AIU Ins. Co. v Robert Plan Corp.

[*1] AIU Ins. Co. v Robert Plan Corp. 2006 NY Slip Op 52536(U) [14 Misc 3d 1216(A)] Decided on August 11, 2006 Supreme Court, New York County Fried, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through January 17, 2007; it will not be published in the printed Official Reports.

Decided on August 11, 2006
Supreme Court, New York County

AIU Insurance Company, et al., Plaintiffs,

against

The Robert Plan Corp., et al., Defendants.



603159/2005

Bernard J. Fried, J.

On June 22, 2006, Defendants-Counterclaim Plaintiffs The Robert Plan Corporation, et al. ("TRP") filed this motion by an Order to Show Cause seeking a preliminary injunction compelling Plaintiffs-Counterclaim Defendants AIU Insurance Company, et al. ("AIU") to grant them access to certain claims and actuarial information, pursuant to the parties' Master Agreement, Managing General Agency Agreement ("MGA"), and the Interim Agreement. AIG filed opposition papers, TRP filed a reply, and both parties submitted affidavits. Oral argument took place on July 14, 2006.

The parties' dispute centers around the interpretation of Article IV, paragraph 9 of the MGA ("paragraph 9"), which provides:

All books, accounts, buyout agreements or other documents constituting, embodying, or in any way relating to the business to be conducted under this Agreement or any Predecessor Agreement, or the transactions contemplated hereby or thereby, except computer software systems, customer lists, customer and client records, and other matters relating to the marketing of LAD/CLAD business, which are the property of AGENT, are the property of the COMPANY whether paid for by it or not. Each party shall be entitled at all times, including after termination of this Agreement, to create and/or retain copies of all such books, accounts, customer lists, customer and client records, buyout agreements and other documents that are designate d hereunder as the property of the other party. Except to the extent set forth in Section 7.4 of the Master Agreement, nothing herein shall entitle the COMPANY to use, exploit or sell for its benefit or for the benefit of any third party any of the proprietary know-how and information of AGENT, whether or not contained in such [*2]books, accounts or other documents. MGA Art. IV § 9 (emphasis added). For purposes of this dispute, "COMPANY" in paragraph 9 means AIG; "AGENT" means TRP.

TRP claims that paragraph 9 gives it the right to obtain copies of certain claims and actuarial information relating to insurance policies written during the term of the parties' Master and Interim Agreements. TRP claims that it needs this information in order to price its products appropriately.[FN1] TRP is seeking information from 2003 through 2005 and the first two quarters of 2006. (Palm Aff. ¶ 9 n. 6.)

A party seeking a preliminary injunction pursuant to C.P.L.R. § 6301 must show: "(1) a likelihood of success on the merits, (2) irreparable injury if provisional relief is not granted, and (3) that the equities are in his favor." J.A. Preston Corp. v. Fabrication Enterprises, Inc., 68 NY2d 397, 406 (1986).

The parties agree that the phrase, "All books, accounts, buyout agreements or other documents constituting, embodying, or in any way relating to the business to be conducted under this Agreement or any Predecessor Agreement, or the transactions contemplated hereby or thereby" (clause A), is the universe of property with which we are concerned. In addition, the parties agree that TRP owns the property described as "computer software systems, customer lists, customer and client records, and other matters relating to the marketing of LAD/CLAD business" (clause B). (Oral Arg. Trans. ("Trans.") at 22-23 (July 14, 2006).)

According to AIG's interpretation of clause A, read in the context of the whole MGA, however, clause A refers only to property created by TRP before the termination of the parties' agreements and physically located at TRP's premises in Bethpage. Consequently, AIG maintains that TRP may look at the claims files as they existed when AIG recovered them from TRP's premises, but TRP may not access the new information added to those files by AIG since TRP's termination, or any other sets of books maintained by AIG off TRP's premises. (Trans. at 18-19, 24.) [*3]

TRP maintains that paragraph 9 gives each party the right to retain and copy all documents that relate in any way to their business under the MGA and predecessor agreements, and this right endures even after termination of the MGA. TRP insists that it is not seeking information concerning policies written by AIG since the MGA and Master Agreement have been terminated; rather, it is seeking information related only to the policies that began during the term of these agreements, i.e. between 2002-05. (Trans. at 12.) TRP has asserted, and it is undisputed, that this information will roll in over a period of time, and new documents necessarily will be generated (by AIG) to reflect this new information. (Trans. at 12, 34.) TRP argues that paragraph 9 gives it the right to access these documents.

