Laskowski et al v. Liberty Mutual Fire Insurance Company

Filing 34

MEMORANDUM-DECISION and ORDER that Liberty's 13 Motion to Dismiss is GRANTED and Laskowski and Hall's declaratory judgment; duty of good faith and fair dealing; and N.Y. Gen Bus Law 349 claims are DISMISSED. That Liberty file the appropriate responsive pleadings within the time allotted by the rules. That the parties notify Magistate Judge Baxter in order to schedule further proceedings in accordance with this order. Signed by Judge Gary L. Sharpe on 10/19/2011. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________
MARK R. LASKOWSKI and
RICHARD HALL,
Plaintiffs,

5:11-cv-340
(GLS/ATB)

v.
LIBERTY MUTUAL FIRE
INSURANCE COMPANY,
Defendant.
____________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFFS:
Anderson, Kill Law Firm
1251 Avenue of the Americas
42nd Floor
New York, NY 10020-1182
FOR THE DEFENDANT:
Hiscock, Barclay Law Firm
50 Beaver Street
Fifth Floor
Albany, NY 12207-2830

DENNIS J. ARTESE, ESQ.
FINLEY HARCKHAM, ESQ.
MARC T. LADD, ESQ.

THOMAS J. O’CONNOR, ESQ.

Gary L. Sharpe
District Court Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiffs Mark R. Laskowski and Richard Hall commenced this

action1 against defendant Liberty Mutual Fire Insurance Company (Liberty),
asserting claims for declaratory judgment, breach of contract, violation of a
duty of good faith and fair dealing, and violation of N.Y. Gen. Bus. Law §
349 (McKinney 2004). (Compl. ¶¶ 27-62, Dkt. No. 1.) Pending is Liberty’s
motion to dismiss Laskowski and Hall’s declaratory judgment, good faith
and fair dealing and N.Y. Gen. Bus. Law § 349 claims. (See Dkt. No. 13.)
For the reasons that follow, the motion is granted.
II. Background2
On January 10, 2010, fire consumed the Eaton, New York home of
plaintiffs Laskowski and Hall, causing significant damage to the structure
and its contents. (Compl. ¶¶ 7-9, Dkt. No. 1.) Plaintiffs held a homeowners
insurance policy on the home through Liberty. (Id. ¶ 8.) Following the
January 10 fire, Laskowski and Hall notified Liberty of the damage and
submitted a claim under their insurance policy. (Id. ¶ 10.) One year later,
Liberty denied Laskowski and Hall’s claim on the grounds that they failed to
cooperate with Liberty’s investigation and that they set the fire or caused it

1

This action was commenced in the Southern District of New York and was transferred
to this court on March 28, 2011. (See Dkt. No. 10.)
2

The facts are drawn from plaintiffs’ Complaint and presented in a light most favorable
to them. (See Compl., Dkt. No. 1.)

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to be set. (Id. ¶ 11.) Liberty also cancelled Laskowski and Hall’s
homeowners insurance policy. (Id. ¶ 21.)
Despite Liberty’s contentions that plaintiffs failed to cooperate with its
fire investigation, Laskowski and Hall contend that they retained fire
consultants to investigate the blaze and offered to share the findings of
those consultants with Liberty. (Id. ¶¶ 14-15.) While initially agreeing to
meet with Laskowski and Hall’s consultants, Liberty reneged on that offer
and issued a denial of coverage without reviewing the consultant’s findings.
(Id. ¶ 16.) Laskowski and Hall also allege that in conducting its
investigation, Liberty ignored the Madison County fire investigator’s
conclusion that the fire was accidental. (Id. ¶ 13.) As a result of Liberty’s
refusal to pay any portion of Laskowski and Hall’s loss, plaintiffs allege that
they have incurred additional and continuing living expenses, and that the
damage to their Eaton home has significantly worsened. (Id. ¶¶ 18, 20.)
III. Standard of Review
The standard of review under Federal Rules of Civil Procedure
12(b)(6) is well established and will not be repeated here. For a full
discussion of the standard, the court refers the parties to its previous
opinion in Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215, 218
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(N.D.N.Y. 2010).
IV. Discussion
A.

