The opinion of the court was delivered by: Cheryl L. Pollak United States Magistrate Judge
This personal injury action was commenced on September 25, 2002, in New York Supreme Court, Kings County, by plaintiffs Robert and Josephine Luizzi based on injuries suffered by Robert Luizzi during a traffic accident that occurred on September 22, 2001, between the car driven by Mr. Luizzi and a tractor trailer owned by Pro Transport, Inc. ("Pro Transport") and driven by Luis Sanchez ("Sanchez"). By Notice of Removal, dated October 4, 2002, defendants removed the action to this Court. A framed issue hearing was held before the Court on January 17, 18, and 22, 2007, to determine whether the insurance policy that had been issued to defendant Pro Transport (the "Pro Transport Policy") by State National Insurance Company ("State National") had been effectively cancelled prior to the date of the accident at issue.*fn1 Based on the evidence presented during the hearing, the Court issued a Memorandum and Order, dated February 26, 2008, determining that due to an error made by Green Mountain Agency, Inc. ("Green Mountain"),*fn2 an insurance wholesaler and agent for State National,*fn3 the policy was not effectively cancelled in accordance with New Jersey law. (See 2/26/08 Order*fn4 at 2).
Presently pending before this Court are the cross motions for summary judgment filed on April 3, 2009 by State National and Green Mountain, which seek a determination as to whether Green Mountain's failure to properly cancel the Pro Transport Policy renders it liable to State National under theories of breach of contract and/or negligence.
Based on the submissions of the parties, and for the reasons set forth below, the Court Orders as follows: 1) with regard to State National's contract claim, Green Mountain's motion for summary judgment is granted, and State National's motion for summary judgment is denied; and 2) with regard to State National's negligence claim, the parties' cross motions for summary judgment are denied.
FACTUAL AND PROCEDURAL HISTORY
The factual and procedural history leading up to the instant set of motions is set forth in greater detail in the Court's Memorandum and Order, dated February 26, 2008, and incorporated herein. For purposes of this motion, only those facts pertinent to an understanding of the relationship between State National and Green Mountain will be addressed in detail.
On or about August 15, 1999, State National entered into a General Agency Agreement (the "State National Agreement") with Reliant American General Agency, Inc. ("Reliant General"). (State Nat'l 56.1 Stmnt*fn5 ¶ 1, Ex. M; see also Darmody Aff.*fn6 ¶ 11). Under the State National Agreement, Reliant General was appointed as State National's "managing general agent" for producing and handling the administration of insurance policies in certain states, including New Jersey. (State Nat'l 56.1 Stmnt ¶ 1, Ex. M at 4; see also Darmody Aff. ¶ 11). The State National Agreement authorized Reliant General to, among other things, perform all acts and duties under any issued policies that would otherwise have been performed by State National. (State Nat'l 56.1 Stmnt ¶ 1, Ex. M; see also Darmody Aff. ¶ 11). Article VII of the State National Agreement contains a hold harmless and indemnification provision under which Reliant General agreed to indemnify State National with respect to any liability stemming from any actions, suits, losses, claims or damages occurring as a result of its conduct. (State Nat'l 56.1 Stmnt ¶ 1, Ex. M at 12).
Thereafter, on or about January 27, 2000, Reliant American Insurance Co. ("Reliant"), a subsidiary of Reliant General, entered into a General Agency Agreement with Green Mountain (the "Green Mountain Agreement"), in which Green Mountain agreed to solicit, receive and transmit proposals for policies and enter into policies on behalf of Reliant, undertaking to collect premiums and perform all customary services, "subject to the requirements imposed by law, the terms of this Agreement, and the underwriting rules and regulations of the company." (State Nat'l 56.1 Stmnt ¶¶ 2-3, Ex. N at 1; see also Darmody Aff. ¶ 12). The Green Mountain Agreement contains an indemnification clause, whereby Green Mountain agreed to indemnify Reliant with respect to any liability stemming from any actions taken by Green Mountain that result in litigation. (State Nat'l 56.1 Stmnt, Ex. N at 6-7).
On March 13, 2001, based on an application for insurance received from Garden State Brokers, Green Mountain provided a quote for commercial automobile insurance coverage to Pro Transport and issued a State National insurance policy to Pro Transport. (Id., ¶ 5, Ex. P). On March 29, 2001, Green Mountain issued a cancellation notice to Pro Transport (the "Notice of Cancellation") based on Pro Transport's failure to pay premiums, and mailed a copy of the Notice of Cancellation addressed to "State National Insurance Co. c/o Reliant American." (Id., Ex. S).
