broker for services in procuring the insurance" and that the contract in issue did not violate public policy. 194 N.Y.S. at 319. After close examination of that decision, as well as the statute before the First Department, the court determines that the Tannenbaum conclusion is not relevant to the case at bar. As the Tanenbaum court pointed out, the statute it was considering was "not applicable to contracts between the insured and his or its agent or broker." 194 N.Y.S. at 320. Unlike the statute before that court, § 2324 specifically includes contracts between an insured and a "licensed insurance broker." Therefore, plaintiff's reliance on Tanenbaum is misplaced.
Notwithstanding the failure of plaintiff to advance a satisfactory response to defendant's claim, the court is constrained to nonetheless deny defendant's motion on this issue. Under New York law an insurance broker may not "make, procure or negotiate any contract of insurance other than as plainly expressed in the policy. . ." however, there remains issues of fact as to whether at the time the contract was offered the price quoted to plaintiff accurately reflected the policy's premium. While defendant continually urges that plaintiff failed to provide adequate information needed to obtain the accurate cost of coverage, it does not claim that the price quoted in the contract offered to plaintiff inaccurately reflected the policy's price based on the available information. If this is so, the contract would not have been illegal at the time it was made in that the broker would have made a contract that was consistent with the policy price. Merely because new developments or information may have affected the cost of the insurance does not mean that the broker violated § 2324. Indeed, when defendant learned that it could not procure the insurance at the stated contract price, defendant informed plaintiff that the insurance coverage agreed upon would have increased premiums. Section 2324 prohibits a broker from offering insurance at any rate other than is stated in the policy. Drawing all inferences in favor of the nonmoving party it appears, based upon the submissions before the court, that the contract offered by defendant comported with New York Insurance Law § 2324. All of the inferences point to the conclusion that when defendant offered to procure insurance for defendant, the premiums quoted in the agreement comported with the actual insurance prices premised upon the information obtained at that time. Since it cannot be said that the contract is illegal, as a matter of law, summary judgment based upon this claim would be inappropriate.
Defendant next contends that it is entitled to summary judgment because the undisputed facts demonstrate that plaintiff did not disclose material information with respect to plaintiff's loss information. The court finds that there are questions of fact regarding this claim thereby precluding summary judgment. Under New York law, "materiality is ordinarily a question of fact, the standard for disclosure being whether a reasonable insured should have believed the fact was something the insurer would consider material." Christiania Gen. Ins. Corp. Of New York v. Great American Ins. Co., 979 F.2d 268, 278 (2d Cir. 1992); Aguilar v. United States Life Ins. Co., 162 A.D.2d 209, 210, 556 N.Y.S.2d 584, 585 (1st Dept. 1990)
Moreover, even if the court could, as a matter of law, find that the information defendant claims to have not received was material, other issues of fact would preclude summary judgment.
Defendant, in support of its motion, argues that plaintiff either wilfully or negligently did not provide accurate and complete loss information when asked. Plaintiff responds that it was defendant who accepted a duty to obtain risk information directly from the subsidiaries, and further that defendant's negligence caused defendant to fail to ascertain or properly digest the information provided by plaintiff's subsidiaries. Attempting to substantiate this claim, plaintiff argues that defendant:
wrote to and visited [plaintiff's] North American subsidiaries. [Defendant] had access to Johnson & Higgins (the prior broker for the North American subsidiaries) and to the subsidiaries' risk managers, documents and other information, including prior insurance policies, coverage specifications, manuscript endorsements, payroll data, financial information, loss information by category of coverage for the period 1983 to 1988, and a separate list of losses in excess of $ 25,000.
Plaintiff's Memorandum of Law in Opposition, p.33. Although defendant agrees that it ultimately learned of additional losses, there is no indication where or when the information came into defendant's possession. Left unanswered is whether defendant learned of the information through the information provided by plaintiff or from some other source. Even assuming an alternative source other than plaintiff, it is unclear whether it was defendant's responsibility to have explored that source before a proposal was made. In short, several questions of fact exist as to whether it was plaintiff's failure or defendant's negligence which caused certain loss information to be withheld from the insurer.
Finally, defendant advances the proposition that since plaintiff, as a matter of law, cannot demonstrate any cognizable damage, the motion should be granted. In support of its contention, defendant asserts that plaintiff "could absolutely not have obtained the coverages set forth in [defendant's] proposal at any price near the price at which Hall proposed." Defendant's Motion in Support of Summary Judgment, p. 22. Defendant principally relies upon Rodriguez v. Investors Ins. Co., 201 A.D.2d 355, 607 N.Y.S.2d 329 (1st Dept. 1994) to buttress this argument. Defendant, however, has misapplied the standard established by the New York courts because the cost of replacement insurance is not relevant to the analysis. In Rodriguez, the First Department stated that in order for a broker to be held liable for failing to procure insurance "it must be demonstrated that the coverage sought could have been procured." Id. at 330. Significantly, the court went on to say that "plaintiff did not prove Investors would have covered the greater area for a larger premium." Id. This statement illustrates the fallacy in defendant's instant claim. Clearly the court was concerned that a party submit proof that coverage was obtained, but established no requirement that plaintiff demonstrate that the coverage would be at the same price. Thus, defendant's argument is without merit.
Moreover, although defendant maintains that plaintiff could not have received the coverage originally proposed, there certainly exists a factual question as to whether this assertion is true. Indeed, plaintiff submits a letter which states that the insurance coverage had been procured, although at a higher price. Plaintiff's Exhibit 15. Defendant's only rejoinder is that plaintiff had not met its burden to demonstrate that "reliance would still be willing to provide the coverage at the alleged contract price proposed by [defendant] in June 1989." Defendant's Reply Brief, p. 8. Since there is a sufficient factual issue raised by this claim, defendant's argument does not provide a basis upon which summary judgment may be granted.
The court finds the existence of genuine issues of material facts, and hence, defendant's motion for summary judgment is hereby denied.
IT IS SO ORDERED
Dated: September 11, 1996
New York, New York
Bernard Newman, U.S.D.J., by designation