“From Broker to Beneficiary” – Second Circuit Affirms that Generic “Agent” Release Clauses Encompass Insurance Brokers and Require Justifiable Reliance for Fraudulent-Inducement Challenges

1. Introduction

Eagle v. USI Insurance Services National, Inc., No. 24-1001-cv (2d Cir. Mar. 28, 2025), tests the outer limits of release provisions and the status of insurance brokers as “agents” for purposes of third-party beneficiary enforcement. Greg W. Eagle and his real-estate entities (collectively, “Plaintiffs”) paid millions in loan-arrangement fees to EVMC Real Estate Consultants (“EVMC”) that ultimately produced no financing. Hoping to salvage the relationship, Eagle signed two broad releases—the 2011 “Release Agreement” (governed by California law) and the 2012 “Credit Facility Agreement” (“CFA,” governed by Florida law)—both of which discharged EVMC and its “agents,” “consultants,” and “insurance carriers” from any and all claims. When the loans again failed to materialize, Plaintiffs sued EVMC and, importantly, EVMC’s insurance broker, USI Insurance Services National, Inc. (“USI”), for fraud and unjust enrichment. The Eastern District of New York granted summary judgment to USI, holding that (i) the releases were enforceable, (ii) USI qualified as EVMC’s “agent/consultant,” and (iii) Plaintiffs’ remaining arguments had been forfeited. On appeal, the Second Circuit affirmed, cementing two critical propositions:

Under both California and Florida law, an insurance broker is an “agent” of the insured and may invoke broad release language as a third-party beneficiary; and
Fraudulent-inducement challenges to settlements governed by Florida law still require justifiable reliance, notwithstanding the Florida Supreme Court’s decision in Butler v. Yusem.

2. Summary of the Judgment

The Second Circuit conducted de novo review of the district court’s summary-judgment ruling and reached three principal conclusions:

Enforceability of CFA: Plaintiffs’ claim that the CFA’s release was procured by fraud failed because Florida law requires justifiable reliance for fraudulent inducement, and plaintiffs’ reliance was “indisputably unreasonable” given years of broken promises.
USI as Third-Party Beneficiary: The plain language of both releases covers EVMC’s “agents” and “consultants.” Under well-settled California and Florida precedent, an insurance broker functions as the insured’s agent; USI therefore qualified to enforce the releases.
Forfeiture of New Arguments: Eight additional arguments raised for the first time on appeal were deemed forfeited; the Court reiterated that a non-moving party at summary judgment can indeed forfeit arguments not timely presented.

Accordingly, the panel affirmed the district court’s judgment in favor of USI.

3. Analysis

3.1 Precedents Cited

The Court’s reasoning leaned heavily on both Florida and California case law:

Maroone Chevrolet, LLC v. Alvarado, 344 So.3d 459 (Fla. 4th DCA 2022) – confirmed four elements of fraudulent inducement, including justifiable reliance.
Columbus Hotel Corp. v. Hotel Mgmt. Co., 156 So. 893 (Fla. 1934) and progeny – parties settling potential litigation may not rely blindly on each other’s representations.
Moriber v. Dreiling, 194 So.3d 369 (Fla. 3d DCA 2016) – reconciliation of Butler with reliance requirement.
Gen. Motors Corp. v. Superior Ct., 15 Cal. Rptr. 2d 622 (Cal. Ct. App. 1993) – outlines California’s third-party beneficiary doctrine.
Marsh & McLennan of Cal., Inc. v. City of Los Angeles, 132 Cal. Rptr. 796 (Cal. Ct. App. 1976); Amstar Ins. Co. v. Cadet, 862 So.2d 736 (Fla. 5th DCA 2003) – both deem insurance brokers agents of the insured.
Siemens Energy, Inc. v. Petróleos de Venezuela, S.A., 82 F.4th 144 (2d Cir. 2023) – restates strong rule against considering issues first raised on appeal.

