Labor Law 240 Risk Mgt., LLC v CRC Ins. Servs., Inc.

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Labor Law 240 Risk Mgt., LLC v CRC Ins. Servs., Inc. 2018 NY Slip Op 30859(U) May 7, 2018 Supreme Court, New York County Docket Number: 654564/2017 Judge: Eileen Bransten Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 1] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORl(: LL\.S PART 3 -----------------~-----------------------------------------------------x LABOR LAW 240 RISK r.,,,fANAGEl'vffiNT, LLC and SHERRY & SONS, INC., Plaintiffs, -against- Index No, 654564/2017 CRC INSURANCE SERVICES, INC., AYvfTRUST NORTH AJvIBRICA INC, ,t\j\/ITRUST INTERNATIONAL 1JNDERW1UTERS LTD,, A~fTRUST FINANCIAL SERVICES, INC., INTERNATIONAL SPECIALTY BROKERS, LTD., and ALEX KULLMAN, Defendants. -----------------------------------------------------------------------x Brn.nsten, .J.: l'vfotion sequence Nos. 001, 002, and 003 are consolidated for disposition, and are disposed ofin accordance with the following decision and order. Defendants ArnTrust North America, Inc. (AmTrust Nmih i\m.), AmTmst International Underwriters Ltd (AmTrust IntL), and AmTrust Financial Services, Inc. (AmTrust Financial) move for an order, pursuant to CPLR 3211 (a) (7), to disrniss the complaint against them for failure to state a claim (motion seq. No. 001). Defendants CRC Insurance Services, Inc. (CRC) and Alex Kullman move to disrniss the complaint~ pursuant to CPLR 3211 (a) (5) and (7), based on the statute of frauds and for failure to state a claim (motion seq. No. 002). Defondant International Specialty Brokers, Ltd, ("ISBL") initially moved to dismiss (motion seq. No. 003), but then settled with plaintiffs and withdrew its motion. 4 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 2] NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk lvfgt,, LLC v CRC Ins. Servs., Inc. I. INDEX NO. 654564/2017 Index No. 654564/2017 Page 2 of25 Backg:rnund In 2013, nonparty Mark Sheffy, an insurance broker and founder ofplaintiff Sheny &. Sons, Inc, ("Sheny &. Sons"), developed an insurance program offering New York construction contractors affordable coverage for gravity-related injuries sustained by construction workers; with premiums that 1;vere significantly 10\ver than those available in the prevailing markets (the "Prob,rram"), Affirmation ofAndrew J Costigan, Exhibit 1; see also, Amended Complaint, iiir 2, 24, 28, In seeking an insurance carrier to issue the master policy to anchor the Program, Shen-y enlisted the help of a long-time friend and business associate, defendant Kullman, who worked for defendant CRC and had a previous business relationship \Vi th, and an ovvnership interest in, defendant ISBL. Id, 1129-31 . In 2016, AmTrust North Am. agreed to be the insurance carrier of record for the Program, assuring Sherry that it would participate in the Program for five years. Id, 1[ 29. On January 1, 2016, AmTrust Intl. and AmTrust North Am. (collectively, "AmTrust") entered into a !vfanaging Producer Agreement ('MPA") with CRC to have CRC act as the manager of the Program. Id,~ 36; see also, Costigan .Alt7nnation, Exhibit 2. Under the MPA, AmTrust appointed CRC; as Producer, on a non-exclusive basis, to market, solicit, undenvrite, bind, execute and service the policies under the Prograrn on behalf of AmTrust See, Costigan Affirmation, Exhibit 2 at 1). The :l\.1PA included an Amendment No, 1 by which AmTrust approved of CRC's delegation of certain of its responsibilities to plaintiff Labor Law 240 Risk i\!Ianagernent ("LL240R1'\t1") and defendant ISBL to be performed under 5 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 3] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk lvfgt. LLC v CRC Ins. Servs,, Inc. Index No. 654564/2017 Page 3 of25 the direction and supervision of CRC. Amended Complaint,~ 39; See also, N'IPA, Arnendment No. l, Amendment No. 1 also provided that ifLL240Rlvf or ISBL failed to perform the functions as required by the MFA, AmTrust could terminate the MPA ·i,vith irnmediate effect "by giving written notice to [CRC] by overnight delivery or certified mail return receipt requested". lvfPA, Amendment No. 1, § 3. Plaintiffs LL240R1\t1 and Sheffy & Sons provided their underwriting guidelines for the Program, which was included as an addendum to the MPA, Amended Cmnplaint, ~ 37. Section 4 of the :tvfPA Addendum provided that CRC was to receive certain program foes, initial commissions, and profit sharing foes, the latter of which i,vere not payable to CRC until after three years of the Program. Costigan Affirmation, Exhibit 2. On January 6, 2016, CRC and LL240Rlv1 entered into a separate agreement, titled Underwriting l'vfanagement Services Agreement ("UJVl"SA's), which set forth the services that LL240Rl\.1 was to perform in connection with the Program. In the UM:SA, LL240Rl'v1 was referred to as ":t\.fanager," and its relationship with CRC was that of an independent contractor. Uli.1SA § 1 at 2. T'he UMSA included a termination provision providing that the agreement could be terminated under certain specified circurnstances, including in the event of termination of the MPA. Id, Ul'vISA § 9 at 6. CRC, ISBL, and LL240ru\/I entered into an oral foe-sharing agreement, under which CRC would share vvith LL240RM and lSBL all program foes that Arn Trust paid to CRC under the MPA. ("Fee Sharing Agreement''), Amended Complaint, ~r 45, CRC and Sherry & 6 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 4] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Index