ADDITIONAL CASES Allendale Bar & Grill, Inc., Third-Party Plaintiff v. Epic Insurance Brokers & Consultants, Third-Party Defendants The following papers numbered 1-3 were read and considered in connection with Third-Party Defendant’s Notice of Motion (Motion #6) for an Order pursuant to Civil Practice Law and Rules §3212 granting summary judgment in favor Third-Party Defendant and dismissing Third-Party Plaintiff’s causes of action in their entirety with prejudice and for further relief as this Court just and proper: PAPERS NUMBER Notice of Motion/Affirmation of Alexander F. Schwall, Esq./Exhibits A — L/Statement of Material Facts/Memorandum of Law 1 Response to Statement of Material Facts/Statement of Material Facts/Memorandum of Law in Opposition/Affirmation of Kimberley A. Brunner, Esq./Exhibits A-E 2 Affirmation of Alexander F. Schwall, Esq./Exhibit A 3 DECISION AND ORDER PROCEDURAL HISTORY This is an action to recover for personal injuries allegedly sustained by Plaintiff, who was working for a promoter for a drink vendor, at a charitable golf event called “It’s a Wonderful Life” when a pop-up tent, or part thereof, flew up and struck her, causing her injuries. Plaintiff alleges that her injuries were caused by negligence on the part of THE TUXEDO CLUB (hereinafter “TUXEDO”), the ALLENDALE BAR & GRILL, INC., (hereinafter “ALLENDALE”) and MAHWAH BAR & GRILL, INC., (hereinafter “MAHWAH”). TUXEDO, ALLENDALE, and MAHWAH all cross-claimed against each other, alleging, inter alia, claims for breach of contract to procure insurance coverage for the cross-claiming Defendant. At the time of the incident the Plaintiff was working at the event for a drink vendor, non-party U.S. CONCEPTS, LLC. Plaintiff commenced the instant action with the filing of a Summons and Verified Complaint on October 22, 2019. Defendant MAHWAH joined issue with the filing of an Answer with cross claims on December 30, 2019. Defendant TUXEDO joined issue with the filing of an Answer with cross claims on January 6, 2020. Defendant ALLENDALE joined issue with the filing of an Answer with cross claims on May 11, 2020. ALLENDALE also filed a third-party action against its insurance broker, EPIC INSURANCE BROKERS & CONSULTANTS (hereinafter “EPIC”), alleging claims sounding in tort and breach of contract for failing to procure insurance coverage for ALLENDALE.1 Plaintiff filed a Second Amended Verified Complaint on May 28, 2020. Defendant ALLENDALE filed a Verified Answer to Plaintiff’s Second Amended Complaint with crossclaims and an Amended Third-Party Complaint as to THIRD PARTY-Defendant EPIC on June 22, 2020. On August 31, 2020, the parties entered into a Stipulation that discontinued without prejudice the action against ALLIED BEVERAGES, LLC (NYSCEF Doc. No. 30, e-filed September 2, 2020). On the same date the parties entered into a Stipulation to Amend the Complaint directing that the Plaintiff shall file a Third Amended Verified Complaint to add ALLIED BEVERAGE GROUP, LLC d/b/a J & J DISTRIBUTORS (hereinafter “ALLIED”) as a defendant in the matter and allowing for service of an Answer to the Third Amended Verified Complaint within forty-five (45) days of service (NYSCEF Doc. No. 31, e-filed September 2, 2020). Plaintiff filed a Third Amended Verified Complaint on September 2, 2020. Third-Party Defendant EPIC joined issue with the filing of an Answer to the Third-Party Complaint on September 29, 2020. Plaintiff filed a Motion for Default Judgment (Motion #1) pursuant to Civil Practice Law and Rules §3215 directing a default judgment be entered against Defendant ALLIED for failure to appear and answer and also directing the assessment of damages against Defendant ALLIED at the time of trial. Defendant ALLIED filed a Verified Answer to the Third Amended Verified Complaint on December 4, 2020. As a result of the filing of the aforementioned Answer, Plaintiff withdrew their Motion for Default Judgment (Motion #1) on December 7, 2020. On December 8, 2020, Third-Party Defendant EPIC filed a Motion to Sever the Third-Party Complaint (Motion #2) pursuant to Civil Practice Law and Rules §603 or Civil Practice Law and Rules §1010 and order a separate trial of the third-party action. The Honorable Catherine M. Bartlett, A.J.S.C. issued a Decision and Order dated February 4, 2021, granting Third-Party Defendant EPIC’s motion in part, and denying it in party: the motion for a trial of the Third-Party claims separate from the trial of