                                  IN THE
             ARIZONA COURT OF APPEALS
                              DIVISION ONE


   BNCCORP, INC. and BNC NATIONAL BANK, Plaintiffs/Appellants,

                                     v.

      HUB INTERNATIONAL LIMITED, HUB INTERNATIONAL
      INSURANCE SERVICES, INC., HUB INTERNATIONAL OF
        CALIFORNIA INSURANCE SERVICES, INC., and HUB
        INTERNATIONAL SOUTHWEST AGENCY LIMITED,
                     Defendants/Appellees.

                           No. 1 CA-CV 15-0708
                             FILED 7-11-2017


           Appeal from the Superior Court in Maricopa County
                          No. CV2012-014329
              The Honorable Lori Horn Bustamante, Judge

                                AFFIRMED


                                COUNSEL

Anthony Ostlund Baer & Louwagie PA, Minneapolis, MN
By Richard T. Ostlund, Shannon M. Awsumb
Counsel for Plaintiff/Appellant BNCCORP, Inc.

Ryley Carlock & Applewhite PA, Phoenix
By Fredric D. Bellamy
Co-Counsel for Plaintiff/Appellant BNC National Bank

Law Offices of Michele Van Quathem PLLC, Phoenix
By Michele Van Quathem
Co-Counsel for Plaintiff/Appellant BNC National Bank
Osborn Maledon PA, Phoenix
By David D. Garner
Counsel for Defendants/Appellees


                                   OPINION

Judge Jon W. Thompson delivered the opinion of the Court, in which
Presiding Judge Randall M. Howe and Judge Lawrence F. Winthrop joined.


T H O M P S O N, Judge:

¶1            BNCCORP, Inc. (BNCCORP) and BNC National Bank, N.A.
(The Bank) (collectively, BNC), appeal from the trial court’s judgments in
favor of HUB International Limited, HUB International Services, Inc., HUB
International of California Insurance Services, Inc., and HUB International
Southwest Agency Limited (collectively, HUB). For the following reasons,
we affirm.

               FACTUAL AND PROCEDURAL HISTORY

¶2             BNCCORP, a Delaware corporation, is a registered bank
holding company with its principal place of business in Bismarck, North
Dakota. It does business through wholly owned subsidiaries, including
The Bank. The Bank’s main office is in Arizona. The Bank has branches in
Arizona, North Dakota and Minnesota. In 2002, BNC purchased BNC
Insurance Services, Inc. (BIS), an insurance agency.1 BNC utilized BIS for
all its insurance broker needs.

¶3           In 2004, BNC entered a mortgage-loans-in-transit (MLT)
agreement with Concord Mortgage (Concord).2           Pursuant to that
agreement, Concord originated loans using up to $100 million in funds
provided by BNC, with BNC retaining a 100% participation interest in each
loan. Concord then sold the loans in the secondary market and paid BNC
back the principal and accrued interest.




1      BNC Insurance Services, Inc. was known as Milne Scali & Company
at the time. It was one of the largest independent insurance agencies in
Phoenix.

2      Concord is not a party to this action.


                                      2
                      BNCCORP et al. v. HUB et al.
                         Decision of the Court

¶4           Although at the time BNC was placing all its own insurance
coverage through BIS, the MLT agreement was a custom agreement that
BNC’s lawyers drafted. BNC did not take additional steps to determine
whether it had coverage for any fraud or other risks that may be associated
with the new MLT arrangement.

¶5            In 2005, BNC’s Chief Financial Officer (CFO) questioned
whether the MLT relationship should be included in BNC’s insurance
application. At the time, BIS had assigned its employee, Kathy Cook
(Cook), as the insurance broker for BNC’s insurance renewal. Because of
its CFO’s question, BNC, through BIS and Cook, added an optional
coverage known as “servicing contractor coverage” to its financial
institution bond and excess follow-form bond insurance policies with
Chubb Group of Insurance Companies (Chubb)3 to insure the MLT
relationship with Concord. BNC did not seek a special endorsement or
manuscript policy concerning any specific aspects of the Concord MLT
relationship.

¶6          In October 2006, BNC entered into another MLT agreement
with American Mortgage Specialists (AMS), an Arizona corporation.4 The
AMS MLT agreement was the same basic contract as was used for the
Concord MLT agreement. Like Concord, AMS was to originate mortgage
loans using funds from BNC, service the loans, and sell them in the
secondary market, and repay to BNC, principal, interest and fees. Under
the agreement, BNC allowed AMS to draw up to $27.5 million in funds
from BNC at any time.

¶7             In March 2006, the Arizona Department of Financial
Institutions (ADFI), under a seventeen-page Consent Order, had sanctioned
AMS and fined it nearly a quarter of a million dollars for unlawful conduct,
unlicensed activity, failure to maintain proper records, failure to maintain
control over bank accounts, failure to comply with an earlier 2004 Consent
Order, and pages of additional enumerated violations. The record does not
indicate that BNC investigated AMS’s standing with ADFI.

¶8           BNC approved and decided to go forward with an MLT
relationship with AMS while BNC was renewing its insurance policies in
August 2006. However, BNC did not disclose this new MLT agreement in


3     Chubb was BNC’s insurance carrier at the time.

4      BNC began considering entering a relationship with AMS in fall
2005, but actively explored doing so as of April 18, 2006.


                                     3
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

its renewal application and requested coverage “same as prior year.” This
included the same servicing contractor coverage that it had obtained in 2005
for the Concord MLT relationship. BNC did not seek, through BIS, a special
endorsement, rider or other coverage specific to the MLT program
(Concord and AMS)—such as one that would cover the risk of a lapping
scheme fraud.

¶9             On March 14, 2007, the relationship between BNC and HUB
began pursuant to a Purchase and Sale Agreement (PSA). BNCCORP and
BIS were the named parties to the agreement, along with HUB International
of California Insurance Services, Inc. (Hub Cal.). Pursuant to the PSA, BNC
sold certain of BIS’s assets and liabilities to HUB. HUB acquired BIS’s book
of business—including the BNC account. The BNC parties also agreed to
appoint either Hub Cal. or one of the HUB “Affiliates”5 as “the broker of
record for all insurance maintained by [BNCCORP] and its direct and
indirect wholly owned subsidiaries,” which included The Bank.

¶10            The PSA did not require HUB to provide BNC with risk
management services, to act as BNC’s guarantor, or otherwise recommend
services beyond those BNC sought. The PSA states that BNCCORP and “its
Affiliates” retained liability for their pre-sale conduct, which would include
conduct arising out of insurance broker services provided to BNC in 2005
and 2006, when BNC added servicing contractor coverage to its insurance
package to cover its MLT relationships, including its relationship with
AMS. The PSA also included a jury trial waiver.