The accident giving rise to this litigation occurred on September 22, 2001, at the intersection of Van Dam Street and Queens Boulevard, in Queens, New York, when a tractor trailer driven by defendant Sanchez, and allegedly owned by defendant Pro Transport, came into contact with a car driven by plaintiff Robert Luizzi. (Luizzi Compl.*fn7 ¶¶ 7-10). Thereafter, plaintiffs Robert and Josephine Luizzi commenced this action against defendants Sanchez and Pro Transport, seeking damages for Mr. Luizzi's personal injuries and Mrs. Luizzi's loss of services as a result of the alleged "negligence and carelessness" of defendants Sanchez and Pro Transport. (Id. ¶¶ 8-9).
On October 17, 2002, defendant Sanchez filed an Answer and asserted a cross claim, seeking contribution and indemnification from his co-defendant Pro Transport,*fn8 and on June 3, 2005, Sanchez filed a Third Party Complaint against State National, seeking indemnification pursuant to the commercial trucking insurance policy issued to Pro Transport by State National. (See Sanchez Compl.*fn9 ¶¶ 29-37).
On or about January 30, 2006, while this action was pending, Reliant was placed in receivership pursuant to an order issued by the District Court of Travis County, Texas, which appointed a rehabilitator. (See Darmody Aff. in Opp.*fn10 ¶ 5, Ex. A).
Following the framed issue hearing held before this Court on January 17, 18, and 22, 2007, and the determination that the commercial trucking insurance policy issued to Pro Transport had not been cancelled in accordance with New Jersey insurance law prior to the Luizzi accident, State National filed a motion for summary judgment on April 3, 2009, seeking a judgment against Green Mountain, contending that: 1) based on Green Mountain's failure to properly cancel the Pro Transport Policy, Green Mountain, as administrator of the policy, is liable to State National under New Jersey law, based on a theory of negligence; and 2) Green Mountain is liable to State National for breach of contract based on the theory that State National is a third party beneficiary to the contract between Green Mountain and Reliant.
Green Mountain also filed a motion on April 3, 2009, seeking summary judgment in its favor, arguing that: 1) Texas law should apply and that under Texas law, State National may not proceed on a theory of negligence, but may only recover for breach of contract; and 2) State National may not pursue a claim for breach of contract because it is not in privity with Green Mountain.
It is well-settled that a party moving for summary judgment has the burden of establishing that there is no genuine issue of material fact in dispute such that it is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Thompson v. Gjivoje, 896 F.2d 716, 720 (2d Cir. 1990). Since summary judgment is an extreme remedy, cutting off the rights of the non-moving party to present a case to the jury, see Jute v. Hamilton Sundstrand Corp., 420 F.3d 166, 172 (2d Cir. 2005); Gibralter v. City of New York, 612 F. Supp. 125, 133-34 (E.D.N.Y. 1985) (stating that summary judgment "is a drastic remedy and should be applied sparingly"), the Court should only grant summary judgment "on the basis that no genuine issue remains for trial because it is quite clear what the truth is." In re Dana Corp., 574 F.3d 129, 151 (2d Cir. 2009) (internal quotation marks and citations omitted). In addition, "'the inferences to be drawn from the underlying facts... must be viewed in the light most favorable to the party opposing the motion.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003) (stating that "[i]n determining whether there are genuine issues of material fact, we are 'required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought'") (quoting Stern v. Trustees of Columbia Univ. in City of New York, 131 F.3d 305, 312 (2d Cir. 1997)).
Once the moving party discharges its burden of proof under Rule 56(c) of the Federal Rules of Civil Procedure, the party opposing summary judgment "must set forth specific facts indicating a genuine issue for trial exists in order to avoid the granting of summary judgment." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 (2d Cir. 1996). Rule 56(e) "provides that a party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248. Indeed, "the mere existence of some alleged factual dispute between the parties," without more, will not defeat a properly supported motion for summary judgment. Id. at 247-48 (emphasis in original). Enough evidence must favor the non-moving party's case such that a reasonable jury could return a verdict in its favor. Id. (internal citation omitted).