Plaintiff’s claims was granted and the motion for severance of the Third-Party action from the main action was denied. On February 8, 2021, Defendant TUXEDO joined issue as to the Third Amended Complaint by filing of a Verified Answer. On February 9, 2021, Defendant ALLENDALE also joined issue as to the Third Amended Complaint by filing of a Verified Answer. On February 17, 2022, Defendant ALLENDALE filed a Motion for Summary Judgment (Motion #3) pursuant to Civil Practice Law and Rules §3212. On June 13, 2022 (e-filed June 14, 2022) the Honorable James L. Hyer, J.S.C. issued a Decision and Order granting Defendant ALLENDALE’s motion “to the extent the Third Verified Complaint is dismissed as it pertains to Allendale,” but not disposing of any cross claims against Defendant ALLENDALE. Defendant TUXEDO filed a Notice of Appeal dated June 22, 2022, as Judge Hyer’s Decision and Order as to Defendant ALLENDALE’s Motion for Summary Judgment (Motion #3). Plaintiff counsel filed a Note of Issue on July 27, 2022, for a jury trial along with a Certificate of Readiness for Trial. On September 27, 2022, Defendant MAHWAH filed a Motion for Summary Judgment (Motion #4) pursuant to Civil Practice Law and Rules §3212 as to liability seeking dismissal of the complaint, all claims, cross and counter claims against Defendant MAHWAH. On September 30, 2022, Defendant ALLENDALE filed a Motion for Summary Judgment (Motion #5) pursuant to Civil Practice Law and Rules §3212 dismissing all claims, cross and counter against ALLENDALE “including those crossclaims for contribution and indemnification filed by Defendants TUXEDO, MAHWAH and ALLIED.” The undersigned issued a Decision and Order dated and filed on April 13, 2023, granting Defendant MAHWAH’s motion for summary judgment (Motion #4) and denying in part and granting in part Defendant ALLENDALE’s motion for summary judgment (Motion #5). On May 12, 2023, Defendant ALLENDALE filed a Notice of Appeal on the aforementioned Decision and Order. The appeal remains pending. On February 9, 2023, Appellate Counsel for Defendant TUXEDO e-filed a letter indicating that the Notice of Appeal filed by them on June 22, 2022, was withdrawn and the withdrawal was granted by the Second Department, Appellate Division in an Order dated October 31, 2022. On June 12, 2023, Third-Party Defendant EPIC filed the instant motion for summary judgment (Motion #6) against Third Party Plaintiff ALLENDALE. According to EPIC the third-party action is based upon ALLENDALE’s allegations that EPIC committed a breach of contract and was negligent in failing to obtain appropriate coverage. ANALYSIS The proponent of a summary judgment motion must establish his or her claim or defense sufficient to warrant a court directing judgment in its favor as a matter of law, tendering sufficient evidence to demonstrate the lack of material issues of fact. See Giuffrida v. Citibank Corp., et al., 100 NY2d 72 (2003), citing Alvarez v. Prospect Hosp., 68 NY2d 320 (1986)]. The failure to do so requires a denial of the motion without regard to the sufficiency of the opposing papers. See Lacagnino v. Gonzalez, 306 AD2d 250 (2d Dept 2003). However, once such a showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof in admissible form demonstrating material questions of fact requiring trial. See Gonzalez v. 98 Mag Leasing Corp., 95 NY2d 124 (2000), citing Alvarez, supra. See also Winegrad v. New York Univ. Med. Center, 64 NY2d 851 (1985). Mere conclusions or unsubstantiated allegations unsupported by competent evidence are insufficient to raise a triable issue. See Gilbert Frank Corp. v. Federal Ins. Co., 70 NY2d 966 (1988); See also Zuckerman v. City of New York, 49 NY2d 557 (1980)]. Where material issues of fact exist that cannot be resolved on the papers filed in support of and in opposition to summary judgement the motion must be denied. See Matter of Suffolk County Department of Social Services V. Jams M., 83 NY2d 178 (1993). “[I]nsurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage.” American Bldg. Supply Corp. v. Petrocelli Group, Inc., 19 NY3d 730, 735 (2012) quoting Murphy v. Kuhn, 90 NY2d 266, 270 (1997). “Under New York law, a party who has engaged a person to act as an insurance broker to procure adequate insurance is entitled to recover damages [for breach of contract] from the broker if the policy obtained does not cover a loss for which the broker contracted to provide insurance, and the insurance