5      In defining affiliates, the PSA states:

       “Affiliate” means, with respect to any specified Person, any other
       Person that, at the time of determination, directly or indirectly
       through one or more intermediaries controls, is controlled by
       or is under common control with such specified Person. For
       purposes of this definition, the term “control” means the
       power to direct or cause the direction of the management of a
       Person, directly or indirectly, whether through the ownership
       of voting securities, contract or otherwise; and the terms
       “controlled” and “controlling” have meanings correlative to
       the foregoing.

(Emphasis added.)



                                       4
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

¶11           In accord with the PSA, upon closing of the sale in mid-2007,
BNC appointed HUB as its broker of record. Cook became HUB’s employee
and continued in her role as BNC’s broker. She assisted BNC in obtaining
its 2007 renewal with Chubb—providing coverage for a bond period from
August 15, 2007, to August 15, 2008. The renewal policy Cook procured
included a financial institution bond and excess follow-form policy that
provided servicing contractor coverage that was materially identical to the
coverage BNC previously obtained through BIS in 2005 and 2006. Again,
BNC did not specifically seek coverage for risks associated with its MLT
program.

¶12          Cook left her position at HUB in May 2008, and Timothy Elliot
and Thomas Gilmor6 reassigned the accounts Cook had serviced—
including the BNC account. BNC’s account was reassigned to HUB’s
insurance brokers, Jerry Thomas and Brett Plant, who completed the 2008
renewal.

¶13         Around the time of the 2008 renewal, BNC’s policies with
Chubb were about to expire. As to the 2008 renewal, in a June 30, 2008 letter
BNC informed HUB, as follows:

       (1) We request a remarket this year. (2) We would like to look
       at the option of a three-year prepaid policy (or annual
       installments) as well as an annual renewal. (3) We would like
       the quote to include various deductible options. (4) We would
       like the quote to include a renewal at the current limits plus
       an increased limit for [Banker’s Professional Liability (BPL)]
       and any recommendations for other limit increases you feel
       appropriate.

(Emphasis added.) As part of the 2008 renewal, BNC asked HUB to help it
procure financial institution bond and excess follow-form policies from
new insurance carriers that matched the coverages BNC’s expiring
insurance policies provided. BNC also requested servicing contractor
coverage, but as in 2006, and 2007, BNC did not request any special




6      At the time, Elliot was managing a small unit focused on
professional liability as its Assistant Vice President, in HUB’s Denver office
which was part of the Southwest region (included New Mexico, Arizona,
and Colorado operations). Gilmor was the chief sales officer.



                                      5
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

endorsement, rider or other coverage specific to AMS or BNC’s MLT
program.

¶14          Consistent with BNC’s directions in the June 30, 2008 letter
and specific requests, HUB obtained insurance quotes/options, from
multiple insurers in the remarketing process—including quotes with
annual renewals, some with three year renewals, with various deductibles,
and requested increases. HUB met with BNC’s management and board to
present options from respective carriers.

¶15            Instead of staying with Chubb, which offered only a one-year
term, BNC elected to move its primary coverage to Colonial/Zurich
(Colonial) and its excess coverage to St. Paul Mercy Insurance
Company/Travelers (Travelers) (collectively, the insurance carriers). The
2008 renewal policies provided BNC with materially identical coverage as
it had with Chubb, but included a higher $14.9 million combined limit and
a guaranteed three-year term. In its bond, Colonial “agree[d] to indemnify
[BNC] for . . . [l]oss resulting from dishonest or fraudulent acts committed
by any servicing contractor7 acting alone or in collusion with others.”

¶16          BNC did not identify any fraudulent activities in its
relationship with AMS until April 2010, despite the activities of its own
management, credit analysts, auditors, and regulators. Throughout its
three-and-a-half-year relationship with AMS, BNC accepted and relied on
AMS’s representations concerning dates, amounts, and “sources” of
secondary-market purchases of loans originated by AMS using funds
provided by BNC. In April 2010, BNC discovered AMS had defrauded it
out of a claimed $26 million (the AMS loss) in a “fraudulent lapping




7       The Colonial bond’s definition of “servicing contractor” includes
any entity authorized by BNC to “(1) collect and record payments on real
estate mortgage . . . loans made, held or assigned to the Insured, and
establish tax and insurance escrow accounts, (2) manage real property . . .
under the supervision or control of the Insured, [or] (3) perform any other
acts related to the above.” AMS’s servicing responsibilities included the
collection and recording of payments made on real estate mortgage loans
and the performance of related acts, including, but not limited to, collecting
and recording payments and establishing tax and insurance escrow
accounts.




                                      6
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

scheme.” Prior to8 discovery of the AMS loss, BNC had not asked or
required any of the secondary-market investors who purchased loans from
AMS to provide purchase (and/or payment) advices directly to BNC, nor
did BNC require any other independent verification of AMS’s
representations that the investor funds were being applied to pay off the
correct loans.

¶17           In July 2010, BNC submitted a proof of loss insurance claim
and supporting information to Colonial and Travelers. Colonial denied the
claim, and thereafter filed a lawsuit seeking declaratory judgment
concerning its obligations under the bond. Travelers also filed a complaint
for declaratory relief. Colonial’s and Travelers’s suits were consolidated
(the coverage litigation). BNC filed counterclaims for breach of contract
and bad faith, and sought punitive damages.

¶18            In September 2012, for $7.5 million, BNC settled its lawsuit
against the insurance carriers. The settlement agreement reflects that BNC
was contemplating filing a suit against HUB. BNC did so less than a week
after settling with the insurance carriers, asserting a claim for negligence
against HUB. The complaint demanded a jury trial.

¶19          In separate rulings in HUB’s favor, the trial court found (1)
pursuant to the waiver in the PSA, BNC had waived its right to a jury trial,
and (2) HUB did not breach the applicable standard of care and that BNC
did not prove HUB proximately caused BNC’s damages. After denying
BNC’s motion for a new trial and/or to alter or amend judgment, the trial
court entered final judgment, pursuant to Rule 54 on August 26, 2015.

¶20            BNC timely appealed to this court. We have jurisdiction
pursuant to Arizona Revised Statutes (A.R.S.) sections 12-120.21 (2016) and
-2101 (2016).9




8      At some point after discovering the AMS fraud, BNC began
requesting purchase (and/or payment) advices from the secondary-market
investors that purchased loans originated by AMS, which could be used to
match incoming payments with the intended assets.

9      We cite a statute’s current version, unless revisions material to this
decision have occurred since the events in question.



