Funk et al v Allstate Insurance Company

Filing 6

MEMORANDUM & ORDER: Plaintiffs' second, third, and fourth causes of action are sua sponte DISMISSED (see Order for details) and the remaining claims by Plaintiffs other than SHERRY FUNK are sua sponte SEVERED and are DISMISSED WITHOUT PREJUDICE. Parties Martin J Ain, Anthony Ambrosecchio, Kathryn Ambrosecchio, Barbara Anaya, Kim Anaya, Giselle Antonelli, Donna Badamo, Robert Badamo, Charles Ballstreri, Marie Ballstreri, Brian Battista, Marguerite Behette-Hart, Joseph Beissel, Kathleen Beis sel, Mary Bennett, Anne Besse, Jean Besse, Jr, Jorge Biaggini, Rosalind Biaggini, Dennis P Brady, Susan Brady, Kevin Buckley, Marilyn Butigian, Mark Butigian, Betty Caggiano, Craig Caggiano, Florence Cahill, Terence Cahill, Richard Canavan, Rosemarie Cannone, Joseph Carley, Margaret Carley, Adeline C Carlo, Elizabeth Carlson, Michael Carlson, James P Carlton, Suzanne Carlton, Toni Ann Carroll, John J Checkett, Joyce A Checkett, Christine Chu, Lorien Colleran, Richard Colleran, Jr, Mary K Collins , Laura M Connolly, Robert F Connolly, Kathleen Conway, Jacqueline Corney, Raymond Corney, Louise M Cronolly, Thomas F Cronolly, Patricia Crowley, Robert Crowley, Patricia M Davan, Robert J Davan, Suzanne Degrechie, Tanya Delfino, Barbara A Denver, T homas J Denver, Donna Diblasio, Steven Diblasio, Christina Doherty, Eileen Dolan, Kevin C Dolan, Robert Donnelly, Barbara Doyle, Joseph Doyle, Joseph Drennan, Marjorie Drennan, Antolin Dubois, Margaret Dugan, Patrick Dugan, David Dukes, Helen Dukes, Karen Ebert, George Ebert, Anthony S Eppolito, Frances Eppolito, Carmine Esposito, Laurie Esposito, Maureen Esposito, Vincent Esposito, Joy Lord Etal, Maryellen Faherty, Anthony Farewell, Tomika Farewell, Anthony Fazzese, Lois Fazzese, Barbara Fedde rn, Joseph Feddern, Dolores Ferro, Mark J Ferro, Michael Fiore, Nancy Fiore, Alice G. Fitzgerald, John J Fitzgerald, Francis Fitzpatrick, Josephine Fitzpatrick, James Fox, Maureen Fox, Jack Franchock, Nancy Gahles-Ritwo, Bernadette Gelineau, Kenneth Gelineau, Andrew Gemmell, Barbara Genoese, William Genoese, Louis Georgetti, Brian Geraghty, Michael Geraghty, Debra-Ann Gialanze, Ronald Gialanze, John Gonzalez, Lynn Goodman, Kim F Greengus, Todd A Greengus, Doris Gresser, Helen Grieco, Domenic Gua stadisegni, Marion Guastadisegni, Gene Hart, Anthony Hayden, Katherine Hayden, Edith M Heinlein, Elizabeth C Heinlein, Andrew T Hickey, Kerry Hickey, Mary Ellen Hickey, William Hilberer, Janet E Hurley, Elizabeth Jordan, Liorr Karasanti, Shanni Kara santi, Brian Kelley, Ursula Kelley, John Kershaw, Prafulla Kothari, Mary Lai, William Lai, Arthur Larsen, Lorraine Larsen, Michael Light, Tara Ann Light, Catherine Lind, Thomas W Lind, S.B. Littlefield, Cameron Livingstone, Patricia Livingstone, Fred erick Marino, Jr, Geraldine Marino, John Matzen, Patricia Matzen, Derek McCarthy, Ellen McCarthy, Sheila McCarthy, Thomas J McCulloch, Kevin McEachern, Tracey McEachern, Michael McElhatton, Daniel McFadden, Patricia McFadden, Jennifer A McHugh, Barba ra McMahon, Thomas McMahon, Elaine McManus, Francine McManus, Antoinette M McVicker, David Mentges, Patricia Mentges, Lorna