The People of the State of New York, by Andrew M. Cuomo, Attorney General of the State of New York, Plaintiff,
Wells Fargo Insurance Services, Inc. and Wells Fargo Bank, N.A., Defendants.
This case is not published in a printed volume and its disposition appears in a table in the reporter.
For Plaintiff: Andrew M. Cuomo, Attorney General of the State of New York, Melvin L. Goldberg, Esq.
For Defendants: Skadden, Arps, Slate, Meagher Flom, LLP, Richard L. Brusca, Esq., Michelle Rogers, Esq.
Bernard J. Fried, J.
Defendants Wells Fargo Insurance Services, Inc. (Wells Fargo) and Wells Fargo Bank, N.A. (Wells Fargo Bank) move (1) for dismissal of the complaint pursuant to CPLR 3211 (a) (1), (a) (3), and (a) (7), on the grounds of a defense founded upon documentary evidence, lack of legal capacity to sue, and failure to state a cause of action, and pursuant to CPLR 3016 (b), on the ground that plaintiff has failed to state the circumstances underlying the fraud claim in sufficient detail; and (2) in the alternative, for an order requiring plaintiff to file a more definite statement, pursuant to CPLR 3024 (a), because the complaint is so vague and ambiguous that defendants cannot respond.
The complaint alleges as follows: the Attorney General, on behalf of the People of the State of New York, commenced this action based upon his authority under the Executive Law and the General Business Law. Wells Fargo is one of the largest provider of insurance brokerage and consulting services in the world, and is the largest bank-affiliated insurance brokerage in the United States. 
Since at least the late 1990's, complicit insurance companies have paid Wells Fargo hidden compensation in a variety of forms, generally based on the amount and profitability of the business that Wells Fargo steered to them. This compensation caused Wells Fargo to shirk its duty to find the best insurance coverage at the best price for its clients.
In 1999, Wells Fargo management systematized its contingent commission program to steer business more efficiently to the insurance companies that paid it the most in hidden compensation, called the "Millennium Partnership Program" (MPP), the purpose of which was to consolidate Wells Fargo's business with a very small number of "Preferred Market Partners," including "Travelers, Hartford, Chubb, Royal SunAlliance, and Atlantic Mutual."
The goal was to extract ever greater payments from these "Partner Markets" in exchange for steering clients to the "Millennium Partners." In return for the hidden compensation, Wells Fargo assured the participating insurers that their business would increase at the expense of non-participating insurers. Wells Fargo promised the Preferred Market Partners that Wells Fargo's senior executives were committed to supporting the MPP, and Wells Fargo's employees dutifully executed the plan. The flip-side to Wells Fargo favoring complicit insurers was that any insurance company that rejected Wells Fargo's invitation to become a Millenium Partner faced significant negative consequences, and it made them aware of the consequences.
Moving business to meet Wells Fargo's production obligations to its Millenium Partners often conflicted with the client's best interests, in that it often made different recommendations to its clients than it would have made absent the MPP. Wells Fargo also entered into "special, one-off deals with Travelers and Hartford to steer whole blocks of business" consisting of thousands of customers. For example, in 2003, Wells Fargo and Hartford put together a wide range of initiatives termed the "Share Shift" with the goal of doubling the business that Wells Fargo steered to Hartford over the following three-year period. As part of the scheme, Wells Fargo's parent, Wells Fargo Bank, agreed with Hartford to mine its customer database, highlighting middle market business customers that fit within industries that Hartford planned to target. Wells Fargo Bank referred those customers to Wells Fargo which, in turn, steered the customers to Hartford, regardless of whether Hartford was best for the customer. Because of Wells Fargo Bank's highly focused screening, Hartford management expected to provide quotes on 75% of the business that Wells Fargo presented to it as part of this scheme, a rate that was 2.5 times better than Hartford's usual submission-to-quote ratio.
As another example, after Kemper Insurance Company's rating was lowered in 2003, representatives from Travelers quickly approached Wells Fargo management to request that Wells Fargo transfer Kemper's entire book of business. Travelers offered and paid secret incentives to Wells Fargo to secure the deal, including up to a 10% "override" if Wells Fargo placed more than 75% of the Kemper book with Travelers. Travelers even sent in "SWAT" teams to local Wells Fargo offices to facilitate the transfer of Kemper business.
In 1999, several insurers declined to join MPP for various reasons. Nonetheless, Wells Fargo continued its efforts to leverage its market power into greater contingent compensation through national agreements with these insurance companies. Wells Fargo entered into numerous other deals that caused them to steer their customers without proper regard for the client's interests, and without revealing the conflicts to the clients. For example, Chubb conspired with Wells Fargo in what was described in the documents outlining the parameters of a "Special Incentive Arrangement" as an effort to maximize and capitalize on their cross-selling opportunities with Wells Fargo. Chubb sought business that it would not have otherwise gotten had it not entered into this agreement, under ...