Opinion
Index No. 654425/2019
12-08-2023
THE ROCKEFELLER UNIVERSITY, Plaintiff, v. AETNA CASUALTY & SURETY COMPANY, THE TRAVELERS INDEMNITY COMPANY, FEDERAL INSURANCE COMPANY INSURANCE COMPANY OF NORTH AMERICA RIUNIONE ADRIATICA DI SICURTA (N/K/A ALLIANZ S.P.A.). ANCIENNE MUTUELLE REASSURANCE (N/K/A COLISEE RE). CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, C.N.A. REINSURANCE OF LONDON LTD. (N/K/A CX REINSURANCE COMPANY LTD.), FIREMAN'S FUND INSURANCE COMPANY, GUARANTY NATIONAL INSURANCE COMPANY, TIG INSURANCE COMPANY (F/K/A RANGER INSURANCE COMPANY), NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. ROYAL INDEMNITY COMPANY (N/K/A ARROWWOOD INDEMNITY COMPANY), TUREGUM INSURANCE COMPANY, UNIONAMERICA INSURANCE COMPANY LTD. (N/K/A RIVER THAMES INSURANCE COMPANY LIMITED), UNITED NATIONAL INSURANCE COMPANY Defendants.
Unpublished Opinion
DECISION + ORDER ON MOTION
HON. MARY V. ROSADO, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 017) 224, 225, 226, 227, 228 were read on this motion to/for DISMISS.
Upon the foregoing documents, and after oral argument on August 15, 2023 when Natasha Romagnoli Esq. and David A. Thomas, Esq- appeared for Plaintiff the Rockefeller University ("Plaintiff''); John Grossbart, Esq. and Gary Mcyerhoff, Esq. appeared for Defendants Aetna Casually and Surety Company and the Travelers Indemnity Company (Travelers), Kelly A. Sherwood. Esq. appeared for Defendant TIG Insurance Company; William A. Accordino Jr., Esq. appeared for Defendant Certain Underwriters at Lloyd's of London; Nora A. Valcnza-Frost, Esq. appeared for Defendants National Union Fire Insurance Company of Pittsburgh and Ancienne Mutucllc Reassurance (N/K/A Colisee Re); Brad C. Wcstyle. Esq. appeared for Defendant United National Insurance Company; Wylly Killorin, Esq. appeared for Defendant Fireman's Fund Insurance Company; and Daren McNally, Esq. appeared for Defendants federal Insurance Company and Insurance Company of North America (collectively, "Chubb), Defendants Chubb and Travelers (collectively, the "Insurer Defendants') motion for an Order dismissing the first cause of action of Plaintiffs Second Amended Complaint for declaratory relief ("First Cause of Action") with respect to the primary policies issued by the Insurer Defendants; fourth cause of action for breach of the Implied Covenant of Good faith and Fair Dealing ("Fourth Cause of Action"); and fifth cause of action for violation of General Business Law §349 ("Fifth Cause of Action"), is granted in part and denied in part.
I. Background
In the underlying action. Plaintiff seeks insurance coverage from its insurers for potential liability arising cut of claims of sexual abuse and molestation Hied under New York's Child Victims Act (the "Underlying Claims") (NYSCFF Doc. 165), Plaintiffs Second Amended Complaint, filed August 10, 2022 (NYSCEF Doc. 165), contends that Defendants have engaged in deceptive business practices, acted in bad faith by delaying in responding to the Underlying Claims, and breached their duly to Plaintiff by, inter alia, failing to indemnify and cover Plaintiffs defense costs (NYSCEF Doc. 165).
On October 7, 2022 the Insurer Defendants brought the instant motion to dismiss Plaintiff s fourth and fifth causes of action, as well as Plaintiff s First Cause of Action with respect to the primary policies issued by the Insurer Defendants (NYSCEF Docs. 224, 227).
II. Discussion
a. The Insurer Defendants' Motion to Dismiss Plaintiff's First Cause of Action for Declaratory Judgment as Duplicative, is Granted
The Insurer Defendants argue that Plaintiffs First Cause of Action for declaratory judgment should he dismissed with respect to the primary' policies issued by the Insurer Defendants on the grounds that it is duplicative of Plaintiffs second and third causes of action for breach of contract (NYSCEF Doc. 227 at p. 6). The Insurer Defendants further argue that Plaintiffs First Cause of Action should be dismissed on the additional ground that it is a claim for "anticipated" future disputes that may never occur, rendering it premature and not ripe for adjudication (NYSCEF Doc. 227 at p. 7).
