CO INC v. RUSSELL GLEASON VAN ROOY INC (1978)

Defendants Russell, Gleason & Van Rooy, Inc. (“RGV”), Thomas O'Loughlin (“O'Loughlin”), and W. C. Van Rooy (“Van Rooy”) appeal from a judgment holding them liable for negligently handling the insurance account of plaintiff G.T.S. Co., Inc. (“G.T.S.”).

FACTS

Plaintiff G.T.S. is a Long Beach, California, corporation engaged in the business of constructing public works projects. Prior to its incorporation in 1970, the business of G.T.S. was conducted by its president, Gerald T. Sullivan, as a sole proprietorship. When Sullivan began his business in 1967, he asked defendant O'Loughlin then with the insurance agency of Walker & Co., to handle all of his bonding and insurance requirements. Thereafter, and continuously until the middle of 1973, O'Loughlin handled all such matters for Sullivan and G.T.S. In 1970, O'Loughlin became associated with defendant RGV, a Glendale, California, insurance agency.

RGV operated as both an insurance broker and an insurance agent. One of the several insurance companies from whom RGV was authorized to act as agent was The Hartford Fire Insurance Company (hereinafter “Hartford”); a “Notice of Appointment of Agent” indicating this relationship was on file with the insurance commissioner pursuant to Insurance Code section 1704. Sullivan was advised by O'Loughlin that RGV had an agency agreement with Hartford and he was aware of the fact that RGV employees could countersign insurance policies as agents for Hartford. Sullivan also knew, however, that RGV acted in an agency capacity for other insurance companies as well and his relationship with O'Loughlin and RGV did not depend upon their obtaining insurance from any particular company. But all else being equal, Sullivan preferred to be covered by Hartford.

Through O'Loughlin, RGV procured for G.T.S. a general and automobile liability policy, a workmen's compensation policy, and an inland-marine policy, all from Hartford or one of its affiliated companies; RGV also obtained for G.T.S. an umbrella policy from the Chicago Insurance Company.

The standard practice followed by Sullivan when he wanted to bid on a public construction project was to first give O'Loughlin certain information such as the name of the project, the type of work, estimated total contract price, and time of completion which would then enable O'Loughlin to obtain an appropriate “bid bond.” If G.T.S. was the successful bidder, O'Loughlin would then obtain any required performance or labor and material bonds, as well as arrange for any insurance coverage called for by the contract. Sullivan was not an expert in insurance matters and therefore left it to O'Loughlin to obtain “complete coverage against all losses.” O'Loughlin was kept informed of the progress of various jobs which G.T.S. had under contract through periodic financial and status reports, as well as through weekly meetings with Sullivan.

One of the types of insurance generally called for by the construction contracts was builder's risk coverage, also called course of construction coverage, which insured the project against fire and other loss until it was completed and accepted by the owners. According to Sullivan, O'Loughlin advised him from the very first time that builder's risk insurance was required on a job, and on other occasions, that, in order to take advantage of the best premium rates, policies of that type should be obtained for periods of one year and then cancelled if the particular project was completed in less time than that. At trial, O'Loughlin and defendant Van Rooy, a principal of RGV, denied that it was RGV's practice to write builder's risk policies for any particular term.

With respect to builder's risk policies, RGV had a “tickler” system of renewal to insure that coverage did not lapse before a project was completed. Under the system, a copy of the invoice for each policy would be placed into an expiration file and then pulled approximately 60 days before the policy's expiration date and referred to the agent responsible for the policy. About two weeks before expiration, the insured would be contacted to determine whether or not the particular job was completed, unless the responsible agent was already aware of the fact. If the job was finished, no further action was taken; if the job was uncompleted, the policy would be renewed.

RGV obtained three builder's risk policies for G.T.S. The first of these was for an Arizona construction project known as the Chinle School job, which was to commence on February 22, 1972 and be completed within six months. Gordon Schmidt, an employee of RGV who handled the mechanics of the issuance and renewal of policies, obtained a one-year builder's risk policy for the project. In the spring of 1973, RGV procured builder's risk insurance for G.T.S. to cover a project known as the Hollywood Bowl Tunnel Entrance, which job was to begin on March 26, 1973 and end on June 30, 1973. Schmidt initially attempted to obtain a one-year policy from Hartford, but Hartford declined the application. Schmidt then applied to the St. Paul Fire and Marine Insurance Company for a one-year policy; at the request of St. Paul, however, and with the permission of someone at G.T.S., Schmidt eventually agreed to a three-month policy from that company.

The third builder's risk policy obtained by RGV for G.T.S., and the subject matter of the instant litigation, was intended to supply coverage for another Arizona construction project, known as the Scottsdale-Vista del Camino job. The project, a one-story building for the City of Scottsdale, had an inception date of December 18, 1972 and was to be completed within 210 days. As was the practice, G.T.S. furnished O'Loughlin with the information necessary to obtain the appropriate bonds and insurance. O'Loughlin, however, never submitted any information to RGV's Schmidt concerning the project.

