2019 WL 6720471

Supreme Court, Appellate Division, Second Department, New York.
MAAD Construction, Inc., appellant,
v.
Cavallino Risk Management, Inc., respondent, et al., defendants.
2017–11634
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(Index No. 602276/15)
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Argued – September 19, 2019
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December 11, 2019
Attorneys and Law Firms
Boies Schiller Flexner LLP, Albany, N.Y. (George F. Carpinello and Teresa A. Monroe of counsel), for appellant.
Clausen Miller P.C., New York, N.Y. (Don Ray Sampen, pro hac vice, and John P. De Filippis of counsel), for respondent.
Cavallino Risk Management, Inc. (hereinafter Cavallino), is a licensed insurance broker. In March 2011, the plaintiff corporation requested that Cavallino procure insurance for the plaintiff ‘s trucking and hauling business and all related equipment. On March 31, 2011, Cavallino, through an intermediate insurance broker—the defendant Marketscout Wholesale, Inc.—procured three insurance policies
for the plaintiff:(1) an auto liability policy underwritten by National Union Fire Insurance Company (hereinafter National Union), (2) a general liability policy also underwritten by National Union, and (3) an inland marine physical damage comprehensive policy underwritten by the defendant Allianz Global Corporate Specialty Insurance Company, USA (hereinafter AGCS). The AGCS policy, which provided coverage
for the plaintiff ‘s equipment, had a termination date of January 18, 2013. The plaintiff obtained financing from First Insurance Company of New York (hereinafter First Insurance) to purchase the policies, making a down payment to Cavallino and thereafter making installment payments toward the balance directly to First Insurance.
ALAN D. SCHEINKMAN, P.J. REINALDO E. RIVERA CHERYL E. CHAMBERS VALERIE BRATHWAITE NELSON, JJ.

Argued—September 19, 2019

DECISION & ORDER
*1 In an action, inter alia, to recover damages for breach of an insurance contract and negligence, the plaintiff appeals from an order of the Supreme Court, Nassau County (Bruce Cozzens, Jr., J.), entered September 20, 2017. The order, insofar as appealed from, granted the motion of the defendant Cavallino Risk Management, Inc., for leave to reargue its prior motion for summary judgment dismissing the complaint insofar as asserted against it, which had been denied in an order of the same court entered October 11, 2016, and, upon reargument, in effect, vacated the order entered October 11, 2016, and thereupon granted that defendant’s prior motion.

ORDERED that the order entered September 20, 2017, is affirmed insofar as appealed from, with costs.

On October 1, 2011, the plaintiff purchased a 2012 Mack tractor and requested that it be added as an insured item under the AGCS policy. The 2012 Mack tractor was added to the AGCS policy as requested by the plaintiff at an increased premium of $1,485. The plaintiff failed to pay the additional premium. AGCS sent a notice of cancellation to the plaintiff on December 19, 2011, for nonpayment of the premium. The plaintiff claims that it did not receive the notice of cancellation issued by AGCS, and was not informed by the insurance brokers, including Cavallino, of the cancellation. The plaintiff asserts that it learned of the cancellation for the first time in October 2012, upon submitting a claim after Hurricane Sandy for damage to its fleet.

The plaintiff commenced the instant action against Cavallino and AGCS, among others. The plaintiff alleged that it entered into a “professional agency relationship” with Cavallino and that, as part of that relationship, Cavallino was obligated to provide the plaintiff with notice of cancellation of the AGCS policy, which it failed to do. Specifically, the plaintiff alleged that, in July 2012, it notified Cavallino that one of its tractor trailers had overturned, and instead of advising the plaintiff that the AGCS policy had been cancelled in January 2012, Cavallino acted as if the policy was still in effect by sending the plaintiff an automobile loss claim form. The claim form, however, listed the insurer as “National Union Fire Ins. Co. of PA,” and bore a policy number different from that of the AGCS policy.