No. 654564/2017 Page 4 of25 Labor Law 240 Risk lvlgt., LLC v CRC Ins. Servs ... Inc. Sons also entered into a brokerage agreement, Vi/hereby Sherry & Sons would be paid 10 percent of the premiums for insurance policies it originated ("Brokerage Ag-reernent"), ld., ~~ 45, 63, Shortly after the l'vfPA. and UMSA vvere executed, on January 15, 2016, Sherry, on behalf of Sherry & Sons, entered into a Non-Compete Agreement with AmTrust. Id.,~ 48. This agreement prohibited Sherry & Sons, during the tem1 of the MPA and for 24 months after, from representing or contracting with any other insurer, directly or indirectly~ for any business that could have been eligible to be written m placed with AmTrust under the MP A, except for eight specific customer accounts previously serviced by Sherry & Sons, Id., From January 2016 through November 2016, plaintiff LL240RM perfonned its obligations under the UMSA, and CRC paid for such perforrnance under that agreement and under the Fee Sharing Agreement Id.,~ 45. Thus, CRC paid Sherry & Sons, as directed by LL240RM, four percent of the prerniurn commissions which it received in the form of Prograrn fees under the MPA, totaling $229,180. Id. During that same period, CRC paid Sherry & Sons $143,918.36 as commissions under the Brokerage Agreement Id,~· 64, On September 29, 2016, AmTrust perfonned an audit ofLL240M1's books and records, but did not produce a report of its findings, Id., 1! 51. About one month later, ArnTrust prohibited Sherry & Sons and LL240Rlv1 from participating in the underwriting proct:ss for the Program, and all payments ceased. Id., 1f 53. On November 21, 2016, CRC sent an email to its ernployees, with a copy to ISBL, notifyfog them that, effective immediately, Sherry and LL240 RTVf were no longer involved with the Program.. Id., ~[ 54. 7 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 5] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lav.1 240 Risk Afgt., LLC v CRC Ins. Servs., inc. Index No. 654564/2017 Page 5of25 From November through Decernber 2016, the underlying master policy remained in place, and AmTrust and CRC continued to w-rite coverage for eligible trade contractors without the involvement of plainti11s, id Thereafter, AmTrust failed to renew the master policy at the end of 2016, and, instead, issued individual policies under the Program, id., ~r~r 53, 67-68. U. Procedural History In June 2017, plaintiffs commenced this action, alleging that defend.ants unilaterally excluded them from the Program while continuing to commercially exploit the Program, and use plaintiffa' underwriting forms and guidelines, without paying plaintiffs any continuing commissions and/or profit sharing payments. The Amended Complaint asserts 11 causes of action, including: (1) breach of the MPA. against AmTrust; (2) breach oft.he Brokerage Agreement against CRC; (3) breach of the agreement with ISBL; (4 & 5) breach and anticipatory breach of the U!vISA and the Fee Sharing Agreement against CRC; (6) tortious interference with the Ui\1SA and Fee Sharing Agrnement against AmTrust, Kullman, and ISBL; (7) tortious interference with the l\.1PA against CRC, Kullman, and ISBL; (8) unfair competition against all defendants; (9) breach of the covenant of good faith against AmTrust, CRC, and ISBL; (10) unjust enrichment against all defendants; and (11) in quantum meruit against all defendants. 8 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 6] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk ,~!gt, LLC v CRC Ins. Servs., Inc. Index No. 654564/2017 Page 6 of25 AmTmst urges that the complaint be dismissed against them on a number of grounds. They urge that plaintiffs' first claim, for breach of the J\1P A, is insufficient because LL240RJV1 was not an intended third-party beneficiary of the MPA, and it fails to plead a breach. AmTrust argues that plaintiffS~ tortlous interference claim {sixth cause of action) is insuflicit~nt, because it fails to identify any breach of the agreements, and AmTrust could terminate the MPA at will. Further, AmTrust asse1is that it had an economic interest defense to such claim. AmTrust urges that the unfair competition claim fails, because the contracts did not prohibit AmTrust from ru1ming the Program without plaintiffs, and Sherry's alleged proprietary interest in the Program does not qualify as a trade secret They argue that the breach of the covenant of good faith implied in the MPA should be dismissed, because plaintiffs \Vere not parties to the f\.1PA, AmTrust further asserts that the unjust enrichment and quantum mernit claims should be dismissed, as duplicative. Finally, AmTrust maintains that all claims against AmTrust Financial should be dismissed, because it was not a party to the transactions. Defendants CRC and Kullman argue that p1aintiffo concede they were compensated fully for the services they provided, and, as the contracts demonstrate, they do not have any perpetual right to foture participation in the Program, They assert that plaintiffs fail to point to any provision in the UMSA or the purported Fee Sharing Agreement that was breached, They contend that there was no anticipatory breach, because the payment of any profit sharing fees is not due until three years after the first Program year, vvhich 'Ncmld be in 2019, Moreover, they urge that recovery under the Fee Sharing Agreement is barred by the statute 9 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 7] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk Mgt., LLC v CRC lns, Servs., lnc Index No. 654564/2017 