But on December 12, 1972, Schmidt received a phone call from Skip Johnson, an employee of G.T.S.‘s Phoenix office, who informed him of the need for builder's risk insurance on the Scottsdale job. Schmidt's notes of the conversation reflect that the project was to be of six month's duration;¹ Johnson did not request any particular policy period, however. Following the phone call, Schmidt, on his own initiative, applied for a builder's risk policy from Hartford, requesting coverage from December 18, 1972 to June 18, 1973. Schmidt intended at that time to renew the policy if the project was not completed within six months.

The policy which was eventually issued by Hartford to cover the Scottsdale job described the period of coverage as follows:

When Schmidt reviewed the policy shortly after RGV received a copy on January 22, 1973, he noted that the figure “1” appeared over the line for “years,” but felt that nothing was wrong since he knew it to be the practice of Hartford to so designate a policy whenever it was issued for a period of one year or less. All invoices for the policy indicated a coverage period of December 18, 1972 to June 18, 1973.

Copies of the builder's risk policy for the Scottsdale job were sent to both Sullivan and Skip Johnson, but neither examined it. Although O'Loughlin knew that Schmidt had received a call from Johnson concerning the need for coverage on the Scottsdale project, he disclaimed any knowledge as to the job period or the term of the policy which was eventually issued.

Schmidt received a copy of the invoice for the Scottsdale policy from the renewal file approximately 60 days prior to the policy's expiration date of June 18, 1973; he then diaried the invoice so that he would remember to determine approximately two weeks before that date whether the project had been completed. It appears that O'Loughlin was never informed that the policy was nearing expiration.

On May 25, 1973, the board of directors of G.T.S. decided to accept the bonding and insurance program presented by another agent, Mr. Friis, and so informed RGV by letter dated that same day. Thereafter, Mr. Friis began the process of replacing some of the policies which had been procured for G.T.S. by RGV.

On June 5 or June 6, 1973, defendant Van Rooy met with Sullivan in an attempt to convince him to leave at least the insurance portion of the program with RGV. Sullivan stated at the meeting that Mr. Friis had presented a very good insurance program and that G.T.S. had decided to go with him on it. Sullivan also instructed Van Rooy that existing policies were to run to expiration date, except for those which RGV was specifically told to cancel. At a second meeting held five or six days later, which this time included O'Loughlin, essentially the same discussion took place. At no time during the June meetings, however, was the subject of builder's risk policies discussed, and neither Sullivan, O'Loughlin, or Van Rooy was then aware that the policy on the Scottsdale project was to expire on June 18.

Following the first meeting with Sullivan, Van Rooy instructed Schmidt not to renew any G.T.S. policies. Schmidt thereupon wrote “Do not renew” on the renewal invoice for the Scottsdale builder's risk policy and no further action was taken on it.

On August 14, 1973, when the Scottsdale project was 95 percent completed, a fire damaged the building. When a G.T.S. employee called RGV's Schmidt to inform him of the fire, she was told that the builder's risk policy had expired on June 18. On August 16, 1973, Hartford informed G.T.S.‘s Johnson that there was no coverage for the loss.

G.T.S. and Sullivan² thereafter instituted the present action against Hartford and defendants RGV, O'Loughlin and Van Rooy, alleging breach of contract and negligence. As originally filed, the action was not restricted to the Scottsdale fire loss, but included a series of insurance claims involving Hartford insurance policies. During the course of trial, however, G.T.S. settled all claims against Hartford, reserving the right to proceed against the other defendants on the theory that they were negligent in either initially procuring a six-month builder's risk policy for the Scottsdale job or in thereafter failing to renew that policy.

The trial was by jury and was bifurcated on the issues of liability and damages. At the conclusion of the liability phase, the jury returned a verdict against the defendants, apportioning their liability at 98 percent and that of G.T.S. at 2 percent on a comparative fault basis. It was thereafter stipulated between the parties that G.T.S.‘s damages were $100,000, excluding any contribution made by Hartford in the settlement, and judgment was so entered with no prejudice to the taking of the present appeal on the issue of liability.

CONTENTIONS

During the course of trial, defendants raised various defenses and alleged errors of law by way of motions for nonsuit, directed verdict, and mistrial, which defenses and alleged errors were rejected by the court. The following contentions made on this appeal are essentially the same as those raised in the proceedings below:

(1) G.T.S.‘s release of Hartford from the action following the settlement operated as a release of defendants as a matter of law;

(2) Defendants were not the proximate cause of any injury to G.T.S. since insurance coverage for the loss was provided on a theory of estoppel;

(3) Defendants were not the proximate cause of any injury to G.T.S. since insurance coverage for the loss was provided by the ambiguous language of the policy;

(4) G.T.S. failed to establish that defendants breached any professional standard of care since no expert testimony was presented on that standard;

(5) The jury was incorrectly instructed;

(6) The trial court engaged in misconduct.