                                     7
                        BNCCORP et al. v. HUB et al.
                           Decision of the Court

                                DISCUSSION

I.     Jury Waiver

¶21           As a preliminary matter, we review whether the trial court
erred in ruling that both BNCCORP and The Bank waived their right to a
jury trial under the terms of the PSA. Both The Bank and BNCCORP argue
that the purported waiver does not extend to the negligence action. Relying
heavily on external authorities, The Bank separately argues that it is not
bound by the jury trial waiver because it was neither a named party nor
signatory to the PSA. We agree with the trial court’s ruling as to both
BNCCORP and The Bank.

¶22            Pursuant to the Arizona Constitution, a right to a jury trial
“may be waived by the parties in any civil cause.” Ariz. Const. art. 6, § 17.
In Arizona, jury waivers are recognized as commonplace such that they
typically “attract no attention.” Indus. Comm’n v. Frohmiller, 60 Ariz. 464,
474, 140 P.2d 219, 223 (1943). It has been said that the right to a jury trial in
civil matters is “a privilege which may be waived by either party and not
an absolute right.” Id. There are typically no procedural obstacles for
obtaining a jury waiver in a civil case, and such waiver may be the
consequence where parties simply fail to timely request a jury. See, e.g.,
Stukey v. Stephens, 37 Ariz. 514, 516, 295 P. 973, 974 (1931). It follows that
parties may include such waiver provisions in their contractual agreements.

¶23            As pertinent here, the jury waiver in the PSA states10:

       Each party hereto hereby irrevocably and unconditionally
       waives any and all right to trial by jury in any action, suit, or
       proceeding arising out of or related to this agreement or any of the
       transactions contemplated hereby. The parties acknowledge and
       agree that the terms and provisions of this section constitute
       a material inducement for the parties to enter into this
       agreement.

(Emphasis added.) We interpret these terms to avoid surplusage. See, e.g.,
Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 158 n.9, 854 P.2d 1134,
1144 n.9 (1993); see also In re Estate of Zaritsky, 198 Ariz. 599, 603, ¶ 11, 12
P.3d 1203, 1207 (App. 2000).



10     In contrast to the PSA’s surrounding sections, the jury waiver is
drafted in capitalized letters.


                                        8
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

¶24             We find the negligence action falls within the terms of the
PSA’s jury waiver. This negligence action could not have arisen absent the
relationships created by the PSA. The provision of broker services, which
HUB is alleged to have negligently provided in procuring insurance for The
Bank, arose out of and was a “transaction contemplated” by the PSA. The
Bank acknowledges as much. In its briefing, The Bank states that the PSA
required HUB to provide BNCCORP and its affiliates—which includes The
Bank—with broker services for five years. Additionally, contrary to The
Bank’s and BNCCORP’s position, the fact that HUB’s duty and standard of
care in the negligence action is dictated by Arizona law does not change the
fact that the jury waiver is guided by the terms of the PSA which extends to
the negligence action.

¶25            We further address The Bank’s objection to being bound by
the waiver because, as The Bank argues, it did not “knowingly and
voluntarily” waive its right to a jury trial. In support of this position, The
Bank asserts that the present jury waiver is unlike an agreement to arbitrate.
Therefore, The Bank posits Arizona’s policy not to presume against jury
waivers—espoused in Harrington v. Pulte Home Corp., which involves an
arbitration agreement—is inapplicable in this matter. 211 Ariz. 241, 250, ¶
30, 119 P.3d 1044, 1053 (App. 2005). We disagree. See id. (citations omitted)
(stating, generally, that in civil actions “test of waiver applied to other
constitutional rights, i.e., that waiver be shown to be an intentional
relinquishment or abandonment of a known right or privilege,” is
inapplicable).

¶26             Furthermore, we find the relevant jury trial waiver is
analogous to an agreement to arbitrate.11 See id. at 249, ¶ 27, 119 P.3d at
1052 (citation omitted) (“Indeed, an agreement to submit disputes to
arbitration is necessarily an agreement to forego dispute resolution by a
jury.”); see also In re Guggenheim Corp. Funding, LLC, 380 S.W.3d 879, 886
(Tex. App. 2012) (noting that public policy favoring freedom of contract
requires that jury trial waivers be scrutinized in a manner similar to
arbitration clauses).

¶27          Accordingly, we hold that in a civil action, waiver of a jury
trial—like an agreement to arbitrate—need not always be directly
“knowingly and voluntarily” waived. A non-signatory to a contract may

11     In some circumstances, the requirements for an agreement to
arbitrate are much more stringent than simply choosing between a jury trial
and a bench trial.



                                      9
                        BNCCORP et al. v. HUB et al.
                           Decision of the Court

be bound by its parent company’s contractual agreement to forego a jury
trial, in accordance with the contract’s jury trial waiver terms. See, e.g.,
Smith v. Pinnamaneni, 227 Ariz. 170, 177, ¶ 23, 254 P.3d 409, 416 (App. 2011)
(citations omitted) (noting that non-signatories, can be required to arbitrate,
i.e, completely forego a judicial forum, under certain circumstances—such
as estoppel, contract theories, and agency theories); see Duenas v. Life Care
Ctrs. of America, Inc., 236 Ariz. 130, 139, ¶ 26, 336 P.3d 763, 772 (App. 2014)
(stating that theories that may bind a non-signatory to an agreement
“include incorporation by reference, assumption, agency, veil-piercing or
alter ego, equitable estoppel, and third-party beneficiary)12 (citation
omitted).

¶28           We conclude that as an affiliate obtaining broker services
from HUB pursuant to the PSA, The Bank is bound, and could have
reasonably expected that it would be bound, by the terms of the jury trial
waiver in the PSA. We affirm the trial court’s order granting HUB’s Motion
to Strike Jury Demand. In our analysis hereinafter, we address The Bank
and BNCCORP as one entity, BNC.

II.    The Negligence Action

¶29            The trial court rendered judgment regarding the negligence
action after taking the matter under advisement. It issued an 18 page, single
spaced decision after “carefully consider[ing] the testimony presented at
trial, the hundreds of exhibits admitted into evidence, relevant case law,
and the arguments of counsel.” On appeal, we have an obligation “to affirm
where any reasonable view of the facts and law might support the judgment
of the trial court. This rule is followed even if the trial court has reached
the right result for the wrong reason.” City of Phoenix v. Geyler, 144 Ariz.
323, 330, 697 P.2d 1073, 1080 (1985) (citation omitted).

