The court approved the magistrate's decision granting a motion to amend the complaint against the broker for negligent misrepresentation and negligent misrepresentation. Ashford Locke Builders v. GM Contrs. Plus Corp., 2020 U.S. Dist. LEXIS 196646 (E.D. N. Y. Oct. 22, 2020).
The broker challenged the amended complaint, arguing that plaintiffs had not stated a cause of action for negligent or fraudulent misrepresentation because the broker did not make any misrepresentations to plaintiff nor did plaintiff plausibly allege justifiable reliance. For the negligent misrepresentation claim, the magistrate judge found that (i) the plaintiff had plausibly alleged that the broker was negligent in failing to obtain workers' compensation coverage, (ii) the plaintiff justifiably relied on the Certificate of Insurance, believing it covered workers' compensation, and (iii) it was reasonably foreseeable that the plaintiff would suffer injury. These allegations were sufficient at the pleading stage.
The magistrate judge also found that plaintiff plausibly alleged fraudulent misrepresentation. The plaintiff alleged that it had a special relationship with the broker, that the broker intentionally provided misleading information regarding insurance coverage, and that the plaintiff reasonably relied on that information. These allegations were also sufficient at the pleading stage.
Finally, the broker objected to the magistrate's conclusion that "the plaintiff was entitled to damages that were in excess of the coverage the policy would have provided had coverage been procured" for its claims of negligent and fraudulent misrepresentation. For alleged tortious conduct, New Jersey law allowed damages in excess of the policy coverage if the plaintiff established negligent or fraudulent misrepresentation.
