| Bonded Waterproofing Servs., Inc. v Anderson-Bernard Agency,Inc. |
| 2011 NY Slip Op 05795 [86 AD3d 527] |
| July 5, 2011 |
| Appellate Division, Second Department |
| Bonded Waterproofing Services, Inc.,Respondent, v Anderson-Bernard Agency, Inc., et al.,Appellants. |
—[*1] White Fleischner & Fino LLP, New York, N.Y. (Janet P. Ford and Benjamin A. Fleischnerof counsel), for appellant National Indemnity Company. Profita & Associates, LLC, New York, N.Y. (Michael Profita and Richard Kolber ofcounsel), for respondent.
In an action, inter alia, to recover damages for breach of contract and negligentmisrepresentation, the defendants Anderson-Bernard Agency, Inc., and Thomas Bernard appeal,as limited by their brief, from so much of an order of the Supreme Court, Richmond County(McMahon, J.), dated April 30, 2010, as denied those branches of their motion which werepursuant to CPLR 3211 (a) (1), (5) and (7) to dismiss the amended complaint insofar as assertedagainst them, and the defendant National Indemnity Company separately appeals from so muchof the same order as denied its separate motion for summary judgment dismissing the amendedcomplaint insofar as asserted against it.
Ordered that the order is reversed insofar as appealed from by the defendant NationalIndemnity Company, on the law, and the motion of the defendant National Indemnity Companyfor summary judgment dismissing the amended complaint insofar as asserted against it isgranted; and it is further,
Ordered that the order is affirmed insofar as appealed from by the defendantsAnderson-Bernard Agency, Inc., and Thomas Bernard; and it is further,
Ordered that one bill of costs is awarded to the defendant National Indemnity Company,payable by the plaintiff, and one bill of costs is awarded to the plaintiff, payable by thedefendants Anderson-Bernard Agency, Inc., and Thomas Bernard.
This action arises from a disclaimer of insurance coverage by the defendant NationalIndemnity Company (hereinafter NIC) under a general commercial liability policy issued to theplaintiff, Bonded Waterproofing Services, Inc. (hereinafter Bonded). The subject policy wasnegotiated and procured for Bonded by the defendant Anderson-Bernard Agency, Inc.(hereinafter A-B), and Thomas Bernard, the principal of A-B, who were insurance brokers whoprocured coverage for Bonded on an annual basis. Bonded and A-B have their principal places ofbusiness [*2]in New Jersey, where Bernard also resides andwhere the subject policy was procured and executed.
NIC disclaimed coverage in connection with a claim asserted by a worker who was injured ata Bonded construction work site in Queens. The disclaimer was based on an express exclusionfrom coverage in the policy for work performed within the five boroughs of the City of NewYork. Bonded thereafter commenced this action against A-B, Bernard, and NIC, alleging, amongother things, that A-B and Bernard had misrepresented the coverage obtained on Bonded's behalf,had breached their contract with Bonded to obtain appropriate coverage, and were negligent infailing to obtain adequate insurance. Bonded further alleged that NIC was vicariously liable forthe conduct of A-B and Bernard, and should be estopped from denying coverage because A-Band Bernard acted as its agents.
A-B and Bernard moved, inter alia, pursuant to CPLR 3211 (a) (1), (5) and (7) to dismiss theamended complaint insofar as asserted against them, and NIC separately moved for summaryjudgment dismissing the amended complaint insofar as asserted against it. The Supreme Courtdenied the motions.
As an initial matter, the parties disagree as to whether the law of New York or New Jerseyshould apply to this action. In determining that question, the first inquiry must be whether there isan actual conflict between the laws of the two jurisdictions (see Matter of Allstate Ins. Co.[Stolarz—New Jersey Mfrs. Ins. Co.], 81 NY2d 219, 223 [1993]; Shaw v Carolina Coach, 82 AD3d98 [2011]). There is no conflict between the laws of New York and New Jersey with regardto the causes of action alleging breach of contract (see JP Morgan Chase v J.H. Elec. of N.Y., Inc., 69 AD3d 802, 803[2010]; Murphy v Implicito, 392 NJ Super 245, 265, 920 A2d 678, 689-690 [2007]),negligent procurement of coverage (seeJual Constr. Ltd. v A.C. Edwards, Inc., 74 AD3d 1150 [2010]; Aden v Fortsh,169 NJ 64, 79, 776 A2d 792, 800-801 [2001]), and breach of the implied covenant of good faithand fair dealing (see Turkat v LalezarianDevs., Inc., 52 AD3d 595, 596 [2008]; Kalogeras v 239 Broad Ave., L.L.C., 202NJ 349, 366, 997 A2d 943, 953-954 [2010]). Moreover, the principles of agency and apparentauthority are substantively the same in New York and New Jersey (see Hallock v State ofNew York, 64 NY2d 224, 231 [1984]; New Jersey Lawyers' Fund for Client Protection vStewart Tit. Guar. Co., 203 NJ 208, 220, 1 A3d 632, 639-640 [2010]).