Page 7 of25 of frauds, They contend that the tortious interference \Vi th the MP A claim is insufficient, because they are parties to the 1V1.PA, and there are no allegations to support Kullman's individual liability. They maintain that the breach of covenant claim is duplicative of the unsustainable breach of contract claim, Finally, they urge that the unjust enrichment and quantum merit claims are barred by the contracts covering the identical subject matter. Ill, Discussion For the following reasons, the AmTrnst Defondants' motion to dismiss is granted, m1d all claims against them are dismissed. The CRC and Kullman Defendants' motion to dismiss is granted, and all claims against them are dismissed. On a motion to dismiss, pursuant to CPLR 3211, the court must afford the pleading a liberal construction, accept the facts alleged in the complaint as true, and accord the plaintiffs the benefit of every possible favorable inference. Leon v Afartinez, 84 :NT'''{2d 83, 87----88 ( 1994 ). \\-'here a fi.1.ctual question is presented, and the issue cannot be resolved as a matter of law, the motion to dismiss must be denied. See Condren, rValker & Co,, Inc, v WcJ£l l9 AD3d 151, 152 ( 1't Dept 2005), "[F]actual allegations that do not state a viable cause of action, that consist of bare iegai conclusions, or that are inherently incredible or clearly contradicted by documentary evidence are not entitled to such consideration". Skillgmnes. LLC v Brod_J', 1 AD3d 24 7, 250 (1st Dept 2003). Wl1ere dismissal is sought based on documentm)' evidence, the motion will succeed "only if the documentary evidence submitted conclusively 10 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 8] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk i.\;fgt, LLC v CRC Ins. Servs., Inc. Index No. 654564/2017 Page 8 of25 establishes a defense to the asserted claims as a matter of law'', /Mandarin Trading Ltd. v Wlldenstein, 65 AD3d 448, 458 (2009), q[ld 16 NY3d 173 (2011 ), citing Leon v A1artinez, 84 A. Claims against AmTrust Financial First, the claims against AmTrusl Financial are dismissed, in their entirety, as ArnTrust Financial did not have any connection with the transactions at issue. The Amended Complaint refers to AmTrust Financial in only two paragraphs-paragraphs 48 and 80, In paragraph 48, plaintiff-; allege that nonparty Sherry entered into the Non-Compete Agreement with AmTrust FimmciaL Amended Complaint,~ 48, The Non-Compete Agreement annexed to the complaint, however, dearly shows that the agreement, which is on AmTrust North Am. letterhead, is betv.reen AmTrust North Arn, and Sherry & Sons. See, Castigan Affirmation, Exhibit 6. In the agreement, Am Trust North Am. is defined as "AmTrnst North America, Inc. on behalf ofAmTrnst International Underwriters Limited". kl. The fact that the signature block indicates that the person signing on behalf of AmTrust North A.m., \Vas "Julian Griffiths, AmTrust Financial Services, Inc.~ Chief Undenvriting Officer---Casua!ty & Other Lines," and that the letterhead indicates that AmTrust North Arn, is "an AmTrust Financial Company," does not make Am Trust Financial a party to the agreement Jn any event, that agreement is not mentioned again in the complaint, and is not a basis for plaintiffs' claims for relief. 11 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 9] INDEX NO. 654564/2017 NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk lvfgt., LLC v CRC Ins. Servs., Inc. In paragraph 80~ Index No. 654564/2017 Page 9 of25 plaintiffs allege that "[t_Jlw acceptance, use and commercial exploitation by De fondants AmTrust International and AmTrnst Financial of the delegated services performed by LL240RM under the l\1PA confim1ed AmTrust North America's contractual obligations to LL240RM under the MPA". Amendea' Complaint, ,80. These allegations are part of the first cause of action which is asserted only against AmTmst North Am. and AmTrust IntL, not AmTrust FinanciaL The reference to AmTrust Financial appears to be a mistake. Plaintiffs' opposition, implying that AmTrust does not maintain separate corporate formalities or entities, and that they should be entitled to discovery on this issue, is rejected. Plaintiffs have failed to plead any basis for piercing the corporate veil. Thus, all claims against AmTrust Financial are dismissed. B. Breach of Contract Claims against Am Trust North Am. The first cause of action against AmTrust North Am. and AmTrust Intl. for breach of the MJ)A also is dismissed. To state a claim for breach of contract, LL240RM must allege the existence of a contract, the plaintiffs' performance thereunder, tbe defendants' brea<.~h, and damages resulting from the breach, See Nevco Contr. Inc. v R. P. Brennan Gen. Contrs. & Bldrs., lnc., 139 AD3d 515, 515 (l81 Dept 2016); ,_)'econd Source Funding, LLC v Yellowstone Capital, LLC, 144 AD3d 445, 445~44_6 (Pt Dept 2016); Harris v Seivard Park Hous. Cmj.YJ., 79 AD3d 425, 426 (1st Dept 2010). 12 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 10] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lcnv 240 Risk Afgt., LLC v CRC Ins, Servs., Inc. Index No. 654564/2017 Page 10 of25 Acknowledging it is not a pmty to the MPA, plaintiff LL240Rlv1 contends it may 11evertheless pursue a breach of contract claim against AmTrust as a third-party beneficiary of the MPA, because CRC delegated to LL240Rl\1 the perfmmance of certain of CRC's obligations under the lVIPA. "The third-party beneficiary concept arises from the notion that it is just and practical to permit the person for whose benefit the contract is made to enforce it against one whose duty it is to pay or perfonn". Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 43 (1985) (internal quotation marks and citations omitted} To assert adairn as a third-party beneficiary, the plaintiff must establish: (1) a valid and binding contract betvveen other parties; (2) that the contract was intended for the plaintiff's benefit; and (3) the benefit \Vas immediate, not incidental, indicating that the parties to the contract assumed a duty to compensate plaintiff if the benefit ls lost State of Cal. Pub. Employees' Retirement ,S:vs. v. Shearman & Ster!ingi 95 NY2d 427, 434-435 (2000). Under the standards in the Restatement (Second) of Contracts for detennining claims of third-party rights, the plaintiff must be an intended, not incidental, beneficiary, such that perfom1tmce of the promise satisfies the obligation of the promisee to pay money to the thirdparty beneficiary, or the circumstances show that "the promisee intends to give the beneficiary the benefit of the promised performance", LaSalle Natl. Bank v Ernst & Young, 285 AD2d 101, 108 (1st Dept 2001); see also, Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 N'Y2d at 44 (internal quotation marks and dtation omitted); see Condren, FValker & Co., inc. v Wolf; l 9 AD3d at 152, H must shovv that :;no one other than the third 13 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 11] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk }vfgt., LLC v CRC Ins. Servs., Inc. Index No. 654564/2017 Page 11of25 party can recover if the promisor breaches the contract," or that the contractual language "clearly evidences an intent to permit enforcement by the third party". Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d at 45. The '~parties' intent to benefit the third party must be apparent from the face of the contract", and their manifostation of intent must be sufficient to make the bem~ficiary's reliance probable and reasonable.· LaSalle Natl Bank v Ernst&: Yi:mng, 285 AD2d at 108; see also, }i'ourth Ocean Putnam Corp. v Interstate JYrecking Co., 66 N-Y2d at 44. "Absent clear contractual language evincing such intent, New York courts have demonstrated a reluctance to interpret circumstances to construe such an intent". LaSalle Natl. Bank v Ernst & Young, 285 AD2d at 108-109. Here, LL240RM is not a prornlsee ofArnTrust, and the M:PA does not require any pt~rfomwnce to be rendered to LL240RNL Under the rv1PA, AmTrust's payments run to CRC, not LL240RM, which was paid pursuant to a separate agreement with CRC, the Ul'vfSA (Undenvriting ~fanagement Services Agreement). AmTrust did not retain CRC, as its managing producer for the Program, for LL240RivI's benefit LL240IL\!1 fails to point to any language indicating that AmTrust and CRC, as the parties to the contract, intended that the MP A vvas for the benefit of LL240Riv1, and that they assmned a duty to compensate LL240RM if the benefit was lost State of Cal. Pub. Employees' Retirement -~vs. v Shearman & Sterling, 95 NY2d at 434-435, CRC dearly had the right to recover from AmTrust if AmTrust breached the MPA, hm.vever, there is no language in that agreement indicating the parties intended to give LL240R1\.1 an individually enforceable right thereunder. See Grunewald v Aietropolitan A1useum ofArt, 125 AD3d 438, 439 (1 >t Dept 2015) (mernbers of 14 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 12] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk Mgt., LLC v CRC Ins. Servs., Inc. Index No. ·654564/2017 Page 12 of25 public are incidental beneficiaries ofMMA's lease with the City, as neither lease language nor circumstances indicate the parties' intent to give public individually enforceable rights thereunder); Gonzalez v Fidelity & Deposit Co. oflvlm:vland, 119 AD3d 432, 433 (1"' Dept 2014) (pleadings failed to allege facts sufficient to show plaintiffs \Vere intended beneficiaries of wage and benefits provisions of general contract); Oursler v rVomen 's Interart Ctr., 170 A. D2d 407, 408 (1 "t Dept 1991) (documentation for N<1;tional Endowment of Arts grant awarded to defendant '''to support production of a videotape by [plaintiffs], n, fails to show clear intent by NE.A or defendant to perrnit enforcement of contract by plaintiff,). Amendment No. 1 to the MPA evidences only that LL240RJ'Vl was a delegee of CRC, consented to by AmTrust, which was to perfom1 certain specified undervvriting services for the Program under CRC, the manager or producer. CRC remained bound by all terms and conditions of the MP A, and was "fblly responsible" for LL240RM' s actions thereundero A4PA, Am.endment No. 1 at 2. The l\rlPA itselfrnakes clear that CRC's right to delegate ce1tain obligations was subject to significant restrictions, including, that Am Trust had to give written consent to any delegationi and that CRC rernained responsible for any obligations that it delegated. Id., I\1.PA, Art ILCJ3i Art III at 2. The Addendum to the MPA, which attaches 11ml~rY:i:r.Hing__gni.~l~.Un.E,';.