FEDERAL JUDGE GRANTS SUMMARY JUDGMENT FOR MANAGING GENERAL AGENCY, CONFIRMING MGAS ARE NOT INSURERS, NOT SUBJECT TO STOWERS AND SORIANO CLAIMS

Last week, a federal district court in Austin granted summary judgment for a managing general agency (MGA) who issued policies and handled claims for an insurer, after a set of claimants attempted to hold the MGA liable for a $300,000 judgment on a minimum limits auto policy.  In Galindo v. Empower Managing Gen. Agency Inc., No. 1:19-CV-00904-SH, 2020 WL 5409162 (W.D. Tex. Sept. 8, 2020) (slip op.), a driver insured by Old American with a minimum limits auto policy hit and killed another driver.  Empower, acting as Old American’s MGA, had issued the policy in Old American’s name and handled the claim on behalf of Old American. 

After Empower paid out the policy limits to a set of claimants who alleged they were the decedent’s wife and child, Galindo appeared, alleged she was the decedent’s true wife, and accused Empower of wrongfully paying the limits to imposters.  Galindo sued the insured driver, and Empower/Old American refused to defend the driver because the policy limits were exhausted.  Galindo collected a $300,000 judgment and a turnover order granting her all of the insured’s rights against his insurer, then sued Empower, alleging Stowers and Soriano claims.  Notably, she did not sue Old American.

The district court granted Empower’s motion for summary judgment on Galindo’s Stowers/Soriano claims, relying on existing case law holding that the Stowers and Soriano duties apply only to insurers, and an MGA is not an insurer.  The policy declarations page showed the insurer was Old American, and Empower was merely the administrator.

The evidence was less conclusive as to whether there was a contract between Empower and Old American’s insured, and therefore the court denied summary judgment on Galindo’s breach of contract claim.

Editor’s note: It remains unclear why Galindo did not sue Old American, which presumably would have allowed the Stowers/Soriano claim concerning the alleged improper payment of the policy limits to the wrong claimants to proceed to its merits.