TORUS U.S. SERVICES, INC. et al v. HYBRID INSURANCE AGENCY, LLC et al
Filing
20
OPINION. Signed by Judge Kevin McNulty on 10/22/15. (cm )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
TORUS U.S. SERVICES, INC.,
TORUS SPECIALTY INSURANCE
COMPANY and TORUS NATIONAL
INSURANCE COMPANY,
Civ. No. 14-01630 (KM)
OPINION
Plaintiffs,
V.
HYBRID INSURANCE AGENCY,
LLC d/b/a HYBRID INSURANCE
GROUP and EARL 0. O’GARRO,
JR.,
Defendants.
MCNULTY, U.S.D.J.:
This matter comes before the Court on the unopposed motion of the
plaintiffs, Torus U.S. Services, Inc. (“Torus US”), Torus Specialty Insurance
Company (“Torus Specialty”), and Torus National Insurance Company (“Torus
National”) for default judgment against the defendants, Hybrid Insurance
Agency, LLC d/b/a Hybrid Insurance Group (“Hybrid”) and Earl 0. O’Garro,
Jr., pursuant to FED. 1?. Civ. P. 55(b)(2). The complaint asserts three counts:
negligence (Count I); breach of contract (Count II); and conversion (Count III).
For the reasons set forth below, I will enter a default judgment against Hybrid
only—not O’Garro—as to the claim of breach of contract (Count II). The motion
is otherwise denied.
I. BACKGROUND
Plaintiff Torus US is a servicing agent for insurance companies with its
principal place of business and place of incorporation in New Jersey. (Dkt. No.
1
¶J
5, 7) Plaintiff Torus Specialty, a U.S. excess and surplus line insurer
1
serviced by Torus US, is domiciled in Delaware and maintains its principal
place of business in New Jersey. (Dkt. No. 1
¶J
5, 8) Plaintiff Torus National, a
U.S. admitted markets insurer serviced by Torus US, is domiciled in Delaware
and has its principal place of business in New Jersey. (Dkt. No. 1
¶J
5, 9)
Defendant Hybrid, an insurance broker, is a Connecticut limited liability
company (“LLC”) with its principal place of business in Connecticut.’ (Dkt. No.
1
¶J
5, 10) Defendant O’Garro, the President and CEO of Hybrid, is a
Connecticut resident. (Dkt. No. 1
¶J
5, 11)
On or about January 18, 2012, Torus US, as servicing agent for Torus
Specialty and Torus National, entered into a contract with Hybrid (the “Broker
Agreement”). (Dkt. No. 1
US
...
¶
12) The agreement stated that it was “between Torus
and the Broker, identified below,” Hybrid. (Dkt. No. 1-3 p. 1) O’Garro
signed on behalf of Hybrid. (Dkt. No. 1-3 p. 8) Under the agreement, Hybrid
was permitted to submit accounts or risks to Torus US for the purpose of
placing and procuring insurance coverage with either Torus Specialty or Torus
National. (Dkt. No. 1
¶
13) The agreement required that Hybrid “hold all
premium funds” in a fiduciary account and “remit to Torus US all premiums”
2
Hybrid received, less certain commissions to which Hybrid was entitled. (Dkt.
No. 1
¶J
14-17; Dkt. No. 1-3
§
IV, III.B) The agreement also provided that in
For purposes of diversity jurisdiction under 28 U.S.C. § 1332(a), the citizenship
of an LLC depends on that of its members. Zambelli Fireworks Mfg. Co. v. Wood, 592
F.3d 412, 4 19-20 (3d Cir. 2010). The complaint generally pleads that diversity
jurisdiction is present. It does not, in so many words, allege the citizenship of each of
the members of the LLC. The United States Court of Appeals for the Third Circuit
recently held that a complaint need not specifically allege the citizenship of the
members of a defendant LLC if, after reasonable investigation, the plaintiff is unable to
do so. Lincoln Ben. L!fe Co. v. AEILfe, LLC, No. 14-2660, 2015 WL 5131423, at *6 (3d
Cir. Sept. 2, 2015).
