TRUSTED TRANSPORTATION SOLUTIONS, LLC. v. GUARANTEE INSURANCE COMPANY et al

Filing 85

MEMORANDUM OPINION. Signed by Judge Jerome B. Simandle on 6/8/2018. (rtm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

TRUSTED TRANSPORTATION
SOLUTIONS, LLC,
Plaintiff,

HONORABLE JEROME B. SIMANDLE

Civil Action No.
16-7094 (JBS/JS)

v.
GUARANTEE INSURANCE COMPANY,
et al.,

MEMORANDUM OPINION

Defendants.

SIMANDLE, District Judge:
In this action, Plaintiff Trusted Transportation Solutions
(“Plaintiff”) alleges that Defendants Guarantee Insurance
Company (“Guarantee”), Patriot Underwriters, Inc. (“Patriot”),
Douglas Cook (“Cook”),1 Brown & Brown of New Jersey, LLC (“Brown
& Brown”), and John F. Corbett (“Corbett”) misrepresented the
terms of a workers’ compensation insurance policy that Plaintiff
purchased from them. [See generally Docket Item 38.] Pending
before the Court is the motion of Brown & Brown and Corbett
(collectively, the “Brown & Brown Defendants”) to dismiss Counts
One through Six and Eight through Ten of the Amended Complaint
for failure to state a claim upon which relief can be granted,
pursuant to Rule 12(b)(6), Fed. R. Civ. P.2 [Docket Item 46.]

1

As discussed, infra, all claims against Guarantee, Patriot, and
Cook have been stayed in this action.
2 Notably, the Brown & Brown Defendants do not seek to dismiss
Count VII, which alleges “Negligence/Broker Malpractice.”

Plaintiff opposed the motion to dismiss [Docket Item 62], and
the Brown & Brown Defendants filed a reply brief.3 [Docket Item
64.] The motion is decided without oral argument pursuant to
Rule 78, Fed. R. Civ. P. For the reasons discussed below, the
Brown & Brown Defendants’ motion will be granted. The Court
finds as follows:
1.

Factual and Procedural Background.4 Plaintiff

originally filed a Complaint in New Jersey Superior Court
against Guarantee, Patriot, and Cook (collectively, the “Insurer
Defendants”). Shortly thereafter, the Insurer Defendants removed
the Complaint to federal court. [Docket Item 1.] Plaintiffs
subsequently filed, with leave of the Court, an Amended
Complaint, which added the Brown & Brown Defendants as parties,
along with four new claims (Counts Seven through Ten). [Docket
Item 38.]
2.

Counts One through Six of the Amended Complaint assert

claims against “all defendants” for: violation of the New Jersey

3

For purposes of deciding this Rule 12(b)(6) motion, the Court
will disregard Plaintiff’s November 20, 2017 letter and exhibits
attached thereto. [Docket Item 66.] See In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (“As a
general matter, a district court ruling on a motion to dismiss
may not consider matters extraneous to the pleadings.”).
4

For purposes of the pending motion, the Court accepts as true
the facts set forth in the Amended Complaint, documents
explicitly relied upon in the Amended Complaint, and matters of
public record. See Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir.
2014).
2

Consumer Fraud Act (Count One); Common Law Fraud (Count Two);
Breach of Contract (Count Three); violation of the Covenant of
Good Faith and Fair Dealing (Count Four); Breach of Fiduciary
Duty (Count Five); and Conversion (Count Six).5 [Id. at ¶¶ 3880.] In support of these claims, Plaintiff alleges that in or
about March 2015, “defendants’ agents and representatives,
including Mr. Cook,” (an employee of Patriot), offered Plaintiff
the opportunity to participate in a “Large Deductible” Worker’s
Compensation Program. [Id. at ¶¶ 4-7.] Plaintiff was allegedly
told the deductible amount for the program was $250,000, a Loss
Fund would be set up with a contribution of $650,000, and that
no administrative fees would be taken out of the loss fund. [Id.
at ¶¶ 8-11.] Plaintiff signed a Term Sheet and was told the
premium would be $303,228.00. [Id. at ¶¶ 17-18.] Plaintiff
claims that unnamed “defendants” made unauthorized deductions
from the Loss Fund, its premium payment was higher than
represented, and some claims may have been improperly paid. [Id.
at ¶¶ 21-37.] Plaintiff also claims that it did not execute or
receive a 21-page “Program Agreement” referred to on the Term
Sheet until June 13, 2016, which was after Plaintiff informed
the Insurer Defendants it would not provide another $650,000 for
a new Loss Fund around April 3, 2016. [Id. at ¶¶ 29-34.]