¶30           To establish negligence, BNC was required to prove: (1) HUB
had a duty to conform to a certain standard of care; (2) HUB breached that
standard of care; (3) a causal connection between HUB’s conduct and BNC’s


12       While Duenas lays out these theories, its facts distinctively warranted
a different outcome. There, the court concluded that on the record before
it, the subject non-signatories could not be bound by the subject arbitration
agreements because the arbitration agreements were not made part of any
separate agreement by the non-signatories, the agreements were not signed
on the non-signatories’ behalf, were not assumed by the non-signatories,
and were not structured to benefit them. See Duenas, 236 Ariz. at 139, ¶ 26,
336 P.3d at 772.


                                      10
                        BNCCORP et al. v. HUB et al.
                           Decision of the Court

resulting injury; and (4) BNC suffered actual damages. See Gipson v. Kasey,
214 Ariz. 141, 143, ¶ 9, 150 P.3d 228, 230 (2007) (citation omitted). Because
we find BNC cannot establish breach of the applicable standard of care, we
ultimately affirm the trial court’s judgment in HUB’s favor.

       A.     Duty/Standard of Care

¶31           “The initial question in a negligence action is whether the law
imposes a duty on a defendant to conform to a certain standard of conduct
to protect others from unreasonable risks of harm.” Sw. Auto Painting &
Body Repair, Inc. v. Binsfield, 183 Ariz. 444, 446, 904 P.2d 1268, 1270 (1995)
(citation omitted).

¶32            BNC argues that the trial court applied the wrong duty and
standard of care. Further, citing “1 New Appleman Insurance Law Practice
Guide § 2.14[1] (2016),” BNC posits that “Arizona recognizes a general duty
of care that brokers owe to insureds to advise them about what insurance
to buy[.]”      However, BNC and Appleman’s 2016 practice guide
misunderstand or incorrectly interpret Sw. Auto’s holding. Sw. Auto did not
hold that there is a duty to advise a client about what insurance to buy or
whether to buy additional insurance. See Sw. Auto, 183 Ariz. at 447, 904
P.2d at 1271 (Details of conduct . . . have to do with whether the defendant
breached the applicable standard of care, not whether a duty and attendant
standard exist.”); see also Webb v. Gittlen, 217 Ariz. 363, 367, ¶ 20, 174 P.3d
275, 279 (2008) (emphasis added) (citations omitted) (noting Sw. Auto holds
“it was a question of breach, not duty, whether an agent’s failure to advise
a client about additional insurance gave rise to liability”); Markowitz v. Ariz.
Parks Bd., 146 Ariz. 352, 355, 107 P.2d 364, 367 (1985) (citation omitted)
(“[D]isapprov[ing] of attempts to equate the concept of duty with specific
details of conduct.”). Given the confusion in distinguishing duty from the
standard of care, and the standard of care from the breach analysis, we aim
here to carefully separate the analysis as to each element.

              1.     The Existence of a Duty

¶33           In determining the existence of a duty, we look to the
relationship between the parties. Bellezzo v. State, 174 Ariz. 548, 550, 851
P.2d 847, 849 (App. 1992). Whether a defendant owes a plaintiff a duty is a
question of law. Lasley v. Shrake’s Country Club Pharmacy, Inc., 179 Ariz. 583,
585, 880 P.2d 1129, 1131 (App. 1994) (citation omitted).

¶34           Here, there is no real quarrel as to duty; both parties concede
that a duty exists. However, to be clear, once a duty exists, the next question
is not what is the extent of the duty; the question most accurately is what


                                      11
                        BNCCORP et al. v. HUB et al.
                           Decision of the Court

level of care does the parties’ duty-inducing relationship trigger? The true
conundrum stirring the parties in this case is the standard of care. Thus, we
examine the applicable standard of care.

              2.      The Applicable Standard of Care

¶35            Questions as to the applicable standard of care are for the trier
of fact. Sw. Auto, 183 Ariz. at 445, 904 P.2d at 1269. Here, the trial court
found that “[i]n connection with the 2008 insurance renewal, HUB had the
duty to exercise the degree of care, skill, and diligence normally exercised
by similarly situated insurance brokers having the information provided to
HUB by BNC, advising about coverage, and taking into account BNC’s
directions, including the request to match expiring coverages.” We will
affirm the trial court’s ruling so long as its “factual findings[,] explicitly or
implicitly made,” are not clearly erroneous, “even if substantial conflicting
evidence exists.” John C. Lincoln Hosp. & Health Corp. v. Maricopa Cty., 208
Ariz. 532, 537, ¶ 10, 96 P.3d 530, 535 (App. 2004) (citations omitted). “We
review evidentiary rulings for an abuse of discretion and generally affirm a
trial court’s admission or exclusion of evidence absent a clear abuse or legal
error and resulting prejudice.” Id. at 544, ¶ 33, 96 P.3d at 541 (citation
omitted).

¶36             As the trial court indicates, the default rule in Arizona is that
a broker who agrees to obtain insurance for a client owes a duty to the client
“to exercise reasonable care, skill and diligence” in so doing. Darner Motor
Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 397, 682 P.2d 388,
402 (1984); see also Webb, 217 Ariz. at 367, ¶ 20, 174 P.3d at 279 (citations
omitted) (acknowledging the Darner standard); Sw. Auto, 183 Ariz. at 448,
904 P.2d at 1272 (reaffirming the Darner standard). Darner also suggests
that this standard of care is not universally applicable, and that an
applicable standard should be determined on a case-by-case basis, and is
an evidentiary determination that may require proof in the form of expert
testimony at trial. 140 Ariz. at 397-98 & n.14, 682 P.2d at 402-03 & n.14.
Thus, we must examine the record in this case to determine whether the
relationship between BNC and HUB commanded the tailored standard the
trial court imposed, or instead whether some different and heightened
standard of care is applicable.13



13      We do not address, as the trial court did, whether a “special
relationship” existed between BNC and HUB. As BNC repeatedly noted in
its briefing on appeal, such an inquiry is “irrelevant” and has yet to be



                                       12
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

¶37            Obligations of reasonable care like the standard Darner
pronounced for insurance agents have been deemed applicable in other
contexts14, and even in cases, unlike this one, involving fiduciary
relationships, such as trustee-beneficiary. See Forest Guardians v. Wells, 201
Ariz. 255, 260, ¶ 13, 34 P.3d 364, 369 (2001) (internal quotation and citation
omitted) (“The trustee is under a duty to the beneficiary to use reasonable
care and skill to preserve the trust property.”).

¶38             Here, pursuant to the PSA establishing their relationship,
HUB was to be the exclusive broker of record for BNC for a period of five
years. As noted above, under the PSA, HUB was not required to provide
BNC with risk management services, to act as BNC’s guarantor, or
otherwise recommend services beyond those BNC actually sought.
Moreover, during the 2008 renewal, from which the primary contentions in
this suit arise, BNC directed HUB to obtain “servicing contractor coverage,”
and asked HUB for “any recommendations for other limit increases you feel
appropriate,” but, as noted BNC did not request any special endorsements
or coverage specific to AMS or BNC’s MLT program.

