United States District Court, E.D. Pennsylvania
MEMORANDUM RE: CENTRAL INSURANCE AGENCY, INC.'S
MOTION TO DISMISS BRANDYWINE INSURANCE ADVISORS, LLC'S
case involves a dispute over where blame lies for the
purchase of an insurance policy that failed to provide the
coverage the plaintiff wanted. Plaintiff David Rich
(“Plaintiff”) brings this action against
Brandywine Insurance Advisors (“BIA”) and Barry
Abrams, an insurance broker for BIA (“Abrams, ”
and collectively, “Original Defendants”).
Plaintiff's Complaint (ECF 1, “Compl.”)
contains four Counts:
(1) Breach of fiduciary duty;
(3) Negligent Misrepresentation; and
(Compl. ¶¶ 89-152).
September 23, 2016, BIA filed a Third-Party Complaint
(“T-P Compl.”) against Central Insurance Agency,
Inc. (“Central”), an insurance advisor with which
BIA consulted, for contribution and indemnification. On
December 9, 2016, Central filed a Motion to Dismiss BIA's
Third-Party Complaint pursuant to Federal Rules of Civil
Procedure 14(a) and 12(b)(6), (ECF 29, “Central's
Mot.”), to which BIA filed an Opposition on January 11,
2017 (ECF 42, “BIA's Opp'n”).
following reasons, Central's Motion to dismiss BIA's
Third-Party Complaint will be DENIED in part and GRANTED in
following facts are taken from the Complaint and Third-Party
Complaint, and are accepted as true for purposes of the
pending motion. See Fed.R.Civ.P. 12(b)(6);
United States Express Lines, Ltd. v. Higgins, 281
F.3d 383, 388 (3d Cir. 2002). In the Spring of 2013,
Plaintiff met Steven Peterson (“Peterson”), who
was engaged in the business of providing “vaulting
services” for ATMs in the New York City metropolitan
area. Vaulting services involve supplying and loading ATMs
with various denominations of cash, which is then dispensed
to customers who draw out money utilizing their bank cards.
(Compl. ¶¶ 10-14).
April 2013, Plaintiff decided to provide secured loans to
Peterson's ATM vaulting business (the “Vaulting
Loans”). (Id. ¶¶ 20-25). According
to Plaintiff, an “explicit precondition and term of the
Vaulting Loans” was that their proceeds were to be used
exclusively as working capital-specifically, as vaulting
cash-for Peterson's ATM vaulting business, and not for
business expenses or other overhead. (Id.
early 2014, Peterson requested additional loans from
Plaintiff. Plaintiff worried that Peterson could abscond with
funds in the vaulting accounts, however, and wanted to
protect his investment with insurance. (Id.
¶¶ 30-32). Before making further loans to Peterson,
Plaintiff required that he obtain “proper business
insurance, ” including, inter alia, “(i)
employee theft and dishonesty coverage (to, among other
things, cover theft and dishonesty by Peterson)[.]”
(Id. ¶ 33). Accordingly, Peterson obtained the
Original Defendants as insurance brokers to obtain the
coverage Plaintiff requested. (Id. ¶ 34).
made it clear to Original Defendants that he wanted an
insurance policy that would protect his interest-i.e. make
him the “loss payee or other form of
beneficiary”-against theft and dishonesty by employees,
including-specifically-Peterson. (Id. ¶¶
40-41). The Original Defendants represented to Plaintiff that
they could obtain a commercial insurance policy (the
“Policy”) which would name Plaintiff as the loss
payee and would protect his interest against theft and
dishonesty by employees, including Peterson. (Id.
¶¶ 44-46). In the Spring of 2014, in reliance on
the Original Defendants' representations to Plaintiff,
the ATM vaulting business obtained the Policy. (Id.
¶ 47). Despite Plaintiff's instructions, however,
the Policy did not include Plaintiff as a loss payee, an
insured, or other form of beneficiary. (Id. ¶
the Original Defendants, both orally and in writing,
repeatedly assured Plaintiff that the Policy protected and
insured him against theft or dishonesty by Peterson.
(Id. ¶¶ 50-53). Because of those
assurances, in July 2014, Plaintiff requested, through the
Original Defendants, that the Policy coverage for employee
theft and dishonesty be raised to $2, 250, 000, which it was.
(Id. ¶¶ 54-55). Plaintiff also made
additional loans and advances to Peterson's ATM vaulting
business in reliance upon the Original Defendants'
representations. (Id. ¶ 56). Plaintiff was not
officially added as a loss payee of the Policy, however,
until December 2014. (Id. ¶ 58).
November 2014, Peterson admitted to Plaintiff that he had
misappropriated about $900, 000 from the ATM vaulting
business, of which $833, 835 he could not return to the
vaulting funds (the “Theft”). (Id.
¶¶ 60, 65, 67). Upon learning of the Theft,
Plaintiff immediately contacted the Original Defendants, who
assured him that the losses to the ATM vaulting business due
to the Theft were covered by the Policy. (Id.
2015, after an investigation and numerous discussions with
the Original Defendants, Plaintiff filed a claim as a loss
payee under the Policy to recover for the Theft.
(Id. ¶ 70). His claim, however, was rejected
because-contrary to the explicit representations and
assurances of the Original Defendants-the Policy did not
cover losses resulting from theft or dishonesty of Peterson
because Peterson was an owner of the ATM vaulting business.
Unbeknownst to Plaintiff, the Policy expressly excepted from
coverage any theft committed by owners of the ATM vaulting
business. (Id. ¶¶ 71-72).
2016, while preparing to bring the instant action, Plaintiff
learned that, at all relevant times, Abrams (1) had been
convicted of felony insurance fraud and perjury in
Pennsylvania, and, (2) as a result of that conviction, had
his insurance license revoked, such that he was ...