Par. Prop. Mgmt. v. Glob. Coverage, Inc.

1

2023 NY Slip Op 31827(U)

PARISH PROPERTY MANAGEMENT, INC., Plaintiff, v. GLOBAL COVERAGE, INC., THE BLACKMAN AGENCY, INC., MICHAEL PAGAN and HAL BLACKMAN, Defendants, and RELIGIOUS PROPERTY TRUST, THE JESUIT COLLABORATIVE, THE NEW YORK PROVINCE OF THE SOCIETY OF JESUS, AND THE JESUIT RESIDENCE, Nominal Defendants.

Index No. 651353/2022, Motion Sequence No. 001 and 002

Supreme Court, New York County

May 25, 2023

Unpublished Opinion

DECISION AND ORDER

NANCY M. BANNON, JUDGE

Motion sequences numbered 001 and 002 are consolidated herein for disposition. In sequence number 001, defendant Global Coverage, Inc. (Global) moves, pre-answer, to dismiss the complaint of plaintiff Parish Property Management, Inc. in its entirety pursuant to CPLR 3211(a)(1) and (a)(7). In sequence number 002, defendant Michael Pagan (Pagan), moves preanswer, to dismiss the complaint in its entirety pursuant to CPLR 3211(a)(1), (a)(5) and (a)(7).

Background

In this declaratory judgment action, plaintiff alleges that Global the insurance brokerage firm it hired to obtain coverage on its behalf, and defendants Pagan, the Blackman Agency (Agency), and Hal Blackman (Blackman), made material misrepresentations and material omissions of fact to plaintiff, to induce it to enter a primary commercial general liability/property and casualty (CGL/P&C) insurance policy which defendants obtained by submitting falsified loss histories to the insurer, in breach of their duties to plaintiff, which led the insurer to bring an action for declaratory relief ultimately rescinding plaintiff's policy and leaving plaintiff with an uninsured liability claim (see verified complaint, e-filed on March 22, 2022 [complaint] [NYSCEF Doc No. 1], ¶¶ 40-62).

Plaintiff asserts four causes of action. First, it asserts a cause of action for fraud, fraudulent misrepresentation, and fraudulent inducement against Pagan (id. ¶¶103-118). In its second cause of action plaintiff asserts a claim of respondeat superior liability for fraud, fraudulent misrepresentation, and fraudulent inducement against Pagan's employer, Global (id. ¶¶119-26). Third, plaintiff asserts a cause of action for fraud, fraudulent misrepresentation, and fraudulent inducement against Blackman and Agency, as Pagan's disclosed principal (id. ¶¶127-34). In its fourth cause of action, plaintiff asserts a claim for common law or implied indemnity against all defendants (id. ¶¶135-45).

Plaintiff is a construction management and general contracting company in Pelham, New York, that serves religious communities and institutions (id. ¶21). Global is an insurance brokerage firm licensed by the State of New York that maintains its place of business on East 37th Street in Manhattan (id. ¶¶2, 22). At all relevant times, Pagan was an employee of Global and a licensed New York State insurance broker (id. ¶23).

At all relevant times, Blackman was a New York State licensed insurance broker who conducted business through Agency (id. ¶¶25-26), and Agency was an affiliate of Global which maintained its place of business at Global's East 37th Street address (id. ¶27).

Plaintiff s account was initially serviced by Blackman and Agency. In or about 2012, Global, Blackman and Agency entered an agreement under which Global would service Blackman and Agency accounts and that Global would share equally with Blackman and Agency in the resulting commissions (id. ¶28). After its agreement with Blackman, Global assigned Pagan to serve as its senior account executive for Blackman and Agency clients (id. ¶¶30-32).^[1]

In 2012, Global and Pagan placed plaintiffs primary CGL/P&C insurance coverage with First Mercury Insurance Company (FMIC), effective March 29, 2012, to March 29, 2013 (FMIC Policy) (id. ¶33). On July 9, 2013, defendants notified First Mercury regarding two separate personal injury claims made against plaintiff within coverage of the FMIC Policy, made under the surnames "Munoz" and "Juarez" (id. ¶34).

Plaintiff alleges that defendants continued to place primary CGL/P&C policies for it in 2013, 2014, and 2015, and that, to obtain coverage for the policy year from March 29, 2015, through March 29, 2016, defendants provided historical loss runs to their new insurer, XL Catlin Insurance Company, including its loss runs for the 2012-2013 FMIC Policy which reflected the Munoz and Juarez claims (id. ¶¶37-38).

Around the beginning of 2016, anticipating renewal of its primary CGL/P&C insurance, plaintiff told defendants that it wished to reduce the cost of its primary coverage and suggested exploring a captive insurance program^[2] or raising its deductibles (id. ¶40). In response, Pagan contacted several wholesale brokers, including agent Mike Tracy (Tracy) of All Risks Ltd., who represented, among other carriers, Berkley Insurance Company (Berkley) (id. ¶41).