¶39          To be sure, comparatively, the five-year relationship the PSA
created between HUB and BNC is nothing near a fiduciary relationship,
and the 2008 renewal did not add much more to the relationship.
Furthermore, the record shows the trial court considered expert testimony,
made extensive factual findings in this case, and took the facts of HUB’s
and BNC’s relationship into account when determining an appropriate
standard, and arrived at the standard noted supra ¶ 35. We find that by
doing so, the trial court adequately complied both with Darner’s default
rule and its case-by-case directive. See supra ¶ 36. Under these
circumstances, we defer to the trial court’s standard of care finding.



undertaken in Arizona. Neither of the applicable tort duty cases, Darner
and Sw. Auto, specifically analyze whether such a relationship existed. We
also note that in undertaking its duty inquiry, the trial court improperly
relied on Nelson v. Davidson, 456 N.W.2d 343, 345-46 (Wis. 1990), which this
court noted conflicts with Darner, because Nelson presented the question of
duty as one of agency law, not tort law. See Sw. Auto., 183 Ariz. at 448 n.2,
904 P.2d at 1272 n.2 (providing this explanation). But see City of Phoenix
supra at ¶ 29.

14     See, e.g., Standard Chartered PLC v. Price Waterhouse, 190 Ariz. 6, 17,
945 P.2d 317, 328 (App. 1996) (auditor-client).



                                     13
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

       B.     Breach

¶40           “Whether the defendant’s conduct breached the standard of
care is usually a question for the trier of fact.” Sw. Auto, 183 Ariz. at 448,
904 P.2d at 1272 (citing Bellezzo, 174 Ariz. at 551, 851 P.2d at 850). The
evidence is sufficient to support the trial court’s ruling that HUB did not
breach the applicable standard of care.

              1.     Under the applicable standard of care, HUB and/or its
                     brokers were not required to assess and obtain
                     coverage for unidentified risks.

¶41           In sum, BNC essentially argues that HUB failed to comply
with its standard of care because: (1) HUB, and/or HUB’s brokers, failed to
take reasonable steps to assess (or identify) BNC’s business risks; and (2)
did not “honestly” advise BNC about the adequacy or appropriateness of
HUB’s recommended coverage to the extent it did, or did not, cover BNC’s
MLT business relationship with its outside servicing contractor, AMS.

¶42            We recognize that in deciding whether a broker has breached
similar standards of care, the general rule is that “brokers have no
[obligation] to advise insureds about the adequacy or appropriateness of
the insurance coverage they purchase, or to inform them about optional
coverage that might be available.” 1-2 New Appleman on Insurance Law
Library Edition § 2.05(5)(a) (hereinafter, Appleman Library Edition). BNC
cites no Arizona authority that has held that in complying with Darner’s
standard of care, a broker, or other insurance professional, ordinarily must
identify risks and recommend alternative or additional coverage than the
client actually sought or requested.

¶43            We consider that Sw. Auto, from which BNC gleans a “duty”
(or more accurately, a responsibility) for HUB to advise about what
insurance to buy, does not impose an insurance professional with such
obligations. Sw. Auto merely reversed the trial court’s decision to grant
summary judgment, where an “expert testified that the standard of care in
the community for professional insurance agents require[d] agents to
advise clients about the relevant types of coverage that are available and
the cost of the coverage,” crafted to the “individual needs of the prospective
insured.” 183 Ariz. at 448, 904 P.2d at 1272. The court specifically took issue
with the fact that the trial court “summarily” rejected the expert’s opinion,
and concluded that the expert’s testimony presented a question of fact that
the trier of fact needed to decide—whether the standard of care for an
insurance agent required the subject agent to “advise” of “the availability



                                      14
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

of relevant types of coverage.” Id. at n.3. To be clear, the Court of Appeals
did not so much answer the question whether the insurance agent needed
to generally advise of additional or alternative coverage, but instead,
remanded to the trial court to reexamine the facts and undertake that
inquiry. Id.; see generally Sw. Auto.

¶44            In support of its arguments, BNC claims the trial court erred
in applying the standard of care because it failed to properly address, in its
judgment, BNC’s experts’—Eric Emmette and Robert Sulpizio—standard
of care opinions at trial. As pertinent here, Emmette testified that HUB’s
broker failed to meet the applicable standard of care in providing broker
services on BNC’s account during the 2008 remarketing. He opined that
the broker should have made efforts to understand BNC’s business,
specifically the MLT program, and its risks, and to read and understand the
applications and information that BNC was providing during the
remarketing. In this effort, he posited that the broker should have reviewed
the policy’s forms to look for gaps between what BNC’s risks were and the
coverages and policies being provided by the insurance carriers, to
understand whether modification of the bond or excess bond was needed,
or whether to explore other “available” options. For his part, Sulpizio
testified that HUB breached the standard of care by failing to adopt policies,
procedures and “quality controls” to ensure the broker had the background
and training appropriate to the BNC assignment to deliver the level of
service HUB promised in their financial institution advertising.

¶45          Because this case went to trial and a judgment was rendered,
it is procedurally and factually different from Sw. Auto. Unlike the
summary dismissal of the expert’s testimony in Sw. Auto, nothing in the
record before us suggests the trial court here did not consider BNC’s
experts’ opinions. The fact that the court’s ruling does not specifically
mention Emmette and Sulpizio’s expert testimony is irrelevant.

¶46           In relevant findings, the trial court found:

       [a]ny claim that BNC relied on HUB to perform risk
       identification and management duties is . . . belied by
       obligations imposed on BNC’s management by BNC’s
       primary regulator, the Office of the Comptroller of the
       Currency (“OCC”), which confirm that bank management is
       responsible for identifying and deciding whether to insure




                                     15
                         BNCCORP et al. v. HUB et al.
                            Decision of the Court

       risks, and that the broker’s role is limited to assistance with
       selecting an insurer.[15]

It also found that,

       [i]n connection with the August 15, 2008 insurance renewal,
       BNC never provided HUB with a copy of the AMS-MLT
       agreement, or any of its subsequent amendments, of any of
       BNC’s annual credit displays . . . or any of BNC’s internal
       audits of the AMS relationship. BNC did not ask HUB to
       analyze the AMS MLT agreement for the purpose of
       recommending coverage . . . BNC did not disclose that AMS
       [had] been repeatedly sanctioned by [ADFI] for unlawful or
       other conduct.

