Opinion
Index No. 152298/2022 Motion Seq. No. 002
05-10-2023
SOCIAL LIFE MAGAZINE, INC., Plaintiff, v. HUDSON VALLEY AGENCY ALLIANCE, LLC, KATHRYN E. MURPHY INSURANCE AGENCY, INC. Defendant.
Unpublished Opinion
Motion Date 10/11/2022
DECISION + ORDER ON MOTION
HON. LORI S. SATTLER, JUDGE
The following e-filed documents, listed by NYSCEF document number (Motion 002) 11, 12, 13, 14, 15, 16, 17, 18, 21, 22, 23 were read on this motion to/for DISMISS.
In this action alleging negligence and negligent misrepresentation, Defendant Kathryn E. Murphy Insurance Agency, Inc. ("Murphy") moves for an order pursuant to CPLR 3211(a)(1) and (7) dismissing the Complaint against it in its entirety, with prejudice. Plaintiff Social Life Magazine, Inc., opposes the motion.
Plaintiff is a commercial business operating in Manhattan. Defendants Murphy and Hudson Valley Agency Alliance, LLC ("Hudson Valley") (collectively "Defendants") are insurance brokers used by Plaintiff beginning in 2009. Plaintiff alleges that in April and May of 2019, it worked with Defendants to secure an insurance policy. Plaintiff sought a policy that would cover "all risks that were beyond [its] control" including "business interruption from any and all catastrophic events" (NYSCEF Doc. No. 1, Complaint ¶¶ 14-15). Plaintiff alleges that it expected Defendants would advise it of "substantial uncovered risks (such as a pandemic) which had the potential to ruin [its] business but that were not insured" (id. ¶ 16). However, Plaintiff claims that Defendants did not inform it about coverage deficiencies related to pandemics.
Defendants informed Plaintiff that they had procured it the best available policies in around August 2019. Plaintiff contends that Defendants informed it that these policies included "complete coverage for business interruption resulting from any and all catastrophic events" (id. ¶ 19). Based on these representations, Plaintiff allegedly purchased an insurance policy issued by nonparty Sentinel Insurance Company Limited ("Sentinel") covering the period from August 4, 2019 to August 4, 2020.
Plaintiff alleges that in 2020 its business activities were disrupted by the Covid-19 pandemic and resulting public health measures, causing it damages. It purportedly requested that Sentinel cover its losses under the policy; Sentinel allegedly declined to do so in April 2020 because the policy did not cover pandemic-related losses. Plaintiff then brought this action in March 2022.
In its complaint, Plaintiff alleges that Defendants were negligent in advising it to purchase the Sentinel policy. And that they negligently misrepresented the extent of coverage provided by the Sentinel policy. Murphy now moves to dismiss the Complaint pursuant to CPLR 3211(a)(1) and (7). On a motion to dismiss, courts must accept as true the facts as alleged in the complaint and grant plaintiffs every possible inference (Sokoloff v Harriman Estates Development Corp., 96 N.Y.2d 409, 414 [2001]). Although favorable inferences are presumed to be true, they "may be properly negated by affidavits and documentary evidence" (Whilhelmina Models, Inc. v Fleisher, 19 A.D.3d 267, 269 [1st Dept 2005], quoting Biondi v Beekman Hill House Apt. Corp., 257 A.D.2d 76, 81 [1st Dept 1999], affd 94 N.Y.2d 659 [2000]).
CPLR § 3211(a)(1) provides that "[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that . . . a defense is founded upon documentary evidence." Dismissal under § 3211(a)(1) is warranted "where the documentary evidence utterly refutes a plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mut. Life Ins. Co., 98 N.Y.2d 314, 326 [2002]; see also 511 W. 232nd Owners Corp v Jennifer Realty Co, 98 N.Y.2d 144, 152 [2002]).
In support of its motion, Murphy submits a "Business Owners Application" from Plaintiff dated August 5, 2010, two summaries of Plaintiff's insurance claims, and a letter from Sentinel to Plaintiff that sets forth its reasons for disclaiming coverage. This purported documentary evidence does not "utterly refute[]" the factual allegations in the Complaint (Goshen, 98 N.Y.2d at 326). Murphy fails to submit any documents that pertain to any representations it made to Plaintiff about the scope of coverage under the Sentinel policy or any documentation related to Plaintiff's purported request for an insurance policy that would cover "any and all catastrophic events." It is therefore unable to establish defenses as a matter of law to Plaintiff's negligence and negligent misrepresentation claims, respectively, and this branch of the motion is accordingly denied.
