267 F. Supp. 3d 384
W.D.N.Y.2017Background
- Plaintiff Violet Realty, Inc. sues Defendant Affiliated FM Insurance Company over a fire loss at a 26-story Buffalo office tower.
- Policy: $342 million limit, effective Sept 1, 2014 to Sept 1, 2016; loss occurred Feb 20, 2016.
- Loss caused by fire, smoke, and firefighter water; Plaintiff remediated and hired its own adjuster; initial and updated loss estimates were ~2.6M and ~6.5M respectively.
- Defendant paid approximately $2.2 million for direct losses; Plaintiff claims additional business interruption losses over $700k and remediation costs Defendant allegedly denied.
- Plaintiff asserts four causes of action: breach of contract, breach of the covenant of good faith and fair dealing, NY Insurance Law § 2601, and NY GBL § 349 deception.
- Defendant moves for judgment on the pleadings; court grants the motion on several claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the implied covenant claim duplicatess the contract claim | Violet argues Bi-Economy supports separate remedy | Affiliated FM contends duplicative with breach of contract | Duplicative; second claim dismissed without prejudice |
| Whether NY Insurance Law § 2601 provides a private right of action | §2601 claim relevant to the second claim | No private right of action exists under §2601 | Dismissed with prejudice |
| Whether GBL § 349 applies to a private insurance contract dispute | Disorderly insurer conduct could be consumer-oriented | Private contract dispute is not consumer-oriented | Dismissed without prejudice |
Key Cases Cited
- Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York, 10 N.Y.3d 187 (New York Court of Appeals 2008) (implicit good faith covenant in insurance; prompt payment damages)
- New York Univ. v. Cont'l Ins. Co., 87 N.Y.2d 308 (New York Court of Appeals 1995) (no private right of action under Insurance Law § 2601)
- Canstar v. J.A. Jones Constr. Co., 212 A.D.2d 452 (1st Dep't 1995) (duplicative implied covenant claim analysis)
- Netologic, Inc. v. Goldman Sachs Grp., Inc., 110 A.D.3d 433 (1st Dep't 2013) (extends duplicative claim rule to implied covenant claims)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (New York Court of Appeals 1995) (consumer-oriented requirement guidance for § 349)
- National Market Share, Inc. v. Sterling Nat'l Bank, 392 F.3d 520 (2d Cir. 2004) (second circuit on contract and good faith principles)
- Fishoff v. Coty Inc., 634 F.3d 647 (2d Cir. 2011) (implied covenant and contract relation in NY law)