No Harm No Foul – Lack of Damages Defeats Suit Against Broker

Plaintiff Had No Right to Rely on a Certificate of Insurance

A suit against an insurance broker for failing to acquire insurance was defeated with a motion for summary judgment because the plaintiff incurred no damage as a result of the alleged failure and because the plaintiffs failed to allege the elements of fraud.  The order, appealed from denied those branches of its motion which were for summary judgment on the issue of liability on the third-party causes of action to recover damages for breach of contract, negligence, and fraud, and granted those branches of the third-party defendants’ cross motion which were for summary judgment dismissing those third-party causes of action.

In Devair Da Silva v. Champ Construction Corp., A. Logan Insurance Brokerage, et al., 186 A.D.3d 452, 128 N.Y.S.3d 582, 2017-10174, Index No. 506852/13, Supreme Court, Appellate Division, Second Department, New York (August 5, 2020) the appellate court resolved the dispute.


The plaintiff sued to recover damages for personal injuries he allegedly sustained in a construction-site. The amended complaint alleged violations of Labor Law §§ 200, 240, and 241(6). At the time of the accident, the plaintiff was employed by the defendant Champ Construction Corp. (hereinafter Champ Construction).

Champ Construction sued an insurance broker, A. Logan Insurance Brokerage (hereinafter Logan), and Scott Handwerger, its principal (hereinafter together the third-party defendants). Champ Construction alleged that Handwerger, on behalf of Logan, had agreed to procure workers’ compensation coverage for the construction project, yet failed to do so.

The Supreme Court (trial court) denied those branches of Champ Construction’s motion which were for summary judgment on the third-party causes of action to recover damages for breach of contract to procure insurance, negligent failure to procure insurance, and fraud relating to the failure to procure insurance, and granted those branches of the third-party defendants’ cross motion which were for summary judgment dismissing those third-party causes of action. Champ Construction appeals.


An insurance broker may be held liable under theories of breach of contract or negligence for failing to procure insurance upon a showing by the insured that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction.

Champ Construction failed to allege or present evidence that showed the existence of an agreement by the third-party defendants to procure workers’ compensation insurance for this project, nor that the third-party defendants specifically undertook a duty to procure such an insurance policy.

The third-party defendants established that notwithstanding the lack of workers’ compensation insurance, the plaintiff received benefits from the general workers’ compensation fund relating to this occurrence. Champ Construction produced no evidence to the contrary. The Supreme Court determined in a related declaratory judgment action, the indemnification contract was not validly executed.

The record showed, as a matter of law, that any failure to procure insurance did not proximately cause damages to Champ Construction.

A cause of action alleging fraud requires the plaintiff to plead:

  1. a material misrepresentation of a fact,
  2. knowledge of its falsity,
  3. an intent to induce reliance,
  4. justifiable reliance, and
  5. damages.

Champ Construction failed to show, prima facie, that the third-party defendants made a material misrepresentation of fact as to the procurement of insurance. Moreover, the certificate of insurance that was purportedly issued by the third-party defendants provided that it was “issued as a matter of information only and confer[red] no rights upon the certificate holder.” Accordingly, as the Supreme Court found, it was unreasonable to rely on that certificate for coverage in the face of th[at] disclaimer language.

Therefore, the third-party defendants were entitled to summary judgment dismissing the third-party fraud cause of action.


To pursue a claim against an insurance agent for failing to acquire insurance ordered it is necessary to allege and prove that an order was made, that the insurance was not obtained and that the plaintiff was damaged as a result of the failure. Since the evidence established that the plaintiff was not damaged no action could survive. Since the certificate, on which the plaintiff alleged it relied, was issued only as a matter of information only and “conferred no rights on the certificate holder” there was no reason to rely on the certificate.

© 2022 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

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