Tower Ins. Co. of N.Y. v PMI Contrs., Inc.

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Tower Ins. Co. of N.Y. v PMI Contrs., Inc. 2012 NY Slip Op 32124(U) August 3, 2012 Supreme Court, New York County Docket Number: 117686/09 Judge: Manuel J. Mendez 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. lNED ON 811012012 [* 1] SUPREME COURT OF THE STATE OF NEW YORK PRESENT: MANUEL J. MENDEZ - NEW YORK COUNTY PART 13 Justice TOWER INSURANCE COMPANY OF NEW YORK, Plaintiffs, -against- INDEX NO. MOTION DATE MOTION SEQ. NO. 06 -20-2012 003 MOTION CAL. NO. PMI CONTRACTORS, INC., JORGE QUILLERMAO, ALAlN REALTY, LLC, and MIGUEL ARADILLAS, Defendants. FILED ALAIN REALTY, LLC, Thlrd-Party Plalntlff, NEW YORK COUNTY CLERKS OFFICE -vPROFESSIONAL BROKERAGE SERVICES CO., and WORLDWIDE INSURANCE BROKERAGE LTD., Thlrd-Party Dofondants. The following papers, numbered 1 to 18 were read on thlr motlon tolfor summary ludanlent and crossmotlono for summary Judgmentand to amend the complaint PAPFRJ NUMBERED Notice of Motlonl Order to Show Cause Answerlng Affldavlts - Exhlblts -Affldavlts - Exhlblts ... cross motlon 5-6,1~,11-12 A Roplylng Affldavlts Cross-Motion: X Yes I-4,7-9.13-1$ No Upon a reading of the foregolng papers cited papers, it is ordered that PROFESSIONAL BROKERAGE SERVICES C 0 , s motlon pursuant to CPLR 93212, for summary judgment dismissing the thlrd-party complaint and all cross-claims against it, is granted. ALAIN REALTY, LLC s cross-motion pursuant to CPLR §3026[b], to amend the complaint, Is denled. WORLDWIDE INSURANCE BROKERAGE LTD. s motion pursuant to CPLR 53212, for summary judgment diSmi88ing the third-party complaint and all crossclalms against it, is granted. The underlying declaratory judgment action was brought by Tower Insurance Company of New York (hereinafter referred to as Tower ) based on an action brought In Supreme Court, Bronx County, by Miguel Aradillas for negligence and labor law vloiations. Miguel Aradliias claims that on August 4, 2008, he wa8 injured while working for Jorge Castillo and PMI Contractors, Inc., performing floor renovations on the premises owned by Alaln Realty, LLC (hereinafter referred to as Alain ), located at 800 East 12thStreet, Brooklyn, New York. Tower Insurance Company, alleges In the Underlying action, that Alain was not named as an assured or additional insured under its poilcy and it has no duty to defend or indemnify. Alaln brought the third-party action against Professional Brokerage Services Co. (hereinafter referred to as Professional ) - [* 2] - Jorge Guiiiermo and PMI Contractors inc. s Insurance broker and against Worldwide Insurance Brokerage Services Ltd. (herein-afterreferred to as Worldwide ), its own broker. The third-party complaint asserts one cause of action against Professional, alleging breach of oral contract and negligence. The third-party complaint asserts causes of action against Worldwide for breach of fiduciary duty, negligence and negIigent misrepresentation. The underlying declaratory judgment action brought by Tower insurance Company was settled and on March 22,2012, the so ordered stipulation waa filed with the county clerk s offlce. The third-party action has been severed and continued with the underlying action s index number. Third-party defendant, Professional makes this motion pursuant to CPLR 93212, for summary Judgment dismissing the third-party complaint and all cross-clalms agalnst It. Aiain cross-moves pursuant to CPLR §3025[b], to amend the third-party complalnt to conform to the evidence adduced during discovery, and to add more comprehensive theorles of recovery, claiming there is no prejudice to the third-party defendants. Third-party defendant, Worldwide cross-moves pursuant to CPLR 5 3212, for summary Judgment, dismissing the thlrd-party complaint and ail cross-claims against it. in order to prevail on a motion for summary Judgment pursuant to CPLR 53212, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence, eliminating ail material issues o fact (Klein v. City f of New York, 89 N.Y. 2d 833, 675 N.E. 2d 648,662 N.Y.S. 2d 723 [1996]). Once the moving party has satisfied these atandards, the burden shifts to the opponent to produce contrary evidence In admissible form, sufflclent to require a trial of material factual issues (Amatuiii v. Deihi Constr. Corp., 77 N.Y. 2d 525, S71 N.E. 2d 645; 509 N.Y.S. 2d 337 [1999]). A party that is not named a8 an additional insured on the face of a policy is not entitled