Biegler v. Underwriting Service Management Company, LLC ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
MARK BIEGLER, )
)
Plaintiff )
) C.A. No. N23C-01-180 FWW
v. )
)
UNDERWRITING SERVICE )
MANAGEMENT COMPANY, LLC and )
UNITED SPECIALITY INSURANCE )
COMPANY, )
)
Defendants. )
Submitted: June 27, 2023
Decided: July 10, 2023
*Corrected: July 18, 2023
Upon the Motion to Dismiss of Defendants Underwriting Service Management
Company, LLC and United Specialty Insurance Company
GRANTED
MEMORANDUM OPINION AND ORDER
Raeann Warner, Esquire, JACOBS & CRUMPLAR, P.A., 750 Shipyard Drive,
Suite 200, Wilmington, DE 19801, Attorney for Plaintiff Mark Biegler.
Loren R. Barron, Esquire, MARGOLIS EDELSTEIN, 300 Delaware Avenue, Suite
800, Wilmington, DE 19801, Attorney for Defendants Underwriting Service
Management Company, LLC and United Specialty Insurance Company.
WHARTON, J.
*Footnotes 77 and 79
I. INTRODUCTION
This case started its life in this Court on August 6, 2021 when Plaintiff Mark
Biegler (“Biegler”) sued Defendants Underwriting Service Management Company,
LLC (“USMC”) and United Specialty Insurance Company (“United Specialty”)
(collectively “Defendants”).1 The Complaint alleged three counts – Negligence
(Count I); Negligent Misrepresentation (Count II); and Tortious Interference with
Prospective Contractual Relations (Count III).2 The Defendants moved to dismiss
under Superior Court Civil Rule 12(b)(6), arguing that all three counts failed to state
claims.3 Further, the Negligent Misrepresentation claim (Count II) in particular was
not within the Superior Court’s jurisdiction because it did not allege consumer fraud
or a violation of the Consumer Fraud Act.4 Apparently agreeing, at least as to Count
II, Biegler voluntarily dismissed the case in Superior Court.5 He sought a more
congenial home for this action in the Court of Chancery when he took his Complaint
to that court.6 Again, the Defendants moved to dismiss.7 Their motion argued that
all three counts failed to state claims and, in addition, Biegler had an adequate
1
Biegler v. United Service Management Company, LLC, et al., N21C-02-035
MAA.
2
Id. Compl., D.I. 1.
3
Id. Defs.’ Mot. to Dismiss, D.I. 10.
4
Id.
5
Id. Pl.’s Not. of Vol. Dismissal, D.I. 11.
6
Biegler v. United Service Management Company, LLC, et al., 2021-1003-MTZ,
D.I. 1.
7
Id. Defs.’ Mot. to Dismiss, D.I. 6.
2
remedy at law for his Negligence (Count I) and Tortious Interference with
Prospective Contractual Relations (Count III) claims.8 The Court of Chancery
agreed with the Defendants, in part, dismissing Biegler’s Negligent
Misrepresentation claim (Count II) for failure to state a claim, but declining to
exercise its clean-up authority to resolve the motion as to Counts I and II, and
recognizing Biegler’s right to transfer those claims back to the Superior Court
pursuant to 10 Del. C. § 1902.9 Like the prodigal son, Biegler returns home to this
Court with his well-traveled Complaint, shorn of its Negligent Misrepresentation
claim.10 This Court now addresses the Defendants’ Motion to Dismiss the
remaining two claims. The Court’s decision follows.
II. FACTS AND PROCEDURAL HISTORY
The following facts are taken from the Court of Chancery’s Order:
Plaintiff Mark Biegler is a licensed insurance producer
and insurance consultant. In August 2017, nonparty
Fleetlogix, Inc. began working with Biegler to find a new
primary insurance policy. Fleetlogix takes possession of
returned rental vehicles and prepares them to return to the
rental pool, and needs primary insurance to cover any
claims while the cars are in its possession. Biegler
assembled a multiperson marketing team to find a policy
meeting Flexlogix’s needs, and the team spoke with
several agencies. Biegler began working with nonparty
8
Id.
9
Id. 2022 WL 17820533, at *4-5 (Del. Ch. Dec. 20, 2022).
10
N23C-01-180 FWW, D.I. 1. (Unless otherwise noted, all subsequent docket
item references are to the current Superior Court action.)
