An Insurance Broker Was Held Jointly Liable for Breach of an Insurance Contract

On September 1, 2016, Tribunal F of the National Commercial Court of Appeals partially reversed the first instance judgment in “Maggio, Rocío Soledad vs Aseguradora Federal Argentina S.A. and other re Ordinary” (File No. 6656/2013).

The plaintiff filed her lawsuit claiming that both the insurance company and the insurance broker be held jointly responsible for the payment of a compensation for the damage suffered by the theft of her car and the civil penalty provided for in the Consumer Protection Law (“LDC” after its acronym in Spanish). She claimed the existence of a consumer relationship and explained that she had taken out her motor insurance through the insurance broker.

The insurer denied the facts invoked in the claim, denied the evidence provided and challenged the compensation and the amounts claimed. For his part, the defense raised by the insurance broker was based on that the LDC was not applicable and that he was not responsible for damages whose cause was unrelated to him. Therefore, he invoked the liability exemption provided in article 40 LDC.

The first instance judge sentenced the insurer to pay the insured capital, deprivation of use and moral damages, plus interest and costs. On the other hand, the judge dismissed the claim filed against the insurance broker, understanding that article 40 LDC was not applicable on the grounds that the defendant acted in fulfillment of the mandate of the insurer and no unlawful act was evidenced for which same should be held responsible, imposing the costs on the plaintiff. The judge also considered that the civil fine provided in favor of the consumer by article 52 bis LCD was not applicable, since said judge understood that a serious misconduct, “deserving a special and exemplary reproach” had not been proven.

The plaintiff appealed the first instance judgment. Her grievances referred to the rejection of the action against the insurance broker, to the imposition of costs on her, to the amount established for moral damage and to the rejection of the application of the fine.

The Court partially admitted the complaints of the plaintiff and partially reversed the first instance judgment .

To so decide, the Court considered that in this case there existed a consumer relationship which justifies the application of the LDC. Referring to article 40 of the LDC, the Court indicated that to exempt oneself of the responsibility whose “attribution factor is the vice or risk of the thing (or vice or risk of the service rendered)”, “the alleged responsible party must prove ‘... that the cause of the damage is unrelated to him/her...’”. Furthermore, citing rulings and case law, the Court indicated that the alleged responsible party “must prove the victim’s negligence, the act of a third party for whom he/she must not respond (not being third parties among each other all those who intervened in the production and marketing chain), or the unforeseen circumstances unrelated to the product or thing that break the causation relation”.

The Court’s resolution continued by mentioning that the insurance broker sought to prove in trial that “he acted within the limits of his mandate and that the cause of the damage was unrelated to him”.

We recall that article 40 LDC states: “If damage to the consumer results from the vice or risk of the thing or the provision of the service, the producer, the manufacturer, the importer, the distributor, the supplier, the seller and those who have put their mark on the thing or service will be liable. (…) The responsibility is jointly, without prejudice of the actions of repetition that may correspond. Only those who prove that the cause of the damage was unrelated to them shall be released wholly or partly”.

However, the Court then added that the insurance broker “failed to undermine his role in the marketing chain of the insurance which covered the plaintiff’s vehicle”. It stressed that “being absolutely clear that the insurance broker is a ‘seller’ of ‘services’ (products) from the Insurance Company, it is evident that he is part of their ‘marketing chain’”.

This way, the Court concluded that article 40 LDC that sets forth the joint liability is directly applicable, notwithstanding any recourse that the insurance broker may have against the insurer.

So the Court held the insurance company and the insurance broker jointly liable and ruled against them, imposed on them the costs, increased the quantification of moral damage and upheld the first instance ruling with regard to the dismissal of the claim on the application of the civil fine in favor of the consumer.