PRG Brokerage Inc. v Aramarine Brokerage Inc.

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PRG Brokerage Inc. v Aramarine Brokerage Inc. 2012 NY Slip Op 30816(U) March 30, 2012 Supreme Court, New York County Docket Number: 111578/2004 Judge: Shirley Werner Kornreich Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] Index Number : 1I 157812004 PRG BROKERAGE INC. INDEX NO. vs ARAMARINE BROKERAGE INC MOTION DATE Sequence Number : 01 1 MOTION SEQ. NO. SUMMARY JUDGMENT MOTION CAL. N O . were read on this motion tolfor The following papers, numbered 1 to PAPERS NUMBERED Notice of Motion1 Order to Show Cause Answering Affidavits Replying Affidavits - Exhibits Exhibits - hYes ... . ~ -- Cross-Motion: - Affidavits - - I - _ _ - I? N o Upon the foregoing papers, it is ordered that this motion I. c> cu -A I? d b , FILED APR 02 2012 NEW YUHK COUNTY CLEHK'S OFFICE Check one: - 17 FINAL DISPOSITION Check if appropriate: L1 u DO NOT POST NON-FINAL DISPOSITION REFERENCE I [* 2] -;I entry of ' gi i i I 1s t - b ~tii~iia j 11 gm en t i ry d ~ d i smi ssing the co nip I ain t ; ;iri d ( ii ) grant i rig Ara ma r i ric s 11111331ary jirdgmcril OH its fifth counlerclaiiii, seeking iiiipositioii o l a cons~ructive trust. Phiilliff PlCG ~ Brokerage Inc. (PKG), cross-moves, inlei' rrlin, for sunimaty judgriienl cm its claims and for dismissal of delkiidant's cuuiiterchiiiis. 'fhc claims and counterclaims asserted in this action hetwecn plaintiff and defcndant arise out of ii co-brokering and coliimissioii-sharing ~irr-raiigeinent for the sale of iiisurunce policies to owners and drivcrs of' livery cars and medallion taxis. 1:or the dcnicd in part. a - [* 3] Silvcr Car s iiiciiibm ;ire O W I I ~ I S .openitors ;iiIcI cjrivcrs o I coiiiiiicrcial h - h i ) - cvehicles, including livery iiutoiiiobilcs aiid laxicabs. PlZCi is xi1 irisimiiiw broker thal Ilad pi-ior cxpericncr sor\,ing tlie livcr-y c;ir itidiisli-q. 0 1 1 .lune 28. 1000, Araj~i;iriilc.;in iilsi1r;iilcc hrokcixgt. owiicd by Elimsri, and I lig1il:inds Insui-nnce C o~iipaiiyI lighlands), an insiircr. ciiterecl into a Ictter ngrccmelit (tlic June 1900 ( Agreement). co~ifcr[ring upon Aratnxinc cxclusive authority to place (iiisui-wceI hiisi ness with 1 Highlands . . . h i . clnsscs :ill [of] btisiiiess prodiicxxi by I PItCi 1. Affidavit o f t h x r i , SWOI II to Ex. August 12, 201 0 (khinsri ;IK,)~ 3. The policy period for the policics issucd by [Highlands was to be tliree years, h i i Ma.idi 1, 2000 tlirougli March 1 2003. ~ C o ti si s I en t w i t 11 t he ;i gr cemen t bet wcc n H i ghland s 111)d Arai na ri I ic, P R G and Aramar i ne entered into ;I co-brokcring agreenicnt, chtcd August 1 I999 (the August 1990 Agreement). Id., ~ Ex. 3. Pursuunt to its tcrms, the parties agreed, i/i/er* liliu, to ; cc7mmission-stiuring arrangciiient 1 with respcct to the premiiims generated by the sale of insirxance policics, agreeing that commissions earned would bc shared equally. /d. Subsequently, the AiigLlst 1999 Agrecinent was Ierininalcd, r r h ittitio, I d . , J k . 8. On 1:cbrnnry 1 2000, the pl:u-ticsentcrcd into ;in amended and restakd co-hrokcring ~ agrezmcnt (the Amcnded Agrecmcnl). 111.- Ex. 4. I lieAmenclcd Agreenlcnl provides Chat rl I c pa 1-1 i c s ori g i mi 11 co11 t elii p1;I 1ed that 1 ii gl 1I :ind s wo I 11d mere I y fro i it t lie req 11i si [e liccnsed insumlice for the progi-nm. and thc risk wias to I ~ cI OO !