14-1954-cv
First Mercury Ins. Co. v. 613 NY Inc.

                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order filed on or
after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and
this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this court, a
party must cite either the Federal Appendix or an electronic database (with the notation “summary
order”). A party citing a summary order must serve a copy of it on any party not represented by
counsel.

    At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, at 40 Foley Square, in the City of New York, on
the 7th day of April, two thousand fifteen.

Present: ROBERT A. KATZMANN,
                     Chief Judge,
         JOHN M. WALKER, JR.,
         GERARD E. LYNCH,
                     Circuit Judges.
________________________________________________

FIRST MERCURY INSURANCE COMPANY,

                          Plaintiff-Counter-Defendant-Appellant,

                           v.                                   No. 14-1954-cv

613 NY INC.,

                          Defendant-Counter-Claimant-Appellee,

CEZARIN NDREKA,

                          Defendant-Appellee.

________________________________________________

For Plaintiff-Counter-Defendant-Appellant:       GIL M. COOGLER, White Fleischner & Fino
                                                 LLP, New York, NY.

For Defendant-Counter-Claimant-Appellee:         JEFFREY D. BUSS & Jennifer L. Stewart, Smith,
                                                 Buss & Jacobs, LLP, Yonkers, NY,
For Defendant-Appellee:                              Denise A. Rubin, Rubin PLLC, New York, NY.


   Appeal from the United States District Court for the Southern District of New York (Crotty, J.
and Ramos, J.)

          ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,

and DECREED that the judgment of the district court be and hereby is AFFIRMED.

          Plaintiff-Counter-Defendant-Appellant First Mercury Insurance Company (“First

Mercury”) appeals from a May 12, 2014 judgment in the United States District Court for the

Southern District of New York (Ramos, J.), which followed the denial of its motion for summary

judgment on January 15, 2013 (Crotty, J.), the denial of its motion for reconsideration on April

22, 2013 (Crotty, J.), and the jury verdict entered against it on May 7, 2014. We assume the

parties’ familiarity with the relevant facts, the procedural history, and the issues presented for

review.

          First, First Mercury challenges the district court’s conclusion that the notice-of-claim

provision of the insurance policy covering defendant-counter-claimant-appellee 613 NY Inc.

(“613 NY”) was ambiguous and that its meaning therefore presented a genuine issue of material

fact for the jury. We review this decision de novo. See Scholastic, Inc. v. Harris, 259 F.3d 73, 81

(2d Cir. 2001). The relevant provision at issue states:

          Notice given by or on behalf of the insured, or written notice by or on behalf of the
          injured person or any other claimant, to any agent of ours in New York State, with
          particulars sufficient to identify the insured, shall be considered to be notice to us.

J.A. 77 (emphasis added). In its motion for summary judgment, First Mercury argued that the

phrase “any agent of ours in New York State” unambiguously refers to CoverX, the agent listed

earlier in the policy for receiving notice of claims, despite the fact that the address listed for



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CoverX is in Southfield, Michigan. In its cross-motion for summary judgment and at trial, 613

NY argued that “any agent of ours in New York State” referred to Brooks Insurance Agency

(“Brooks”), the excess line broker through which First Mercury issued the policy.

       “Whether a contract is ambiguous . . . is a ‘threshold question of law to be determined by

the [district] court.’” Parks Real Estate Purchasing Grp. v. St. Paul Fire & Marine Ins. Co., 472

F.3d 33, 42 (2d Cir. 2006) (quoting Duane Reade Inc. v. St. Paul Fire and Marine Ins. Co., 411

F.3d 384, 390 (2d Cir. 2005)). “[W]here the language [of the contract] and the inferences to be

drawn from it are unambiguous . . . a district court [may] construe a contract as a matter of law

and grant summary judgment accordingly.” Alexander & Alexander Servs., Inc. v. These Certain

Underwriters at Lloyd’s, London, 136 F.3d 82, 86 (2d Cir. 1998) (internal quotation marks

omitted). Where, however, “the terms of a contract could suggest ‘more than one meaning when

viewed objectively by a reasonably intelligent person who has examined the context of the entire

integrated agreement and who is cognizant of the customs, practices, usage and terminology as

generally understood in the particular trade or business,’” ambiguity exists. Id. (quoting

Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir. 1997)). “If there is ambiguity in

the terminology . . . and determination of the intent of the parties depends on the credibility of

extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic

evidence, then such a determination is to be made by the jury.” Hartford Acc. & Indem. Co. v.

