Oct 26th, 2020

FKB’s Andrew S. Kowlowitz and Shari Sckolnick obtain summary judgment dismissal of a high exposure Insurance Broker/Agent Errors & Omissions Claim, arising from allegations that an insurance broker failed to procure sufficient insurance, and timely tender a multi-million dollar claim to an insurer

This matter involved a claim that an insurance agent (FKB’s client) failed to secure proper insurance coverage and timely report a claim on behalf of it’s client, BeautyKo (a large Amazon virtual store).  Amazon brought a claim against BeautyKo related to, among other things, inventory discrepancies.  BeautyKo alleged that since the insurance agent failed to procure the correct insurance, and then failed to timely report the claim to its insurer, the insurer disclaimed coverage.  As a result of the lack of insurance coverage, BeautyKo was ultimately forced to pay “out of pocket” millions of dollars to Amazon.  BeautyKo sought reimbursement of those sums paid to Amazon in this errors & omissions lawsuit. 

FKB conducted full discovery.  At the conclusion of discovery, including expert discovery, FKB filed a Motion for Summary Judgment pursuant to CPLR 3212.  On October 26, 2020, Justice Cohen (NY County Supreme), granted FKB’s Motion in its entirely, finding that Plaintiffs failed to establish a claim for negligence arising from the failure to procure proper insurance.  This determination was based largely on FKB’s expert, who opined that the type of insurance coverage Plaintiffs purportedly sought could not have been procured, as it did not exist (i.e., coverage for commercial/breach of contract disputes).  Second, Justice Cohen agreed that Plaintiffs failed to establish proximately caused damages. Next, Justice Cohen found that Plaintiff’s broad request that FKB’s client procure “every insurance possible” was insufficient, as a matter of law, to impose a special duty on the insurance broker.  Similarly, the Court ruled that the allegations asserted were insufficient to  impose a “special relationship” between Plaintiff and the insurance broker, and as such, an additional duty of advisement was created.  Finally, the Court dismissed all claims of intentional wrongdoing.

If you have any questions about this decision, or the defense of insurance brokers/agents or other professionals, please contact Andrew S. Kowlowitz and Shari Sckolnick.