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Insurent Agency Corp. v. Hanover Ins. Co. - 2018 U.S. Dist. LEXIS 140922 (S.D.N.Y. Aug. 20, 2018)

Rule:

Summary judgment is appropriate where the record establishes that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).

Facts:

Plaintiff Insurent Agency Corporation ("Insurent") specializes in serving as a guarantor for residential leases. Insurent and its parent company, Plaintiff RS Holdings Corporation ("RS Holdings"), sued Insurent's competitor, Defendant Guarantr, LLC, d/b/a The Guarantors Agency ("Guarantors"), along with defendants The Hanover Insurance Company ("Hanover") and Ronald MacDonald, asserting claims under federal and New York law. Defendants move for summary judgment as to all claims against all defendants. The motion is granted in part and denied in part. In addition, plaintiffs move to amend their complaint to add as a plaintiff RS Reinsurance (“Bermuda”) Ltd. ("RS Reinsurance"), a Bermuda corporation and wholly-owned subsidiary of plaintiff RS Holdings. Plaintiffs' motion is granted.

Plaintiffs commenced this lawsuit in April 2016 and amended their complaint in June and September 2016. The Second Amended Complaint ("Complaint"), the operative complaint, asserts claims for (1) copyright infringement; (2) misappropriation of trade secrets under New York law; (3) misappropriation of trade secrets under the federal Defend Trade Secrets Act ("DTSA"); (4) unfair competition due to trade secret misappropriation; (5) breach of fiduciary duty; (6) interference with prospective business advantage; (7) false advertising and promotion under § 43(a) of the Lanham Act; (8) false advertising under New York General Business Law ("NYGBL") § 350; (9) breach of contract; and (10) inducement of breach of contract.

Issue:

Is summary judgment appropriate as to all claims against Hanover?

Answer:

No.

Conclusion:

Summary judgment is denied as to plaintiffs' claims against Guarantors and MacDonald for trade secret misappropriation under New York and federal law, and unfair competition under New York law (Counts 2, 3 and 4) because a reasonable juror could conclude from the evidence in the record that MacDonald disclosed proprietary information concerning Insurent's loss rate and loss ratio to Guarantors. Summary judgment is granted as to plaintiffs' claims against Hanover for trade secret misappropriation under New York and federal law, and unfair competition under New York law (Counts 2, 3 and 4) because plaintiffs proffer no evidence from which a reasonable jury could infer that Hanover had notice of the purported misappropriation. Without notice of any misappropriated trade secrets, Hanover cannot have used "improper means," or displayed "bad faith," in acquiring them. Summary judgment is denied as to plaintiffs' claims for breach of fiduciary duty and breach of contract (Counts 5 and 9) against MacDonald. Summary judgment is denied as to plaintiffs' claim of inducement of breach of contract against Guarantors. "Tortious interference with contract requires the existence of a valid contract between the plaintiff and a third party, defendant's knowledge of that contract, defendant's intentional procurement of the third-party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom." Summary judgment is granted as to plaintiffs' claim for interference with prospective business advantage because plaintiffs fail to proffer evidence of business relationships that were injured as a result of defendants' alleged misconduct. Summary judgment is denied as to plaintiffs' claim for false advertising under the Lanham Act15 U.S.C. § 1125(a), against Guarantors. "To prevail on a Lanham Act false advertising claim, a plaintiff must establish that the challenged message is (1) either literally or impliedly false, (2) material, (3) placed in interstate commerce, and (4) the cause of actual or likely injury to the plaintiff." Summary judgment is denied as to plaintiffs' claim against Guarantors for false advertising under NYGBL § 350. To prevail on a claim under the statute, a plaintiff must prove that "a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice." Reliance is not an element. For the same reasons summary judgment is denied as to Guarantors on the Lanham Act claim, summary judgment is also denied as to Guarantors on the NYGBL § 350 claim, but granted as to the other defendants. Summary judgment is granted as to plaintiffs' claim for copyright infringement (Count 1) because plaintiffs proffer insufficient evidence that they own any copyrights at issue.

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