Henry L. Fox Co. v. William Kaufman Organization, 74 N.Y.2d 136 (1989)
Under New York Insurance Law § 2119(a)(1), an insurance consultant cannot recover fees for services unless there is a written memorandum, signed by the party to be charged, that clearly defines the amount or extent of compensation.
Summary
Henry L. Fox Co., an insurance consultant, sued William Kaufman Organization for breach of contract, alleging that Kaufman failed to pay for consulting services. Fox argued that a series of signed and unsigned writings satisfied the Statute of Frauds under Insurance Law § 2119(a)(1). The Court of Appeals reversed the lower courts, holding that the statute requires a signed writing explicitly defining the compensation agreement. The court emphasized the legislative intent to protect insureds from unsubstantiated compensation claims and clarified that general Statute of Frauds principles do not override the specific requirements of the Insurance Law.
Facts
Henry L. Fox Co. sent a letter to William Kaufman Organization proposing to review their insurance portfolio to reduce costs, with compensation based on a percentage of premium savings. Kaufman did not respond in writing. Fox later sent a schedule of insurance coverage and requested an authorization letter to obtain inspection reports. Kaufman provided a signed authorization letter and cover letter, but these did not mention the compensation agreement. Fox obtained insurance bids, but Kaufman ultimately purchased insurance through another broker and refused to pay Fox for its services.
Procedural History
Fox sued Kaufman for breach of contract and quantum meruit. The Supreme Court denied Kaufman’s motion for summary judgment, and the Appellate Division modified, dismissing the quantum meruit claim but allowing the breach of contract claim to proceed. The Appellate Division reasoned that the signed and unsigned writings could be combined to satisfy the Statute of Frauds. Kaufman appealed to the Court of Appeals, challenging the Appellate Division’s order after a jury verdict in favor of Fox.
Issue(s)
Whether Insurance Law § 2119(a)(1) requires a written memorandum, signed by the party to be charged, that explicitly specifies or clearly defines the amount or extent of compensation for insurance consulting services.
Holding
Yes, because Insurance Law § 2119(a)(1) mandates a signed writing explicitly defining the compensation agreement, and the writings presented by Fox did not meet this standard.
Court’s Reasoning
The court emphasized that Insurance Law § 2119(a)(1) requires a more exacting standard than general Statute of Frauds principles. The statute focuses on the *amount* of compensation, requiring a clearly defined price evidenced by a signed writing. The court explained that the legislative intent was to protect insureds from unsubstantiated claims for compensation. The court noted the inconsistency in Fox’s claim for compensation, highlighting the need for clarity. The court stated, “Where additional compensation is expected by licensees, they must secure a signed writing agreeing to the terms and conditions of this special arrangement from the insured”. The court distinguished this case from *Crabtree v. Elizabeth Arden Sales Corp.*, where a signed writing established a contractual relationship, while here, there was no signed writing specifying the compensation. The court found that the authorization letter only permitted inspection arrangements. The court stated, “The writings are insufficient on their face, and the conclusion follows, as a matter of law, that they do not satisfy the Statute of Frauds”.