Coverage-Action Litigation Costs Are a Present Injury for Ripeness; An Insurance Broker’s Specific Undertaking Creates a Duty to Notify the Insurer

A commentary on Paro Mgmt. Co., Inc. v. Willis of N.J., Inc., No. 25-872-cv (2d Cir. Nov. 5, 2025) (summary order).

Note: This decision is a “summary order” of the U.S. Court of Appeals for the Second Circuit and, under Federal Rule of Appellate Procedure 32.1 and Local Rule 32.1.1, it is nonprecedential. It may be cited, but it does not have binding precedential effect.

Introduction

This case arises from a familiar triangle in insurance disputes: the insured, the insurer, and the broker. Plaintiffs Paro Management Co., Inc. and J&N Realty Associates, LLC (together, “Paro”) allege that their broker, Willis of New Jersey, Inc. (“Willis”), agreed to transmit a lead-paint notice to Paro’s insurer but failed to do so. Former tenants later sued Paro over lead exposure at a Queens residential property; the insurer disclaimed coverage for untimely notice; and Paro brought a state court coverage action. Paro then sued Willis for negligence and negligent misrepresentation. The Southern District of New York (Vyskocil, J.) dismissed the complaint as unripe, and alternatively for failure to state a claim.

On appeal, the Second Circuit affirmed in part, reversed in part, and remanded. The panel (Cabranes, Park, Menashi, JJ.) held that Paro’s claims are ripe because the costs of litigating the insurer’s coverage denial are a present “pocketbook injury,” irrespective of the coverage action’s outcome. The court also held that Paro plausibly alleged a negligence duty where the broker specifically undertook to transmit the notice. However, it affirmed dismissal of the negligent misrepresentation claim because the alleged statements were promissory (future conduct) and not actionable absent facts suggesting an intent not to perform at the time the promise was made.

Summary of the Opinion

• Jurisdictional housekeeping: The court deemed the pleadings amended under 28 U.S.C. § 1653 to cure diversity pleading defects relating to the LLC’s citizenship, concluding complete diversity exists (citing Wiener v. AXA Equitable Life Ins. Co.).
• Ripeness:
  • Constitutional ripeness is satisfied because Paro is incurring ongoing, tangible litigation expenses in its coverage action that are allegedly caused by Willis’s failure to transmit the notice—an actual, not hypothetical, “pocketbook injury.”
  • Prudential ripeness (assuming it remains viable) is also satisfied: the questions presented are largely legal (Rule 12(b)(6) sufficiency) and withholding decision imposes hardship on Paro by allowing coverage-action costs to accrue.
• Negligence:
  • Paro plausibly alleged that Willis owed a duty by specifically agreeing to undertake the task of notifying the insurer about the lead claim, an obligation “above and beyond” merely procuring coverage.
  • Paro also plausibly alleged breach (failure to notify) and injury/causation (coverage denial leading to litigation costs).
• Negligent misrepresentation:
  • Dismissal affirmed. Willis’s statements—that it would provide notice—were promises of future conduct, not misstatements of existing fact; without allegations that Willis lacked intent to perform at the time of the promise, the claim fails.
• Disposition: Affirmed as to negligent misrepresentation; reversed as to ripeness and negligence; remanded.