5

Notably, and as discussed in more detail below, the Brown &
Brown Defendants are neither specifically named nor referenced
until Count Seven.
3

3.

Counts Seven through Ten assert claims against only

Brown & Brown and Corbett individually and/or jointly and
severally for: Negligence/Broker Malpractice (Count Seven);
Breach of Fiduciary Duty (Count Eight); Breach of Special
Relationship (Count Nine); and Common Law Fraud (Count Ten).
[Id. at ¶¶ 81-106.] Specifically, Plaintiff alleges that Brown &
Brown and Corbett, an employee of Brown & Brown, made
misrepresentations while assisting Plaintiff in obtaining
worker’s compensation insurance and failed to exercise
reasonable care and fully investigate the proposal provided by
the Insurer Defendants. [Id. at ¶¶ 82-89.] Plaintiff also claims
that the Brown & Brown Defendants obtained the Program Agreement
from the Insurer Defendants but failed to provide the Program
Agreement or disclose the terms of the Program Agreement to
Plaintiff. [Id. at ¶ 105(d)-(e).]
4.

On November 27, 2017 a Consent Order was filed in the

Circuit Court of the Second Judicial Circuit, in and for Leon
County, Florida, thereby staying all judicial actions against
Guarantee. [Docket Item 68.] Several months later, Patriot filed
a Voluntary Petition for Chapter 11 Bankruptcy. [Docket Item
77.] Plaintiff’s claims against Guarantee, Patriot, and Cook
were automatically stayed in this matter. [See Docket Item 83 at
4 n.3; see also Docket Items 68 & 71.] The Brown & Brown
Defendants then filed a letter application requesting that the
4

Court stay the entire case [Docket Item 75], which, after
extensive briefing and oral argument, Magistrate Judge Schneider
denied in an 18-page Memorandum Opinion and Order. [Docket Item
83.]
5.

The Brown & Brown Defendants have moved to dismiss all

claims against them, except those alleged in Count Seven, for
failure to state a claim upon which relief can be granted.
[Docket Item 46.] This motion is now fully briefed and ripe for
decision.6
6.

Standard of Review. Pursuant to Rule 8(a)(2), Fed. R.

Civ. P., a complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief.” Specific facts are not required, and “the statement
need only ‘give the defendant fair notice of what the ... claim
is and the grounds upon which it rests.’” Erickson v. Pardus,
551 U.S. 89, 93 (2007) (citations omitted). While a complaint is
not required to contain detailed factual allegations, the
plaintiff must provide the “grounds” of his “entitle[ment] to
relief”, which requires more than mere labels and conclusions.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
7.

A motion to dismiss under Rule 12(b)(6), Fed. R. Civ.

P., may be granted only if, accepting all well-pleaded

6

The Court exercises jurisdiction over this action pursuant to
28 U.S.C. §§ 1332(a), 1441(b).
5

allegations in the complaint as true and viewing them in the
light most favorable to the plaintiff, a court concludes that
the plaintiff failed to set forth fair notice of what the claim
is and the grounds upon which it rests. Id. A complaint will
survive a motion to dismiss if it contains sufficient factual
matter to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). Although a
court must accept as true all factual allegations in a
complaint, that tenet is “inapplicable to legal conclusions,”
and “[a] pleading that offers labels and conclusions or a
formulaic recitation of the elements of a cause of action will
not do.” Id. at 678.
8.