The court additionally noted

       BNC’s executives, including its CEO, testified that the
       underlying fraud was not foreseeable and that it was never
       identified as a risk before discovery of the loss by BNC, its
       auditors, or its regulators.

These findings were supported by the evidence in the record.

¶47         As it did in the trial court, BNC seeks to support a breach
argument by highlighting three instances whereby it claims it provided
HUB’s broker “with information regarding the MLT program because the
Bank wanted to ensure that the [unknown] risk was covered.” (Emphasis
added.) BNC notes: (1) “The Bank provided HUB with the Chubb bond
renewal application that included an annual report discussing the MLT
program;” (2) The Bank also provided HUB’s broker “with a Travelers

15      BNC takes issue with the trial court’s reference to the OCC, arguing
“HUB never disclosed that handbook as a trial exhibit or offered it during
trial as a trial exhibit.” We find the trial court properly took judicial notice
of OCC’s regulations. See, e.g., Ariz. R. Evid. 201(b)(1), (2) (a court may take
judicial notice on its own or if it is requested); Climate Control, Inc. v. Hill, 86
Ariz. 180, 188, 342 P.2d 854, 859 (1959) modified on reh’g on other grounds by
87 Ariz. 201, 349 P.2d 771 (1960) (explaining that a court may take judicial
notice of administrative regulations); State v. Rojers, 216 Ariz. 555, 560, ¶ 26,
169 P.3d 651, 656 (App. 2007) (citations omitted) (stating a court may take
judicial notice of an agency’s published manuals).



                                        16
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

questionnaire in which the Bank described the MLT program;” and (3) The
Bank arranged a September 4, 2008 conference call with HUB to discuss the
MLT program and how to complete the Colonial and Travelers applications
to ensure coverage for the risk associated with the MLT program. We will
address each in turn.

¶48          As to the first, the record established that BNC provided the
Chubb policy, which was set to expire, to HUB with the understanding that
HUB would match the coverages provided under BNC’s expiring policies,
not to independently complete extensive risk assessment. Further, HUB
provided coverage, as requested.

¶49           The second refers to a Credit Investment Questionnaire, and
presumably the two application forms BNC filled out. However, as the trial
court’s ruling noted,

       [n]one of these documents references AMS or the MLT
       agreement; none mentions AMS’s servicing duties; none is
       accompanied by a copy of the AMS MLT agreement; and
       none contains any tie between the AMS MLT agreement and
       any request for bond coverage, servicing contractor, or any
       other coverage.[16]

Much of this was affirmed by BNC’s Eckroth during her trial testimony.
Eckroth admitted that due to “oversight” BNC did not specifically identify
AMS as a mortgage banker to which BNC extended credit in the Travelers’


16    BNC’s drafted response to the relevant question in the questionnaire
was that

       BNC does not extend warehouse lines; however, a similar
       product is offered where BNC purchases a participating
       interest in mortgage loans held for sale. BNC currently has
       one customer participating in this program which consists of
       a $25 million commitment, with a $2.5 million over-line
       facility. Each of the loans participated has a maturity of 120
       days from origination.

But, BNC’s Chief Credit Officer and president of its North Dakota
operations, David Gordon Hoekstra, who testified to drafting this “alert”
to “brokers of the MLT program,” conceded that nothing in the description
identified AMS or indicated that the description is tied to a specific request
for servicing contractor coverage.


                                     17
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

questionnaire. In fact, BNC failed to identify AMS even though the
applications expressly asked BNC to mention, by name, the servicing
contractor for which coverage was wanted. Even more than “oversight,”
Eckroth testified, in her deposition and at trial, that at the time she
completed the Colonial application she did not know AMS was BNC’s MLT
contractor.

¶50           As to the September 4, 2008 conference call with HUB’s
broker—Plant, of the two BNC representatives participating—Eckroth and
Franz, neither had direct responsibility nor a detailed understanding of the
MLT program. Eckroth testified that while she remembered there was
discussion of the MLT program during the call, she did not remember the
specifics. She confirmed that she was not “involved in the oversight and
management of the MLT program”—and in fact, had no role in the
operation of the MLT program. She stated that she did “not consider
[herself] knowledgeable about how the MLT program operates, and had
never read the AMS MLT agreement.”

¶51           The trial court noted that Franz repeatedly testified that it was
not his “responsibility” to know the details of the MLT program. It stated
that Franz confirmed he had never read the AMS MLT agreement, was not
involved in the day-to-day management and oversight of the program, and
was not familiar with the mechanics of the program. However, the court
noted that when asked whether he discussed servicing contractor coverage
in the context of the MLT program during the phone conversation, Franz
responded:

       Yes, we did . . . We talked about the fact that AMS originated
       loans and sold them on the secondary market; that they
       serviced them in the interim period, and that we wanted coverage
       for those servicing activities.

As to this response, Franz was impeached on cross-examination with his
2012 testimony from the coverage litigation between BNC and the
insurance carriers. The court found that in the coverage litigation, Franz
had testified that he “d[idn’t] recall” whether he “ever discuss[ed] BNC’s
relationship with AMS with Brett Plant” or whether he was “ever present
at any meetings, phone conferences, [or] video conferences in which anyone
at BNC discussed BNC’s relationship with AMS with Brett Plant.” Having
highlighted Franz’s testimony in its ruling, the court likely concluded that
Franz was not credible.




                                      18
                         BNCCORP et al. v. HUB et al.
                            Decision of the Court

¶52             Most importantly, none of Eckroth’s and Franz’s testimonies
indicated that they requested or directed HUB to independently identify
risks that may stem from BNC’s relationship with AMS. The trial court
concluded that “even assuming the accuracy of Mr. Franz’s testimony in
this litigation regarding the September 4, 2008 phone call, it establishes only
that BNC sought fidelity coverage for AMS’s servicing activities, which HUB
helped BNC obtain.” (Emphasis added.)

¶53           The applicable standard of care did not require HUB and/or
its broker to undertake independent risk evaluation. See, e.g., Couch on
Insurance § 46:38 (3d ed. 2014) (“Insurance agents do not have an
independent [obligation] to identify their clients’ needs and to advise them
regarding whether they may be underinsured because it is the client’s
responsibility or [obligation], not the insurance agent’s, to determine the
amount of coverage needed and advise the agent of those needs.”). Based
on BNC’s specific coverage requests, it would be far-reaching to say that it
behooved HUB to identify BNC’s risks generally, and more specifically the
unbeknownst particular fraud risks AMS posed.