3
Amy Phillips, a broker with GMI Insurance, to find
coverage for Fleetlogix.
After several weeks of discussions and negotiations,
Phillips presented a policy from defendant United
Specialty Insurance Company, underwritten by defendant
Underwriting Service Management Company, LLC
(“USMC”) and together, “Defendants”). Biegler insisted
on a few particular items, which Defendants accepted.
Phillips gave Biegler a copy of the proposed policy, and
Biegler reviewed it with Fleetlogix. Biegler and
Fleetlogix’s general counsel reviewed the policy to
ensure it accurately reflected the negotiated terms.
Biegler noticed that the policy was excess, rather than
primary. Biegler spoke to Phillips to fix this issue and
Phillips confirmed to him the entire policy would be
primary.
Fleetlogix chose the coverage Phillips offered. Coverage
was bound on April 10, 2018, and the binder contained
the negotiated terms. After receiving the policy, Biegler
reviewed it again and confirmed the policy offered
primary coverage and contained other specifically
requested terms.
In May 2018, Fleetlogix submitted a potential claim to
Phillips. Phillips informed Biegler that USMC was
providing only umbrella coverage and Fleetlogix would
need to get coverage through its primary insurer. At this
point, Biegler spoke with United Specialty and USMC
directly, pressing his view that Fleetlogix required and
had been provided primary coverage. USMC conceded
the policy, as written, provided primary coverage but
asserted that was a mistake, and it had thought it was
writing an excess policy. USMC agreed to cover
Fleetlogix under the policy as written.
In June, Fleetlogix submitted more claims. On July 3,
USMC sent a ten-day cancellation notice, asserting
Fleetlogix lacked underlying insurance. Biegler informed
4
USMC the ten-day notice violated the policy’s terms.
USMC replaced the ten-day notice with a twenty-day
notice and then a thirty-day notice of termination and
cancelled the policy.
Due to the fact and nature of the cancellation, Fleetlogix
terminated its relationship with Biegler and used another
agent to secure replacement coverage. Biegler lost the
approximately $250,000 in annual commissions he had
expected to earn from his work for Fleetlogix.11
As noted, Biegler initially sued in the Superior Court and voluntarily
dismissed that action without prejudice to pursue the matter in the Court of
Chancery. He is now back in the Superior Court after the Court of Chancery
dismissed his equitable claim for failure to state a claim and declined to address his
claims at law.
III. THE PARTIES’ CONTENTIONS
The Defendants move under Superior Court Civil Rule 12(b)(6) to dismiss
both remaining counts for failure to state a claim.12 As to Count I, Negligence, the
Defendants posit the elements of a claim of professional negligence to be: (1) the
11
The Court adopts the Background section of the Court of Chancery’s Letter
Order, which drew on the facts alleged in Biegler’s Complaint as well as
documents attached and integral to it. Internal footnotes are omitted. Biegler,
2022 WL 17820533, at *1-2.
12
The Court of Chancery docket has been docketed in this Court as D.I. 7. The
Defendants’ Motion to Dismiss, the Biegler’s Response, and the Defendants’
Reply as filed in the Court of Chancery appear in full as an Appendix to D.I. 8,
Biegler’s status letter to the Court dated March 27, 2023. References to those
pleadings will be to that docket item.
5
defendant owes the plaintiff a duty of care; (2) the defendant breached that duty; (3)
the defendant’s breach was the proximate cause of the Plaintiff’s injury; and (4) the
plaintiff incurred damages.13 Originally, the Defendants argued that a claim of
professional negligence against an insurance broker depends upon whether the
broker had a fiduciary duty towards the plaintiff.14 The Defendants contended that
Biegler had failed to allege that USMC, and by extension United Specialty, had any
duty, much less a fiduciary duty, towards him.15 Just prior to the Court holding oral
argument on the motion, the Defendants abandoned their contention that Biegler is
required to allege that a fiduciary duty existed between him and the Defendants in
order to bring a negligence claim.16 Instead, they rely on their other arguments
advanced in their papers.17
Regarding Count III, the Tortious Interference with Prospective Contractual
Relations claim, the Defendants state that the elements of such a claim are: (1) the
existence of a valid business relation or expectancy; (2) the interferer’s knowledge
of the relationship or expectancy; (3) intentional interference that (4) induces or
causes a breach or termination of the relationship or expectancy and that; (5) causes
13
Defs.’ Mot. to Dismiss at 7, D.I. 8.