It is well settled that "a declaratory judgment action should not be entertained where it 'parallel[s]' a breach of contract claim, and 'merely seek[s] a declaration of the same rights and obligations"' (Conflin SNP-1 Funding, LLC v Security Natl. Props. Servicing Co., LLC, 199 A.D.3d 406, 407 [1 st Dept 2021)] (quoting Apple Records v Capitol Records, 137 A.D.2d 50, 54, 11 st Dept 19881). Moreover, a cause of action for a declaratory' judgment "is unnecessary and inappropriate when the plaintiff has an adequate, alternative remedy in another form of action, such as breach of contract" (Apple Records v Capitol Records. 137 A.D.2d 50, 54, [1st Dept 1988]). A cause of fiction is duplicative of a breach of contract action "where it alleges a breach of the same obligations based on the same facts and seeks identical damages" (J 5/or Ben Sasha LLC v HFZ 235 W. 75ch St. Owner I.LC. 21 5 A.D.3d 515, 516 ] 1 st Dept 2023]).
Here, Plaintiffs First Cause of Action merely seeks a declaration of the same rights and obligations addressed by Plaintiffs breach of contract claims. Plaintiffs First Cause of Action seeks a declaratory' judgment establishing that "Defendants arc obligated to pay for all Underlying Claims for damages because of bodily injury, and defense costs and expenses, pursuant to the insuring agreements of those policies," that "Defendants' obligations under the Policies include the duty to pay on the [Plaintiffs] behalf, all sums that the [Plaintiff] becomes legally obligated to pay as damages.. for the underlying claims," and that Defendants' arc obligated "to pay for or reimburse defense costs and/or pay for indemnity amounts in the form of judgments or settlements in connection with the Underlying Claims" (NYSCEF Doc. 165 at ¶¶ 106, 107, 111).
Similarly, Plaintiffs second cause of action for breach of contract addresses the Insurer Defendants' duty to defend and to pay defense costs, and centers on Plaintiff's claim that "[b]y failing to provide coverage for all of the Universities defense expenses. Travelers and Chubb have breached the terms of their respective Primary Policies" (NYSCEF Doc 165 at ¶ 121). Plaintiffs third cause of action for breach of contract addresses the Insurer Defendants' duty in indemnify and asserts that the Insurer Defendants do not intend to provide coverage pursuant to their obligations under the Primary Policies for indemnity amounts (NYSCEF Doc. 165 at ¶ 128).
As Plaintiffs First Cause of Action seeks only a declaration of the same rights and obligations sought in Plaintiffs second and third causes of action for breach of contract, Plaintiffs First Cause of Action is dismissed as duplicative.
b. The Insured Defendants' Motion to Dismiss Plaintiffs Fourth Cause of Action for Bad Faith as Duplicative, is Denied
The Insurer Defendants argue that Plaintiff s Fourth Cause of Action for breach of the implied Covenant of Good Faith and Fair Dealing should be dismissed on the grounds that ii is duplicative of Plaintiff s second and third causes of action for breach of contract (NYSCEF Doc. 227 at p. 6).
The First Department has held that ''[w]here a cause of action for breach of the implied covenant of good faith and fair dealing is based on the same operative facts and seeks Hie same damages as a cause of action for breach of contract, the good faith claim is duplicative and should be dismissed" (AEA Middle Mkf. Debt Funding LLC v Marblegate Asset Mgt., LLC, 214 A.D.3d 111, 132-133, [1st Dept 2023 J). However, "[a] good faith claim.. .is not duplicative of a breach of contract claim where the complaint alleges conduct that is separate from the conduct constituting Hie alleged breach of contract and such conduct deprived the other party' of the benefit of its bargain" (Id.). Further, breach of the Implied Covenant of Good Faith and Fair Dealing can legally support a cause of action independent of claims for breach of contract when the good faith and fair dealing claims "arc not wholly duplicative of [the] breach of contract claims" (Id.).
Plaintiff's Fourth Cause of Action tor bad faith alleges that the Insurer Defendants "have engaged in continued and unjustified delays for years in the course of responding to the Underlying Claims" and that the Insurer Defendants adopted a "wait and see" approach that protected their own interests to the detriment of Plaintiff (NYSCLF Doc. 165 at ¶33, 135). As Plaintiff s causes of action for breach of contract do not pertain to the alleged delays or the "wait and see" approach upon which Plaintiffs Fourth Cause of Action relics, Plaintiffs Fourth Cause of Action does not arise from the same conduct as Plain tiff's breach of contract claims. Accordingly, Plaintiff s Fourth Cause of Action is not duplicative and should not be dismissed.
c. The Insured Defendants' Motion to Dismiss Plaintiff's Fourth Cause of Action for Bad Faith on the Ground that Plaintiff Fads to Plead a Cause of Action, is Denied
Pursuant to CPLR 3211(a)(7), "[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that.. .the pleading fails to state a cause of action...." In considering a motion pursuant to CPI.R 3211 (a)(7) to dismiss a complaint for failure to state a cause of action, "the court roust give the pleading a liberal construction, accept the facts alleged in the complaint to be true and afford the plaintiff the benefit of every possible favorable inference" (J.P. Morgan Sec. Inc. v Vigilant Ins. Co. 21 N.Y.3d 324, 334 [2013]). "[T]he sole criterion is whether the pleading states a cause of action, and therefore if from its four corners factual allegations are discerned which if taken together can manifest any cause of action, a motion for dismissal must fail" (Kusher v King 126 A.D.2d 446, 467 [1st Dept 1987]).
