232 Dune Rd. v. Scottsdale Ins. Co.
| Decision Date | 13 February 2023 |
| Docket Number | 20-CV-7721 (CS) |
| Parties | 232 DUNE ROAD, LLC, Plaintiff, v. SCOTTSDALE INSURANCE COMPANY, ISU JOHN C. CONKLIN AGENCY, GERARD K. QUINN, Defendants. |
| Court | U.S. District Court — Southern District of New York |
David Feureisen Bartels & Feureisen LLP Counsel for Plaintiff
Tracey K. Wishert Michael V. Caracappa Riker Danzig Scherer Hyland & Perretti LLP Counsel for Defendant Scottdale Insurance Company
Seth I. Weinstein Lewis Brisbois Bisgaard & Smith LLP Counsel for Defendants ISU John C. Conklin Agency and Gerard K. Quinn
Before the Court are the motions for summary judgment of Defendant Scottsdale Insurance Company (“Scottsdale”), (ECF No. 50), and Defendants ISU John C. Conklin Agency and Gerard K. Quinn (collectively, “Conklin”), (ECF No. 48) and the cross-motion for summary judgment of Plaintiff 232 Dune Road, LLC (“Plaintiff” or “Dune”), (ECF No. 62). For the following reasons Scottsdale's motion is GRANTED, Conklin's motion is GRANTED, and Plaintiff's cross-motion is DENIED.
The following facts are based on the parties' Local Civil Rule (“LR”) 56.1 Statements, , and the evidentiary materials submitted by the parties, and are undisputed unless otherwise noted.[1]
Dune is a New York limited liability company based in Mount Kisco and formed in 2019 as a single-purpose entity to acquire a vacant oceanfront property in Quogue, New York and build a luxury one-family home. Michael Gaetano and his father, real estate developers and the sole members of Dune, have completed several real estate projects, including commercial and multi-family mixed-use residential buildings and a single-family luxury oceanfront home at 65 Dune Road. (P's 56.1 Scottsdale ¶¶ 1-2.)
Prior to the project at issue, Conklin and one of its principals, Quinn, (id. ¶ 3), procured insurance for two of the Gaetanos' projects: once in 2012 for two multi-family mixed use buildings in Manhattan and again in 2016 for the 65 Dune Road home, (ECF No. 63 (“Gaetano Decl.”) ¶ 7; P's 56.1 Conklin ¶ 4). Gaetano states in his declaration that he and his father had come to rely on Quinn “to provide expertise and advice on insurance coverage needed for our various projects,” (Gaetano Decl. ¶ 6), but provides no facts to support that assertion.
In November 2019, Gaetano emailed Quinn informing him that they were in contract to purchase a vacant lot located at 232 Dune Road and requesting that Quinn procure “a policy to cover this piece of land.” (ECF No. 70-8 at 2; see P's 56.1 Conklin ¶ 5.) Gaetano further wrote, “Since this is just vacant land at the moment the policy should reflect this at the time and change as construction progress is made?” (ECF No. 70-8 at 1.) When asked at his deposition whether he made any specific request for coverage, Gaetano testified that (ECF No. 70-1 (“Gaetano Depo.”) at 47:4-13.)
On February 3, 2020, Quinn wrote to another Conklin employee, indicating that he had spoken to Gaetano on the phone:
They will be breaking ground in early March. Mike asked if we are able to get a homeowners policy, based on the fact they expect to occupy the house when completed....We will need a home insurance policy, preferably in the name of the LCC ....We will also need a minimum premium [workers' compensation] policy....Everything will be subcontracted out with Certificates of Insurance (COI) being provided by the subcontractors with the LLC included as an Additional Insured.
(ECF No. 70-17.)[2]
Johnson & Johnson, Inc. (“J&J”) is Scottsdale's “managing general agent.” (Scottsdale 56.1 Stmt. ¶ 2.) A “JJ Select High Value Home Quote Sheet” for 232 Dune Road, created on or before February 6, 2020 on J&J letterhead, provides details about the project and requests a Builders Risk policy, (ECF No. 70-22), although the record is frustratingly unclear as to who filled out the quote sheet, when and based on what source of information. As best as the Court can tell, the information on the form came from Conklin. (See Quinn Depo. at 18:4-16; ECF No. 70-6 (“McDonald Depo.”) at 89:1192:7.)
