Fed. Ins. Co. v. Distinguished Properties Umbrella Managers Inc.

• Decision Date: 12 July 2010
• Docket Number: No. 09 Civ. 8686.,09 Civ. 8686.
• Citation: 721 F.Supp.2d 293
• Parties: FEDERAL INSURANCE COMPANY, Plaintiff, v. DISTINGUISHED PROPERTIES UMBRELLA MANAGERS INC., a Delaware Corporation or Group, Distinguished Programs Insurance Brokerage LLC, a New York Corporation, and the Distinguished Programs Group, LLC, a Delaware Corporation, Defendants.
• Court: U.S. District Court — Southern District of New York

721 F.Supp.2d 293

FEDERAL INSURANCE COMPANY, Plaintiff,

v.DISTINGUISHED PROPERTIES UMBRELLA MANAGERS INC., a Delaware Corporation or Group, Distinguished Programs Insurance Brokerage LLC, a New York Corporation, and the Distinguished Programs Group, LLC, a Delaware Corporation, Defendants.

No. 09 Civ. 8686.

United States District Court,S.D. New York.

June 28, 2010.

As Amended July 12, 2010.

Cozen O'Connor, by John Galligan, Esq., Daniel Theveny, Esq., New York, NY, for Plaintiff.

Kaufman, Dolowich, Voluck & Gonzo LLP, by Janene Marasciullo, Esq., Jennifer E. Sherven, Esq., Woodbury, NY, for Defendants.

OPINION

SWEET, District Judge.

Defendants Distinguished Properties Umbrella Managers, Inc. (“Distinguished Umbrella”), Distinguished Programs Insurance Brokerage LLC (“Distinguished Brokerage”), and the Distinguished Programs Group, LLC (“Distinguished Group”) (collectively the “Defendants”) have moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the Complaint of Plaintiff Federal Insurance Company (“Chubb”). Upon the facts and conclusions set forth below, the motion is granted, and the Complaint dismissed with prejudice and costs.

Prior Proceedings

Chubb filed its Complaint on October 14, 2009, alleging negligence (Count I), negligent misrepresentation (Count II), and breach of an implied-in-fact contract (Count III).

The instant motion was heard and marked fully submitted on March 17, 2010.

The Facts

On October 27, 2003, Chubb issued a Chubb Commercial Umbrella insurance policy, number 7949-86-82, (the “Insurance Policy”) to Distinguished Umbrella, a federal risk purchasing group. The Insurance Policy identified Distinguished Brokerage as the producer and Distinguished Umbrella and members of the federal risk purchasing group as the insureds. (Def. Ex. D.) The Insurance Policy was in effect from August 30, 2003 until August 30, 2005. (Def. Ex. A.)

An endorsement to the Insurance Policy, “Named Insured,” stated that the named insured included “Distinguished Properties Umbrella Managers, Inc. and its members.” (Def. Ex. D.) Another endorsement to the Insurance Policy, “Inception Named Insured & Covered Locations,” provided that

[i]t is hereby agreed that those entities or group of related entities designated as members of this risk purchasing group on the individual member's Certificate of Coverage and identified on the initial bordereau dated August 30, 2003 submitted to the company by the broker Distinguished Programs Insurance Brokerage LLC are included as insureds under this policy.

(Def. Ex. D.) The individual member's certificate of coverage reflected the specific term of the individual member's coverage period. (Def. Ex. D.)

The Insurance Policy required that Distinguished Umbrella “must see to it” that Chubb and Distinguished Umbrella's underlying insurers “are notified as soon as reasonably possible of any occurrence which may result in a claim if the claim may involve this policy or any underlying insurance” and “receive notice of the claim or suit as soon as reasonably possible.” (Def. Ex. D.)

The Insurance Policy provided that Chubb had “the right and the duty to assume control of the investigation, settlement or defense of any claim or suit against the insured for damages covered by this policy, even if the allegations of the claim or suit are groundless, false or fraudulent.” (Def. Ex. D.)

One entity insured under the Insurance Policy was 65 Ocean Avenue Associates, LLC (now known as The Grove, LLC), which was located at 65 Ocean Avenue, Brooklyn, New York (the “65 Ocean Property”) and another location. (Compl. ¶ 16; Def. Ex. A.) On December 17, 2004, Distinguished Group notified Chubb in writing that the 65 Ocean Property was deleted from coverage under the Insurance Policy. (Compl. ¶¶ 16, 18; Def. Ex. A.) On December 24, 2004, an employee of an elevator service company suffered significant personal injury while performing work at the 65 Ocean Property. (Compl. ¶ 17.) In April 2005, the employee filed a lawsuit entitled Todorovic v. 65 Avenue Associates et al., N.Y. Sup. Ct., Bronx County, Index. No. 14179-2005 (the “Todorovic lawsuit”). (Compl. ¶ 17; Def. Ex. B.)

