AmTrust North America, Inc. v. Securranty, Inc.

Background

AmTrust brought this diversity action against Securranty based on an Administration Agreement the parties entered into in May 2017. The Agreement authorized Securranty to market and administer service contracts and insurance programs. It also required Securranty to provide monthly sales and claims reports, remit premiums and fees to AmTrust, maintain separate accounts for claims and amounts owed to AmTrust, and keep records.

AmTrust’s first amended complaint alleged that Securranty used marketing materials that AmTrust had not approved, failed to provide required sales and claims information, provided incomplete reports, and failed to remit premiums or fees. The amended complaint asserted breach of contract and breach of fiduciary duty. It alleged approximately $58,805 owed from “first dollar” contracts, $104,817 from “excess of loss” contracts, and $4,578 from insurance policies, for a total of approximately $168,200.

Amount in Controversy

Securranty moved under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, arguing that the amended complaint did not adequately establish the amount required for diversity jurisdiction. Under 28 U.S.C. § 1332(a), the amount in controversy must exceed $75,000, excluding interest and costs.

The court explained that the amount alleged in the complaint generally controls if the claim appears to have been made in good faith. AmTrust’s detailed breakdown of approximately $168,200 was sufficient to allege an amount exceeding $75,000. The court rejected Securranty’s arguments that AmTrust needed to attach the underlying agreement and other documents or that disputes about the meaning of electronic data defeated jurisdiction. Those disputes concerned the precise amount owed and did not establish that AmTrust’s jurisdictional allegation was made in bad faith.

Breach of Fiduciary Duty

Securranty also moved under Rule 12(b)(6), which tests whether a complaint adequately states a claim. It argued that AmTrust’s fiduciary-duty claim duplicated the contract claim and lacked the required detail.

Applying New York law, the court explained that claims are duplicative when they arise from the same facts and seek no distinct damages. The claims were not duplicative because AmTrust sought damages and remedies on the fiduciary-duty claim that it might not obtain through the contract claim, including punitive damages, an injunction, and an accounting.

The court also addressed the required level of pleading detail. The Agreement allegedly required Securranty to maintain a separate fiduciary account for money belonging to AmTrust, and the amended complaint alleged that Securranty failed to remit premiums and fees that it was required to hold as a fiduciary. The court held that these allegations, together with the other allegations in the amended complaint, satisfied Federal Rules of Civil Procedure 8 and 9(b).

Disposition

Judge Denise Cote denied Securranty’s June 26, 2020 motion to dismiss AmTrust’s first amended complaint. The opinion did not decide whether AmTrust would ultimately prevail on its claims; it decided only that the claims could proceed past the motion-to-dismiss stage.