to coverage. A certificate of insurance that includes a disclaimer that it is for information purposes only, does not confer coverage, or establish as conclusive proof that coverage exlsta (Buccini v. 1568 Broadway Assoc., 250 A.D. 2d 466, 674 N.Y.S. 2d 398 [ N.Y.A.D. 1 Dept., 19981). An insurance broker cannot be found liable for breach of contract to an additional named insured because privity of contract only runs from a broker to its customer (Arrendondo v. City of New York, 6 A.D. 3d 328,775 N.Y.S. 2d 150 [N.Y.A.D. I Dept., 20041). An insurance broker cannot be found liable for fraud or negligence based on the unreasonable reliance on information contained in a certificate of insurance that has a disclaimer. A oiaim of negligent misrepresentation against an insurance broker based on a certificate of insurance that has a disclaimer, is invalid because it Is unreasonable to rely on them for coverage and there is no privity, which is a prerequisite to establishing liability (Greater Mutual Ins. Co. v. White Knight Restoration, Ltd., 7 AD. 3d 292,776 N.Y.S. 2d 257 [N.Y.A.D. lmt 20041 and Benjamin Dept., Shapiro Realty Co. v. Kemper Nat. ins. Companies, 303 A.D. 2d 245, 766 N.Y.S. 2d 45 [N.Y.A.D. lrt Dept., 20031). An insured is presumed to have read, known, understood and assented to the terms of the insurance policy after it has been retained, therefore, a claim o negligence f and breach of contract cannot be sustained against the broker (Busker on The Roof Ltd. Partnership Co. v. Warrington, 283 A.D. 2d 276,725 N.Y.S. 2d 45 [N.Y.A..D. Iat Dept., [* 3] 20011). A claim of fraudulent inducement cannot be sustained unless there is a fiduciary or special relationship between the parties (Goiub v. Tanenbaum-Harber Co., inc., 88 A.D. 3d 622,931 N.Y.S. 2d 308 [N.Y.A.D. lot 20111). Dept., insurance brokers do not have a, ..continuing duty to advise, guide, or direct a client to obtain additional coverage. (Murphy v. Kuhn, 90 N.Y. 2d 266, 682 N.E. 2d 972, 660 N.Y.S. 2d 371 [1997]). A claim of breach of fiduciary duty against an Insurance broker requires proof of extraordinary circumstances giving rise to a special relationship beyond mere procurement of insurance. Extraordinary circumstances are found where the broker or agent, has been asked to advise based on professional expertise and inform the client concerning coverage; receives compensation for consultation separate from payment of premiums; and ha8 had an extended period of dealings with the client (Murphy v. Kuhn, 90 N.Y. 2d 266, supra). Pursuant to CPLR 53025, leave to amend pleadings, shall be freely granted upon such terms as may be just the decision to disallow the amendment Is at the Court s discretion (McCaskey, Davies & Associates, Inc. v. New York City, 59 N.Y. 2d 755,450 N.E. 2d 240,463 N.Y.S. 2d 434 [1983]). Leave to amend should be granted as long as there is no surprise or prejudice to the opposing party. Delay alone is insufflcient to defeat a motion for leave to amend. To establish prejudice there must be a showing of hindrance in preparation of the case or the prevention from taking measure8 in support of a party s positlon (Kocourek v. Booz Allen Hamilton, Inc., 85 A.D. 36 502, 925 N.Y.S. 2d 51 [N.Y.A.D. lat Dept., 20111 and Loomls v. Civetta Corinno Constr. Corp. 54 N.Y. 2d 18, 429 N.E. 2d 90,444 N.Y. S .2d 571 [1981]). Leave to amend a pleading will be denied where the proposed pleading falls to state a cause of action or is patently insufficient as a matter of law (Davis & Davis, P.C. v. Morson, 286 A.D. 2d 684,730 N.Y.S. 2d 293 [N.Y.A.D. 1 Dept. 20011 and Bishop v. Maurer, 83 A.D. 3s 483,921 N.Y.S. 2d 224 [N.Y.A.D. lot 201I]). Dept. ... Professional seeks summary judgment claiming that there are no issues of fact and it is not liable to Aiain because there is no privity of contract and no proximate cause. Professional provides the affidavit of Ann Marie Miranda, its president, she states that the liability policy with Tower insurance Company was procured by its clients, PMI Contractors, Inc. and Jorge Castillo and that at no time was there established any kind of contractual relationship or agreement with Aiain. The two payments of premiums by Alain, were made on behalf of PMI Contractors, Inc. and Jorge Castillo. Professional claims it is not liable to Aiain for breach of contract because the certificate of insurance has a disclaimer (Professional Mot. Exh. 1); Michael Rosen, the member of Aiain responslble for obtalning Insurance admitted