14
Id.15
Id. at 7-8.
16
D.I. 11.
17
Id.
6
resulting damages to the party whose relationship or expectancy is disrupted. 18
Here, the Defendants contend that Biegler failed to allege that USMC had
knowledge of a business relationship between himself and Fleetlogix beyond one
conversation he had with USMC about one policy.19 Since that conversation
occurred after Fleetlogix purchased the policy, it cannot be the basis for intentional
interference based on selling the excess coverage policy.20 The Defendants also
argue that Biegler fails to allege that USMC acted improperly in cancelling the
policy or that it intentionally interfered with his business relationship with
Fleetlogix.21
In response to the Defendants argument on Count I, Negligence, Biegler
devoted the bulk of his attention to the now abandoned fiduciary duty argument. 22
Regarding ordinary negligence, he submits that the Defendants “provided and
binded [sic] coverage on terms they did not understand and were not willing to
accept;” that they “terminated coverage midterm on grounds that it [sic] had
inadvertently placed primary coverage when it intended to place excess coverage;”
that “sending of 10-day and 20-day cancellation notices was in violation of the
18
Defs.’ Mot. to Dismiss at 10 (citing In re Frederick’s of Hollywood, Inc.
Shareholders Litig., 1998 WL 398244 (Del. Ch. July 9, 1998), D.I. 8.
19
Defs.’ Mot. to Dismiss at 10-11, D.I. 8.
20
Id., at 11.
21
Id. at 11-12.
22
Pl.’s Resp. to Defs.’ Mot to Dismiss at 6-7, D.I. 8.
7
standard of care and insurance provisions;” and that he “was a foreseeable victim
of Defendants’ actions.”23
Regarding Count III, Tortious Interference with Prospective Contractual
Relations, Biegler asserts that GM Insurance (“GMI”), as agent of United Specialty,
was “well aware of the business relationship between him and Fleetlogix” because
Biegler worked with GMI through its broker Amy Phillips (“Phillips”) to procure
the coverage for Fleetlogix from United Specialty and USMC.24 Additionally,
USMC became aware of Biegler’s business relationship with Fleetlogix through its
conversations with Biegler.25 Despite having promised Biegler that it would
continue the policy as written, according to Biegler, USMC nonetheless improperly
issued 10 and 20-day cancellation notices and cancelled the policy mid-term “in
violation of the standard of care in the insurance industry, the conditions of the
coverage policy, and contrary to relevant insurance regulations.”26 As a result,
Biegler alleges that he lost his business relationship and economic expectancies
with Fleetlogix.27
In their Reply, the Defendants advanced the argument upon which they now
primarily rely - that the Negligence claim cannot survive dismissal because the
23
Id. at 9.
24
Id. at 11.
25
Id.
26
Id. at 11-12.
27
Id. at 12.
8
Defendants agreed to provide, and did provide, the coverage for which Fleetlogix
contracted as the contract was written, despite their alleged misunderstanding of the
coverage and ineffective 10 and 20-day cancellation notices.28 Moreover, the
Defendants argue that Biegler does not allege that the 30-day cancellation notice,
which ultimately terminated coverage, was improper.29 The Defendants contend
that coverage was maintained “up until the claims began to accumulate, and, then,
it issued the cancellation.”30 Thus, according to the Defendants, because the
Complaint does not allege that “USMC did anything other than fulfill its obligations
under the policy and later cancel the policy, the claim is not valid.”31
The Defendants next contend that the Tortious Interference with Prospective
Contractual Relations claim is deficient because it fails to allege that USMC
intentionally interfered with or even knew of Biegler’s prospective opportunities
with Fleetlogix.32 The Defendants admit that they knew Biegler was working with
Fleetlogix on a garage keepers policy, but the Complaint does not allege that USMC
knew about any prospective business between the two, intentionally tried to
interfere with such prospective business, or was in competition with Biegler.33 The
28
Defs.’ Reply in Support of its Mot. to Dismiss at 1-2, D.I. 8.
29
Id. at 2.
30
Id. at 2.
31
Id. at 2-3.
32
Id. at 3.
33
Id. at 3-4.
