Bruckmann, Rosser, Sherrill & Co., L.P. v. Marsh United States, Inc.
Supreme Court of New York, Appellate Division, First Department
September 1, 2009, Decided; September 1, 2009, Entered
[*866] [**277] Order, Supreme Court, New York County (Milton A. Tingling, J.), entered December 19, 2008, which granted defendants' motion for summary judgment dismissing the complaint, modified, on the law, to reinstate the causes of action for negligence and breach of contract, and otherwise affirmed, without costs.
The second cause of action for breach of contract should be reinstated. "Under New York law, a party who has engaged a person to act as an insurance broker to procure adequate insurance is entitled to recover damages from the broker if the policy obtained does not cover a loss for which the broker contracted to provide insurance, and the insurance company refuses to cover the loss" (Long Is. Light. Co. v Steel Derrick Barge "FSC 99," 725 F2d 839, 841 [2d Cir 1984]; Landusky v Beirne, 80 App Div 272, 80 NYS 238 , affd 178 NY 551, 70 NE 1101 ). Plaintiffs' settlement of their underlying claim against the insurer, [***2] under circumstances in which the merits of the claim for coverage were equivocal, did not break the chain of proximate causation with respect to their claim against their broker for failure to procure appropriate coverage (see Bernstein v Oppenheim & Co., 160 AD2d 428, 430, 554 NYS2d 487 ). Resource Fin. v. National Cas. Co. (219 AD2d 627, 631 NYS2d 411 ), upon which the motion court relied, is distinguishable because the insured there settled its claim against the insurer despite having prevailed against the insurer on the underlying coverage issue.
An insurance agent or broker can be held liable in negligence if he or she fails to exercise due care in an insurance brokerage transaction. Thus, a plaintiff may seek to hold a defendant broker liable under a theory of either negligence or breach of contract (Bedessee Imports, Inc. v Cook, Hall & Hyde, Inc., 45 AD3d 792, 793-794, 847 NYS2d 151 ; see also Hersch v DeWitt Stern Group, Inc., 43 AD3d 644, 644-645, 841 NYS2d 516 [**278] ; Katz v Tower Ins. Co. of N.Y., 34 AD3d 432, 824 NYS2d 146 ). On this appeal, defendants did not argue that the negligence claim should be dismissed as duplicative of the breach of contract claim, and it is clear that plaintiffs allege a breach of duty independent [***3] of the contract itself. Specifically, plaintiffs maintain that defendants' failure to exercise due care is shown, inter alia, by their failure to include in the binder a reference to the tie-in provision and [****2] to timely review the draft policy and alert plaintiffs to the potential for a reduction in the limits of liability. Thus, the first cause of action for negligence should be reinstated.
The third and fourth causes of action for breach of the duty of loyalty and breach of fiduciary duty were properly dismissed. What is involved here is a dispute between insureds and their broker over whether the broker failed to obtain coverage [*867] requested and whether the broker is liable for damages as a result of that failure. "[T]he law is reasonably settled … that insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage" (Murphy v Kuhn, 90 NY2d 266, 270, 682 NE2d 972, 660 NYS2d 371 ). Thus, absent a special relationship, a claim for breach of fiduciary duty does not lie (see e.g. People v Liberty Mut. Ins. Co., 52 AD3d 378, 380, 861 NYS2d 294 ; [***4] Sutton Park Dev. Corp. Trading Co. v Guerin & Guerin Agency, 297 AD2d 430, 431-432, 745 NYS2d 622 ). Punitive damages are not available, since they are not recoverable for an ordinary breach of contract (Rocanova v Equitable Life Assur. Soc'y. of U.S., 83 NY2d 603, 613, 634 NE2d 940, 612 NYS2d 339 ) or for ordinary negligence (Munoz v Puretz, 301 AD2d 382, 384, 753 NYS2d 463 ). Concur--Catterson, Renwick and Richter, JJ.Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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65 A.D.3d 865 *; 885 N.Y.S.2d 276 **; 2009 N.Y. App. Div. LEXIS 6201 ***; 2009 NY Slip Op 6366 ****
[****1] Bruckmann, Rosser, Sherrill & Co., L.P., et al., Appellants-Respondents, v Marsh USA, Inc., et al., Respondents-Appellants.
Subsequent History: Subsequent appeal at Bruckmann, Rosser, Sherrill & Co., L.P. v. Marsh USA, Inc., 926 NYS2d 471, 2011 N.Y. App. Div. LEXIS 5453 (N.Y. App. Div. 1st Dep't, June 28, 2011)
Prior History: Bruckmann, Rosser, Sherrill & Co., L.P. v. Marsh USA, Inc., 2008 N.Y. Misc. LEXIS 9758 (N.Y. Sup. Ct., Dec. 15, 2008)
broker, coverage, cause of action, reinstated, breach of contract, insurer, procure