Fin. Res. Network, Inc. v. Brown & Brown, Inc.

• Decision Date: 13 June 2012
• Docket Number: Civil Action No. 09–11315–MBB.
• Citation: 867 F.Supp.2d 153
• Court: U.S. District Court — District of Massachusetts
• Parties: FINANCIAL RESOURCES NETWORK, INC., Financial Family Holdings LLC, Rosalind Herman and Gregg D. Caplitz, Plaintiffs, v. BROWN & BROWN, INC., Brown & Brown of California, Inc., American Guarantee and Liability Insurance Company, Zurich North America Company and Calsurance, Defendants.

867 F.Supp.2d 153

FINANCIAL RESOURCES NETWORK, INC., Financial Family Holdings LLC, Rosalind Herman and Gregg D. Caplitz, Plaintiffs,

v.BROWN & BROWN, INC., Brown & Brown of California, Inc., American Guarantee and Liability Insurance Company, Zurich North America Company and Calsurance, Defendants.

Civil Action No. 09–11315–MBB.

United States District Court, D. Massachusetts.

March 31, 2012.

Order Granting Reconsideration in Part June 13, 2012.

Robert D. Cohan, Cohan, Rasnick, Myerson LLP, Boston, MA, for Plaintiffs.

David A. Grossbaum, Samuel C. Bodurtha, Hinshaw & Culbertson LLP, Sarah–Elizabeth Cloutier, Allen N. David, Peabody & Arnold LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER RE: RENEWED MOTION FOR SUMMARY JUDGMENT OF DEFENDANTS AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY, ZURICH NORTH AMERICA COMPANY, BROWN & BROWN, INC., BROWN & BROWN OF CALIFORNIA, INC., AND CALSURANCE (DOCKET ENTRY # 85); PLAINTIFFS' CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT (DOCKET ENTRY # 92); DEFENDANTS' MOTION TO STRIKE PLAINTIFFS' CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT (DOCKET ENTRY # 99); PLAINTIFFS' AMENDED CROSS MOTION FOR SUMMARY JUDGMENT (DOCKET ENTRY # 100); AND DEFENDANTS' MOTION TO STRIKE PORTIONS OF THE AFFIDAVITS OF GREGG CAPLITZ AND ROSALIND HERMAN (DOCKET ENTRY # 103)

BOWLER, United States Magistrate Judge.

Pending before this court is a renewed motion for summary judgment on the remainingcauses of action in the first amended complaint (Docket Entry # 28) filed by defendants American Guarantee and Liability Insurance Company (“American Guarantee”), Zurich North America Company (“Zurich North”), Brown & Brown, Inc. (“B & B”), Brown & Brown of California (“BBC”) and Calsurance (collectively “defendants”). (Docket Entry # 85). Plaintiffs Financial Resources Network, Inc. (“Financial Resources”), Financial Family Holdings LLC (“FFH”), Rosalind Herman (“Herman”) and Gregg D. Caplitz (“Caplitz”) (collectively “plaintiffs”) filed a cross motion for partial summary judgment seeking inter alia jury instructions that plaintiffs were insured under a Life Insurance Agents Errors & Omissions Liability Policy (“E & O Policy”) against claims made by Rudy K. Meiselman, M.D. (“Meiselman”), that defendants failed to defend and indemnify plaintiffs in connection with the Meiselman's cross claim and that defendants misled plaintiffs by misrepresenting the coverage under the E & O Policy. (Docket Entry # 92). Defendants filed a motion to strike plaintiffs' cross motion for summary judgment as untimely and as introducing new facts. (Docket Entry # 99). Defendants also filed a motion to strike portions of the affidavits of Caplitz and Herman as containing statements improperly based upon the beliefs of the parties, speculative and conclusory assertions, statements in contradiction with prior pleadings and sworn statements and statements in support of issues barred by issue preclusion. (Docket Entry # 103).

The claims subject to the alleged coverage under which American Guarantee and Zurich North had a duty to defend and indemnify originate from a November 2004 civil action (“the Indianapolis action”) filed in this district by Indianapolis Life Insurance Company (“Indianapolis Life”) against Herman, Caplitz, Meiselman and his wife, Hope E. Meiselman, (“the Meiselmans”) and the Financial Resources Network Plan, Inc. Profit Sharing Plan and Trust (“the FRN Plan”). A default judgment was issued in January 2006 on the claims in the complaint as well as those in a cross claim filed by Meiselman (“Meiselman cross claim”). This final judgment ordered inter alia the rescission of life insurance policies on Meiselman and his wife and the return of a $650,297.01 commission previously paid to Caplitz. On appeal, the First Circuit affirmed. Indianapolis Life Ins. Co. v. Herman, 204 Fed.Appx. 908 (1st Cir.2006).

Thereafter, in the Indianapolis action, the district court denied a motion by Herman to stay enforcement and correct execution of the judgment. On appeal, the First Circuit affirmed, holding that the default judgment ran against Herman in her personal capacity. Indianapolis Life Ins. Co. v. Herman, 516 F.3d 5 (1st Cir.), cert. denied,555 U.S. 823, 129 S.Ct. 137, 172 L.Ed.2d 38 (2008).

