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ANGLO-IBERIA UNDERWRITING MANAGEMENT v. LODDERHOSE

September 5, 2002

ANGLO-IBERIA UNDERWRITING MANAGEMENT COMPANY AND INDUSTRIAL RE INTERNATIONAL, INC., PLAINTIFFS,
V.
DANIEL J. LODDERHOSE, SECURITY RESOURCES INTERNATIONAL, INC., GC INSURANCE BROKERS LIMITED, GC INTERMEDIARIES LIMITED, PETER J. GREENGRASS, LESLIE J. COOPER, AND A.J. SMITH, DEFENDANTS.



The opinion of the court was delivered by: Marrero, District Judge

  DECISION AND ORDER

Plaintiffs Anglo-Iberia Underwriting Management Company and Industrial Re International, Inc. (collectively "Plaintiffs") brought this action invoking this Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332, and now move for summary judgment as to their claims of common law fraud, negligent misrepresentation, conversion, and breach of contract against defendants Peter I. Greengrass, GC Insurance Brokers Limited, Leslie J. Cooper, and A.J. Smith (collectively "Defendants"). For the reasons stated below, Plaintiffs' motion is granted in part and denied in part.

I. BACKGROUND

The present dispute arises from a Quota Share and Excess of Loss Facultative and Treaty Reinsurances Slip Agreement (the "Agreement")*fn1 entered into by P.T. Astek (Persero), also known as P.T. Jamsostek (Persero) ("Astek") and plaintiffs, Anglo-Iberia Underwriting Management Company ("AI") and Industrial Re International, Inc. ("IR"). Under the Agreement, Astek, an enterprise owned by the government of Indonesia, purportedly agreed to reinsure a portfolio of risk of ceding companies declared by AI for a period of two years commencing on January 1, 1995.*fn2 AI is a reinsurance underwriter, IR is a reinsurance intermediary, and Rene A. Gutierrez ("Gutierrez") is their president. Daniel J. Lodderhose ("Lodderhose") and Security Resources International, Inc. ("SRI"), his firm, were hired as Astek's global reinsurance managers by Prio Adhi Sartono ("Sartono"), an Astek employee, and all correspondence with Astek was to be directed through them. GC Insurance Brokers Limited*fn3 ("GC"), a reinsurance broker, along with Peter I. Greengrass ("Greengrass"), an officer, director, and owner of GC, brokered the Agreement, and all communications by Plaintiffs to Lodderhose, SRI, or Astek had to go through GC and Greengrass pursuant thereto. (Deposition of Peter Greengrass ("Greengrass Dep."), at 205-206, 316-320.) Leslie J. Cooper ("Cooper") was also an officer, director, and owner of GC, and A.J. (Tony) Smith ("Smith"), was an employee. Cooper administered GC's bookkeeping, and Smith first introduced the Plaintiffs to Greengrass, though he did so prior his employment with GC.

The negotiations that produced these arrangements commenced in earnest*fn4 at a reinsurance conference in Monte Carlo in September of 1995, which Gutierrez attended on behalf of Plaintiffs to find a replacement reinsurer for a reinsurance arrangement between AI and IR and a firm known as Dai-ichai & Kobe that had fallen through. (Greengrass Dep., at 58-61.)

Prior to this conference, Greengrass and GC, as reinsurance intermediaries attempting to broker and procure business, had inquired about Astek's reinsurance business, namely, whether it engaged in international reinsurance, and about Sartono's authority to act for the company. According to Greengrass, he asked Pieter Vlasbloem ("Vlasbloem"), an Indonesian reinsurance broker, if it was "possible, probable, that [Astek] would be moving into the international reinsurance business, " and Vlasbloem replied that it was "very likely." (Id., at 54-55.)

Lodderhose, prior to the initial negotiations underlying the Agreement at the Monte Carlo conference, suggested to Greengrass that Sartono was a director of Astek. (Id., at 65-66.) Vlasbloem, however, in addition to reporting on Astek's reinsurance business, also explored Sartono's credentials and sent Greengrass a fax dated February 2, 1995 indicating that Sartono was not a director of Astek but a manager of a subdivision of the company, which led Vlasbloem to question Sartono's authority to initiate reinsurance arrangements. (Declaration of John R. Keough, III dated April 29, 2002 ("Keough Decl."), at App. 1, Ex. GC 36.) Accordingly, Vlasbloem recommended to Greengrass that "it is worthwhile investigating." (Id.) Nonetheless, Greengrass conducted no further investigation into Astek's reinsurance practice or Sartono's authority within the company. (Greengrass Dep., at 56-57.) Instead, knowing that Plaintiffs were in quick need of a replacement reinsurer, Greengrass negotiated and brokered the Agreement, with much of the principal discussions and introductions occurring at a meeting during the Monte Carlo conference attended by Greengrass, Lodderhose, Sartono, and Gutierrez and arranged by Greengrass. (Greengrass Dep., at 58-67.)

