Pilkington N. Am., Inc. v. Mitsui Sumitomo Ins. Co. of Am.

• Decision Date: 18 May 2020
• Docket Number: No. 18 Civ. 8152 (JFK),18 Civ. 8152 (JFK)
• Citation: 460 F.Supp.3d 481
• Parties: PILKINGTON NORTH AMERICA, INC., Plaintiff, v. MITSUI SUMITOMO INSURANCE CO. OF AMERICA and Aon Risk Services Central, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

460 F.Supp.3d 481

PILKINGTON NORTH AMERICA, INC., Plaintiff,

v.MITSUI SUMITOMO INSURANCE CO. OF AMERICA and Aon Risk Services Central, Inc., Defendants.

No. 18 Civ. 8152 (JFK)

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

Signed May 18, 2020

FOR PLAINTIFF PILKINGTON NORTH AMERICA, INC.: Seth A. Tucker, Bethany Theriot, Bruno Campos, Rachel Snidow, P. Benjamin Duke, COVINGTON & BURLING LLP.

FOR DEFENDANT MITSUI SUMITOMO INSURANCE COMPANY OF AMERICA: Brian E. O'Donnell, Maura C. Smith, Brooks H. Leonard, RIKER DANZIG SCHERER HYLAND & PERRETTI LLP.

FOR DEFENDANT AON RISK SERVICES CENTRAL, INC.: Robert B. Ellis, Lauren Casazza, Rana B. Dawson, Michael S. Biehl, KIRKLAND & ELLIS LLP.

OPINION & ORDER

JOHN F. KEENAN, United States District Judge:

Before the Court are motions by Defendants Mitsui Sumitomo Insurance Company of America ("MSI"), a New York insurance company, and Aon Risk Services Central, Inc. ("Aon"), an Illinois insurance broker, to dismiss the Amended Complaint ("the AC") filed by Plaintiff Pilkington North America, Inc. ("Pilkington"), a Delaware manufacturer. On October 30, 2019, the Court granted in part and denied in part similar motions by MSI and Aon to dismiss Pilkington's claims against them pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure. See Pilkington N. Am., Inc. v. Mitsui Sumitomo Ins. Co. of Am., 420 F. Supp. 3d 123, 130 (S.D.N.Y. 2019). The October 30, 2019 Opinion & Order ("the MTD Order") allowed Pilkington the opportunity to replead its fraud claims with the particularity required under Rule 9(b). Jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a).

For the reasons set forth below, MSI's motion is DENIED. Aon's motion is GRANTED.

I. Background

This action arises out of an approximately $60 to $100 million loss that Pilkington incurred when a tornado ("the Tornado") struck its glass manufacturing factory in Ottawa, Illinois on or around February 28, 2017. Pilkington seeks compensation for the loss pursuant to a commercial property and business interruption insurance policy that was issued by MSI to Pilkington's parent company, and which was brokered by Aon. Pilkington alleges that MSI is liable for fraudulently revising the insurance policy such that the loss caused by the Tornado is not fully compensable; and Aon is liable for providing faulty advice while brokering the policy, which allowed MSI's fraud to succeed.

The AC asserts ten total causes of action, nine of which were asserted in the Complaint ("the original complaint" or "the OC"), (ECF No. 1), and one new claim against MSI for equitable estoppel. The AC adds additional detail to Pilkington's original allegations of fraud, but it is, in essence, substantially the same as the OC.

A. Factual Allegations

To briefly summarize, Pilkington alleges that MSI misrepresented certain changes MSI wanted to make to the active insurance policy it had issued to Pilkington's parent company for the 2015–2016 policy period ("the Policy"). MSI proposed the changes by means of an endorsement ("the Endorsement") to Pilkington's insurance broker, Aon, who failed to notify Pilkington that, in addition to certain non-controversial changes to currency valuations in the Policy, the Endorsement also revised the wording of a policy sublimit applicable to certain types of windstorms ("the Windstorm Sublimit"). Aon failed to advise Pilkington that the Endorsement substantially reduced coverage for windstorms such as the Tornado.

Distilled to its core, the AC alleges that MSI represented to both Aon and Pilkington that the Endorsement only changed currency valuations, when in fact the Endorsement also stealthily reduced MSI's exposure to certain types of losses. The AC further alleges that Aon either was a willing participant in MSI's fraud or a negligent conduit who helped trick Pilkington into consenting to the Endorsement, and surreptitiously or negligently incorporated the same fraudulently revised terms into the following year's insurance policy, which was in effect when the Tornado struck.

