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

• Citation: 930 F.Supp.2d 287
• Decision Date: 14 March 2013
• Docket Number: Civil Action No. 09–11315–MBB.
• 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.
• Court: U.S. District Court — District of Massachusetts

930 F.Supp.2d 287

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 14, 2013.

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

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

MEMORANDUM AND ORDER RE: DEFENDANTS' SECOND RENEWED MOTION FOR SUMMARY JUDGMENT (DOCKET ENTRY # 119);¹PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT (DOCKET ENTRY # 115) BOWLER, United States Magistrate Judge.

Pending before this court is a third summary judgment motion filed by defendants American Guarantee and Liability Insurance Company (“American Guarantee”), Zurich North America Company (“Zurich”), Brown & Brown, Inc. (“B & B”), Brown & Brown of California, Inc. (“BBC”) and Calsurance (collectively “defendants”). (Docket Entry # 119). They seek summary judgment on counts I, III, IV, V and VI in the first amended complaint. Plaintiffs Financial Resources Network, Inc. (“Financial Resources”), Rosalind Herman (“Herman”) and Gregg D. Caplitz (“Caplitz”) (collectively “plaintiffs”) ² seek partial summary judgment to establish certain facts under Rule 56(g), Fed.R.Civ.P. (“ Rule 56”), and liability under Rule 56(a) in their favor. After conducting a hearing in October 2012, this court took the motions (Docket Entry 115 & 119) under advisement.

PROCEDURAL BACKGROUND

Summary judgment opinions in November 2010 and March 2012 (754 F.Supp.2d 128 (D.Mass.2010) & 867 F.Supp.2d 153 (D.Mass.2012)) outline the procedural history in depth. Briefly stated, this litigation concerns Life Insurance Agents Errors & Omissions Liability Policies for the July 1, 2003 to July 1, 2004 policy year (“2003–2004 E & O Policy”) and for the July 1, 2004 to July 1, 2005 policy year (“2004–2005 E & O Policy”). Caplitz, an agent of Indianapolis Life Company (“Indianapolis Life”), was enrolled in the 2003–2004 E & O Policy provided by American Guarantee, a wholly owned subsidiary of Zurich, for Indianapolis Life insurance agents from 2001 to July 2004.³ As a contracted agent with Indianapolis Life, he was a “Named Insured” under the 2003–2004 E & O Policy. ( 754 F.Supp.2d at 143).

In 2002, Financial Resources hired Rudy K. Meiselman, M.D. (“Meiselman”) as a technical analyst. As an employee of Financial Resources, Meiselman elected to

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participate in the Financial Resources Network Plan and Trust (“the FRN Plan”) and executed a tax free rollover of his retirement funds into the FRN Plan. Herman and Caplitz used funds in Meiselman's account to pay for insurance policies on the lives of Meiselman and his wife (“the Meiselman life insurance policies”). The two, July 2003 applications identified the FRN Plan as the designated owner. Caplitz received a $650,297.01 commission.

On October 28, 2004, Meiselman filed a lawsuit against the FRN Plan, Herman, as trustee of the FRN Plan, and Caplitz (“Meiselman I”) when Herman allegedly failed to respond to Meiselman's request to transfer his funds in the FRN Plan into a third party account. On November 19, 2004, Caplitz executed a release and settlement agreement agreeing to transfer the funds to the third party account.

The claims subject to this insurance coverage dispute under which American Guarantee and Zurich had an alleged duty to defend and indemnify emanate from a complaint in a November 2004 civil action (“the Indianapolis action”) filed in this district by Indianapolis Life against Herman, identified as trustee of the FRN Plan; Caplitz; Meiselman and his wife, Hope E. Meiselman, (“the Meiselmans”); and the FRN Plan. On January 26, 2006, the district court allowed Indianapolis' summary judgment motion on all five counts in the complaint (“the Indianapolis complaint”). The district court ruled that Indianapolis Life had properly rescinded the Meiselman policies.⁴SeeIndianapolis Life Ins. Co. v. Herman, 204 Fed.Appx. 908, 909–10 (1st Cir.2006).

The alleged duty to defend and indemnify also involves a February 2005 crossclaim Meiselman filed against Herman, Caplitz and Financial Resources (“Meiselman crossclaim”) in the Indianapolis action. The crossclaim sought a declaratory judgment nullifying the release in Meiselman I (Count I) and alleged breach of an employment contract (Count II), breach of fiduciary duty (Count III), breach of contract (Count IV) and conversion (Count V). In August 2005, the district court allowed Meiselman's motion for a default judgment.

