Tiffany Tower Condo., LLC v. Ins. Co. of the Greater N.Y.

• Decision Date: 22 August 2018
• Docket Number: Index 510005/14,2016–01314
• Citation: 164 A.D.3d 860,84 N.Y.S.3d 167
• Parties: TIFFANY TOWER CONDOMINIUM, LLC, et al., respondents, v. INSURANCE COMPANY OF the GREATER NEW YORK, appellant, et al., defendant.
• Court: New York Supreme Court — Appellate Division

164 A.D.3d 860

84 N.Y.S.3d 167

TIFFANY TOWER CONDOMINIUM, LLC, et al., respondents,

v.INSURANCE COMPANY OF the GREATER NEW YORK, appellant, et al., defendant.

2016–01314

Index 510005/14

Supreme Court, Appellate Division, Second Department, New York.

Argued—April 10, 2018

August 22, 2018

Speyer & Perlberg, LLP, Melville, N.Y. (Thomas E. Scott of counsel), for appellant.

Held & Hines, LLP, Brooklyn, N.Y. (James K. Hargrove and Scott Richmond of counsel), for respondents.

ALAN D. SCHEINKMAN, P.J., SHERI S. ROMAN, SANDRA L. SGROI, JOSEPH J. MALTESE, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for branch of contract, the defendant Insurance Company of the Greater New York appeals from an order of the Supreme Court, Kings County (Sylvia Ash, J.), dated January 13, 2016. The order, insofar as appealed from, denied those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the second, third, and fourth causes of action insofar as asserted against that defendant.

ORDERED that the order is modified, on the law, by deleting the provisions thereof denying those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the second, third, and fourth causes of action insofar as asserted against the defendant Insurance Company of the Greater New York, and substituting therefor a provision granting that branch of the motion which was to dismiss the second cause of action insofar as asserted against that defendant to the extent it is based on the plaintiff's original claim of damages to the subject premises, and provisions granting those branches of the motion as were to dismiss the third and fourth causes of action insofar as asserted against that defendant; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

In November 2012, the plaintiff Tiffany Tower Condominium, LLC (hereinafter Tiffany Tower), which owns a condominium building located in Brooklyn, filed a claim (hereinafter the original claim) with its insurer, the defendant Insurance Company of the Greater New York (hereinafter the defendant), for damages sustained by the building during Superstorm Sandy. The defendant paid the original claim in December 2012. Almost two years later, in September 2014, Tiffany Tower submitted a supplemental claim (hereinafter the supplemental claim) to the defendant for additional losses which it asserted were caused by the storm. The defendant denied coverage for the supplemental claim.

In October 2014, Tiffany Tower and its Board of Managers (hereinafter together the plaintiffs) commenced this action seeking, in the first cause of action, to recover damages for breach of contract; in their second cause of action, to recover consequential damages for breach of the implied covenant of good faith and fair dealing; in their third cause of action, a judgment declaring that coverage for the supplemental claim was improperly denied; and in their fourth cause of action, to recover damages for violation of General Business Law § 349. The defendant and a codefendant moved, inter alia, pursuant to CPLR 3211(a) to dismiss the second, third, and fourth causes of action insofar as asserted against the defendant. Those branches of the motion were denied, and the defendant appeals.

Contrary to the defendant's contention, the plaintiffs sufficiently stated a cause of action to recover consequential damages for breach of the implied covenant of good faith and fair dealing based upon the defendant's refusal to pay the plaintiff's supplemental claim. This cause of action is not duplicative of the breach of contract cause of action. "As in all contracts, implicit in contracts of insurance is a covenant of good faith and fair dealing, such that ‘a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims’ " ( Bi–Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y. , 10 N.Y.3d 187, 194, 856 N.Y.S.2d 505, 886 N.E.2d 127, quoting New York Univ. v. Continental Ins. Co. , 87 N.Y.2d 308, 318, 639 N.Y.S.2d 283, 662 N.E.2d 763 ). Breach of that duty can result in recoverable consequential damages, which may exceed the limits of the policy (see Panasia Estates, Inc. v. Hudson Ins. Co. , 10 N.Y.3d 200, 203, 856 N.Y.S.2d 513, 886 N.E.2d 135 ; Bi–Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y. , 10 N.Y.3d at 195, 856 N.Y.S.2d 505, 886 N.E.2d 127 ; Gutierrez v. Government. Empls. Ins. Co. , 136 A.D.3d 975, 976–977, 25 N.Y.S.3d 625 ). "Such a cause of action is not duplicative of a cause of action sounding in breach of contract to recover the amount of the claim" ( Gutierrez v. Government Empls. Ins. Co. , 136 A.D.3d at 977, 25 N.Y.S.3d 625 ).

Here, the plaintiffs stated a viable cause of action to recover consequential damages based on the defendant's refusal to pay the supplemental claim by alleging, among other things, that they did not have the financial resources to repair the damage to the building and that the defendant's delay in paying the supplemental claim caused the building to continue to deteriorate (cf. Bi–Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y. , 10 N.Y.3d at 194–195, 856 N.Y.S.2d 505, 886 N.E.2d 127 ). Contrary to the defendant's contention, the plaintiffs, in an affidavit in opposition to the defendant's motion, specifically identified the consequential damages allegedly suffered, including damage to fireproofing and additional water damage (see generally Rovello v. Orofino Realty Co. , 40 N.Y.2d 633, 636, 389 N.Y.S.2d 314, 357 N.E.2d 970 ). Accordingly, the Supreme Court correctly declined to direct the dismissal of the second cause of action to the extent that it is based on the...