Altruis Group, LLC v. Prosight Specialty Management Company, Inc.

Background

Altruis Group, LLC provides services in the captive insurance market. ProSight Specialty Management Company, Inc., New York Marine and General Insurance Company, and Gotham Insurance Company are insurance and management companies. The parties entered into a Niche Management Agreement under which Altruis would provide services for Defendants’ customers and could receive commissions. A later amendment added a section describing “Minimum Services.”

The amendment stated both that Altruis was “authorized and obligated” to perform all of the listed Minimum Services and that, at Defendants’ sole option, Altruis would perform some, all, or none of those services. Defendants terminated the agreement in November 2021 based on an alleged material breach, claiming that Altruis failed to provide the required Minimum Services. Altruis then brought claims including breach of contract. The court had previously dismissed Altruis’s claims for breach of the implied covenant of good faith and fair dealing, violation of Section 349 of the New York General Business Law, and declaratory relief. Defendants asserted an unjust enrichment counterclaim.

The parties waived a jury trial, and trial was scheduled to be held before the court. Before trial, Defendants moved to prevent Altruis from introducing parol evidence—evidence outside the written contract—about the contract’s meaning. Altruis moved to exclude hearsay concerning the parties’ intent, evidence concerning Defendants’ unjust enrichment counterclaim, and evidence that Defendants had not identified during discovery.

Contract Evidence

Under New York law, evidence outside a contract generally cannot be used to interpret it unless the contract is ambiguous. The court found that the amendment’s language was reasonably capable of more than one meaning. Defendants reasonably read the first sentence as creating an immediate obligation to perform all the Minimum Services. Altruis reasonably read the second sentence as meaning that Altruis had to perform only the services Defendants selected or requested.

Because the written contract did not clearly resolve the conflict, the court held that the amendment was ambiguous. It ruled that evidence concerning the parties’ mutual intent when they formed the contract could be admitted at trial. The court stated that the admissibility of particular evidence would be decided case by case. Defendants’ motion to exclude parol evidence was therefore denied, and Altruis’s related request to exclude Defendants’ evidence about the contract’s formation and intent was also denied.

Unjust Enrichment Evidence

Altruis argued that Defendants should not be allowed to present evidence supporting their unjust enrichment counterclaim because the parties had a valid contract. The court held that a motion in limine, which is a request to rule on evidence before trial, was not the proper method to dismiss an entire claim or decide whether the evidence was sufficient to prove it.

The court also stated that New York law permits an unjust enrichment claim when a party seeks to recover an overpayment made under a contract. Defendants said their counterclaim concerned commission overpayments, while Altruis disputed that any mistaken overpayment occurred. The court declined to resolve that factual dispute before trial and denied Altruis’s request to exclude evidence concerning the counterclaim.

Evidence Not Disclosed During Discovery

Altruis broadly asked the court to exclude any evidence or witnesses that Defendants had not timely disclosed during discovery. The court found that Altruis identified no particular witness or evidence and that discovery had already closed without a specific discovery dispute being presented. Because the request depended on speculation about evidence that might later be offered, the court denied it.

Disposition

The court denied Defendants’ motion in limine and denied Altruis’s motion in limine. It directed the Clerk of Court to terminate docket entries 64 and 67. The opinion did not enter judgment on the underlying contract claims or decide the merits of Defendants’ unjust enrichment counterclaim.