Opinion
38131/07.
October 21, 2009.
ACKERMAN, LEVINE, CULLEN, BRICKMAN LIMMER, LLP, Attorneys for Plaintiff, Great Neck, New York.
WILSON, ELSER, MOSKOWITZ, EDELMAN DICKER, LLP, Attorneys for Defendants, White Plains, New York.
Upon the following papers numbered 1 87 read on this motion for summary judgment ; Notice of Motion and supporting papers 1-47; 81 ; Notice of Cross Motion and supporting papers____; Answering Affidavits and supporting papers 48-71; 82 ; Replying Affidavits and supporting papers 72-80 ; Other 83-87 it is,
ORDERED that this motion by the defendants for summary judgment dismissing the complaint is granted.
The plaintiff is engaged in the business of providing general contracting and construction management services. Patrick O'Brien is the sole owner of the defendant O'Brien Agency, Inc., which has procured commercial general liability, excess liability, and commercial automobile insurance policies for the plaintiff since 1993. It was the plaintiff's practice to have O'Brien review the insurance requirements contained in the construction contracts that it bid on to determine if the plaintiff had adequate insurance coverage. In late 2002 and early 2003, the plaintiff made some inquiries of O'Brien regarding whether it needed to procure construction management liability insurance. O'Brien advised the plaintiff that it did not have construction management liability insurance; that it was available but expensive; and that the plaintiff's business, as it was described to him, was covered by the existing general liability insurance policy. The plaintiff did not ask O'Brien to procure construction management liability insurance for it in 2002 or 2003.
The court notes that the plaintiff provided O'Brien with only the insurance provisions of its contracts, not complete copies thereof.
From 1995 until August 30, 2002, O'Brien procured the plaintiff's commercial general liability and excess liability insurance from Nationwide. In 2002, Nationwide no longer covered general contractors, and O'Brien obtained several quotations for general and excess liability insurance for the plaintiff. On August 20, 2002, O'Brien reviewed the quotes with the plaintiff, which subsequently accepted the general liability policy provided by QBE Insurance Corporation and the excess liability policy provided by American Markel Insurance Company for the period from August 30, 2002, to August 30, 2003. The QBE policy contained an endorsement excluding liability for professional services from its coverage. For the period from August 30, 2003, to August 30, 2004, O'Brien again obtained several quotations for the plaintiff for general and excess liability insurance. The plaintiff accepted the general and excess liability policies provided by RLI Insurance Company, which have been renewed annually since August 30, 2004. Like the QBE policy, the RLI general liability policy contained an endorsement excluding liability for professional services from its coverage. It also contained a breach-of-contract endorsement excluding coverage for damages or injuries arising from breach of contract; breach of warranty; fraud or misrepresentation in the formation, terms, or performance of a contract; and defamation within a contractual relationship.
In June and July 2003, the plaintiff entered into two construction management contracts with Williams Scotsman, Inc., and I-R Mobile Modular, respectively, to build modular elementary school buildings in New Jersey. Both contracts clearly required the plaintiff to have construction management professional liability insurance in addition to commercial general liability insurance and excess liability insurance. There is evidence in the record that the plaintiff sent the insurance provisions of the I-R Mobile contract to the O'Brien Agency on July 24, 2003, in connection with a request for a certificate of insurance. The O'Brien Agency issued a certificate of insurance for the I-R Mobile contract on September 25, 2003, and one for the William Scotsman contract on October 24, 2003. The certificates, which were sent to the plaintiff, indicated that the plaintiff had existing general liability, excess liability, automobile liability, and property insurance, but not construction management liability insurance as required by the contracts. There is no evidence in the record that the plaintiff subsequently asked O'Brien to procure the required construction management insurance for it.