In addition, Rule 9(b), Fed. R. Civ. P., imposes a

heightened pleading standard on fraud-based claims, requiring a
party to “state the circumstances constituting fraud with
particularity.” Klein v. Gen. Nutrition Companies, Inc., 186
F.3d 338, 344 (3d Cir. 1999). To satisfy this standard, the
plaintiff must “plead the date, time, and place of the alleged
fraud, or otherwise inject precision into the allegations by
some alternative means.” In re Riddell Concussion Reduction
Litig., 77 F.Supp.3d 422, 433 (D.N.J. 2015). This requirement is
intended “to place the defendants on notice of the precise
misconduct with which they are charged.” Seville Indus. Mach.

6

Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir.
1984).
9.

Discussion. The Brown & Brown Defendants argue that

all of Plaintiff’s claims asserted against them in the Amended
Complaint, except for those alleged in Count Seven, should be
dismissed for failure to state a claim upon which relief can be
granted. As discussed next, Plaintiff does not address Brown &
Brown’s argument that Counts One through Six do not state a
claim upon which relief can be granted against them, but
otherwise opposes the Brown & Brown Defendants’ motion. For the
following reasons, the Court will grant the Brown & Brown
Defendants’ motion to dismiss.
10.

Claims Against “All Defendants” (Counts One Through

Six). The Brown & Brown Defendants first argue that Counts One
though Six should be dismissed against them because Plaintiff
has not pled any facts as to Brown & Brown or Corbett in any of
those Counts. (Def. Br. at 5-6.) Plaintiff did not respond to
this argument in its opposition papers. The Court deems
Plaintiff’s opposition waived and will dismiss these claims
against the Brown & Brown Defendants, but not the Insurer
Defendants, with prejudice, for the reasons discussed below.
11.

Neither Brown & Brown nor Corbett are mentioned

anywhere in the Amended Complaint until Count Seven. (See Am.
Compl. at ¶¶ 82-83.) In an effort to resolve ambiguity within
7

the Amended Complaint “without the need to resort to motion
practice,” counsel for the Brown & Brown Defendants conferred
with Plaintiff’s attorney who apparently agreed that Counts One
through Six were not directed at the Brown & Brown Defendants
but nonetheless refused to replead the Amended Complaint. (Def.
Br. at 5.) The Brown & Brown Defendants subsequently moved to
dismiss Counts One through Six “as a formality.” (Id.)
12.

The Court initially notes that, notwithstanding the

fact that Counts One though Six reference “all defendants,” none
of the allegations in those counts appear to be directed at the
Brown & Brown Defendants who, as noted supra, are named for the
first time in the Amended Complaint in Paragraphs 82 and 83 of
Count Seven. In fact, Counts One through Six of the Amended
Complaint are essentially identical to Counts One through Six of
the original Complaint, which Plaintiff filed against only the
Insurer Defendants and before the Brown & Brown Defendants were
added as a party in this action. [Compare Docket Item 1-1 at ¶¶
1-80, with Docket Item 38 at ¶¶ 1-80.]
13.

More importantly, in its opposition papers Plaintiff

did not dispute or even address any of the Brown & Brown
Defendants’ arguments with respect to dismissal of Counts One
through Six. Plaintiff’s opposition to dismissal of these counts
is, therefore, deemed waived. See Anspach v. City of Phila., 503
F.3d 256, 259 n.1 (3d Cir. 2007). For all of these reasons, the
8

Court will dismiss Counts One through Six against the Brown &
Brown Defendants with prejudice.7
14.

Breach of Fiduciary Duty (Count Eight). The Brown &

Brown Defendants next argue that Count Eight should be dismissed
because, under New Jersey law, there is no separate cause of
action for “breach of fiduciary duty” against an insurance
broker; rather, such claims are incorporated into the State’s
“broker negligence” cause of action. (Def. Br. at 6-7.)
Plaintiff, in turn, cites three New Jersey cases, discussed in
turn below, which refer generally to a “fiduciary duty of care”
owed by insurance brokers to insureds, and argues “none of these
courts dismissed a claim for breach of fiduciary duty as being
redundant.” (Pl. Opp. Br. at 6-7). The Court finds that New
Jersey law does not recognize a separate cause of action for
“breach of fiduciary duty” and will dismiss Count Eight.
15.

