Alpha/Omega Concrete Corp. v. Ovation Risk Planners, Inc.

• Decision Date: 29 September 2021
• Docket Number: 2019–10061,Index No. 605860/16
• Citation: 154 N.Y.S.3d 113,197 A.D.3d 1274
• Parties: ALPHA/OMEGA CONCRETE CORP., plaintiff/second third-party defendant-respondent, v. OVATION RISK PLANNERS, INC., defendant/third-party plaintiff/second third-party defendant-appellant, Scottish American Insurance General Agency, Inc., defendant/third-party defendant/second third-party plaintiff-respondent, State National Insurance Company, defendant; Jerry Campbell, et al., second third-party defendants, Michael Villano, second third-party defendant-appellant.
• Court: New York Supreme Court — Appellate Division

197 A.D.3d 1274
154 N.Y.S.3d 113

ALPHA/OMEGA CONCRETE CORP., plaintiff/second third-party defendant-respondent,
v.
OVATION RISK PLANNERS, INC., defendant/third-party plaintiff/second third-party defendant-appellant,

Scottish American Insurance General Agency, Inc., defendant/third-party defendant/second third-party plaintiff-respondent,

State National Insurance Company, defendant;

Jerry Campbell, et al., second third-party defendants,

Michael Villano, second third-party defendant-appellant.

2019–10061
Index No. 605860/16

Supreme Court, Appellate Division, Second Department, New York.

Submitted—March 11, 2021
September 29, 2021

154 N.Y.S.3d 118

Litchfield Cavo, LLP, New York, N.Y. (Beth A. Saydak of counsel), for defendant/third-party plaintiff/second third-party defendant-appellant, Ovation Risk Planners, Inc., and second third-party defendant-appellant, Michael Villano.

Law Office of Harry C. Demiris, Jr., P.C., Westbury, NY, for plaintiff/second third-party defendant-respondent, Alpha/Omega Concrete Corp.

Keidel Weldon & Cunningham, LLP, White Plains, N.Y. (Howard S. Kronberg of counsel), for defendant/third-party defendant/second third-party plaintiff-respondent, Scottish American Insurance General Agency, Inc.

Stonberg Moran, LLP, New York, N.Y. (Sherri N. Pavloff of counsel), for defendant State National Insurance Company.

LEONARD B. AUSTIN, J.P., COLLEEN D. DUFFY, ANGELA G. IANNACCI, PAUL WOOTEN, JJ.

DECISION & ORDER

197 A.D.3d 1274

In an action, inter alia, to recover damages for breach of contract, the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., and the second third-party defendant Michael Villano appeal from an order of the Supreme Court, Nassau County (Timothy S. Driscoll, J.), entered July 25, 2019. The order, insofar as appealed from, granted the motion of the defendant/third-party defendant/second third-party plaintiff, Scottish American Insurance General Agency, Inc., for summary judgment dismissing the third-party complaint, and denied those branches of the motion of the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., and the second third-party defendant Michael Villano which were for summary judgment dismissing the complaint insofar as asserted against Ovation Risk Planners, Inc., and the third through eighth causes of action in the second third-party complaint insofar as asserted against them, and for summary judgment on the third-party complaint.

ORDERED that the order is modified, on the law, (1) by deleting

197 A.D.3d 1275

the provision thereof denying those branches of the motion of the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., and the second third-party defendant Michael Villano which were for summary judgment dismissing the second through fourth causes of action in the complaint insofar as asserted against the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., and substituting therefor a provision granting those branches of the motion, and (2) by deleting the provision thereof denying those branches of the motion of the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., and the second third-party defendant Michael Villano which were for summary judgment dismissing the fifth through eighth causes of action in the second third-party complaint insofar as asserted against them, and substituting therefor a provision granting those branches of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

