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Essex Insurance Co. v. William Kramer & Associates, Inc.

United States District Court, D. Connecticut

May 19, 2016

Essex Insurance Company, Plaintiff,
v.
William Kramer & Associates, Inc., Defendant.

          MEMORANDUM AND ORDER

          MICHAEL P. SHEA, U.S.D.J.

         This case requires me to decide whether a jury’s finding that the applicable statute of limitations was tolled under Connecticut’s “continuing course of conduct” doctrine is supported by sufficient evidence. Essex Insurance Company (“Essex”) asserts a negligence claim against independent adjuster William Kramer & Associates, LLC (“WKA”), arising out of Essex’s employment of WKA in 2006 and 2007 to adjust losses to commercial properties in Florida caused by Hurricane Wilma. Essex claims that WKA was negligent in failing to inform Essex, before it issued the final claim check for the loss, of the existence of a mortgagee on one of the properties. The undisclosed mortgagee later sued Essex and received a large settlement.

         The Court held a jury trial on February 10, 11, and 12, 2016. The jury found Essex negligent and awarded damages of $1, 250, 002.89. The jury also found that although Essex had brought suit more than three years after WKA’s negligent conduct, the claim was not time-barred because WKA had engaged in a “continuing course of conduct” that tolled the applicable statute of limitations.

         WKA has renewed its motion for judgment as a matter of law, arguing that no reasonable juror could find based on the evidence presented at trial that Connecticut’s “continuing course of conduct” doctrine sufficiently tolled the statute of limitations to make Essex’s claim timely.

         After construing the evidence in the light most favorable to Essex and drawing all reasonable inferences in its favor, I agree with WKA and conclude that it is entitled to judgment as a matter of law.

         I. Legal Standard

         Fed. R. Civ. P. 50(a)(1)(B) states,

If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may . . . grant a motion for judgment as a matter of law against the party on a claim . . . that, under the controlling law, can be maintained . . . only with a favorable finding on that issue.[1]

         “Judgment as a matter of law may not properly be granted under Rule 50 unless the evidence, viewed in the light most favorable to the opposing party, is insufficient to permit a reasonable juror to find in her favor.” Galdieri-Ambrosini v. Nat’l Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998).

[T]he district court must [also] draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence. . . . Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. . . . Thus, although the Court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.

Manganiello v. City of New York, 612 F.3d 149, 161 (2d Cir. 2010) (citations and internal quotation marks omitted). “Although a party making a Rule 50 motion always faces a heavy burden, that burden is particularly heavy, where, as here, the jury has deliberated in the case and actually returned its verdict in favor of the non-movant.” Newton v. City of New York, 779 F.3d 140, 146 (2d Cir. 2015).

         II. Factual Background

         Construing the evidence presented at trial in the light most favorable to Essex, and drawing all reasonable inferences in its favor, the jury could have found the following facts.

         A. Essex Hires WKA to Adjust Losses to The Villas

         In October of 2005, Hurricane Wilma damaged several properties in Florida, including a commercial property known as “The Villas.” (Verna Test., ECF No. 79-3, at 6.) Before the storm, IDM, owner of The Villas and other properties in the area, obtained several layers of insurance to protect itself against loss. (Id. at 3.) IDM had an initial layer of $5 million in coverage from Aspen Insurance Company (“Aspen”) and an excess layer of $10 million shared by Essex and a third insurance company. (Id. at 4.) After the storm, Essex received a Notice of Loss from IDM’s retail agent, Brian Adams (an employee of insurance agency USI), indicating that the loss resulting from the damage to The Villas might reach Essex’s layer of coverage. (Id. at 5.)

         Aspen hired WKA to adjust the loss to the IDM properties for its initial layer of coverage. (Id.) Around that time, Dennis Martin, a WKA employee, contacted Essex and asked if WKA could also perform adjusting work for Essex should the loss reach Essex’s excess layer. (Id.) It is customary for excess-layer insurers to engage the same independent adjuster as the initial layer insurer because all insurers can thereby share the information and work product already generated by the original adjuster, reducing the need for redundant work. (Id. at 6.) Richard Verna, an Essex employee, agreed to hire WKA as Essex’s independent adjuster for the IDM properties, which included The Villas. (Id. at 5-6.)

         On April 25, 2006, Adams sent WKA adjuster Robert Oberpriller a letter indicating there had been an issue with one of Aspen’s payment checks. (Pl.’s Ex. 2.) Adams attached to his letter “a copy of the mortgagees” on each of the IDM properties. (Id.) The attached document, titled “IDM Management, Inc. /schedule of Mortgagees, ” listed Intervest National Bank (“Intervest”) as a mortgagee on The Villas. (Id.) After receiving Adams’s letter, Oberpriller sent a letter to Aspen employee Kevin Igoe, requesting that Aspen reissue the check referenced in Adams’s letter. (Pl.’s Ex. 3.)

         B. WKA Performs Adjusting Work on The Villas

         Upon hiring WKA, Essex (through Verna) requested that WKA perform a “full adjustment” on The Villas. (Verna Test. at 12.) A full adjustment includes inspecting the property, determining the scope of damage and estimating the loss, working with IDM to agree to an amount of loss, reviewing all coverage aspects of Essex’s policy, identifying any potential coverage issues, and reporting all elements associated with the investigation and the claim measuring process. (Id.) It also includes identifying any mortgagees on the properties on which WKA was performing its work:

Q: Did WKA at the time it was adjusting the loss for Essex Insurance Company . . . have a duty to Essex to follow the instructions that was given to it by Essex regarding adjusting the loss?
A: Yes.
Q: And one of the things we’ve looked at a few times in this case is an assignment from Aspen, the first insurer that said identify the mortgagees, right?
A: Right.
Q: That was one of the duties in this case of William Kramer and Associates, wasn’t it?
A: Right.
Q: And that duty wasn’t just to Aspen, was it?
A: No, to all insurance companies.
Q: Including Essex, correct?
A: Correct.