he did not read the certificate of insurance in its entirety (Professional Mot. Exh. F, p. 30); and there was no Contractual duty or obligation to obtain liability insurance coverage for Alain. Professional claims that Alain cannot establish proximate cause for negligence because Tower disclaimed for multiple reasons including an employee exclusion. Alain opposes Professional s motion for summary judgment, claiming that there remain issues of fact based on whether there was, a special relationship creating a fiduciary duty; privity of contract; an oral agreement, and direct communication to Professional of its needs as a third-party beneflciary of the insurance contract. Aiain claims that the payments made to Professional are proof of the oral agreement and that Professional made multiple false representations which led Aiain to reasonably believe it possessed the appropriate coverage. Worldwide opposes Professional s motion [* 4] ciaimlng that the deposition testimony of Ann Marie Miranda concerning conversations with Michael Rosen a member of Alain, raises issues of fact concerning privity of contract and negligence (Worldwide Opp. Exh. A, pp. 22-2S, 34-36, 143-144, 149). Professional has met Its burden of proof and established a prima facie basis to obtain summary judgment. The disclaimer on the certificate of lnsurance states It is for, information purposes only, (Professional Mot. Exh. I ) , Michael Rosen on behalf of Alain failed to read the entire certificate and learn of its contents. Alain failed to request a copy of the insurance policy and was unaware of its contents. Professional s customer is PMI and Jorge Castillo, there was no privity of contract with Alain, a proposed additional named Insured. Alain s claim of an oral contract as a third-party beneficiary and its terms have not been established, and the two payments wore made on behalf of PMI Contractors, inc. and Jorge Castillo, not Alain. Michael Rosen contacted Professional and spoke to individuals over the telephone but there Is Insufficient proof that those conversatlons gave rlse to a contractual relationship. Reliance on potential coverage based on the certlflcate of insurance Is not sufflclent to establish privity. Alain has not established that there was a fiduciary duty on the part of Professional, there was no duty to advise or separate payment of conrrultation fees. Claims of negligence are not properly asserted by Alain, they can be asserted by PMI Contractors, Inc. and Jorge Castillo. Alain has not established a basis to sustain its claims of negligence based on reliance on the certificate of insurance. Worldwide s cross-motion seeks summary Judgment claiming that Aialn did not pay for insurance consultation servlces related to llabiiity coverage and there was no special relationship or fiduciary duty based on Alain s request for advice regarding coverage from another broker. Worldwide states that it odly placed one casualty pollcy at Alain s request for the property involved prior to the incident and that policies obtained for other properties owned by Alain should not be considered in this action. Worldwide claims that proposed additional liability coverage was rejected and Mr. Rosen, a member that testified on behalf of Aialn, admitted he ultimately made the decision regarding purchase of coverage (Worldwide Mot. Exh. G, pp. 105-106). Worldwide claims Professional was retained and Is liable for its negligence and failure to obtain liability coverage and that Aiain cannot establish proximate cause. Aiain opposes Worldwide s motion claiming that it had a special relationship based on ten years of brokerage advise for insurance coverage and purchase related to other properties. Alain claims it relied on Worldwide s advice that the coverage provided In the Tower insurance policy as indicated in the certificate of insurance was sufficient and based the decision not to procure further coverage on that advice. Aiain and Professional oppose Worldwide s motlon claiming that Worldwide had a long standing relationship providing insurance coverage, having reviewed the certlflcate of insurance and suggesting amendments, Worldwide was under a duty to advise that the certiflcate was not the actual coverage, seek a copy of the full policy and protect its client. Worldwide has met its burden of proof and established a prima facie basis to obtain summary judgment. Worldwide has established that there was no fiduciary duty. Worldwide was not