United States District Court, E.D. North Carolina
LIVERMAN M RECYCLING, INC. and EMPIRE SERVICES, INC., Plaintiffs,
ARTHUR J. GALLAGHER & CO., Defendant.
TERRENCE W. BOYLE, UNITED STATES DISTRICT JUDGE
matter is before the Court on defendant's motion for
summary judgment [DE 25]. The matters are fully briefed and
are ripe for ruling. A hearing was held before the
undersigned on April 6, 2018 at Raleigh, North Carolina. For
the following reasons, the motion is denied.
are two companies, Empire and Liverman, that process scrap
metal. At the time of the events giving rise to this case,
they were in the process of merging. Empire was acquiring
Liverman, and a management plan was established. As a part of
this plan, Empire's employees were moved on to
Liverman's payroll processing system. Concurrently,
Liverman renewed its workmen's compensation insurance
policy. The defendant, Arthur J. Gallagher & Co., an
insurance broker, handled the renewal. The insurer was a
company called Bridgefield Insurance Company.
December 2013, an employee suffered an onsite injury at one
of the processing locations and filed a claim for
workmen's compensation. Bridgefield, the insurer, denied
the claim. Bridgefield's justification for the denial was
that the injured employee worked for Empire, and their
insurance policy only covered Liverman. Plaintiffs brought
the case to the North Carolina Industrial Commission, which
rules on workmen's compensation claims. The Commission
found that Bridgefield owed coverage. The Commission found
that defendant, acting as Bridgefield's agent, had
knowledge of the merger and the location in question where
the employee worked when renewing plaintiff Liverman's
policy. That knowledge was imputed to Bridgefield and it was
required to pay out the coverage. The Commission found that
since Bridgefield's refusal to provide coverage was
reasonable, it did not owe attorneys' fees. Empire and
Liverman jointly brought this action to recover those fees,
on the grounds that defendant's actions caused
Bridgefield to wrongly disclaim coverage, leading to the
proceeding before the Industrial Commission. Plaintiffs have
alleged the following causes of action: negligent failure to
procure workmen's compensation insurance; negligent
failure to advise plaintiffs of the need to procure
workmen's compensation insurance; fraud; constructive
fraud; and a violation of North Carolina's Unfair and
Deceptive Trade Practices Act, N.C. Gen. Stat. §
75-1.1(a). This Court has jurisdiction as the parties are
diverse. Following discovery, defendant moved for summary
motion for summary judgment may not be granted unless there
are no genuine issues of material fact for trial and the
movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). In determining whether a genuine issue of
material fact exists for trial, a trial court views the
evidence and the inferences in the light most favorable to
the non-moving party. Scott v. Harris, 550 U.S. 372,
378 (2007). However, "[t]he mere existence of a
scintilla of evidence" in support of the non-moving
party's position is not sufficient to defeat a motion for
summary judgment; "there must be evidence on which the
[fact finder] could reasonably find for the [non-moving
party] on the evidence presented." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
Speculative or conclusory allegations will not suffice.
Thompson v. Potomac Elec. Power Co., 312 F.3d 645,
649 (4th Cir. 2002). Here, there are genuine issues of
material fact still left to be resolved.
case is about attorneys' fees. Plaintiffs seek the fees
they incurred before the Industrial Commission from
defendant, on the grounds that it is defendant's fault
they had to argue the claim before the Commission. Defendant
argues plaintiffs ended up before the Commission because of
their failure to properly procure coverage, and it is not
defendant's fault. Defendant has moved for summary
judgment on three grounds. First, that there is no proximate
cause between defendant's alleged actions and
Bridgefield's claim denial. Second, that there was no
breach of a duty such that defendant acted negligently.
Third, that there was no detrimental reliance by plaintiff on
any misrepresentation by defendant to support a fraud or
deceptive trade practices claim.
proximate cause argument is misplaced. Proximate cause is
"a cause that produced the result in continuous sequence
and without which it would not have occurred, and one from
which any man of ordinary prudence could have foreseen that
such a result was probable under all the facts as they
existed." F.D.I.C. ex rel. Co-op. Bank v.
Rippy, 799 F.3d 301, 316 (4th Cir. 2015) (quoting
Mattingly v. North Carolina R.R. Co., 253 N.C. 746,
117 S.E.2d 844, 847 (1961)) (citation and internal quotation
marks omitted). Plaintiffs' tort claims require a showing
of proximate cause, as does their claim that defendant
violated North Carolina's Unfair and Deceptive Trade
Practices Act. Strates Shows, Inc. v. Amusements of Am.,
Inc., 646 S.E.2d 418, 424 (2007); N.C. Gen. Stat. §
75-1.1(a); Restatement (Second) of Torts § 9 (1965).
argues that it did not cause the injury because
Bridgefield's denial of the workmen's compensation
claim was not wrongful: Bridgefield evaluated the claim,
determined, to its knowledge, that the injured employee
wasn't a covered employee, and denied it.
plaintiffs' argument is that defendant's conduct is
what led to Bridgefield reasonably finding a distinction
between Liverman employees and Empire employees in the first
place. Defendant's proximate cause defense begs the
question. The inquiry is not whether what Bridgefield did was
reasonable, but why it was done. Accordingly, defendant's
motion for summary judgment on these grounds is denied.
defendant argues that there was no breach of its duties as an
insurance broker. An insurance broker can be liable for the
failure to procure insurance when he "promises or gives
some affirmative assurance" that he will do so.
Barnett v. Security Ins. Co. of Hartford, 352 S.E.2d
855, 857 (1987). But the broker is not obligated to
"procure a policy for the insured which has not ...