Wesolowski, 305 N.E.2d 907, 909 (N.Y. 1973).

       Applying this framework to the present case, we conclude that the district court correctly

held that the notice-of-claim provision was ambiguous. As the district court explained, “[i]f First

Mercury’s argument is to be accepted, the contract language would have to be changed from

‘agent . . . in New York State’ to ‘agent . . . for New York State.’” Special App. 5–6 (emphasis

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added). CoverX was never located in or licensed by the state of New York and the address listed

in the policy for CoverX was a P.O. Box in Southfield, Michigan. A plain text reading of the

notice-of-claim provision, therefore, cannot be found to unambiguously require that notice be

provided to CoverX.

        Second, First Mercury contends that the district court improperly denied its motion for

summary judgment and its motion for reconsideration after concluding that the policy’s notice-

of-claim provision, as a matter of law, could permit an excess line agent to act as an excess line

broker’s agent under New York’s commercial insurance scheme. We review the district court’s

denial of plaintiff’s summary judgment motion de novo, Scholastic, 259 F.3d at 81, and the

denial of plaintiff’s motion for reconsideration for abuse of discretion, Aczel v. Labonia, 584

F.3d 52, 61 (2d Cir. 2009).

        In support of its motion for summary judgment, First Mercury argued that as a matter of

New York case law, an excess line broker may not be found to be the agent of the excess line

insurer. In support of this contention, First Mercury relied exclusively on Gershow Recycling

Corp. v. Transcon. Ins. Co., 801 N.Y.S.2d 832, 834 (App. Div. 2005), a case in which the New

York Appellate Division, Second Department, concluded that, while “it is a common practice for

insureds to notify their brokers, rather than their carriers, in the event of a claim or lawsuit. . . .

we emphasize that insureds do so at their peril since the law is clear: the policy requirement that

the notice must be provided to the carrier trumps any informal arrangement or practice engaged

in between insureds and their brokers.” According to First Mercury, Brooks was accordingly not

permitted as a matter of law to act as the agent of First Mercury and the district court should

never have permitted the jury to conclude otherwise.

        We find this reasoning unpersuasive. In Gershow, the court found “the fact that [the

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insured] may have provided timely notice . . . to its broker . . . of no consequence” because “the

policy explicitly required [the insured] to notify [the insurer].” Id. at 833. Here, by contrast, the

policy was ambiguous and arguably permitted 613 NY to submit notice to Brooks. While

Gershow identified the general rule that an insured cannot fulfill its duty to provide notice to an

insurer by providing notice to the insured’s broker, there is also a well-established exception to

that rule that “a broker will be held to have acted as the insurer’s agent where there is some

evidence of action on the insurer’s part, or facts from which a general authority to represent the

insurer may be inferred.” Inc. Vill. of Pleasantville v. Calvert Ins. Co., 612 N.Y.S.2d 441, 441

(App. Div. 1994) (alterations and internal quotation marks omitted) (listing cases); see also

Robert A. Rubin, et. al., New York Construction Law Manual § 10:18 (2d ed.) (“Whether an

insurance salesperson is a broker or an agent is determined by the circumstance of the case, not

by statutory definitions.”). First Mercury would have us read Gershow as eliminating this well-

established exception, despite the fact that nothing in Gershow purports to do so. Tellingly,

subsequent cases in the same Department of the Appellate Division have interpreted insurance

contracts in certain circumstances “to allow notice to [a] broker” as notice to the insurer after

Gershow was decided. See Prince Seating Corp. v. QBE Ins. Co., 903 N.Y.S.2d 64, 65 (App.