Minor, Michael J Mitchell, Susan Mitchell, Christin Montalbano, Christopher Muldoon, Colomba Muldoon, Noreen R Mulvantery, Br ian Murphy, Catherine Murphy, Jack Nacmias, Jane Nacmias, Lili Natale, Michael Natale, Susan O'Brien, Timothy W O'Brien, Desmond O'Leary, Rosalind O'Leary, Anthony J O'Neill, Donna L O'Neill, James O'Sullivan, Mary O'Sullivan, Ursula Odierna, Patricia L Powers, Mary Puma, Kathleen Reid, William Reid, Jr, Daisy M Remig, Jaime Resker, Angela Resta, Rudolph Resta, Stewart Ritwo, Kerry Robertson, Michael Robertson, Mary Rodman, Catherine A Rose, Robert W Rose, Jr, Dennis Ryan, Donald Ryan, Linda Ryan, Maureen Ryan, Linda Salle, Henry Sautner, Marjorie Sautner, Ruby K Schaberich, Sheila Schaberich, Carmine Schirripa, Michael Schramm, Noreen Schramm, Edward Scott, Bruce Sklover, Tamar Sklover, Joanne Steinm etz, Gerald Sullivan, Denise J Tesoriero, Frank J Tornetti, John Towey, Mary Ellen Towey, Berris Turnbull, Mattie Turnbull, Evelyn Twohig, Diane Vann, Raymond Vann, Geraldine Vitorella, Larry Wade, Leary Wade, Catherine Weber, Eric Weber, Estelle Wei nstein, Christine Williams, Terrence Williams, John Willis, Gary J Wilson, Jean M Wilson, Kathleen Winters, Jo-Ann Yanello, Peter Yannello, Robert Ahern and Ingrid Ain are TERMINATED from this action. Ordered by Judge Joanna Seybert on 12/13/2013. (Nohs, Bonnie) Modified on 12/13/2013 (Mahon, Cinthia).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------X
SHERRY FUNK, BRUCE SKLOVER, TAMAR
SKLOVER, LINDA SALLE, ELAINE MC MANUS,
JOY LORD ETAL, GISELLE ANTONELLI,
LOUIS GEORGETTI, KEVIN MC EACHERN,
TRACEY MC EACHERN, MICHAEL GERAGHTY,
KIM ANAYA, BARBARA ANAYA, JACQUELINE
CORNEY, RAYMOND CORNEY, MICHAEL
FIORE, NANCY FIORE, CHRISTINE
WILLIAMS, TERRENCE WILLIAMS, KERRY
HICKEY, ARTHUR LARSEN, LORRAINE
LARSEN, MICHAEL LIGHT, TARA ANN
LIGHT, JEAN BESSE, JR., ANNE BESSE,
JOSEPH BEISSEL, KATHLEEN BEISSEL,
GEORGE EBERT, KAREN EBERT, MARQUERITE
BEHETTE-HART, GENE HART, CHARLES
BALLSTRERI, MARIE BALLSTRERI, STEVEN
DIBLASIO, DONNA DIBLASIO, MARJORIE
DRENNAN, JOSEPH DRENNAN, CHRISTOPHER
MULDOON, COLOMBA MULDOON, MARY RODMAN,
JOSEPH CARLEY, MARGARET CARLEY, PETER
YANNELLO, JO-ANN YANELLO, RUDOLPH
RESTA, ANGELA RESTA, CARMINE SCHIRRIPA,
MARYELLEN FAHERTY, KATHLEEN WINTERS,
JOHN MATZEN, PATRICIA MATZEN, JACK
NACMIAS, JANE NACMIAS, EVELYN TWOHIG,
JACK FRANCHOCK, MICHAEL ROBERTSON,
KERRY ROBERTSON, MARY BENNETT, WILLIAM
HILBERER, ELIZABETH JORDAN, ELIZABETH
CARLSON, MICHAEL CARLSON, JAIME RESKER,
BRIAN BATTISTA, MICHAEL SCHRAMM, NOREEN
SCHRAMM, GERALDINE MARINO, FREDERICK
MARINO, JR., HELEN GRIECO, DONALD RYAN,
LINDA RYAN, VINCENT ESPOSITO, LAURIE
ESPOSITO, MAUREEN ESPOSITO, CARMINE
ESPOSITO, ESTELLE WEINSTEIN, ANDREW T.
HICKEY, MARY ELLEN HICKEY, JORGE
BIAGGINI, ROSALIND BIAGGINI, DESMOND
O’LEARY, ROSALIND O’LEARY, JAMES
O’SULLIVAN, MARY O’SULLIVAN, NOREEN R.
MULVANTERY, MARY K. COLLINS, THOMAS J.
MC CULLOCH, JOHN GONZALEZ, ANTHONY
HAYDEN, KATHERINE HAYDEN, LARRY WADE,
LEARY WADE, JOHN KERSHAW, S.B. LITTLEFIELD,
ROBERT DONNELLY, TODD A. GREENGUS, KIM F.
GREENGUS, ROBERT J. DAVAN, PATRICIA M.
DAVAN, MAUREEN RYAN, DENNIS RYAN,
DENISE J. TESORIERO, MICHAEL MC ELHATTON,