Greengrass and GC did not pass along to Plaintiffs any of this information concerning Astek's business or Sartono's credentials with the company and, with no definitive inquiry into the matter, repeatedly represented to Plaintiffs that Astek's practice included international reinsurance and that the Agreement through Sartono was valid. Greengrass himself communicated as much via facsimile to IR on November 13, 1995. (Keough Decl., at App. 1, Ex. GC 42.)

In October-November of 1995, Plaintiffs formally entered into the Agreement with Astek, (Declaration of Rene A. Gutierrez dated January 26, 1998 ("Gutierrez Decl."), at ¶ 8), and through August of 1996, AI and IR paid premiums and brokers' fees in the amount of $711,031.65 to GC, in accordance with the Agreement. GC retained approximately $75,000 in satisfaction of its broker fees*fn5 and forwarded the rest to SRI and Astek, again, in accordance with the Agreement. (Keough Decl., at App. 2, Ex. G.) AI and IR, as reinsurance underwriting manager and intermediary, respectively, endeavored to register Astek in Latin America, the Caribbean, and Mexico, promoted Astek to clients, and generally managed and administered Astek's reinsurance account. (Gutierrez Decl., at ¶ 13.)

By late August of 1996, the parties' relationships had deteriorated. Plaintiffs claim that in contravention of the Agreement, AI and IR, despite repeated requests, never received the necessary corporate, financial, and Indonesian governmental documents necessary to register Astek as an international reinsurer in certain designated countries. (Id., at ¶ 18.) In August of 1996, after repeated unsuccessful attempts to acquire these documents, AI and IR stopped paying the premiums provided for in the Agreement, and Lodderhose notified Plaintiffs that Astek was voiding the Agreement. When Plaintiffs then circumvented GC, Greengrass, SRI, and Lodderhose and contacted Astek directly, they discovered that Sartono, SRI, and GC were not authorized to act on Astek's behalf and that Astek did not authorize any reinsurance in its name. (Gutierrez Decl., ¶ 21.) Plaintiffs' premium payments were never refunded. (Memorandum of Law in Support of Plaintiffs' Motion for Partial Summary Judgment on Liability Against GC Defendants dated April 29, 2002 ("Pl.'s Brief"), at 8.)

II. DISCUSSION

A. STANDARD OF REVIEW

A motion for summary judgment should be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." Fed.R.Civ.P. 56(c). See Rodriguez v. Hahn, 209 F. Supp.2d 344, 346 (S.D.N.Y. 2002) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The role of the Court is not to resolve issues of fact but, rather, "to determine as a threshold matter whether there are genuine unresolved issues of material fact to be tried." Gibson v. American Broadcasting Cos., 892 F.2d 1128, 1132 (2nd Cir. 1989). The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548, The nonmoving party "must support with specific evidence his assertion that a genuine dispute as to material fact does exist," id., 477 U.S. at 324, 106 S.Ct. 2548, and "may not rely on conclusory allegations or unsubstantiated speculation," Scotto v. Almenas, 143 F.3d 105, 114 (2nd Cir. 1998). The opposing party's showing of a genuine dispute must be grounded in concrete evidence sufficient to support a reasonable jury's rendering a verdict in his favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 248, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). ("The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient."); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). All ambiguities and inferences drawn from the underlying facts must be resolved in the light most favorable to the party opposing the motion. See United States v. One Tintoretto Painting Entitled "The Holy Family With Saint Catherine and Honored Donor"; 691 F.2d 603, 606 (2nd Cir. 1982) (citing United States v. Diebold Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)). "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

B. COMMON LAW FRAUD

A New York common law fraud claim is defined as "a representation of fact, which is untrue and either known by defendant to be untrue or recklessly made, which is offered to deceive and to induce the other party to act upon it, and which causes injury." Suez Equity Investors, L.P. and SEI Associates v. The Toronto-Dominion Bank, et al., 250 F.3d 87, 104-105 (2nd Cir. 2001); Banque Franco-Hellenique ...


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