3.2 Legal Reasoning

Fraudulent Inducement & Reliance (Florida Law)
• Plaintiffs attempted to exploit the Florida Supreme Court’s remark in Butler that “justifiable reliance is not a necessary element of fraudulent misrepresentation.”
• The Second Circuit emphasized that Butler spoke to misrepresentation claims, not inducement, and that later Florida courts consistently require justifiable reliance for inducement claims.
• The panel also relied on the “common-sense principle” that when adversaries settle threatened litigation, each negotiates at arm’s length and cannot reasonably rely on the other’s statements.
• Given EVMC’s documented history of broken promises and litigation threats, Plaintiffs’ reliance was objectively unreasonable.
Scope of “Agent” in Release Provisions
• Both California and Florida treat insurance brokers as agents of the insured as a matter of law.
• The releases unambiguously discharged claims against EVMC’s “agents” and “consultants.”
• USI’s 2006 Client Services Agreement with EVMC additionally established it as a “consultant.”
• Consequently, USI fit squarely within the beneficiary class contemplated by the parties, despite not being named expressly.
Doctrine of Forfeiture on Appeal
• Eight new arguments—ranging from public-policy challenges to contract-interpretation nuances—were not raised below.
• Relying on Second Circuit precedent (Unkechaug Indian Nation, Parada, Oneida Indian Nation), the panel refused to entertain them.

3.3 Impact of the Decision

Release Drafting & Litigation Strategy: Parties should assume that broadly worded releases using the term “agent” will sweep in insurance brokers, consultants, and potentially other service providers—even if unnamed.
Fraud Claims Under Florida Law: Litigants must still plead and prove justifiable reliance in fraudulent-inducement cases; Butler cannot be used as a shortcut to bypass that element.
Appellate Practice: The decision underscores the Second Circuit’s unwillingness to hear arguments not raised at the trial level, even where the appellant was the non-movant on summary judgment.
Cross-Border Contracts: Multi-state agreements invoking different governing laws (California vs. Florida here) will be harmonized pragmatically; where both jurisdictions treat a party (e.g., an insurance broker) similarly, courts will not hesitate to apply that parallel reasoning.

4. Complex Concepts Simplified

Fraudulent Inducement – A claim that a party was tricked into signing a contract because of false statements. To succeed in Florida, the plaintiff must show (1) a false statement, (2) knowledge of falsity, (3) intent to induce, and (4) justifiable reliance.
Justifiable Reliance – The plaintiff’s belief in the false statement must be reasonable under the circumstances; prior history of deception can negate reasonableness.
Third-Party Beneficiary – Someone who is not a signatory but may enforce a contract if the original parties intended the contract to benefit that person or class.
Insurance Broker as Agent – In most U.S. jurisdictions, an insurance broker represents the insured, not the insurer, and is therefore the insured’s “agent.”
Forfeiture vs. Waiver – Forfeiture is the loss of a legal right due to failing to assert it timely; waiver is the intentional relinquishment of a known right. Here, plaintiffs forfeited new arguments by not raising them below.
Summary Order – A short appellate disposition that is non-precedential under 2d Cir. R. 32.1.1, though still persuasive.

5. Conclusion

Eagle v. USI reinforces critical contractual and procedural doctrines:

Insurance brokers plainly fall within the “agent” umbrella in release agreements, thus enjoying third-party beneficiary status.
Fraudulent-inducement claims governed by Florida law live or die on justifiable reliance—a hurdle plaintiffs in contentious, long-running disputes may find difficult to clear.
Arguments not presented at the district-court level are unlikely to be heard on appeal, regardless of burdens of proof at summary judgment.

While issued as a non-precedential summary order, the decision offers instructive guidance for transactional lawyers drafting releases, litigators contesting fraudulent-inducement defenses, and appellate practitioners preserving issues for review. The take-home message is clear: when you release claims against your counterparty’s “agents,” expect that umbrella to be broad, and if you want to contest the release later, you must show reasonable reliance and raise every viable argument at the earliest stage.