By a letter dated January 29, 2004, I-R Mobile declared the plaintiff in default of its contract. On February 25, 2004, I-R Mobile commenced an action against the plaintiff in the Superior Court of New Jersey. That action was subsequently discontinued, and I-R Mobile commenced a second action against the plaintiff, among others, in the Superior Court of New Jersey. The complaint asserted, inter alia, causes of action for breach of contract, breach of warranty, and negligence based on the plaintiff's alleged failure to perform its services competently, professionally, and in accordance with the terms of the parties' agreement and applicable construction industry standards. Neither action was reported to the plaintiff's insurance carriers, and the second action is still pending. To date, the plaintiff has incurred more than $1 million in legal and expert witness fees defending the I-R Mobile action.
On February 28, 2005, William Scotsman commenced a third-party action against the plaintiff in the Superior Court of New Jersey for breach of contract, negligence, indemnification and contribution. All four causes of action were based on the plaintiff's alleged failure to perform services in a professional manner using its reasonable skill and judgment. The plaintiff sent a copy of the third-party summons and complaint to O'Brien, who forwarded it to RLI and QBE. On March 21, 2005, RLI disclaimed coverage, and on June 2, 2005, QBE disclaimed coverage. Both RLI and QBE disclaimed coverage, in part, because the insurance policies in question did not apply to damages or injury caused by the rendering or failure to render professional services or construction management services. The William Scotsman action was settled before trial for $40,000, and the plaintiff incurred more than $40,000 in legal fees and costs defending the action.
After the disclaimer letters were received, it was determined that, even if the plaintiff reported the I-R Mobile action to its insurance carriers, RLI and QBE, any claim would he denied given the similarities between the I-R Mobile and William Scotsman actions. In November 2005, O'Brien procured professional liability or construction management liability insurance for the plaintiff.
The plaintiff subsequently commenced this action against the O'Brien Agency, inc., and the O'Brien Group, LLC, both of which are owned by Patrick O'Brien. The plaintiff seeks to impose liability on the O'Brien Agency and the O'Brien Group for failing to procure construction management liability insurance on its behalf. The plaintiff alleges that it had both express and implied agreements with the O'Brien Agency, dating back to 1993, to provide advice regarding its insurance needs and to procure insurance for it when its coverage was insufficient. The plaintiff alleges that the O'Brien Agency breached those agreements by failing to procure construction management liability insurance on its behalf. The defendants move for summary judgment dismissing the complaint.
Preliminarily, the court notes that the plaintiff does not allege the existence of a contract between itself and the O'Brien Group. Moreover, the record reflects that all of the plaintiff's dealings were with Patrick O'Brien and the O'Brien Agency. A party may not maintain an action for breach of contract against someone with whom that party is not in privity ( see, Grandell Rehabilitation Nursing Home v Devlin, 10 Misc 3d 1054 [A]). Accordingly, the court finds that the plaintiff's allegations are insufficient as a matter of law to state a cause of action for breach of contract against the O'Brien Group, and the complaint is dismissed insofar as it is asserted against the O'Brien Group.
It is well settled that insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or to inform the client of their inability to do so. Insurance agents do not have a continuing duty to advise, guide, or direct a client to obtain additional insurance coverage ( Murphy v Kuhn, 90 NY2d 266, 270). Insurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status. Insureds are in a better position than general insurance agents or brokers to know their personal assets and their ability to protect themselves, unless the latter are informed and asked to advise and act ( Id. at 273). Unlike a recipient of the services of a doctor, attorney, or architect, the recipient of the services of an insurance broker is not at a substantial disadvantage to question the actions of the provider of services ( Id. at 273).
Nevertheless, the Court of Appeals has acknowledged that exceptional and particularized situations may arise in which an insurance agent, through his conduct or by express or implied contract, assumes or acquires duties in addition to those fixed at common law ( Id. at 272). Whether such additional responsibilities should be recognized and given legal effect is governed by the particular relationship between the parties and is best determined on a case-by-case basis ( Id. at 272). While the New York courts disfavor finding such a relationship, they may recognize an additional duty in exceptional situations, for example, when the agent receives compensation for consultation beyond the premium payments, when the insured relies on the expertise of the agent regarding a question of coverage, or when there is an extended course of dealing sufficient to put an objectively reasonable insurance agent on notice that his advice is being sought and is specially relied upon ( Id. at 272; see also, Curanovic v New York Central Mutual Fire Ins. Co., 307 AD2d 435, 438). The burden of establishing such a relationship is on the insured ( Murphy v Kuhn, supra at 273).
