State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: February 18, 2016 521434 

________________________________

KEN FINCH JR.,

Appellant,

v MEMORANDUM AND ORDER

STEVE CARDELL AGENCY,

Respondent,

et al.,

Defendants.

________________________________

Calendar Date: January 13, 2016

Before: Peters, P.J., Garry, Egan Jr., Rose and Clark, JJ.

__________

Frederick J. Meagher Jr., Binghamton, for appellant.

Coughlin & Gerhart, LLP, Binghamton (Keith A. O'Hara of

counsel), for respondent.

__________

Garry, J.

Appeal from an order of the Supreme Court (Guy, J.),

entered October 13, 2014 in Broome County, which, among other

things, granted a cross motion by defendant Steve Cardell Agency

for summary judgment dismissing the complaint against it.

Plaintiff is a self-employed logger who is also engaged in

the business of putting on rodeos. In connection with this

business, plaintiff owns bulls and other animals, as well as

trucks and trailers. In approximately 2006, plaintiff began

obtaining homeowners' insurance and liability and automobile

coverage for his business operations from defendant Steve Cardell

Agency (hereinafter defendant), a New York insurance agency of

which Steven I. Cardell (hereinafter Cardell) is president. 
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Plaintiff obtained liability insurance for rodeos by contacting

defendant before each show. Defendant would then procure

coverage for the event and provide plaintiff with an insurance

certificate. In August 2012, plaintiff contacted defendant to

obtain coverage for an upcoming rodeo in Pennsylvania. The

transaction was handled by an office assistant. The carrier that

had previously provided plaintiff's rodeo insurance declined to

cover the event, apparently due to its location in Pennsylvania,

and the assistant instead found what she believed to be

equivalent coverage issued by a different carrier, Atlantic

Casualty Insurance Company (hereinafter ACIC).

At the conclusion of the Pennsylvania rodeo, four bulls

escaped from a group that was being moved from a holding pen

through a system of gates immediately prior to loading into

plaintiff's trailer. Several bystanders were injured before the

animals were recaptured, and lawsuits were filed against

plaintiff as a result. When plaintiff advised defendant of the

incident, Cardell reviewed the ACIC policy and discovered that it

contained an exclusion for injuries or damage caused by animals. 

Thereafter, ACIC declined coverage, relying on the animal

exclusion and also on a policy exclusion for losses arising out

of the use of an "auto" (hereinafter the auto exclusion), which

the policy defined to include loading and unloading operations. 

When plaintiff sought coverage under the automobile insurance

policy that defendant had furnished through a different company,

that carrier also denied coverage on the ground that the trailer

into which the bulls were being loaded was not listed in the

policy's schedule of covered vehicles. Although plaintiff's

trucks were listed and covered, on this occasion he had used a

borrowed truck owned by defendants Mark Woodruff and Robin

Woodruff to tow his trailer to the rodeo.

Plaintiff commenced this insurance malpractice action

alleging that defendant was negligent in procuring a rodeo

insurance policy with an animal exclusion. Following joinder of

issue, plaintiff moved for summary judgment; after an agreed-upon

adjournment for discovery, defendant cross-moved for summary

judgment dismissing the complaint. During the pendency of the

motions, plaintiff amended his complaint to add a cause of action

against the Woodruffs, and a new cause of action that amplified
-3- 521434 

his insurance malpractice claim against defendant. Plaintiff

then argued that the amended complaint rendered defendant's cross

motion premature and unripe for determination. Supreme Court

rejected this assertion, denied plaintiff's motion and granted

defendant's cross motion for summary judgment dismissing the

complaint against defendant, on the ground that the animal

exclusion was not the proximate cause of plaintiff's loss. 

Plaintiff appeals.

An insurance agent has a common-law duty to provide

requested coverage within a reasonable time and may be held

liable for negligence or breach of contract when a client

establishes that a specific request was made for coverage that

was not provided in the policy (see American Bldg. Supply Corp. v

Petrocelli Group, Inc., 19 NY3d 730, 735 [2012]). A breach of

this duty will give rise to liability if it is shown to be the

proximate cause of a client's loss (see Milgrim v Royal &

SunAlliance Ins. Co., 75 AD3d 587, 589 [2010]; Cosmos, Queens

Ltd. v Matthias Saechang Im Agency, 74 AD3d 682, 683-684 [2010],

lv denied 15 NY3d 711 [2010]). Here, Supreme Court determined

that defendant's potential negligence was not the proximate cause

of plaintiff's loss, as plaintiff's claim would have been denied,

in any event, based upon the auto exclusion. However, this

failed to address the allegations set forth within the amended

complaint. In this pleading, plaintiff alleged that defendant

negligently failed to advise him of the "gap in coverage" created

by the auto exclusion, and that this failure resulted in his lack

of coverage.

Although an insurance agent's common-law duty to his or her

clients does not include a continuing duty to advise the clients

on appropriate coverage or to recommend additional coverage that

the clients did not request (see Catalanotto v Commercial Mut.