In President v. Jenkins, an insured party alleged that

an insurance broker was “professionally negligent in breaching
its duty to procure insurance adequate to meet his needs.” 814
A.2d 1173, 1185 (N.J. Super. Ct. App. Div. 2003), aff’d in part
and rev’d in part, 180 N.J. 550 (2004). Within this context, the
Appellate Division of the New Jersey Superior Court observed
that, “[w]ithout question, insurance brokers and agents owe a

7

Counts One through Six remain against the Insurer Defendants in
the event the stay is eventually lifted against them.
9

fiduciary duty of care to insureds.” President, 814 A.2d at 1185
(emphasis added). The Court then explained that a broker may be
liable for breach of that duty: “(1) if the broker neglects to
procure the insurance, (2) the policy is void, (3) if the policy
is materially deficient, or (4) the policy does not provide
coverage he undertook to supply.” Id. (internal quotation marks
and citations omitted). Ultimately, the Court held that the
insurance broker did not breach any legal duty owed to the
insured because “there was no evidence from which a jury could
reasonably conclude that the gap in [the insured’s] insurance
coverage for claims arising from the events [at issue] was
attributable to [the insurance broker’s] failure to exercise the
requisite skill and diligence.” Id. at 1186. In other words, the
President Court found that there was no evidence from which a
reasonable jury could conclude that the insurance broker had
committed broker negligence.
16.

New Jersey federal courts have twice looked to

President for guidance in applying the duties owed by an
insurance broker to an insured. In Knaus v. Scottrade, Inc.,
Judge Salas cited President for the proposition that “[b]roker
negligence is recognized as a claim in the insurance context.”
2016 WL 1222268, at *3 (D.N.J. Mar. 28, 2016). In Moreira v.
Peixoto, 2009 WL 4609842, at *4 (D.N.J. Nov. 25, 2009), Judge
Greenaway reasoned that “[o]n the issue of broker negligence,
10

[President] is instructive.” Both cases cite President in the
context of a broker negligence claim, and neither mention any
separate cause of action for “breach of fiduciary duty” against
an insurance broker.
17.

Notwithstanding that these three cases refer generally

to a “fiduciary duty of care” owed by insurance brokers to
insureds, Plaintiff provides no support for the notion that,
under New Jersey law, there is a separate cause of action for
“breach of fiduciary duty” against an insurance broker. Instead,
as the cases above strongly indicate, the sole duty of care owed
by an insurance broker to an insured is to refrain from engaging
in conduct giving rise to a claim for broker malpractice. To the
extent an insurance broker owes a “fiduciary duty” to an
insured, such duty arises only in the context of a broker
malpractice and/or negligence claim. See Triarsi v. BSC Group
Serv., LLC, 27 A.3d 202, 208 (N.J. Super. Ct. App. Div. 2011)
(analyzing count alleging breach of fiduciary duty and another
alleging broker malpractice and finding that “as a matter of
law, there is actually a single duty and it is essentially one
sounding in negligence.”). In other words, a broker’s breach of
fiduciary duty amounts to a breach of a standard of professional
performance owed by the broker to its client, actionable as
professional malpractice. Plaintiff brought such a claim in
Count Seven, which the Brown & Brown Defendants did not move to
11

dismiss, and which will remain in the case for Plaintiff to
pursue. Count Eight, on the other hand, will be dismissed with
prejudice for the reasons explained above.
18.

Breach of Special Relationship (Count Nine). The Brown

& Brown Defendants also argue that Count Nine should be
dismissed because Plaintiff fails to allege any facts in support
of its claim that a “special relationship” existed between the
parties beyond the typical agent-insured relationship. (Def. Br.
at 7-9). Plaintiff counters that this count should not be
dismissed due to pleading deficiencies “[g]iven the minimal
requirements of notice pleading, and since the amended complaint
includes adequate notice of the claim.” (Pl. Opp. Br. at 7.) The
Court finds that Count Nine does not adequately allege a
“special relationship” between Plaintiff and the Brown & Brown
Defendants beyond the typical broker-client relationship, and
will dismiss this Count without prejudice.
19.

