Hamlet v. Great Lakes Reinsurance (UK) PLC
| Decision Date | 03 December 2013 |
| Docket Number | 13 CV 5941 (SJF)(GRB) |
| Parties | CHRISTOPHER HAMLET and BARBARA HAMLET, et al., Plaintiffs, v. GREAT LAKES REINSURANCE (UK) PLC, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
On October 28 2013, plaintiffs Christopher Hamlet and Barbara Hamlet (collectively, Hamlet) and plaintiff Doreen Defficy ("Defficy") commenced this action against defendant Great Lakes Reinsurance (UK) PLC ("defendant") pursuant to this Court's diversity jurisdiction under 28 U.S.C. § 1332(a), seeking to recover: (1) damages resulting from defendant's purported breach of contract, i.e., its failure to pay the full amount of their respective claims under separate insurance policies issued to them by defendant; and (2) compensatory, consequential, punitive and/or treble damages for defendant's purported fraudulent misrepresentation and inducement, breach of the implied covenant of good faith and fair dealing and violations of Sections 349 and 350 of the New York General Business Law. For the reasons set forth below, the fraudulent misrepresentation and inducement, breach of the implied covenant of good faith and fair dealing and New York General Business Law claims are sua sponte dismissed and Defficy's remaining claim is sua sponte severed from this action pursuant to Rule 21 of the Federal Rules of Civil Procedure and dismissed without prejudice.
The complaint alleges, inter alia: (1) that defendant issued individual property insurance policies to Hamlet and Defficy covering losses to their respective dwellings and personal property, (Compl., ¶¶ 5-7); (2) that Hamlet and Defficy paid all of the premiums due on their respective policies, (Compl., ¶¶ 6-7); (3) that as a result of "Superstorm Sandy" ("the Storm"), Hamlet and Defficy "sustained substantial losses and wind damage to their insured properties," (Compl., ¶¶ 8-9); (4) that Hamlet and Defficy reported and properly submitted claims for wind damage to defendant under their respective policies, (Compl., ¶ 10); (6) that defendant "improperly adjusted and denied at least a portion of [Hamlet's and Defficy's] claims without an adequate investigation," (Compl., ¶ 11), "unjustifiably refused to perform its obligations under the property insurance Policies and wrongfully denied payment in the full amount of [Hamlet's and Defficy's] claims," (Compl., ¶ 12); (7) that Hamlet and Defficy retained independent experts and consultants to evaluate the damages sustained to their respective properties and "thoroughly documented" and submitted their respective losses to defendant for review, (Compl., ¶ 13); and (8) that as a result of defendant's failure to pay the full amount of Hamlet's and Defficy's respective claims, they have been unable "to properly and/or completely repair the damages to their [respective] properties," or the repairs were delayed, "caus[ing] additional damages to [them]***," (Compl., ¶ 14).
On October 28, 2013, Hamlet and Defficy commenced this diversity action against defendant asserting four (4) causes of action for: (1) breach of contract, seeking to recover the actual damages they sustained as a result of defendant's failure to pay the full amount of their respective claims under their respective insurance policies, as well as compensatory damages, (Compl., ¶¶ 15-19); (2) fraudulent misrepresentation and inducement, seeking compensatory, consequential and punitive damages based upon, inter alia, defendant's purported "misrepresentations about its fairness and willingness to pay the full amount of claims under the[ir] [respective] Policies," (Compl., ¶¶20-26); (3) breach of the implied covenant of good faith and fair dealing, seeking compensatory, consequential and punitive damages against defendant based upon, inter alia, defendant's purported denial of their respective claims, misrepresentation that their respective claims were not covered under their respective insurance policies, unreasonable investigation of their respective claims and "refus[al] to accept the facts and documentation supporting [their respective] claims * * *," (Compl., ¶¶ 27-36); and (3) violations of Sections 349 and 350 of the New York General Business Law, seeking compensatory, consequential and treble damages based upon defendant's purportedly "deceptive acts or practices in conducting the business of insurance and the furnishing of insurance services in New York * * *," (Compl, ¶¶ 37-40).
In their second claim for relief, Hamlet and Defficy allege, inter alia: (1) that "prior to issuing [their respective] Policies, [defendant] * * * fraudulently misrepresented coverage * * * in order to induce [them] * * * to purchase insurance," (Compl., ¶ 22); (2) that defendant "made misrepresentations about its fairness and willingness to pay the full amount of claims under the Policies, when its actual intention and practice was to unreasonably deny payment for any or all of the proceeds due," (id.); (3) that defendant "fraudulently induced and misled [them] by promising to pay claims in good faith and according to the Policy terms and conditions when [it] had no intention to do so," in order to "further its own economic interests," (Compl., ¶ 23); (4) that defendant "knowingly misrepresented property coverage and claims services," (Compl., ¶ 24); and (5) that they "reasonably relied on the misrepresentations and false and misleading information from [defendant] to their detriment in deciding to purchase their [respective] Policies," (Compl., ¶ 25).
"To state a claim for fraudulent misrepresentation under New York law[1] 'a plaintiffmust show that (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance.'" Eternity Global Master Fund Limited v. Morgan Guaranty Trust Co. of New York, 375 F.3d 168, 186-87 (2d Cir. 2004) (quoting Banque Arabe et Internationale D'Investissement v. Maryland National Bank, 57 F.3d 146, 153 (2d Cir. 1995)); see also Manning v. Utilities Mutual Ins. Co., Inc., 254 F.3d 387, 400 (2d Cir. 2001) . False statements, even if intentionally made, merely indicating an intent to perform under the parties' contract are "not sufficient to support a claim of fraud under New York law." Brideestone/Firestone, Inc. v. Recovery Credit Services, Inc., 98 F.3d 13, 19-20 (2d Cir. 1996); see also Merrill Lvnch & Co. Inc. v. Allegheny Energy, Inc, 500 F.3d 171, 184 (2d Cir. 2007) (); Wall v. CSXTransportation, Inc., 471 F.3d 410, 416 (2d Cir. 2006) ("[G]eneral allegations that defendant entered into a contract while lacking the intent to perform it are insufficient to support [a fraud] claim." (quoting New York University v. Continental Ins. Co., 87 N.Y.2d 308, 318, 639 N.Y.S.2d 283, 662 N.E.2d 763 (N.Y. 1995)); Manning, 254 F.3d at 401 ()
"To maintain a claim of [fraudulent inducement of a contract], a plaintiff must either: (i) demonstrate a legal duty separate from the duty to perform under the contract, * * * or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the contract, * * *" or (iii) seek special damages that are caused by the misrepresentation and unrecoverable as contract damages." Brideestone/Firestone, 98 F.3d at 20; see also Wall, 471 F.3d at 416 (); TVT Records v. Island Def Jam Music Group, 412 F.3d 82, 91 (2d Cir. 2005) ( ; Manning, 254 F.3d at 400 .
District courts have inherent authority to dismiss meritless claims sua sponte, even if the plaintiffs have paid the filing fee. See Fitzgerald v. First East Seventh Street Tenants Corp., 221 F.3d 362, 363-64 (2d Cir. 2000) (); see also Zahl v. Kosovsky, 471 Fed. Appx. 34, 37 (2d Cir. Mar. 27, 2012), cert. denied, 133 S. Ct. 1460, 185 L.Ed. 2d 363 (2013) (); Zapolski v. Federal Republic of Germany, 425 Fed. Appx. 5, 5 (2d Cir. Apr. 14, 2011) (accord).
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