(Martin Test. at 10.) On multiple occasions while WKA was performing its adjusting work for Essex, Verna asked Martin and/or Oberpriller whether there was a mortgagee on The Villas, and the WKA employees responded in the negative:

Q: And did you specifically in 2006 ask WKA, in particular, Mr. Oberpriller or Mr. Martin who was working on the file, to identify if there was a mortgagee for [T]he Villas?
A: I did, yes.
Q: And do you recall receiving [this] email . . . from Mr. Oberpriller dated August 28, 2006, in particular, in the second line where he indicates there is no mortgage company for [T]he Villas?
A: Yes, sir, I recognize this.
Q: And at that period, was that the response you’re receiving from WKA, that there was not a mortgage company for [T]he Villas?
A: Yes.

(Verna Test. at 12-13.)

         While performing the adjusting work, WKA sent periodic status reports to Essex. (Id. at 15-17.) These reports included lists of the IDM properties as well as the name of any mortgagees on those properties. (Id.) The lists identified a mortgagee on each IDM property except The Villas, for which WKA indicated that there was “no mortgagee.” (Id. at 17-18.) Each status report was signed by Oberpriller and Martin. (Id. at 18.) Had Oberpriller looked in WKA’s files regarding the work it had done for Aspen, he would have seen the schedule of mortgagees it received from Adams, which indicated that Intervest was a mortgagee on The Villas. (Martin Test. at 3; see also Def.’s Ex. 51, at 152 (“Q: Would you agree with me, sir, that had you looked in WKA’s file or had you looked at this in particular, this letter that was addressed to you . . . that you could have seen on the schedule of mortgagees . . . that The Villas did have a mortgagee? A: Yes.”).) Martin agreed that Essex, while WKA was performing its adjusting work, could “fairly rely” on the fact that WKA would share information about IDM properties WKA obtained while performing work for Aspen, including the schedule of mortgagees Adams sent to Oberpriller. (Martin Test. at 7.)

         In March 2007, before issuing Essex’s final claim payment check for The Villas, Verna again asked Martin and Oberpriller if there was a mortgagee on The Villas. (Verna Test. at 13.) The WKA employees responded that they had not received a response from the policyholder as to whether a mortgagee interest existed on The Villas, but stated that there was no indication there was a mortgagee. (Id.) Verna assumed that when he inquired as to whether there was a mortgagee on The Villas, the WKA employees would look in their files to see if they had that information. (Id. at 13-14.) Verna never received any indication from WKA in 2007 that The Villas had a mortgagee. (Id. at 21.) Because Verna was not a licensed insurance adjuster in the State of Florida, he lacked authority to contact IDM or its representatives directly. (Id.) Essex issued the final claim payment check on March 19, 2007; it did not list Intervest as a payee. (Def.’s Ex. 515.) Had Verna known about Intervest’s interest in The Villas, he would have included Intervest on the payment check or reached out to Intervest to “let them know that we had been apprised that they had an interest” and that Essex was going to make its final claim payment. (Verna Test. at 25.) Because WKA failed to inform Essex about Intervest’s interest, Verna was not in a position to initiate any such discussion with Intervest or IDM. (Id. at 26; Martin Test. at 26.)

         C. WKA’s Post-March 2007 Relationship with Essex

         Essex and WKA never executed a written contract regarding WKA’s adjusting work on the IDM properties. Once Essex issued its final payment check to IDM, Verna ceased “tracking what was going on” with the IDM properties. (Verna Test. at 30.) WKA, however, still considered Essex its “client” after finishing its adjusting work on the IDM properties, and continues to do so “[e]ven to this day.” (Martin Test. at 25.) In August or September of 2007, Martin contacted Essex to inform it that AXIS Insurance Company (“AXIS”), which held the final excess layer of coverage on the IDM properties, had contacted WKA and asked how Essex had made its payment checks payable. (Verna Test. at 28.) In addition, when WKA was subpoenaed in 2009 and when Martin was required to testify at a deposition in 2012 in connection with a lawsuit Intervest had initiated regarding the IDM properties (the “Intervest Action”) - which is discussed in greater detail below - WKA billed Essex for the costs it incurred. At trial, Mr. Martin of WKA testified as follows:

Q: But you do remember that at each time that you -- WKA was contacted about [T]he Villas or IDM after March ’07, you would reach out to Essex on each of those occasions, wouldn’t you?
A: I can’t say, sir, each occasion.
Q: Well, I’ve shown you at least two[, the 2009 subpoena and the 2012 deposition], right?
A: Yes.
Q: And you would use their attorneys, right?
A: Right.
Q: And you would bill them for the services they provided you, right?
A: Usually, yes.

(Id. at 24-25.) This was because WKA and Essex had on “ongoing relationship” with Essex with regard to The Villas, even after 2007:

Q: And you still had that relationship with Essex regarding IDM and [T]he Villas loss even up until the time of 2012, at the time you were billing them for services, correct?
A: Right.
Q: You’re still treating them like your client, right?
A: Yes.
Q: Because you had an ongoing relationship with them, didn’t you?
A: Sure. Even to this ...

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