On February 7, 2020, Quinn emailed Plaintiff:
Please review the attached in reference to the captioned and let us know if you have any questions at all. In accordance with your request, we have included $3,300,000 for the dwelling with a $10,000 property loss deductible, other than windstorm/hail claims for which there is a 2% deductible ($66,000). There is also $500,000 of liability coverage and $5,000 for Medical Payments to Others included.
(ECF No. 70-16 at DUNE0000095-96.)[3] On February 13, 2020, Gaetano wrote, (Id. at DUNE0000094.) On February 18, 2020, Gaetano reiterated that (ECF No. 70-19 at DUNE0000099.) On February 26, 2020, at Gaetano's request, Conklin re-sent its February 7 email regarding the proposal. (Id. at DUNE00000111-12.)
On February 27, 2020, J&J issued a New Business Insurance Quote and, under the “Rating Factors and Underwriting Information” section, the policy form field read “HO3” and the occupancy field read “Builders Risk (Ground Up Construction).” (ECF No. 49-15 at J&J000095.) An HO3 policy form is a type of “standard form for insurance coverage used in the insurance industry” generated by the Insurance Services Office, Inc. (“ISO”). (Quinn Depo. at 79:16-18; see id. at 79:11-80:3, 84:18-85:1; McDonald Depo. at 73:4-9 ().) Matt McDonald, the underwriter for J&J who underwrote the policy for Plaintiff on behalf of J&J, testified that the HO3 policy designation in the insurance quote “indicate[d] that the standard HO3 Form was intended to be the main coverage form for the Scottsdale policy that was being purchased.” (McDonald Depo. at 77:2-20.)
On March 2, 2020, Quinn asked Gaetano to “remind [him] where we are with the Builder's Risk insurance,” to which Gaetano responded, (ECF No. 70-19 at DUNE0000115-16.) On March 3, 2020, Gaetano received and signed a Homeowner Application, which was dated February 6, 2020 and listed February 6, 2020 to February 6, 2021 as the effective dates of the policy. The application also listed “HO3” in the “HO Form” field of the “Coverages/Limits of Liability” section of the application. (ECF No. 70-23 at DUNE0000032; P's 56.1 Scottsdale ¶ 13.) Conklin understood that, through this designation, Plaintiff was applying for an HO3 policy for 232 Dune Road, (Quinn Depo. at 74:19-76:9), but Gaetano states in his declaration that Quinn “never explained to me in any way what the ‘HO3' entry meant,” and that nobody from Quinn's office ever reviewed the application with him, (Gaetano Decl. ¶ 15). Nevertheless, Gaetano testified that Conklin had authority to act on Dune's behalf in binding the coverage that was proposed in the Scottsdale quote, which mirrored the Homeowner's Application,[4] and that Quinn was “my agent acting in my best interest.” (See Gaetano Depo. at 171:17-172:2.) Also on March 3, 2020, Gaetano signed a “Builders Risk Supplemental Questionnaire,” (ECF No. 70-20,) and on March 4, J&J issued a binder, which indicated that the policy form was an “HO3” and that the occupancy type was “Builders Risk (Ground Up Construction),” (ECF No. 49-17 at J&J000174; P's 56.1 Scottsdale ¶ 17).
On March 26, 2020, Gaetano received from Conklin a copy of the policy issued by Scottsdale (the “Policy”), (P's 56.1 Scottsdale ¶ 18; Gaetano Decl. ¶¶ 18-19), a 44-page document bearing policy number HOS1279122 and covering the period “03/05/2020 to 03/05/2021,” (ECF No. 70-7 (“Policy”)). It did not contain the HO3 form, (see id.), or list the HO3 form on the “Schedule for Forms and Endorsements,” (id. at J&J000532), but it did contain several references to “HO3.” First, on each of the declarations pages - the first two pages of the Policy - the policy form is listed as “HO3.” (Id. at J&J000529-30.) Second, on several of the endorsements, the text at the top of the page stated that the endorsement modified the “Homeowners 3 - Special Form.” (Id. at J&J000536, J&J000539, J&J000546, J&J000548-49, J&J000551.) Without the HO3 form, the Policy neither explained its coverage nor set forth its exclusions (other than to the extent the endorsements modified what would have been covered or excluded by the HO3 form). According to both Plaintiff and Quinn, Quinn did not review or explain the coverage set forth in the Policy to Gaetano. (Gaetano Decl. ¶ 18; Quinn Depo. at 38:2-7.) The declarations pages each specified “Builders Risk (Ground Up Construction),” (Policy at J&J000530-31), and the Endorsements included one for “Builders Risk Liability Coverage,” (id. at J&J000549).
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