9
Defendants maintain that they were simply acting in their own best interests without
regard to any prospective business relationship between Biegler and Fleetlogix.34
IV. STANDARD AND SCOPE OF REVIEW
A motion to dismiss for failure to state a claim pursuant to Superior Court
Rule 12(b)(6) will not be granted if the “plaintiff may recover under any reasonably
conceivable set of circumstances susceptible of proof under the complaint.”35 The
Court's review is limited to the well-pled allegations in the complaint.36 In ruling
on a 12(b)(6) motion, the Court “must draw all reasonable factual inferences in
favor of the party opposing the motion.”37 Dismissal is warranted “only if it appears
with reasonable certainty that the plaintiff could not prove any set of facts that
would entitle him to relief.”38 However, the Court will “ignore conclusory
allegations that lack specific supporting factual allegations.”39 The Court may,
“despite allegations to the contrary,” dismiss a complaint “where the unambiguous
language of documents upon which the claims are based contradict the complaint’s
allegations.”40
34
Id. at 4-5.
35
Browne v. Robb, 583 A.2d 949, 950 (Del. 1990).
36
Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005).
37
Id.38
Id.39
Ramunno v. Cawley, 705 A.2d 1029, 10345 (Del. 1998).
40
Tigani v. C.I.P. Assocs., LLC, 2020 WL 2037241, at v*2 (Del. Apr. 27, 2020)
(citing Malpiede v. Townson, 780 A.2d 1075, 1083 Del. 2001).
10
V. DISCUSSION
A. Count I – Negligence
Count I, Negligence, alleges that the Defendants failed to exercise reasonable
care by being unaware of the nature of the coverage they bound, by binding
coverage on terms they were not willing to accept, and by terminating coverage as
a result.41 As a result of the negligence of Defendants, Biegler claims he suffered
significant economic loss, including loss of commission income, as well as damages
from suffering severe emotional distress.42 The Defendants present a two-pronged
attack. First they argue they owed no duty to Biegler. Second, they argue that the
Complaint fails to allege that they did anything other than provide the coverage for
which the parties contracted until they properly terminated the policy.
The Court reprises the relevant history related in the Complaint in search of
facts: (1) identifying a duty that the Defendants owed to Biegler; and (2) supporting
the allegations that the Defendants’ coverage termination was improper. The
Complaint identifies Biegler an “insurance producer duly licensed and authorized
to do business in Montana.”43 Fleetlogix is a business that takes possession of
returned rental vehicles from car rental companies and prepares them to return to
41
Compl. at ⁋ 24, D.I. 1.
42
Id. at ⁋ 25.
43
Id. at ⁋ 1.
11
those companies’ rental pools.44 In August 2016, Fleetlogix asked Biegler to work
for it as an insurance consultant to find replacement primary liability and physical
damage insurance coverage for rental vehicles temporarily in its custody.45 To that
end, Biegler assembled a marketing team and began speaking with various
carriers.46 Eventually, he began working almost exclusively with Phillips of GMI.47
In the last week of March 2018, Biegler received a sample copy of a policy
from GMI48 He reviewed it with Fleetlogix’s general counsel and they determined
that “[T]he policy met all the requirements Biegler had requested on behalf of
Fleetlogix.”49 The only glitch was that the garage keepers coverage was listed as
excess coverage rather than primary coverage.50 After Biegler reiterated to Phillips
that Fleetlogix required that all of its contracts required that all parts of the coverage
be primary, Phillips confirmed that the garage keepers coverage would be changed
to primary.51
On or about April 10, 2018, Biegler received the coverage binder.52 Shortly
after that, Biegler received the policies themselves and reviewed them for
44
Id. at ⁋ 6.
45
Id.46
Id. ⁋ 8.
47
Id.48
Id. at ⁋ 10.
49
Id.50
Id. at ⁋ 11.
51
Id.52
Id. at ⁋ 12.
