Guy Carpenter & Company, LLC v. Lockton RE, LP (S.D.N.Y. November 4, 2010)
Guy Carpenter & Company, LLC (“Guy Carpenter”) is a reinsurance intermediary. Lockton RE, LP and Lockton Insurance Agency, Inc. (collectively “Lockton”) is a competitor. Two insurance companies were clients of Guy Carpenter and Guy Carpenter placed reinsurance contracts for them in exchange for a brokerage fee. The parties agreed that the brokerage fee would be paid by allowing Guy Carpenter to retain a percentage of the quarterly premium payments its clients made to the reinsurers. Eventually, the two insurers notified Guy Carpenter of their intent to use a different broker, Lockton. This allegedly occurred when a particular broker left Guy Carpenter for new employment with Lockton.
Although the full commission was earned in June 2009 when the business was placed, the two insurers paid only a quarter of their premiums to Guy Carpenter and accordingly, only a portion of the brokerage fee they owed for the placement of those policies before the move to Lockton. Guy Carpenter alleged that it was still owed over $1.5 million, and sued Lockton for conversion, tortious interference with contract and unjust enrichment. Lockton moved to dismiss plaintiff’s claims for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure.
The United States District Court for the Southern District of New York denied Lockton’s motion to dismiss the first two causes of action, but granted Lockton’s motion with respect to the third. With respect to plaintiff’s conversion claim, the court held that plaintiff identified a specific fund of money to which plaintiff claimed title. In this regard, the brokerage fee was an identifiable chattel and was properly subject to a conversion claim.
With respect to plaintiff’s claim for tortious interference with contract, the court held that while the client relationship between plaintiff and the two insurers was terminable at will, the two insurers were not free to shirk their contractual obligation to pay Guy Carpenter its brokerage fee. Plaintiff alleged that Lockton was fully aware of the insurers obligations to pay the brokerage fee, but refused to forward to plaintiff its portion of the premium payments when Lockton received the money from the two insurers. This, combined with plaintiff’s allegation that it did not receive its full brokerage fee, was sufficient to state a claim for tortious interference with contract.
The court granted Lockton’s motion to dismiss plaintiff’s unjust enrichment claim, however. The court held that New York courts do not allow unjust enrichment claims when there is a valid contract between the parties governing the subject matter at issue. Here, plaintiff’s entitlement to the unpaid brokerage fee is governed by agreements between it and the two insurers. Accordingly, the court held that the unjust enrichment claim is improper.
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Toni Frain and Michael Glascott
https://www.goldbergsegalla.com/attorneys/Frain.html
https://www.goldbergsegalla.com/attorneys/MGlascott.html
case provided courtesy of Lexis