Ins. Co., 285 AD2d 788, 790 [2001], lv denied 97 NY2d 604

[2001]), an agent may be liable for failing to provide

appropriate advice in circumstances where there is a special

relationship. As pertinent here, such a relationship may arise

when "there is a course of dealing over an extended period of

time which would have put objectively reasonable insurance agents

on notice that their advice was being sought and specially relied

on" (Murphy v Kuhn, 90 NY2d 266, 272 [1997]; accord Voss v
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Netherlands Ins. Co., 22 NY3d 728, 735 [2014]). The question

whether a special relationship exists between an insurance agent

and a client giving rise to a duty to guide and advise the client

is a factual determination that "is governed by the particular

relationship between the parties and is best determined on a

case-by-case basis" (Murphy v Kuhn, 90 NY2d at 272). Here,

plaintiff testified that he had purchased his business and

personal insurance from defendant for at least six years, that he

knew little about insurance and that he relied upon defendant to

obtain the appropriate coverage for his rodeo operations. He

stated that he had never seen any of the rodeo insurance policies

that defendant procured on his behalf, that insurance

certificates were the only documents ever provided to him, and

that "with [Cardell] being my agent for years, I took that as he

was representing me and making sure that I was covered." As for

the failure to include the trailer in the schedule of covered

vehicles in plaintiff's automobile insurance policy – which

defendant had also procured – plaintiff stated that he understood

that his trailers were covered by his truck insurance and that he

was never advised that his trailers should be separately listed

as covered vehicles until after the Pennsylvania incident. 

Cardell testified that defendant had been providing

plaintiff with homeowners' insurance, private automobile

insurance and commercial truck insurance since 2006 and had been

procuring general liability insurance coverage for plaintiff's

rodeo operations for several years before the Pennsylvania

incident. He testified that after the previous carrier declined

coverage, the general marketing agency that defendant worked with

offered the ACIC policy as a substitute. Cardell acknowledged

that the presence of the animal exclusion in the ACIC policy was

an error, stating that the assistant "overlooked" the exclusion,

that Cardell did not discover it until after the incident, and

that an employee of the marketing agency was later fired for

issuing the policy with the animal exclusion. Nothing in

Cardell's testimony contradicted plaintiff's allegations that he

relied upon defendant to procure adequate coverage, or that

defendant had not advised him of any need for additional

protection because of the auto exclusion. 
-5- 521434 

As to application of the auto exclusion, defendant

correctly asserts that clauses in automobile liability insurance

policies defining the use of an automobile to include loading and

unloading are broadly construed to include "the complete

operation" (Wagman v American Fid. & Cas. Co., 304 NY 490, 494

[1952] [internal quotation marks omitted]; see Hertz Corp. v

Bellin, 22 NY2d 736, 736 [1968]; Travelers Ins. Co. v Saunders &

Sons, 18 AD2d 126, 127-128 [1963], affd 13 NY2d 1019 [1963]). 

Critically, however, the language at issue here is not a coverage

provision in an automobile liability policy, but an exclusion

from coverage in a general liability insurance policy. It is

well established that such exclusions are subject to a strict and

narrow construction and can be "enforced only when the insurer

establishes that the pertinent language is 'subject to no other

reasonable interpretation'" (Essex Ins. Co. v Grande Stone

Quarry, LLC, 82 AD3d 1326, 1327 [2011], quoting Seaboard Sur. Co.

v Gillette Co., 64 NY2d 304, 311 [1984]; see Fulmont Mut. Ins.

Co. v New York Cent. Mut. Fire Ins. Co., 4 AD3d 724, 726 [2004]). 

The record here contains no specific information as to the

particular circumstances in which plaintiff's bulls caused

injuries after their escape, or how closely related those

circumstances were to the operation of transferring the bulls

from the holding pen to the trailer. Accordingly, the record

fails to establish as a matter of law that ACIC would necessarily

be able to demonstrate that the injuries fall within the scope of

the auto exclusion.

The question whether negligence on the part of an insurance

agent or broker proximately caused a client's losses "should

generally be resolved by the factfinder" (Voss v Netherlands Ins.

Co., 22 NY3d at 737). In our view, the evidence raises triable

issues of fact as to whether plaintiff and defendant had a

special relationship and, if so, whether defendant proximately

caused plaintiff's loss by negligently failing to advise and

guide him in obtaining adequate insurance coverage for all

aspects of his rodeo operations, including his trailers (see Voss

v Netherlands Ins. Co., 22 NY3d at 736-737; South Bay

Cardiovascular Assoc., P.C. v SCS Agency, Inc., 105 AD3d 939, 942

[2013]; Axis Constr. Corp. v O'Brien Agency, Inc., 87 AD3d 1092,

1093-1094 [2011]). Therefore, defendant's cross motion for

summary judgment dismissing the complaint should not have been
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granted. 

Peters, P.J., Egan Jr., Rose and Clark, JJ., concur.

ORDERED that the order is modified, on the law, without

costs, by reversing so much thereof as granted the cross motion

by defendant Steve Cardell Agency for summary judgment dismissing

the complaint against it; said motion denied; and, as so

modified, affirmed.

ENTER:

Robert D. Mayberger

Clerk of the Court