As an initial matter, the parties in this case dispute which state's law should be applied in analyzing State National's claims against Green Mountain. State National contends that its claims are governed by New Jersey law, while Green Mountain contends that Texas law governs. In cases based on diversity jurisdiction, see 28 U.S.C. § 1332, the choice of law rules of the forum state determine which state's substantive law governs the claims in the action. See Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir. 2001) (citing Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)); Machleder v. Diaz, 801 F.2d 46, 51 (2d Cir. 1986), cert. denied, 479 U.S. 1088 (1987); see also Protostorm, LLC v. Antonelli, Terry, Stout & Kraus, LLP, No. 08 CV 931, 2010 WL 785316, at *4 (E.D.N.Y. Mar. 8, 2010). In this case, New York is the forum state, as the case was properly removed to the Eastern District of New York, and thus the appropriate substantive law to apply will be determined in accordance with New York's choice of law rules.
Under New York law, a court must first determine whether a contract between the parties contains an enforceable choice of law provision. As a general matter, New York courts will enforce such a provision so long as the chosen law has a "reasonable relationship" to the contract and does not violate New York public policy. See, e.g., Cargill, Inc. v. Charles Kowsky Res., Inc., 949 F.2d 51, 55 (2d Cir. 1991) (noting, however, that the court may disregard the parties' choice of law provision if "the most significant contacts" are in a different state); LaGuardia Assocs. v. Holiday Hosp. Franchising, Inc., 92 F. Supp. 2d 119, 127 (E.D.N.Y. 2000); Rosenberg v. Pillsbury Co., 718 F. Supp. 1146, 1150 (S.D.N.Y. 1989); Finucane v. Interior Const. Corp., 264 A.D.2d 618, 620, 695 N.Y.S.2d 322, 325 (1st Dep't 1999).
Absent an enforceable choice of law provision, New York courts require that an actual conflict of law exists before engaging in a choice of law analysis. See Fieger v. Pitney Bowes Credit Corp., 251 F.3d at 393 (stating: "It is only when it can be said that there is no actual conflict that New York will dispense with a choice of law analysis") (citation and internal quotations omitted); see also K.T. v. Dash, 37 A.D.3d 107, 112, 827 N.Y.S.2d 112, 117 (1st Dep't 2006). In the event that no conflict exists, and "if New York law is among the relevant choices, New York courts are free to apply [New York law]." International Bus. Mach. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004).
Once an actual conflict is found, New York courts apply a variety of tests to determine the appropriate law to apply to each claim. With regard to contract claims, New York applies the law of the state with the "most significant contacts to the contract." Schwimmer v. Allstate Ins. Co., 176 F.3d 648, 650 (2d Cir. 1999) (citations omitted); see also GlobalNet Financial.com, Inc. v. Frank Crystal & Co., Inc., 449 F.3d 377, 383 (2d Cir. 2006) (referring to this analysis as the "center of gravity" test). As the Second Circuit has explained, this test considers a variety of factors, including, "'the place of contracting, negotiation and performance; the location of the subject matter of the contract; and the domicile of the contracting parties.'" GlobalNet Financial.com, Inc. v. Frank Crystal & Co., Inc., 449 F.3d at 384 (internal quotation omitted).
With regard to tort claims, New York courts apply an "[i]nterest analysis" approach. See, e.g., Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 197-200, 491 N.Y.S.2d 90, 95-98, 480 N.E. 2d 679, 684-87 (1985). Interest analysis generally requires courts to apply "[t]he law of the jurisdiction having the greatest interest in the litigation." Id. This requires consideration of two questions: "1) what are the significant contacts and in which jurisdiction are they located; and 2) whether the purpose of the law is to regulate conduct or allocate loss." K.T. v. Dash, 37 A.D.3d at 111, 827 N.Y.S.2d at 116; see also GlobalNet Financial.com, Inc. v. Frank Crystal & Co., Inc., 449 F.3d at 384-85. In answering the second question, courts define loss allocation laws as those that are "applicable once there is admittedly tortious conduct," and conduct regulating laws as "those [that] people use as a guide to governing their primary conduct." AllGood Entm't, Inc. v. Dileo Entm't & Touring, Inc., No. 09 CV 5377, 2010 WL 2606042, at *5 (S.D.N.Y. June 26, 2010) (internal citation and quotations omitted). As the Second Circuit has explained:
If conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders. If the conflict involves allocation of losses, the site of the tort is less important, and the parties' domiciles are more important.
GlobalNet Financial.com, Inc. v. Frank Crystal & Co., Inc., 449 F.3d at 384-85 (internal quotations and citations omitted); see also Lindsay v. Toyota Motor Sales, U.S.A., Inc., 11 Misc. 3d 1077(A), 816 N.Y.S.2d 697 (table; text available at 2006 WL 940645, at *6) (Sup. Ct. 2006) ...