/;, reinsured by a i 1 oI f-shorc C nyiiiali Jslands rcinstiraiice ccll owiicci hy I , n r p Hlcssingcr. a principal of PRG. l oward this cnd, Elinasri and Blcssingcr cntcrcd into several otlicr agreeincnts through entities they owncd 01controlled. including: (1) a Segregated I oi-tlhlio Agrccmciit. ( i i ) ;I M;rnagemcnt Agreement, and (iii) a Service Agrczmcrit. Eliiiasri ;iff-.. llss. 5-7. For various rtlasoi1s, the vciiltlre ncvt r wcllt Ibr W;I r cl , and , iI 1s t C;I d I 1 i gliI ni i d s i 11s11red t li e pro g1-aI ii S;I a t r :id i t i (1i i a I i ti sI1 r c ~ . 1 11ese ad cl i ti ( )i 1:1 I ~rgrceiiicnts werc tcrtiiinatcd. r r h irrifio,a ( llic S ; I I I I U tinic ;is llic Augusl lc)W Agremiellt. I ( / , ,Ex. 7 - t! _I 8. 2 [* 4] ' 1 ' 1 ~jiisiiraiicc hrokcragc commission geiicraled on 311 business i I i c 1lid i iig c o iiti ngc iici c s oii :I II biI s i ness bc diviclcd h ~ t w e e A r i ~ i ~ : ~ r ii I'R(i t~ td ie :IS t o l l o w : Arainar-iiic shall be eiilitlcci to Jifty percent (SO'%) of the (-.'on I I I i s s i u 11 p I 11s: thirty - five d o 1lars ( $35 ) per i ii s I ircd vc h i c 1c. i l . Pi?(.; shall be elitillecl to iifty pcrceiit (509'0) of.(ho C'oiiimission rniniis thirty-tivt. dollars ($35) per insured vehicle. PRG shall bill lor and collect all prcriiiiriiis on I'RG Husiricss aiid shall rcinil such premiums to Aminariiic, iiet of' PKG's share of the Commission . . . Each party shall maintain the prciiiiums it rcceivcs in a fiduciary capacity in accordancc with applicable law. s ii hi cc I t (:) t I1i s A g ree ni cn 1, p l ~ Iiereiincler . . . sh:ill ~ d Other rclevaiit sections of (he Amcnded Agrccment, provide that: I'RCi shall be responsible for performing all undcrwriting activities in connection with the business subject to this Agreeinent, including I-cview of all applications for i nxurance. claims history and physical inspection and pliotographiiig oi' dl insured vehicles. id., Section 2 (c); 3 [* 5] id., Section I ? ( b ) . Fcbrunry o r March of3OOC). thcrc was a iiiccting rcgartfing the Silver Car program betwcell, among others, represcnlativcs of I lighlands, iilcluding its CEO, Willis King, and General Counsel, Stephen Cireenbcrg, a s well tis Bles.;inger and Elmasri. TIE participants at tlic meeting spoke about the treatment of colnmissiuns. the flow of h i d s , and liow the premiums would get to Highlands. In~tially, lhc Amcnded Agreement, prcmiums were to bc paid to PICG, sent 011 per to Artliiiaritie, and then to I lighlands, with PRG and Arainxrinc each takiiig out thcir commission along the way. ld., Sec. 4. Howevcr. bccaiise the ina,jority of premiuins were being tinanced [* 6] Higlilaiids q n r d i n g the paymont of corniiiissions (thc .\Line 22, 2000 letter). It stntos, in relcvan! part, tha! This agreeiiimt shall riot be dccrzied to nlociily o r waive any provision of the I Ame~ided]Agreemcnt or any other agreement bctweeii the parties, iior sliall this agreement bc deemed a waiver of rights or claims PR(i or Aramarine may have against each other I([.-Ex. 22 (empliasis addcd). Cunscqwltly, d t c r Julic 22, 2000, I Iiglllands paid coniniissioiis At SOIIIC point during the 1-irstyear of the Silver C'ar progrniii, Highlands cspressctl the program at tlie end of i t s Iirst ~ C L I I . .On ilccciiibcr 1 O h 2000, I iighlancls scnt ;I Nolioc 01' 'l'criiiiiiation to PRG and cach ol'tlic insurcd drivcrx iinder the Silvcr Car prograi~i,stating tlia! [* 7] [* 8] 7 [* 9] [* 10] showing of cntiticment to judgment as a mailer of law. teiidering evjdcntiary proof in admissible Iomi. Src