Plaintiff made a claim to its insurance company for water damage and loss of business. After what appears to have been a contentious investigation, the claim was denied because the carrier alleged that plaintiff did not provide it with all of the necessary documents and information and because some of the damage was allegedly caused by a prior incident.
Plaintiff sued the carrier, and included a claim under New York’s General Business Law § 349, which prohibits deceptive business practices. This claim was based on the carrier’s bad-faith claim investigation, including its demand for irrelevant documents, and its intentional delay of issuing a denial until after the policy’s statute of limitations period had expired. Defendants moved to dismiss all of the claims.
In denying dismissal, the trial court determined that a claim under § 349 had been made, as plaintiff had sufficiently alleged that the carrier (i) engaged in a deceptive act or practice, (ii) the act or practice was consumer-oriented, and (iii) plaintiff was injured as a result in that it was now pressured to accept an unfavorable settlement due to the expiration of the contractually-shortened statute of limitations period. Finding that the shortened limitations period was universal in all similar insurance policies, the court rejected the carrier’s claim that this was not generally a consumer-oriented claim. The court also allowed the consequential damages claim of lost business to proceed to trial.
This claim is somewhat novel in this setting and demonstrates the need to explore all theories when faced with a difficult circumstance, here the shortened time in which to sue the carrier.
37 West 24th Street, LLC v. Seneca Insurance Co., Inc., N.Y. County 150104/17