In 2008, Herman, Caplitz, and Financial Resources filed suit in Massachusetts Superior Court (Suffolk County) against Meiselman and various members of his family. Meiselman removed the matter to federal court and the district court dismissed on claim preclusion grounds. On appeal, the First Circuit affirmed. Herman v. Meiselman, 541 F.3d 59 (1st Cir.2008).

Count I in this proceeding sets out claims against B & B, BBC and Calsurance for breach of contract by estoppel. (Docket Entry # 28). Counts II through V consist of claims against Zurich North and American Guarantee for breach of contract. Respectively, these claims allege breach of an express contract to defend and indemnify (Count II), breach of an oral contract (Count III), breach of an implied in fact contract (Count IV) and breach of contract by estoppel (Count V). Count II remains only as to the duty to defend and indemnify Financial Resources, Herman and Caplitz against the Meiselman cross claim. (Docket Entry # 72, pp. 28, 38 & 40). Count VI includes claims against all defendants for breach of the implied covenant of good faith and fair dealing. As noted below, this court allowed summary judgment on counts VII, VIII and IX. (Docket Entry # 72, p. 72).

PROCEDURAL BACKGROUND

Plaintiffs filed this action in June 2009 in Massachusetts Superior Court (Suffolk County). (Docket Entry # 6). In August 2009, defendants filed a timely notice of removal. Shortly after removal, B & B, BBC and Calsurance filed a motion to dismiss the claims lodged against them in the original complaint pursuant to Rule 9(b), Fed.R.Civ.P., and Rule 12(b)(6), Fed.R.Civ.P.

In particular, B & B, BBC and Calsurance moved to dismiss the claims for breach of an oral contract to provide insurance (Count I), breach of an implied in fact contract to provide insurance (Count II), breach of contract by estoppel (Count III) and breach of the implied covenant of good faith and fair dealing (Count VIII) due to the absence of an allegation of a contract. In addition to asserting the untimeliness of the contract claims, B & B, BBC and Calsurance moved to dismiss the negligent misrepresentation, fraud and chapter 93A claims as untimely and the fraud claim due to the lack of particularity. They also sought to dismiss the claims brought by plaintiffs, except those asserted by Caplitz, because Caplitz was the only plaintiff seeking the errors and omission insurance at issue. (Docket Entry # 8 & 9).

The court allowed the motion on counts I and II because plaintiffs had not “alleged an express contract.” (Docket Entry # 24, pp. 3–4 & 9). The court also dismissed the fraud claim without prejudice, allowed plaintiffs leave to file a motion to amend to set out the fraud claim with particularity and otherwise denied the motion.

On February 9, 2010, this court allowed a motion to amend and denied a motion for reconsideration. (Docket Entry 28 & 26). In the latter motion, B & B, BBC and Calsurance sought reconsideration of the denial of the motion to dismiss the negligent misrepresentation and chapter 93A counts as untimely and the breach of the implied covenant of good faith and fair dealing count as lacking an enforceable contract. In denying reconsideration, this court advised the parties that:

Defendants may renew the arguments on summary judgment based upon a more developed factual record and the different legal standard of review that applies to a summary judgment motion as opposed to a motion to dismiss. See McKenzie v. BellSouth Telecommunications, Inc., 219 F.3d 508, 513 (6th Cir.2000); McAnaney v. Astoria Financial Corp., 665 F.Supp.2d 132, 142–43 (E.D.N.Y.2009); see also Fisher v. Trainor, 242 F.3d 24, 29 n. 5 (1st Cir.2001).

Thereafter, American Guarantee and Zurich North filed a motion for summary judgment (Docket Entry # 46) on counts II through IX of the first amended complaint. Adopting the arguments in American Guarantee's and Zurich North's motion, B & B, BBC and Calsurance also moved for summary judgment. (Docket Entry # 54). Plaintiffs filed a cross motion for partial summary judgment seeking a declaration that “plaintiffs' claims are not time barred” and that “defendants were obligated to provide coverage to the plaintiffs.” (Docket Entry 59 & 60).

On November 18, 2010, 754 F.Supp.2d 128 (D.Mass.2010), this court allowed defendants' motions for summary judgment as to counts VII, VIII and IX and denied them as to counts II through VI. (Docket Entry # 72). In allowing summary judgment on the fraud, negligent misrepresentation and chapter 93A claims as time barred, this court noted that “plaintiffs reasonably should have known that they were injured as a result of defendants' conduct no later than March or April 2005.” Plaintiffs filed this action in June 2009, after the expiration of the three year limitations period applicable to the fraud and negligence tort claims and the four year limitations period applicable to chapter 93A.

This court also denied plaintiffs' cross motion for partial summary judgment. (Docket Entry # 72). As explained supra, plaintiffs were not entitled to a declaration that their claims were timely and “the record contains sufficient evidence to allow a reasonable jury to find that the [E & O] policy never issued thereby precluding summary judgment in plaintiffs' favor.”

Currently before this court is the renewed summary judgment motion filed by defendants (Docket Entry # 85), the cross motion for partial summary judgment filed by plaintiffs (Docket Entry # 92), the motion to strike plaintiffs' cross motion for partial summary judgment filed by defendants (Docket Entry # 99), the amended cross motion for summary judgment filed by plaintiffs (Docket Entry # 100) and the motion to...