~ that identify the three "key parties'' to the Program as LL240Rl'v1, CRC, and ISBL, does not demonstrate that LL240RNI was an intended beneficiary to the MPA. The only party to the !v1PA identified in the attached guidelines as a "key party" to the Program is CRC, and LL240Rl'Vf fails to 15 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 13] INDEX NO. 654564/2017 NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor La:w 240 Risk Aigt, LLC v CRC lns. Servs .. Inc. Index No. 654564/2017 Pa.gt~ 13 of 25 explain how this translates to LL240RlVI being an intended beneficiary of the MPA, Where a contract fails to expressly state the parties' intention to benefit a third party, the third party 'lNho contracts with the promisee does not have the right to enforce the promisee' s contract with another, Port Chester E!ec, Constr, Cmp. v Atlas, 40 NY2d 652, 656 1976). AmTrust and CRC entered into the l'v1PA for their mutual benefit, not to benefit an entity that CRC retained to help it perform its obligations as manager and producer under the l'v1PA. LL240Rrvf. is, at best, an incidental beneficiary. \Vhile LL240R!'vf asserts that it should be permitted discovery on this issue, it fails to describe what discovery would bear on this question. The MI~A's terrns establish that, at best, LL240RM is an incidental, not an intended, beneficiary of the MPA, and discovery 1vill not breathe life into plaintiffs' claim, Even if LL240Rlv1 was an intended beneficiary, or there vvas ar1 issue as to its status, plaintiffs fail to allege a breach of the MP A. ·while the Amended Complaint refers to Amendment No.I, it only asserts that it was breached by ArnTrusfs actions in excluding LL240Rl'v1 from the Program. The l'v1PA, including Amendment NoJ, however, does not guarantee that LL240RM vvould ahvays be part of the ProgT.arn, does not contain a time period, and the delegation of some ofCRC's duties to LL240R11 was for an indefinite period of time, making the JYIPA terminable at will. Greenwich Vil. Bel'erages v FcJod JJ.1erchandisers, 8 AD2d 719 (1°1 Dept 1959); see also LoPresti v .tWassachusetts A1ut. L{te Ins. Co., 30 AD3d 474, 476 (2d Dept 2006). lVforeover, the tem1ination provision in the rv1P A, while providing for termination upon written notice, only requires written notice to the Producer, which is dearly defined as 16 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 14] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk Afgt., LLC v CRC Ins. Servs .. Inc. Index No, 654564/2017 Page 14 of25 CRC. A1PA at 10. Thus, there is no basis to assert a breach. Therefore, the first cause of action as against AmTrust North Am. for breach of the MPA is dis:missed. C Breach of Brokerage Agreement as against CRC The second cause of action by Sherry & Sons against CRC for breach of the Brokerage Agreernent is dismissed for failure to state a clairn. In the Amended Complaint, Sherry & Sons states it \Vas paid a 10 percent commission under the agreement from January 2016 through November 2016 in the amount of $143,918.36, and concedes it was folly compensated during that period (amended complaint, iii! 64, 87-88). It then vaguely alleges that CRC has breached by failing to continue to pay cornmissions. As with the alleged breach oflhe IVIPA, Sherry & Sons apparently da.irns that CRC was required to continue to pay it cornrnissio.ns indefinitely, It, howevers fails to point to any policies it originated after November 2016, or between January and November 2016 that remained in effect such that CRC was required to pay it additional commissions. CRC was not the insurer, and any decision to issue or renew policies would have been made by AmTrust~ the insurer, not CRC. l'vforeover, there is no term of the Brokerage Agreement providing that CRC had an obligation to renew insurance policies to ensure that Sherry & Sons vvould receive cornrnissions. 17 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 15] INDEX NO. 654564/2017 NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk Mgt., LLC v CRC Ins. Servs,, Inc. .D. Index No, 654564/2017 Page 15 of25 Breach o.fthe U2i1SA t.uul Fee Sharing Agreement agllinst CRC The fourth cause of action, for breach of the UJ'v1SA and the Fee Sharing Agreement~ also is dismissed. LL240filvl alleges that, pursuant w Section 12 of the Ul'v:lSA and the Fee Sharing Agreement, CRC agreed to pay it a four percent commission on premiums for Programrelated underwriting services, and that commencing in October 2016, CRC began excluding LL240Rl\1 from the Program, and ceased paying any commissions, violating the tenns of those agreernents. A.mended Complainl, ~~ l 00-103. As a prelirninary matter, the UMSA does not declare that LL240Rlv1 was the exclusive underwriter for the Program, and, it is noted that CRC also \Vas not the exclusive manager under·the fvfPA. Compare, },,fPA with [l.111SA. Second, LL240Rlv1 does not allege that it rendered any services after November 2016. It concedes that, during the time when it actually performed the tasks specified in the UMSA, CRC properly compensated it for its work Aamended Complaint, i1' 4 5. LL240RIVI also concedes that, as of December 2016, it \.Vas no longer participating in the underwriting process for the Program (id., i-f 53). It friils to point to any provision in the Ul'v1SA requiring payment to it when services are not rendered. Finally, the Ufv1SA does not indicate that CRC must use LL240RIV1's services for any period of time. Moreover, \.Vhile it contains a termination provision, that provision does not require provision of any vvritten notice, U.ll1f;jM § 9 at 6, Even if it did, CRC may tem1inate the UMSA where the MPA was terminated. Id. 18 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 16] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk Afgt., LLC v CRC ins. Servs., Inc. Index No. 654564/2017 Page 16 of25 As to the Fee Sharing Agreement, because LL240Rlv1 fri.ils to allege any breach of the UMSA, there is no breach of this alleged agreement The alleged Fee Sharing Agreement simply