The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
Defendant Frank Crystal & Co., Inc. ("Crystal") has moved
pursuant to Federal Rule of Civil Procedure 56 for summary
judgment, and/or Rule 12(c) for judgment on the pleadings
dismissing the complaint of Globalnet Financial.com, Inc.
("Globalnet") alleging breach of contract, breach of fiduciary
duty, and negligence on the part of Crystal as the insurance
broker for Globalnet. Globalnet has cross-moved for partial
summary judgment against Crystal. For the reasons set forth
below, Crystal's motion is granted and Globalnet's motion is
This diversity action was initiated by the filing of
Globalnet's complaint on January 31, 2003 in which it alleged
that Crystal, its insurance broker, breached its contract duties,
its fiduciary duty and was negligent in its performance, all
arising out of the failure of Crystal to notify Globalnet that
its directors and officers liability policy was to be cancelled
for premium payment failure.
Discovery proceeded and Crystal moved for summary
judgment on February 4, 2004, and Globalnet cross-moved for
partial summary judgment on March 4, 2004. Both motions were
heard and marked fully submitted on March 24, 2004. Parties
At all relevant times, Globalnet was in the business of
providing on-line news and financial information to private
investors around Europe and the United States, and providing
on-line trading facilities.
Crystal is a commercial insurance broker incorporated and
headquartered in New York. Crystal is also licensed in the State
of New York. Crystal also has offices in various locations in the
United States, including two in Florida.
The facts are set forth in the Local Rule 56.1 Statements of
the parties and affidavits and deposition evidence and are
undisputed except as noted below.
Globalnet is a Delaware company and had an office in Boca
Raton, Florida at the time the relationship with Crystal began.
Globalnet was acquired by London-based investor/shareholder
NewSparkMedia in a tender offer that was finally completed in or
about the fall of 2001.
Crystal as an insurance broker arranged for Globalnet to
purchase directors and officers ("D&O") liability coverage for
the period December 36, 1999 to December 30, 2001. The primary policy
was issued by National Union Fire Insurance Company of PA
("National Union"), an excess D&O policy was issued by Lloyd's of
London, and a second excess D&O policy was issued by Federal
Insurance Company. Crystal also arranged for the financing of the
payment of premiums by AI Credit Group Corp. ("AICCO"), an
affiliated and member of American International Group, through an
agreement between AICCO and Globalnet.
Until about the summer of 2000, the premium payments on
Globalnet's D&O insurance, coverage were handled out of the
Globalnet Florida office, after which responsibility for the
financial affairs of Globalnet shifted from Florida to London.
In or about August 2001, AICCO sent a September 2001 Premium
Finance Statement, which was dated August 1, 2001, to Globalnet
at its 7284 West Palmetto Park Road, Boca Raton, Florida office
which was returned. Globalnet had closed and vacated that address
in late June or early July 2001. The envelope also contained a
new address for Globalnet 225 N.E. Mizner Boulevard, Boca
Raton, Florida (the "Mizner address"). AICCO corrected its
records for Globalnet's new address and resent the September
statement to the Mizner address.
On or about October 10, 2001, AICCO sent an Intent to cancel
notice to Globalnet, indicating that Globalnet's D&O coverage would be cancelled effective October 22, 2001 for
nonpayment of premiums if a premium of $25,052.73 plus a late fee
of $1,252,64 was not paid. On or about October 22, 2001, AICCO
mailed a cancellation notice to Globalnet informing it that its
D&O policies would be canceled effective October 22, 2001 based
upon Globalnet's failure to pay its premiums. Both the Intent to
Cancel notice and the cancellation notice were mailed to the
The Mizner address was occupied by a company called
International Capital Growth ("ICG"), which was a spin-off from
Globalnet prior to the completion of the tender offer, in
approximately July or August 2001. Peter Wallis ("Wallis"), the
associate general counsel for Globalnet, instructed the Boca
Raton Post Office to forward all mail addressed to Globalnet at
7284 West Palmetto Park Road to the Mizner address. When shown
the envelope which was returned to AICCO with the "Return to
Sender" stamp and the Mizner address, Wallis testified that the
Post Office was doing "exactly what I wanted it to do." Wallis
Deposition at 97.
According to Globalnet, "[m]ail intended for Globalnet was
generally supposed to be forwarded to London," Globalnet
Rule 56.1 Counter-statement of Material Facts at ¶ 22. Further, it was
the "custom and practice" of someone at the Mizner address to
forward mail addressed to Globalnet to someone in London.
Deposition of Monique McClaren, at 81-82. However, the Intent to Cancel notice and the cancellation notice which were sent to the
Mizner address were never received by the London office of
Globalnet. Consequently, ...