American Empire Surplus Lines Insurance Company v. MTB AMG INC.
1:20-cv-03929
E.D.N.YFeb 8, 2023Background
- American Empire issued Commercial General Liability policies covering Apr 1, 2018–Apr 1, 2019 and Apr 1, 2019–Apr 1, 2020 for five related entities; premiums were percentage-based on gross receipts with advance premiums set on projected receipts.
- Audits revealed much higher actual gross receipts: the 2018 audit found $11,172,231.22, producing an additional premium of $334,543 (which Defendants do not dispute).
- For the 2019 policy period, an adjusted advance premium of $149,464 was added, and a revised audit later produced an additional premium of $460,296; combined with the 2018 shortfall, Plaintiff seeks $944,303 in unpaid premiums.
- Defendants largely declined to file a Local Rule 56.1 response and in discovery conceded the 2018 shortfall; they asserted but did not substantively prove challenges to the auditor’s allocation between "fabrication" and "installation" receipts.
- Plaintiff moved for summary judgment seeking unpaid premiums, interest, fees, and declaratory relief; the court granted summary judgment on the unpaid premium claim, awarded $944,303 plus prejudgment interest at 9% from February 16, 2022, denied attorneys’ fees, denied declaratory relief about defense/indemnity, and dismissed Defendants’ counterclaims as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence and breach of contract (unpaid premium) | Policies + audits + insurer affidavit establish a prima facie unpaid premium claim of $944,303 | Audit allocation method flawed; amount disputed as conclusory and contested | Granted: plaintiff proved contract, performance, breach, and damages; $944,303 awarded |
| Entitlement to attorneys' fees | Fees warranted because defendants acted in bad faith and pursued meritless defenses | Defendants say they dropped defenses for cost reasons and had possible defenses | Denied: no statute or contract authorizes fees and no exceptional bad‑faith shown |
| Prejudgment interest and accrual date | Interest accrues as of final audit endorsement date (Feb 16, 2022) at NY statutory rate | Defendants did not contest accrual date materially | Granted: interest at 9% p.a. from Feb 16, 2022 until payment |
| Declaratory relief (no duty to defend/indemnify) | Seek declaration that if defendants don't pay, insurer has no duty to defend/indemnify | Defendants did not show active underlying claims that would trigger duty | Denied: no actual controversy or ripeness for declaratory relief regarding defense/indemnity |
Key Cases Cited
- Olin Corp. v. Am. Home Assurance Co., 704 F.3d 89 (2d Cir. 2012) (insurance policies are contracts governed by contract interpretation principles)
- Johnson v. Nextel Commc'ns, Inc., 660 F.3d 131 (2d Cir. 2011) (elements of a breach of contract claim)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting framework)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (no genuine issue where record could not lead a rational trier of fact for non-movant)
- Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240 (U.S. 1975) (attorney-fee rule and narrow bad-faith exception)
- Evanston Ins. Co. v. Po Wing Hong Food Mkt., Inc., 800 N.Y.S.2d 396 (N.Y. App. Div.) (audit + insurer affidavit can establish prima facie unpaid-premium case)
- Kerzer v. Kingly Mfg., 156 F.3d 396 (2d Cir. 1998) (conclusory allegations insufficient to create a triable issue)
- Ridinger v. Dow Jones & Co., 651 F.3d 309 (2d Cir. 2011) (opposition to summary judgment must identify specific contested facts)