12
accuracy.53 He confirmed that all parts of the policy were primary and that
Fleetlogix’s other requirements were met.54
In May 2018, Fleetlogix had a potential bodily injury claim.55 Fleetlogix
submitted the claim to USMC through Phillips.56 Biegler learned from Phillips that
USMC took the position that Fleetlogix would need to turn the claim into its
primary carrier because USMC provided only umbrella coverage.57 Ultimately,
Biegler spoke to Ed Murphy (“Murphy”), the owner of USMC, and his attorney and
explained to them that USMC’s policy provided primary coverage.58 Murphy said
that he thought he was writing an excess policy and that he had been misled by
Phillips who told him that Fleetlogix had other coverage.59 Nonetheless, Murphy
agreed to continue coverage of Fleetlogix under the policy as written.60
In June 2018, Fleetlogix reported an unspecified number of additional claims
to USMC.61 In early July 2018, USMC sent Fleetlogix a 10-day notice of
cancellation, incorrectly stating that Fleetlogix did not have the required amount of
53
Id. at ⁋ 13.
54
Id.55
Id. at ⁋ 14.
56
Id.57
Id.58
Id. at ⁋ 16.
59
Id.60
Id.61
Id. at ⁋ 17.
13
underlying insurance as stated in the quote.62 Biegler notified USMC that the notice
violated policy conditions and was unlawful.63 USMC replaced the 10-day notice
with a 20-day notice, which in turn was replaced with a 30-day notice of
termination.64 As a result of these notices, the termination mid-term and the
purported reason for the termination, the Complaint alleges that Fleetlogix lost
confidence in Biegler and ended its relationship with him.65 The Complaint states,
“The 10 and 20-day notices were contrary to the policy’s condition page.”66 At this
point, the Complaint does not allege that the 30-day notice of cancellation was
contrary to the policy’s condition page.67 But, it does allege in the paragraph
following this allegation that “The short-term notices of cancellation and mid-term
cancellation where there was no material change in the risk to be covered were
contrary to the conditions of coverage, relevant insurance code provisions, and the
standard of care in the insurance industry.68
Biegler identifies as his economic injuries from his loss of the Fleetlogix
account: (1) “$65,000 per year (after $45,000 in year one) in direct GL/HNO
commissions;” (2) “another $30,000 annually for additional lines Fleetlogix had
62
Id.63
Id. at ⁋ 18.
64
Id.65
Id.66
Id.67
Id.68
Id. at ⁋ 19.
14
already asked Biegler to secure for them;” and (3) “another $150,000 or more
annually in additional business for Biegler based on the likelihood that Biegler
would become the agent for Fleetlogix’s workers’ compensation plan.”69 It appears
that only the commissions identified in the first item are directly related to the policy
with USMC. The other claimed injures relate to prospective income from lines of
insurance not yet secured and Biegler’s anticipated role as agent for Fleetlogix
workers’ compensation plan.
The gaps in the record the parties have chosen to present to the Court have
made the Court’s task more difficult than necessary. Biegler attached a number of
exhibits to his original Complaint in this Court. Those exhibits were the Insurance
Binder (Exhibit 1), an endorsement modifying the Commercial General Liability
Coverage Part (Exhibit 2), a Primary and Noncontributory endorsement (Exhibit 3),
a General Liability Declarations page (Exhibit 4), a Self-Insured Retention
Endorsement (Exhibit 5), the 10-day Notice of Cancellation (Exhibit 6), the
General Liability/Hired & Non-Owned Quote (Exhibit 7), and Fleetlogix’s Excess
Liability Insurance Policy Declarations page from Sandstone (Exhibit 8).70 Those
same exhibits were attached the Complaint in the Court of Chancery.71 Biegler did
not attach any exhibits to the Complaint when he filed it again in this Court, but the
69
Id. at ⁋ 21.
70
Compl., Exs. 1-8, D.I. 1 (N21C-08-035 MAA).
71
Compl., Exs. 1-8, D. I. 1 (C.A. No. 2021-1003-MTZ).
15
exhibits became part of the record when the Court of Chancery’s record was filed
here.72
Yet, whether by design or inadvertence, there are notable omissions from the
exhibits. For example, despite alleging in Paragraph 18 that the 10 and 20-day
notices (but not the 30-day notice) were contrary to the policy’s condition page, and
in Paragraph 19 that “the short term notices of cancellation and the mid-term
cancellation where there was no material change in the risk to be covered were
contrary to the conditions of coverage,” the policy’s condition page was not
included as an exhibit.73 While the 10-day notice of cancellation stating the reason
for the termination was attached, the 20-day notice, and, more importantly, the
operative 30-day notice were not.74 Further, while the Complaint alleges that
72
D.I. 8.