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Section III.B of the Broker Agreement states:
Broker guarantees the full payment due Torus Specialty or Torus
National (whichever applies) of all premiums, including any and all
deposit, earned, extension and adjustable premiums, fees,
surcharges, assessments plus any applicable taxes, less
commission, on every insurance contract bound or written for
Broker pursuant to this Agreement, whether or not collected by
Broker.
2
the event of an enforcement proceeding to collect amounts due under the
agreement, Hybrid would pay “all costs incident thereto, including reasonable
attorney’s fees.” (Dkt. No. 1-3
§
III.B) Under the agreement, Hybrid was
required to remain licensed in Connecticut, and the agreement provided for
automatic termination “if any public authority cancels or declines to renew
Broker’s license or certificate of authority.” (Dkt. No. 1
¶
19; Dkt. No. 1-3
§
II.A, X. 1) The Broker Agreement also provided that it would be governed by the
laws of New York. (Dkt. No. 1-3
§
3
XIV.D)
Around the same time, Torus US entered into a second agreement (the
“Portal Agreement”) with Hybrid, again as servicing agent for Torus Specialty
and Torus National. (Dkt. No. 1
¶
24) Again, the agreement stated that it was
between Torus US and Hybrid, and O’Garro signed on behalf of Hybrid. (Dkt.
No. 1 pp. 1, 6) The agreement authorized Hybrid to utilize an online insurance
portal “to quote, rate, bind, submit, invoice, and issue insurance policies
through Torus Specialty and Torus National.” (Dkt. No. 11 p. 4; Dkt. No. 1-2 §
I) Under the agreement, Hybrid agreed that the information it provided
plaintiffs through the portal would be accurate and that it would not engage in
behavior that would “violate any applicable law or regulation.” (Dkt. No. 1 ¶j
27-28; Dkt. No. 1-2 § VI.A) The Portal Agreement incorporated the terms and
conditions of the Broker Agreement “except as expressly modified” by the Portal
The Broker Agreement contained an alternative dispute resolution provision
stating that “all disputes, controversies and claims of any kind and nature between
shall be resolved
the parties arising out of or in any way related to this Agreement
exclusively by” negotiation, mediation, or arbitration. (Dkt. No. 1-3 § XII) The Broker
Agreement is governed by New York law, and the Court of Appeals for the Second
Circuit has held that a party waives its right to arbitration by defaulting. See Baker &
Taylor, Inc. v. AlphaCraze.Com Corp., 602 F.3d 486, 492 (2d Cir. 2010)(defendant that
“has not appeared or sought to defend itself in any way, never moved to compel
has waived its right to arbitrate”). Although the
arbitration, but instead defaulted
Court of Appeals for the Third Circuit has not addressed this specific issue, district
court authority within this Circuit is in accord. See Eastern Constr. & Elec., Inc. v.
Universe Technologies, Inc., No. 10-1238, 2011 WL 53185, at *7 & n.5 (D.N.J. Jan. 6,
2011) (entering default judgment despite an arbitration provision because defendant
failed to assert the right to arbitrate) (citing Nino v. Jewelry Exch., Inc., 609 F.3d 191,
214 (3d Cir. 2010) (defendant waived the right to arbitrate because he failed to assert it
in a timely manner and instead engaged in litigation behavior)).
3
...
...
3
4
Agreement. (Dkt. No. 1
¶
25; Dkt. No. 1-2 P. 1) The agreement also obligated
Hybrid to indemnify the plaintiffs for claims arising from its use of the portal,
“including reasonable attorney’s fees.” (Dkt. No. 1
¶
29; Dkt. No. 1-2
§
VI.I) The
Portal Agreement provided that it would automatically terminate in the event
that the Broker Agreement was terminated. (Dkt. No. 1
¶
20; Dkt. No. 1-2 p. 1)
This agreement provided that it would be governed by the laws of New Jersey.