¶54          We nonetheless consider the possibility whether HUB may
have been required to affirmatively recommend additional or alternative
coverage that may have protected BNC from the particular fraud AMS
perpetrated due to BNC’s request that HUB provide BNC with “any
recommendations for other limit increases you feel appropriate,” or
“recommendations for enhancements to [BNC’s] insurance program.”
However, based on the record and general legal consensus, we cannot
surmise so much.

¶55             Firstly, the general rule is that vague requests for coverage do
not change the broker’s obligations. See Appleman Library Edition §
2.05(5)(b); see e.g., Trotter v. State Farm Mut. Auto. Ins. Co., 377 S.E.2d 343, 347
(S.C. Ct. App. 1988) (internal quotations and citation omitted) (expressing
the rule: “A request for ‘full coverage,’ ‘the best policy,’ or similar
expressions does not [oblige an insurance agent] to determine the insured’s
full insurance needs, to advise the insured about coverage, or to use his
discretion and expertise to determine what coverage the insured should
purchase”).

¶56             Secondly, in its brief on appeal, HUB informs that it offers risk
management services at additional costs, beyond what BNC paid for HUB’s
services; this strongly suggests HUB never agreed to provide BNC with risk




                                        19
                        BNCCORP et al. v. HUB et al.
                           Decision of the Court

assessment services.17 BNC does not refute that it did not pay additional
costs for risk assessment services. Thirdly, it is difficult to understand how
BNC could have expected HUB to adequately identify the possible risks
AMS posed. Given the unique circumstances regarding AMS, particularly
its unlawful activities extending back to 2006 before HUB was BNC’s
broker, not providing HUB with information more specific to AMS is fatal
for BNC. It is also hard to see how HUB could have been expected to
identify the specific fraudulent lapping scheme at issue here, or propose
additional or alternative coverage to more “adequately” protect BNC in its
relationship with AMS, when BNC itself did not foresee this fraud and did
not provide HUB with a copy of the AMS MLT agreement. See Appleman
Library Edition § 2.05(5)(d) (stating that a broker is not in breach for failing


17     Evaluating the breach of the standard of care, as Sulpizio suggested,
in terms of the extent to which HUB’s broker’s level of service—having not
retrospectively met BNC’s standards—comported with the level of service
HUB advertised in its financial institution advertisements would distort the
facts and ignores insightful legal principles. First, it is a well-known
starting legal principle that advertisements are generally regarded as
invitations to the public, not specific offers of service. Second, relevant
factors weigh against assigning a requirement to advise to HUB based on
advertisements indicating that HUB provides risk analysis. See Couch, §
46:38 (“Some of the factors relevant to a determination of whether a long-
term relationship or special circumstance exists between an insurance
broker and the insured sufficient to impose a duty on the broker to obtain
additional information necessary for coverage include: (1) the broker’s
exercise of broad discretion in servicing the insured’s needs, (2) the broker’s
counseling of the insured concerning specialized insurance coverage, (3)
the broker’s declaration that he is a highly skilled insurance expert, coupled
with the insured’s reliance upon the expertise, and (4) the broker’s receipt
of compensation above the customary premium paid for expert advice
provided.”).

      Here, in addition to BNC’s failure to separately pay for risk advising,
the marketing materials stated they were “presented without any
representation or warranty,” and directed potential clients to “consult your
own professional advisor about your insurance needs.” Thus, BNC would
be unjustified in relying on the relevant ads. Neither does the record
suggest HUB exercised broad discretion in servicing BNC’s needs. The
record is replete with letters and emails confirming BNC’s practice of
asking specific questions about issues it wanted its broker to consider.



                                      20
                        BNCCORP et al. v. HUB et al.
                           Decision of the Court

to advise, and thus cannot “face liability[,] unless [the] insured provides
them with the information necessary to render the advice sought”).

¶57            Moreover, we agree with the trial court that it would be
incongruous to impose upon an insurance broker “a duty to identify risks
resulting from a client’s business operations that the client itself was unable to
foresee despite the sensitive and highly regulated nature of the client’s
business.” (Emphasis added.) Given the highly-regulated nature of the
banking industry, it is reasonable that risk identification should be deemed
a bank’s obligation; of course, unless a broker agrees to take on such
obligations on behalf of the bank. It seems most reasonable that a bank, its
directors and managers, particularly those with risk management
responsibilities should first clearly assess and identify the risks the bank
face, and then, “decide the most appropriate method for treating a
particular risk”—including whether they ought to request coverage for the
identified risk(s). See, e.g., Sadler v. Loomis Co., 776 A.2d 25, 40 (Md. App.
2001) (citation omitted) (stating, “the insured is generally considered best
able to balance the factors relating to potential economic loss against the
expense of purchasing additional insurance, the likelihood that a particular
risk will materialize, and the insured’s own comfort level with the risks
versus the cost of greater protection”). If they decide to obtain particular
coverage, and in fact make such a request to a broker, and the broker agrees
to seek such coverage for the bank, then the broker must act in accordance
with the standard of care in seeking out the appropriate coverage to meet
the identified risk(s).

¶58           We hold that where a bank fails to identify or foresee its own
risks, but makes a general request for additional coverage
recommendations, a broker need not assess for risks absent a specific
request to identify, and an agreement to do so, accompanied by adequate
information to undertake such assessment.18

              2.      HUB’s conduct satisfied the applicable standard of
                      care because HUB obtained coverage for BNC that was
                      consistent with or better than BNC actually requested.

¶59           In meeting the default standard of care under Darner, HUB’s
brokers were required to perform in accordance with the “degree of care
ordinarily to be expected from others in [their] profession.” 140 Ariz. at



18    To reiterate, statements regarding conduct, like this one, pertains to
the applicable standard of care and has no bearing on the duty element.


                                       21
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

398, 682 P.2d at 404. At trial, HUB’s expert, John Alberts, explained that the
insurance broker’s duty is ordinarily satisfied by

       act[ing] on the instructions of the client, [going] to the market
       place to obtain terms or to market an account, and
       [responding] back to the client in a timely manner with either
       proposals or the information that the insurance product or
       coverages that were part of the instruction from the client are
       either not available or available at an extraordinary expense.

This testimony is supported by Appleman’s Library Edition. See Appleman
Library Edition § 2.05(3)(a) (stating that an insurance broker’s obligation of
care to an insured is ordinarily satisfied by “procur[ing] the coverage
specifically requested” and/or informing the insured that the requested
coverage is unavailable).

¶60           The Restatement (Second) of Torts also states that

       [w]hen an act is negligent only if done without reasonable
       care, the care which the actor is required to exercise to avoid
       being negligent in the doing of the act is that which a
       reasonable man in his position, with his information and
       competence, would recognize as necessary to prevent the act
       from creating an unreasonable risk of harm to another.

