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JEFFERSON CITY, Mo.—Brokers that accept contingent commissions are not in breach of their fiduciary duties to their clients under Missouri law, the Missouri Supreme Court has ruled.
The high court also held Tuesday in Emerson Electric Co. vs. Marsh & McLennan Cos. Inc. et al. that brokers have no duty to their clients to find insurance at the lowest possible cost available, and that they do not breach fiduciary duty by earning interest on premium payments sent to them before the payments are sent on to the insurer.
But the court remanded the case to St. Louis Circuit Court for further consideration, saying that the lower court erred in its October 2010 ruling, when it said that Emerson could not recover on one or more of its claims as a matter of law.
Instead, the Missouri Supreme Court said the “existence and scope of the fiduciary duties owed by Marsh to Emerson depend on the extent of the relationship between the parties as well as the nature of any agreements that existed between them. It was premature, therefore, to determine that, as a matter of law, Marsh did not breach any fiduciary duties owed to Emerson.”
Despite remand, an attorney who represented Marsh hailed the decision.
“The court said, ‘Look, brokers do not have a fiduciary duty or duty of loyalty that prohibits them from receiving contingent commissions or that requires them to disclose them,'” said Christopher J. St. Jeanos, a partner at Willkie Farr & Gallagher L.L.P. in New York. The decision was “significant in striking down an effort by an insured to expand the scope of insurance broker fiduciary duties.”
“Emerson has always thought that the way the brokerage industry has handled this particular issue was unconscionable, and we are pleased that the Supreme Court has agreed with our position that we are entitled to a trial on the merits of our claim,” said Mark G. Arnold, a partner at Husch Blackwell L.L.P. who represented Emerson Electric.