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ONE BEACON INSURANCE v. TERRA FIRMA CONSTRUCTION MGMT.

February 24, 2004.

ONE BEACON INSURANCE f/k/a CGU INSURANCE, Plaintiff, -against- TERRA FIRMA CONSTRUCTION MANAGEMENT & GENERAL CONTRACTING, LLC and KAFCI CORPORATION, Defendants; TERRA FIRMA CONSTRUCTION MANAGEMENT & GENERAL CONTRACTING, LLC and KAFCI CORPORATION, Third-Party Plaintiff's, -against- SELECT PLANNING, LTD, Third-Party Defendant


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

OPINION AND ORDER

On November 18, 2002, One Beacon Insurance f/k/a CGU Insurance ("One Beacon") filed an action against Terra Firma Construction Management & Page 2 General Contracting, LLC. ("Terra") and K.A.F.C.I. Corp. ("KAFCI") to recover premiums owing under workers' compensation insurance policies. See One Beacon Complaint ("Compl."). On June 11, 2003, Terra and KAFCI filed a third-party action for indemnification, breach of contract and negligence against their insurance broker, Select Planning, LTD. ("Select"). See Third-Party Complaint ("TP Compl.").

  Third-Party Defendant Select now moves for summary judgment. In support of its motion, Select submits that Terra & KAFCI's breach of contract and negligence claims are barred by statutes of limitation and that Terra and KAFCI cannot state a valid claim for indemnification. For the reasons set forth below, Select's motion is granted and the Third-Party Complaint is dismissed.

 I. FACTS*fn1

  A. Parties

  One Beacon is an insurance provider organized under the laws of Pennsylvania with its principal place of business in Pennsylvania. Terra and KAFCI are companies engaged in interior/drywall construction and contracting organized under the laws of New York, each with a principal place of business in New York. Select is an insurance broker organized in New York with a principal Page 3 place of business in New York. One Beacon Amended Complaint ("AM Comp.") ¶¶ 2-3.

  B. Insurance Contracts

  Sometime prior to 1994, Terra and KAFCI hired Select to review their insurance needs and to procure workers' compensation insurance policies for their employees and operations. TP Compl. ¶ 5.

  1. The First Policy

  On June 15, 1996, Select helped Terra and KAFCI obtain an insurance contract from One Beacon (the "First Policy"). By the terms of that contract, Terra and KAFCI were to pay insurance premiums to One Beacon in return for one year of workers' compensation coverage. The First Policy was effective from June 15, 1996 to June 15, 1997. AM Compl. ¶ 6.

  The price of the insurance premiums that Terra and KAFCI owed to One Beacon under the First Policy was subject to retrospective adjustment. Id. Under insurance policies subject to retrospective adjustment, the insured initially pays premiums at a set price. Subsequently, the price of the premiums is adjusted by the insurer to reflect updated estimates of risk for the insurance coverage ("Retrospective Adjustment"). Retrospective Adjustment can result in the insured owing additional premiums or in premiums being returned to the insured, Page 4 depending on whether the price is raised or lowered. In this case, the premiums Terra and KAFCI owed to One Beacon under the First Policy were retrospectively adjusted to a higher price. See id. ¶ 11. This caused Terra and KAFCI to owe One Beacon additional premiums (the "Retrospective Premiums"), which One Beacon claims it has not received. See id.

  2. The Second Policy

  On June 15, 1997, Select helped Terra and KAFCI obtain a second contract from One Beacon for workers' compensation coverage (the "Second Policy"). Unlike the First Policy, the Second Policy was not subject to Retrospective Adjustment. Under that policy, Terra ...


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