MEMORANDUM & ORDER
13-CV-5933(JS)(GRB)

THOMAS MC MAHON, BARBARA MC MAHON, ROBERT
AHERN, ANTHONY AMBROSECCHIO, KATHRYN
AMBROSECCHIO, ANDREW GEMMELL, JOHN J.
FITZGERALD, ALICE G. FITZGERALD, URSULA
ODIERNA, KATHLEEN CONWAY, LYNN GOODMAN,
RICHARD CANAVAN, PATRICK DUGAN, MARGARET
DUGAN, HENRY SAUTNER, MARJORIE SAUTNER,
HELEN DUKES, DAVID DUKES, JANET E. HURLEY,
LORNA MINOR, WILLIAM REID, JR., KATHLEEN
REID, ELIZABETH C. HEINLEIN, EDITH M.
HEINLEIN, KEVIN C. DOLAN, EILEEN DOLAN,
JOSEPY DOYLE, BARBARA DOYLE, ANTOINETTE M.
MC VICKER, JENNIFER A. MC HUGH, STEWART
RITWO, NANCY GAHLES-RITWO, SUZANNE
CARLTON, JAMES P. CARLTON, GARY J. WILSON,
JEAN M. WILSON, DORIS GRESSER, ANTOLIN
DUBOIS, MARK BUTIGIAN, MARILYN BUTIGIAN,
PATRICIA L. POWERS, FLORENCE CAHILL,
TERENCE CAHILL, BRIAN KELLEY, URSULA
KELLEY, BETTY CAGGIANO, CRAIG CAGGIANO,
DR. CHRISTIN MONTALBANO, JOANNE STEINMETZ,
TOMIKA FAREWELL, ANTHONY FAREWELL,
ADELINE C. CARLO, THOMAS J. DENVER,
BARBARA A. DENVER, ANTHONY S. EPPOLITO,
FRANCES EPPOLITO, JOHN J. CHECKETT,
JOYCE A. CHECKETT, SHANNI KARASANTI,
LIORR KARASANTI, MICHAEL NATALE, LILI
NATALE, ROBERT W. ROSE, JR., CATHERINE A.
ROSE, TONI ANN CARROLL, MAUREEN FOX,
JAMES FOX, DONNA L. O’NEILL, ANTHONY J.
O’NEILL, WILLIAM GENOESE, BARBARA
GENOESE, FRANCIS FITZPATRICK, JOSEPHINE
FITZPATRICK, MARION GUASTADISEGNI,
DOMENIC GUASTADISEGNI, KENNETH GELINEAU,
BERNADETTE GELINEAU, RONALD GIALANZE,
DEBRA-ANN GIALANZE, TANYA DELFINO,
THOMAS W. LIND, CATHERINE LIND,
DENNIS P. BRADY, SUSAN BRADY, ERIC
WEBER, CATHERINE WEBER, DOLORES FERRO,
MARK J. FERRO, FRANK J. TORNETTI,
BRIAN MURPHY, CATHERINE MURPHY, DAVID
MENTGES, PATRICIA MENTGES, MARY ELLEN
TOWEY, JOHN TOWEY, LOIS FAZZESE,
ANTHONY FAZZESE, SUZANNE DEGRECHIE,
EDWARD SCOTT, ROSEMARIE CANNONE,
PATRICIA CROWLEY, ROBERT CROWLEY,
CHRISTINA DOHERTY, GERALD SULLIVAN,
LORIEN COLLERAN, RICHARD COLLERAN, JR.,
2

CHRISTINE CHU, LAURA M. CONNOLLY,
ROBERT F. CONNOLLY, MICHAEL J. MITCHELL,
SUSAN MITCHELL, MARTIN J. AIN, INGRID
AIN, KEVIN BUCKLEY, JOSEPH FEDDERN,
BARBARA FEDDERN, PRAFULLA KOTHARI,
WILLIAM LAI, MARY LAI, SHEILA MC CARTHY,
DEREK MC CARTHY, DANIEL MC FADDEN,
PATRICIA MC FADDEN, TIMOTHY W. O’BRIEN,
SUSAN O’BRIEN, MARY PUMA, RUBY K.
SCHABERICH, SHEILA SCHABERICH, JOHN
WILLIS, GERALDINE VITORELLA, FRANCINE
MC MANUS, RAYMOND VANN, DIANE VANN,
DAISY M. REMIG, BERRIS TURNBULL,
MATTIE TURNBULL, CAMERON LIVINGSTONE,
PATRICIA LIVINGSTONE, ROBERT BADAMO,
ELLEN MC CARTHY, THOMAS F. CRONOLLY,
LOUISE M. CRONOLLY,
- against-

Plaintiffs,

ALLSTATE INSURANCE COMPANY,
Defendant.
----------------------------------X
APPEARANCES
For Plaintiffs:
Sean Greenwood, Esq.
Gauthier Houghtaling & Williams
52 Duane Street, 7th Floor
New York, NY 10007
For Defendant:

No appearances.

SEYBERT, District Judge:
On

October

28,

2013,

217

plaintiffs

(collectively,

“Plaintiffs”) commenced this action against defendant Allstate
Insurance Company (“Defendant”) pursuant to this Court’s diversity
jurisdiction under 28 U.S.C. §§ 1332(a) and 1441, each seeking to
recover: (1) his or her actual damages resulting from Defendant’s
purported breach of contract, i.e., its failure to pay the full
amount of each Plaintiff’s respective claims under an insurance
3

policy issued to him or her by Defendant; and (2) compensatory,
consequential, punitive and/or treble damages for Defendant’s
purported breach of the implied covenant of good faith and fair
dealing,

fraudulent

misrepresentation

and

inducement,

and

violations of Sections 349 and 350 of the New York General Business
Law.

For the reasons set forth below, the breach of the implied

covenant

of

good

faith

and

fair

dealing,

fraudulent

misrepresentation and inducement, and New York General Business Law
claims are sua sponte DISMISSED and the remaining claims of all
Plaintiffs except the first-named Plaintiff, Sherry Funk (“Funk”),
are sua sponte SEVERED from this action pursuant to Rules 20 and 21
of the Federal Rules of Civil Procedure and DISMISSED WITHOUT
PREJUDICE to commencing separate actions for each insurance policy
issued by Defendant.
BACKGROUND1
Plaintiffs separately own real property in this judicial
district and separately purchased from Defendant an insurance
policy to cover their respective properties. (Compl. ¶¶ 1, 4, 6.)
The Complaint alleges, inter alia: (1) that Defendant issued an
individual property insurance policy to each Plaintiff covering
losses to his or her dwellings and personal property (Compl. ¶¶ 56); (2) that each Plaintiff paid all of the premiums on his or her
1