AGCS successfully moved for summary judgment dismissing the complaint insofar as asserted against it, with the Supreme Court finding that AGCS gave the plaintiff proper notice of cancellation. Cavallino thereafter moved for summary judgment dismissing the complaint insofar as asserted against it, arguing, inter alia, that no special relationship existed between the plaintiff and Cavallino that would require Cavallino to advise, guide, or direct the plaintiff to procure additional coverage. The plaintiff opposed Cavallino’s summary judgment motion, arguing, inter alia, that Cavallino’s “professional agency relationship” obligated it to inform the plaintiff of any loss or cancellation of coverage. In an order entered October 11, 2016, the court denied Cavallino’s motion, finding that, with respect to the July 2012 accident, a question of fact existed as to whether Cavallino breached its duty to or a contract with the plaintiff. Cavallino subsequently moved for leave to reargue its motion for summary judgment. In the order appealed from, the court granted Cavallino’s motion and, upon reargument, in effect, vacated the order entered October 11, 2016, and thereupon granted the motion for summary judgment.

*2 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” (American Bldg. Supply Corp. v. Petrocelli Group, Inc., 19 NY3d 730, 735 [internal quotation marks omitted] ). In the ordinary broker-client setting, the client may prevail only where it can establish that it made a particular request to the broker and the requested coverage was not procured. The plaintiff herein does not allege that it specifically requested a type of insurance that was not procured by Cavallino within a reasonable time. Thus, its claim hinges on the existence of a special relationship. Where a special relationship develops between the broker and client, the broker may be liable, even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage (see Hoffend & Sons, Inc. v. Rose & Kiernan, Inc., 7 NY3d 152, 158; Murphy v. Kuhn, 90 N.Y.2d 266, 272–273). The Court of Appeals has identified three exceptional situations that may give rise to a special relationship, thereby creating an additional duty of advisement: “(1) the agent receives compensation for consultation apart 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” (Murphy v. Kuhn, 90 N.Y.2d at 272 [citations omitted]; see Voss v. Netherlands Ins. Co., 22 NY3d 728, 735).

A motion for leave to reargue is addressed to the sound discretion of the Supreme Court (see HSBC Bank USA, N.A. v. Halls, 98 AD3d 718; Matter of Swingearn, 59 AD3d 556). A motion for reargument must be “based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion” (CPLR 2221[d][2] ). Contrary to the plaintiff’s contention, the Supreme Court providently exercised its discretion in granting leave to reargue Cavallino’s motion for summary judgment, since Cavallino demonstrated that the court overlooked or misapprehended the fact that the plaintiff did not have an interaction with Cavallino regarding a question of coverage under the AGCS policy in July 2012 that would have triggered a duty to advise the plaintiff of the cancellation.

We agree with the Supreme Court’s determination, upon reargument, to grant the motion for summary judgment. Cavallino made a prima facie showing that it procured the insurance coverage requested by the plaintiff and the plaintiff does not dispute that fact (see generally Maxwell Plumb Mech. Corp. v Nationwide Prop. & Cas. Ins. Co., 116 AD3d 740). Moreover, Cavallino demonstrated that the notice of cancellation was sent to the plaintiff by AGCS on December 19, 2011, at the plaintiff’s listed address.

In opposition, the plaintiff failed to raise a triable issue of fact as to whether there was some interaction between it and Cavallino in July 2012 regarding a question of coverage under the AGCS policy. Moreover, the plaintiff has failed to raise a triable issue of fact as to whether Cavallino received payment from it for consultation apart from payment of the premium or whether there was a course of dealing over an extended period of time such that Cavallino would be on notice that the plaintiff was seeking its advice and relying thereupon. Therefore, we agree with the Supreme Court’s determination that the plaintiff failed to raise a triable issue of fact as to whether a special relationship existed between it and Cavallino such that Cavallino had a continuing duty to advise, guide or direct the plaintiff to obtain additional coverage.

