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An insurance broker for a church-funded day camp in Pennsylvania that owed $5.7 million beyond camp insurance policy limits to six sexual assault victims has prevailed on a motion for summary judgment, defeating the church and camp’s claim that it negligently misrepresented the upper limits of available sexual misconduct coverage. The broker in Methodist Home for Children v. Biddle & Co. Inc. also demonstrated that the plaintiffs could not support breach of contract or breach of fiduciary duty claims since no written contract existed between the parties and there was no disparity of expertise between them. The church and camp did, however, manage to keep alive their claim that the defendant negligently failed to obtain adequate sexual misconduct liability coverage. “Plaintiffs argue that defendant breached its duty by compromising the search for adequate insurance coverage because of its concern for earning commissions from those companies with which it then had relationships,” wrote Judge Albert W. Sheppard Jr. of the Commerce Case Management Program of the Philadelphia Court of Common Pleas, denying summary judgment. “Defendant disputes this and asserts that it made a good faith effort to obtain higher limits of sexual misconduct liability coverage without success. … This court believes that whether this broker acted negligently, as plaintiffs claim, or made a good faith effort to obtain insurance must be resolved by the finder of fact.” Turning to plaintiffs’ losing contentions, Sheppard found that to show misrepresentation, the plaintiffs had to do more than present expert testimony that higher term limits for sexual misconduct coverage did, in fact, exist. They also needed to demonstrate that the broker told them higher limits for the coverage were not available. “Not only do the plaintiffs fail to demonstrate when these alleged misrepresentations took place,” Sheppard wrote, “but when Charles Taylor, plaintiffs’ board member … was asked by counsel whether … the defendant’s broker made any representation one way or another as to whether other markets, other than the markets that she had access to, could provide higher coverage for sexual misconduct liability, Taylor’s answer was ‘She did not.’” Interestingly, the opinion states that after Biddle & Co.’s broker failed to secure higher limits, she told plaintiffs that a $250,000-per-occurrence, $500,000 aggregate limit was not available. According to Sheppard, an official for the plaintiffs then requested that the broker again attempt to obtain higher limits. Apparently, the broker attempted to do so by contacting carriers found in her marketeer guide as well as providers with whom the defendant had contacts, but was unable to do so. “In fact, the record reveals not only several unsuccessful attempts by [the broker] to obtain higher limits, but also her subsequent communication back to plaintiffs about her inability to obtain such higher limits,” Sheppard wrote. “Simply put, the record reflects that [the broker] obtained the coverage that she actually represented she would obtain, namely the $100,000/ $300,000-limit policy that the plaintiffs actually paid for. Thus her conduct will not support an action for misrepresentation.” The controversy in Methodist Home arose after the church and the day camp it funded, Bennett and Simpson Enrichment Services (BASES), purchased a policy for sexual misconduct liability coverage with limits of $100,000 per occurrence and $300,000 in the aggregate. Two years later, in 1997, several of the plaintiffs’ campers were sexually assaulted by a counselor-in-training. According to Sheppard’s opinion, six of the victims settled with the plaintiffs for $6 million, with a seventh suit pending. The plaintiffs owed substantially more than their policy limits. The court granted summary judgment on the plaintiffs’ claim that Biddle & Co. breached its contract to properly place the insurance coverage because there was no evidence on the record identifying the terms of the alleged contract. “It is well settled that, in order to determine the obligations of contracting parties, a reviewing court must find them from the language written within the four corners of the contract,” Sheppard wrote. “Here the motion for summary judgment as to plaintiffs’ breach of contract claim is granted because there is no evidence of a written contract between the parties.” And as to the breach of fiduciary duty claim, the judge found ample evidence indicating that there was no disparity of expertise between the plaintiffs and the defendant. “In fact,” he wrote, “deposition testimony demonstrates that in their dealings with other insurance brokers and the defendant, the plaintiffs created a de facto insurance subcommittee. This subcommittee consisted of, among others … plaintiffs’ board member with 44 years of experience in the insurance business, and [another official] with about 10 years experience in purchasing insurance for plaintiffs.” Sheppard said that because the church and camp were well-versed in the methods of obtaining insurance, it was disingenuous for them to argue that they were on anything but equal footing with Biddle & Co. Ira B. Silverstein of Silverstein & Bellin in Philadelphia represented the plaintiffs. William J. Schmidt of White & Williams served as counsel for Biddle & Co. Schmidt could not be reached before press time.

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