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Starr Indemnity & Liability Company v. American Claims Management, Inc.

United States District Court, S.D. New York

November 21, 2014


Thomas J. McCormack, Seth M. Kruglak, Michael A. Samalin, CHADBOURNE & PARKE LLP, New York, NY, David M. Raim, CHADBOURNE & PARKE LLP, Washington, DC, Eric D. Freed, Lezlie Madden, COZEN O'CONNOR, Philadelphia, PA, for plaintiff Starr Indemnity & Liability Company.

Thomas Cahill, Joshua M. Rubins, Justin Klein, SATTERLEE STEPHENS BURKE & BURKE LLP, New York, NY, for defendant American Claims Management, Inc.


DENISE COTE, District Judge.

Defendant American Claims Management Inc. ("ACM") has moved for summary judgment on certain claims brought by plaintiff Starr Indemnity & Liability Company ("Starr"). For the reasons that follow, the motion is denied.


In this action, Starr, an insurer, seeks to recover damages from ACM, the company that administered claims brought by insureds under Starr's non-standard automobile insurance policy, a high-risk insurance program implemented in accordance with the Personal Injury Protection ("PIP") section of the Michigan No-Fault Insurance Act. Starr alleges that ACM improperly adjusted PIP claims so as to pay benefits to claimants before obtaining reasonable proof that the alleged losses were compensable or had even occurred. According to Starr, ACM's errors in handling various claims resulted in what is known in the insurance industry as "leakage" - paying more than necessary to resolve a claim, whether due to inefficiency, process malfunction, human error, fraud, or other causes.

Starr contends that ACM's poor handling of these claims violated standards of professional reasonableness and the parties' Claims Services Agreement ("Agreement"). The Agreement, which became effective on January 1, 2010 and is governed by New York law, required ACM to have qualified personnel investigate, adjust, administer, and pay non-standard auto claims in accordance with all laws, rules, regulations, industry practices, and ACM guidelines.

At present, this action involves thirty-three insurance claims that ACM administered on behalf of Starr. ACM has limited its summary judgment motion to twelve claims ("the Claims"), which represent eighty-five percent of the total damages sought by Starr.


Summary judgment may not be granted unless all of the submissions taken together "show[] that there is no genuine dispute as to any material fact" and that ACM, the movant, "is entitled to judgment as a matter of law." See Fed.R.Civ.P. 56(a). ACM bears the burden of demonstrating the absence of a material factual question, and, in making this determination, all facts are viewed in the light most favorable to Starr and all reasonable inferences are drawn in Starr's favor. See Eastman Kodak Co. v. Image Technical Servs., 504 U.S. 451, 456 (1992); Holcomb v. Iona Coll., 521 F.3d 130, 132 (2d Cir. 2008). If ACM has asserted facts showing that Starr's claims cannot be sustained, Starr must "set out specific facts showing a genuine issue for trial" and cannot "rely merely on allegations or denials" contained in the pleadings. See Fed.R.Civ.P. 56(e); Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). Nor may Starr "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment, " as "[m]ere conclusory allegations or denials cannot by themselves create a genuine issue of material fact where none would otherwise exist." See Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (citation omitted).

Starr's complaint contains one count for "breach of contract, " one count for "negligence and/or professional negligence, " and one count for "breach of warranty." ACM contends, and Starr does not dispute, that, whether Starr's claims sound in contract or in tort, Starr must prove, among other things, that ACM's conduct was a but-for cause resulting in damages. ACM moves for summary judgment on the elements of factual causation and damages, arguing that the record lacks material creating triable issues on those elements. Due to this lack of evidence, ACM asserts that Starr is left to rely on mere speculation to overcome the summary judgment motion.

To deny ACM's motion, it suffices to show that the record contains material creating triable issues on causation and damages with respect to the twelve Claims. Thus, the following discussion of the twelve Claims presents but a few representative key facts from which a jury could reasonably draw the inference that ACM's conduct caused Starr to suffer damages.

Before that discussion, however, a word on one piece of evidence in the record - the report of Starr's expert, Alan Gray. ACM explicitly has not made a motion in limine under Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993), to exclude Gray's report. Instead, ACM argues that Gray's report is simply an attempt to convert Starr's version of the facts into expert testimony and that, in any case, Gray's report raises no triable issues of fact as to causation or damages. ACM's arguments with respect to Gray's report need not be considered at this juncture, because the record contains submissions that Starr represents it will admit through fact witnesses from which a jury could reasonably infer that ACM's conduct caused Starr ultimately to pay more than it otherwise would have on the twelve Claims. Those submissions, consisting of police reports, files from ACM and Starr, and the like, form the basis of the ensuing discussion of the twelve Claims.

1. Cusick Claim

The police records from the car accident of claimant Janice Cusick reported no passengers in the car other than Cusick, who was driving. And when Cusick first reported the accident to ACM, she mentioned no passengers. Nonetheless, without further investigation, ACM paid ...

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