The Insurer Defendants contend that Plaintiff's Fourth Cause of Action must be dismissed as Plaintiffs Complaint "docs not contain any factual allegations showing a reckless disregard, conscious disregard or a pattern of gross disregard by the [Insurer Defendants]" (NYSCEF Doc. 227 at p. 19).
In Pavia v State Farm Mut. Auto. Ins. Co., 82 N.Y.2d 445. 453 (1993), a case involving alleged bad faith in the settlement and defense of insurance claims, the Court of Appeals held that "in order to establish a prima facie case of bad faith, [a] plaintiff must establish that the insurer's conduct constituted a 'gross disregard' of the insured's interests - that is. a deliberate or reckless failure to place on equal footing the interest of its insured with its own interests...."
Here, Plaintiffs Second Amended Complaint alleges that the "wait and see approach" by the Insurer Defendants was adopted to protect the Insurer Defendants interests "to the serious detriment of Plaintiff' (NYSCEF Doc. 165 at ¶ 135). A Hording the pleading a liberal construction and the benefit of every possible favorable inference, the Court finds that Plaintiff's pleadings are sufficient to manifest a cause of action for bad faith. Accordingly, the Insurer Defendants' motion to dismiss Plaintiffs Fourth Cause of Action is denied
d. The Insurer Defendants Motion to Dismiss Plaintiffs Fifth Cause of Action for Violation of General Business Law § 349 on the Ground that Plaintiff Fails to Plead a Cause of Action, is Denied
General Business Law § 349 declares that ''[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state arc...declared unlawful." The First Department has held that "[t]o state a cause of action [under General Business Law § 349], a plaintiff must allege that the defendant's challenged act was consumer oriented and materially misleading and resulted in injury' to the plaintiff (Kickertz v New York Univ. 110 A.D.3d 268, 273 ). The necessary' consumer-oriented conduct "need not be repetitive or recurring but defendant's acts or practices must have a broad impact on consumers at large" (New York Univ. v Cont'l Ins. Co. 87 N.Y.2d 308,320 [1995]).
Here, Plaintiffs Fifth Cause of Action alleges, infer alia, that the Insurer Defendants have;
taken improper coverage positions and engaged in unjustifiable delays, which they improperly and without a good-faith basis purported to justify as interpretations of the same standard-form insurance policy language that, upon information and belief, [the Insurer Defendants] use in insurance policies sold to many other educational and hospital institutions in New' York and elsewhere, in a manner that would affect, apply to, and injure all of their policyholders with similar policy language that suffer losses and bring coverage claims to [the Insurer Defendants] expecting fair and good-faith treatment (NY'SCEF Doc. 165 at ¶ 145).
Affording the pleading a liberal construction and the benefit of every possible favorable inference, the Court finds that Plaintiffs pleadings on the Fifth Cause of Action have abroad impact on other educational and hospital institutions conducting business with the Insurer Defendants, sufficiently alleging the requisite consumer-oriented conduct to state a cause of' action under General Business Law §349.
With respect to the alleged requirement that Plaintiff plead independent injuries under General Business Law § 349. Insurer Defendants' argument is unavailing.
Accordingly, it is hereby, ORDERED that the Insurer Defendants' motion for an Order dismissing the First Cause of Action of Plaintiffs Second Amended Complaint with respect to the primary policies issued by the Insurer Defendants, is granted; and it is further
ORDERED that the Insurer Defendants' motion for an Order dismissing the Fourth and Filth Causes of' Action of Plaintiff's Second Amended Complaint, is denied; and it is farther
ORDERED that on or before February 6,2024, the parties arc directed to submit a proposed Status Conference Order to the Court via e-mail to SFC-Part33-Clerk@nycourts.gov. If the parties arc unable to agree to a proposed Status Conference Order, the parties are directed to appear for an in-person status conference with the Court in Room 442, 60 Centre Street, on February 7, 2024 at 9:30 a.m.; and it is farther
ORDERED that within ten (10) days of entry. counsel for Defendants Federal Insurance Company and Insurance Company of North America shall serve a copy of this Decision and Order, with notice of entry, on all parties to this case; and it is farther
ORDERED that the Clerk of the Court is directed to enter judgment accordingly.
This constitutes the Decision and Order of the Court.