defines the compensation resulting frorn section 12 of the UJ\.1SA, which is silent as to the specific compensation to be paid to LL240R:.vt In addition, the claim for profit sharing under this Fee Sharing Agreement is barred by the statute of frauds. Under General Obligations Law § 5-701 (a) ( 1), an oral agreement is void unless there is some writing subscribed by the party to be charged, If such agreement by its terms could not be performed vv'ithin one year from its making. According to plaintiffs 1 allegations and Addendum 1 of the MPA, CRC as the Producer was entitled to profit sharing, if any, three years after the expiration of the first Program year. lvJPA, Addendum 1, § 4(c). Since the Progrmn began in January 2016, profit sharing fees, at the earliest, would not be earned until January 2019. Thus, LL240RJV1' s purported portion of the profit sharing foes could not be earned, and the Fee Sharing Agreement with respect thereto, could not be performed, \Vithin one year, Accordingly, the . Fee Sharing Agreement needed to be in vvriting, signed by the party to be charged, to be enforceable, E. Anticipatory Bret1cll o..ftlle Ulv!SA and Fee Sharing Agreement Similarly~ the fifth cause of action, for anticipatory breach of the U:MSA and the Fee Sharing Agreement, is dismissed as insufficient Again, LL240Rl'v1 fails to allege that it performed any tasks under the UMSA or the Fee Sharing Agret~ment afler November 2016 and concedes it was paid for all services 19 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 17] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk M._g;t., LLC v CRC Ins. Servs., Jnco Index No. 654564/2017 Page 17of25 performed before that, and the agreements fail to contain provisions requiring it be paid if it was no longer providing services under the Program. Additionally, the profit sharing fees have not, and may never, become payable under the l'vlPA. Finally, the statute of frauds bars recovery for anticipatory breach of the oral Fee Sharing Agreement with regard to profit sharing fees. See, Camhi v. Tedesco Realty, LLC, 105 AJ).3d 795, 796 (2nd Dept 2013). F. Tortious interference Clabns The sixth cause of action against AmTrust and Kullman for tortious interference 'vVith the lll\tfSA and the Fee Sharing Agreement fails to state a claim and, therefore, is dismissed. To assert a claim for tortious interference with an existing contract, the plaintiff must allege: (1) the "existence of its valid contract with a third party;" (2) "defendant's knowledge of that contract;" (3) "defendant's intentional and improper procuring of a breach" of the contract; and (4) resulting damages. "f¥hite Plains Coat & Apron Co., Inc. v. Cintas Corp., 8 NY3d 422, 426 (2007); see also Law Offs. o.f1ra H. Leiboi-vitz v. Landmark Ventures, Inc., 131AD3d583, 585 (2d Dept 2015); AREP F{t!y-Seventh, LLC v. PN!GP Assoc .. LP., 115 AD3d 402, 402 (Pt Dept 2014). First, as to defendant Kullman, as an employee of CRC, a party to both of those agreements, he is not a st.ranger to the contracts. Ashby v. AL.A1 A1edia, LLC, 110 A.D.3d 459, 459 (1st Dept 2013). In addition, the Amended Complaint is devoid of non-conclusory allegations of fact that would support the inference that Kullman induced CRC to breach its agreements with LL240RTVf in any capacity other than that of an officer and/or employee of 20 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 18] INDEX NO. 654564/2017 NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk A:fgt... LLC v CRC Ins, Servs., ll'lc. Index No. 654564/2017 Page 18 of25 CRC, and that he was acting with malice, in order to impair the plaintiff's business, or for his personal profit. Robbins v. Panitz, 61 NY2d 967~ 969 (1984) (corporate officer not personally liable for inducing corporation to breach unless activity involved a separate tortious act); Travelsavers Enters., Inc, v, Analog Analytics, Inc., 149 AD3d 1003, 1007 (2d Dept 2017) (dismissed where no independent torts allegedly committed by officer); Baer v Complete l?.fl .Supply Warehoµse Corp., 89 AD3d 877, 878-879 (2d Dept 2011) (dismissed where plaintiff failed to adequately allege independent torts by corporate officer); Petkanas v Kooyman, 303 AD2d 303, 305 (1,t Dept 2003) (must allege corporate officer's acts which resulted in tortious interference were beyond scope of employment} Deriving some financial benefit as a shareholder of one ofthe parties to the contract is insufficient in and of itself "to establish that his predominant motive was to obtain an individual pecuniary benefit, rather than advance the interests of the corporation". Kats v East JJlh St. T{fereth Place, LLC, 73 AD3d 706, 708 (2d Dept 2010). Thus, plaintiffs' assertion that Kullman has a financial interest in ISBL, without any allegations of fa.ct that his . ~ predominant motive was to obtain a personal pecuniary benefit, fails to provide a basis for individual liability for Kullman. Therefore, LL240RM has not stated a claim holding Kullman personally liable on the theory that he induced CRC to breach the agreements for personal gain. As to AmTrust,,as determined above, there was no breach of the UMSA or the Fee Sharing Agreement. 