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

Decision Date30 October 2019
Docket NumberNo. 18 Civ. 8152 (JFK),18 Civ. 8152 (JFK)
Citation420 F.Supp.3d 123
Parties PILKINGTON NORTH AMERICA, INC., Plaintiff, v. MITSUI SUMITOMO INSURANCE CO. OF AMERICA and Aon Risk Services Central, Inc., Defendants.
CourtU.S. District Court — Southern District of New York

FOR PLAINTIFF PILKINGTON NORTH AMERICA, INC., Peter Benjamin DeWitt Duke, Rachel Garland Snidow, Bethany Theriot, Seth Adam Tucker, COVINGTON & BURLING LLP.


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


JOHN F. KEENAN, United States District Judge:

Pilkington North America, Inc. ("Pilkington"), a Delaware manufacturer, brings suit against Aon Risk Services Central, Inc. ("Aon" or "ARS"), an Illinois insurance broker, and Mitsui Sumitomo Insurance Company of America ("MSI"), a New York insurance company, for breach of contract, negligence, intentional and negligent misrepresentation, and breaches of certain fiduciary duties and the implied covenant of good faith and fair dealing. Jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). Before the Court are Aon's and MSI's motions to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Aon's motion is GRANTED in part and DENIED in part. MSI's motion is GRANTED in part and DENIED in part.

I. Background

The Court takes the following facts and allegations from the Complaint and, for the purposes of these motions, deems them to be true.

Pilkington is a Delaware corporation with its principal place of business at 811 Madison Avenue, Toledo, Ohio 43697. (Compl. ¶ 5.) Pilkington manufactures and markets glass and glazing products, primarily for the architectural and automotive markets. (Id. ) Pilkington owns a factory in Ottawa, Illinois that incurred approximately $60 to $100 million of property damage and business interruption loss due to a tornado on or around February 28, 2017 ("the Tornado"). (Id. ¶¶ 31-32.)

MSI is a property and casualty insurance company organized under the laws of the State of New York with its principal place of business at 560 Lexington Avenue, 20th Floor, New York, New York 10022. (Id. ¶ 6.) At the time the Tornado struck, Pilkington, as a fully owned subsidiary of NSG Holding USA II, Inc. ("NSG"), was insured under a commercial property and business interruption insurance policy issued to NSG by MSI ("the Policy"). (Id. ¶¶ 2, 13.) The Policy was brokered by Aon, an Illinois corporation with its principal place of business at 200 East Randolph Street, Chicago, Illinois 60601. (Id. ¶¶ 7, 19.) Aon is licensed by the New York State Department of Financial Services to transact business in the State of New York. (Id. ¶ 7.)

Since at least 2010, Aon performed a variety of services for Pilkington related to its active and future insurance coverage needs. (Id. ¶¶ 19-20.) Pilkington relied on Aon to advise and guide it regarding the scope and terms of the Policy, and Aon understood that Pilkington relied on it for guidance with respect to policy changes and renewals. (Id. ¶¶ 22-23.)

In 2015 and 2016, Aon included its ARS US Business Terms, Edition Date June 20, 2014 ("the Contract") with the policy renewal proposals that it presented to Pilkington.

(Id. ¶ 25.) Pilkington accepted the Contract, which was in effect during the entirety of the 2015-2016 and 2016-2017 policy periods. (Id. ¶¶ 26-27.) The Contract provided Aon would deliver certain services to Pilkington and specified that Aon would review with Pilkington the benefits, terms, and conditions of its insurance contracts. (Id. ¶¶ 28-29.) The standard practice between Aon and Pilkington was for Aon to handle direct communications with Pilkington's insurers, and for Pilkington not to receive direct communications from them. (Id. ¶ 24.)

When the Tornado struck, the Policy had an indemnification limit of approximately $320 million per occurrence excess of deductible. (Id. ¶ 33.) Pilkington timely submitted a claim to MSI for the property damage and business interruption loss it incurred. (Id. ¶ 34.) MSI, however, invoked a policy sublimit applicable to certain types of windstorms, which capped coverage at $15 million ("the Windstorm Sublimit"). (Id. ¶¶ 37, 51.) The Windstorm Sublimit MSI invoked under the 2016-2017 Policy differed from the sublimit in the 2015-2016 Policy, as originally issued, due to a revision that was requested by MSI, proposed to Aon, and endorsed by Pilkington during the 2015-2016 policy period ("the Endorsement"). (Id. ¶¶ 35, 38, 44, 47.)

The Windstorm Sublimit in the 2015-2016 Policy, as originally issued ("the Original Windstorm Sublimit"), would not have triggered the $15 million limitation. (Id. ¶ 44.) The Windstorm Sublimit in the Endorsement and the 2016-2017 Policy (the "Revised Windstorm Sublimit"), however, broadened the definition of the types of windstorms subject to the cap. As a result, when the Tornado struck, Pilkington's coverage for the loss was limited to $15 million. (Id. ¶¶ 39-43, 45, 51.)