Analysis

Precedents Cited and How They Shaped the Decision

• Ripeness and standing:
  • Texas v. United States, 523 U.S. 296 (1998) and Vill. Green at Sayville, LLC v. Town of Islip, 43 F.4th 287 (2d Cir. 2022) – the court reiterates that claims resting on contingent future events may be unripe. Here, however, the injury is present: litigation costs.
  • Nat’l Org. for Marriage, Inc. v. Walsh, 714 F.3d 682 (2d Cir. 2013) – frames constitutional ripeness as the “actual injury” component of standing; the panel uses this to focus on whether Paro’s injury is actual or hypothetical. It is actual.
  • Tyler v. Hennepin County, 598 U.S. 631 (2023) – invoked for the concept of “pocketbook injury,” i.e., concrete financial harm supporting Article III injury-in-fact.
  • Mental Disability Law Clinic v. Hogan, 519 F. App’x 714 (2d Cir. 2013) and Nnebe v. Daus, 644 F.3d 147 (2d Cir. 2011) – litigation expenses can establish injury in fact.
  • Moreira v. Société Générale, S.A., 125 F.4th 371 (2d Cir. 2025) – distinguishes existence of injury from the quantification of damages; uncertainty in amount does not defeat standing.
  • Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014); Nat’l Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803 (2003); Revitalizing Auto Communities Env’t Response Tr. v. Nat’l Grid USA, 10 F.4th 87 (2d Cir. 2021); Variscite NY Four, LLC v. N.Y. State Cannabis Control Bd., 152 F.4th 47 (2d Cir. 2025) – the panel notes skepticism about “prudential ripeness,” but even assuming it applies, the case is fit for review (a pure legal sufficiency question) and delay imposes hardship.
• Pleading standards:
  • Ashcroft v. Iqbal, 556 U.S. 662 (2009) – plausibility standard for Rule 12(b)(6); the court applies it to hold the negligence claim sufficiently pled based on a specific undertaking.
  • Anderson News, L.L.C. v. American Media, Inc., 680 F.3d 162 (2d Cir. 2012) – supports that whether a complaint states a claim is a legal question suitable for resolution now (relevant to prudential ripeness).
• Insurance broker’s duty under New York law:
  • Murphy v. Kuhn, 90 N.Y.2d 266 (1997) and GlobalNet Financial.com, Inc. v. Frank Crystal & Co., Inc., 449 F.3d 377 (2d Cir. 2006) – a broker’s default duty is limited to procuring requested coverage. Anything more requires a “special” undertaking.
  • Martin Assocs., Inc. v. Illinois Nat’l Ins. Co., 188 A.D.3d 572 (1st Dep’t 2020) and Wied v. N.Y. Cent. Mut. Fire Ins. Co., 208 A.D.2d 1132 (3d Dep’t 1994) – when an insured asks the broker to assume additional responsibilities and the broker agrees, a duty arises to execute with reasonable care. This frames the undertaking-to-notify as a cognizable duty.
• Negligent misrepresentation and promissory statements:
  • Hydro Investors, Inc. v. Trafalgar Power Inc., 227 F.3d 8 (2d Cir. 2000) – negligent misrepresentation generally lies for false statements of existing fact, not promissory statements about future conduct.
  • Capricorn Invs. III, L.P. v. CoolBrands Int’l, Inc., 66 A.D.3d 409 (1st Dep’t 2009) – promises of future conduct are not actionable as negligent misrepresentation.
  • Transit Mgmt., LLC v. Watson Indus., Inc., 23 A.D.3d 1152 (4th Dep’t 2005) – a promise can be actionable if accompanied by facts indicating the promisor lacked intent to perform at the time of the statement; absent such allegations, no claim.
• Attorney’s fees and coverage litigation:
  • N.Y. Univ. v. Cont’l Ins. Co., 87 N.Y.2d 308 (1995) – insureds generally cannot recover fees from their insurers for prosecuting an affirmative coverage action.
  • Goldberg v. Mallinckrodt, Inc., 792 F.2d 305 (2d Cir. 1986); Coopers & Lybrand v. Levitt, 52 A.D.2d 493 (1st Dep’t 1976) – the “third-party litigation” exception allows recovery of attorneys’ fees as consequential damages from a party whose wrongful act foreseeably necessitated litigation with others; critical to both ripeness and damages theory against the broker.
• Accrual under New York law (broker negligence):
  • Bonded Waterproofing Servs., Inc. v. Anderson-Bernard Agency, Inc., 86 A.D.3d 527 (2d Dep’t 2011) – claims against a broker for failure of coverage accrue when coverage is denied, not when underlying litigation ends; the panel highlights this rule, reinforcing ripeness and timeliness.
  • Comparative note: Stephens v. Worden Ins. Agency, LLC, 859 N.W.2d 723 (Mich. Ct. App. 2014) – referenced as part of a survey of contrary approaches in other jurisdictions.
• Jurisdictional pleading cures:
  • Wiener v. AXA Equitable Life Ins. Co., 113 F.4th 201 (2d Cir. 2024) – the court may deem pleadings amended under 28 U.S.C. § 1653 to cure defective diversity allegations, as it did here for LLC citizenship.