DISCUSSION

As will be developed in the discussion which follows, we conclude that the viability of defendants' first two contentions requires a showing that they were, at all pertinent times, acting as agents for the insurer only, a factual determination which was decided adversely to the defendants by the triers of fact. We further conclude that the language of the policy did not provide coverage as a matter of law and reject defendants' contention that expert testimony was required to establish the appropriate standard of care. Lastly, we find no prejudicial error in the instructions to the jury or in the trial

court's conduct of the proceedings and, therefore, affirm the judgment. The Existence of a Dual Agency Relationship Here Permitted G.T.S. to Proceed Against Defendants Despite Hartford's Release or the Claim that Coverage Was Afforded on an Estoppel Theory

In general, an insurance agent or broker who undertakes to effect insurance for another in return for compensation, and thereafter negligently fails to do so, will be liable for any resulting damages. (43 Am.Jur.2d, Insurance, s 174, pp. 230-231; see Greenfield v. Insurance Inc. (1971) 19 Cal.App.3d 803, 810, 97 Cal.Rptr. 164; Mid-Century Ins. Co. v. Hutsel (1970) 10 Cal.App.3d 1065, 1068, 89 Cal.Rptr. 421; see generally, Annot. (1976) 72 A.L.R. 747; Annot. (1975) 64 A.L.R.3d 398, 410-413.) The duty owed to the insured under such circumstances by the agent or broker has been described as the duty “to exercise good faith and reasonable diligence to procure insurance on the best terms he can obtain, and any negligence or other breach of duty on his part which defeats the insurance he procures will render him liable for the resulting loss. In this regard, the agent must faithfully carry out the instructions given him by his principal, his duty being not merely to obtain a policy, but to obtain one which conforms to the application.” (Fns. omitted.) (43 Am.Jur.2d, Insurance, s 176, p. 232; see Colpe Investment Co. v. Seeley & Co. (1933) 132 Cal.App. 16, 19, 22 P.2d 35; 3 Couch on Insurance (2d ed. 1960) s 25:37, pp. 335-336.)

By their first two contentions, defendants seek avoidance of the aforementioned rule on the basis of their agency relationship with Hartford. The seminal point of these contentions may be seen in the well established legal maxim that an agent who negotiates a contract for a disclosed principal does not assume personal liability thereon absent an express agreement to the contrary. (Lippert v. Bailey (1966) 241 Cal.App.2d 376, 382, 50 Cal.Rptr. 478; Cline v. Atwood (1966) 241 Cal.App.2d 108, 113, 50 Cal.Rptr. 233; 16 Appleman, Insurance Law and Practice (rev.ed.1968) s 8832, pp. 459-460.)

The arguments associated with defendants' first two contentions may be briefly summarized as follows: First, defendants assumed no personal liability on the Scottsdale policy since they were acting as authorized agents for Hartford in securing the policy; the release of Hartford by G.T.S. therefore necessarily acted as a release of defendants. Second, Hartford was estopped to deny coverage for the Scottsdale project since defendants had acted as Hartford's agents in representing to G.T.S. that the project would be fully covered. Given that there was insurance coverage, the negligence of defendants could not have been the proximate cause of any injury to G.T.S.; the fact that G.T.S. chose to settle with Hartford for an amount less than that provided by the coverage could not have changed this result.

The resolution of the issues raised by these two arguments requires some discussion of the relationship between insurance brokers and agents and the functions they serve.

An “insurance broker” is defined by Insurance Code section 1623 as “a person who, for compensation and on behalf of another person, transacts insurance . . . with, but not on behalf of, an insurer.” (See also Ins.Code, s 33.) An “insurance agent” is defined in section 1621 of that code as “a person authorized by and on behalf of an insurer to transact insurance. . . .” (See also Ins.Code, s 31.) The basic distinction is that an insurance broker acts as an intermediary between the insured and the insurer, but is not authorized to and may not accept risks on behalf of the companies from which the insurance is procured, whereas an insurance agent acts with binding authority to accept risks for the insurer. (3 Couch on Insurance, Supra, s 25:92, p. 402; see Marsh & McLennan of Cal., Inc. v. City of Los Angeles (1976) 62 Cal.App.3d 108, 118, 132 Cal.Rptr. 796.)

The law recognizes, however, the possibility of a dual relationship in which the same person acts in a brokerage capacity on behalf of the insured for some purposes and in an agency capacity on behalf of the insurer for other purposes. (3 Couch on Insurance, Supra, at p. 403; 39 Cal.Jur.3d, Insurance Companies, s 145, p. 142; see Walter J. Warren Ins. Agency v. Surpur Timber Co. (1967) 250 Cal.App.2d 99, 104, 58 Cal.Rptr. 143; Maloney v. Rhode Island Ins. Co. (1953) 115 Cal.App.2d 238, 244-245, 251 P.2d 1027.) As was stated in Fraser-Yamor Agency v. County of Del Norte (1977) 68 Cal.App.3d 201, 213, 137 Cal.Rptr. 118, 126: “Although an insurance broker is ordinarily the agent of the insured and not of the insurer (citations), he may become the agent of the insurer as well as for the insured. (Citation.) P In the present case, in view of the manner in which the insurance business of the county was handled it appears that the agency acted as both the agent of the county (i. e., as an insurance broker) and as an agent of the respective insurance companies (i. e., as an insurance agent).” Further, it is generally held that the question of whether an insurance agency acts as the agent of the insured or of the insurer is a question of fact. (3 Couch on Insurance, Supra, s 25:05, p. 420.)