The following facts are drawn from the Complaint and are
presumed to be true for the purposes of this Memorandum and
Order.
4

policy (Compl. ¶ 6); (3) that as a result of “Superstorm Sandy”
(“the Storm”), “each Plaintiff sustained substantial losses and
wind damage to their respective properties” (Compl. ¶¶ 7-8); (4)
that each Plaintiff reported and properly submitted a claim under
his or her policy to Defendant (Compl. ¶ 9); (6) that Defendant
“improperly

adjusted

and

denied

at

least

a

portion

of

each

Plaintiffs’ claims without an adequate investigation” (Compl.
¶ 10), “unjustifiably refused to perform its obligations under the
property insurance Policies and wrongfully denied payment in the
full amount of each Plaintiff’s claims” (Compl. ¶ 11); (7) that
Plaintiffs retained independent experts and consultants to evaluate
the

damages

sustained

to

their

respective

properties

and

“thoroughly documented” and submitted their losses to Defendant for
review (Compl. ¶ 12); and (8) that as a result of Defendant’s
failure to pay the full amount of each Plaintiff’s claim, each
Plaintiff has been unable “to properly and/or completely repair the
damages

to

their

properties,”

or

the

repairs

were

delayed,

“caus[ing] additional damages to Plaintiffs . . . .” (Compl. ¶ 13).
Based on the allegations of the Complaint, Plaintiffs’
claims share very little in common.

Plaintiffs do not allege that

the policies are identical, nor do they explain the specific
instances

of

Moreover,

Plaintiffs’

locations.

Defendant’s

denial

respective

(Compl. ¶ 6.)
5

or

limitation

properties

are

of
in

coverage.
various

DISCUSSION
Plaintiffs

commenced

this

diversity

action

against

Defendant asserting four causes of action against Defendant for:
(1) breach of contract, with each Plaintiff seeking to recover the
actual damages he or she sustained as a result of Defendant’s
failure to pay the full amount of his or her claim under his or her
respective insurance policy

(Compl. ¶¶ 14-18); (2) fraudulent

misrepresentation and inducement, with each Plaintiff seeking
compensatory and consequential damages and costs, and punitive
damages against Defendant’s alleged fraudulent inducement because
Defendant allegedly fraudulently induced and misled Plaintiffs and
knowingly misrepresented property coverage and claims services
(Compl. ¶¶ 19-25); (3) breach of the implied covenant of good faith
and

fair

dealing,

with

each

Plaintiff

seeking

compensatory,

consequential, and punitive damages against Defendant based upon,
inter alia, Defendant’s purported denial of his or her claim,
misrepresentation that his or her claim was not covered under his
or her respective insurance policy, unreasonable investigation of
his

or

her

claim

and

“refus[al]

to

accept

the

facts

and

documentation supporting Plaintiffs’ claims . . .” (Compl. ¶¶ 2635); and (4) violations of Sections 349 and 350 of the New York
General Business Law, with each Plaintiff seeking compensatory,
consequential, and treble damages based upon Defendant’s purported
“deceptive

acts

or

practices

in
6

conducting

the

business

of

insurance and the furnishing of insurance services in New York
. . .” (Compl. ¶¶ 36-39).
I.

Fraudulent Misrepresentation and Inducement
In their second claim for relief, Plaintiffs allege,

inter alia: (1) that “prior to issuing [each Plaintiff’s] Polic[y],
[Defendant] fraudulently misrepresented coverage . . . (Compl.
¶ 21); (2) that Defendant “made misrepresentations about its
fairness and willingness to pay the full amount of claims . . .
when its actual intention and practice was to unreasonably deny
payment” (Compl. ¶ 21); (3) that Defendant “fraudulently induced
and misled Plaintiffs by promising to pay claims in good faith and
according to the Policy terms and conditions when [it] had no
intention

to

interests”

do

so”

(Compl.

¶

in

order

22);

to

and

(4)

“further
that

its

own

Defendant

economic

“knowingly

misrepresented property coverage and claims services” (Compl.
¶ 23).
To state a claim for fraudulent inducement under New York
law, a plaintiff must allege that “‘(1) the defendant made a
material

false

representation,

(2)

the

defendant

intended

to

defraud the plaintiff thereby, (3) the plaintiff reasonably relied
upon the representation, and (4) the plaintiff suffered damage as
a result of such reliance.’”

Eternity Global Master Fund Ltd. v.

Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 186-87 (2d Cir. 2004)
(quoting Banque Arabe et Internationale D’Investissement v. Md.
7

Nat’l Bank, 57 F.3d 146, 153 (2d Cir. 1995)).

However, false

statements, even if intentionally made, merely indicating an intent
to perform under a contract are “not sufficient to support a claim
of fraud under New York law.”

Bridgestone/Firestone, Inc. v.

Recovery Credit Servs., Inc., 98 F.3d 13, 19-20 (2d Cir. 1996); see
also Merrill Lynch & Co., Inc. v. Allegheny Energy, Inc., 500 F.3d
171,

184

(2d

Cir.

2007)

(“New

York

distinguishes

between

a

promissory statement of what will be done in the future that gives
rise

only

to

a

breach

of

contract

cause

of

action

and

a

misrepresentation of a present fact that gives rise to a separate
cause of action for fraudulent inducement.”).
Thus, to state a claim for fraudulent inducement in a
case that arises from a breach of contract, “a plaintiff must
either: (i) demonstrate a legal duty separate from the duty to
perform under the contract; or (ii) demonstrate a fraudulent
misrepresentation collateral or extraneous to the contract; or
(iii) seek special damages that are caused by the misrepresentation
and unrecoverable as contract damages.”