(Dkt. No. 1-2
§
VI.K)
On November 14, 2013, the Connecticut Insurance Department revoked
Hybrid’s insurance licenses, which automatically terminated the Broker
agreement, and in turn the Portal Agreement. (Dkt. No. 1
¶J
2 1-23, 31; Dkt.
No. 1-4) By letter dated November 25, 2013, the plaintiffs notified Hybrid of the
termination of the agreements. (Dkt. No. 1
¶
23; Dkt. No. 1-5)
The plaintiffs allege that since January 2012, the defendants have
received and retained $265,836 in premiums for insurance policies issued by
Torus Specialty and Torus National. (Dkt. No. 1
¶
32) The “Defendants also
have failed to provide an accounting sufficient for Plaintiffs to identify and
5
confirm which of the insureds have paid insurance premiums to Defendants.”
(Dkt. No. 1
¶
35) The plaintiffs request that the Court enter default judgment
as to liability and order an inquest to assess the amount of damages to which
they are entitled. (Dkt. No. 11 pp. 10-11)
II. DISCUSSION
A. Legal Standard and Prerequisites for Default Judgment
“[TJhe entry of a default judgment is left primarily to the discretion of the
district court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citing
The Portal Agreement refers to the “Producer Agreement or Excess and Surplus
Lines Agreement.” As the plaintiffs’ brief explains, this is intended to refer to the
Broker Agreement. (See Dkt. No. lip. 4 n.4.)
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5
Under the terms of the Broker Agreement, the plaintiffs are entitled to
premiums for “every insurance contract bound or written for Broker pursuant to this
Agreement, whether or not collected by Broker.” (Dkt. No. 1-3 Section ITI.B)
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Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951)).
Because the entry of a default judgment prevents the resolution of claims on
the merits, “this court does not favor entry of defaults or default judgments.”
United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984).
Thus, before entering default judgment, the Court must determine whether the
“unchallenged facts constitute a legitimate cause of action” so that default
judgment would be permissible. DirecTV, Inc. v. Asher, No. 03-1969, 2006 WL
680533, at *1 (D.N.J. Mar. 14, 2006) (citing Wright, Miller, Kane, 1OA Federal
Practice and Procedure: Civil 3d
§ 2688, at 58—59, 63).
“[D]efendants are deemed to have admitted the factual allegations of the
Complaint by virtue of their default, except those factual allegations related to
*2
the amount of damages.” Doe v. Simone, No. 12-5825, 2013 WL 3772532, at
(D.N.J. July 17, 2013). While “courts must accept the plaintiffs well-pleaded
factual allegations as true,” they “need not accept the plaintiffs factual
allegations regarding damages as true.” Id. (citing Chanel Inc. v. Gordashevsky,
558 F.Supp.2d 532, 536 (D.N.J. 2008)). Moreover, if a court finds support to be
lacking, it may order or permit a plaintiff seeking default judgment to provide
additional evidence in support of the allegations. Id.
Before a court may enter default judgment against a defendant, the
plaintiff must have properly served the summons and complaint, and the
defendant must have failed to file an answer or otherwise respond to the
complaint within the time provided by the Federal Rules, which is ordinarily
twenty-one days. See Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 18—
19 (3d Cir. 1985); FED. R. Civ. P. 12(a).
The complaint, alleging negligence, breach of contract, and conversion
arising from violations of the Broker Agreement and Portal Agreement, was filed
on March 13, 2014, and the clerk issued a summons. (Dkt. No. 1). The
plaintiffs have filed proofs of proper service of the summons and complaint
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upon Hybrid and O’Garro on May 20, 2014.6 (Dkt. Nos. 4, 5) Under FED. R. CIV.
