FKB's Mike Furman and Lynn Dukette win dismissal of third-party professional malpractice (E&O) claims against an established New Jersey wholesale insurance brokerage firm in the United States District Court for the Eastern District of New York. 2/8/10

The third-party claims against FKB's client, a wholesale insurance brokerage in New Jersey, arose from a substantial fire loss that destroyed a residential apartment building in Brooklyn, New York. FKB's client was the wholesale insurance broker who placed the insurance policy at issue in the first party action.

In the first party declaratory judgment action, the insurer denied coverage for liability claims on grounds of late notice and the applicability of the "independent contractors" exclusion in the policy, as the massive explosion which caused the underlying damage apparently stemmed from the actions and/or omissions of an independent contractor.

At the conclusion of discovery, all parties moved before U.S. District Court Judge Eric Vitaliano for summary judgment.

While the Court denied the insurer's claims of late notice as to the bodily injury claims (noting that the insurer had "imputed knowledge" of the explosion at the subject property for more than six months before it disclaimed coverage for the bodily injury claims), the Court noted that FKB's client, the wholesale broker, was the insurers' agent and vested with authority to receive notice of an occurrence. The Court pointed out that FKB's client June 16, 2004 receipt of notice of the property damage claim was sufficient for the property owner to satisfy their obligation to provide notice of the "occurrence" ("loss," "explosion" and "fire erupted in the basement") to the liability insurer. The Court refuted the insurers' position that notice to one insurer (the property insurer) does not constitute notice to all insurers (including the liability insurer), and found that notice of the fire was provided in a timely manner to liability insurer.

With regard to the FKB's client, the Court dismissed the claims arising from the bodily injury claims, since the property owner sought only one remedy in their third-party complaint against the wholesale broker – namely that a declaration that the broker was jointly and severely liable for damages, costs, etc. arising out of the liability insurers' assertion that it was not timely advised of the fire.

As to the property claims, the liability insurers' motion was granted on the basis of the applicability of the "independent contractor" exclusion, mooting the third-party claims against FKB's client.

FKB associate Lynn Dukette assisted in the drafting of the winning summary judgment motion papers.

Mike Furman's bio / email | Lynn Dukette's bio / email

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