SCHEINKMAN, P.J., RIVERA, CHAMBERS and BRATHWAITE NELSON, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
All Citations
— N.Y.S.3d —-, 2019 WL 6720471

2019 WL 6907532

Not for Publication
United States District Court, D. New Jersey.
PRIME PROPERTY & CASUALTY INSURANCE INC., Plaintiff,
v.
FREIGHTWAY LOGISTICS LLC, et al., Defendants.
Civil Action No. 18-15681
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Signed 12/19/2019
Attorneys and Law Firms
David M. Kupfer, Eduardo Demarco, Kennedys CMK LLP, Basking Ridge, NJ, for Plaintiff.
Stephen N. Dratch, Franzblau Dratch, PC, Livingston, NJ, John V. Mallon, Chasan Lamparello Mallon & Cappuzzo, PC, Secaucus, NJ, Daniel Steven Strick, Wright & O’Donnell, PC, Conshohocken, PA, Amos Gern, Starr, Gern, Davison & Rubin, Esqs., Roseland, NJ, for Defendants.

OPINION
John Michael Vazquez, U.S.D.J.
*1 Currently pending before the Court is the motion by Defendant Certain Underwriters at Lloyd’s, London (“Certain Underwriters” or “Defendant”) to dismiss Plaintiff Prime Property & Casualty Insurance Co.’s (“Prime” or “Plaintiff”) Complaint as to Certain Underwriters pursuant to Federal Rule of Civil Procedure 12(b)(6). D.E. 15. Plaintiff filed a brief in opposition, D.E. 22, to which Certain Underwriters replied, D.E. 23.1 The Court reviewed the parties’ submissions and decided the motion without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the reasons set forth below, Certain Underwriters’ motion is GRANTED.

I. FACTUAL2 & PROCEDURAL BACKGROUND
Prime Property issued a commercial motor vehicle insurance policy (the “Policy”) to Defendant Freightway Logistics LLC (“Freightway”) on December 14, 2017. Compl. ¶ 18; see also Compl., Ex. A. The Policy only covered scheduled drivers and vehicles. Id. ¶ 17. The Policy included a “Scheduled Drivers Endorsement” that identified ten individuals as scheduled drivers who were covered under the policy, id. ¶ 20, and incorporated policy form ACA-99-04, which identified twenty-two covered motor vehicles, id. ¶ 22. On December 13, 2017, Freightway signed the “Loss Adjustment and Collateral Agreement as to Contingent Risks” (“Loss Adjustment Agreement”). Id. ¶¶ 25, 30; see also Compl., Ex. B. Pursuant to the Loss Adjustment Agreement, Freightway agreed to “indemnify, defend and hold [Prime] harmless with respect to any and all accidents, losses or claims of whatever kind, occurring and arising during the term of the Policy, to the extent of any payment made by [Prime] on account of a Non-Covered Claim.” Id. ¶ 25. “[A]ll claims as to non-scheduled drivers or autos will qualify as Non-Covered Claims for purposes of [the Policy].” Id. ¶ 26.

Defendant Jacinto Barrera a.k.a. Jacinto Zeas-Barrera is the owner of a Peterbilt tractor trailer (the “Barrera tractor trailer”), which he allegedly used to haul freight. Id. ¶¶ 39-40. On January 22, 2018, Barrera and Freightway entered into a lease agreement through which Barrera agreed to provide a “tractor and/or trailer, and all other equipment incident to his performing hauling services under this contract.” Id. ¶ 42; see also Compl., Ex. E. The lease further provided that Barrera will “commit such tractor, trailer and equipment to the exclusive use of [Freightway], as needed for the duration of the lease.” Id.; Compl., Ex. E. The lease states that Barrera is an independent contractor, “shall not be an employee for the [Freightway] for any reason,” and that he “shall have absolute discretion with respect to the manner and method of performing hauling services pursuant to this agreement.” Id., Ex. E at 2. Finally, through the lease, Freightway agreed “to provide and pay the cost of primary liability and cargo insurance on the vehicles operated by the Company.” Id. at 3. Barrera, however, was required to “provide evidence of non-trucking liability insurance.” Id. at 4. Freightway did not initially seek to add Barrera as a covered driver or the Barrera tractor trailer as a covered vehicle under the Policy. Compl. ¶¶ 43-44, 48.

