Opinion
Calendar No.: 3573-006 3706-007 Index No.: 100587/10
05-22-2013
COG-NET BUILDING CORP., Plaintiff, v. THE TRAVELERS INDEMNITY COMPANY, and RUSSO PICCIURRO MALOY, LLC d/b/a RPM INSURANCE AGENCY, Defendants.
DECISION
HON. JOSEPH J. MALTESE
The following papers numbered 1 to 8 were fully submitted on the 5th day of April, 2013:
+-----------------------------------------------------------------------------+ ¦ ¦Pages ¦ ¦ ¦Numbered ¦ +---------------------------------------------------------------+-------------¦ ¦Notice of Motion for Summary Judgment ¦ ¦ ¦ ¦ ¦ ¦by Defendant Russo Picciurro Maloy, LLC d/b/a RPM Insurance ¦ ¦ ¦Agency, ¦1 ¦ ¦ ¦ ¦ ¦with Supporting Papers, Exhibits and Memorandum of Law, ¦ ¦ ¦ ¦ ¦ ¦(dated December 3, 2012) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Notice of Cross Motion for Summary Judgment ¦ ¦ ¦ ¦ ¦ ¦by Defendant the Travelers Indemnity Company, ¦ ¦ ¦ ¦2 ¦ ¦with Supporting Papers, Exhibits and Memorandum of Law, ¦ ¦ ¦ ¦ ¦ ¦(dated December 20, 2012) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Plaintiff's Affirmation in Opposition to Cross Motion ¦ ¦ ¦ ¦3 ¦ ¦(dated February 12, 2013) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Plaintiff's Affirmation in Opposition to Motion ¦ ¦ ¦ ¦4 ¦ ¦(dated February 12, 2013) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Amended Affirmation in Opposition to Cross Motion ¦ ¦ ¦ ¦5 ¦ ¦(dated March 6, 2013) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Amended Affirmation in Opposition to Motion ¦ ¦ ¦ ¦6 ¦ ¦(dated March 6, 2013) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Affirmation in Further Support of Motion for Summary Judgment ¦ ¦ ¦ ¦ ¦ ¦by Defendant Russo Picciurro Maloy, LLC d/b/a RPM Insurance ¦ ¦ ¦Agency, ¦7 ¦ ¦ ¦ ¦ ¦with Memorandum of Law ¦ ¦ ¦ ¦ ¦ ¦(dated April 2, 2013) ¦ ¦ +---------------------------------------------------------------+-------------¦ ¦Reply Affirmation ¦ ¦ ¦ ¦ ¦ ¦by Defendant the Travelers Indemnity Company, ¦ ¦ ¦ ¦8 ¦ ¦with Supporting Papers and Exhibits ¦ ¦ ¦ ¦ ¦ ¦(dated April 3, 2013) ¦ ¦ +-----------------------------------------------------------------------------+
Upon the foregoing papers, the respective motion (No. 3573-006) and cross motion (No. 3706-007) for summary judgment by defendants Russo Picciurro Maloy, LLC d/b/a RPM Insurance Agency (hereinafter "RPM") and the Travelers Indemnity Company (hereinafter "Travelers") are granted, and the complaint is dismissed.
The denial of RPM's pre-answer motion to dismiss was affirmed by the Appellate Division, Second Department in Cog-Net Bldg Corp v. Travelers Indem Co, (86 AD3d 585 [2011]).
To the extent relevant, plaintiff Cog-Net Building Corp. (hereinafter "Cog-Net") leased its commercial premises located at 1870 Richmond Terrace, Staten Island, New York to nonparty Motorvations Inc. (hereinafter "Motorvations") on or about February 28, 2005. According to the most recent lease agreement, Motorvations was required to obtain an insurance policy including "$1,000,000 for injury (including death), and $250,000 for damage to property (combined single limit); which policy shall name the Landlord as an additional insured" (see RPM's Exhibit "A", Rider at para "Fortieth").
It is undisputed that on or about January 21, 2008, Travelers, acting upon a request from RPM, issued a certain insurance policy bearing the number #I-680-6924B757-IND-08 to Cog-Net's tenant, Motorvations, providing coverage against the risk of property damage to the subject premises, including loss by fire and its effects, up to $220,500 (see Complaint, para 4; Travelers' Exhibits "A", "B"). The above policy also provided general liability coverage, and while plaintiff was named an "additional insured" under its liability provisions, it is undisputed that Cog-Net was named as a "loss payee" under the property endorsement.
On February 17, 2009, the subject premises was damaged and destroyed by fire and its effects, resulting in a property loss to plaintiff in excess of the policy limit. Plaintiff thereafter submitted a property damage claim to Travelers, but when it was discovered that the owner of Motorvations, Steven Alonso, had hired an arsonist to burn down the building, Travelers denied the claim on the ground that the intentional act of the insured negated any coverage under the policy.
