Policyholder’s Claims Against Policy Administrator To Recover Demutualization Proceeds Survive Motion To Dismiss

Posted: July 22, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Motion to Dismiss, Fiduciary Duties, Unjust Enrichment, Commercial

Policyholder’s Claims Against Policy Administrator To Recover Demutualization Proceeds Survive Motion To Dismiss

On July 10, 2026, in Kim v. Radiology Associates of Main Street, P.C., Index No. 715347/2025, Justice Marguerite A. Grays of the Queens County Commercial Division denied defendant’s pre-answer motion to dismiss.

Plaintiff, a physician formerly employed by the defendant radiology group, sued to recover a $335,319.62 cash distribution arising from the demutualization of Medical Liability Mutual Insurance Company (MLMIC). As an “eligible policyholder,” plaintiff was entitled to the cash consideration under New York Insurance Law § 7307, but defendant, her former employer and the policy administrator that had paid her malpractice premiums, received the funds and refused to forward them, contending that plaintiff had assigned her ownership interest by executing a consent form supplied by MLMIC. Plaintiff alleged that the consent form merely designated defendant as her agent to receive the distribution and did not transfer or waive her rights, and she asserted claims for conversion, unjust enrichment, money had and received, and breach of fiduciary duty. Defendant moved, among other things, to dismiss under CPLR 3211(a)(1), arguing that the consent form was documentary evidence that utterly refuted the complaint. The Court agreed with plaintiff’s view of the consent form and denied the motion. The Court explained:

The terms of the Consent clearly establish that its purpose is to grant authority to the previously appointed policy administrator so that the policy administrator may “receive any distribution that may be allocated to the undersigned upon the consummation of the announced proposed conversion” (defendant’s exhibit A). Furthermore, the Consent also states that by signing same, the policyholder “supplements the policy administrator appointment previously executed by the undersigned” (id.). This evidences that the nature of the appointment is the same in that the policy administrator is further acting as agent on behalf of the policyholder. Thus, plaintiff’s claim that she is entitled to the cash distribution over and above defendant is not refuted by the Consent.

The attorneys at Schlam Stone & Dolan LLP have extensive experience litigating breach of fiduciary duty claims and pre-answer motions to dismiss in complex commercial disputes. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.