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The Winfield Group, Inc v. the Erie Insurance Group

October 12, 2012


The opinion of the court was delivered by: Gary L. Sharpe Chief Judge


I. Introduction

Plaintiff The Winfield Group, Inc. commenced this diversity action against defendant The Erie Insurance Group pursuant to 28 U.S.C. § 1332, alleging claims of conversion, interference with business relationships, and a violation of N.Y. Gen. Bus. Law § 349. (See Compl., Dkt. No. 1.)

Pending before the court are Erie's motion for summary judgment and Winfield's cross motion for partial summary judgment as to liability. (See Dkt. Nos. 17, 21.) For the following reasons, Erie's motion is granted and Winfield's cross motion is denied.

II. Background

A. Facts*fn1

On May 17, 2007, Winfield, an insurance agency authorized to write insurance in New York, entered into an asset purchase agreement (APA) with Farley Insurance Agency, Inc., an insurance agency with offices in the Town of Clifton Park, New York. (See Dkt. No. 17, Attach. 2 at 13; Def.'s Statement of Material Facts (SMF) ¶¶ 1, 3, Dkt. No. 17, Attach. 26.) Pursuant to the APA, Farley agreed to sell, among other things, its expirations-the records or copies of an insurance agency's policies containing "the date of the policy, name of the insured, date of expiration, amount of insurance, premiums, property covered, and terms of insurance," Richard T. Blake & Assocs. v. Aetna Cas. & Sur. Co., 255 A.D.2d 569, 570 (2d Dep't 1998)-to Winfield. (See Dkt. No. 17, Attach. 2 at 13.) A large percentage of policies serviced by Farley were Erie policies, and Winfield's intention in buying out Farley was to "expand [its] personal line insurance, build up volume, and acquire the right to offer and service insurance from other companies not previously represented by [it], including, potentially, Erie." (Def.'s SMF ¶¶ 5-6.) John Tomassi, Winfield's president, was aware at the time the APA was executed, however, that Erie may decline to appoint Winfield as its agent and that Erie was not obligated to do so, even on a temporary basis. (See id. ¶¶ 4, 10-11.) Nonetheless, Tomassi expected to retain no less than eighty to eight-five percent of the policyholders by selling them non-Erie policies; he also believed that whether or not Winfield was named an Erie agent, it would continue to service the Erie policies until the end of their term and any authorized extensions. (See Pl.'s SMF ¶¶ 11, 13-14, Dkt. No. 21, Attach. 17.)

Within days after execution of the APA, Tomassi contacted James Nolan, district sales manager for Erie, and discussed with him the possibility of Winfield being appointed as an Erie agent. (See Def.'s SMF ¶¶ 19-21.) Nolan eventually advised Tomassi that Erie was not interested in appointing Winfield as a permanent agent. (See id. ¶ 22.) On June 26, 2007, however, Erie appointed Winfield as a temporary agent, which was memorialized in a written temporary agency agreement (TAA). (See id. ¶ 27.) The TAA specifically required termination of the temporary agency "very shortly after" it began, and Erie was required to send out notice of termination to Winfield "within no more than one (1) month" after execution of the TAA. (Dkt. No. 17, Attach. 10 at 3-4.) By letter, in September 2007, Erie notified Winfield that it was terminating the TAA effective December 4, 2007. (See Def.'s SMF ¶¶ 35-40; Dkt. No. 17, Attach. 12 at 1.)

On September 26, 2007, Erie sent "offer letters" to policyholders being serviced by Winfield, which explained "that the agency relationship between Winfield and Erie had been terminated" and contained other information-relevant to the individual policyholders' options in light of Erie's termination of the TAA-that is at the center of this action. (Def.'s SMF ¶ 42.) In pertinent part, the letters, which existed in three iterations for personal lines, automobile, and commercial lines policies, explained that Winfield had been terminated as an agent, the policyholder was entitled to continue the policy through Winfield, and Erie would non-renew the policy at the appropriate time. (See Dkt. No. 17, Attachs. 13-15.) As for personal lines and automobile policies, if no action was taken, the policy would be serviced by Erie directly, and the policyholder was given only three weeks to express his or her intention. (See Dkt. No. 17, Attachs. 13- 14.) The letter sent to commercial lines policyholders did not require any affirmative action on their part to remain with Winfield. (See Dkt. No. 17, Attach. 15.) All three letters also encouraged the policyholder-in bold and mostly capitalized text-to contact Winfield to inquire about his or her policy and potentially "ARRANGE FOR REPLACEMENT COVERAGE WITH ANOTHER COMPANY." (Dkt. No. 17, Attachs. 13-15.)

Winfield sent out its own letters afterward, and therein attempted to explain the Erie offer letters to the policyholders in an effort to retain their business. (See Def.'s SMF ¶¶ 51-53.) Consistent with Erie's offer letters, some policyholders elected to continue with Winfield during the statutory run-off period and Erie paid commissions to Winfield until the policies were non-renewed. (See id. ¶ 54.) Erie also permitted Winfield to service the policies after it objected to the offer letters even if an individual policyholder did not indicate his or her intention to remain with Winfield by returning a signed letter. (See id. ¶ 55.) Only policyholders that specifically requested a new agent from Erie were provided information about how to obtain an Erie-approved agent, and, even then, Erie would merely refer the policyholder to the website that listed Erie agents, or provide the names and telephone numbers of such agents to the inquiring policyholder. (See id. ¶¶ 56-59.) Ultimately, Winfield only retained approximately thirteen percent of the expirations, far less than the eighty to eighty-five percent that Tomassi hoped for. (See Dkt. No. 21, Attach. 11 ¶ 26; Pl.'s SMF ¶ 11.)

B. Procedural History

Winfield commenced this action on December 21, 2010 alleging claims of conversion, tortious interference with business relationships, and a violation of N.Y. Gen. Bus. Law § 349. (See Compl. ¶¶ 34-44.) Following joinder of issue, (see Dkt. No. 8), and discovery, (see, e.g., Dkt. No. 17, Attachs. 4-5, 17, 20-22; Dkt. No. 21, Attachs. 5, 8-9), Erie moved for summary judgment, (see Dkt. No. 17), and Winfield cross-moved for partial summary judgment, (see Dkt. No. 21). Winfield has withdrawn its cause of action pertaining to N.Y. Gen. Bus. Law § 349. (See Dkt. No. 21, Attach. 15 at 4.)

III. Standard of Review

The standard of review pursuant to Fed. R. Civ. P. 56 is well established and will not be repeated here. For a full discussion of the standard, the court refers the parties to its decision in Wagner ...

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