1\tforeover, AmTrust had an economic interest in those agreements, as it was the insurer under the Program and it approved CRC' s delegees, including LL240Rt\il, on 21 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 19] INDEX NO. 654564/2017 NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor Lavt. 240 Risk A1gt,, LLC v CRC Ins. Servs., Inc. 1 Index No. 654564/2017 Page 19 of25 whom CRC relied to fulfill its underwriting obligations in the Program. Thus, it was privileged to interfere \vith those agreements. See. Foster v Churchill, 87 NY2d 744, 750 ( 1996); lvh.:wgan v Worldwide Entertainment Holdingc;, Inc., 141 AD3d 461, 463 ( l st Dept 2016), The A.mended Complaint fails to allege either malice or fraudulent or illegal means to defoat this econornic justification defense. 1\/lorgan v vVorldwide Entertainment Holdings, inc,, 141 AD3d at 463, Accordingly, there can be no claim for t01iious interference with those agTeements, and the sixth cause of action is dismissed, The seventh claim for tortious interference with the MPA against CRC and Kullman similarly is insufficient. CRC was a party to the lviPA, <:md, therefore, cannot be liable for tortious[y interfering \Vith it Kullman, again, as an employee of CRC was not a stranger to the contract, there are no allegations that he acted with malice or personally profited, and there are no nonconclusory factual allegations that his predominant motive '\Vas to obtain an individual pecuniary benefit G. Unfair Competition Claim The eighth cause of action for unfair competition is also disrnissed, The gravamen of this.claim is that AmTrust, CRC, and Kullman have continued to nm the Program without plaintiffs, thereby "misappropriat[ing] the labor, skills and resources of Plaintiffs for their own benefit and to the detriment of the Plaintiffs", Amended Complaint, 22 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 20] NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labar Law 240 Risk Aigt., LLC v CRC Ins. Servs., Inc. ~128. INDEX NO. 654564/2017 Index No. 654564/2017 Page 20 of25 None of the contracts governing these parties' relationship, hov.rever, contain any provisions prohibiting the parties from continuing to nm the Program without plaintiffs, To state a claim for unfair competition, the plaintiff n:mst allege harm from acts or practices relating to: (1) deceptive marketing; (2) trademark infringement; or (3) appropriation of ~'intangible trade values including trade secrets and the right of publicity". !vfarsh USA . Inc. v. Alliant Ins. Sers., Inc., 49 l\rfisc 3d 1210 (A), 2015 NY Slip Op 51555 (U), * 5 (Sup Ct, NY County 2015), quoting Restatement (Third) of Unfair Competition§ 1. "[T]he primary concern in unfair competition is the protection of a business from another's misappropriation of the business' organization or its expenditure oflabor, skill, and money". lvfacy's Inc. v Afartha Stewart Living Onrnimedia, Irie., 127 AD3d 48, 56 (1st Dept 2015) (internal quotation marks and citation omitted). The Amended Complaint does not allege any trademark infringement or any trade secrets, Plaintiffs claim they have alleged deceptive marketing, because their complaint details how they developed the Program, only to have defendants cut them out of it and hold it out as their own" Plaintiffs' memorandum in opposition (motion seq" No, 001) at 14-15. The Amended Complaint, however, does not allege any such reverse palming off. Amended Cornplaint, 414! 125-133, ]\,forever, there are no allegations that there was any customer confusion based on deceived bt~cause defendants~ marketing --- the custorners were insureds and were not AmTrust \vas still the insurer under the Program. 23 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 21] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk Mgt,, LLC v CRC Ins. Servs,, Inc. Index No, 654564/2017 Page 21 of25 Plaintiffs admit they do not allege that the Program qualifies as a trade secret PlaintiffJJ" opposition 001 at 15, but, instead, assert that their claim may be sustaim.:d because it is based on proprietary information, First, plaintiffs fail to plead, or present any factual allegations, as to what about the Program involves their proprietary information, \Vhat they did to protect such proprietary information~ and hovv defendants used that information. In addition, in asserting an unfair competition claim, the plaintiff must allege the bad faith misappropriation of a commercial advantage which belonged exclusively to the plaintiff (Brook v Peconic Bay lvfed Ctr., 152 .AD3d 436, 439 [1 ;;t Dept 2017]; LoPresti v lYJassachusetts lvfut. L(.fe Ins. Co., 30 AD3d at 476), a confidential relationship between the parties or a valid agreement to refrain from competing unfairly (see V. Ponte & Sons v American Fibers Intl., 222 AD2d 271, 272 [l si Dept 1995])~ and special damages (see T'Vaste Distillation Tech v. Blasland & Bouck Engrs., 136 AD2d 633~ 634 [1"1 Dept 1988] [plaintiff must plead special damages in form of actual losses identified and causally related to defendant's tortious act]). Plaintiffs do not allege the existence of a confidential relationship or a valid agreement to not compete, \Vhile Sherry & Sons executed the non-compete agreement with AmTrust with regard to the rvIP A, it never sought a reciprocal confidentiality or non-compete agreement from AmTmst, or a separate one with CRC, regarding plaintiffs' alleged proprietary infonnatiorL Plaintiffs also fail to allege special damages. The allegations that defondants continued to sel1 the insurance under tbe Prograrn do not constitute acts of bad faith misappropriation of plaintiffs' skills, labor and expenditures, See Krinos Foods. Inc. v. 24 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 22] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk ldgt., LLC v CRC ins. Servs., inc. Index No. 654564/2017 Page 22 of25 Vintage Food Cmp., 30 AD3d 332, 