73
It appears the policy was made available to the United States District Court in
related litigation in Montana, and may have contained a clause allowing USMC to
terminate it upon 30-day notice. Biegler v. G.M.I. Inc. N.A., et al., 2020 WL
7209151, at *5 (D. Mont. Dec. 7, 2020). That court granted GMI’s motion to
dismiss for failure to state a claim for “the simple reason that GMI provided
Fleetlogix with the primary coverage Biegler requested.” Id. It is unclear whether
Biegler challenged USMC’s right to terminate the policy. Certainly, there is no
mention of any such challenge in the opinion. The counts against USMC and
United Specialty in that case were dismissed on personal jurisdiction grounds.
Biegler v. G.M.I., N.A., Inc., et al., 2020 WL 6940382 (D. Mont. Nov. 25, 2020).
74
The defendants contend that they terminated the policy “when claims began to
accumulate.” Defs.’ Reply in Support of Its Mot. to Dismiss at 2, D.I. 8. Whether
this rationale was expressed at the time of termination in the 30-day notice or only
later in litigation is unknown due to the absence of the 30-day notice from the
record.
16
“relevant insurance code provisions” were violated, it does not identify those
provisions.75
In their Reply, the Defendants contend that the negligence claim is defective
because the Complaint failed to allege that USMC did anything other than fulfill its
obligations under the policy, and later lawfully cancel the policy by the 30-day
notice after claims began to accumulate.76 The Defendants do not cite to the
Complaint or any documents integral to the Complaint for these assertions, nor do
they provide the Court with the policy conditions or 30-day termination notice.
They do cite to Biegler v. G.M.I. N.A. Inc.,77 a copy of which they attach to their
Reply.78 Biegler unsuccessfully brought an action against GMI in Montana. But,
the decision of the 9th Circuit in Biegler v. G.M.I. N. A. Inc. bears the notation that
it is not appropriate for publication and is not precedent except as provided by Ninth
Circuit Rule 36-3.79 That Rule provides that unpublished dispositions and orders
of the Ninth Circuit Court of Appeals are not binding precedent, except when
relevant under the doctrines of law of the case, res judicata, and collateral
75
Compl. at ⁋ 19, D.I. 1.
76
Id. at 1-2.
77
Biegler v. G.M.I. N.A. Inc., 2022 WL 401492, (9th Cir. Feb. 9, 2022). (affirming
dismissal of Biegler’s claims).
78
Defs. Reply at 3-5, D.I. 8..
79
Biegler at n *.
17
estoppel.80 The Defendants have not argued that any of those exceptions applies
here. Accordingly, the Court does not consider the Ninth Circuit decision.
The Court first turns to the issue of whether the defendants owed a duty to
Biegler. Delaware courts look to the Restatement (Second) of Torts to determine
whether one party owes another a duty of care.81 The Restatement (Second)
distinguishes between negligent acts (“malfeasance”) and negligent omissions
(“nonfeasance”) for purposes of determining the nature of the duty owed.82 Anyone
who performs an affirmative act is under a duty to others to “exercise the care of
a reasonable man to protect them against an unreasonable risk of harm to
them arising out of the act.”83 Conversely, one who “merely omits to act” generally
has no duty to do so, “unless there is a special relationship between the actor and
the other which gives rise to the duty.”84 Here, because Biegler alleges negligence
80
Palo Verde Investments v. Coach-Net Roadside Assistance, 2014 WL 12573958,
at * 1 (D. Az. Jan. 13, 2014).
81
See Doe v. Bradley, 2011 WL 290829, at *7 (Del. Super. Ct. Jan. 21, 2011)
82
Id. Section § 284 of the Restatement (Second) outlines the difference between
these two concepts, noting that negligent conduct may be either:
(a) an act which the actor as a reasonable man should recognize as involving
an unreasonable risk of causing an invasion of an interest of another, or
(b) a failure to do an act which is necessary for the protection or assistance of
another and which the actor is under a duty to do.
83
Id. at *5
84
Id.
18
based on the Defendants’ actions, the parties agree that there is no need for Biegler
to allege the existence of a special relationship.
