In Lido Beach Towers v. Denis A. Miller Agency, Inc., 2015 N.Y. App. Div. LEXIS 4383 (N.Y. App. Div. 2d Dep’t May 27, 2015), the Appellate Division, Second Department, affirmed the Supreme Court’s order dismissing all claims of negligence, breach of contract and cross-claims against the individual insurance broker. In this case, principles of agency worked in favor of getting the insurance broker off the hook for the alleged acts of his disclosed principal.
Plaintiffs’ action arose in the aftermath of Super Storm Sandy for damages to its condominium building, the Lido Beach Towers, and as a result of alleged insufficient flood coverage. Plaintiffs brought suit against Denis Miller, individually (the insurance broker), Denis A. Miller Insurance Agency (the “Agency”, his employer), and Kaled Management Inc. (the manager of Lido Beach Towers). Defendant Miller moved below to summarily dismiss plaintiffs’ claims of negligence and breach of contract, and all cross claims by Kaled, against him individually. The Supreme Court granted Miller’s motion, and the Second Department affirmed on appeal.
The court found “corporate officers may not be held personally liable on contracts of their corporations, provided they did not purport to bind themselves individually under such contracts.” Id. at *3. The court noted, however, that personal liability can be established against corporate officers when torts are committed during the performance of their corporate duties. Where Miller demonstrated that he was 1) acting within the course and scope of his employment and 2) did not engage in any independent tortious conduct with respect to the handling of plaintiffs’ insurance policy, he sufficiently established that the claims against him should be summarily dismissed.
Critically, the court found that “When an agent acts on behalf of a disclosed principal, the agent will not be personally liable for a breach of contract unless there is clear and explicit evidence of the agent’s intention to be personally bound.” Id. at *4. Miller made his case by demonstrating that there was no evidence of his personal intent to be bound; thus, liability could not be imputed on the part of Miller individually.
Finally, the appellate panel found that Kaled’s claim that summary judgment was premature equally failed because Kaled failed to show that discovery would yield relevant information exclusively within Miller’s knowledge and control. The evidence demonstrated that the Agency failed to advise plaintiffs of a change to the coverage under the policy.
Take away: Where the facts demonstrate: a) a disclosed principal; b) no evidence of the individual broker’s intent to be bound; and c) no independent tortious acts of the broker, an argument based on agency principles may relieve a broker from personal liability for the alleged acts of his principal.