The court finds that the record establishes as a matter of law that the plaintiff failed to request the specific coverage at issue prior to November 2005 ( see, Hoffend Sons, Inc. v Rose Kiernan, Inc., 7 NY3d 152, 156-158). While the plaintiff made some inquiries of O'Brien in 2002 and 2003 regarding whether it needed to obtain construction management liability insurance, the record reveals that the plaintiff did not specifically request O'Brien to procure such insurance at that time. Moreover, there is no evidence in the record that the plaintiff requested O'Brien to procure construction management liability insurance either before or after it executed the I-R Mobile and William Scotsman contracts. While the plaintiff sent the insurance provisions of the I-R Mobile contract to the O'Brien Agency on July 24, 2003, it was in connection with a request for a certificate of insurance. The court finds that such a request was not a specific request for a certain type of coverage. Accordingly, it was insufficient to trigger O'Brien's common-law duty ( Id. at 157-158).
The plaintiff contends that it had a special relationship with O'Brien, who was its insurance agent for 16 years, who was aware of its construction management business, who reviewed the insurance requirements contained in the construction contracts that it bid on to determine if the plaintiff had adequate insurance coverage, and who agreed to advise the plaintiff and make recommendations to it regarding insurance matters.
The court finds that the services provided by O'Brien to the plaintiff in his capacity as an insurance agent do not rise to the level of a special relationship. Although the parties had an extended course of dealing, the plaintiff did not compensate O'Brien for his insurance advice apart from its payment of premiums, nor did it delegate its insurance decision-making responsibility to O'Brien ( Hoffend Sons, Inc. v Rose Kiernan, Inc., supra at 158). The record reveals that the plaintiff, a sophisticated commercial entity, was actively involved with O'Brien in procuring both the QBE and RLI insurance policies. The plaintiff is presumed to have had knowledge of the contents of those policies ( see, McGarr v Guardian Life Ins. Co. of Am., 19 AD3d 254, 256; Busker on the Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376, 377; Rotanelli v Madden, 172 AD2d 815, 817), as well as the contents of the I-R Mobile and William Scotsman contracts ( see, Daniel Gale Assocs. v Hillcrest Estates, 283 AD2d 386, 387; Sofio v Hughes, 162 AD2d 518, 519; Avanta Bus. Servs. Corp. v Colon, 4 Misc 3d 117, 119). In fact, the record reveals that the plaintiff was well aware that it did not have the construction management liability insurance explicitly required by the I-R Mobile and William Scotsman contracts. O'Brien advised the plaintiff, in 2002 or 2003, before it entered into those contracts, that it did not have construction management liability insurance. Moreover, as previously discussed, the plaintiff sent the insurance provisions of the I-R Mobile contract to the O'Brien Agency on July 24, 2003, in connection with a request for a certificate of insurance. The certificates that were sent back to the plaintiff clearly indicated that the plaintiff had only general liability, excess liability, automobile liability, and property insurance. The plaintiff, a sophisticated commercial entity who was in a better position than O'Brien to protect itself, did nothing to procure construction management liability insurance at that time. The court finds that, under these circumstances, the plaintiff has no cause of action against O'Brien. It was the plaintiff's failure to obtain the construction management insurance explicitly required by the I-R Mobile and William Scotsman contracts, and not any breach of duty by O'Brien, that proximately caused the plaintiff's damages ( see, Busker on the Roof Ltd. Partnership Co. v Warrington, supra at 377). Accordingly, the complaint is dismissed insofar as it is asserted against the O'Brien Agency.