United States District Court, D. Connecticut
MEMORANDUM OF DECISION ON DEFENDANTS' MOTIONS FOR
W. EGINTON, SENIOR UNITED STATES DISTRICT JUDGE.
an action by an insured business against its insurance broker
and its insurer after a fire destroyed retail and storage
facilities containing personal property and equipment. The
insurance policy at issue allegedly failed to provide
adequate building, personal property and equipment coverage
and lacked coverage for “extra expense” or
business income interruption.
Northeast Builders Supply & Home Centers, LLC, alleges
(1) negligence, (2) misrepresentation, (3) breach of
fiduciary duty, and (4) violation of the Connecticut Unfair
Trade Practices Act against defendants Member Insurance
Agency, Inc., and Pennsylvania Mutual Insurance Company.
Defendants have each moved for summary judgment. For the
following reasons, defendants' motions will be granted in
part and denied in part.
following background was gleaned from the parties'
statements of fact, affidavits, deposition transcripts, and
Builders Supply & Home Centers, LLC, is a multi-location
lumber and hardware wholesaler and retailer with its
principal place of business located at 1460 Barnum Avenue,
Insurance was established in 1972, and provides insurance
products for the retail, hardware, lumber, and building
2009, Northeast procured commercial insurance through Member
in 2009, Northeast procured insurance through David Kelly, of
the Bouvier Insurance Agency. Since 2009, Northeast's
insurance carrier was Acadia.
prior coverages provided to Northeast by Acadia, the parties
dispute whether plaintiff's Cornwall Bridge and Grove
Street locations had coverage for items such as business
income loss and extra expense. Northeast maintains that its
prior policies are not material to its claims in the instant
case, as plaintiff alleges it requested blanket loss income
and extra expense coverage for all locations.
principal, Jan Cohen, was a practicing certified public
account in the state of Connecticut for approximately ten
years before leaving the accounting profession to begin a
career developing real estate. When he worked as a CPA at
Caposella Cohen, Mr. Cohen performed audits for two lumber
companies one of which, Bridgeport Lumber, he would later
acquire. Mr. Cohen began his first real estate development
business, 340 Orange Street, with his partner, Arnie Foster.
Mr. Cohen and Mr. Foster met at Capossela Cohen in 1982 when
Mr. Foster was hired as a computer consultant. Mr. Cohen
began buying commercial real estate and operating his real
estate business while he was still working as a CPA at
Cohen testified that over the years he and Mr. Foster have
owned approximately 25 business entities. By 1990, Mr. Cohen
entered the lumber and building materials business in
addition to real estate development. Mr. Cohen had previously
purchased real estate with a lumber business on it in 1988.
Mr. Cohen and Mr. Foster have operated that lumber business,
Bridgeport Lumber, continuously since its purchase in 1988.
Bridgeport Lumber became Northeast Builders Supply. Mr. Cohen
testified that he is Northeast's Chief Financial Officer
and co-CEO. In addition to supervising and managing most of
Northeast's real estate holdings, Mr. Cohen supervises
the accounting department and makes management decisions with
Cohen also testified that it has been his responsibility to
negotiate and acquire policies of insurance for Northeast.
disputes that Mr. Cohen's professional experience as a
CPA or his role at Northeast of negotiating and acquiring
insurance for the company bears any relevance. Plaintiff
submits that Mr. Cohen, as an insured, is not sophisticated
in commercial insurance and the procurement of such
insurance. Member Insurance, as a broker, has the expertise
in insuring the commercial lumber industry and had the
responsibility of properly quoting and procuring coverage for
Northeast's risk. Northeast contends that it was
appropriate for Mr. Cohen to trust and rely on Member
Insurance to properly quote and procure insurance coverage
October 7, 2013, Greg Cooper, a Member Insurance Account
Executive, emailed plaintiff's principal, Jan Cohen, to
submit a bid for plaintiff's commercial insurance. Jan
Cohen instructed his assistant, Jessica Mandujano, to get the
information that Mr. Cooper requested, so he could bid the
after Jan Cohen directed Ms. Mandujano to provide the
requested information to Mr. Cooper, Mr. Cooper emailed Jan
Cohen again and asked, "Jan, before we move forward, has
anything changed since last year? I certainly do not want to
waste your time."
Cohen responded three minutes later: "Our loss ratios
for comp have come way down. Nothing has changed and we make
Cooper responded five minutes later, "[w]ill you allow
us to use Pennsylvania Lumbermens this year? If not, I
don't see a reason to move forward."
minutes later, Mr. Cohen responded, "Yes go ahead."
Four minutes later, Mr. Cooper responded, "OK, I will
move forward with PLM for your 1/1 renewal. They should be
able to provide competitive alternative to Acadia this year.
I work closely with their field underwriter, Sheila."
minutes later, Mr. Cohen responded: "I will be at do it
[Do It Best Corp. show] on the 18th . . . If you can provide
significant savings we will change."
Wednesday, October 2, 2013, Jessica Mandujano sent Greg
Cooper the expiring policy that was provided through the
Acadia Insurance Company as well as Northeast's recent
loss run and related requested information.
same day, Greg Cooper emailed Jan Cohen a draft "Broker
of Record Letter" to allow Member Insurance to ...