Halpin v. Prudential Ins. Co. of America

• Decision Date: 13 December 1979
• Citation: 425 N.Y.S.2d 48,401 N.E.2d 171,48 N.Y.2d 906
• Parties: , 401 N.E.2d 171 Paul HALPIN, Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 48

425 N.Y.S.2d 48

48 N.Y.2d 906, 401 N.E.2d 171

Paul HALPIN, Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA et al., Respondents.

Court of Appeals of New York.

Dec. 13, 1979.

Ernest Holzberg, New York City, for appellant.

Ferdinand M. Schwartz, New York City, for respondents.

OPINION OF THE COURT MEMORANDUM.

The order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

In this action, plaintiff seeks to recover compensatory and punitive damages for defendant's alleged wrongful termination of disability benefits under a group accident and sickness insurance policy. In addition, plaintiff has interposed a cause of action against defendant insurer for malpractice allegedly committed by a physician who conducted an examination at the insurer's request as provided by the policy. The principal issue is whether punitive damages may be awarded in these circumstances.

Inasmuch as plaintiff's action is grounded upon private breach of contract, and does not seek to vindicate a public right or deter morally culpable conduct, punitive damages are not recoverable (e. g., Trans-State Hay & Feed Corp. v. Faberge, Inc., 35 N.Y.2d 669, 360 N.Y.S.2d 886, 319 N.E.2d 201, affg. 42 A.D.2d 535, 344 N.Y.S.2d 730; Walker v. Sheldon, 10 N.Y.2d 401, 404, 223 N.Y.S.2d 488, 490, 179 N.E.2d 497, 498; see Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 358, 386 N.Y.S.2d 831, 833, 353 N.E.2d 793, 795). Contrary to plaintiff's argument Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 436-437, 334 N.Y.S.2d 601, 607-608, 285 N.E.2d 849, 853-854, and similar cases do not hold otherwise. There, the court indicated that an insured may recover damages in excess of policy limits when such damages stem from an insurer's bad faith refusal to settle a liability claim made by a third party. That principle can find no application where the insurer has terminated disability benefits allegedly payable to the insured, for there is no possibility of the insured being cast in damages which exceed policy limits by reason of the insurer's conduct. Nor may the punitive damage claim be sustained under section 40-d of the Insurance Law. Assuming, without deciding, that a private damage action lies under that section, the one instance of unfair settlement practice pleaded would not constitute a general business practice within the meaning of the statute.

Finally, the malpractice cause of action must fail. Although the doctor...