company refuses to cover the loss.” Broecker v. Conklin Property, LLC, 138 NYS3d 177, 180 (2d Dept 2020) quoting Bruckmann, Rosser, Sherill & Co., L.P. v. Marsh USA, Inc., 65 AD3d 865, 866 (1st Dept 2009). The third-party complaint alleges that broker THOMPSON, the insurance broker from EPIC, was instructed to procure coverage for all of ALLENDALE’s activities and events including off-site events such as the subject golf outing. Further, the complaint asserts that EPIC was involved in securing ALLENDALE’s coverage from American Automobile Insurance Company and ALLENDALE had a reasonable expectation based upon representations and omissions of EPIC that any personal injury incident at the subject golf outing would be covered by the insurance procured by EPIC for ALLENDALE. In the complaint ALLENDALE alleges that upon submitting a claim for the subject accident to American Automobile Insurance Company they learned that coverage was denied because the event occurred off-premises of ALLENDALE’s insured location and was therefore not covered. According to ALLENDALE, but for the failures of EPIC to procure insurance, and their misleading instructions, misrepresentations, and material omissions ALLENDALE would have maintained insurance for an off-site event covering personal injury. In regard to the first cause of action, breach of contract, ALLENDALE contends they had a contractual relationship with EPIC in which EPIC was to procure adequate and necessary coverage against risk of loss in the event of personal injury for all events, including off-site events such as the subject golf outing. ALLENDALE alleges that EPIC failed to ensure ALLENDALE had adequate coverage for off-site events and therefore breached the parties’ agreement. As a direct and proximate result, ALLENDALE asserts that they suffered consequential damages plus costs of defense including legal fees and court costs. “The elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff’s performance under the contract, the defendant’s breach, and resulting damages.” Detringo v. South Is. Family Med., LLC, 158 AD3d 609, 609-610 (2d Dept 2018); See also 34-06 73, LLC v. Seneca Insurance Company, 39 NY3d 44, 52 (2022); JP Morgan Chase v. J.H. Elec. Of N.Y., Inc., 69 AD3d 802 (2d Dept 2010). “To create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms.” Matter of Express Indus. & Term. Corp. v. New York State Dept. of Transp., 93 NY2d 584, 589 (1999) citing Martin Delicatessen v. Schumacher, 52 NY2d 105, 109 (1981). “Generally, a party alleging a breach of contract must demonstrate the existence of a contract reflecting the terms and conditions of their purported agreement. Moreover, the plaintiff’s allegations must identify the provisions of the contract that were breached.” Canzona v. Atanasio, 118 AD3d 837, 839 (2d Dept 2014). Here, EPIC contends that ALLENDALE’s breach of contract cause of action fails because there is no contract, nor is there any evidence that has been elicited in discovery or deposition testimony that demonstrates that EPIC was the “broker of record” for ALLENDALE. Further, EPIC avers that they never entered into a formalized broker/client agreement or relationship with ALLENDALE or MAHWAH or the KUNISCH family at any time before the subject accident. According to EPIC the only signed document between EPIC and ALLENDALE was the “Accord applications” which allowed EPIC to solicit bids for coverage for ALLENDALE (and MAHWAH) from insurers. In opposition, the third-party Plaintiff ALLENDALE concedes there was no written contract between them and EPIC and instead argues that the “acts and conduct” of ALLENDALE and EPIC formed a contract that is implied in fact pursuant to which EPIC was ALLENDALE’s “exclusive” insurance broker. Based upon ALLENDALE’s concession the Plaintiff’s allegations of an alleged contract are, therefore, insufficient to plead a breach of contract cause of action against EPIC. Turning next to ALLENDALE’s argument that EPIC breached an implied contract between the parties. “An implied-in-fact contract requires the same elements as an express contract including, consideration, mutual assent, legal capacity, and legal subject matter.” Mass v. Cornell Univ., 94 NY2d 87, 93-94 (1999). “A contract implied in fact may result as an inference from the facts and circumstances of the case, although not formally stated in words.” Jemzura v. Jemzura, 36 NY2d 496, 503-504 (1975) Similarly to an express contract, an