333-334 (!5' Dept 2006), Their allegations are plainly insufficient See APF 1~fgt Co., LLC v. lvhmn, 151AD3d668, 671 (2d Dept 2017); Abe's Romns, Inc. v. Space Hunters. Inc., 38 AD3d 690, 692-693 (2d Dept 2007). Therefore, the eighth cause of action is dismissed. IL Breach of Duty of Good Faith Claim The ninth cause of action, for breach of the duty of good faith and fair dealing, fails to state a claim. To the extent that plaintiff Sherry & Sons brings this claim, it is insufficient because it was not a party to the MPA, the UMSA or the Fee Sharing Agreement. With respect to the Brokerage Agreement, to which Sherry & Sons was a party, as discussed above, the Amended Complaint fails to allege a breach, and this claim duplicates the unsustainable breach of contract claim. See Ski!lgmnes, LLC v. Brody, 1 AD3d at 252 (claim for breach of irnplied covenant cannot substitute for unsustainable breach of contract claim), Moreover, both causes of action arise from the same facts and seek the same damages. Thus, the implied covenant claim is duplicative, Berkeley Research Group, LLC v FTJ Consulting, Inc., 157 AD3d 486, 489 (1st Dept 2018); see Deadco Petroleum v Trqf7gura AG, 151 AD3d 547, 548 (1 si Dept 2017); Atncan Holdings, Inc. v Canadian Imperial Bank of Commerce, 70 AD3d 423, 426 (1st Dept 2010). 25 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 23] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk lvfgt., LLC v CRC Ins. ,','ervs.. Inc. J:ndex No. 654564/2017 Page 23 of25 LL240R.1VI's claim for breach of the covenant of good faith with regard to the MPA is dismissed, because, as determined above, it failed to adequately allege that it is a third-party beneficiary of the MPA. lVforeover, as with Sheffy & Sons' claim, this claim duplicates the insufficient breach of contract clairrL Deaa'co Petroleum v Trafigura AG, 151 AD3d at 548. LL240RM's claim against CRC is dismissed for the same reasons. LL240RM alleges tbat CRC deprived it from receiving the value of the Program which plaintiffs created, developed and implemented. Amended Complaint, 41137. The UMSA, however, did not contemplate that LL240Rlv1 was going to receive the "value of the Program;" rather, it was to be compensated for the underwriting services it provided under the agreement A.s determined above, plaintiffs admit that LL240RJY1 was paid for the services it provided from January through Novernber 2016 under the UMSA, and that it did not render any further CRC had the right to terminate the UMSA subject to AmTrust's agreernent or in the event of termination of the lVIPA, which occurred, Plaintiffs cannot use this claim as a substitute for its unsustainable breach of contract claim against CRC I; Quasi-C'ontn:u:t Claims The tenth and eleventh causes of action, vvhich allege unjust enrichment and seek recovery in quantum meruit, respectively, are subject to dismissal in Hght of the existence of an enforceable contract governing the same subject matter. See Clark-Fitzpatrick; Inc. v Long fa. R.R. Co., 70 NY2d 382, 388 (1987); APF 1\1gt.Co., LLCv lvfunn, 151 AD3d at 671. 26 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 24] NYSCEF DOC. NO. 85 INDEX NO. 654564/2017 RECEIVED NYSCEF: 05/08/2018 Labor Law 240 Risk Aigt. LLC v CRC ins. Servs .. inc. Index No. 654564/2017 Page 24 of25 Both claims sound in quasi contra.ct Edelman v Starn1ood Capital Group, LLC, 70 AD3d 246, 250 (JS1 Dept 2009); Fulbright & Jmvorski, LLP v Carucci, 63 AD3d 487, 488-489 (1st Dept 2009). Recovery in quasi contract may not be obtained where there is a valid enforceable contract betvveen the parties regarding the same subject matter. IDT Corp. v. A1organ Stanley Dean Witter & Co., 12 N'{3d 132, 142 (2009); Goldman v IY!etropolitan Life Ins. Co., 5 NY3d 561, 572 (2005), unless there is a bona fide dispute as to the existence of the contract. AHA Sales, Inc. v. Creative Bath Prods., Inc., 58 AD3d 6, 20 (2d Dept 2008). Here, there is no such bona fide dispute, and the subject matter of both of these claims as to all defondants is identical to that asserted lillder the breach of contract claims. Therefore, the tenth and eleventh causes of action are dismissed. Accordingly, it is ORDERED that the motion of defondants AmTrust North America, Inc,, AmTrust International Undenvriters Ltd, and AmTrust Financial Services, Inc, (motion seq, No. 001) to dismiss the Amended Complaint against them is granted and the complaint is dismissed in its entirety against said defendants, with costs and disbursements to said defendants as taxed. by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendants; and it is further ' 24 27 of 28 [*FILED: NEW YORK COUNTY CLERK 05/08/2018 01:43 PM 25] INDEX NO. 654564/2017 NYSCEF DOC. NO. 85 RECEIVED NYSCEF: 05/08/2018 Labor Lmv 240 Risk lvfgt,, LLC v CRC Ins. 5'ervs., inc. Index No, 654564/2017 Page 25 of25 ORDERED that the motion of defendants CRC Insurance Services, Inc. and A.lex Kullman (motion seq. No. 002) to dismiss the Amended Complaint against them is granted and the complaint is dismissed in its entirety against said defendants, V\iith costs and disbursements to said dt:fendants as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in frwor of said defendants; and it is fmiher ORDERED that the motii;m of defendant International Specialty Brokers, Ltd. (rnotion seq. No. 003) to dismiss the complaint. against it was withdrawn, 3=,", Dated: May _ 2018 ENTER: {,,.··"'-"-"-;·~ \~,_;1:\. ~,, _\'~2>~ (';<: . . EILEEN BRANSTEN, J.S.C 25 28 of 28

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