AmTrust North America, Inc. v. KF&B, Inc.

Background

AmTrust North America, Inc., Wesco Insurance Company, Inc., and Technology Insurance Company, Inc. brought claims against KF&B, Inc., doing business as KF&B Program Managers Insurance Services. The complaint alleged that AmTrust hired KF&B to operate as program manager for the KF&B Limousine and Taxi Program.

The complaint asserted three causes of action: breach of contract, breach of fiduciary duty, and declaratory judgment. The fiduciary-duty claim alleged that KF&B put its own interests ahead of AmTrust’s by failing to perform basic due diligence and selling insurance to risky or otherwise inappropriate customers to increase its commissions. The declaratory-judgment claim sought a declaration that KF&B had to reimburse AmTrust for future losses arising from policies sold through the program and for deductibles and collateral that AmTrust could not collect from certain policyholders.

Motion and arguments

KF&B moved for summary judgment, which is a ruling entered when the moving party shows that no genuine dispute over an important fact requires a trial and that it is entitled to judgment under the law. KF&B argued that the breach-of-fiduciary-duty claim duplicated the breach-of-contract claim. Both claims relied on Section III of the Managing Producers Agreement, which stated that KF&B would perform its obligations as AmTrust’s fiduciary and use its best efforts to conduct business for AmTrust.

AmTrust acknowledged that it sought the same damages for the contract and fiduciary-duty claims, but argued that the agreement expressly created a fiduciary relationship independent of KF&B’s contractual duties. AmTrust did not oppose KF&B’s motion concerning the declaratory-judgment claim.

Court’s analysis

The court explained that the same conduct can sometimes breach both a contract and a separate duty created by the relationship between the parties. But the court found that AmTrust’s fiduciary-duty claim relied entirely on the promises in the Managing Producers Agreement. The claim involved the same duties, acts, agreement, and damages as the contract claim. The court therefore concluded that the contract, rather than tort law, defined the duties at issue, even though the contract described those duties by referring to fiduciary law.

Ruling

The court granted KF&B’s motion for summary judgment dismissing the second cause of action for breach of fiduciary duty. Because AmTrust did not oppose the motion concerning the third cause of action, the court also granted summary judgment dismissing the declaratory-judgment claim. The conclusion states that KF&B’s motion for summary judgment on the second and third causes of action was granted and directs the Clerk of Court to close the motion. The opinion does not state the disposition of the first cause of action for breach of contract.