To be sure, New Jersey law recognizes certain

circumstances where an insurance broker assumes duties beyond
those typically associated with the agent-insured relationship
(i.e., a “special relationship”). Triarsi, 27 A.3d at 209
(citing Glezerman v. Columbian Mut. Life Ins. Co., 944 F.2d 146,
150-51 (3d Cir. 1991)). In these circumstances, an insurance
broker may be liable for breach of a “special relationship”
where the broker “assumed duties in addition to those normally
12

associated with the agent-insurance relationship by conduct that
invited plaintiff’s detrimental reliance.” Triarsi, 27 A.3d at
210 (internal quotation marks and citation omitted); see also
Glezerman, 944 F.2d at 150 (“[T]he client must establish
‘something more’ than a broker-client relationship in order to
impose a heightened standard of care on a broker.”). “This claim
does not require proof of a deviation from a professional
standard of care, but instead depends on proof of the parties’
conduct.” Triarsi, 27 A.3d at 210 (internal quotation marks and
citations omitted).
20.

Here, Count Nine of the Amended Complaint contains

three short paragraphs, which read, in their entirety:
96.

Plaintiff repeats the allegations contained in
the previous paragraphs.

97.

Brown & Brown and Corbett had a special
relationship with plaintiff since they assumed
duties in addition to those normally associated
with a broker-insured relationship.

98.

Brown & Brown and Corbett breached the special
relationship with plaintiff, and as a result,
plaintiff suffered and continues to suffer
damages.

(Am. Compl.) These allegations amount to a mere restatement of
the elements of a breach of special relationship claim, which is
not entitled to the assumption of truth at the motion to dismiss
stage and would, alone, plainly be insufficient to state a claim
upon which relief can be granted. See Burtch v. Milberg Factors,

13

Inc., 662 F.3d 212, 224 (3d Cir. 2011); see also Connelly v.
Lane Constr. Corp., 809 F.3d 780, 786-87 (3d Cir. 2016).
21.

Plaintiff argues that other portions of the Amended

Complaint, which are incorporated by reference in Count Nine,
provide the factual basis for its breach of special relationship
claim. (Pl. Opp. Br. at 9.) Plaintiff cites specific allegations
in the Amended Complaint that the Brown & Brown Defendants:


“assisted in obtaining workers’ compensation
insurance in 2015” (¶ 84);



“had assisted plaintiff in obtaining workers’
compensation insurance in prior years” (¶ 85);
“made representations to plaintiff regarding a
proposal for workers’ compensation insurance from
[the Insurer Defendants]” (¶ 86);





“failed to fully investigate the workers’
compensation proposal provided by the [Insurer
Defendants]” (¶ 89); and



“obtained the Program Agreement from [the Insurer
Defendants], [but] failed to provide the Program
Agreement to plaintiff [and] . . . obtained the
Program Agreement from [the Insurer Defendants],
but failed to disclose the terms of the Program
Agreement to plaintiff” (¶ 105)

(Pl. Opp. Br. at 9.) None of these allegations, even if assumed
to be true, demonstrate “something more” than a typical brokerclient relationship. Glezerman, 944 F.2d at 150. In fact, this
is exactly the type of conduct (or misconduct) one might assume
would take place between an insurance broker and her client. On
these facts, Plaintiff cannot sustain a claim for “breach of a
special relationship.” Count Nine will be dismissed.
14

22.

Because it is not clear that amendment would be futile

in its ability to address the above deficiencies of the present
pleading, the Court will dismiss Count Nine without prejudice.
Plaintiff may file a motion for leave to file a Second Amended
Complaint that plausibly alleges that its relationship with the
Brown & Brown Defendants amounted to “something more” than a
typical broker-client relationship, and that the Brown & Brown
Defendants somehow breached its heightened duty.
23.

Common Law Fraud (Count Ten). Finally, the Brown &

Brown Defendants argue that Count Ten fails to state a claim
upon which relief can be granted because it does not satisfy the
heightened pleading requirements of Rule 9(b), Fed. R. Civ. P.
(Def. Br. at 9-10.) Specifically, the Brown & Brown Defendants
argue Count Ten “merely rehashes the same alleged
misrepresentations Defendant Douglas Cook [of Patriot]
purportedly made to Trusted Transportation at a March 2015
meeting.” (Id. at 9.) Plaintiff argues that the Brown & Brown
Defendants’ brief “misrepresents the allegations in the
complaint,” and that Count Ten satisfies Rule 9(b). The Court
finds Count Ten does not state with sufficient particularity the
circumstances constituting fraud by the Brown & Brown Defendants
in this case, as required under Rule 9(b).
24.

