Holoness Realty Corp. v. New York Property Ins. Underwriting Ass'n
| Decision Date | 29 April 1980 |
| Citation | 427 N.Y.S.2d 264,75 A.D.2d 569 |
| Parties | HOLONESS REALTY CORP. et ano., Plaintiffs-Respondents, v. NEW YORK PROPERTY INSURANCE UNDERWRITING ASSOCIATION, Defendant-Appellant, Eastern Savings Bank et ano., Defendants. |
| Court | New York Supreme Court — Appellate Division |
F. A. Weg, New York City, for plaintiffs-respondents.
A. N. Brook, New York City, for defendant-appellant.
Before FEIN, J. P., and SULLIVAN, ROSS, SILVERMAN and CARRO, JJ.
Order, Supreme Court, New York County, entered September 13, 1979, denying defendant's motion to dismiss the fourth through ninth causes of action (denominated "Third through Eighth" in the Notice of Appeal), unanimously reversed, on the law, with costs and disbursements, and the motion granted.
Three weeks after the acquittal of two officers who were the sole stockholders of plaintiffs on a charge of arson arising out of a fire at the insured premises fifteen months earlier, plaintiffs commenced this action against their fire insurer alleging three causes of action for breach of contract under the insurance policies (not at issue here), and six causes of action * for punitive damages of $1,000,000 due to the insurer's bad faith. The insurer moved to dismiss the latter causes of action pursuant to CPLR § 3211(a)(7) for failure to state a cause of action. Special Term concluded that the bad faith allegations stated a cause of action whether the motion was considered as a motion to dismiss for failure to state a cause of action (CPLR § 3211(a)(7) or as a motion for summary judgment (CPLR § 3211(c)). We disagree.
A claim for punitive damages against an insurer is cognizable in New York only in circumstances where a plaintiff has made sufficient evidentiary allegations of ultimate facts of a fraudulent and deceitful scheme in dealing with the general public as to imply a criminal indifference to civil obligations. (M.S.R. Associates Ltd. v. Consolidated Mutual Ins. Co., 58 A.D.2d 858, 396 N.Y.S.2d 684; see Walker v. Sheldon, 10 N.Y.2d 401, 405, 223 N.Y.S.2d 488, 179 N.E.2d 497.)
As stated by Special Term in another case:
(W)here there is an allegation of fraudulent, criminal or dishonest acts or practices by the insurer as to or affecting the general public, a claim for punitive or exemplary damages may be made. Under the doctrine of Walker v. Sheldon . . . it must be alleged and shown that there was a gross and wanton fraud upon the public involving a high degree of moral culpability, not merely an isolated transaction, although claimed to be fraudulent,...
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