Ural v. Encompass Ins. Co. of Am.

• Decision Date: 05 July 2012
• Citation: 97 A.D.3d 562,2012 N.Y. Slip Op. 05407,948 N.Y.S.2d 621
• Parties: Thomas P. URAL, appellant, v. ENCOMPASS INSURANCE COMPANY OF AMERICA, et al., respondents, et al., defendant.
• Court: New York Supreme Court — Appellate Division

97 A.D.3d 562

948 N.Y.S.2d 621

2012 N.Y. Slip Op. 05407

Thomas P. URAL, appellant,

v.ENCOMPASS INSURANCE COMPANY OF AMERICA, et al., respondents, et al., defendant.

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

July 5, 2012.

Daniel R. Wotman & Associates, PLLC, Great Neck, N.Y., for appellant.

Bruno, Gerbino & Soriano, LLP, Melville, N.Y. (Charles W. Benton of counsel), for respondents.

MARK C. DILLON, J.P., ANITA R. FLORIO, PLUMMER E. LOTT, and SANDRA L. SGROI, JJ.

In an action, inter alia, to recover damages for breach of an insurance contract, the plaintiff appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Mahon, J.), dated December 13, 2010, as granted those branches of the motion of the defendants Encompass Insurance Company of America and Encompass Insurance Company which were pursuant to CPLR 3211(a)(7) to dismiss the second, third, eighth, and ninth causes of action, the first cause of action to the extent it sought to recover damages for alleged violations of Insurance Law § 2601, and the claims for punitive damages insofar as asserted against them, denied those branches of his motion which were to compel the defendants Encompass Insurance Company of America and Encompass Insurance Company to comply with his first and second notices for discovery and inspection and to produce certain witnesses to be deposed, and granted that branch of the cross motion of the defendants Encompass Insurance Company of America and Encompass Insurance Company which was for a protective order pursuant to CPLR 3103(a).

ORDERED that the order is modified, on the law and the facts, (1) by deleting the provision thereof granting those branches of the motion of the defendants Encompass Insurance Company of America and Encompass Insurance Company which were pursuant to CPLR 3211(a)(7) to dismiss the third cause of action, which sought damages for an alleged violation of General Business Law § 349, the first cause of action to the extent it sought damages for alleged violations of Insurance Law § 2601, and the claims for punitive damages insofar as asserted against them, and substituting therefor a provision denying those branches of the motion, (2) by deleting the provision thereof denying that branch of the plaintiff's motion which was to compel the defendants Encompass Insurance Company of America and Encompass Insurance Company to produce the documents contained within the plaintiff's claim file which were withheld by those defendants based upon work product privilege, and substituting therefor a provision granting that branch of the motion to the extent of directing those defendants to provide the Supreme Court with a detailed privilege log, (3) by deleting the provision thereof granting the cross motion of the defendants Encompass Insurance Company of America and Encompass Insurance Company for a protective order pursuant to CPLR 3103(a), and substituting therefor a provision denying the cross motion, and (4) by adding a provision thereto denying that branch of the motion of Encompass Insurance Company of America and Encompass Insurance Company which was for summary judgment dismissing the third cause of action insofar as asserted against them; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Nassau County, for an in camera review of the allegedly privileged documents in accordance herewith.

On February 10, 2006, a water pipe burst in the second floor of the plaintiff's house, causing extensive water damage. The home was covered by a homeowners' insurance policy issued by the defendants Encompass Insurance Company of America and Encompass Insurance Company (hereinafter together Encompass). Following the occurrence, the plaintiff filed an insurance claim with Encompass. However, after a year of attempting to negotiate a settlement, and after receiving what he considered inadequate offers and improper mold remediation efforts from Encompass, the plaintiff commenced this action alleging, inter alia, that Encompass breached the insurance policy in the manner in which it handled his claim, and engaged in deceptive business practices through a general policy of denying, delaying, and defending against such claims with respect to him and other similarly situated policy holders, in order to force him and other policy holders into woefully inadequate claim settlements. Encompass moved, inter alia, pursuant to CPLR 3211(a)(7) to dismiss the complaint insofar as asserted against it. The Supreme Court, inter alia, partially granted Encompass's motion. The plaintiff appeals, and we modify.

“On a motion to dismiss the complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory” ( Breytman v. Olinville Realty, LLC, 54 A.D.3d 703, 703–704, 864 N.Y.S.2d 70;see Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511).

To state a cause of action under General Business Law § 349, the complaint must allege that the defendant engaged in a deceptive act or practice, that the challenged act or practice was consumer-oriented, and that the plaintiff suffered an injury as a result of the deceptive act or practice ( see Stutman v. Chemical Bank, 95 N.Y.2d 24, 29, 709 N.Y.S.2d 892, 731 N.E.2d 608;Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25, 623 N.Y.S.2d 529, 647 N.E.2d 741). Contrary to the Supreme Court's determination, the plaintiff's third cause of action, as amplified by the affidavit and documents he submits in opposition to the motion, states a cognizablecause of action to recover damages for unfair practices under General Business Law § 349, including a general practice of inordinately delaying the settlement of insurance claims against policyholders ( see Wilner v. Allstate Ins. Co., 71 A.D.3d 155, 161, 893 N.Y.S.2d 208;Acquista v. New York Life Ins. Co., 285 A.D.2d 73, 82, 730 N.Y.S.2d 272). Accordingly, the Supreme Court erred in granting that branch of Encompass's motion which was pursuant to CPLR 3211(a)(7) to dismiss the third cause of action insofar as asserted against it. In addition, contrary to Encompass's contention, a claim for punitive damages may be asserted in the context of a cause of action predicated upon an alleged violation of General Business Law § 349 ( see Wilner v. Allstate Ins. Co., 71 A.D.3d at 167, 893 N.Y.S.2d 208).

Encompass also moved for summary judgment dismissing the third cause of action insofar as asserted against it. However, the Supreme Court did not decide that branch of Encompass's motion. In the interest of judicial economy, we hold that the branch of Encompass's motion which was for summary judgment dismissing the third cause of action insofar as asserted against it must be denied. Not only was that branch of the motion premature, having been made in the earliest phase of discovery in this action ( see Elbaz v. New York City Hous. Auth., 90 A.D.3d 986, 935 N.Y.S.2d 333), but Encompass's attorney's affirmation and exhibits were insufficient to establish its prima facie entitlement to judgment as a matter of law with respect to that cause of action ( see Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572;Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642;Sellino v. Kirtane, 73 A.D.3d 728, 901 N.Y.S.2d 299;Lampkin v. Chan, 68 A.D.3d 727, 891 N.Y.S.2d 113).

The Supreme Court also erred in granting that branch of Encompass's motion which was pursuant to CPLR 3211(a)(7) to dismiss the first cause of action to the extent it sought to recover damages for violations of Insurance...