A. MSI's proposed changes to the Policy

MSI first proposed revising the Windstorm Sublimit in an email to Aon on June 2, 2015. (Id. ¶ 52.) The revision was one of several proposed changes to the Policy. (Id. ) The body of MSI's email disclosed only that it proposed changing the values of the Policy's limit and sublimits because some of the figures were incorrect due to "redundancy" and "the exchange rate." (Id. ¶ 53.) MSI's representative assured Aon that the proposed changes "will not affect too much on" Pilkington. (Id. ) Although the body of MSI's email did not disclose any changes to the wording of any sublimits, the email attached an Excel file that listed all of the sublimits in the Policy and showed proposed changes to certain of them. (Id. ¶¶ 53-54.) In the Excel file, the Windstorm Sublimit was annotated "Partially Delete" with the relevant text marked with a strikethrough. (Id. ¶ 54.) MSI did not copy Pilkington on, and Pilkington did not otherwise receive, MSI's email or the Excel file attachment. (Id. ¶ 55.)

On November 24, 2015, MSI again emailed proposed changes to the Policy to Aon. (Id. ¶ 57.) MSI's November email did not refer to its June email or the Excel file attachment. (Id. ) The proposed revised policy declarations in the November email included the new, Revised Windstorm Sublimit, however the wording of the sublimit was not marked to indicate that it had been revised. (Id. ¶¶ 45, 58.) Pilkington was not copied on this email either. (Id. ¶ 61.)

On December 14, 2015, MSI emailed Aon a second proposed revised version of the policy declarations that it requested to be incorporated into the Policy through the Endorsement. (Id. ¶ 62.) The proposal again included the Revised Windstorm Sublimit wording. (Id. ) Pilkington was copied on MSI's December email, but Pilkington did not realize the Revised Windstorm Sublimit changed the terms of the Original Windstorm Sublimit because the body of MSI's email did not address any of the revisions that were proposed, and the attachment did not flag the proposed changes to the Windstorm Sublimit. (Id. ¶¶ 63, 92.)

In mid-January 2016, Aon and MSI discussed the proposed Endorsement during a telephone call. (Id. ¶ 68) Sometime prior to the call, Aon independently formed the understanding that the Policy defined the types of windstorms subject to the Revised Windstorm Sublimit by reference to certain wind zones that were defined elsewhere in the Policy. (Id. ¶ 69.) Aon believed the Revised Windstorm Sublimit would only apply to windstorms occurring within the defined zones. (Id. ) Aon conveyed its mistaken understanding to MSI during the January 2016 call, but MSI did not contradict Aon's statement, and Aon did not ask any questions about, or further discuss, MSI's proposed revisions to the Windstorm Sublimit. (Id. ¶ 70.) Although Aon recognized that the Endorsement revised the language of the Windstorm Sublimit, Aon failed to confirm its understanding regarding the types of windstorms subject to the Revised Windstorm Sublimit or to ensure that the new terms were consistent with its understanding. (Id. ¶¶ 73-74.) If the Revised Windstorm Sublimit applied as Aon understood it, the loss resulting from the Tornado would have been fully covered up to the $320 million policy limit. (Id. ¶ 71.)

B. Aon's advice regarding the Endorsement

After the call with MSI, Aon conferred with Pilkington and incorrectly advised Pilkington that the Endorsement would only change the values of the Policy limit and sublimits to correct currency valuations. (Id. ¶¶ 75, 77.) Aon advised Pilkington that the Endorsement's proposed changes were acceptable and recommended Pilkington agree to it. (Id. ¶ 78.) Aon, however, failed to notify Pilkington that the Endorsement revised the wording of the Windstorm Sublimit and failed to advise Pilkington that the Endorsement would reduce coverage for certain types of windstorms. (Id. ¶ 79.)

Relying on Aon's advice and guidance, Pilkington consented to the Endorsement, and on January 19, 2016, Aon transmitted Pilkington's authorization to MSI. (Id. ¶¶ 64, 75, 81.) The Endorsement became part of the 2015-2016 Policy. (Id. ¶ 64.) In its transmission, Aon notified MSI that Pilkington's consent was based on "the property limit presentation" MSI provided "and the assurance no other terms and conditions other than valuation were included in the [E]ndorsement." (Id. ¶ 65.) Pilkington believes that the "property limit presentation" Aon referenced is the same document as the "comparison of major items" attachment MSI provided in its November 2015 email, which did not indicate that any change was proposed with respect to the Windstorm Sublimit. (Id. ¶¶ 59, 65.) The Policy premium was not reduced as a result of the Endorsement. (Id. ¶ 64.)

In late-March 2016, Aon prepared...

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