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Omega Demolition Corp. v. Hays Group, Inc.

United States District Court, D. Minnesota

March 17, 2015

Omega Demolition Corp., Plaintiff,
v.
The Hays Group, Inc., Defendant.

Anthony M. Sciara, Esq., Harvey Kruse, P.C., Troy, MI, and Adina R. Bergstrom, Esq., Sauro & Bergstrom, PLLC, Oakdale, MN, on behalf of Plaintiff.

Daniel J. Cunningham, Esq., Tessler LLP, Chicago, IL, and Charles E. Spevacek Esq., Meagher & Geer, PLLP, Minneapolis, MN, on behalf of Defendant.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

This matter came before the undersigned United States District Judge on December 18, 2014 on Defendant The Hays Group Inc.'s ("Hays Group") Motion to Dismiss or Transfer [Docket No. 19]. For the reasons discussed below, Hays Group's Motion to Dismiss is granted.

II. BACKGROUND

This is a professional liability action in which Plaintiff Omega Demolition Corp. ("Omega") seeks tort damages arising from the alleged failure of its insurance broker to secure coverage for Omega's use of barges to demolish a bridge on the Fox River in Illinois. Compl. [Docket No. 1] ¶¶ 5-8.

A. The Parties

Omega is an Illinois demolition and dismantlement company located in Elgin, Illinois. The Hays Group is a Minnesota corporation that provides commercial insurance brokerage services. Compl. ¶ 2; Cunningham Aff. [Docket No. 23] ¶ 5. Hays Group of Illinois ("Hays Illinois") is an entity related to Hays Group that provided brokerage services to Omega in Illinois. Hays Illinois is a Minnesota Limited Liability Company ("LLC") authorized to do business in Illinois. Kerr Aff. [Docket No. 24] ¶ 5. There are two members of Hays Illinois: Walter Kerr and Hays Group Id . ¶ 4. Hays Group is a resident of Minnesota and Mr. Kerr is a resident of Illinois. Hays Illinois is not a named party in this case.

B. The Fox River project

In the Spring of 2009, Omega began demolishing a bridge on the Fox River. Compl. ¶ 5. Omega contracted with Sunflower Enterprises, LLC ("Sunflower") to lease barges and other equipment for the demolition. Id . ¶ 6. Omega's agreement with Sunflower required Omega to secure insurance for the barges on behalf of Sunflower. Id . ¶ 7. In June and July 2009, Hays Illinois issued Certificates of Liability Insurance to Omega. Cunningham Aff. [Docket No. 23-1] Ex. A. In August 2009, Omega sent a payment of more than $100, 000 for the insurance to Hays Group in Minnesota. Compl. ¶ 17. These funds were transferred back to Illinois shortly thereafter because Hays Illinois provided the brokerage services to Omega in Illinois. Def.'s Mem. Supp. Mot. Dismiss [Docket No. 21] 14. Omega relied on the Certificates as confirmation that the barges were insured by Travelers Property Casualty Company of America ("Travelers") from July 1, 2009 to July 1, 2010. Compl. ¶ 11.

In July 2009, the barges were damaged, "most likely [due to] the water level in the Fox River lowering, a falling bridge or construction debris." Id . ¶ 14. Omega submitted a claim to Travelers in August 2009, but Travelers refused coverage based on policy exclusions. Id . ¶ 16. The issues surrounding the coverage dispute are not relevant here except that, after three years of arbitration with Sunflower, an award was entered against Omega for $363, 794.99. Id . ¶ 21. In January 2014, Omega filed suit against Travelers in Illinois state court, which was subsequently removed to federal court in the Northern District of Illinois. Id . ¶ 22. This suit followed.

C. Omega's claims against Hays Group

Although Hays Illinois is the entity that secured the insurance for the barges in Illinois, Omega sued Hays Group on three counts for their alleged failure to secure appropriate coverage, including: (1) negligence; (2) negligent misrepresentation; and (3) breach of fiduciary duty. Id . ¶¶ 25-40. Omega's Complaint does not seek to pierce the corporate veil between Hays Group and Hays Illinois. Omega also admitted at the hearing that its ...


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