It was the position of G.T.S. at trial that defendants had acted in a brokerage capacity, and thus as agents of G.T.S., in procuring coverage for the Scottsdale project given that they had assumed the responsibility of keeping G.T.S. fully insured without any binding instructions as to which insurance companies to deal with. The determination of the issue was submitted to the jury as the triers of fact, and, impliedly, resolved against the defendants. That determination, we have concluded, renders defendants' first two contentions meritless.

The assertion that the release of Hartford operated as a release of the defendants as a matter of law is based on the case of Lippert v. Bailey, supra, 241 Cal.App.2d 376, 50 Cal.Rptr. 478. In Lippert, the plaintiffs sued both the insurer and two insurance agents to establish coverage for a fire loss. The agents had been authorized to act for the insurer. Prior to trial, the plaintiffs settled with the insurer, purporting to reserve the right to proceed against the agents. In holding that by settling with the insurer the plaintiffs had also extinguished any right to proceed against the agents, the court stated:

“While an insurance agent may be personally liable to the insured for damages which are the result of the agent's negligent failure to insure property as contracted, the agent's personal liability is dependent upon the extent of the disclosure of his agency. . . .

“The action against defendants, Bailey and Marcom, is not maintainable as it appears from the plaintiffs' complaint that the defendants, Bailey and Marcom, were known to the plaintiffs to be the agents of the codefendant, Fireman's Fund. The complaint further discloses that when the policy, which is the subject of this action, was issued on January 1, 1959, the plaintiffs knew it would be issued by Fireman's Fund and contracted with that end in view.”

(Id. at pp. 382-383, 50 Cal.Rptr. pp. 481-482.) The court further indicated, however, that a different result would have occurred had the plaintiffs been able to show that the defendants had also acted as their agents in procuring adequate insurance coverage for their property over an extended period, noting that “the issue pertaining to the existence of a dual agency was a question to be determined by the trier of fact.” (Id. at p. 383, 50 Cal.Rptr. at p. 482; see also Cline v. Atwood, supra, 241 Cal.App.2d 108, 112, 50 Cal.Rptr. 233, 235, where the court, in rejecting a claim that an agent had obligated himself as an insurer by acting for a partially disclosed principal, stated that it was significant that no argument had been made “that there was any breach of an obligation to procure insurance coverage.”)

Here, the dual agency issue was submitted to the trier of fact and decided adversely to the defendants: the jury impliedly found that defendants had acted as agents for G.T.S. in promising to procure complete coverage for the Scottsdale project and, therefore, had incurred direct liability to G.T.S. by their negligent failure to do so. Further, while the court in Lippert noted that the plaintiffs therein had contracted with the expectation of being covered by a particular insurance company (Lippert v. Bailey, supra, 241 Cal.App.2d at p. 383, 50 Cal.Rptr. 478), the evidence in the present case disclosed that G.T.S. had relied on defendants' knowledge and skill to select the appropriate coverage, without restrictions as to which company to place the insurance with.

The existence of a dual agency in this case also defeats defendants' contention that no action could be maintained against them because Hartford was estopped to deny G.T.S. coverage on the Scottsdale project. The jury could have found, as it apparently did, that no coverage by estoppel arose since defendants, while acting as agents for Hartford insofar as the actual execution of the Scottsdale six-month policy was concerned, had acted as the agents of G.T.S. in undertaking the responsibility of keeping the Scottsdale project fully insured. (See Conestoga Chem. Corp. v. F. H. Simonton, Inc. (Del.1970) 269 A.2d 237, 239; Gay v. Lavina State Bank (1921) 61 Mont. 449, 202 P. 753; Arley v. Chaney (1972) 262 Or. 496, 496 P.2d 202, 204-205; see generally, Annot., Supra, 64 A.L.R.3d 398, 444-449.)³

Before leaving this section, however, we must consider the impact of Insurance Code section 1731, which defendants maintain mandates the conclusion that they were acting solely as the agents of Hartford in procuring coverage for the Scottsdale project.⁴ That section provides as follows:

“If a person be licensed to act as an insurance broker and as an insurance agent, he shall be deemed to be acting as an insurance agent in the transaction of insurance placed with those insurers for whom a notice of appointment has been filed with the Insurance Commissioner in accordance with Section 1704 and is then in force.”