Legal Reasoning

1) Ripeness is satisfied by present, causally connected litigation costs. The district court viewed Paro’s claim as contingent on two future events: liability in the tenants’ lead case and success of the insurer’s coverage denial. The panel rejected this framing. Paro is already incurring out-of-pocket legal fees in a separate coverage action that it alleges were caused by Willis’s failure to transmit notice. Because New York law typically bars fee shifting for affirmative coverage suits (New York University), those costs exist regardless of who wins coverage. Thus, the injury is “actual or imminent,” not hypothetical. The court also emphasized that uncertainty as to the amount of damages does not defeat ripeness or standing (Moreira).

Even assuming prudential ripeness survives the Supreme Court’s skepticism, the claim is “fit” (it turns on a legal sufficiency question at the pleading stage) and withholding adjudication would impose “hardship” (coverage-action costs will continue to accrue). This dovetails with the panel’s articulation of mandatory jurisdiction and the narrowness of prudential abstention.

2) Negligence duty arises from a broker’s specific undertaking to notify the insurer. New York’s default rule limiting a broker’s duty to procuring requested coverage (Murphy; GlobalNet) yields where the insured asks, and the broker agrees, to perform an additional task. The complaint alleges precisely that: Paro instructed Willis to notify the insurer of the lead claim, and Willis affirmatively represented it would do so. At the pleading stage, no more detail was required to plausibly allege a duty and agreement to assume the task. Having pled duty and breach, Paro also alleged causation and injury: the failure to notify allegedly led to coverage denial, which foreseeably triggered coverage litigation costs recoverable from the wrongdoer under the third‑party litigation exception (Goldberg; Coopers & Lybrand).

3) Negligent misrepresentation fails where statements are promissory and no present-intent-to-breach is alleged. New York law generally confines negligent misrepresentation to false statements of existing fact made in a special or privity-like relationship; promises of future conduct are not actionable unless the plaintiff alleges the promisor lacked intent to perform when the promise was made (Hydro Investors; Capricorn; Transit Mgmt.). Paro alleged that Willis promised to send the notice but did not allege facts suggesting Willis never intended to perform at the time of the promise. The claim was therefore properly dismissed. The panel did not reach other elements (e.g., special relationship), resolving the issue on the “promissory vs. factual” axis alone.

Impact

For insureds and practitioners:

• Immediate justiciability against brokers: Plaintiffs can bring broker-negligence claims without waiting for the resolution of underlying tort suits or coverage actions, so long as they are already incurring litigation costs causally linked to the broker’s alleged failure. This avoids years of delay inherent in waiting for the “last” contingent event.
• Pleading the undertaking matters: The complaint should clearly allege the insured’s instruction and the broker’s agreement to undertake the specific task (e.g., transmitting notice). That allegation alone can create a duty beyond mere procurement.
• Damages theory clarified: Even if the insured ultimately prevails against the insurer, fees spent prosecuting the coverage action are not recoverable from the insurer under New York law, but may be recoverable as consequential damages from the broker whose negligence necessitated the litigation.
• Accrual date anchored: Under New York law, broker-negligence claims accrue upon coverage denial, not upon final resolution of coverage or underlying liability. Counsel should calendar limitations periods accordingly.

For brokers and risk management:

• Undertakings create duties: Agreeing to “take care of” notice can create a tort duty to perform with reasonable care. Brokers should implement clear protocols and documentation around who provides notice, how, and when, and should confirm transmission with proof.
• Clarity in engagement letters: Use written agreements to delineate responsibilities (e.g., insured retains responsibility to notify; broker will only transmit upon written request to a specified address; broker provides acknowledgment receipts).
• Exposure to fee damages: A broker’s misstep can expose it to substantial fee-shifting liabilities under the third‑party litigation exception—fees from coverage actions and potentially related litigation reasonably flowing from the failure.