implied-in-fact contract requires a demonstration that there was a meeting of the minds between the parties. See Id. “A contract implied in fact may result as an inference from the facts and circumstances of the case, although not formally stated in words, and is derived from the presumed intention of the parties as indicated by their conduct.” Jemzura v. Jemzura, 36 NY2d at 503-504. A finding of the existence of the implied-in-fact contract relies upon a consideration of the conduct between EPIC and ALLENDALE that demonstrated mutual assent and intentions for an exclusive broker/client relationship. Craig KUNISCH testified in “most” years he would “shop” the polices for both restaurants for the purpose of soliciting the best price for the most comprehensive services, which was consistent with THOMPSON’s testimony as to their business relationship. KUNISCH did indicate in his testimony that it had been a while since he “shopped” the policy, but also clarified that he made the determination to “shop” the policies based on several factors including his own time, the renewal dates of the policies and the needs of the restaurant. Despite KUNISCH not recalling the last time the policy was “shopped,” based upon the length of the business relationship between himself and THOMPSON it appears that there was no loyalty or exclusive nature to their insurance broker/client relationship and “shopping” of the policy was not a one-time event. The conduct of KUNISCH in regularly “shopping the policy” by reaching out to other brokers and soliciting other prices and insurance demonstrates that he did not believe he had an exclusive insurance broker agreement with EPIC on behalf of ALLENDALE (or MAHWAH and the KUNISCH family). ALLENDALE’s argument that there was mutual assent by the fact that KUNISCH sought an insurance policy quote yearly from EPIC is flawed, as it would also result in the other insurance brokers to whom KUNISCH “shopped” his policy needs to have created the same exclusive broker/client relationship. The lack of written agreement between the parties along with both KUNISCH and THOMPSON’s testimony indicating that KUNISCH had the ability to yearly “shop” his policy, that THOMPSON was aware KUNISCH engaged in this conduct and that KUNISCH did “shop” the policy regularly is conduct that demonstrates that there was merely a mutual agreement that EPIC would be an included broker in the “shopping” of the insurance policy, nothing more. The parties have made the determination of the existence of the implied-in-fact contract complicated by referencing the personal “relationship” between KUNISCH and THOMPSON. It is apparent from the deposition testimony and emails between THOMPSON and KUNISCH that they had a long-standing personal friendship outside of the insurance broker/client relationship and that personal relationship allowed for continued business between EPIC and ALLENDALE (and MAHWAH). However, in considering conduct as to the intentions and assent regarding an exclusive broker/client relationship and implied contract the existence of the personal relationship between them alone does not support a finding of an exclusive insurance broker/client relationship upon which a breach of implied contract may be founded. In addition to the lack of an exclusive relationship, there is no evidence presented that ALLENDALE relied on EPIC or the agent, THOMPSON, to make insurance or risk management decisions other than a single email inquiry from 2011 in which KUNISCH’s brother sought a specific policy for a hole in one sponsorship. The content of the email did not include any requests for an opinion or recommendation as to the necessity or lack thereof a policy and instead was focused primarily on whether EPIC could assist with procuring of “hole in one” insurance. That single email from KUNISCH’s brother and THOMPSON does not demonstrate that the relationship between ALLENDALE and EPIC consisted regularly (or ever) of recommendations as to risk management or insurance as to ALLENDALE for the necessity of the addition of off-site premises insurance in the restaurant’s policy. Based upon the foregoing, the Court finds that EPIC has met its prima facie burden as to the first cause of action for breach of contract, including an implied-in-fact-contract, and in opposition ALLENDALE has failed to demonstrate a question of fact upon which the motion should be denied. As such, EPIC is granted summary judgment as