Terra Insurance v. New York Life Investment Management LLC

ORDER ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

INTRODUCTION

In this civil action involving the alleged failure by an investment advisor to disclose material investment-related information to a client, defendant New York Life Investment Management LLC (“NYLIM”) moves for summary judgment against plaintiff and former client Terra Insurance Company. For the reasons explained below, NYLIM’s summary judgment motion is Granted in part and Denied in part.

STATEMENT

Terra is a “risk retention group” under federal law. In other words, it is a liability insurance company owned exclusively by its policyholders (Okcu Deel. Exh. 8, Exh. 11 at 37). These policyholders pay premiums to Terra, which are then invested and used to pay insurance claims (ibid.) Terra’s board of directors — which consists almost entirely of engineers' — employs the assistance of professional financial advisors to help manage the company’s investment portfolio (id. at Exh. 11 at 51-55, 311).

In this connection, Terra hired Towneley Capital Management as its investment ad-visor in 1989 (Wall Deck Exh. 1). Throughout this relationship, Terra worked primarily with Wesley McCain, the Chairman of Towneley, and Joan…