Clement v. Smith

Following a court trial, defendants CSI Insurance Agency, Inc., and CSI agent Gordon Smith were found liable to their former client, Larry Clement, on a theory of negligent misrepresentation based on statements made by Smith assuring Clement he had insurance coverage which he did not in fact possess. In this appeal, defendants assert error in various legal rulings and factual determinations by the trial court. We find no error and affirm.

Factual and Procedural Background

In 1984 Clement sold Thomas Carter a piece of property Carter was interested in developing. A dispute between the two arose when Carter later learned there were limitations on the number of units which could be built on the property. In March 1986, Clement and Carter settled this dispute pursuant to a written understanding (Agreement Resolving Dispute or ARD). Included in the ARD was a provision requiring Clement, if certain conditions were met, to subordinate the trust deed securing a $150,000 promissory note to construction financing Carter expected to obtain.

Beginning in 1984, Clement’s insurance needs were handled by Gordon Smith, an agent with the CSI Insurance Agency. Among other insurance…