P. 12(a)(1), the defendants had twenty-one days to respond to the complaint.
Defendants’ time to respond expired, and they did not answer or otherwise
respond to the complaint. At the plaintiffs’ request, the Clerk of Court entered
default against the defendants on September 23, 2014. On December 23, 2014,
the plaintiffs filed this motion for default judgment. (Dkt. No. 11) Again, there
has been no response.
Accordingly, I am satisfied that the prerequisites to a motion for default
judgment are met. See Gold Kist, 756 F.2d at 18—19.
B. Analysis
In deciding whether to enter a default judgment, a court must consider
the following three factors: (1) whether the party subject to default has a
meritorious defense, (2) the prejudice suffered by the party seeking default, and
(3) the culpability of the party subject to default. Doug Brady, Inc. v. N.J. Bldg.
Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco
Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)). Those factors, considered
in light of the record of this case, weigh in favor of entry of a default judgment
against Hybrid as to the breach of contract claim (Count II). I do not see any
sufficient basis for entering judgment against O’Garro, who was not personally
a contracting party. I find that the plaintiffs’ tort claims, negligence and
conversion (Counts I and III), would be barred by the “economic loss doctrine.”
I therefore decline to enter a default judgment as to either defendant on those
counts.
O’Garro was served personally and as President and CEO of Hybrid. Service of a
corporate entity, partnership or “other unincorporated association that is subject to
suit under a common name” may be made by delivering a copy of the summons and
complaint to “an officer, a managing or general agent, or any other agent authorized
by appointment or by law to receive service of process.” FED. R. Civ. P. 4(h) (1).
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6
1. Breach of Contract (Count II)
I first consider breach of contract, the claim most clearly applicable to
the facts. As to the first factor—whether the defendants have a meritorious
defense to plaintiffs’ claims—I am disadvantaged of course by the lack of any
submission by the defendants. However, based on my independent review of
the record before me, I see no suggestion that the plaintiffs’ breach of contract
claim is legally flawed as to Hybrid, the other party to the contracts at issue.
See Doe, 2013 WL 3772532, at *5 Accepting the factual allegations as true, I
find that the plaintiffs have properly pled a cause of action for breach of
7
contract against Hybrid under both New Jersey and New York law. (Section
B. 1 .a) I address the question of O’Garro’s liability separately. (Section B. 1 .b)
a. Liability of Hybrid for Breach of Contract
To establish a breach of contract claim under New Jersey law, a plaintiff
must allege “(1) a contract between the parties; (2) a breach of that contract; (3)
damages flowing therefrom; and (4) that the party stating the claim performed
its own contractual obligations.” Frederico v. Home Depot, 507 F.3d 188, 203
(3d Cir. 2007) (internal citation omitted). New York law is similar. See Swan
Media Group, Inc. v. Staub, 841 F. Supp. 2d 804, 807 (S.D.N.Y. 2012)(”[T]he
elements of a breach of contract claim are (1) the existence of an agreement; (2)
adequate performance of the contract by the plaintiff; (3) breach of contract by
the defendant; and (4) damages.”) (citations omitted).
I am satisfied that the plaintiffs have set forth a legally sufficient claim of
breach of contract against Hybrid. I cannot, from the materials before me,
discern any meritorious defense. The plaintiffs have alleged specific facts
showing that Torus US and Hybrid entered into two valid, enforceable
The Broker Agreement is governed by New York law, and the Portal Agreement
by New Jersey law. (Dkt. No. 1-3 § XIV.D; Dkt. No. 1-2 § VI.K) However, the alleged
causes of action are substantively identical under the laws of both states.