I conclude that TRP's interpretation is most consistent with the language of paragraph 9.[FN2] The property described in clause A includes "documents constituting, embodying, or in any way relating to the business to be conducted under this Agreement or any Predecessor Agreement, or the transactions contemplated hereby or thereby." MGA Art. IV § 9 (emphasis added). This language indicates that the property described in clause A must "relat[e] to the business" of the parties under these agreements; clause A does not [appear to] limit the universe of property at issue here to property at TRP's premises.

Paragraph 9 further provides that "Each party shall be entitled at all times, including after termination of this Agreement, to create and/or retain copies of all such books, accounts, customer lists, customer and client records, buyout agreements and other documents that are designated hereunder as the property of the other party" (clause E). MGA Art. IV § 9 (emphasis added). This language indicates that both parties are entitled to retain and obtain copies of documents that are owned by the other party. It does not limit TRP's entitlement only to those documents created by TRP before the termination of the agreements between the parties.

In conclusion, none of the limitations geographic or temporal on the universe of property described in clause A, championed by Plaintiffs, are evident in paragraph 9.

TRP contends that, if it is not given this information, it will suffer irreparable harm, because it will be unable to incorporate this information into its pricing models, so that it can bid effectively for the 2007 buy-out contracts when the bidding begins in September 2006.

In opposition to TRP's request, AIG asserts that TRP already possesses the relevant claims and actuarial data for 2003, 2004, the first three quarters of 2005 and a portion of the fourth quarter of 2005, and that this information is "sufficient" for TRP "to go to market with competitive pricing." (Beck Aff. ¶¶ 3, 10.) AIG maintains that the information to which it has denied TRP access concerning "a small portion of the fourth quarter of 2005 and the first two quarters of 2006," (AIG Opp'n Br. at 17) is only "a little bit of additional information" that could not, "in fact, change a competitive situation," (Trans. at 29-30). Even AIG does not deny, however, that the latter information would be useful to TRP in creating such pricing models or calculating the buy-out fee.

I credit TRP's averments that the information it seeks is a component of its pricing models, upon which it will rely during the bidding process, which will begin in several weeks. Therefore, I conclude that TRP's inability to obtain this information promptly would cause irreparable injury to TRP.

Moreover, in light of my interpretation of the parties' agreement and the enormous monetary value of the buy-out contracts at stake, I find that the balance of the equities favors TRP.

Accordingly, it is hereby:

ORDERED that Defendants' motion is GRANTED; and it is further

ORDERED that AIG shall immediately provide TRP with the claims and actuarial information relating to insurance policies written during the term of the Master and Interim Agreements beginning with the information for the last quarter of 2005, and the 1st and 2nd quarters of 2006; and it is further

ORDERED that the parties shall appear at a conference before this Court at 3:00 am on September 19, 2006, in order to discuss scheduling an evidentiary hearing in this matter. Also at that time, oral argument will be held on motion sequence nos. 011 and 012.

____________________________

Fried, J.S.C. Footnotes

Footnote 1:TRP is responsible for pricing "buy-out contracts." These are contracts in which TRP assumes the assigned risk obligations of an insurance carrier for a "buy-out" fee. TRP expects to enter into between 1400 1500 such contracts for the 2007 year, valued in the aggregate at $125 150 million. Bidding on the 2007 buy-out contracts takes place during September and October 2006. In anticipation of the September bidding, TRP is developing pricing models, in which TRP tries to project its future profits, based on information about TRP's indemnity losses on previous policies. Claims for coverage under an insurance policy written in a particular year are typically received, processed, and resolved over several years. Consequently, TRP analyzes its indemnity losses for several years after the policy coverage terminates. (Palm Aff. ¶¶ 5-10, 24-25.)

Footnote 2:As I read paragraph 9, according to its plain meaning and following customary grammatical rules, clause A is the universe of property with which we are concerned. When we carve out from this universe a subset of property represented by clause B, the property left over is "the property of the COMPANY whether paid for by it or not" (clause D). The subset of property that we carved out, which is not "the property of the COMPANY," is "the property of AGENT" (clause C). In other words, clause C the clause beginning with "which" modifies the property described in clause B. The property described in clause A, with the exception of the subset of property described in clause B, is owned by AIG.