| Hersch v DeWitt Stern Group, Inc. |
| 2007 NY Slip Op 06567 [43 AD3d 644] |
| September 6, 2007 |
| Appellate Division, First Department |
| Dennis S. Hersch, Respondent, v DeWitt Stern Group, Inc.,Appellant. |
—[*1] Davis Polk & Wardwell, New York (Melissa Aoyagi of counsel), for respondent.
Order, Supreme Court, New York County (Judith J. Gische, J.), entered February 21, 2007,which, to the extent appealed from, denied defendant's motion for summary judgment dismissingthe complaint, modified, on the law, to grant the motion with respect to the third, fourth, fifth,sixth and seventh causes of action, and otherwise affirmed, without costs.
The court properly denied defendant's motion for summary judgment insofar as it soughtdismissal of plaintiff's first two causes of action sounding, respectively, in negligence and breachof contract, and alleging that defendant, an insurance brokerage firm, failed to procure adequateinsurance for plaintiff. There are triable issues as to whether plaintiff specifically requestedadditional coverage for the "additions and alterations" to his cooperative apartment, which wasdamaged in a fire in November 2004 (see Murphy v Kuhn, 90 NY2d 266 [1997]).Although plaintiff admittedly received and read the policy procured by defendant brokerage, hewas allegedly assured that the requested coverage had been obtained and he had "a right to lookto the expertise of [his] broker with respect to insurance matters" (Baseball Off. of Commr. vMarsh & McLennan, 295 AD2d 73, 82 [2002]).
Plaintiff's cause of action for breach of fiduciary duty, however, should have been dismissed.Although the parties' relationship lasted a considerable period of time and defendant assuredplaintiff that his insurance needs were being met, these circumstances are not so exceptional as tosupport imposition of a fiduciary duty upon defendant (see Busker on Roof Ltd. PartnershipCo. v Warrington, 283 AD2d 376, 377 [2001]). Plaintiff's fourth through seventh causes ofaction, which are based on allegations that the existence of a contingent commission agreementbetween defendant and the company that issued the subject insurance policy should have beendisclosed to him, should have been dismissed as well. Contingent commission agreementsbetween brokers and insurers are not illegal (see Amusement Bus. Underwriters v AmericanIntl. Group, 66 NY2d 878 [1985]), and, in the absence of a special relationship between theparties, defendant had no duty to disclose the existence of the contingent commission agreement(see Wender v Gilberg Agency, 304 AD2d 311, 311-312 [2003], lv denied 100NY2d 507 [2003]).
We have considered defendants' remaining arguments and find them unavailing.Concur—Tom, J.P., Mazzarelli, Andrias and Williams, JJ.
McGuire, J., concurs in part and dissents in part in a memorandum as follows: While I agreewith much of the majority's disposition of this appeal, I disagree with its conclusion that SupremeCourt properly denied those aspects of defendant's motion seeking summary judgment dismissingthe first two causes of action. Accordingly, I respectfully dissent in part.
In 1992 plaintiff contacted defendant, an insurance broker, and requested that defendantprocure insurance for, among other things, plaintiff's cooperative unit. Defendant procured apolicy from nonparty Chubb & Son, Inc., which plaintiff signed and subsequently renewed. Thepolicy contained a provision entitled "Additions and alterations" which stated that:
"We cover your building additions, alterations, fixtures, improvements, installations or itemsof real property that pertain to your unit. . . .
"For a covered loss to these items, we will pay up to 10% of the amount of contents coverageor any higher amount listed in the Coverage Summary for Additions and Alterations. The samepayment basis applies to Additions and Alterations as to contents."
With respect to cooperative units, "Additions and alterations" coverage apparently includessuch items as flooring, certain kinds of carpeting, curtains and painted walls. In order to obtainfull insurance coverage of those items the insured must purchase an additions and alterationsrider to the policy. Plaintiff did not purchase such a rider.
On November 5, 2004, a fire occurred in plaintiff's unit, causing extensive fire, smoke andwater damage. Plaintiff submitted a claim to Chubb for the damage to the flooring, carpeting,curtains, painted walls and bookcases in the unit. Pursuant to the policy, Chubb paid plaintiffapproximately 10% of the value specified in the policy of the "contents" of the unit. Plaintiffcommenced this action against defendant asserting numerous causes of action seeking to recoverthe difference between the damage to the flooring, carpeting, curtains, painted walls andbookcases and the 10% payout issued by Chubb. The gravamen of plaintiff's first and secondcauses of action—negligence and breach of contract—is that defendant failed toprocure insurance sufficient to cover the full value of such flooring, carpeting, curtains, paintedwalls and bookcases. Supreme Court denied defendant's motion for summary judgmentdismissing the complaint and this appeal ensued.
"While an insurance broker acting as an agent of its customer has a duty of reasonable care tothe customer to obtain the requested coverage within a reasonable time after the request, or toinform the customer of the agent's inability to do so, the agent owes no continuing duty to advise,guide or direct the customer insured to obtain additional coverage" (Hjemdahl-Monsen vFaulkner, 204 AD2d 516, 517 [1994] [internal quotation marks and citation omitted]; seeMurphy v Kuhn, 90 NY2d 266, 270 [1997]). Further, the duty owed by an insurance brokerto his or her customer is ordinarily defined by the nature of the request the customer makes to thebroker (Madhvani v Sheehan, 234 AD2d 652, 654 [1996]; see Chase's Cigar Store vStam Agency, 281 AD2d 911 [2001]). Therefore, in order to recover damages for negligenceor breach of contract against a broker based on the broker's failure to procure a particular type ofcoverage, the plaintiff must demonstrate that he or she made a specific request [*2]to the broker for that coverage (Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 7 NY3d 152, 158[2006] ["A general request for coverage will not satisfy the requirement of a specific request for acertain type of coverage"]; see Catalanotto v Commercial Mut. Ins. Co., 285 AD2d 788,790 [2001], lv denied 97 NY2d 604 [2001]). Defendant made a prima facie showing ofentitlement to judgment as a matter of law dismissing plaintiff's causes of action to recoverdamages for negligence and breach of contract on the ground that plaintiff made no specificrequest for additional coverage protecting the flooring, carpeting, curtains, painted walls andbookcases in the unit. In support of its motion, defendant submitted the deposition testimony ofplaintiff, who testified in general terms that he discussed with defendant "what the apartmentconsisted of, how it was furnished, what had been done to it, and the fact that [plaintiff] wantedto make sure [the unit] was properly insured." Plaintiff's testimony is bereft of any indication thathe specifically requested coverage for the flooring, carpeting, curtains, painted walls andbookcases in the unit. At bottom, the evidence submitted by defendant established that plaintiffmade a generalized request that defendant procure a policy that fully or completely insured thecontents of the unit. Such a request is insufficient to impose liability on defendant for notprocuring an additions and alterations rider (see Hoffend, 7 NY3d at 157;Catalanotto, 285 AD2d at 790; see also MDW Enters. v CNA Ins. Co., 4 AD3d338 [2004]; Empire Indus. Corp. v Insurance Cos. of N. Am., 226 AD2d 580 [1996];Chaim v Benedict, 216 AD2d 347 [1995]). In opposition, plaintiff failed to demonstrate theexistence of a triable issue of fact regarding whether he made a specific request for coverage forthe flooring, carpeting, curtains, painted walls and bookcases.
Since I agree with the majority that plaintiff's third through seventh causes of action shouldbe dismissed, I would reverse the order and dismiss the complaint.