Pilkington's claims center on the following communications and allegations, which the Court must deem to be true at this procedural stage:

June 2015 email. On June 2, 2015, MSI's agent, Shinji Tanaka ("Tanaka"), emailed Aon's agent, Joseph Perry ("Perry"), to request "changes in limit/sublimit on Pilkington's [p]roperty [insurance policy]" ("the June Email"). (Am. Compl. ¶¶ 8, 11, 56–57, ECF No. 73; Ex. 8 to Am. Compl., ECF No. 73-8.) Tanaka's message disclosed only that MSI proposed to increase the value of some of the Policy's limit/sublimits and decrease others—revisions that Tanaka stated were needed to address "figures [that] were incorrect." (Am. Compl. ¶ 57.) Tanaka explained that MSI proposed to "consolidate[ ]" certain sublimits to address "redundancy," and further explained that the revisions would address "the exchange rate," which was "incorrectly used before." (Id. ) Tanaka's email said nothing about changing the scope of any sublimits. (Id. ¶ 58.) To the contrary, Tanaka indicated that MSI's proposed changes consisted solely of non-controversial corrections, (id. ), which the AC describes as "corrections pertaining to valuation only," (id. ¶ 99). Tanaka assured Perry that the proposed changes "will have mixed impact on the coverage, but overall, I believe those changes will not affect too much on client [i.e., Pilkington], except the overall limit has increased by $62.2 million." (Id. ¶ 59.) Tanaka asked Perry to "[p]lease discuss with client [i.e., Pilkington] if we can re-issue the policy with those changes." (Id. )

The June Email attached an Excel file that listed all of the sublimits in the Policy and showed changes to certain of the sublimits, some of which were marked for deletion to address the "redundancy" issue noted in Tanaka's email. (Id. ¶ 60.) Although the body of Tanaka's message did not disclose any proposed changes to the scope of any of the sublimits, in the Excel file, the Windstorm Sublimit was annotated "Partially Delete" and was modified with a strikethrough as follows: "Windstorm caused by Named Storm combined per occurrence and in the annual aggregate." (Id. ) Pilkington was not copied on, and did not otherwise receive, the June Email or its attachment.¹ (Id. ¶¶ 61, 72.)

November 2015 email. Almost six months later, on November 24, 2015, Tanaka again emailed Perry regarding proposed changes to the Policy ("the November Email"). (Id. ¶ 62; Ex. 9 to Am. Compl., ECF No. 73-9.) Tanaka's message did not reference the June Email or its Excel file attachment. (Am. Compl. ¶ 62.) The November Email attached an Excel file that Tanaka described as "the comparison of major items," and a Word document labeled "Pilkington Revised Policy 2015-16 (3)." (Id.; Ex. 9 to Am. Compl.) "[T]he comparison of major items" attachment indicated that MSI only proposed to change certain of the monetary values in the Policy—it did not indicate that any change was proposed with respect to the Windstorm Sublimit. (Am. Compl. ¶ 63.) Likewise, the monetary values in the Word document were highlighted, indicating that MSI's proposed revisions only concerned valuation and did not change the wording of any sublimits. (Id. ¶ 64.) The Word document included new wording for the Windstorm Sublimit ("the Revised Windstorm Sublimit")—specifically, "U.S. Windstorm combined per occurrence and in the annual aggregate"—but the revised wording, unlike the monetary values, was not highlighted or otherwise marked in any way to indicate that it had been revised. (Id. ) Tanaka asked Perry to "use the attached materials to propose the policy changes" and to "start negotiating with client [i.e., Pilkington] at the earliest." (Id. ¶ 65.) Pilkington was not copied on, and did not otherwise receive, the November Email or its attachment. (Id. ¶¶ 66, 73.)

December 2015 email. On December 14, 2015, Tanaka again emailed Perry requesting that the proposed revised version of the Policy declarations be incorporated into the Policy through the Endorsement ("the December Email"). (Id. ¶ 67; Ex. 10 to Am. Compl., ECF No. 73-10.) Pilkington was copied on the December Email, however, the text of Tanaka's message did not address any of the revisions that were proposed, and, as with the November Email, the attachment did not flag any proposed changes to the wording of the Windstorm Sublimit. (Am. Compl. ¶ 68.)

January 2016 call between MSI and Aon. On or around January 17, 18, or 19, 2016, Perry conferred with Tanaka over the telephone about the Endorsement ("the January Call"). (Id. ¶ 74.) Sometime prior to the call, despite the fact that the Policy does not define "U.S. Windstorm," Perry independently formed the understanding that the term was defined by reference to certain "hazard wind zones" defined elsewhere in the Policy, and the Revised Windstorm Sublimit would apply only to windstorms occurring within those zones. (Id. ¶ 75.) During the January Call, Perry conveyed this mistaken understanding to Tanaka. Tanaka, however, did not correct or contradict Perry's statement, and Perry did not ask any questions about or further discuss the proposed revisions to the Windstorm Sublimit. (Id. ¶ 76.)

The factory the Tornado struck is not located within the hazard wind zones. (Id. ¶ 77.) Accordingly, if the Revised Windstorm Sublimit applied as Perry believed, Pilkington's loss would not have been subject to the $15 million sublimit, and it would have been fully covered up to the Policy's approximately $320 million limit. (Id. ) Aon, however, failed to ensure that the language of the Policy reflected and effectuated its understanding of how the revised sublimit would apply. (Id. ¶¶ 79–80.)

January 2016 call between Pilkington and Aon. Following the January Call, Perry spoke with Pilkington's Elizabeth Feltman ("Feltman") to advise her on the changes proposed by the Endorsement. (Id. ¶¶ 6, 81.) Perry knew that Feltman lacked insurance expertise and that she and...