7
contracts: the Broker Agreement and the Portal Agreement. They plausibly
allege that Hybrid breached its explicit contractual obligations by failing to hold
funds in a fiduciary capacity and to remit the insurance premiums in
accordance with the agreements. (Dkt. No. 1
¶J 34-36) The plaintiffs allege that
they “fully performed” their own contractual duties, and I have no facts before
me to the contrary. (Dkt. No. 1
¶ 50) The plaintiffs allege that they were
financially damaged as a result of Hybrid’s breach and that they are entitled to
receive an estimated $265,836, plus interest, for insurance premiums that
Hybrid collected but did not pass along to Torus US (Dkt. No. 1
¶J 52-54) That
theory of damages is straightforward and uncontroversial. The plaintiffs also
claim costs and reasonable attorneys’ fees under the contracts, which both
provide for such awards. (Dkt. No. 1
¶ 54)
The second and third factors also weigh in favor of default judgment as
to Hybrid. Hybrid was properly served on May 20, 2014, well over a year ago,
but has failed to appear and defend itself in any manner. It is clear that the
plaintiffs have been prejudiced by this dereliction because it has “prevented
[plaintiffs] from prosecuting [their] case, engaging in discovery, and seeking
relief in the normal fashion.” Teamsters Pension Fund of Philadelphia & Vicinity
v. Am. Helper, Inc., No. 11-624, 2011 WL 4729023, at *4 (D.N.J. Oct. 5, 2011).
Absent evidence to the contrary, a properly served defendant’s failure to answer
is sufficient to establish its culpability for the default. Id. In this case, there is
nothing before the Court to show that Hybrid’s “failure to file an answer was
not willfully negligent.” Id. (citing Prudential Ins. Co. of America v. Taylor, No.
08-2 108, 2009 WL 536403 at *1 (D.N.J. February 27, 2009)(finding that when
there is nothing before the court to suggest anything other than that the
defendant’s willful negligence caused the defendant to fail to file an answer, the
defendant’s conduct is culpable and warrants default judgment)).
The only possible conclusion based on the record before me is that
Hybrid is liable for breach of contract. Accordingly, I find that the entry of a
default judgment against Hybrid as to Count II is appropriate.
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b. Liability of O’Garro for Breach of Contract
As to O’Garro’s liability in his personal capacity, the picture is different.
8
The plaintiffs have failed to allege a plausible claim of breach of contract
against O’Garro himself. Both the Broker Agreement and Portal Agreement
state clearly that the contracting parties are Torus US (as servicing agent for
Torus Specialty and Torus National) and Hybrid. True, O’Garro signed the
contracts, but he did so on Hybrid’s behalf as its President and CEO. That,
without more, does not render him personally liable under the contract. See
Irwin Katz & Assoc., Inc., v. Concepts in Health, Inc., No. 13-12 17, 2014 WL
6471486, at *14 (D.N.J. Nov. 19, 2014)(”[T]he mere fact that an individual
executed a contract for the purpose of binding a corporation does not also
render that individual liable.”) (internal quotations and citation omitted); cf
N.J.S.A. 42:2C-30 (stating that the debts of an LLC are solely the obligation of
the LLC and not of any members, managers or employees); Rivera v. Lincoln
Park Care Center, LLC, No. 12-7432, 2014 WL 29029, at *6 (D.N.J. Jan. 2,
20 14)(”The primary purpose of forming a corporation, such as a limited liability
company (‘LLC’), is to insulate its members from the liabilities that accompany
a business enterprise.”) (citations omitted). To the contrary, O’Garro is shielded
from liability unless the plaintiffs allege facts sufficient to pierce the corporate
veil of Hybrid—which requires a significant showing. See Irwin Katz & Assoc.,
2014 WL 6471489 at *14; Rivera, 2014 WL 29029, at *6 (“Courts are generally
unwilling to pierce the corporate veil
...
unless the corporation is being used to
defeat the ends of justice... .“) (citation omitted). The plaintiffs, far from making
9
It is unclear whether the plaintiffs truly intend to assert claims against O’Garro.
Neither in the complaint nor in this motion do they assert any basis for his personal
liability. They merely name him as a defendant and assert their positions against
“defendants” (plural) throughout their complaint and brief. I therefore address the
issue, but only briefly.
