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July 22, 2004.

FRANK CRYSTAL & CO., INC. and A.I. CREDIT CORP., Defendants.

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, 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 denied.

  Prior Proceedings

  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

  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 Mizner address.

  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, ...

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