The Newest Turns In This Complicated Insurance coverage Protection Case
In a significant setback for Harvard College in its authorized battle to gather multi-million greenback damages from its insurance coverage dealer, Marsh USA Inc., the US District Court docket for the District of Massachusetts granted Marsh’s movement to dismiss Harvard’s breach of contract claims on August 15, 2024.
As beforehand reported by Company Checklists, Harvard sued Marsh in October 2023, alleging that the dealer’s failure to inform Zurich American Insurance coverage of a discrimination lawsuit in a well timed method resulted within the lack of $15 million in extra protection. The discrimination swimsuit in query was the high-profile College students for Honest Admissions (SFFA) lawsuit towards Harvard’s admissions insurance policies, which Harvard finally misplaced in a landmark U.S. Supreme Court docket ruling. See Company Checklists’ article of October 31, 2023, “A New Lawsuit: Harvard’s $15 Million Dispute With Its Broker Marsh.”
Harvard’s lawsuit towards Marsh had 4 counts alleging:
- Depend I, “Dealer Malpractice,” as a breach of the brokerage contract between Harvard and Marsh looking for to have the six-year contract statute of limitations start as of Zurich’s denial of protection.
- Depend II, looking for a declaratory judgment on the identical allegations as Depend I for Marsh’s alleged breach of its brokerage contract with Harvard.
- Depend III, asserting “Dealer Malpractice” towards Marsh as an error and omission tort declare based mostly on Marsh, as Harvard’s insurance coverage dealer, assuming “an obligation to behave in accordance with the requirements of care relevant to professionals within the insurance coverage brokerage business, each nationally and in Massachusetts;” and,
- Depend IV, requesting the courtroom problem a declaratory judgment on the identical allegations as Depend III for Marsh failing to behave inside the usually accepted requirements of care in reporting a declare made towards its consumer.
Marsh’s movement to dismiss Harvard’s contract claims
Marsh responded to Harvard’s lawsuit, transferring to dismiss Counts I and II of the criticism.
Marsh’s movement argued the phrases of the written brokerage settlement between Harvard and Marsh required the courtroom to use New York regulation to find out if Harvard had filed its swimsuit inside the statute of limitations. Harvard argued in opposition that Massachusetts regulation ought to apply as a matter of public coverage.
The viability of Harvard’s breach of contract counts rested on whether or not the Court docket would agree that Massachusetts legal guidelines ought to apply in figuring out whether or not Harvard filed its swimsuit in time to keep away from dismissal on statute of limitations grounds.
Choose Burroughs’ ruling New York regulation utilized to Marsh’s brokerage settlement
In her ruling on Marsh’s movement, Choose Burroughs rejected Harvard’s argument for a practical strategy to figuring out the relevant regulation. As a substitute, she emphasised the significance of the contractual selection of regulation provision and famous the substantial relationship between the transaction and New York, provided that Marsh maintains its principal place of job there.
Harvard’s contract claims fail on New York’s inflexible statute of limitations rule
As soon as Choose Burroughs determined New York regulation utilized, she made rulings on Marsh’s statute of limitations protection, discovering that breach of contract claims are topic to a six-year statute of limitations beneath New York regulation.
Underneath Massachusetts regulation, six years for submitting the motion would even have utilized. Nevertheless, the statute of limitations would have run from when Harvard first discovered about Marsh’s failure to inform Zurich in 2017 in regards to the submitting of the SFFA lawsuit.
In New York, the decide famous that the statute of limitations for breach of contract claims begins to run from the date of the breach, no matter whether or not the social gathering looking for to sue solely discovered of the breach at some later date.
Primarily based on the date of the breach, Choose Burrough dominated Harvard’s explanation for motion towards Marsh started to accrue when Marsh allegedly first breached its dealer settlement with Harvard. She calculated that this date occurred when Marsh didn’t notify Zurich of the SFFA lawsuit inside 90 days after the top of the coverage interval, which was January 30, 2016.
Just like Massachusetts, New York had a tolling of statute of limitations through the COVID-19 pandemic. This tolling interval gave Harvard an additional 228 days, extending its New York deadline for submitting its swimsuit to September 15, 2022.
Sadly for Harvard, it didn’t file its swimsuit till October 2023, 13 months too late by Choose Burrough’s reckoning.
Court docket dismisses breach of contract counts, however negligence counts stay alive
Primarily based on its ruling, the courtroom dismissed Counts I and II of Harvard’s criticism, which alleged breach of contract, and sought a declaratory judgment on the identical grounds. Whereas the ruling doesn’t immediately tackle Counts III and IV of Harvard’s criticism, alleging dealer malpractice in tort, it raises questions on their viability given comparable statute of limitations considerations.
Wanting forward
Though Choose Burrough’s ruling solely affected Counts I and II of Harvard’s criticism, the criticism’s error and omission claims beneath Counts III and IV of the criticism are nonetheless pending..
New York, like Massachusetts, has a three-year statute of limitations for insurance coverage brokers and brokers.
There are jurisdictions, like Florida, the place Harvard’s errors and omissions declare wouldn’t have accrued till the ultimate ruling on August 9, 2023, denying Harvard’s attraction of its protection swimsuit towards Zurich. See Company Checklists’ article of August 15, 2023, “The Pitfall of Late Notice: Harvard’s $15 Million Coverage Loss.” Nevertheless, New York doesn’t seem to comply with Florida’s observe.
In New York, Harvard’s explanation for motion for negligence towards Marsh doubtless would have accrued, and the statute of limitations begun to run when Harvard obtained discover on October 25, 2017, from Zurich wouldn’t afford any protection for the SFFA swimsuit due to Marsh’s late discover.
Thus, if its remaining claims are dismissed, Harvard may have reached the top of the highway in pursuing an indemnity based mostly on the surplus coverage it purchased from Zurich via Marsh.
Company Checklists will proceed to observe this case intently and supply updates because it progresses via the authorized system.
Owen Gallagher
Insurance coverage Protection Authorized Professional/Co-Founder & Writer of Company Checklists
Over the course of my authorized profession, I’ve argued a lot of circumstances within the Massachusetts Supreme Judicial Court docket in addition to helped brokers, insurance coverage firms, and lawmakers alike with the complexities and idiosyncrasies of insurance coverage regulation within the Commonwealth.
Join with me immediately, by calling me at 617-598-3801.