Bridgestone/Firestone, 98

F.3d at 20; see also Wall v. CSX Transp., Inc., 471 F.3d 410, 416
(2d Cir. 2006) (“New York law specifically recognizes causes of
action for fraud in the inducement when the misrepresentation is
collateral to the contract it induced.”).
District

courts

have

inherent

authority

to

dismiss

meritless claims sua sponte, even if the plaintiffs have paid the
8

filing fee.

See Fitzgerald v. First E. Seventh St. Tenants Corp.,

221 F.3d 362, 363-64 (2d Cir. 2000) (holding that the district
court has the power to dismiss a frivolous complaint sua sponte
even if the plaintiff has paid the filing fee); see also Zahl v.
Kosovsky, 471 F. App’x 34, 37 (2d Cir. 2012), cert. denied, 133 S.
Ct. 1460, 185 L. Ed. 2d 363 (2013) (“A district court has inherent
authority to dismiss meritless claims sua sponte, even where a
plaintiff has paid the filing fee.”).
The

Complaint

does

not

allege

that

Defendant

owed

Plaintiffs a legal duty separate from its duty to perform under the
respective insurance policies.

In fact, Plaintiffs allege that

Defendant owed a duty “to investigate and pay claims in good faith
and according to the Policy terms and conditions” (Compl. ¶ 20) and
the only misrepresentation alleged relates to Defendant’s future
obligations under the policies.

Thus, it is not collateral or

extraneous to the contract and Plaintiffs do not seek special
damages. Accordingly, Plaintiffs’ fraudulent misrepresentation and
inducement claims are sua sponte DISMISSED as meritless.
II.

Breach of the Implied Covenant of Good Faith and Fair
Dealing Claims
The third cause of action in the Complaint alleges, inter

alia: (1) that “[b]y wrongfully denying payments to Plaintiffs,
[Defendant] breached the Policies, causing damage, . . .” (Compl.
¶ 29); (2) that Defendant “breached or will breach its duty to deal
fairly and in good faith to the extent that it has or will engage
9

in conduct calculated to further its own economic interests at the
expense of Plaintiffs” (Compl. ¶ 30); (3) that Defendant “breached
its duty to Plaintiffs” by [(a)] “misrepresenting . . . that
Plaintiffs’ claims were not covered under the Policies even though
the

damage

resulted

from

a

covered

cause

of

loss”

[(b)]

unreasonably investigating Plaintiffs’ claims; and [(c)] “refusing
to accept the facts and documentation supporting Plaintiffs’ claims
prepared by Plaintiffs and by experts on their behalf” (Compl. ¶
31); (4) that Defendant’s “conduct constitutes a pattern of unfair
dealing and unfair settlement practices directed at Plaintiffs and
the public at large” (Compl. ¶ 32); (5) that Defendant “had
economic incentive to disregard its obligation to act in good faith
and deal fairly with its policyholders, including Plaintiffs,
regarding

large-dollar

claims”

(Compl.

¶

33);

and

(6)

that

Defendant “has breached, or will breach, the duties of good faith
and fair dealing owed to Plaintiffs, and to the public at large, by
other acts and omissions of which Plaintiffs are presently unaware”
(Compl. ¶ 34).

Plaintiffs seek “compensatory and consequential

damages and costs and . . . punitive damages, in an amount [each]
Plaintiff may prove at trial . . ., [and] all costs associated with
recovering, repairing and/or replacing the damaged property . . .
.”

(Compl. ¶ 35.)
“Under New York law, parties to an express contract are

bound by an implied duty of good faith, but breach of that duty is
10

merely a breach of the underlying contract.”

Harris v. Provident

Life & Accident Ins. Co., 310 F.3d 73, 80 (2d Cir. 2002) (quoting
Fasolino Foods Co. v. Banca Nazionale del Lavoro, 961 F.2d 1052,
1056 (2d Cir. 1992)); see also Fishoff v. Coty Inc., 634 F.3d 647,
653 (2d Cir. 2011) (“A breach of the duty of good faith and fair
dealing is considered a breach of contract.”)2

“New York law . . .

does not recognize a separate cause of action for breach of the
implied covenant of good faith and fair dealing when a breach of
2

