Opinion
46200/03.
Decided on May 13, 2004.
Defendant, MetLife, Inc. ("MetLife"), moves to dismiss the complaint against it pursuant to CPLR 3211 (a)(1), (5), and (7) on the grounds that Plaintiff's action to recover damages for professional negligence, fraud, and breach of fiduciary duty is barred by the statute of limitations, the complaint fails to state a cause of action, and there is a defense founded upon documentary evidence. In a cross-motion, Defendant Stephen Filoramo joins in the motion to dismiss upon the grounds stated in Metlife's motion to dismiss.
Plaintiff's complaint arises out of her purchase of two "Life-Paid-up at Age 98" life insurance policies and a variable annuity from Defendant Metlife. The life insurance policies were issued on December 21, 1999, and the annuity was purchased on March 2, 2000. Plaintiff, who was age 60 at the time of purchase, claims that she purchased the policies in reliance upon oral representations made by Stephen Filoramo, a MetLife broker, that they would generate sufficient revenue to satisfy the payment of all premiums on the policies and would meet her specific financial needs after a period of seven years. Plaintiff filed her complaint on November 26, 2003, claiming that the revenues were not sufficient to meet her specific financial needs and that the broker's promise of vanishing premiums was false.
Defendants' motions to dismiss must be granted as to the causes of action for professional negligence and breach of fiduciary duty because Plaintiff filed her complaint beyond the three-year period of limitations applicable to those claims. CPLR § 214(6); Yatter v. William Morris Agency, Inc., 256 AD2d 260, 261 (1st Dep't, 1998) ("Because plaintiff's breach of fiduciary duty claim seeks only money damages, the applicable limitations period is three years".) Whereas a cause of action for professional negligence accrues upon the rendering of the professional services ( Video Corporation of America v. Frederick Flalto Associations, Inc., 85 AD2d 448, 453 (1st Dep't, 1982); Sosnow v. Paul, 43 AD2d 978 (2nd Dep't, 1974)), in this case, upon the issuance of the subject policies on December 21, 1999 and March 3, 2000, the filing of Plaintiff's complaint on November 26, 2003, was untimely. Moreover, inasmuch as insurance brokers have been determined not to be "professionals" within the ambit of CPLR § 214(6), and the complaint does not describe a long-term advisory relationship unrelated to the issuance of the subject policies, the continuous representation doctrine, of which Plaintiff seeks to avail herself, is inapplicable. Chase Scientific Research, Inc. v. NIA Group, 96 NY2d 20, 30-31 (2001); Castle Oil Corp. v. Thompson Pension Employee Plans, 299 AD2d 513 (2nd Dep't 2002); Zaref v. Berk Michaels, PC., 192 AD2d 346, 348 (1st Dep't, 1993).
Addressing Defendants' other contentions, "the sole criterion [when considering a motion to dismiss for failure to state a cause of action] is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken togethermanifest any cause of action cognizable at law." Mastrocola v. County of Nassau, 248 AD2d 684 (2nd Dep't, 1998), quoting Guggenheimer v. Ginsberg, 43NY2d 268, 275 (1977). "The pleadings must be liberally construed, and the facts pleaded are presumed to be true and are accorded every favorable inference". Id. However, where, as here, documentary evidence is submitted that arguably precludes Plaintiff's recovery on her alleged causes of action, it is the responsibility of the court to "determine whether the proponent of the pleading has a cause of action, not whether he or she has stated one". Steiner v. Lazzaro Gregory P.C., 271 AD2d 596 (2nd Dep't, 2000). In the face of documentary evidence of the terms of the insurance policies which form the only basis of Plaintiff's claims and which directly contradict the allegations in the complaint, the Court is not required to assume the reliability of the contradicted allegations. O'Donnell, Fox Gartner, P.C. v. R-2000 Corporation, 198 AD2d 154 (1st Dep't 1993). Plaintiff had the burden to provide evidence in support of her claims in order to overcome the documentary evidence. She has failed to do so and her pleadings fail therefore to state any cause of action cognizable at law.
Because insurance brokers are not "professionals", Plaintiff's first cause of action for professional negligence must fail. As defined by the Court of Appeals, a professional is someone who has had extensive formal training and is subject to licensure and regulation indicating a qualification to practice, a code of conduct imposing standards beyond those accepted in the marketplace, and a system of discipline for violation of those standards. The status of "professional" implicates a relationship of trust and confidence in which the professional assumes a duty to counsel and advise others. Chase Scientific Research, Inc. v. NIA Group, Inc., supra, 96 NY2d at 29. It has been determined that while insurance brokers may be licensed, they are not required to engage in extensive specialized education and training and are not bound by a standard of conduct for which discipline might be imposed. Chase Scientific Research, Inc. v. NIA Group, Inc., id.
