of the agent/broker agreement (addressing the delivery of policies) that he did not have to personally deliver the insurance policy to Thomas, nor did he believe that he had to personally ask about Thomas’ health. He mentioned that he would not have been able to see Thomas’ “boil” even if he had personally delivered the policy, and he speculated that Thomas would have said “no” if asked if there had been any change in his health between November and December 1999. A Banner claims analyst, William Fuchs, who investigated Linda’s claim after Thomas’ death, pointed out at trial that Thomas had been aware of the “boil” six weeks prior to his January 2000 doctor’s appointment, though Fuchs also acknowledged that Thomas wasn’t diagnosed with cancer until Jan. 25, 2000. In Fuchs’ opinion, though, if Pacheco had asked Thomas about recent health developments and Thomas had answered “no,” then Banner would have had a reason to rescind the policy. Fuchs acknowledged that it was Thomas, as the applicant, who had a duty under the application to notify Banner of any changes in his health Peter Marules, Banner’s insurance expert, testified that he did not think Pacheco adhered to the agent/broker agreement. Marules said that Pacheco had a duty to inquire into Thomas’ health prior to delivering the policy. He also said Thomas was obligated to advise Banner of any changes in his health between the time of application and delivery of the policy; failure to do so would be grounds for Banner to void the policy. Marules’ opinion was that a “boil” is change in health that should be reported. Pacheco’s insurance expert, Gary Beck, disagreed with Marules’ conclusion. He found that the agent/broker agreement did not mention personal delivery of a policy, merely delivery in general terms. He did not think the agreement required Pacheco to inquire into Thomas’ health. It was also his opinion that, when insurers want to know about changes in health between application and delivery of policy, they are asking about material changes, something life-threatening or something that will shorten one’s life expectancy. Beck opined that an agent’s inquiry into an applicant’s health can be as general as just looking at the person. Finally, Linda testified. She gave the time line of Thomas’ awareness of the “boil” to the time he died. She said he had not seen any other doctors about the “boil” prior to his Jan. 7 appointment. A jury returned a verdict for Pacheco, and a take-nothing judgment was entered against Banner. On appeal, Banner challenges the evidence supporting the jury’s answers to the breach of contract, breach of fiduciary duty and negligence questions. HOLDING:Affirmed. The court first considers the jury’s finding that Pacheco did not breach the contract. The court finds the plain language of both the agent/broker agreement and the insurance application does not require that the agent personally deliver the policy to the insured nor does it require the agent to inquire of the insured’s health. There was conflicting evidence given by the experts, and it was up to the jury to judge those witnesses’ credibility. The court next considers the jury’s finding that Pacheco did not breach his fiduciary duty to Banner. The evidence clearly establishes that Thomas was not diagnosed with cancer until the end of January 2000 and that Pacheco did not learn of Thomas’ diagnosis until the following month. There is no precedent requiring an insurance agent to make an independent inquiry into an insured’s health at the time of delivery. While the court agrees an agent has a fiduciary duty of good faith and fair dealing to his principal, in this case Pacheco simply did not know, and had no duty to determine, Thomas’ health status at the time the policy was delivered. “We decline to hold an agent breaches a duty to his principal by failing to report information of which the agent has no knowledge.” The court then considers the jury’s finding that Pacheco was not negligent. The court finds no case law supporting Banner’s theory that Pacheco had a duty to view Thomas prior to delivering the policy. In any case, Thomas appeared to be in good health at the time Linda received the policy. Even if the court assumes that Pacheco had a duty to view Thomas at the time of delivery, the evidence at trial revealed that “viewing” Thomas would not necessarily have disclosed the presence of the “boil” on his scalp. In addition, there was expert testimony that Banner could have voided the life insurance policy based upon Thomas’ own failure to advise Banner of the “boil.” OPINION:Anderson, J.; Anderson, Hudson and Frost, JJ.

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