Defendants applied for primary CGL/P&C insurance for the 2016/2017 policy year, providing Tracy, among other things, plaintiffs loss runs for the five preceding policy years, including those for the 2012/2013 FMIC Policy (id. ¶¶43-44).

Plaintiff alleges that the loss run report for the 2012/2013 FMIC Policy (FMIC Loss Run), which defendants produced to Tracy in PDF format, had been altered by Pagan, who had placed a text box over the entries made for the Munoz and Juarez claims, and then entered the words "No Losses" in place of those entries (id. ¶45, citing complaint, exs D [NYSCEF Doc No. 6] [altered FMIC Loss Run] and E [NYSCEF Doc No. 7] [unaltered FMIC Loss Run]). Plaintiff further alleges that the metadata for the altered FMIC Loss Run indicates that the "author" of the text box was "mpagan" and that the alteration was made at "3/3/2016 4:13:52 PM" (complaint, ex D), less than a month before plaintiffs 2015/2016 policy would lapse.

On March 24, 2016, Blackman sent an e-mail to plaintiff which compared the terms of plaintiffs expiring primary and umbrella excess insurance policies with those projected for the 2016/2017 policy year, based on the primary policy proposed by Berkley (Berkley Policy), which purportedly met plaintiffs coverage requirements at lower annual premiums (complaint ¶51 and ex G thereto [NYSCEF Doc No 9]). That same day, plaintiff responded by e-mail to Blackman, directing defendants to "please proceed with renewal as quoted" (id. ¶52). The following day, defendants asked Tracy to bind coverage in accordance with the quoted proposal (id. ¶54), to which Tracy responded by e-mail on March 28, 2016, transmitting, among other documents, a copy of the "Binder" of coverage with respect to the Berkley Policy (id. ¶55 and ex H thereto [NYSCEF Doc No. 10]).

On April 6, 2016, Blackman sent an e-mail to plaintiffs president, William O'Connor (O'Connor) (id. ¶51), which attached a copy of the Berkley Policy, signed on April 6, 2016 by Berkley's "Authorized Representative" (id. ¶56-57 and exs I and J thereto [NYSCEF Doc Nos. 11 and 12]). Berkley, through Global, invoiced plaintiff $175,000 for its premium on the Berkley Policy (see complaint, ¶58 and ex J thereto), which plaintiff paid in full (complaint, ¶59).

The complaint further alleges that, in obtaining coverage under the Berkley Policy for the 2016/2017 policy year, defendants represented to plaintiff that they had properly placed, and Berkley had bound itself to provide, primary CGL/P&C coverage for plaintiff and its additional insureds, for occurrences of bodily injury and/or property damage, subject to the Berkley Policy's terms, conditions, exclusions, limits, and deductibles, and that the Berkley Policy would provide plaintiff coverage for contractual indemnity liability to owners and managers of properties where plaintiff worked during the policy period (id. ¶62).

On July 15, 2016, plaintiff entered a contract with the Nominal Defendants to provide construction management services for a renovation project at the Loyola School, at 53 East 83rd Street in Manhattan. This contract provided, among other things, that the Nominal Defendants were to be named as additional insureds under the Berkley Policy and plaintiff s umbrella excess policies, and that plaintiff was to hold the Nominal Defendants harmless from any loss arising from plaintiffs work as construction manager (id. ¶63).

The Berkley Policy provided coverage to the Nominal Defendants as additional insureds, and to plaintiff for contractual liability under an "insured contract" for liability for bodily injury or property damage caused to third parties by plaintiff, or those acting on its behalf (id. ¶65).

In February 2017, defendants began working to renew the Berkley Policy for the period from March 29, 2017 to March 29, 2018. To that end, on February 17, 2017, Pagan sent an e- mail to Tracy, attaching FMIC loss runs for the policy periods from 2010 to 2013, which included the unaltered FMIC Loss Run from 2012/2013 (id. ¶¶66-67).

Tracy responded to Pagan by e-mail on February 20, 2017, asking him to explain why the $1,732 million reserved for the Munoz, Juarez, and Russo^[3] claims reflected on the newly submitted 2012/2013 FMIC Loss Run did not appear on the 2012/2013 FMIC Loss Run that defendants submitted the year before to solicit the Berkely Policy. Tracy also asked Pagan to send him plaintiff's loss runs for 2013 through 2016, so he could "paint the best possible picture" for the insurers he represented (id. ¶¶68-69 and ex M thereto [NYSCEF Doc No. 15]).

Pagan e-mailed Tracy on February 21, 2017, writing only "Need your markets now" (id. ¶70 and ex N thereto [NYSCEF Doc No. 16]). Tracy responded that day copying Blackman, and asked Pagan again to explain the discrepancy between the 2012/2013 FMIC Loss Run defendants submitted that year and the one they submitted in the year before (id. ¶¶71 -72 and ex O thereto [...