Commercial Division Blog

Posted: June 4, 2015 / Categories Commercial, Contracts, Agency

Insurance Broker Not Liable for Alleged Torts and Breach of Contract of His Employer

On May 27, 2015, the Second Department issued a decision in Lido Beach Towers v. Denis A. Miller Insurance Agency, Inc., 2015 NY Slip Op. 04455, dismissing claims against an insurance broker.

In Lido Beach Towers, the plaintiffs brought claims against an insurance agency and one of its brokers based on claims relating to the sufficiency of the insurance the defendants procured for the plaintiffs. The Second Department affirmed the decision of the trial court to dismiss some of the claims against the individual defendant, explaining:

Corporate officers may not be held personally liable on contracts of their corporations, provided they did not purport to bind themselves individually under such contracts.

Here, [the individual defendant] established his prima facie entitlement to judgment as a matter of law dismissing the third cause of action, which alleged negligence, by demonstrating that he did not engage in any independent tortious conduct with respect to the handling of the plaintiffs' insurance policy. The record demonstrates that, at all relevant times, [the individual defendant] was acting within the course and scope of his employment with [the agency defendant], and that any alleged negligence in failing to advise the plaintiffs of a change to the coverage provided by the subject policy was due to a failure on the part of [the agency defendant].

When an agent acts on behalf of a disclosed principal, the agent will not be personally liable for a breach of contract unless there is clear and explicit evidence of the agent's intention to be personally bound. [The individual defendant] further established his prima facie entitlement to judgment as a matter of law dismissing the fourth cause of action, which alleged breach of contract, by demonstrating that there was no evidence of his intent to be personally bound.

(Internal quotations and citations omitted).