Verne Pedro, the managing partner of Fullerton Beck’s New Jersey office, won a dismissal in a professional malpractice case filed against the firm’s client, an insurance broker based in California. The case involved a brewery in Ronkonkoma, NY, that sustained flood damage during Hurricane Ida. The brewery’s insurance carrier denied insurance coverage because its package liability policy did not cover flood damage.  The brewery then sued the broker for failing to obtain proper insurance. 

When the brewery first opened, it opted for insurance offered by the lender that financed its equipment. This insurance provided coverage for certain perils, including flood. After a few months, the brewery decided to buy its own insurance and purchased a customized brewery insurance package through our client in 2017.  But the brewery never asked for flood insurance nor tell our client the area was susceptible to flooding.  

Verne filed a pre-answer motion to dismiss in the Superior Court of Westchester. He successfully argued that, despite four years of policy renewals before the 2021 property loss, the brewery did not ask for flood coverage, nor was the broker required to obtain it without express instruction from his client to do so. Verne also argued that the policy, on its face, clearly did not provide flood insurance. Thus, the brewery would have known it was not covered for flood damage if it read the initial policy and each subsequent policy renewal in the intervening years before Ida. In addition, any assurance that the broker could obtain coverage that was “as good or better” than the lender-placed coverage did not mean the broker promised to obtain flood insurance – especially since it was never requested. The brewery maintained there was a “special relationship” between the parties, which placed a heightened duty on the broker to obtain flood insurance — an argument that went flat in court. 

The court agreed with Verne’s compelling argument and granted the firm’s motion to dismiss with prejudice.