Murphy further seeks to dismiss Plaintiff's Complaint for failure to state a cause of action under CPLR 3211(a)(7). When considering a motion to dismiss for failure to state a cause of action under CPLR 3211(a)(7), "the court is required to accept as true the facts as alleged in the complaint, accord the plaintiff the benefit of every favorable inference and strive to determine only whether the facts alleged fit within any cognizable legal theory" (Vig v New York Hairspray Co., L.P., 67 A.D.3d 140, 144-145 [1st Dept 2009], citing Sokoloff v Harriman Estates Dev. Corp., 96 N.Y.2d 409, 414 [2001]). However, "factual allegations which fail to state a viable cause of action" or "that consist of bare legal conclusions . . . are not entitled to such consideration" (Leder v Spiegel, 31 A.D.3d 266, 267 [1st Dept 2006]).
Murphy's motion is denied as to the first cause of action for negligence. "An insurance agent or broker can be held liable in negligence if [it] fails to exercise due care in an insurance brokerage transaction" (Bruckmann, Rosser, Sherrill & Co., L.P. v Marsh USA, Inc., 65 A.D.3d 865, 866 [1st Dept 2009]). A broker fails to exercise due care "when an insurance policy does not cover a loss for which the broker was contracted to obtain coverage" (Cosmos, Queens Ltd. v Matthias Saechang Im Agency, 74 A.D.3d 682, 683 [1st Dept 2010]). Here, the Court finds that Plaintiff sufficiently alleges that Murphy breached its duty of care by failing to procure an insurance policy "with complete coverage for business interruption resulting from any and all catastrophic events" (Complaint ¶ 15) and that this breach caused it damages when its business activities were interrupted by the Covid-19 pandemic.
The Court also denies the motion with respect to Plaintiff's second cause of action for negligent misrepresentation. The elements of negligent misrepresentation cause of action are: "(1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information" (MatlinPatterson ATA Holdings LLC v Fed. Express Corp., 87 A.D.3d 836, 840 [1st Dept 2011], citing JAO Acquisition Corp. v Stavitsky, 8 N.Y.3d 144, 148 [2007]. "In exceptional circumstances a cause of action for negligent misrepresentation exists where there is a special relationship between the customer and the insurance broker and the customer reasonably relies upon the broker's representations" (Houston Cas. Co. v Cavan Corp. of NY, 161 A.D.3d 427, 428 [1st Dept 2018]). A plaintiff must allege more than a "longstanding relationship" to plead a special relationship with an insurance broker (Dae Assoc., LLC v AXA Art ins. Corp., 158 A.D.3d 493, 494 [1st Dept 2018] [affirming dismissal of negligent misrepresentation claim against broker where complaint contained "no specific allegations that plaintiff would meet with its broker every year to discuss the types of policies purchased, the limits to purchase, or what optional coverages should be purchased"]).
Here, Plaintiff sufficiently alleges the elements of negligent misrepresentation. The Complaint adequately pleads that a special relationship existed between Plaintiff and Murphy based on their ten years of prior dealings during which it purportedly consulted with Murphy "on multiple occasions . . . regarding the adequacy of [its] insurance coverage" (Complaint ¶ 22); Murphy's knowledge that Plaintiff was relying on it to protect against business risks based on "express conversations and past course of dealings" (id. ¶ 23); and that, in the course of these communications, Plaintiff asked Murphy "to procure . . . the best available policy with complete coverage for catastrophic events" (id. ¶ 24). Plaintiff adequately pleads a special relationship with Murphy by specifically alleging that it regularly consulted with Murphy about its insurance needs during their decade-long relationship (cf. Dae Assoc., LLC, 158 A.D.3d at 494).
The Complaint further alleges that Murphy gave Plaintiff incorrect information about the scope of coverage under the Sentinel policy and that Plaintiff reasonably relied on this incorrect information based upon. Taking, as it must, the allegations in the Complaint as true, the Court finds the Plaintiff adequately states a cause of action for negligent misrepresentation (Vig, 67 A.D.3d at 144-145; see Houston Cas. Co., 161 A.D.3d at 428 [holding that plaintiff stated cause of action for negligent misrepresentation where against insurance broker where it "alleged that it met annually with its broker, in the course of their 20-year relationship, to discuss its insurance needs, and that it relied on the broker's advice"]).
Accordingly, it is hereby:
ORDERED that the motion is denied; and it is further
ORDERED that counsel for parties shall appear for a Preliminary Conference on June 20, 2023 at 9:30 a.m., in person at 60 Centre Street, Room 212.