On January 27, 2006, the district court in the Indianapolis action entered a final judgment in favor of Indianapolis Life. The final judgment ordered inter alia the rescission of the Meiselman life insurance policies and a return of the $650,297.01 commission previously paid to Caplitz. The Indianapolis court also awarded Meiselman $938,640.14 on the crossclaim.⁵

Count I of the first amended complaint in this action sets out claims against B & B, BBC and Calsurance for breach of a contract by estoppel. Counts II through V consist of claims against Zurich and American Guarantee for breach of contract. Respectively, they allege breach of the express E & O Policy 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 a contract by estoppel (Count V). Count VI is brought against all defendants for breach of the implied covenant of good faith and fair dealing. Counts VII, VIII and IX constitute claims against all defendants for fraud, negligent misrepresentation and violation of Massachusetts General Laws chapter 93A (“chapter 93A”).

The November 2010 decision allowed defendants' summary judgment motions on counts VII, VIII and IX as untimely under

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applicable statutes of limitations. (754 F.Supp.2d at 153 & 155–62). With respect to Count II, summary judgment issued in defendants' favor only with respect to the breach of the duty to defend and indemnify the counts in the complaint in the Indianapolis action under the express 2003–2004 and 2004–2005 E & O Policies (“the E & O Policies”). Count II remained as to the Meiselman crossclaim except with respect to FFH. (754 F.Supp.2d 128).

The March 2012 decision allowed defendants' summary judgment motion (Docket Entry # 85) on the remaining portion of Count II, i.e., the breach of the duty to defend and indemnify the Meiselman crossclaim in violation of the express E & O Policies. The opinion also issued rulings on a motion to strike various paragraphs of affidavits by Caplitz (Docket Entry # 95) and Herman (Docket Entry # 96).

In June 2012, this court allowed a motion to reconsider (Docket Entry # 111) but only in light of plaintiffs' limited opposition. In pertinent part, the Order reads:

In light of plaintiffs' failure to oppose reconsideration if afforded an opportunity to file their own summary judgment motion, this court will allow defendants an opportunity to file a summary judgment motion on the remaining causes of action. Plaintiffs may also file a summary judgment motion on the remaining causes of action .... the motion for reconsideration (Docket Entry # 111) is ALLOWED only to the extent that defendants and plaintiffs may each file one summary judgment motion subject to the above parameters.

(Docket Entry # 114, pp. 5 & 6). The Order did not eviscerate or eliminate the effect of the prior summary judgment opinions as setting out the law of this case. See generally Iacobucci v. Boulter, 193 F.3d 14, 19 (1st Cir.1999) (noting that “trial court ordinarily is the best expositor of its own orders” and deferring to district judge's interpretation of her own order). For example, this court has not considered the portions of Caplitz's affidavit (Docket Entry # 95) and Herman's affidavit (Docket Entry # 96) that plaintiffs continue to cite and that this court struck from the prior summary judgment record. Plaintiffs offer no basis to alter or reconsider that ruling.

At this point, the following claims remain: (1) breach of contract by estoppel against B & B, BBC and Calsurance to provide plaintiffs insurance (Count I); (2) breach of an oral contract for insurance against Zurich and American Guarantee (Count III); (3) breach of an implied in fact contract for insurance against Zurich and American Guarantee (Count IV); (4) breach of contract by estoppel against Zurich and American Guarantee (Count V); and (5) breach of the implied covenant of good faith and fair dealing against defendants (Count VI). Defendants presently seek summary judgment on these remaining counts. (Docket Entry # 119).

In addition to a number of factual findings under Rule 56(g), plaintiffs seek partial summary judgment under Rule 56(a) insofar as:

1. B & B, BBC and CalSurance are liable for breach of oral contract and breach of implied-in-fact contract to provide insurance.

2. B & B, BBC and CalSurance are liable for breach of contract by estoppel to provide insurance.

3. Zurich and American Guarantee are liable for breach of oral contract and breach of implied-in-fact contract to defend and indemnify.

4. Zurich and American Guarantee are liable for breach of contract by estoppel to defend and indemnify.

5. All defendants are liable for breach of the implied covenant of good faith and fair dealings.

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(Docket Entry # 115). Item numbers two through five involve counts I, III, IV, V and VI.

The first request, however, attempts to resurrect claims dismissed from the original complaint by the district judge on October 21, 2009. Count I in the original complaint alleged that B & B, BBC and Calsurance breached an oral contract to provide a insurance...