to the first cause of action, breach of contract. Turning next to the second cause of action sounding in negligence. Generally, “Insurance brokers have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage.” Voss v. Netherlands Ins. Co., 22 NY3d 728, 734 (2014); Joseph v. Interboro Ins. Co., 144 AD3d 1105 (2d Dept 2016); JT Queens Carwash, Inc. v. JDW & Associates, Inc., 144 AD3d 750 (2d Dept 2016). “An insurance agent or broker can be held liable in negligence if he or she fails to exercise due care in an insurance brokerage transaction. Thus, a plaintiff may seek to hold a defendant broker liable under a theory of either negligence or breach of contract.” Id; See also Bedessee Imports, Inc. v. Cook, Hall & Hyde, Inc., 45 AD3d 792 (2d Dept 2007). “An insured must show that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction.” Bedessee Imports, Inc. v. Cook, Hall & Hyde, Inc., 45 AD3d at 794 citing Mickey’s Rides-N-More, Inc. v. Antony Viscuso Brokerage, Inc., 17 AD3d 328, 329 (2d Dept 2005). “To set forth a case for negligence or breach of contract against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy.” Id. citing Hoffend & Sons, Inc. v. Rose & Kiernan, Inc., 7 NY3d 152, 155 (2006). A general request is insufficient in demonstrating there was a specific request of a type of coverage. See Id. Based upon the testimony and evidence presented to the Court ALLENDALE through KUNISCH sought a package policy for 2018, as they had done in years prior. There is no testimony presented that ALLENDALE sought insurance for outside or off-premises events or that they indicated that they engaged in same. To demonstrate that EPIC and specifically THOMPSON breached their duty to ALLENDALE, the insured, there needs to be a showing that ALLENDALE made a specific request for off-premises or special event coverage for the subject golf outing. The fact that THOMPSON attended the event over the years and had a long-standing friendship with KUNISCH is insufficient to demonstrate that he had a duty to advise KUNISCH his insurance policy did not include off-premises events. THOMPSON’s presence at the event as a participant and even as a sponsor does not demonstrate that he was aware of TUXEDO and ALLENDALE’s contractual agreement and any insurance/indemnification requires that flowed from same. It has been elicited that in the twelve (12) years that EPIC procured insurance for ALLENDALE they never asked for additional insurance for the golf outing and everyone was aware the event took place off-premises at golf clubs. The Court finds that EPIC through their broker, THOMPSON satisfied their common law duty in procuring the insurance sought by ALLENDALE for calendar year, 2018, by providing ALLENDALE the package policy they sought for the restaurant business operation at the premises where the restaurant was located. Based upon the foregoing, the Court finds that EPIC has met its summary judgment burden as to the second cause of action for negligence and in opposition ALLENDALE has failed to demonstrate a question of fact. As such, EPIC is granted summary judgment as to the second cause of action, negligence. The third cause of action sounds in negligence based upon a special relationship. “Generally, “[t]o set forth a case for negligence or breach of contract against an insurance broker, a plaintiff must establish that a specific request was made to the broker for the coverage that was not provided in the policy.” Joseph v. Interboro Ins. Co., 144 AD3d at 1108 quoting American Bldg. Supply Corp. v. Petrocelli Group Inc., 19 NY3d at 735. “Thus, the duty is defined by the nature of the client’s request.” Broecker v. Conklin Prop., LLC, 189 AD3d at 752. However, where a special relationship exists between the insurance broker and client then the broker may be liable for failing to advise or direct the client to obtain additional coverage even in the absence of a specific request. See Hoffend & Sons, Inc. v. Rose & Kiernan, Inc. 7 NY3d at 158; See also Waters Edge @ Jude Thaddeus Landing, Inc., et al. v. B & G Group, Inc., 129 AD3d 706 (2d Dept 2015); Shenrock Shore Club, Inc. v. Rollins Agency, 270 AD2d 330 (2d Dept 2000). The Court of Appeals stated in Murphy that there are “particularized situations [that] may arise in which insurance agents, through their conduct or by express or implied contract with customers and clients, may assume or acquire duties in addition to those fixed at common law.” Murphy