By pleading a claim under New York law, i.e., Plaintiffs’
fourth cause of action alleging violations of Sections 349 and
350 of the New York General Business Law, Plaintiffs impliedly
concede that New York law applies to this case. In addition,
since jurisdiction in this case is premised upon diversity of
citizenship, the choice-of-law rules of the state in which this
Court sits--i.e., New York--are applied. See Forest Park
Pictures v. Universal Television Network, Inc., 683 F.3d 424, 433
(2d Cir. 2012) (“A federal court sitting in diversity
jurisdiction applies the choice of law rules of the forum
state.”). With respect to tort claims, “[i]n New York, ‘the
relevant analytical approach to choice of law in tort actions’ is
the ‘interest analysis.’” Lazard Freres & Co. v. Protective Life
Ins. Co., 108 F.3d 1531, 1539 n.5 (2d Cir. 1997) (quoting Schultz
v. Boy Scouts, 65 N.Y.2d 189, 491 N.Y.S.2d 90, 95, 480 N.E.2d
679, 684 (1985)); see also White Plains Coat & Apron Co., Inc. v.
Cintas Corp., 460 F.3d 281, 284 (2d Cir. 2006). Under the
“interest analysis,” “the law of the jurisdiction having the
greatest interest in the litigation will be applied.” Id.
(quoting Schultz, 65 N.Y.2d 189, 491 N.Y.S.2d at 95). “If
conflicting conduct-regulating laws are at issue, the law of the
jurisdiction where the tort occurred will generally apply because
that jurisdiction has the greatest interest in regulating
behavior within its borders.” White Plains Coat, 460 F.3d at 284
(quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72, 595
N.Y.S.2d 919, 612 N.E.2d 277 (1993)). Since, inter alia, all
Plaintiffs and their property are located in New York and all the
damages were suffered in New York, New York clearly has the
greater interest in regulating the conduct in question.
Accordingly, New York law applies to Plaintiffs’ tort claim for
breach of the implied covenant of good faith and fair dealing.
11

contract claim, based upon the same facts, is also pled.”

Harris,

310 F.3d at 81; see also Fleisher v. Phoenix Life Ins. Co., 858 F.
Supp. 2d 290, 299 (S.D.N.Y. 2012) (“To avoid redundancy, [c]laims
of breach of the implied covenant [of good faith and fair dealing]
must be premised on a different set of facts from those underlying
a claim for breach of contract.” (internal quotation marks and
citations omitted).)

“Therefore, when a complaint alleges both a

breach of contract and a breach of the implied covenant of good
faith and fair dealing based on the same facts, the latter claim
should be dismissed as redundant.”

Cruz v. FXDirectDealer, LLC

(FXDD), 720 F.3d 115, 125 (2d Cir. 2013). Since Plaintiffs’ claims
for breach of the implied covenant of good faith and fair dealing
and breach of contract rest upon the same alleged conduct by
Defendant, the breach of the implied covenant of good faith and
fair dealing cause of action is sua sponte DISMISSED as redundant.
Nor does the Complaint state a claim for bad faith denial
of coverage, which requires the following:
(1) defendant’s conduct must be actionable as
an independent tort; (2) the tortious conduct
must be of [an] egregious nature. . .; (3) the
egregious
conduct
must
be
directed
to
plaintiff; and (4) it must be part of a
pattern directed at the public generally.
Sichel v. Unum Provident Corp., 230 F. Supp. 2d 325, 328 (S.D.N.Y.
2002) (quoting N.Y. Univ. v. Cont’l Ins. Co., 87 N.Y.2d 308, 316,
639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) (alterations in original));
see also Dekel v. Unum Provident Corp., No. 04-CV-0413, 2007 WL
12

812986, at *2 (E.D.N.Y. Mar. 14, 2007) (holding that a claim that
an insurer committed a tortious act through the bad faith denial of
a plaintiff’s insurance claim is not cognizable under New York
law).

“Where

a

lawsuit

has

its

genesis

in

the

contractual

relationship between the parties, the threshold task for a court
. . . is to identify a tort independent of the contract.”

N.Y.

Univ., 87 N.Y.2d at 316, 639 N.Y.S.2d 283. Since Plaintiffs do not
allege

a

tort

independent

of

their

respective

contract

with

Defendant, i.e., that Defendant owed them a duty of care distinct
from its contractual obligations or engaged in tortious conduct
separate and apart from its failure to fulfill its contractual
obligations, see id., the Complaint fails to state a claim for bad
faith denial of coverage.3
III.

New York General Business Law Claims
The fourth cause of action in the Complaint alleges,

inter alia, that Defendant violated Sections 349 and 350 of the New
York General Business Law by “engaging in deceptive acts or
practices

in

conducting

the

business

of

insurance

and

the

furnishing of insurance services in New York as described in the
facts and allegations set forth in the paragraphs above.”

(Compl.

¶ 38.)
Section 349(a) of the New York General Business Law

3

The Court makes no determination at this stage of the
proceedings as to the viability of a claim for consequential
damages based on alleged bad faith.
13

prohibits “[d]eceptive acts or practices in the conduct of any
business, trade or commerce or in the furnishing of any service in
[New York].”

Section 349(h) of the New York General Business Law

provides, in relevant part, that:
any person who has been injured by reason of
any violation of this section may bring . . .
an action to recover his actual damages or
fifty dollars, whichever is greater . . . .
The court may, in its discretion, increase the
award of damages to an amount not to exceed
three times the actual damages up to one
thousand dollars, if the court finds the
defendant willfully or knowingly violated this
section . . . .
Section

350

of

the

New

York

General

Business

Law

prohibits “[f]alse advertising in the conduct of any business,
trade or commerce or in the furnishing of any service in [New
York].”

“The standard for recovery under General Business Law

§ 350, while specific to false advertising, is otherwise identical
to section 349[,]” Oscar v. BMW of N. Am., LLC, 274 F.R.D. 498, 512
(S.D.N.Y. 2011) (quoting Goshen v. Mut. Life Ins. Co., 98 N.Y.2d
314, 746 N.Y.S.2d 858, 774 N.E.2d 1190, 1195 n.1 (2002)), with the
exception

that

Section

350,

unlike

Section

349,

requires

a

plaintiff to also “demonstrate reliance on the allegedly false
advertising.”

Leider v. Ralfe, 387 F. Supp. 2d 283, 292 (S.D.N.Y.