Following the denial of its property damage claim, Cog-Net commenced this action to recover damages for breach of the insurance contract against defendant-insurer Travelers, as well as a cause of action for, e.g., negligence against defendant- broker RPM for its failure to procure proper insurance coverage. According to plaintiff, had it been named an "additional insured" for property damage, as the lease required, it would have been able to recover under the Travelers policy notwithstanding the tenant's arson (see Complaint, para 7). In addition, plaintiff seeks, inter alia, reformation of the insurance contract to reflect its "intended" status as an additional insured under the property endorsement (id. at 33).
At his deposition, Ben Cognetta, the president and owner of Cog-Net, testified that he had twice initiated telephone calls to RPM to confirm that Cog-Net "was covered by Motorvations' policy" and "insured for [both] liability and fire" (see EBT of Ben Cognetta, pp 54, 59-61, 121-126). Previously, Steven Alonzo, the then-owner of Motorvations, had allegedly notified the witness of the procurement of insurance through RPM (id. at 57). However, Cognetta conceded that he never spoke to anyone at Travelers about insurance coverage on the leased premises (id. at 70), and admitted that while Motorvations had been its tenant since February of 2005, he had never seen or received a copy of the insurance policy until after the date of loss (id. at 136-137).
Frank Picciurro, Jr testified on behalf of RPM that the agency only accepts instructions or requests from its clients, here, Motivations (see EBT of Frank Picciurro, Jr, pp 58-59). In addition, he testified that in his opinion, the "terminology additional insured always refers to.. general liability" coverage, and that he has "never seen... additional insured status granted by any insurance company for any risk on [the] property portion of a policy". In fact, he purportedly did not know if such coverage even exists (id. at 72, 79, 98). Picciurro further stated that he was not aware of any telephone conversation with Cog-Net's Cognetta, nor do his computer records reflect any such conversation (id. at 82-93). Moreover, he was unable to locate any documents memorializing a request by Cog-Net to be named as an additional insured on the property endorsement (id. at 99, 101-102).
Steven Alonso testified at his deposition that he and his wife owned Motorvations from October of 2005 until February of 2009 (see EBT of Steven Alonso, p 15). Upon taking control of the company, he retained the same insurance policy held by the prior owner (id. at 19), having been advised by Cognetta that he was satisfied with the current policy (id. at 25). Alonso also testified that he contacted RPM twice to make changes in the policy, first for 2007-2008, when Cognetta asked him to increase the property damage limit to $200,000 and a subsequent increase to $220,500 for the 2008-2009 policy year (id. at 28-30, 41). Otherwise, there had been no requests for policy changes (id. at 50). When directly asked if he received any request from Cognetta to add Cog-Net as an additional insured on the property endorsement, Alonso responded in the negative (id. at 39). To the contrary, he stated that Cognetta had requested that Cog-Net be listed as a loss payee, the same status as on the previous policies (id. at 57-59). He also denied receiving any complaints from Cognetta indicating that the policy limits were insufficient (id. at 47).
In connection with the February 17, 2009 fire, Steven Alonso was charged with the Class E felony of insurance fraud (see EBT of Steven Alonso, p 51). He pled guilty and received five years probation (id.).
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Karin Boone, a senior account executive for Travelers, testified on its behalf that during her experience at Travelers, a building owner with a tenant would not be named as an additional insured under the property section of an insurance policy, particularly with regard to the underwriting guidelines for a small commercial or "select" business unit (see EBT of Karin Boone, pp 51-52, 61). She further stated that if an agent or broker had contacted an underwriter and requested that the building owner be named as an additional insured under the property damage endorsement, she would have declined the request because it is outside Travelers' guidelines (id. at 53). Finally, the witness testified that she was unaware of any requests by RPM to add Cog-Net as an additional insured (id. at 57).
In moving for summary judgment, defendant RPM argues that (1) it procured the coverage specifically requested by Motorvations, and (2) its duty ran exclusively that entity, rather than Cog-Net.
Travelers' cross motion for summary judgment is predicated on the grounds that (1) its underwriting guidelines do not permit a person in plaintiff's position to be named an additional insured on the type of policy at issue, and (2) throughout the four years that the subject policy was in effect, neither Cog-Net nor Motorvations requested Travelers or RPM to add plaintiff as an additional insured under the property loss provision. In fact, it is argued that the only request Travelers ever received from Motorvations was in a fax dated March 12, 2006 from Steven Alonso seeking an increase in the property limits, wherein it was specifically acknowledged that plaintiff be covered as a loss payee for purposes of such coverage (see Travelers' Exhibit "M"). Finally, Travelers maintains that it properly denied coverage for the subject claim since its insured admitted to having fraudulently caused the instant fire (see Affirmation of D. Carolina Lopez, Esq, para 19). Consequently, neither the insured, Motorvations, nor plaintiff, Cog-Net, were entitled to payment under the loss payee provisions of the policy (id. at 5-6).
