No Private Cause of Action under Unfair Claim Settlement Act
Petrilli v. Adirondack Ins. Exchange, 2018 WL 2322773 (N.Y.Sup.), 2018 N.Y. Slip Op. 30941(U) (NY Sup. Ct., Nassau Co., May 16, 2018)
This decision involves a first-party property insurance dispute in which plaintiff-insureds claimed their building sustained damage from a collapse that was covered under their policy. The insurer, Adirondack, disagreed because its engineers found the loss was caused by an excluded peril.
The insureds sued Adirondack and its parent company, National General. Aside from claiming that defendants breached the insurance contract, the insureds alleged fraud on the ground that Adirondack’s engineer allegedly changed the cause of the loss in his report at the request of Adirondack, ostensibly a move that supported Adirondack’s decision to disclaim coverage. The insureds also asserted causes of action for violations of NY General Business Law § 349 and NY Unfair Claims Settlement Act, as well as breach of the duty of good faith and fair dealing.
On Adirondack’s motion to dismiss, the court held that the insureds could not assert causes of action for breach of contract or breach of a duty of good faith and fair dealing against National General, due to lack of privity. The court dismissed the claim for breach of the duty of good faith against Adirondack on the ground that it was duplicative of the breach of contract claim.
The Unfair Claims Settlement Act claim was dismissed because there is no private cause of action for such a violation; the General Business Law § 349 claim was likewise dismissed because the statute requires an impact on consumers at large, not just damages to the insureds. Finally, the court dismissed the fraud claim because the insureds failed to allege that they relied to their detriment on any representations by Adirondack.
This decision was reported in the May 31, 2018 edition of the New York Law Journal as a Decision of Interest.