(Reuters) – A national insurance brokerage did not take on any additional obligations to its clients by wooing them with a sales pitch that touted its sophistication, experience and ability to meet their insurance needs, a federal appeals court held.

The 8th US Circuit Court of Appeals affirmed a win for Truist subsidiary McGriff Insurance Services Wednesday in a lawsuit by hotel renovator I Square Management and a related company, which suffered a million-dollar uninsured loss when property stored in an offsite warehouse during renovations was damaged by flooding in 2019.

There was no evidence that the companies had ever mentioned the warehouse to their McGriff agent, let alone asked him to obtain coverage for the property stored there, the court noted.

I Square, however, argued that McGriff had created a “special relationship” that required it to discover and fill the coverage gap by presenting itself as a “highly skilled expert” at the 2017 sales meeting and acting as an “integral” team member afterward .

The 8th Circuit disagreed.

“It would be the rare agent who does not hold himself out as highly skilled, and the rare insured who doesn’t rely on the agent’s skill in making insurance selections,” Circuit Judge Morris Arnold wrote, joined by Circuit Judges James Loken and Jonathan Kobes.

Attorneys for both sides did not immediately respond to requests for comment on Wednesday. Neither did North Carolina-based Truist.

According to the 8th Circuit, Arkansas-based I Square manages, builds and renovates hotels. The Tennessee hotel it was renovating in 2019 was owned by Arkansas Knoxville Hotel (AKH), ​​a limited partnership formed by I Square’s CEO.

After I Square hired McGriff, it asked its agent to obtain coverage for furniture, fixtures and equipment stored offsite for three of its other projects. However, it made no such request for the Knoxville renovation.

As a general rule, an agent’s duty is to obtain the coverage the client requested, the 8th Circuit said. Courts in many states have recognized a special-relationship exception to that rule but differ on how the exception is triggered.

The Arkansas Supreme Court acknowledged the existence of the exception in 1986 but has never applied it, the 8th Circuit said. Neither has any Arkansas appellate court.

Given the high court’s “dim view” of the exception and the 36-year “unbroken string of Arkansas appellate decisions rejecting this theory,” the panel said, nothing in McGriff’s sales pitch and its subsequent dealings with I Square and AKH was enough to establish a special relationship under state law.

The case is I Square Management LLC and Arkansas Knoxville Hotel LP v. McGriff Insurance Services Inc., 8th US Circuit Court of Appeals, No. 21-3256.

For I Square Management and Arkansas Knoxville Hotel: Scott Poynter of Poynter Law Group; Cody Kees of Bequette, Billingsley & Kees; and E. Clarke Tucker IV of Clarke Tucker Law

For McGriff Insurance Services Inc.: Christin Jones of Kilpatrick & Townsend; Karen “Betsy” Baker and BJ Walker of Rose Law Firm

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