8
Under New Jersey law, which governs the Portal Agreement, a court has two
options when determining the law to apply regarding piercing the veil of an LLC. First,
the New Jersey Limited Liability Company Act instructs application of the law of the
state under which the LLC was formed. See N.J.S.A. 42:2C-57(a)(2). Here, that is
9
such a showing, have not even made any pertinent allegations. A default
judgment against O’Garro, a non-contracting party, for breach of contract is
therefore inappropriate.
2. Tort Claims (Counts I and III)
The plaintiffs also allege two causes of action based in tort: negligence
(Count I) and conversion (Count III). Because these tort claims flow directly
from the breach of contract, they are barred by the economic loss doctrine.
To establish a claim of negligence under New Jersey law, a plaintiff must
allege “a duty of care owed by the defendant to the plaintiff; (2) a breach of that
duty; (3) proximate cause; and (4) actual damages.” In re Paulsboro, No. 127648, 2013 WL 5530047, at *2 (D.N.J. October 4, 2013) (citation omitted). New
York law is similar. See Caronia v. Philip Morris USA, Inc., 715 F. 3d 417, 428
(2d Cir. 2013) (plaintiff must allege “(1) the existence of a duty on the
defendant’s part as to plaintiff; (2) a breach of this duty; and (3) injury to the
plaintiff as a result thereof’) (citation omitted).
Connecticut. Second, courts have applied the law of “the state that has the most
significant connections with the parties and the transaction.” Mark IV Transp. &
Logistics, Inc. v. Lighting Logistics, LLC, No. 09-6480, 2014 WL 70703088, at *3 (D.N.J.
Dec. 15, 2014) (citations omitted). Here, the obvious candidates are Connecticut,
where Hybrid was formed and based, and New Jersey, where the plaintiffs maintain
their primary place of business and chose to bring suit. I need not decide which state’s
law applies because they are substantively the same, and under either, the plaintiffs
have not established what is required to pierce the corporate veil. See North American
Steel Connection, Inc. v. Watson Metal Products Corp., 515 Fed. Appx 176, 179 (3d Cir.
2013)(to pierce the veil in New Jersey a plaintiff must demonstrate (1) “such unity of
interest and ownership that the separate personalities of the corporation and the
individual no longer exist” and (2) that “adherence to the fiction of separate corporate
existence would sanction a fraud or promote injustice”) (internal quotations and
citations omitted); In re Carrano, 50 B.R. 540, 555-556 (D. Conn. 2015)(in
Connecticut, “[c]ircumstances under which the corporate veil may be pierced occur
when the corporation is controlled and dominated in a manner that requires liability
to be imposed on the real actor.”) (citation omitted). Under New York law, which
governs the Broker Agreement, again the law of Connecticut would apply. See Xiotech
Corp. v. Express Data Products Corp., 11 F.Supp.3d 225, at 235-236 n.5 (N.D.N.Y.
2014) (the law of the state of incorporation governs the decision to pierce the corporate
veil) (citation omitted).
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To establish a claim of conversion under the law of New Jersey, a plaintiff
must allege “the wrongful exercise of dominion and control over property owned
by another in a manner inconsistent with the owner’s rights.” D & D
*4 (D.N.J.
Technology, Inc. v. CytoCore, Inc., No. 14-42 17, 2014 WL 4367314, at
2014). Again, New York law is similar. See Pacific M. Intern. Corp. v. Raman
intern. Gems, Ltd., 888 F.Supp.2d 385, 396 (S.D.N.Y. 2012)(”[c]onversion is the
unauthorized assumption and exercise of the right of ownership over goods
belonging to another to the exclusion of the owner’s rights.”) (citations omitted).