Why it would be reasonable for the Defendants to owe a duty of care to
Biegler and be responsible to him for damages resulting from Fleetlogix’s
termination of him as its insurance consultant, under the facts alleged in the
Complaint, eludes the Court. It is not alleged that the defendants had any
particularized knowledge of the professional relationship between Biegler and
Fleetlogix, including the terms of any contract they may have had related to the
policy at issue here. Nor is it alleged that the Defendants had any reason to know
that Biegler’s continued retention by Fleetlogix was contingent on the Defendants’
performance under the insurance policy, especially where the policy obtained by
Biegler contained all of the provisions Fleetlogix required.
Fleetlogix had a contract with the Defendants for the Defendants to provide
primary insurance. If the Defendant’s properly terminated the contract, as they
allege, they are blameless for Fleetlogix ending its relationship with Biegler.
Conversely, to the extent that the Defendants terminated that contract in violation
of its terms, as Biegler alleges, Fleetlogix, but not Biegler, would have a cause of
action against the Defendants for breach of contract.85 In either case, Biegler’s real
85
Interestingly, no mention of any such litigation has been made in this case. The
Court assumes none ever was initiated.
19
complaint is not with the Defendants, but with Fleetlogix. Fleetlogix’s collateral
termination of Biegler, despite Biegler having obtained a policy meeting
Fleetlogix’s specifications, is not a reasonable risk the Defendants could or should
have foreseen, absent specific factual allegations making the Defendants aware of
the risk of that result. The Complaint lacks such specific factual allegations.
Accordingly it fails to allege any duty of care the Defendants owed to Biegler.
The Defendants argue that they did not violate the policy’s termination
provisions when they cancelled Fleetlogix’s policy. Maybe, maybe not. They have
not chosen to provide the Court with a copy of the policy or the 30-day termination
notice. Biegler alleges in the Complaint that the cancellation of the policy violated
the policy’s conditions of coverage, relevant insurance code provisions and the
standard of care in the insurance industry. These allegations are conclusory and
unsupported by specific facts. They suffer from the same deficiencies as the
Defendants’ argument in that Biegler also has not chosen to provide the Court with
a copy of the relevant policy provisions, nor has he referenced any specific
insurance code provisions. Biegler’s reliance on his contention that the Defendants
failed to meet the appropriate standard of care is insufficient to avoid dismissal
because that contention merely is derivative of his conclusory allegations that the
Defendants improperly terminated the policy. Accordingly Count I – Negligence
is DISMISSED.
20
Count III - Tortious Interference with Prospective Contractual
Relations.
In order to properly state a claim for tortious interference with prospective
Contractual relations, a plaintiff must allege “(a) a reasonable probability of a
business opportunity or prospective contractual relationship, (b) intentional
interference by a defendant with that opportunity, (c) proximate cause, and (d)
damages.”86 While nobody disputes that the Defendants were aware that Biegler
had a relationship with Fleetlogix in the context of the policy at issue, the Complaint
lacks any allegation that the Defendants were aware of any prospective reasonably
probable contractual relations between Fleetlogix and Biegler. Even if the
Defendants were aware of such prospective contractual relations, the Complaint
fails to allege that interfering with those prospective contractual relations played
any role in the Defendants terminating their policy with Fleetlogix. In other words,
the Complaint fails to allege that the Defendants acted intentionally to interfere with
any prospective contractual relations between Biegler and Fleetlogix. For that
reason, Count III – Tortious Interference with Prospective Contractual Relation is
DISMISSED.
86
Great Am. Opportunities, Inc. v. Cherrydale Fundraising, LLC, 2010 WL
338219, at *9 (Del. Ch. Jan. 29, 2020); See also, KT4 Partners LLC v. Palantir
Technologies, Inc. 2018 WL 4033767, at *6 (Del. Super. Aug. 22, 2018 (citing
World Energy Ventures, LLC v. Northwind Gulf Coast LLC, 2015 WL 7772638, at
*6 (Del. Super. Nov. 2, 2015)).
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VI. CONCLUSION
THEREFORE, the Motion to Dismiss of Defendants United Specialty
Insurance Company and Underwriting Service Management Company, LLC is
GRANTED. The Complaint is DISMISSED WITHOUT PREJUDICE.
Plaintiff Mark Biegler is granted leave to file an Amended Complaint within 30
days from the date of this Memorandum Opinion.
IT IS SO ORDERED.
/s/ Ferris W. Wharton
Ferris W. Wharton, J.
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