Doctrinally:

• Ripeness and “pocketbook injury” broadened in application: The reasoning reinforces that concrete financial harms—like litigation costs incurred now—can satisfy Article III injury even when other case developments remain uncertain.
• Negligent misrepresentation boundary maintained: The decision keeps the line between contract-like promises and tort misrepresentation bright; absent allegations of present intent not to perform, broken promises do not morph into negligent misrepresentation.
• Appellate flexibility on jurisdictional pleading defects: The court’s use of § 1653 underscores that pleading defects about LLC citizenship can be cured on appeal where the record permits, preventing unnecessary remands.

Complex Concepts Simplified

• Ripeness (constitutional vs. prudential):
  • Constitutional ripeness asks whether the plaintiff has suffered an actual or imminent injury traceable to the defendant and redressable by the court. Here, ongoing legal fees are a present injury.
  • Prudential ripeness (a discretionary doctrine of timing) considers whether the issue is fit for review and whether delay would impose hardship. The continued accrual of fees satisfied hardship; the legal sufficiency of the complaint satisfied fitness.
• “Pocketbook injury”: A tangible financial loss—like paying lawyers—that is sufficient to establish injury-in-fact for Article III standing and ripeness.
• Broker’s duty via “specific undertaking”: Although a broker generally must only procure requested coverage, if the insured asks the broker to do more (e.g., submit a claim or notice) and the broker agrees, a duty arises to perform that task with reasonable care.
• Negligent misrepresentation vs. promissory statements: Negligent misrepresentation targets false statements about present facts, not mere promises about future acts. A promise becomes actionable only if the promisor lacked intent to perform when the promise was made (which is often pleaded as fraudulent intent; negligent misrepresentation rarely fits this scenario).
• Third‑party litigation exception (attorneys’ fees as damages): If a defendant’s wrongful act foreseeably forces the plaintiff into litigation with a third party, the plaintiff may recover those litigation expenses from the wrongdoer as consequential damages, even though American Rule usually bars fee shifting.
• Accrual of broker-negligence claims in New York: Such claims generally accrue when the insurer denies coverage, starting the limitations clock then—not when downstream litigation concludes.
• Duplicative tort claims: New York courts sometimes dismiss negligence claims as duplicative of misrepresentation or contract claims if they rest on the same facts and duty. Here, the panel allowed negligence to proceed while dismissing negligent misrepresentation, sidestepping duplicativeness concerns.
• Section 1653 cures: 28 U.S.C. § 1653 allows appellate courts to treat pleadings as amended to correct defective jurisdictional allegations (e.g., missing LLC member citizenships), provided the facts support jurisdiction.

Conclusion

Although nonprecedential, Paro Mgmt. Co., Inc. v. Willis of N.J., Inc. delivers two practical and doctrinally significant takeaways.

First, the Second Circuit emphasizes that present, out-of-pocket litigation costs in a related coverage lawsuit can satisfy Article III ripeness, even while underlying tort and coverage disputes remain unresolved. That holding removes a common obstacle to timely broker-negligence suits and aligns injury analysis with real-world economic harms insureds face when coverage is denied.

Second, the court reinforces New York’s “specific undertaking” pathway to a broker’s duty: when a broker agrees to transmit notice (or perform comparable tasks) at an insured’s request, the broker assumes a duty to do so with reasonable care. Pleading the insured’s instruction and the broker’s agreement suffices at the motion-to-dismiss stage. At the same time, the decision fortifies the boundary that promissory statements about future conduct, absent allegations of present intent not to perform, cannot sustain a negligent misrepresentation claim.

On remand, Paro may pursue negligence-based relief against the broker, including recovery of litigation costs that New York law typically precludes against the insurer. Practitioners should heed the case’s practical guidance: document responsibility for notices, avoid assumptions about broker roles, and plead broker undertakings with specificity. Even as a summary order, the court’s analysis will be persuasive across similar disputes involving broker duties, ripeness, and the recoverability of litigation expenses as consequential damages.