While on first glance the plaintiffs seem to have set forth the essential
elements of these torts, their allegations are in reality just the breach-ofcontract allegations repackaged. Under the economic loss doctrine (applicable
in both New Jersey and New York), “parties to a contract are not entitled to
supplemental protection by negligence principles.” D & D Technology, 2014 WL
4367314, at *34 (citations omitted). Where a plaintiff recasts a claim of breach
of contract in tort, the tort claim will not stand. See Hanover Architecture
Service P.A. v. Christian Testimony-Morris, N.P., No. 10-5455, 2014 WL 884778,
at *7 (D.N.J. March 6, 2014)(the economic loss doctrine “preclud[es] a party’s
negligence action, in addition to a contract action, unless the plaintiff can
establish an independent duty of care” external to the contract) (internal
quotations and citations omitted); DiAntonio v. Vanguard Funding, LLC, No. 144526, 2015 WL 3629539, at *7 (D.N.J. June 10, 2015)(”[TJo the extent the
negligence claim is based upon Defendants’ failure to comply with contractual
obligations, the claim is subject to dismissal”); D & D Technology, 2014 WL
4367314, at *34 (“New Jersey courts have expressly restricted application of
the doctrine of conversion when it seeks to turn a claim based on breach of
contract into a tort claim.”); Kalimantano GmbH v. Motion in Time, Inc., 939
F.Supp.2d 393, 416 (S.D.N.Y.)(under New York law, “[a] conversion claim must
be dismissed when it does not stem from a wrong independent of the alleged
breach of contract.”) (citation omitted).
To support an independent tort claim, then, the complaint’s allegations
11
must arise from a wrong independent of the alleged breach of contract. The
allegations of this complaint do not. The plaintiffs rely solely on their contracts
with Hybrid. With respect to their negligence claim, they allege that the
defendants violated their duty to hold the collected insurance premiums in a
“fiduciary capacity,” which arises only from the Broker Agreement (and by
incorporation, the Portal Agreement). (Dkt. No. 1
¶ 42;
see Dkt. No. 1-3
§ IV) As
to the plaintiffs’ conversion claim, the property they allege was wrongfully
withheld consists of the payments they were entitled to receive under the
agreements. (See Dkt. No. 1
¶ 61; Dkt. No. 1-3 Section III.B.) These allegations
boil down to a claim of breach of contract, as to which I have entered default
judgment against Hybrid. I decline to enter a default judgment on the tort
claims as to either defendant.
C. Remedy
The plaintiffs assert that they are owed an estimated $265,836 in
insurance premiums, as well as interest, costs, and attorneys’ fees. In support
of their estimate of actual damages, they attach to the affidavit of Jason
Simmons, Head of Compliance for Torus US, a chart listing the premiums
plaintiffs believe Hybrid was paid and failed to remit. (Dkt. No. 11-2 Exhibit E)
The plaintiffs do not submit any underlying documentation regarding their
calculation of outstanding premiums or any documents regarding other
sources of damages (e.g., interest, costs, attorneys’ fees). Instead, the plaintiffs
request an inquest on damages pursuant to FED. R. Civ. P. 55(b)(2).
To order an inquest now—where only one page of material regarding
damages is before the Court—would be premature. If the plaintiffs have any
additional proofs the Court should consider regarding damages, including
documentation relating to (1) the basis for the estimated amount of
outstanding insurance premiums, (2) calculation of interest on those
premiums, and (3) attorneys’ fees and costs, they should file it with the Court
in the form of an affidavit or certification. Upon reviewing any such materials, I
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will enter either enter final judgment or revisit the request for an inquest.
III. CONCLUSION
For the foregoing reasons, I will enter a separate order granting the
plaintiffs’ motion for a default judgment against Hybrid on Count II of the
complaint. The motion is otherwise denied. The plaintiffs are ordered to file
with the Court any proof documenting actual or estimated damages, as well as
costs and fees.
KEVIN MCNULTY
United States District Judge
Dated: October 22, 2015
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