It appears that Insurance Code section 1731 has not heretofore been construed by the courts of this state, despite the fact that it was enacted in 1959. In Jonathan Woodner Co. v. Aetna Ins. Co. (1971) 143 U.S.App.D.C. 32, 36-37, 442 F.2d 754, 758-759, however, the federal circuit court considered a similar District of Columbia statute⁵ and found that it did not exclude the possibility of a dual agency. As stated by the court: “If Congress had wished to avoid this popular concept, it could easily have created the statute to read that any policy-writing agent shall be considered the agent of the company Exclusively.” (Id. 143 U.S.App.D.C. at p. 36, 442 F.2d at p. 758; italics in original.)

We conclude that Insurance Code section 1731 likewise does not preclude the possibility of a dual agency, even when an agent places insurance with companies for whom a notice of appointment has been filed. Section 1731 serves the obvious protective function of preventing an insurer from denying an insurance obligation through the claim that a broker-agent for whom a notice of appointment has been filed was acting solely in his or her brokerage capacity in procuring a policy from the insurer. Thus, in the case at bench, Hartford could not have relied on defendants' dual role as broker-agents to deny liability on the six-month Scottsdale policy which it issued had the loss occurred during the policy period. Section 1731 does not, however, compel the conclusion that defendants' status as appointed agents for Hartford obligated Hartford to provide coverage beyond the term of the policy. Had the Legislature intended to eliminate the well established concept of dual agency by the enactment of section 1731, it would have done so by more explicit language.

Coverage Was Not Provided By The Language of the Policy

One of the most settled principles of law is that ambiguous terms of an insurance policy will be construed against the insurer. (Williams v. American Cas. Co. (1971) 6 Cal.3d 266, 275, 98 Cal.Rptr. 814, 491 P.2d 398; Gray v. Zurich Ins. Co. (1966) 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168; Otter v. General Ins. Co. (1973) 34 Cal.App.3d 940, 949, 109 Cal.Rptr. 831.) Relying on this rule, defendants contend that the uncertainty created by the presence of the figure “1” over the line for “Years” in the portion of the Scottsdale policy describing the policy's term must be construed so as to extend the coverage afforded by that policy beyond its stated expiration date of “06 18 73.” As thus interpreted, defendants argue, the policy would have covered the Scottsdale fire loss and, consequently, relieved defendants from any liability for failure to obtain proper insurance, G.T.S.‘s settlement with Hartford notwithstanding.

When the issue of the proper interpretation of the policy period was raised below, the trial court, relying on the case of Epps v. Old Republic Ins. Co. (1966) 113 Ga.App. 136, 147 S.E.2d 513, ruled that the insertion of the figure “1” over the years' line was a typographical error and that the term of the policy was therefore only six months. In Epps, the sole question presented was whether or not coverage existed under the policy in question as of June 23, 1964, the date of a fire. On the face of the policy, the inception date was stated to be “5/3/63” and the expiration date “5/3/64.” On a line above the word “Years,” the figure “1” appeared, but with the figure “3” typed beneath it. The insured contended that this created an ambiguity as to the term of the policy which should be construed most strongly against the insurer so as to result in three years' coverage. In rejecting this argument, the Georgia court stated: “This contention overlooks the other controlling provisions and terms of the policy. While the word ‘Years' with a figure above it may be ambiguous itself, and when this word has typed above it a ‘1’ over a ‘3’, this may compound the ambiguity, this creates an ambiguity only as to this term; however, this ambiguity is dissolved when other controlling provisions of the policy, about which there is no ambiguity, are referred to, that is, that only one years' premium was paid, the express expiration date, . . . and the insuring clause, which, in our opinion, makes the expiration date shown on the face of the policy the controlling date in the absence of a renewal endorsement.” (Id. 147 S.E.2d at p. 514; see also Wax v. American Bankers Ins. Co. of Florida (La.App.1966) 190 So.2d 473; Evans v. Glenns Falls Ins. Co. (1911) 38 Utah 461, 113 P. 1019.)

While we are not bound by the trial court's interpretation of the Scottsdale policy (Williams v. American Cas. Co., supra, 6 Cal.3d 271, 98 Cal.Rptr. 814, 491 P.2d 398; Silva & Hill Constr. Co. v. Employers Mut. Liab. Ins. Co. (1971) 19 Cal.App.3d 914, 921, 97 Cal.Rptr. 498), we conclude that its determination, if not its reasoning, is adequately supported by pertinent California authority.

