A U.S. District Court dismissed a landlord’s claims against an insurance agency it claimed failed to obtain sufficient insurance for the insured-Tenant.

Emerald Coast owned a warehouse in Pensacola, Florida, which it leased to Sunrise Fresh Produce.  The lease agreement required Sunrise obtain insurance on the building with limits equal to 100% of the replacement value of the building.  At the inception of the lease, Sunrise placed insurance with BancorpSouth Insurance Services with limits of $5,000,000.

In April 2013 the warehouse burned to the ground. When a claim was filed with the insurance company, it tendered the policy limits.  However, Emerald Coast claimed the cost to replace the building was over $15 million.  Claiming it was a third-party beneficiary of the insurance policy, Emerald Coast sued BancorpSouth for negligently failed to procure coverage limits equal to the replacement value of the warehouse.

Although BancorpSouth sought summary judgment on a variety of grounds, the federal court disposed of all Emerald Coasts based upon a single ground.  Assuming it was a third party beneficiary under the insurance policy, such claims would have to spring from the terms of the policy.  Here the Court found Emerald Coast’s claims of negligence procurement all arise from BancorpSouth’s alleged failure to procure adequate coverage.  By definition, such negligence arises prior to the existence of the insurance policy creating that third-party-beneficiary status.  Therefore, Emerald Coast had no claim against BancorpSouth, warranting summary judgment.

Firm attorneys James Heidelberg and April McDonald represented BancorpSouth.