Progressive is among the largest automobile insurers in the United States with a large presence in this state. Plaintiff is an automobile repair shop in Westchester County.
On February 16, 2007, plaintiff commenced this proceeding. As originally filed, the complaint asserted eight causes of action: (1) violation of General Business Law § 349; (2) violation of Insurance Law § 260if
The gravamen of the claims is that Progressive, through its employees (the individual defendants) steered its insureds to the DRP shops and away from plaintiff by means of deceptive, misleading and untrue statements which disparaged plaintiff. A trial readiness order was issued on September 15, 2010. Progressive timely moves for summary judgment dismissing the section 349 claim and plaintiff timely moves for summary judgment as to liability with respect to such claim.
General Business Law § 349 (a) declares unlawful “[deceptive acts or practices in the conduct of any business” and was enacted in order to protect consumers from misleading advertizing (see Small v Lorillard Tobacco Co.,
Progressive moves for summary judgment upon the grounds: (1) plaintiff cannot demonstrate the requisite broad impact on consumers at large; (2) plaintiff cannot show that any consumer to whom Progressive made an allegedly “deceptive” statement suffered any actual harm; (3) plaintiff cannot show that Progressive engaged in misleading or deceptive behavior; and (4) assuming any consumers were harmed, any injury plaintiff suffered was derivative only and therefore not actionable by plaintiff under section 349.
It is clear that misrepresentations uttered in connection with a private, business-to-business dispute do not turn the matter into a section 349 violation (see e.g. Anesthesia Assoc. of Mount
Progressive relies on MVB Collision, Inc. v Progressive Northeastern Ins. Co. (Sup Ct, Nassau County, 2010, No. 18018/ 09) for the position that this is a private, nonconsumer business dispute and therefore not protected by section 349. Plaintiff relies on M.V.B. Collision, Inc. v Allstate Ins. Co. (
In the Progressive case, Supreme Court dismissed. The Progressive court held that Progressive’s alleged wrongdoing was only a private contract dispute without an extensive marketing scheme or broad consumer impact. The Progressive court also held that, as the plaintiff body shop was suing the insurer of its consumer-customers, its claim was derivative only in violation of Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc. (
The United States District Court in Allstate, on apparently identical facts, held that the evidence of Allstate’s practice of steering and making misrepresentations to its insureds concerning plaintiff satisfied the consumer element of section 349 based on the number of Allstate policyholders all of whom were potential customers of plaintiff (M.V.B. Collision, Inc. v Allstate
“When, for example, Allstate allegedly . . . steered a car away from Mid Island [by misrepresentations], not only was the customer the victim of a deceptive practice, but Mid Island also suffered a loss of business or other injury ....
“In sum, given that Mid Island’s alleged injuries [loss of business] occurred as a direct result of the alleged deceptive practices directed at consumers, its injuries were not ‘solely as a result of injuries sustained by another party.’ ” (Id. at 217-218.)
With respect to the argument that the plaintiffs cause of action was really a disguised steering claim, the Allstate court held:
“Here, by contrast, there is evidence of a ‘freestanding claim of deceptiveness’ that simply ‘happens to overlap’ with a claim under the Insurance Law .... The alleged scheme [to dissuade Allstate insureds from going to Mid Island] involved not only . . . steering but also, inter alia, alleged . . . defamatory comments ....
“In sum, because plaintiffs § 349 claim merely ‘happens to overlap’ with provisions of New York Insurance Law, it is not an improper attempt to circumvent the lack of [a] private right of action under [the] Insurance Law . . . .” (Id. at 219-220.)
This court agrees with M.V.B. Collision, Inc. v Allstate Ins. Co. (
Progressive also argues that the section 349 claim fails to state a cause of action because plaintiff cannot show that any of Progressive’s consumer-insureds were harmed by its alleged misrepresentations concerning plaintiff. This is actually another way of arguing that a business has no standing to assert a section 349 claim against a business competitor based on misrepresentations made by such competitor to consumers. Although section 349 (h) extends the right of action to “any person who has been injured by reason of any violation of this section,” case
As to Progressive’s alleged misleading or deceptive behavior, plaintiff has submitted evidence that Progressive employees made disparaging, untrue statements to its insureds concerning plaintiff, in connection with the DRF that caused plaintiff to lose customers. The court holds that such evidence of misrepre
The second remaining cause of action is tortious interference with prospective business advantage. The elements of such cause of action are: (1) a prospective business relationship with a third party; (2) the defendant’s interference with that relationship; (3) undertaken with the sole purpose of harming the plaintiff or by wrongful means; and (4) causing injury to the plaintiff (Advanced Global Tech. LLC v Sirius Satellite Radio, Inc.,
All the defendants move for summary judgment dismissing this claim based on the plaintiffs asserted failure to identify those insureds, potential customers, who Progressive interfered with; and that whatever actions Progressive took with respect to plaintiffs customers were those of a competitor acting in its own economic interest, and not therefore undertaken with the sole purpose of harming plaintiff, nor by wrongful means. As indicated above (see footnote 3, supra), plaintiff and Progressive were, to all intents and purposes, business competitors and whatever actions Progressive took with respect to its insureds— plaintiffs prospective customers — were motivated by Progressive’s legitimate economic self-interest. Accordingly, in order for plaintiff to established this cause of action, it must show that Progressive interfered with specified potential customers, by wrongful means, resulting in them not employing plaintiff to repair their vehicles (Carvel Corp. v Noonan,