2005).
“To state a claim under § 349, a plaintiff must allege:
(1) the act or practice was consumer-oriented; (2) the act or
practice

was

misleading

in

a

material
14

respect;

and

(3)

the

plaintiff was injured as a result.”
F.3d 64, 74 (2d Cir. 2009).

Spagnola v. Chubb Corp., 574

Thus, in order to state a claim under

either Section 349 or Section 350, a plaintiff must allege actual
injury.

See Ritani, LLC v. Aghjayan, 880 F. Supp. 2d 425, 449

(S.D.N.Y. 2012).
“[A]lthough a monetary loss is a sufficient injury to
satisfy the requirement under § 349, that loss must be independent
of the loss caused by the alleged breach of contract.”
574 F.3d at 74.
Defendant

that

Spagnola,

Plaintiffs do not allege any specific conduct by
is

purportedly

deceptive.

Rather,

Plaintiffs

expressly refer to the “facts and allegations” set forth in the
preceding paragraphs of the Complaint to be the deceptive acts and
practices in which defendant purportedly engaged.

“[T]wo claims

predicated on the same conduct are likely to involve similar
injury.”

Fleisher, 858 F. Supp. 2d at 305.

Indeed, Plaintiffs do

not allege any loss allegedly sustained by them as a result of
Defendant’s allegedly deceptive acts, practices, or advertisement
much less one that is independent of the loss caused by Defendant’s
purported breach of contract. Since Plaintiffs have not alleged an
actual or cognizable injury, their fourth cause of action, alleging
violations of Sections 349 and 350 of the New York General Business
Law, is sua sponte DISMISSED for failure to state a claim.
IV.

Permissive Joinder of Plaintiffs
Rule 20(a)(1) permits the joinder of multiple plaintiffs

15

in an action if: “(A) they assert any right to relief jointly,
severally, or in the alternative with respect to or arising out of
the same transaction, occurrence, or series of transactions or
occurrences; and (B) any question of law or fact common to all
plaintiffs will arise in the action.”

FED. R. CIV. P. 20(a)(1).

These elements are preconditions and both must be met for joinder
to be proper.

Deskovic v. City of Peekskill, 673 F. Supp. 2d 154,

159 (S.D.N.Y. 2009) (“As is clear from the plain language of Rule
[the Rule], both criteria must be met for joinder to be proper.”).
While “[t]he requirements of Fed. R. Civ. P. 20(a) are to be
interpreted liberally to enable the court to promote judicial
economy by permitting all reasonably related claims for relief by
or against different parties to be tried in a single proceeding,
the requirements of the rule still must be met and constrain the
Court’s discretion.”

Kalie v. Bank of Am. Corp., --- F.R.D. ----,

2013 WL 4044951, at *3 (S.D.N.Y. Aug. 9, 2013) (alteration in
original) (internal quotation marks and citation omitted).

“If a

court concludes that [parties] have been improperly joined under
Rule 20, it has broad discretion under Rule 21 to sever [those]
parties . . . from the action.”

Id.

In determining whether claims arise out of the same
“transaction” or “occurrence” under Rule 20(a), “courts are to look
to the logical relationship between the claims and determine
‘whether the essential facts of the various claims are so logically

16

connected that considerations of judicial economy and fairness
dictate that all the issues be resolved in one lawsuit.’” Id.
(quoting United States v Aquavella, 615 F.2d 12, 22 (2d Cir.
1979)).

Plaintiffs bear the burden of demonstrating that joinder

is proper under Rule 20(a).

Deskovic, 673 F. Supp. 2d at 159.

Here, Plaintiffs’ claims do not arise out of the same
transaction or occurrence.

Courts in this District have recently

applied the standards set forth above to almost identical lawsuits
seeking insurance coverage for property damage caused by Superstorm
Sandy and have summarily held that joinder is not appropriate.
See, e.g., Dante v. Nat’l Flood Ins. Program, No. 13-CV-6207, 2013
WL 6157182, at *2 (E.D.N.Y. Nov. 22, 2013) (collecting similar
cases from the Eastern District of Louisiana and the Southern
District of Mississippi denying joinder of insurance claims related
to property damage caused by Hurricane Katrina); Baiardi v. The
Standard Fire Ins. Co., No. 13-CV-5912, 2013 WL 6157231, at *2-3
(E.D.N.Y. Nov. 21, 2013).

As these courts recognized, despite the

fact that a single natural disaster, Superstorm Sandy, caused the
damage to Plaintiffs’ properties, Plaintiffs’ claims do not arise
out of the same transaction or occurrence because “[t]he claims
involve entirely different factual and legal issues, including each
property’s respective condition and location before the storm, the
value of the properties, and the extent of damage sustained.”
Dante, 2013 WL 6157182, at *2 (quoting Sucherman v. Metro. Prop. &

17

Cas. Ins. Co., Nos. 06–CV-8765, 05–CV-6456, 2007 WL 1484067, at *2
(E.D.

La.

May

21,

2007)).

Thus,

with

respect

to

damages,

Plaintiffs’ individual claims undoubtedly will require different
evidence

relating

to

the

cause,

and

extent,

of

the

loss.