v. Kuhn, 90 NY2d at 272. The three exceptional situations that may give rise to a special relationship and may create an additional duty of advisement are: “(1) the agent receives compensation for consultation part from payment of the premiums; (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent; or (3) there is a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on.” Id; See also AB oil Service, Ltd. V. TCE Insurance Services, Inc. et al., 188 AD3d 624 (2d Dept 2020). ALLENDALE alleged in the third-party Complaint that EPIC and its employees including THOMPSON “interacted” with ALLENDALE regarding adequate coverage “relating to all functions” and that ALLENDALE relied upon EPIC’s expertise to properly advise them as to issues related to the coverage in their insurance policies. According to the Complaint ALLENDALE’s reliance on EPIC occurred based upon the parties “special relationship of confidence and trust.” In support of the existence of the special relationship ALLENDALE alleged that they had a “long-standing relationship” with EPIC for years in which they served as ALLENDALE’s “insurance advisor and broker” as to “all aspects of coverage for” ALLENDALE’s business ventures. Additionally, ALLENDALE alleges that employees of EPIC attended the subject golf event and the prior years events and based upon that attendance had knowledge that ALLENDALE engaged in off-site events as a host and that they wanted insurance coverage “for all functions.” Based upon this relationship ALLENDALE alleges that EPIC had a duty to properly advise them as to whether they had insurance coverage for off-site events. Here, EPIC has demonstrated their prima facie entitlement to judgment as a matter of law as to the third cause of action by submitting evidence that KUNISCH had never sought their advice regarding the necessity for off-premises insurance for any event, and specifically not for the golf outing they had sponsored for years prior to the alleged incident. KUNISCH’s own deposition testimony indicates that when he sought an insurance policy yearly, he was looking for a package policy that covered the restaurant business. There is no evidence within any of the depositions of either ALLENDALE or EPIC that either party had discussed with the other that there was any insurance liability incurred by ALLENDALE by their position of hosting the subject golf outing. Rather, THOMPSON clearly delineates in his deposition that he did not ever discuss ALLENDALE’s insurance needing to cover their sponsorship of the golf outing because when he attended the event, he noticed that ALLENDALE was not operating as a restaurant; they did not serve food or alcohol and none of their employees were working at the event. THOMPSON’s testimony demonstrates the lack of any special relationship as to advice. Based upon his mere participation in the golf outing he did not create a special relationship upon which he should be aware of all of the business dealings of ALLENDALE that would require him to inform ALLENDALE that the insurance that they sought lacked coverage for off-premises events. The twelve (12) year relationship is also not enough to demonstrate a special relationship. See Moutafis Motors, Ltd. V. MRW Group, Inc., 144 AD3d 1000 (2d Dept 2016). There is nothing within the testimony and evidence before this Court that distinguishes the relationship between ALLENDALE and EPIC from the typical customer-broker relationship. THOMPSON’s participation in the golf outing and friendship with KUNISCH did not create a special relationship and as such Defendant EPIC’s motion for summary judgment as to the third cause of action is granted. In arriving at this decision the Court has reviewed, evaluated, and considered all of the issues framed by these motion papers and the failure of the Court to specifically mention any particular issue in this Decision and Order does not mean that it has not been considered by the Court in light of the appropriate legal authority. Accordingly, it is hereby ORDERED that Third-Party Defendant EPIC’s Motion for Summary Judgment (Motion #6) is granted in its entirety; and it is further ORDERED that the Third-Party Complaint filed by Third-Party Plaintiff ALLENDALE is dismissed; and it is further ORDERED that the remaining parties are to appear for an in-person status conference on NOVEMBER 28, 2023, at 2:00 p.m. The foregoing is the Court’s Decision and Order as to Motion #6 Dated: October 23, 2023