Restatement (Second) of Torts § 298 (1968). BNC cites no authority
indicating that Darner’s requirement that a broker display the level of skill
and diligence normally possessed by members of his profession, required a
broker to obtain and display, without specific requests and agreement,
specialized knowledge related to advising about risks or to diligently assess
and surveil for unidentified risks. The record supports the trial court’s
implicit adoption of HUB’s expert’s testimony; we defer to the trial court as
such reliance is not clearly erroneous.

¶61           The record shows that HUB’s broker, Thomas, discussed with
BNC options it might consider and asked if BNC wanted to pursue certain
options with renewal. HUB’s broker, Plant, sent the insurance coverage
proposals it received from the insurers to BNC, thereby giving BNC the
opportunity to examine whether the proposed coverage would provide it
with adequate protection. Plant made changes to the requested coverage
proposal and he even flew to Minneapolis to present the proposal at a BNC
board meeting. No questions were raised at the meeting about servicing
contractor coverage. Ultimately, because of its brokers’ work, HUB
obtained for BNC coverage that was consistent with or better than BNC


                                      22
                      BNCCORP et al. v. HUB et al.
                         Decision of the Court

requested, based on the direction and information BNC actually
provided.19, 20 The possibility that BNC may have been better served by a
more assertive and proactive broker does not put HUB in breach of the
applicable standard of care.21


19    This is established by an exchange between HUB’s counsel and
BNC’s Eckroth in the trial transcript:

      Q. All right. Let’s take a look at what you actually requested
      in writing, what’s documented, a request to remarket, and
      HUB did that remarketing; correct?
      A. Yes.
      Q. And you asked that HUB look at the option of a three-year
      prepaid policy, and HUB did that; correct?
      A. Yes.
      Q. And you asked that they quote—that the quote include
      various deductible options, and HUB did that as well; correct?
      A. Yes.
      Q. And finally you asked that the quote include renewal at
      current limits, plus an increased limit for BPL—that stands for
      banker’s professional liability; correct?
      A. Yes.
      Q. And that was also accomplished by HUB; correct?
      A. Yes.
      Q. And for recommendations for other limits increases you
      feel appropriate, and HUB did that as well; correct?
      A. I believe, yes.
20      We draw specific attention to the fact that BNC’s own expert, Mike
Hogan, acknowledged that the servicing contractor coverage HUB obtained
for BNC was broader than the coverage afforded by BNC’s expiring Chubb
policy.

21     BNC notes behavioral issues with Plant that HUB became aware of
in 2010 but did not subsequently inform BNC of. These issues are
attenuated from the work Plant did back in 2008 to have relevance in this
appeal. We are similarly unconvinced that HUB should be liable because it
did not assist BNC in pursuing its July 2010 insurance claim against BNC’s
insurers, (as suggested in HUB’s advertisements). See Couch § 46:38
(suggesting that absent a specific agreement an insured’s agent [(or here
broker)], would not have a continuing obligation—assuming they had such



                                    23
                       BNCCORP et al. v. HUB et al.
                          Decision of the Court

¶62            The fact that in the financial institution bond HUB obtained
for BNC from Colonial, Colonial agreed to “indemnify” BNC for “[l]oss
resulting directly from dishonest or fraudulent acts committed by any
servicing contractor acting alone or in collusion with others” is crucial to
the outcome in this matter. The trial court noted that “BNC affirmed at trial
its position that [Colonial] and Travelers were wrong to deny coverage for
the AMS [relationship] and did so in bad faith and with an ‘evil’ mind.”
The court explained that

      BNC’s position is supported by detailed, extensive reports
      and analysis by multiple experts engaged by BNC, including
      a professor of insurance/former deputy insurance
      commissioner, an insurance law professor and author of
      casebooks on insurance law, a mortgage banking industry
      expert with 37 years of experience, and a forensic
      accountant—each of whom concluded that there was
      coverage under the [Colonial] bond for the AMS loss.

¶63           Accordingly, any argument the insurers may have made to
convince BNC it did not have coverage for AMS’s fraud—hence the
settlement and subsequent suit against HUB—does not foreclose the trial
court’s finding that coverage existed, even for AMS, pursuant to the
servicing contractor coverage provided by the Colonial bond. See supra n.7
(documenting the language of the bond and AMS’s servicing
responsibilities). While the trial court included these findings in its
causation analysis, we conclude they are more appropriately presented in
the discussion of breach.22 It would be illogical to conclude that a broker
should be deemed in breach for not obtaining coverage, even where the
insured concedes that such coverage was obtained. We do not agree with
BNC’s apparent position that HUB should nonetheless be held liable




an obligation in the first place— to advise “guide, or direct the insured’s
coverage after the agent has complied with his or her obligation to obtain
coverage on behalf of the insured”). Notably, BNC did not join HUB as a
party to the coverage litigation.

22     The trial court did note that to the extent its conclusions of law
contained findings of facts, those findings were “incorporated into” the
findings of fact.




                                     24
                      BNCCORP et al. v. HUB et al.
                         Decision of the Court

because the insurance carriers could, and did in fact, contest the existence
of coverage.

¶64          On the record before us, we find the evidence sufficiently
supported the trial court’s finding that HUB did not breach the applicable
standard of care. Accordingly, because BNC did not carry its burden to
show breach, we need not discuss the issue of liability further.23 Likewise,
we affirm the trial court’s final judgment as to damages—i.e., HUB did not
cause, and thus is not responsible for, BNC’s damages.24




23     Among the issues we need not discuss is whether HUB breached the
applicable standard of care by assigning BNC to the broker, Plant.

24     BNC alleged that it suffered more than $26 million in losses for the
fraudulent lapping scheme AMS perpetrated. BNC argued that because of
coverage denials it did not receive “15 million in MLT insurance
proceeds”— and was forced to sell its banking operations in Phoenix and
Minneapolis and other assets. It sought to recover more than $27 million
dollars from HUB. On partial summary judgment as to damages, the trial
court limited BNC’s potential damages award, finding: (1) Because BNC
already received $7.5 million of the $14.9 million—the actual amount of
coverage under the bond—combined policy limits it thus was not entitled
to what would be double-recovery under Arizona law; (2) BNC is not
entitled to recover commissions paid to HUB; (3) BNC was not entitled to
pre-judgment interests of its unliquidated damages; and (4) BNC cannot
recover attorneys’ fees in connection with its lawsuit under Arizona law.


                                    25
                      BNCCORP et al. v. HUB et al.
                         Decision of the Court

                              CONCLUSION

¶65           For the foregoing reasons, we affirm the trial court’s rulings
as to these matters.




                         AMY M. WOOD • Clerk of the Court
                         FILED: AA




                                       26