Div. 2010); Jeffrey v. Allcity Ins. Co., 809 N.Y.S.2d 174, 174 (App. Div. 2006). For these

reasons, we cannot conclude that the district court erred by allowing a jury to decide whether the

insurance contract permits a broker to act as an agent for the insured.

       In First Mercury’s subsequent motion for reconsideration, it argued for the first time that

the New York Insurance Law and the regulations promulgated pursuant to it categorically

prevent an excess line broker from acting as the agent of an out-of-state excess line carrier and

that a jury may not be permitted to conclude otherwise. We find this contention also without

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merit. Assuming without deciding that First Mercury reads the relevant statutes and regulations

correctly, the fact that an excess line broker is prohibited from acting as the agent of an excess

line insurer does not preclude a court from finding that such an agency relationship in fact

existed. To the contrary, “the weight of authority in New York holds that an insurance

company’s failure to comply with the licensing scheme of this State does not invalidate the

insurance contract, but rather subjects the insurer to the available statutory penalties and

sanctions that may be imposed by the Superintendent of Insurance.” 3405 Putnam Realty Corp.

v. Chubb Custom Ins. Co., 788 N.Y.S.2d 64, 65 (App. Div. 2005). Because First Mercury’s

statutory argument was not timely raised and does not compel clearly a result in First Mercury’s

favor, the district court did not abuse its discretion in denying First Mercury’s motion for

reconsideration.

       Third, First Mercury challenges the sufficiency of the evidence at trial. Yet at trial, First

Mercury did not move for a directed verdict on the basis of insufficiency of the evidence.

Generally, we do not review sufficiency of the evidence claims upon appeal if they were not

preserved below unless such review is required to prevent manifest injustice. See Kirsch v. Fleet

St., Ltd., 148 F.3d 149, 164 (2d Cir. 1998); Cruz v. Local Union No. 3 of Int’l Bhd. of Elec.

Workers, 34 F.3d 1148, 1155 (2d Cir. 1994). Here, First Mercury failed to raise the sufficiency

of the evidence claim below and, in any event, based on the evidence adduced at trial, a

reasonable jury easily could have concluded that the parties intended the policy to allow Brooks

to accept notice on First Mercury’s behalf under the terms of the policy. Accordingly, we have

no basis to reverse the jury’s decision.

       Fourth, First Mercury challenges the ordering of the questions on the verdict sheet. “The

formulation of special verdict questions rests in the sound discretion of the trial judge, and

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should be reviewed by an appellate court only for an abuse of that discretion.” Vichare v.

AMBAC Inc., 106 F.3d 457, 465 (2d Cir. 1996). “Reversal is warranted if the questions mislead

or confuse the jury, or if they inaccurately frame the issues to be resolved by the jury.” Id.

Although in First Mercury’s view the district court should have required the jury to make a

finding that Brooks had provided timely notice of the claim to First Mercury prior to concluding

that the contract permitted Brooks to act as First Mercury’s agent, this argument is wholly

without merit. To the contrary, each of the three questions on the jury verdict sheet represented

an independent basis for the jury to conclude that the 613 NY provided timely notice under the

policy. Because the jury concluded that Brooks was First Mercury’s agent under the terms of the

notice-of-claim provision and there is no dispute that 613 NY provided timely notice to Brooks,

the jury was justified in concluding that 613 NY fulfilled its requirement to provide notice the

moment it submitted a claim to Brooks regardless of whether Brooks forwarded the claim to

First Mercury.

       We have considered First Mercury’s remaining arguments and find them to be without

merit. For the reasons given, we AFFIRM the judgment of the district court.

                                              FOR THE COURT:
                                              CATHERINE O’HAGAN WOLFE, CLERK




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