Hoffend & Sons, Inc. v. Rose & Kiernan

• Decision Date: 08 June 2006
• Citation: 7 N.Y.3d 152,851 N.E.2d 1149
• Parties: HOFFEND & SONS, INC., Appellant, v. ROSE & KIERNAN, INC., et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

851 N.E.2d 1149

7 N.Y.3d 152

HOFFEND & SONS, INC., Appellant, v. ROSE & KIERNAN, INC., et al., Respondents.

Court of Appeals of New York.

June 8, 2006.

Hiscock & Barclay, LLP, Rochester (Anthony J. Piazza, Joseph A. Wilson and Paul A. Sanders of counsel), for appellant.

Lustig & Brown, LLP, Buffalo (R. Scott Atwater, James C. Keidel, Jonathan Schapp and Randolph E. Sarnacki of counsel), for respondents.

OPINION OF THE COURT

ROSENBLATT, J.

The appeal before us involves a suit by a policyholder against its insurance broker, contending that the broker did not obtain a policy that would have covered the loss involved. We hold that, as a matter of law, the policyholder did not establish that it made a specific request for the coverage in question or that it had a special relationship with the broker. Accordingly, we affirm the Appellate Division's dismissal of the complaint, although for different reasons.

Plaintiff Hoffend & Sons, Inc. is an Ontario County firm that does design and construction work for theater stages. Defendant Rose & Kiernan, Inc. (R & K) was Hoffend's insurance brokerage firm and defendant Mark Nickel's employer.

On December 11, 1998, R & K gave Hoffend a written proposal for insurance coverage for one year starting December 12, 1998. The proposal included descriptions of two policies relevant to this appeal. One was a "Blanket Installation Floater," or builders' risk policy, provided by Travelers Indemnity Co. of Illinois, to cover property damage to domestic construction projects generally. The second was a Great Northern "Foreign Liability Exporters' Package Policy," to cover general liability, non-owned automobile coverage and workers' compensation for foreign projects. It did not cover property damage incurred during construction abroad.

On December 22, Ruth Abate of R & K sent a letter to Dan DiPofi, Hoffend's chief financial officer, stating that the Travelers builders' risk policy would cover only property damage arising out of domestic projects. Foreign projects, she pointed out, should be discussed on a project-by-project basis.

The loss in question arose out of a foreign project. On February 8, 1999, Hoffend entered into a contract with an Argentine contractor, ORMAS, for a construction project in La Plata, Argentina. Hoffend was the subcontractor, providing the Argentine firm with materials, engineering and design expertise, as well as supervision. Donald Hoffend, a Hoffend principal, claims that he and R & K's Mark Nickel discussed the project at a December 11, 1998 meeting and that he made it clear to Nickel that the project should be "covered." Under the contract with ORMAS, Hoffend was obligated to acquire insurance for labor-related accidents, which was covered by the Great Northern exporters' package policy. The ORMAS contract, however, made no mention of builders' insurance to cover property damage—the type of loss involved here.

In December 1999, R & K gave Hoffend a written insurance proposal for the period from December 12, 1999 to December 12, 2000, which included the date of the loss in question. The coverage was to be essentially the same as the previous year, but the proposal did not specifically state that foreign coverage under the Travelers blanket installation floater would still have to be negotiated on a project-by-project basis. Hoffend's Dan DiPofi testified that to simplify the bonding process he wanted to show R & K (who also handled the bonding) that most of Hoffend's La Plata work would take place in the United States. DiPofi did not recall anyone at R & K stating that the project would be covered for the type of loss involved here.

R & K's Ruth Abate also testified that under Hoffend's contract with ORMAS, the latter was to be responsible for the builders' risk insurance. The Travelers builders' risk policy clearly states that it only covered property in the United States, Puerto Rico and Canada. After the policy was issued, DiPofi and Donald Hoffend read it and did not contact R & K with any questions or changes.

The accident took place on October 5, 2000, when a lighting bridge at the project collapsed, damaging Hoffend's work and causing consequential damage. Hoffend filed claims with both Travelers and Great Northern. With a reservation of rights, Great Northern agreed to defend and indemnify Hoffend against third-party liability. Travelers disclaimed, citing the territorial limitation in its...