*2 On February 21, 2018, Barrera, while he was operating the Barrera tractor trailer, was involved in an accident with Raven Barzda. Ms. Barzda died as a result of injuries sustained during the accident. Id. ¶¶ 45-47. Ellen Barzda as executor of the Estate of Raven Barzda (the “Barzda Estate”) is a Defendant in this matter. Id. ¶ 7. After the accident occurred and without informing Prime of the accident, Freightway’s insurance broker sent an email to Prime requesting that Barrera be added to the Policy as a scheduled driver and that the Barrera tractor trailer be added as a covered auto. Id. ¶ 49. The following day, February 22, 2018, Freightway’s broker submitted a notice of loss form for the accident that included the VIN number for the Barrera tractor trailer. Id. ¶ 52.

On April 19, 2018, Prime learned that the Barzda Estate was pursuing claims against Freightway and Barrera in New Jersey state court. Id. ¶ 53; see also Def. Br., Ex. E. Then, on April 30, 2018, Prime was informed by the Barzda Estate’s attorney that Barrera had “Non-Trucking Liability” insurance policies with Continental Insurance Agency, Inc. that were “maintained” by Certain Underwriters. Id. ¶ 54. These policies may provide coverage to Barrera and Freightway for the claims asserted in the Barzda Estate’s litigation. Id. ¶ 56.

On November 5, 2018, Prime filed this suit seeking a declaratory judgment as to the rights and obligations under the Policy and Barrera’s Certain Underwriters’ policies. In Count Two, which is the sole claim asserted against Certain Underwriters, Prime seeks a declaratory judgment as to whether Certain Underwriters has a duty to defend or indemnify Barrera and Freightway pursuant to Barrera’s Non-Trucking Liability policies. Id. ¶¶ 62-64.

Certain Underwriters filed this motion to dismiss, arguing that the Complaint should be dismissed in its entirety as to Certain Underwriters because the policies it issued to Barrera do not provide coverage for the Barzda Estate’s claims in the underlying state court litigation. D.E. 15.

II. STANDARD OF REVIEW
Certain Underwriters seeks dismissal pursuant to Rule 12(b)(6). Rule 12(b)(6) permits a court to dismiss a complaint that fails “to state a claim upon which relief can be granted[.]” For a complaint to survive dismissal under Rule 12(b)(6), it must contain sufficient factual matter to state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Further, a plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery will uncover proof of her claims.” Connelly v. Lane Const. Corp., 809 F.3d 780, 789 (3d Cir. 2016). In evaluating the sufficiency of a complaint, district courts must separate the factual and legal elements. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009). Restatements of the elements of a claim are legal conclusions, and therefore, are not entitled to a presumption of truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however, “must accept all of the complaint’s well-pleaded facts as true.” Fowler, 578 F.3d at 210. Even if plausibly pled, however, a complaint will not withstand a motion to dismiss if the facts alleged do not state “a legally cognizable cause of action.” Turner v. J.P. Morgan Chase & Co., No. 14-7148, 2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).