In Count Ten, Plaintiff asserts generally that “Brown

& Brown and Corbett misrepresented key facts about the workers’
15

compensation policy being offered to plaintiff” (Am. Compl. at ¶
100), which “include, but are not limited to”:
a.

That the funding of the Loss Fund with
$650,000.00 was a one time contribution.
Plaintiff was told that at the end of the year,
amounts that had been paid out would have to be
replenished.

b.

That the money in the Loss Fund would be used
only for the payment of claims, not
administrative expenses or claims expenses.

c.

That the premium for the insurance program would
be based upon a rate of $5.32 per $100.00. [sic]
of payroll.

d.

After Brown & Brown and Corbett obtained the
Program Agreement from [the Insurer Defendants],
they failed to provide the Program Agreement to
plaintiff.

e.

After Brown & Brown and Corbett obtained the
Program Agreement from [the Insurer Defendants],
they failed to disclose the terms of the Program
Agreement to plaintiff.

(Id. at ¶ 105.)
25.

To state a claim for fraud under New Jersey law, a

plaintiff must allege: (1) a material misrepresentation of fact;
(2) knowledge or belief by the defendant of its falsity; (3) an
intention that the other person rely on it; (4) reasonable
reliance thereon by the other person; and (5) resulting damage.
Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007)
(citing Gennari v. Weichert Co. Realtors, 148 N.J. 582 (1997)).
Further, a plaintiff alleging fraud must satisfy the heightened
pleading requirement of Rule 9(b), which requires the plaintiff
16

to “state with particularity the circumstances constituting
fraud.” Rule 9(b), Fed. R. Civ. P (emphasis added). The level of
particularity required is sufficient details to put defendants
on notice of the “precise misconduct with which they are
charged.” Seville Indus. Machinery Corp., 742 F.2d at 791. This
requires a plaintiff to “plead the date, time, and place of the
alleged fraud, or otherwise inject precision into the
allegations by some alternative means.” In re Riddell Concussion
Reduction Litig., 77 F.Supp.3d at 433.
26.

Here, Plaintiff’s allegations clearly lack the

particularity required by Rule 9(b). First, Plaintiff does not
identify who, besides Corbett, at Brown & Brown made the alleged
misrepresentations or omissions to Plaintiff, and how these
alleged misrepresentations or omissions are different from those
alleged against Cook (of Patriot) in Paragraphs 46(a)-(c) of the
Amended Complaint. Second, Plaintiff does not specify the date
of the alleged fraud. Third, Plaintiff does not allege how, if
at all, any of the alleged misrepresentations or omissions were
intended to induce Plaintiff to act. Finally, Plaintiff does not
detail its alleged damages. Simply, Plaintiff has fallen well
short of meeting Rule 9(b)’s heightened pleading requirement.
27.

For these reasons, the Court will grant Defendants’

motion to dismiss Count Ten of the Amended Complaint. As with
Count Nine, the Court will dismiss Count Ten without prejudice.
17

Plaintiff may file a motion for leave to file a Second Amended
Complaint that pleads with more particularity the “date, time,
and place of the alleged fraud, or otherwise inject precision
into the allegations by some alternative means.” In re Riddell
Concussion Reduction Litig., 77 F.Supp.3d at 433.
28.

Conclusion. For the foregoing reasons, the Court will

grant the Brown & Brown Defendants’ motion to dismiss. Counts
One through Six and Eight will be dismissed with prejudice,
while Counts Nine and Ten will be dismissed without prejudice.
Plaintiff may file a motion for leave to amend the Amended
Complaint to address the deficiencies noted herein in Counts
Nine and Ten only, within thirty (30) days from the entry of
this Memorandum Opinion and Order upon the docket. An
accompanying Order shall be entered.

June 8, 2018
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

18