Pilkington North America, Inc. v. Mitsui Sumitomo Insurance Company of America
- John Keenan
- 1:18-cv-08152
- U.S. District Court · Southern District of New York
- 41
Pilkington v. Mitsui, Judge Keenan denied Mitsui’s dismissal motion, granted Aon’s dismissal motion, and allowed claims against Mitsui to proceed.
Pilkington’s claims against MSI may proceed, while its intentional-misrepresentation claim against Aon was dismissed and could not be amended again at this time. The parties were required to proceed with discovery.
What happened
In Pilkington North America, Inc. v. Mitsui Sumitomo Insurance Company of America, Pilkington alleged that Mitsui and Aon helped reduce insurance coverage for tornado damage without clearly telling Pilkington about the change. The dispute arose after a tornado damaged Pilkington’s glass factory and its insurance policy limited recovery to $15 million.
The court held that Pilkington plausibly alleged that Mitsui misled it by describing policy changes as valuation corrections while failing to correct misunderstandings about a windstorm coverage limit. The court also found that Pilkington plausibly alleged equitable estoppel, breach of the implied promise of good faith and fair dealing, breach of contract, and declaratory-relief claims against Mitsui. The court dismissed Pilkington’s intentional-misrepresentation claim against Aon because the complaint did not strongly support an inference that Aon intended to defraud Pilkington.
Judge John F. Keenan denied Mitsui’s motion to dismiss the amended complaint in its entirety and granted Aon’s motion to dismiss Count VII, the intentional-misrepresentation claim. He did not allow Pilkington to amend that claim again, lifted the discovery stay, and directed the parties to proceed with discovery.
The detailed version
- Pilkington North America, Inc. v. Mitsui Sumitomo Insurance Company of America · No. 1:18-cv-08152
- John Keenan
- May 18, 2020
Background
Pilkington alleged that it suffered an approximately $60 million to $100 million loss when a tornado struck its glass manufacturing factory in Ottawa, Illinois, on or around February 28, 2017. Pilkington sought insurance compensation under a commercial property and business-interruption policy issued by Mitsui Sumitomo Insurance Company of America (MSI) to Pilkington’s parent company and brokered by Aon Risk Services Central, Inc. (Aon).
According to the amended complaint, MSI proposed an endorsement that was presented as correcting policy valuations but also changed the wording of a windstorm sublimit. Pilkington alleged that Aon did not tell it about the wording change and that Aon incorrectly understood the revised sublimit. Pilkington alleged that it accepted the endorsement based on the belief that only monetary values were changing. The 2016–2017 policy then contained a revised windstorm sublimit that capped recovery for the tornado at $15 million.
This was a motion-to-dismiss decision. The court was required to accept well-pleaded factual allegations as true and decide whether they plausibly stated claims, not determine whether the allegations were ultimately true.
Claims Against MSI
Pilkington asserted claims against MSI for reformation of contract, breach of contract, declaratory relief, breach of the implied duty of good faith and fair dealing, and equitable estoppel. MSI moved to dismiss the amended complaint in its entirety.
The court denied MSI’s motion in its entirety. It ruled that Pilkington plausibly alleged that MSI committed fraud by omission by failing to correct Aon’s mistaken understanding during a January 2016 call and by failing to respond to Aon’s statement that Pilkington’s consent was based on an assurance that no terms other than valuation had changed. The court concluded that these allegations plausibly supported a material misrepresentation, a duty to speak, reasonable reliance, and a strong inference of fraudulent intent. The reformation claim therefore survived.
The court also permitted Pilkington’s newly added equitable-estoppel claim to proceed, finding that the amended complaint plausibly alleged a misrepresentation or concealment and reasonable reliance. The court allowed the breach-of-contract claim to proceed because it was pleaded alongside the surviving reformation claim. The declaratory-relief claim survived because an actual dispute existed, and the court again allowed the implied-covenant claim to proceed because Pilkington plausibly alleged that MSI covertly reduced coverage and thereby interfered with a fundamental insurance benefit.
Claim Against Aon
Pilkington asserted five claims against Aon: breach of contract, intentional misrepresentation, negligence, negligent misrepresentation, and breach of fiduciary duty. Aon moved to dismiss only the intentional-misrepresentation claim.
The court granted Aon’s motion to dismiss Count VII, the intentional-misrepresentation claim. It concluded that the amended complaint did not plead facts creating a strong inference that Aon intended to defraud Pilkington. The allegations instead indicated that Aon misunderstood the effect of the revised windstorm language and negligently failed to protect Pilkington from MSI’s alleged fraud. The court also found that Aon’s conduct, as alleged, was not highly unreasonable or an extreme departure from ordinary care in a way that established fraudulent intent.
The court denied Pilkington’s request to amend the intentional-misrepresentation claim again. It reasoned that Pilkington had already received an opportunity to correct the pleading defects and that the proposed additional allegations would be only more detail concerning the same insufficient claim.
Other Orders and Disposition
The court lifted the discovery stay. It directed the parties to proceed with discovery under the supervision of Magistrate Judge Fox, join any additional parties by June 15, 2020, and file a joint proposed case-management order by June 22, 2020. The Clerk was directed to terminate the two motions on the docket.
The order’s dispositions were: MSI’s motion to dismiss the amended complaint in its entirety was DENIED; Aon’s motion to dismiss Count VII was GRANTED; and discovery was LIFTED.
Read the full 41-page opinion on CourtListener, the free public archive maintained by the Free Law Project.