The individual defendants, who are all employees of Progressive, move for summary judgment dismissing the complaint as against them. The individual defendants established their prima facie entitlement to summary judgment by submitting evidence in admissible form that they did not make any misrepresentations or falsehoods to any Progressive insureds concerning plaintiff. In response, plaintiff did not oppose the motion of A1 Lucette and it is granted without opposition. As to the other in
The final cause of action is for injurious falsehood. The tort of injurious falsehood consists of the publication of false matter derogatory to the plaintiffs business of a kind calculated to prevent others from dealing with the plaintiffs business. The communication must have been malicious and have played a material and substantial part in inducing others not to deal with the plaintiff, with the result that special damages, in the form of lost dealings, are incurred. However, if the accusation impeaches the integrity of the plaintiff, special damages need not be shown (Drug Research Corp. v Curtis Publ. Co.,
The plaintiff has submitted evidence that Progressive uttered numerous derogatory statements to its insureds concerning plaintiff. These may be broadly sorted into three categories:
(1) plaintiff was a problem shop/difficult to deal with; (2) plaintiff overcharged/did not do good work; (3) plaintiff was a bunch of crooks. Category (1), assuming they were said, were statements of opinion, not fact, and therefore not actionable (Gilliam v Richard M. Greenspan, P.C.,
Finally, in 2007, the New York State Insurance Department conducted an investigation into insurer’s, including Progressive’s, compliance with Insurance Law § 2610. At a January 28, 2010 deposition of Victor Politzi, the president of one of the Progressive defendants, he refused to answer questions concerning the investigation based on attorney-client privilege, and, on May 25, 2010, obtained a protective order from Justice Lefkowitz, sitting in the Compliance Part,
“to Supreme Court, Westchester County, for an in camera inspection of answers, to be supplied by Politzi in writing, that are responsive to the disputed deposition questions posed by the plaintiffs counsel at Politzi’s deposition regarding the letter dated July 3, 2007, and for a new determination thereafter of the defendants’ motion for a protective order.”
By letter dated June 15, 2011, plaintiff requested that this court direct Mr. Politzi’s written responses for in camera review by June 30, 2011. By letter dated June 22, 2011, Progressive responded that it anticipated that written responses would be provided within 30 days of its letter. This court does not supervise discovery. Justice Lefkowitz issued the protective order, and the Appellate Division remitted the matter to her. Mr. Politzi’s responses shall be submitted to the Compliance Part in accordance with whatever schedule Justice Lefkowitz sets. Any and all applications for post-note of issue discovery will be made to the Compliance Part. As there is no longer a claim for steering in this case, such is without prejudice to the Trial Assignment Part scheduling this matter for trial pending the discovery on this tangential issue.
Notes
. Plaintiff is owned by Greg Coccaro, Sr. (51%), Frank Massella (24.5%) and Lazio Tudor (24.5%).
. Insurance Law § 2610 provides:
“(a) Whenever a motor vehicle collision or comprehensive loss shall have been suffered by an insured, no insurer providing collision or comprehensive coverage therefor shall require that repairs be made to such vehicle in a particular place or shop or by a particular concern.
“(b) In processing any such claim (other then a claim solely involving window glass), the insurer shall not, unless expressly requested by the insured, recommend or suggest repairs be made to such vehicle in a particular place or shop or by a particular concern.”
. To the extent that M.V.B. Collision, Inc. v Allstate Ins. Co. (
. Aside from the question of the continued efficacy of Sarmiento v World Yacht Inc. (
. The court notes that in opposition to Progressive’s motion, plaintiff submitted evidence of what it contends were deceptive acts perpetrated by two of Progressive’s DRP shops, aided and abetted by Progressive, such as charging the consumer-insureds for parts which were not installed or for new parts when used parts were used, harming the consumer-insureds. The court fails to see the relevance. The issue to be determined is whether and to what extent plaintiff lost customers due to misrepresentations made by Progressive to its insureds concerning plaintiff, not what misrepresentations it may or may not have made to its insureds concerning repairs that were performed at shops other than plaintiffs.
. Plaintiff also submitted evidence that Progressive interfered with prospective customer Rrustem Gecai in 2002. The complaint here was filed on February 16, 2007. All of the defendants have answered. None of the parties submitted the answer in violation of CPLR 3212 (b), and the court could have denied all the motions on that basis alone (Zellner v Tarnell,
. Jim Mazz Auto, Inc. also held that Progressive’s steering of its insureds in violation of Insurance Law § 2610 was wrongful conduct as criminal under Insurance Law § 109. This court disagrees. As plaintiff has no cause of action for steering, it cannot form the basis for a tortious interference claim whether criminal under the Insurance Law or not.
. While plaintiff submitted evidence that defendant Allison Chabon made misrepresentations about plaintiff to Thomas Leonard, as he continued to use plaintiffs shop, plaintiff was not injured by this alleged misrepresentation.
. Pursuant to the memorandum of Justice Scheinkman, Administrative Judge for the Ninth Judicial District, dated October 22, 2009, all discovery motions are heard in the Compliance Part.