154 N.Y.S.3d 119

In July 2015, Alpha/Omega Building Consulting Corp. (hereinafter Consulting) was awarded a contract to perform concrete work on a construction project involving a residential high-rise apartment building being constructed in Long Island City. Before beginning work on the project, Consulting, via its principal, Anthony Frascone, contacted the second third-party defendant Michael Villano, the principal of the defendant/third-party plaintiff/second third-party defendant, Ovation Risk Planners, Inc., a retail insurance broker (hereinafter Ovation; together with Villano, the Ovation defendants), to obtain liability insurance for Consulting with respect to its work on the subject project. Villano, on behalf of Consulting, submitted a commercial insurance application to the defendant/third-party defendant/second third-party plaintiff, Scottish American Insurance General Agency, Inc. (hereinafter Scottish American), a wholesale insurance broker, which transmitted the application to nonparty Prime Specialty, Inc. (hereinafter Prime), for underwriting. Prime, in turn, placed the commercial general liability policy with the defendant State National Insurance Company (hereinafter SNIC), an insurance carrier. To pay for the policy, Consulting obtained a loan from nonparty Capital Premium Financing, Inc. (hereinafter CPF). The policy was to remain in effect from July 13, 2015, until the earlier of July 13, 2017, or the end of the project.

Consulting's work on the project was terminated prior to the project's completion. The remaining concrete work was to be performed by the plaintiff, Alpha/Omega Concrete Corp. (hereinafter

197 A.D.3d 1276

Concrete). Despite their similar names, Concrete and Consulting had no corporate relationship with one another. Concrete was formed by the second third-party defendant Gerald Campbell, sued herein as Jerry Campbell, who owned a steam fitting company which was a subcontractor of the mechanical contractor on the project, performing mechanical and sprinkler work. In addition, Campbell provided funding to Consulting to perform the concrete work at the subject property in exchange for receiving a quarter of Consulting's profits.

After Consulting was terminated from the project and while in the process of forming Concrete, Campbell contacted Villano to arrange for the procurement of commercial liability insurance for Concrete through Ovation with respect to Concrete's work on the project. Villano prepared a policy change request to add Concrete to Consulting's policy with SNIC and, on August 20, 2015, transmitted the request to Scottish American. Scottish American confirmed receipt of the policy change request, but failed to forward it to Prime or SNIC.

Villano, who testified at his deposition that he was unaware that the policy change request had not been processed by Prime or SNIC, informed Campbell that Concrete was insured for the subject project. In addition, an Ovation employee requested that CPF change the billing address for invoices for the SNIC premium loan to Concrete's address, and Campbell began making monthly payments on the CPF debt. Campbell eventually paid in excess of $1 million.

During the course of performing work on the project, two claims, one for property damage and the other for personal injury, arose involving Concrete. Concrete submitted the claims to SNIC and its third-party claim administrator, but the claims were denied on the basis that Concrete was not covered by the subject policy as it had not been added as a named insured on the subject policy. Thereafter, Concrete commenced this action, inter alia, to recover damages for breach of contract

154 N.Y.S.3d 120

against Ovation, Scottish American, and SNIC. Subsequently, Concrete discontinued this action insofar as asserted against Scottish American. Ovation thereafter commenced a third-party action against Scottish American, alleging causes of action for contribution and common-law and contractual indemnification. SNIC asserted cross claims against Scottish American and Ovation for contribution, common-law and contractual indemnification, and attorneys’ fees and costs. Scottish American then commenced a second third-party action against Concrete, Campbell, Ovation, Villano, and Consulting.

Scottish American moved for summary judgment dismissing

197 A.D.3d 1277

Ovation's third-party complaint. The Ovation defendants moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against Ovation, on Ovation's third-party complaint against Scottish American, and dismissing Scottish American's second third-party complaint insofar as asserted against them. In an order entered July 25, 2019, the Supreme Court, among other things, granted Scottish American's motion for summary judgment dismissing Ovation's third-party complaint, and denied those branches of the Ovation defendants’ motion which were for summary judgment dismissing the complaint insofar as asserted against Ovation and the third through eighth causes of action in the second third-party complaint insofar as asserted against them, and for summary judgment on the third-party complaint. The Ovation defendants appeal.

In general, "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" ( AB Oil...