A/cako.mrrn t' C 'icy of NCLV York, 49 NY3d 557, 560 ( 1980). Once this showing has bccri iiiade, the biirrlen shitis to the party opposing tlic motion to rebut the p i i r i [ i , f m i i ) sliowing by producing cvidenti:iry prool'in iidmissible l'om sufficient to rcquirc fact. A w ' K~izifIiwi ,Ci/vc~i., 00 I> ii trial of iiiatcrial issucs of NY2d 204, 208 ( 1997). A d d i t i o d l y . in deciding the motion, thc [* 11] tu cancel the policics prciiia~urcly:and (1;) the priyincnt w;is in kccping with lllu mcthod for A: Yes. 0:Did any portion ol' that munctary payment coiistitutc thc share of coiiiniissions thal WIS due to P R I i or might be due to PRG? A: Well, the short ;u~swer yoiii. question is no . . , And the p q x w of the settlement to was to make Aramririne, arid only Araniarinc, wllolt: Ihr its lost r e v e n ~ ~as a result cs 0 1 I lighlands' desire to withdraw. IO [* 12] A: Ycs. Evidence that even PKCi uiider-stood that the scttlenicnt Aramarinc cnter-cd into with Highlnnds was tbr Aramxine s share ol thc commissioris can he gleancd h m the Proposed Agreemcnt that, though never cf ikctivc, was signed by PKG s counscl. According to its proposed terms, while I-Iighlaiids could reserve its rights with regard lo PKG s entitlement t o coinmissions, Hjghlands shall place 5Yn of gross wriltcn preiiiiuiii received by 1 lighlancis, less $35 per irisurcd vehicle, into an interest hcriring escrow account pending rcsolution of I RG s entitleiiicn( to (ciiiphasis addcd ). PKG s j71.iiicjp;~I argument is that nothing in thc J w c 23.2000 lettcr relieved it ol its right to SLIC~I [* 13] la sct forth in the A tmkcrage cominissioiis '*shall hc divided I and] rcuciws i i i ;I ISdircial-y capiicity i I rcceivud w;is ~i t m ; d i ,> , . iieiidccl A y e c iii e n t . st i 1' id at i 11 that g . t;ach party shall niaintain rhc prcniiuiiis i t I(rgo. Ai-iiiiIwiiie's fiiilui-cto sharc the $3 million sctlleiIlcnt ol'tht. Aiiiendecl Agreriwn1. 'This argiiment misses the point. ' hissuc be1i:)t.c the court is 1101. as PRG wo~ild Iiave i t , whelhcr it had ; righl I to commissions. ICatIicr, oiicc I I ighlands was given the ;iii(liority to pay each hrokcr its cnminissioii share directly. lllc questiori oii h i s motioii is \whcthcr 11ie sctlleiiicnl ainouiil paid to Arailiarinc was solcly for its commission shatc (as authorized hy the .lune 22,3000 Ieller) or included somc porlion of PRG's coiiimission dlocation. Here, the mdispiitcd evidcnce bcfore the court is that Highlands hild iiegoljatcd and scttled with Aratnarinc for a discouiited value on ils share of the commissions that would havc been due had the prognuii Coiiliiiiicd b o u g h the reiiiairidcr of the policy term. Indeed, that settlcrnent ended litigation with Aramarine, but litigation continued wilh PRG. Giviiig plaintiff every favorable inference, the prool'suhniitlcd in opposition to the first branch of Aramarine's inotion i s inadcquak to raise a triahlc issuc ol' fact with respecl to ally legitiniate right to share the $2 million scttlcment As d l of I'ICCr's claims rest up011 delnclant's rcf~isul share t h u scttlemeiit ;tmcsunt, plaintill' cannot maintain them, 'I'hercfore, to judgmcnt in h v o r o f clcl'endiuit on the lii-st branch ol'its motion. is gralltcd. aiid (he amanded comp I 3 i 11I is d i SINi sscd . A s a ci)i-oI ar-y t hu 1 Imnch of 13I ct iiiti fl' s cross 1110 1i r) ti sWE; i 11g ,j 1 11 giII c11 1 1 t ~ i.m its claiins, is dciiid. I ~o\vcxw. discllsscd as liioi~ j'~iIIy ill t h u w