required to provide advice Concerning coverage obtained from another broker. Worldwide advised Alain that it should be named an additional Insured In PMI Contractors Inc. and Jorge Castillo s policy and suggested the purchase of additional liability coverage which was rejected. There was no continuing obligation to [* 5] advl e, direct or guide Alain to purchase additional liability coverage. Alain did not pay Worldwide for its consultation services and only sought and paid for casualty coverage. Worldwide has also established that the disclaimer should have been read by Michael Rosen and that he unreasonably relied on the certificate of insurance to establish coverage. Alain has not established Worldwide s negligence or negllgent misrepresentation, it unreasonably relied on the certlflcate of Insurance. Alaln and Professional did not raise an issue of fact, or establish a special relationship concerning the liability coverage that was purchased from Professional by PMI Contractors Inc. and Jorge Castillo. Alaln did not purchase or contract to purchase liability coverage from Professlonal or Worldwide, and made its own decision to only purchase casualty coverage from Worldwide. Alaln s cross-motion seeks to amend the complaint and assert additional causes of action against Professional for breach of contract as third-party beneficiary, negllgence, negligent misrepresentation, fraud and breach of the covenant of good faith and falr dealing. Alain also seeks to amend and clarify the asserted causes of actlon against Worldwide and add an ad damnum provlslon. Alaln clalms that there is no prejudice or surprise to the third-party defendants and although depositions are complete, the note of Issue has not been filed, and further discovery Including depositions could be obtained. Professional opposes Alaln s cross-motion claiming that the proposed amendment Is both prejudiclal and a hindrance in the preparation of Its case. Professional claims that Alain s motion was made almost a year after depositions were taken, and after the summary judgment motlons were filed with no explanation for the delay. Professional and Worldwlde clalm that the motlon to amend should be denied because the amended causes of actlon have no merit. Alain s proposed amendments as to Professlonal are an expansion of its claim of breach of oral contract and negligence, also seeking relief under quasi-contract theories. Professional has sufficiently estabilshed that there is no merit to those claims In Its motion for summary judgment. Alain s proposed amendments as to Worldwide further expand on clalms that have been established to have no merlt based In Worldwide s motion for summary judgment. Upon revlew of the papers submitted this Court flnds that Professional has established a prima facie basis to obtain summary judgment on the cause of actlon for breach of contract for lack of privity and negligence and the cross-claims for Indemnification and contribution. Plaintiff and Worldwlde have not raised an Issue of fact. Worldwide has established Its prima facie basls to obtain summary judgment on the causes of actlon for breach of fiduciary duty, negligence and negligent misrepresentation and cross-claim for indemnlflcatlon and contribution. Plalntiff and Professional have not raised an issue of fact. The third-party defendants have established a basis to obtain summary judgment and Alain s proposed amended pleadlngs are without merit. Accordingly , it is ORDERED that PROFESSIONAL BROKERAGE SERVICES CO. s motion pursuant to CPLR 53212, for summary judgment dlsmlssing the thlrd-party complaint and all cross-claims against It, Is granted., and it is further, [* 6] ORDERED, that ALAlN REALTY, LLC a cross-motion pursuant to CPLR §3025[b], to amend the complaint, is denied ORDERED, that WORLDWIDE INSURANCE BROKERAGE, LTD. smotion pursuant to CPLR 93212, for summary judgment dismissing the third-party complaint and all crossclaims against it, is granted, and it is further, ORDERED, that the Thlrd-Party Complaint against defendant8,PROFESSIONAL BROKERAGE SERVICES CO. and WORLDWIDE INSURANCE BROKERAGE, LTD, Is dlsmlssed. This constitutes the decision, order and judgment of thls court. ENTER: MANOEL J. MENDEZ, Dated: August 3,2012 J.S.C. MANUEL J. MENDEz J,S. C. Check one: X FINAL DISPOSITION 0 NON-FINAL DISPOSITION Check if appropriate: 0 DO NOT POST 0 REFERENCE FILED NEW YORK COUNTY CLERKS OFFICE

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