However, New York law and New Jersey law differ with regard to the elements of the causeof action sounding in negligent misrepresentation, since New York requires a showing of "aspecial or privity-like relationship" between the parties that New Jersey does not (J.A.O. Acquisition Corp. v Stavitsky, 8NY3d 144, 148 [2007]; cf. Kaufman v i-Stat Corp., 165 NJ 94, 109, 754 A2d 1188,1195-1196 [2000]). The state with the most significant relationship to the particular issue inconflict (see Indosuez Intl. Fin. v National Reserve Bank, 98 NY2d 238, 245 [2002];J. Zeevi & Sons v Grindlays Bank [Uganda], 37 NY2d 220, 226-227 [1975], certdenied 423 US 866 [1975]) is New Jersey, since all of the relevant contacts lie in NewJersey. Accordingly, the law of that state should be applied to the negligent misrepresentationcause of action, as it is "the jurisdiction having the greatest interest in resolving the particularissue" (Cooney v Osgood Mach., 81 NY2d 66, 72 [1993]).
In view of the foregoing, the Supreme Court properly denied that branch of the motion ofA-B and Bernard which was pursuant to CPLR 3211 (a) (7) to dismiss the negligentmisrepresentation cause of action, since the elements of that cause of action were adequatelypleaded under New Jersey law. Bonded alleged that A-B and Bernard issued a certificate ofliability insurance to Bonded which misrepresented that Bonded was covered for the workconducted in Queens under the policy issued by NIC, and that Bonded reasonably and justifiablyrelied on that certificate to its detriment (see Kaufman v i-Stat Corp., 165 NJ at 109, 754A2d at 1195-1196).
Bonded also sufficiently stated a cause of action against A-B and Bernard to recoverdamages for breach of contract. Bonded alleged that it entered into an agreement with A-B andBernard, whereby A-B and Bernard would procure appropriate liability coverage for Bonded onan annual basis, and that A-B and Bernard breached that agreement by procuring deficientcoverage, which ultimately resulted in the disclaimer by NIC, relegating Bonded to defendingitself in the underlying action (see JP Morgan Chase v J.H. Elec. of N.Y., Inc., 69 AD3dat 803; Murphy v [*3]Implicito, 392 NJ Super at 265, 920A2d at 689-690).
Furthermore, the documentary evidence submitted by A-B and Bernard, including theinsurance policy and the certificate of insurance, did not resolve "all factual issues as a matter oflaw, and conclusively dispose[ ] of the plaintiff's claim[s]" (Trade Source v WestchesterWood Works, 290 AD2d 437, 437 [2002] [internal quotation marks omitted]; see 511 W.232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002]). Therefore, theSupreme Court properly denied those branches of the motion of A-B and Bernard which werepursuant to CPLR 3211 (a) (1) to dismiss the amended complaint insofar as asserted againstthem.
The Supreme Court also properly denied that branch of the motion of A-B and Bernardwhich was pursuant to CPLR 3211 (a) (5) to dismiss, as time-barred, the cause of action torecover damages for negligence asserted against them. A-B and Bernard contend that thenegligence cause of action accrued at the time that the allegedly defective coverage was firstprocured, which occurred no later than March 2005. Since the complaint was filed more thanthree years later, they argue that the negligence cause of action was time-barred. The Court ofAppeals, however, has held that the statute of limitations "does not [begin to] run until there is alegal right to relief" (Kronos, Inc. v AVX Corp., 81 NY2d 90, 94 [1993]). In other words,"accrual occurs when the claim becomes enforceable, i.e., when all elements of the tort can betruthfully alleged in a complaint" (id. at 94). Since damages are a necessary element of anegligence cause of action (see Lewiarzv Travco Ins. Co., 82 AD3d 1464, 1466 [2011]; Hesse v Speece, 204 AD2d 514[1994]), such a cause of action is not cognizable until damages are sustained. "[W]here, as here, aclaim against an insurance agent or broker relating to the failure of insurance coverage sounds intort, the injury occurred and the plaintiffs were damaged when coverage was denied"(Lewiarz v Travco Ins. Co., 82 AD3d at 1466; see Lavandier v Landmark Ins. Co., 26 AD3d 264 [2006]; Venditti v Liberty Mut. Ins. Co., 6AD3d 961, 962 [2004]; see alsoBond v Progressive Ins. Co., 82 AD3d 1318 [2011]). Any loss of "an intangible propertyright" that may have been sustained by the plaintiff does not constitute an actual injury(Kronos, Inc. v AVX Corp., 81 NY2d at 95). Since the plaintiff could not haveestablished any harm of a tortious nature until its request for coverage and a defense was deniedby NIC, its negligence cause of action against A-B and Bernard did not accrue until that timeand, thus, its negligence cause of action was not time-barred. To the extent that prior decisions ofthis Court would require a different result (see Atlantic Balloon & Novelty Corp. v American Motorists Ins. Co.,62 AD3d 920, 922 [2009]; Mauro v Niemann Agency, 303 AD2d 468 [2003]), theyshould no longer be followed.
The remaining contention of A-B and Bernard regarding the cause of action alleging breachof the implied covenant of good faith and fair dealing is without merit.
However, NIC's motion for summary judgment dismissing the complaint insofar as assertedagainst it should have been granted. NIC met its prima facie burden on the motion bydemonstrating that it could not be held vicariously liable because A-B and Bernard were not itsagents, nor were they cloaked with apparent authority to act on its behalf (see generallyHallock v State of New York, 64 NY2d at 231; New Jersey Lawyers' Fund for ClientProtection v Stewart Tit. Guar. Co., 203 NJ at 220, 1 A3d at 639-640). Bonded failed to raisea triable issue of fact in opposition to NIC's motion. Mastro, J.P., Skelos, Leventhal and Roman,JJ., concur. [Prior Case History: 27 Misc 3d 1216(A), 2010 NY Slip Op 50776(U).]