To invoke the rule that ambiguities in a policy are to be resolved against the insurer, it appears that the preferred construction must be “ semantically permissible.” (See State Farm Mut. Auto Ins. Co. v. Jacober (1973) 10 Cal.3d 193, 203, 110 Cal.Rptr. 1, 514 P.2d 953; Crane v. State Farm Fire & Cas. Co. (1971) 5 Cal.3d 112, 115, 95 Cal.Rptr. 513, 485 P.2d 1129.) The rule thus applies when policy provisions “are susceptible to alternative readings . . . .” (Paramount Properties Co. v. Transamerica Title Ins. Co. (1970) 1 Cal.3d 562, 569, 83 Cal.Rptr. 394, 463 P.2d 746.) Here, the only semantically permissible construction of the expiration provision was that offered by RGV's Schmidt, namely, that the figure “1” meant that the policy term was one year Or less. This in fact was the only extrinsic evidence offered as to the meaning of the policy language. To adopt the construction that the policy afforded coverage for one year would be in clear conflict with the stated inception and expiration dates of “12 18 72” and “06 18 73,” respectively.

Moreover, it cannot be said that one year's coverage was what the insured under the Scottsdale policy “would reasonably expect.” (Gray v. Zurich Ins. Co., supra, 65 Cal.2d 263, 270, 54 Cal.Rptr. 104, 419 P.2d 168; see Otter v. General Ins. Co., supra, 34 Cal.App.3d 940, 950, 109 Cal.Rptr. 831.) The policy in question was specifically ordered as a six-month policy, all invoices pertaining to it designated an effective date of 12-18-72 to 6-18-73, and it appears that only a six-month's premium was paid. Further, there was no testimony that anyone who reviewed the policy ever considered it to be for a period of longer than six months. As the policy clearly stated its expiration date to be June 18, 1973, we cannot conclude that it provided any coverage beyond that date.⁶

Expert Testimony Was Not Required

We turn now to defendant's contention that G.T.S. failed to carry its burden of proof in that there was no expert testimony offered on the standard of professional care to be exercised by insurance agents or brokers under facts similar to those presented here. Defendants argue that such expert testimony was required to establish that they breached a legal duty owed to G.T.S., a necessary element of actionable negligence (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 594, 83 Cal.Rptr. 418, 463 P.2d 770). We disagree.

It appears that the question of whether the standard of care to be exercised by an insurance broker or agent must, in all cases, be established by expert testimony has never been squarely considered by the courts of this state. One leading commentator on insurance law, however, has stated that “a principal, in an action for the negligent failure to obtain insurance, is not required to prove a standard of professional care with respect to the establishment of the broker's duty.” (16 Appleman, Insurance Law and Practice, Supra, s 8841, p. 521, fn. omitted.) Other courts which have considered this issue have reached the same conclusion. (See Consolidated Sun Ray, Inc. v. Lea (3d Cir. 1968) 401 F.2d 650, 658; Lowitt v. Pearsall Chem. Corp. of Maryland (1966) 242 Md. 245, 219 A.2d 67, 73-74.)

As a general proposition, the law in California is that “the standard of care applicable to a given profession must be determined from the testimony of experts Unless the conduct involved is within the common knowledge of laymen.” (Italics in original.) (Allied Properties v. John A. Blume & Associates (1972) 25 Cal.App.3d 848, 858, 102 Cal.Rptr. 259, 265; see Cobbs v. Grant (1972) 8 Cal.3d 229, 236, 104 Cal.Rptr. 505, 502 P.2d 1 (physicians' standard of care); Bardessono v. Michels (1970) 3 Cal.3d 780, 789-790, 91 Cal.Rptr. 760, 478 P.2d 480 (same); Wright v. Williams (1975) 47 Cal.App.3d 802, 810, 121 Cal.Rptr. 194 (attorneys' standard of care). In fact, Evidence Code section 801, subdivision (a), limits expert opinion testimony to that which is “(r)elated to a subject that is sufficiently beyond common experience that the opinion of an expert would assist the trier of fact . . ..” (See Witkin, Cal. Evidence (2d ed. 1966) The Opinion Rule, s 408, pp. 366-367.)

In the case at bench, there were no questions concerning proper premium rates, the availability of specialized types of policies, or similar, technical areas of insurance law. Rather, the issue presented to the jury was simply whether defendants had exercised due care in fulfilling their assumed obligation to keep G.T.S.‘s construction projects insured pursuant to contract requirements, a subject which we conclude was not beyond the understanding of the average person. No expert testimony was consequently required.⁷

The Jury Was Adequately Instructed

Contrary to defendants' assertions, we have found no error in the jury instructions such as would justify reversal. “A judgment will not be reversed for errors in jury instructions unless it appears reasonably probable that, absent the error, the jury would have rendered a verdict more favorable to the complaining party.” (Jarchow v. Transamerica Title Ins. Co. (1975) 48 Cal.App.3d 917, 946-947, 122 Cal.Rptr. 470, 491.)

