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TRELLEBORG, AB v. FRANK B. HALL & CO. OF NEW YORK

September 11, 1996

TRELLEBORG, AB, Plaintiff, against FRANK B. HALL & CO. OF NEW YORK, INC., Defendant.


The opinion of the court was delivered by: NEWMAN

BERNARD NEWMAN, Senior Judge:1

 Trelleborg, AB ("plaintiff") brings this action for breach of contract against Frank B. Hall & Co. of New York, Inc. ("defendant") arising under the court's diversity jurisdiction, pursuant to 28 U.S.C. ยง 1332(a). Presently before the court is defendant's motion for summary judgment in conformity with F.R.C.P. Rule 56.

 BACKGROUND

 Plaintiff is a publicly held Swedish industrial conglomerate and defendant is a New York licenced insurance broker. During the spring of 1989 plaintiff, seeking consolidation of its North American subsidiaries' insurance coverage, engaged defendant and another company to submit proposals. On June 6, 1989 after plaintiff chose defendant's proposal, the parties entered into a contract requiring defendant to procure casualty insurance coverage, at a specified price, for each of plaintiff's North American subsidiaries during the period of October 1, 1989 until October 1, 1990. In the fall of 1989, defendant informed plaintiff that it could not provide the insurance at the contracted price and that defendant would be required to pay higher premiums in order to maintain the agreed coverage.

 As a result, plaintiff contends that it was required to purchase casualty insurance through another broker for substantially higher premiums than set forth in its contract with defendant. In filing this suit, plaintiff seeks recovery of damages in excess of $ 1.3 million from defendant for the alleged breach of contract and claimed negligence in failing to obtain coverage within the parameters of the contract. In response, defendant maintains that it has not breached any contract or duty to plaintiff and, in any event, that plaintiff has not suffered any compensable loss.

 Defendant urges that the court grant the instant motion because the contract between defendant and plaintiff for the procurement of insurance is prohibited by New York statutory law and is therefore void. Additionally, defendant insists that because the contract was premised on inaccurate and misleading loss information supplied by plaintiff, it is unenforceable. Finally, defendant submits that plaintiff has not suffered measurable damages claiming that plaintiff cannot establish it could have purchased insurance from any carrier at the price stated in the contract if accurate loss information was disclosed. Plaintiff asserts that since material factual disputes surround these issues and that defendant's legal positions are without merit, the summary judgment motion must be dismissed.

 DISCUSSION

 Summary judgment may be granted only if viewing the evidence in the light most favorable to the nonmovant party, the court determines that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." F.R.C.P. Rule 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The party seeking summary judgment bears the burden of establishing the absence of any factual dispute. Celotex, 477 U.S. at 322-323. If the movant satisfies this requirement the burden then shifts to the nonmovant to come forward with specific facts showing the existence of a genuine issue necessitating a trial. Anderson, 477 U.S. at 257.

 The court finds the existence issues of fact exist respecting each of defendant's claims, and thus the motion is denied.

 A.

 Defendant's first contention is that the contract itself, by virtue of New York statutory law, is illegal. Obviously, "illegal contracts are, as a general rule unenforceable." Lloyd Capital Corp. v. Pat Henchar Inc., 80 N.Y.2d 124, 127, 589 N.Y.S.2d 396, 397, 603 N.E.2d 246 (1992). If the contract is unenforceable, even after drawing all factual inferences in favor of the plaintiff, defendant would be entitled to summary judgment. The court, however, finds that the defendant has not sufficiently established that the contract is of the type which falls under the New York prohibition. Accordingly, summary judgment on this issue would be inapplicable.

 New York law provides that:

 
. . . no licenced insurance broker shall make, procure or negotiate any contract of insurance other than as plainly expressed in the policy or other written ...

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