x t section of this clccision, addressing plaintitf's 12 [* 14] [* 15] fees. must be clisniissed tilih counterclajm (constructive trust), ,\ruiiwiiic asserts n new theory to j u s t i f y irs cutitlcincnt to Islands trans:iction - a dcal that iievcr wont Ibrwnrd: Ar:imiirine's position is that while at one point PliG had bccn givcn 3 rig111 to charge and collcct membcr-ship dues from Silver C'ar's r-nemhei-s,that right - - graiilecl in the Mariagcineiit Agrecmcnt - - was terminated when the agrcemeiil was termjnated and voided oh inifio , , . PItG's decision io cliargc and collcct such ducs withoiit authorily w x highly imp-oper. Furtlicr, PRG pi-portcd to chargc those dues for tlie exact same services it claiiiicd it was providing I'or which the iilsurcd drivers were being charged sirbstantial 'adininistralioii fccs'. . . Arni.riai.iile ha.rrs if,r clnim to a constructive trust over the fccs collected zq~m ltlcfhot that PRG h ~ no lcgnl righi to collcct s u ? n ~ , theii jiiil to d und w m i t tlic~Lfies Silver C'ar. io Defeiidant's responscs and objections lo couiitcrstalement, 1 28 (emphasis added). 1 By contrast, tht: h ? o r y initially advanced by Arnmarine relied wliol ly on thc Amended Agree men t : '['he monics collec(ed From the itisui-od members ol'the Silver ChiProgram ;is k e s and dues were collected by PliG iii hrcach of PRG's fiduciary duties lo ARAMAIiWE, arid conccalcd from A r;iiii a ri 11c i I i b re;]c I1 of I-' liCi ' s co 11 tract 11 1 o b 1i gat ions i111dc r I hr ii terms 01' the I Alncnded Agruement 1, As tlic iiitonl ol'tlic [Aiiieildccl Agreement I was lo havc AI<AblARINI: Lind PR(.;share eqiially in the receipt ol'bi+okcr;igt: reveii~ic (including contingei~ics) generated hy tlie placement of business into thc I'urchasing G r o u p 1'rogr;iiiis (with the esccption 01' thc $ 3 5 per veliiclc paymen1 to he puid to Ai-amariric from i~I<G's coliilnission sharc). ;I wnstructivc [rust should be plnced 14 [* 16] [* 17] shall bc h i t 01 indepciident coniraciors and iioiliing lierein shall create the rclationship Ilatly contrndictcd by its vcl-y tcrms. b tii-tl~cr. bccause ;I neccssai-y elenieiit o r :i constructive trust It follows that Araimrinc s brciich of fjduciary duty counterclaim, bascd adverse affect I RG s cliargiiig of I c s may have had insurance product, cariiiot survivc. coiriiterclaim i s prediciltcd OII AS 011 (71 C)II the potentid the competitiveness or Silver Car s allcged, leaving asidc its clearly speculative nalure, this lhc esjsteiicc o f 3 joint-vcntul-e relationship bctwcen the pai*ticsthat the Amended Agrcenicnl exprcssly disavows. Clnuntcrcl. 1 25 ( As a joint venturer with 1 Araiiiariiie . . . P l l G had a liduciary obligation .... ). f lowcver, Aramarine s second counlcrclaini seeking ;in accountirig of prcmiuins allegcdly rcceived by PRG during the sucond ycat o f the Silvcr car program ~ u r v i v e s . ~ Tiirniiig to the ~-cmaiiiclcr f tlic relicf solight hy PliC; or1 its cinss-motion, tllat branch o 7 Altho~ighnot ;iii issue rcachecl by the court in its decision. the parties seck to establish. hy oilkrs of proal; ,4rainnrjne s knowlcdgc, or lack thercol: ol the tbes cliargcd by PRG. The coiirt notes that its review of ilie record cloes not revc;il i i i i y evidcncc tIi3t i t fecls conclusively cstnblishes this fiict one way or the otlicr. [* 18] 17 [* 19] Dated: March 30, 201 2 ENTER: i r / FILED APR 02 2012 N k W YOHK I ul\J-rY CLERKS OFFICE

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