As heretofore noted, it is not alleged that Plaintiff had any dealings with Defendants prior to the purchase of the subject policies beginning on December 21, 1999. Although Plaintiff may have been influenced by the sales representations of broker Filoramo, she has no greater legal entitlement to recover for her dissatisfaction with the performance of Defendants' product than would be available in any other consumer transaction. Defendants assumed no greater duty to Plaintiff than to any other insured, according to the complaint. See Kimmel v. Schaefer, 89 NY2d 257, 263 (1996): "[N]ot all representations made by a seller of goods or provider of services will give rise to a duty to speak with care." The absence of any particularized allegations of services rendered by Defendants outside or beyond the writing of the subject insurance policies precludes a finding that the complaint sufficiently states a claim for professional negligence.
It is further well settled that insurance brokers and insurance companies do not generally owe a fiduciary duty to insureds. Murphy v. Kuhn, 90 NY2d 266 (1997). A fiduciary duty may arise if the facts of the particular relationship between the parties create an exceptional situation in which an insurance agent, through his or her conduct or by express or implied contract, assumes or acquires duties in addition to those fixed at common law. Murphy v. Kuhn, id. at 272; Fortino v. Hersh, 307 AD2d 899 (1st Dep't, 2003). Generally, of course, whether such a duty has been created is a question of fact. In Murphy v. Kuhn, however, the Court of Appeals declared unequivocally that "[i]nsurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status," noting that an insured is usually in the best position to judge her needs ( 90 NY2d at 273).
While Plaintiff herein has alleged in her complaint that Defendant Filoramo "held himself out to the public and to plaintiff as having expertise as an investment, financial and insurance advisor" (paragraph 10) and that in March 2000, he "provided professional investment, financial and insurance advice" to Plaintiff (paragraph 11) and on March 3, 2000, "recommended and advised . . . [the] purchase [of] certain variable universal insurance policies and annuity contracts" (paragraphs 12, 13) and that in reliance on Defendant Filoramo's advice, on the same date, such policies were purchased, in light of the public policy implications in overriding the settled rule against imposing a fiduciary duty on insurance brokers and providers (see Murphy v. Kuhn, id. at 273), this court does not find such general allegations relating solely to the purchase of the insurance policies at issue sufficient to state a cause of action for breach of fiduciary duty. Nor are Plaintiff's bald allegations that, following the purchase of the policies "on March 3, 2000", she continued to receive advice from Defendants while she continued to pay the premiums until April 7, 2003, sufficient to establish the kind of special relationship that would impose upon Defendants, retroactively, a fiduciary duty with respect to policies that had already been purchased.
The facts alleged in Plaintiff's complaint are in sharp contrast to the circumstances in Murphy v. Kuhn, wherein the broker-insured relationship had continued for several decades prior to the events that were the basis of the lawsuit, and were nonetheless found to be inadequate to impose a greater duty on the broker. Fortino v. Hersh, supra, 307 AD2d 899, cited by Plaintiff, is actually closer to the facts presented in the complaint herein. While the majority in the First Department Appellate Division seems to have permitted the challenged action there to proceed largely for procedural reasons, this Court finds more persuasive the dissenting opinion of Justice Andrias who found the allegations, like those herein, insufficient to establish an "exceptional situation" differing in any material respect from the "practice of the art of salesmanship" and would have dismissed the cause of action for breach of fiduciary duty.
Also to be distinguished from the instant case is Davis v. CCF Capital Corp., 277 AD2d 342 (2nd Dep't, 2000), in which claims for fraud and breach of fiduciary duty against a financial advisor who had accepted $130,000 for investment in risky mortgages survived dismissal on a motion under CPLR 3211(a)(7) based upon plaintiff's submission of documentary evidence in support of her claim. In contrast, Plaintiff here has failed to elucidate the substance of her conclusory allegations of a fiduciary relationship with any elaboration or evidenciary proof. In fact, the only evidence, submitted by Defendants in support of their motion pursuant to CPLR § 3211 (a)(1), contradicts Plaintiff's position. As noted in Davis, id. at 343, even when a motion to dismiss is not converted to a summary judgment motion, affidavits by someone with knowledge are appropriately submitted to remedy inadequacies in pleading. No such submissions have been received here in response to Defendants' documentary evidence and legal arguments.
In her response in opposition to Defendants' motions to dismiss, Plaintiff relies upon her attorney's Affirmation in Opposition, which, in turn, relies exclusively on the Verified Complaint. No affidavit has been submitted from Plaintiff. The complaint clearly states that Plaintiff's relationship with the Defendants began on March 3, 2000 when the policies at issue were purchased. See paragraphs 11-17 of Verified Complaint. (The two Life Paid up at Age 98 policies were actually issued on December 21, 1999). While Plaintiff asserts at paragraphs 24 and 33 that "continuous professional investment, financial and insurance services and advice" were provided during the period up to April 7, 2003, during which she paid the premiums on these policies, there are no specific allegations to suggest that any relationship existed during this period other than insured and insurer. There are no specific allegations that Defendant Filoramo at any time advised Plaintiff regarding any other "investments". There is no indication in the complaint or otherwise that Stephen Filoramo did anything to assume or acquire duties above and beyond those imposed by the common law. Insureds bear the burden of showing that there was a specific undertaking to warrant the imposition of a greater duty. Murphy v. Kuhn, supra, 90 NY2d at 273. That an insurance broker advised Plaintiff generally that her financial needs would be met is not so exceptional as to support imposition of a special or fiduciary duty. Busker on the Roof Limited Partnership Co. v. M.E. Warrington, 283 AD2d 376 (1st Dep't, 2001). Plaintiff has failed to particularize any factual basis to support the existence of a special fiduciary relationship with Defendants. Therefore, the second cause of action for breach of fiduciary duty must be dismissed.