III. ANALYSIS
Certain Underwriters argues that the claims asserted against it should be dismissed because they are not plausibly pled. Def. Br. at 10-11. As discussed, Prime seeks a declaratory judgment in Count Two stating that Certain Underwriters has a duty to defend and/or indemnify Barrera and Freightway in the Barzda Estate’s state court matter. Thus, to state a claim, Prime must plausibly plead facts (1) that establish what claims the Barzda Estate asserts in the underlying state court action; and (2) that Certain Underwriters’ policies create a duty for Certain Underwriters to defend and/or indemnify those claims. Prime’s Complaint fails to plead sufficient facts as to either. Prime only pleads that it received a letter from the Barzda Estate’s attorney that informed Prime of the claims, Compl. ¶ 53, and that Certain Underwriters issued policies that “may afford coverage” to Barrera or Freightway, id. ¶ 56.3 Thus, Count Two is dismissed pursuant to Rule 12(b)(6).

IV. CONCLUSION
*3 For the foregoing reasons, Defendant Certain Underwriters at Lloyd’s, London’s motion to dismiss, D.E. 15, is GRANTED. Certain Underwriters at Lloyd’s, London is dismissed as a Defendant without prejudice. Plaintiff is provided with thirty (30) days to file an amended complaint that cures the deficiencies noted herein. An appropriate Order accompanies this Opinion.

All Citations
Slip Copy, 2019 WL 6907532

Footnotes

1
Certain Underwriters’ brief in support of its motion, D.E. 15-2, will be referred to as “Def. Br.”; Plaintiff’s brief in opposition, D.E. 22, will be referred to as “Plf. Opp”; and Certain Underwriters’ reply brief, D.E. 23, will be referred to as “Def Reply”.

2
The Court draws the following facts from Plaintiff’s Complaint, D.E. 1, which are taken as true for the purposes of the current motion. See James v. City of Wilkes-Barre, 700 F.3d 675, 679 (3d Cir. 2012). The Court also relies on documents Plaintiff attached as exhibits to its pleading. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002).

3
Certain Underwriters includes the relevant Certain Underwriters’ policies, in addition to documents filed in the underlying state court litigation as exhibits to its motion to dismiss. Def. Br., Exs. A-D. Certain Underwriters contends that the Court can consider these documents at the motion to dismiss stage.
In deciding a motion to dismiss, a court ordinarily considers only the factual allegations, exhibits attached to the complaint, and matters of public record, Lum v. Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir. 2004). Certain Underwriters relies on documents filed in the state court matter to establish how the February 21 accident occurred and, therefore, that there is no coverage under the policies for Barrera or Freightway. See, e.g., Def. Br. at 5 (citing Def. Br., Ex. 1). Prime counters that these documents cannot be considered in a Rule 12(b)(6) motion to dismiss. Plf. Opp. at 7-8. A court may take judicial notice of documents filed in other court proceedings because they are matters of public record. Liberty Int’l Underwriters Can. v. Scottsdale Ins. Co., 955 F. Supp. 2d 317, 325 (D.N.J. 2013) (taking judicial notice of stipulation and assignment agreement that was filed in state court). A court cannot, however, rely on these public records to establish facts. Lum, 361 F.3d at 221 n.3 (“While a prior judicial opinion constitutes a public record of which a court may take judicial notice, it may do so on a motion to dismiss only to establish the existence of the opinion, not for the truth of the facts asserted in the opinion.”). Thus, the Court may take judicial notice that the Barzda Estate has asserted claims in New Jersey state court, but the Court cannot rely on any documents filed in the state court litigation to establish what is asserted in those documents — here, the circumstances of the February 21 accident.
A court may also rely on “a document integral to or explicitly relied upon in the complaint” in a Rule 12(b)(6) motion. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002) (emphasis in original) (citation omitted). A document is integral if a “claim would not exist but-for the existence of the document.” Dix v. Total Petrochemicals USA, Inc., No. 10-3196, 2011 WL 2474215, at *1 (D.N J. June 20, 2011). Here, Count Two would not exist without the Certain Underwriters’ policies. Accordingly, Exhibits A through D of Certain Underwriters’ motion to dismiss are integral to the pleading and can be considered by the Court at this time. However, because Plaintiff’s Count Two is not plausibly pled, the Court does not reach an analysis of Certain Underwriters’ policies.