Distinguished Group notified Chubb of the Todorovic lawsuit by facsimile, including: (1) a First Notice of Umbrella Claim (the “Notice”); (2) a copy of the Todorovic lawsuit summons and complaint; (3) a certificate of insurance issued on February 18, 2004; and (4) a copy of the bordereau. (Compl. ¶¶ 18-19; Def. Ex. B.) The Notice identified the insured and the plaintiff, provided the location and a brief description of the incident, and contained a note asking Chubb to provide a claim number and identify the adjuster. (Compl. ¶ 18; Def. Ex. B.)

There were no further communications between Chubb and Defendants regarding the Todorovic lawsuit. (Compl. ¶¶ 18-21.) In September 2007, Chubb paid $1,125,000 to settle the Todorovic lawsuit. (Compl. ¶ 21.)

The 12(b)(6) Standard

On a motion to dismiss pursuant to Rule 12, all factual allegations in the complaint are accepted as true, and all inferences are drawn in favor of the pleader. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993). The issue “is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 235-36, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Though the court must accept the factual allegations of a complaint as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). Plaintiffs must allege sufficient facts to “nudge [ ] their claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955.

When deciding a 12(b)(6) motion, a court may consider the complaint's factual allegations and documents attached to, incorporated by reference in, or otherwise integral to the complaint. Roth v. Jennings, 489 F.3d 499, 509 (2d Cir.2007). Likewise, a reviewing court may consider any matter “of which judicial notice may be taken.” Hoffenberg v. Hoffman & Pollok, 288 F.Supp.2d 527, 534 (S.D.N.Y.2003) (citation omitted).

The Negligence Counts Are Barred by the Statute of Limitations

Pursuant to the Erie doctrine in this diversity case, the Court must look to state law to determine the substantive rights and obligations of the parties and the applicable statute of limitations. Stuart v. Am. Cyanamid Co., 158 F.3d 622, 626 (2d Cir.1998) (“Where jurisdiction rests upon diversity of citizenship, a federal court sitting in New York must apply the New York choice-of-law rules and statutes of limitations.”); see Hoffenberg, 288 F.Supp.2d at 535 (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 86-87, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) and Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-497, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)); Guaranty Trust Co. v. York, 326 U.S. 99, 110, 112, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945) (a federal court sitting in diversity must look to state law to determine the applicable limitations period). New York substantive law governs this action, because Defendants' principal place of business is in New York and all relevant events occurred in New York. (Compl. ¶¶ 2-4, 9-10.)

New York applies a three-year statute of limitations to claims sounding in tort, as is the case for Counts I (negligence) and II (negligent misrepresentation). See N.Y. C.P.L.R. § 214(4); Mauro v. Niemann Agency, Inc., 303 A.D.2d 468, 756 N.Y.S.2d 611, 612 (2003). ¹

As a general rule, “[a] tort claim accrues as soon as the claim becomes enforceable, i.e., when all elements of the tort can be truthfully alleged in a complaint.” IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 140, 879 N.Y.S.2d 355, 907 N.E.2d 268 (2009) (quotations and citations omitted). Thus, “[t]o determine timeliness, [a court] consider[s] whether plaintiff's complaint must, as a matter of law, be read to allege damages suffered so early as to render the claim time-barred.” Id. (citations omitted).

The Complaint alleges that “Defendants affirmatively and expressly represented to Plaintiff that the personal injury claim at the 65 Ocean Avenue property which was the subject of the Todorovic lawsuit was covered under Plaintiff's policy of insurance.” (Compl. ¶ 18.) The Complaint further alleges that “Defendants breached the duty they owed to [Chubb] by failing to properly investigate and determine coverage ... and in wrongfully reporting this personal injury claim to [Chubb] and advising [Chubb] that [there] was coverage for same.” (Compl. ¶ 28.) Finally, the Complaint alleges that Defendants made a negligent misrepresentation “by making a false representation about coverage for this personal injury claim when [they] inaccurately and incorrectly reported this personal injury claim to [Chubb].” (Compl. ¶ 33.) The Complaint alleges that this purported wrongful act occurred on April 20, 2005. (Compl. ¶¶ 18-19.) The Notice appended to the Complaint establishes that this allegedly wrongful communication occurred on April 20, 2005. (Compl. ¶¶ 18, 19; Pl. Ex. B.)

Chubb also alleged that “the incident and resulting damage which forms the basis of this lawsuit occurred in September 2007,” when, in exercise of its contractual responsibility to investigate and settle claims, Chubb “wrongfully paid $1,125,000.00 in settlement of this personal injury claim.” (Compl. ¶¶ 5, 21.)

In the IDT...