Plaintiff's complaint also fails to state a cognizable cause of action for fraud. In order to state a claim for fraud relating to the issuance of an insurance policy, the plaintiff must allege a material omission or misrepresentation, made with knowledge of falsity and intent to deceive, reasonably relied upon by the purchaser, and consequent injury. Gaidon v. Guardian Life Insurance Co., 94 NY2d 330, 348 (1999). In her complaint, Plaintiff asserts that the policies she purchased were falsely represented to be "low risk, high yield, secure, safe, sound and suitable" (paragraph 39) and that they would "generate sufficient revenue and/or value to satisfy the payment of any premiums after a period of seven (7) years and would generate sufficient income to satisfy plaintiff's needs" (paragraph 40). Plaintiff further alleges that such ambiguous representations were known to be false and were intended to deceive her and that she relied upon them to her detriment in purchasing the policies. Such alleged representations are, by their nature, too speculative and aspirational to be actionable. Zaref v. Berk Michaels, P.C., supra, 192 AD2d at 349. The only sufficiently factual, material representation which Plaintiff identifies, that revenues would cover premiums after seven years, is directly contradicted by the Premium Schedule contained within each of the "Life Paid-up at Age 98" policies which expressly states that premiums are payable for 38 years based upon Plaintiff's age of 60. The annuity policy does not appear to specify any pay-in obligations. The only fees expressed are an annual $20 administrative fee deducted from the "Account", which is inapplicable to accounts with a balance of $20,000 or more, and fees related to withdrawals. In the absence of any specific allegation concerning the substance of a particular representation and the manner in which it is claimed to be false, and the precise nature of the harm to plaintiff, the pleading is inadequate to state a cause of action for fraud. 107 Realty Corp. v. National Petroleum USA, Ltd., 181 AD2d 817, 818 (2nd Dep't, 1992); CPLR § 3016 (b). It is further noted that, whereas the gravamen of Plaintiff's complaint seems to be that the policies were not self-sustaining after seven years, since seven years have not elapsed, her claims are either premature or insufficiently articulated.
Moreover, Plaintiff cannot claim that she relied on the broker's oral representations to modify the express terms of the written policies in support of her cause of action for fraud. Where a writing is clear in its terms and purports to express the parties' entire agreement, evidence of oral communications between the parties that contradicts or varies the written terms of the agreement is generally barred by the parol evidence rule. Any "meaningful" discrepancy between the written contract and an alleged oral representation "negates a claim of reasonable reliance upon the oral representation." Stone v. Schultz, 231 AD2d 707, 708 (2nd Dep't, 1996). Here, the policies expressly provide that they, together with any riders, constitute the entire agreements between MetLife and the policyholder. They also state unambiguously that brokers have no authority to waive or change the terms of the policies and that any changes must be in writing and signed by the MetLife President, Secretary, or Vice President. The Life Paid-up at Age 98 policies state that they are to be paid over a period of thirty-eight years and that Plaintiff had sixty days to examine the policies and return them for a refund of any premiums already paid. Plaintiff had the right to return the Multifunded Annuity Contract for full refund within ten days following receipt. Plaintiff is conclusively presumed to have read, known, understood and have assented to the terms of the written policies. Busker on the Roof Limited Partnership Co. v. M.E. Warrington, supra, 283 AD2d at 377. Although extrinsic parol evidence would be admissible to establish fraud in the inducement, and the merger clause contained in the policies at issue would not alone preclude such evidence, the complaint fails to set forth with sufficient particularity even the most rudimentary elements of fraud. See Goshen v. Mutual Life Ins. Co. Of NY, 1997 WL 710669 (Sup.Ct., NY Co.), aff'd, 259 AD2d 360 (1st Dep't, 1999), aff'd in relevant part, 94 NY2d 330 (1999)). Only were this Court to disregard the clear terms of the written contracts, could the claim of fraud survive. Plaintiff cannot establish that she reasonably relied on the allegedly fraudulent representations of Defendant Filoramo that premiums would vanish after seven years when such allegations are so blatantly contradicted in writing. Plaintiff's cause of action for fraud must also fail.
Since legal precedent and the documentary evidence adduced clearly indicate that Plaintiff has no viable cause of action based upon her pleading, Defendants' motion to dismiss all three causes of action pursuant to CPLR §§ 3211 (a) (1),(5) and (7) is granted.
The foregoing constitutes the decision and order of the Court.