Cosmopolitan Shipping CO., Inc. v. Continental Insurance Company

Background

Cosmopolitan Shipping Company, Inc. brought claims involving insurance coverage for seamen’s asbestos claims. It sought coverage from Continental Insurance Company and damages from Marsh USA, Inc. for allegedly negligent advice concerning that coverage. After a bench trial limited to the coverage issue, Cosmopolitan’s claims against Continental were dismissed because, although the court found that Continental Policy C-4893 covered certain claims, Cosmopolitan could not prove the material terms of the 1947 policy after it was lost.

Cosmopolitan retained Marsh as an insurance broker from 1953 to 1985, but Marsh did not place Policy C-4893. In 1995, Marsh claims advocate Stanley Schiff had one telephone conversation with Cosmopolitan’s owner, Granville Conway, about possible coverage for the asbestos claims. Schiff left Conway a voicemail with recommendations. In 1997, Schiff sent colleagues and an outside asbestos-coverage lawyer an email summarizing the conversation and mailed a copy to Conway.

The email discussed possible insurance provided by the United States government during World War II and later taken over by Fulton P&I. It recommended that Cosmopolitan either try to tender the defense to the United States government or assert that the claims were time-barred after Cosmopolitan’s anticipated dissolution. Cosmopolitan later alleged that Marsh’s advice incorrectly directed it toward Fulton P&I instead of Continental and caused it to stop looking for responsive protection-and-indemnity policies. Cosmopolitan first added Marsh as a defendant in 2018.

Motion and legal standard

Marsh moved for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is appropriate when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The court must view the evidence favorably to the party opposing the motion, but that party must identify evidence—not speculation—that could allow a reasonable jury to rule in its favor.

Statute of limitations

The court did not decide whether New York or New Jersey law governed because it concluded that Cosmopolitan’s negligence claim was untimely under either state’s law.

Under New York law, negligence claims against insurance brokers have a three-year limitations period. A tort claim generally accrues when an injury occurs. The court held that Cosmopolitan’s claim accrued in 1995, when Schiff gave the allegedly erroneous advice. Cosmopolitan did not dispute that the claim was untimely under New York law.

Under New Jersey law, a professional-negligence claim has a six-year limitations period. A discovery rule may delay the start of that period when a plaintiff did not know, and could not reasonably have known, the basis for the claim. Cosmopolitan had the burden to show that it could not have discovered its claim through ordinary diligence until 2012 or later because it first asserted the claim in 2018.

The court found that Cosmopolitan received the allegedly erroneous advice in 1995 and again in writing in 1997. Cosmopolitan did not try to confirm the advice until 2016, when the Fulton Syndicate stated that it had no evidence of providing the relevant coverage. Cosmopolitan offered no reason or evidence explaining why waiting until 2016 was consistent with ordinary diligence. Because Marsh had identified Fulton P&I as a likely source of coverage in both 1995 and 1997, the court concluded that Cosmopolitan reasonably should have investigated years before 2012. The court found that no hearing was necessary because the critical facts were undisputed.

Additional grounds and disposition

The court also stated in a footnote that summary judgment was warranted because no reasonable jury could find that Marsh owed Cosmopolitan a duty or that Marsh’s conduct caused Cosmopolitan’s injury, under either New York or New Jersey law. The court did not discuss those grounds in detail because it considered the statute-of-limitations ground sufficient.

Judge Lorna G. Schofield granted Marsh’s motion for summary judgment. The Clerk was directed to close the motion at Docket No. 228 and close the case.