Plaintiffs’ individual claims also may require particularized
evidence on the issue of whether the policies actually provide
coverage

for Plaintiffs’ claims because Plaintiffs purchased

separate insurance policies and Defendants may have different
reasons

for

denying

and/or

limiting

payment

for

Plaintiffs’

individual claims.
As far as the Court can tell from the Complaint here, the
only material commonalities between Plaintiffs’ claims are that
Plaintiffs’ properties suffered damages caused by the same storm
and that Plaintiffs present similar legal theories against a common
defendant.
“common

However, the mere presence of a common defendant and

questions

of

law

or

fact

does

not

satisfy

the

same

transaction or occurrence requirement.”

Id. at *3 (holding that

plaintiffs’

for

separate

insurance

claims

damages

caused

by

Superstorm Sandy did not arise out of the same transaction or
occurrence

because

plaintiffs

“failed

to

explain

why

their

individual claims should be joined other than that they share two
common facts––that they were brought about by Hurricane Sandy and
brought

against

[the

same

defendant]––and

may

raise

similar

theories of law”) (quoting McNaughton v. Merck & Co., No. 04-CV-

18

8297, 2004 WL 5180726, at *2 (S.D.N.Y. Dec. 17, 2004)); see Abraham
v. Am. Home Mortg. Servicing, Inc., --- F. Supp. 2d ----, 2013 WL
2285205, at *4 (E.D.N.Y. May 23, 2013) (holding that plaintiffs’
“separate mortgage transactions d[id] not constitute a single
transaction

or

occurrence”

and

stating

that

“even

claims

by

plaintiffs who engaged in separate loan transactions by the same
lender cannot be joined in a single action”).
With

no

common

transaction

or

occurrence

among

Plaintiffs’ claims, the Court therefore finds that Plaintiffs’
claims are not properly joined under Rule 20(a).

Accordingly, the

remaining claims of all Plaintiffs except the first-named Plaintiff
Sherry Funk are sua sponte SEVERED from this action and are
DISMISSED WITHOUT PREJUDICE to commencing a separate action for
claims related to his or her insurance policy.

See Kalie, 2013 WL

4044951, at *6 (holding that where there is “no common transaction
or occurrence, severance and dismissal of the misjoined claims is
mandatory”)
V.

Severance Under Rule 21
Finally, the Court notes that, even if the presence of

common defendants or a single natural disaster were sufficient to
satisfy Rule 20(a), the Court would reach the same result in
exercising its discretion under Rule 21 of the Federal Rules of
Civil Procedure.
Rule 21 provides, in relevant part, that “[o]n motion or

19

on its own, the court may at any time, on just terms, add or drop
a party . . . [and] sever any claim against any party.”
CIV. P. 21.

FED. R.

In deciding whether to sever a claim under Rule 21,

courts generally consider, in addition to the preconditions set
forth in Rule 20(a), “[1] whether settlement of the claims or
judicial economy would be facilitated; [2] whether prejudice would
be avoided if severance were granted; and [3] whether different
witnesses and documentary proof are required for the separate
claims.”

Crown Cork & Seal Co., Inc. Master Retirement Trust v.

Credit Suisse First Boston Corp., 288 F.R.D. 331, 333 (S.D.N.Y.
2013) (quoting Erausquin v. Notz, Stucki Mgmt. (Bermuda) Ltd., 806
F. Supp. 2d 712, 720 (S.D.N.Y. 2011)).

“A court should consider

whether severance will ‘serve the ends of justice and further the
prompt and efficient disposition of litigation.’”

Crown Cork, 288

F.R.D. at 332 (quoting T.S.I. 27, Inc. v. Berman Enters., Inc., 115
F.R.D. 252, 254 (S.D.N.Y. 1987)); see also In re Ski Train Fire in
Kaprun,

Austria,

on

November

11,

2004,

224

F.R.D.

543,

546

(S.D.N.Y. 2004).
Here, joinder of Plaintiffs’ claims involving separate
insurance policies does not serve the interest of judicial economy.
There will be little, if any, overlapping discovery and Plaintiffs’
individual

breach

of

contract

claims

will

require

distinct

witnesses and documentary proof. See Boston Post Rd. Med. Imaging,
P.C. v. Allstate Ins. Co., No 03-CV-3923, 2004 WL 1586429, at *2

20

(S.D.N.Y. July 15, 2004) (severing breach of insurance policy
claims even though policies were identical because joinder would
not

serve

the

interests

of

judicial

economy

or

efficiency).

Furthermore, settlement of the claims is likely to be facilitated
if the claims relating to separate insurance policies are litigated
separately.

See Adams v U.S. Bank, NA, No. 12-CV-4640, 2013 WL

5437060, at * 4 (E.D.N.Y. Sept. 27, 2013). In addition, “[a] joint
trial could lead to confusion of the jury and thereby prejudice
defendants.”

Kalie, 2013 WL 4044951, at * 6 (internal quotation

marks and citation omitted).

Thus, for these reasons, the Court

also finds that the Rule 21 factors require severance.
CONCLUSION
For the reasons stated herein, Plaintiffs’ second, third,
and fourth causes of action are sua sponte DISMISSED and the
remaining claims by Plaintiffs other than Funk are sua sponte
SEVERED pursuant to Rules 20 and 21 of the Federal Rules of Civil
Procedure

and

are

DISMISSED

WITHOUT

PREJUDICE

to

commencing

separate actions for each insurance policy issued by Defendant.

SO ORDERED.
/s/ JOANNA SEYBERT
Joanna Seybert, U.S.D.J.
Dated: December
13 , 2013
Central Islip, New York

21