In opposition to both motions, plaintiff argues that RPM's alleged verification of coverage with Cognetta over the telephone and Cog-Net's subsequent reliance thereon is sufficient to establish privity. Moreover, plaintiff submits an affidavit from Stephen Ruchman, an insurance agent for over fifty years, who attests that RPM could have obtained "additional insured" coverage for Cog-Net on the property endorsement by going through the Farmers Insurance Company, with which RPM has an agency relationship (see Affidavit of Stephen Ruchman, para 4).
It is well settled that an insurance agent or broker may be held liable under the theories of breach of contract or negligence for failing to procure a particular policy of insurance (see Bedessee Imports, Inc v. Cook, Hall & Hyde, Inc, 45 AD3d 792, 793-794 [2nd Dept 2007]). However, in order to be successful, an insured must show that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached some agreement or because it failed to exercise due care in effectuating the transaction (id.; see Gagliardi v. Preferred Mut Ins Co, 102 AD3d 741 [2nd Dept 2013]). In this regard, an insurance agent or broker has been held to have a common-law duty to obtain the coverage requested by a client within a reasonable amount of time, or to inform the client of its inability to do so (see Axis Constr Corp v. O'Brien Agency, Inc, 87 AD3d 1092, 1093 [2nd Dept 2011]; Core-Mark Intl v. Swett & Crawford Inc., 71 AD3d 1072, 1073 [2nd Dept 2010]). Conversely, absent a specific request for coverage not already in a client's policy or the existence of a special relationship with the client, it is well established that an insurance agent or broker has no continuing duty to advise, guide, or direct a client to obtain additional or different insurance coverage (see Axis Constr Corp v. O'Brien Agency, Inc, 87 AD3d at 1093). A special relationship spawning a duty to advise a client may arise, inter alia, where there has been a mutual course of dealing over an extended period of time which objectively would put a reasonable insurance agent on notice that his or her advice was being sought and specially relied upon (id.).
Here, defendants have each demonstrated a prima facie entitlement to judgment as a matter of law by, e.g., the submission of deposition testimony demonstrating that they procured the specific insurance coverage requested by the insured, Motorvations (see Femia v. Graphic Arts Mut ins Co, 100 AD3d 954, 955 [2nd Dept 2012]), and that neither it nor plaintiff ever requested that Cog-Net be named an additional insured in the property damage endorsement (see Axis Constr Corp v. O'Brien Agency, Inc, 87 AD3d at 1093; Verbert v. Garcia, 63 AD3d 1149 [2nd Dept 2009]; Loevner v. Sullivan & Strauss Agency, Inc., 35 AD3d 392, 394 [2nd Dept 2006]). Hence, there was no reason for either RPM or Travelers to anticipate a desire or the need for such inclusive coverage. Moreover, plaintiff failed to demonstrate any triable issue of fact that it had a special relationship with either defendant (compare South Bay Cardiovascular Assoc v. SCS Agency, Inc, _ AD3d _, 2013 NY Slip Op 2564 [2nd Dept]) or that there was more than the standard "consumer-agent insurance placement relationship" between plaintiff and either of them (Murphy v. Kuhn, 90 NY2d 266, 271 [1997]).
With regard to the cause of action seeking reformation of the policy on the ground of mutual mistake, plaintiff failed to refute RPM's and Travelers' deposition testimony that Travelers does not insure building owners as additional insureds under a tenant's policy covering property losses, and consequently, could not have intended to provide said coverage to Cog-Net (see Portnoy v. Allstate Indem Co, 82 AD3d 1196, 1198 [2nd Dept 2011]). Additionally, plaintiff cannot seek damages from RPM for its failure to procure such a policy. Assuming arguendo that RPM was negligent, it breached a duty owed to Motorvations, not Cog-Net (see American Ref-Fuel Co of Hempstead v. Resource Recycling, 248 AD2d 420, 424 [2nd Dept 1998]). In any event, since the subject policy was in effect for at least four years prior to the loss for which coverage is sought, and was repeatedly renewed as originally written, Cog-Net and Motorvations are "conclusively presumed to have read and assented to [its] terms" (Portnoy v. Allstate Indem Co, 82 AD3d at 1198 [citations and internal quotation marks omitted]). Under these circumstances, plaintiff has failed to demonstrate the existence of any triable issue of fact on any of its claims (id.).
Accordingly, it is hereby:
ORDERED that defendants' motion and cross motion for summary judgment are granted; and it is further
ORDERED that the complaint is dismissed; and it is further
ORDERED that the Clerk enter judgment and mark his records accordingly.
ENTER,
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Joseph J. Maltese
Justice of the Supreme Court