Defendants initially contend that it was error to instruct the jury that negligence would be established if they determined that RGV had “breached its duty or was negligent in the performance of its duty” to obtain proper coverage for the Scottsdale project, and that “the failure of RGV to either obtain such insurance coverage for an adequate period of time or in the alternative, to obtain a renewal of said coverage was the proximate cause of damage to plaintiff.” Defendants argue that the use of the phrase “breached its duty or was negligent” was misleading since it permitted the jurors to hold defendants liable for a breach of duty which did not amount to negligence; they assert that the second part of the quoted language was argumentative in that it assumes that G.T.S.‘s lack of insurance coverage was the responsibility of RGV. The criticized language, however, was part of a much larger instruction on the parties' burden of proof which correctly instructed the jurors that G.T.S., to establish its claim, would have to prove: (1) that RGV was acting as the agent of G.T.S. in requesting insurance coverage for the Scottsdale project; (2) that RGV agreed to obtain such coverage as would protect G.T.S. until the project's completion; (3) that RGV failed to obtain such coverage; (4) that such failure was due to RGV's negligence or breach of duty as an agent for G.T.S., and (5) that such failure was the proximate cause of injury to G.T.S. Further, the duty of an insurance agent or broker to a customer was adequately defined for the jury in an instruction requested by defendants. “When the instructions, considered as a whole, state the law fairly and clearly, they are unobjectionable even though, by selecting isolated passages from single instructions, they may in some respects be subject to criticism.” (Valdez v. J. D. Diffenbaugh Co. (1975) 51 Cal.App.3d 494, 511, 124 Cal.Rptr. 467, 478; see also Yecny v. Eclipse Fuel Engineering Co. (1962) 210 Cal.App.2d 192, 199, 26 Cal.Rptr. 402.)

We likewise find no prejudicial error in the language of several instructions which stated that defendants would have to show that “RGV was acting only as the agent of Hartford” in order to escape liability by virtue of G.T.S.‘s settlement with the insurer. Since the jurors had been previously instructed that the only remaining issue in the case was the question of RGV's negligence in procuring or failing to renew the Scottsdale builder's risk policy, it is not reasonable to conclude, as defendants assert, that the jurors would have improperly considered other transactions in determining whether defendants had acted solely as agents for Hartford. We further find no error in the court's refusal to instruct the jury that defendants had, at all relevant times, acted as agents of Hartford since, as defendants admit, such instruction would have amounted to a directed verdict.

Defendants' requested special instruction on the scope of authority of an agent was adequately covered by another instruction and, thus, was properly refused. (Jarchow v. Transamerica Title Ins. Co., supra, 48 Cal.App.3d 917, 947, 122 Cal.Rptr. 470.) While we agree with defendants' assertion that the giving of an instruction concerning the fiduciary obligations of an agent was improper as not substantially related to the issues in the case, we cannot conclude that the instruction was likely to mislead the jury or that a different result would have occurred had the instruction not been given. (See Harpst v. Kirkpatrick (1972) 26 Cal.App.3d 482, 487, 102 Cal.Rptr. 621.)

The remainder of defendants' allegations of error pertaining to the trial court's giving or refusing of proffered instructions are rooted in their contentions which have been previously rejected in other sections of this opinion, and thus merit no discussion.

The Court Did Not Commit Prejudicial Misconduct

Defendants' allegations of trial court require little comment. The court's statement that “it takes a Philadelphia lawyer” to understand all the terms of an insurance policy was an entirely offhand remark made in jest. When the possible prejudicial impact of the statement was brought to the court's attention, it admonished the jurors against drawing any conclusions based on the court's statements. The jury was later also formally instructed in that regard. The court's statement suggesting that Sullivan had been assured he was covered for all risks, which was made in response to an objection of defense counsel,⁸ was, like the “Philadelphia lawyer” comment, an entirely offhand remark not likely to have influenced the jury's decision. Lastly, we find no error in the court's handling of a defense motion for mistrial made near the conclusion of the proceedings.

The judgment is affirmed.

FOOTNOTES

1.  At trial, Johnson testified that although he could not recall the telephone conversation, he did not believe he could have told Schmidt it was a six-month job when he knew that the contract period was 210 days.

2.  Sullivan was dismissed as an individual plaintiff during the course of trial.

3.  The cases cited by defendants do not compel a different conclusion. While the court in Home Indemnity Co. v. Mission Ins. Co. (1967) 251 Cal.App.2d 942, 60 Cal.Rptr. 544, did hold that the defendant insurance agent could not be held liable for failing to secure the insurance requested since the insurer was estopped to deny coverage (Id. at p. 967, 60 Cal.Rptr. 544), it does not appear that the issue of a dual agency was raised. In Beach v. United States Fid. & Guar. Co. (1962) 205 Cal.App.2d 409, 23 Cal.Rptr. 73, the appellate court likewise did not consider the dual agency question since the insured's assignees there chose not to appeal the trial court's determination that there was insurance coverage on an estoppel theory and that the insured therefore had suffered no injury from the negligence of his insurance agents. (Id. at p. 410, 23 Cal.Rptr. 73.) The dual agency issue also appears to have escaped consideration in Modica v. Hartford Acc. & Indem. Co. (1965) 236 Cal.App.2d 588, 46 Cal.Rptr. 158, where, in fact, the court did not even discuss whether its determination that the subject insurance policy should be reformed to afford coverage would operate to relieve the defendant insurance agent of liability. Other cases cited by defendants have been found similarly inapposite.

4.  In supplemental briefing submitted at the time of oral argument at the request of this court, G.T.S. contended for the first time that Arizona law, and not the California Insurance Code, was controlling since the Scottsdale builder's risk policy was countersigned by a Hartford agent in Arizona pursuant to various statutes of that state and the requirements of G.T.S.‘s contract with the City of Scottsdale; G.T.S. additionally argued that its agency agreement with Hartford precluded it from acting within the State of Arizona.“(G)enerally speaking the forum will apply its own rule of decision unless a party litigant timely invokes the law of a foreign state.” (Hurtado v. Superior Court (1974) 11 Cal.3d 574, 581, 114 Cal.Rptr. 106, 110, 522 P.2d 666, 670.) Here, the question of whether defendants were authorized to operate in Arizona was never at issue in the trial court; to the contrary, the evidence showed that defendants were authorized to, and did, accept risks on behalf of Hartford for policies to be issued in Arizona. Furthermore, we note that the Arizona statutes cited by G.T.S. as controlling are, in actuality, quite similar to the California legislative scheme. (Compare Ins.Code, s 1731 and 7 Ariz.Rev.Stats.Annot. (West 1975) s 20-301.) As the case was tried under the assumption that California law was controlling, and since it has not been shown that pertinent Arizona law is inharmonious with the law of this state, we conclude that consideration of foreign law would be inappropriate at this stage of the proceedings.

5.  The District of Columbia statute considered by the federal court read, in pertinent part, as follows:“Any policy-writing agent or salaried company employee authorized by any company to solicit, negotiate, bind, write, or issue policies or applications therefor shall, in any controversy between the insured or his representative and the said company, be held to be the agent of the company which issued or effected the policy solicited or so applied for, anything in the application or policy to the contrary notwithstanding.” (Jonathan Woodner Co. v. Aetna Ins. Co., supra, 143 U.S.App.D.C. at p. 36, 442 F.2d at p. 758; court's italics omitted.)

6.  Even if the term of the Scottsdale policy was found to have been ambiguously stated, we would have to question the application of a rule of construction designed for the benefit of insureds to defeat a claim by an insured against a broker-agent for negligence.

7.  The cases cited by defendants are not persuasive. United States Liability Ins. Co. v. Haidinger-Hayes, Inc., supra, 1 Cal.3d 586, 83 Cal.Rptr. 418, 463 P.2d 770 was a suit by an insurance company against its authorized agent for negligently issuing a contract of insurance which would probably result in substantial financial loss to the company. While there apparently was some expert testimony offered during the trial on the practice of insurance agents and underwriters (Id. at p. 592, 83 Cal.Rptr. 418, 463 P.2d 770), that testimony related to a complicated area of premium rate setting which would not have been within the capability of the average person.In Allied Properties v. John A. Blume & Associates, supra, 25 Cal.App.3d 848, 102 Cal.Rptr. 259, the question presented was whether expert testimony was necessary to determine the standard of professional care to be exercised in the performance of a marine engineering study to determine the feasibility of a small boat pier. In holding that is was, the court, after noting the general rule regarding when experts must testify, stated: “The voluminous record indicates that the standard of care and the complex calculations required were exclusively within the knowledge of experts . . ..” (Id. at p. 858, 102 Cal.Rptr. at p. 265.Swett v. Gribaldo, Jones & Associates (1974) 40 Cal.App.3d 573, 115 Cal.Rptr. 99, concerned the liability of a soils engineer who had tested the plaintiff's lot to determine its stability. The court reversed a judgment for the lot owner because the jury had been incorrectly instructed that the engineer could be held liable on a strict liability or breach of warranty theory. (Id. at pp. 575-577, 115 Cal.Rptr. 99.) On the issue of negligence, the court noted that none of the experts who testified had suggested that the defendant had breached the standard of care to be exercised by a soils engineer. The court rejected the plaintiff's contention that the type of tests or computations which the defendant should have performed would be “within the capability of laymen generally.” (Id. at p. 577, 115 Cal.Rptr. at p. 102.)

8.  The criticized statement appears in the following questioning of Sullivan:“Q. (By counsel for G.T.S.) Did you, at any time subsequent to that time, have any conversation yourself with anyone from RGV as to why you weren't covered that you recall?“A. I don't recall any conversation.“Q. You say that when you received this information you remembered because you were surprised. Upon what basis did you say that you were surprised?“MR. HUDSON: I object, Your Honor, that calls for speculation on the part of the witness.“THE COURT: Not necessarily.“MR. HUDSON: I don't think his understanding of surprise or nonsurprise is relevant.“THE COURT: For example, it might be that he was given assurance he was covered for all risks. I don't know. Overruled.”

KLEIN, Presiding Justice.

ALLPORT, and POTTER, JJ., concur.