Declaratory Judgment
In their first cause of action, Laskowski and Hall request judicial

declaration that Liberty is “obligated to perform its contractual obligation”
and that “[p]laintiffs are entitled to coverage for the full amount of their
[l]oss.” (Compl. ¶ 30, Dkt. No. 1.) Liberty moves unopposed to dismiss
Laskowski and Hall’s claim on the grounds that declaratory relief is
inappropriate where, as here, a plaintiff possesses an alternative remedy.
(Dkt. No. 13.) The court agrees. Accordingly, Liberty’s motion to dismiss
Laskowski and Hall’s claim for declaratory judgment is granted and
plaintiffs’ first cause of action is dismissed.
B.

Duty of Good Faith and Fair Dealing
In their third cause of action, Laskowski and Hall allege that Liberty is

liable for a violation of “the duty of good faith and fair dealing” (Compl. ¶¶
35-45., Dkt. No. 1.) Liberty seeks to dismiss Laskowski and Hall’s third
claim because it is duplicative of their breach of contract claim and lacks a
factual basis. (Dkt. No. 13 at 3.) The court agrees that dismissal is
warranted.
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In every contract, there is an “implied covenant of good faith and fair
dealing.” District Lodge 26, Intern. Ass’n of Machinists & Aerospace
Workers, AFL-CIO v. United Tech. Corp., 610 F.3d 44, 54 (2d Cir. 2010).
A cause of action for breach of this implied covenant, however, “cannot be
maintained where the alleged breach is intrinsically tied to the damages
allegedly resulting from a breach of contract.” Schlather, Stumbar, Parks &
Salk, LLP v. One Beacon Ins. Co., No. 5:10-cv-0167, 2011 WL 222235, at
*4 (N.D.N.Y. Jan. 21, 2011) (quotation marks and citation omitted).
Laskowski and Hall allege that Liberty breached its duty of good faith
and fair dealing by, inter alia, “[u]nreasonably, maliciously, recklessly, or
intentionally” denying their claim and delaying decision of that denial.
(Compl. ¶¶ 40-43, Dkt. No. 1.) While Laskowski and Hall argue that such
allegations constitute a separate cause of action, “employing language
familiar to tort law, does not, without more, transform a simple breach of
contract into a tort claim.” Clark-Fitzpatrick, Inc. v. LIRR Co., 70 N.Y.2d
382, 390 (1987).
Laskowski and Hall place great weight on Chernish v. Mass. Mut. Life
Ins. Co., No. 5:08-cv-0957, 2009 WL 385418 (N.D.N.Y. Feb. 10, 2009) for
the proposition that claims for breach of covenant of good faith and breach
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of contract can be pursued simultaneously. Subsequent case law in this
District, however, has made clear that where the wrong alleged and the
damages sought are the same, a breach of covenant of good faith and fair
dealing claim is duplicative of a breach of contract claim and should be
dismissed. Schlather, 2011 WL 222235, at *4. Here, because Laskowski
and Hall’s allegations under both causes of action complain of the same
wrongdoing, and both claims seek consequential damages (see Compl. ¶¶
34, 45, Dkt. No. 1), plaintiffs’ breach of covenant claim is duplicative of their
breach of contract claim. Accordingly, Liberty’s motion to dismiss
Laskowski and Hall’s third cause of action is granted.3
C.

N.Y. General Business Law § 349
In their fourth cause of action, Laskowski and Hall allege that Liberty

violated N.Y. General Business Law § 349. (Compl. ¶¶ 46-62, Dkt. No. 1.)
Liberty seeks to dismiss plaintiffs’ claim on the grounds that the dispute in
question is wholly private and therefore does not implicate § 349. (Dkt. No.
13 at 7-11.) The court agrees.
Section 349 of New York’s General Business Law makes unlawful

3

Liberty also seeks to dismiss Laskowski and Hall’s demand for punitive damages
under their third cause of action. (Dkt. No. 13 at 6.) Because that cause of action has been
dismissed, the court need not address the issue of punitive damages.

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“[d]eceptive acts or practices in the conduct of any business, trade or
commerce or in the furnishing of any service in this state.” N.Y. Gen. Bus.
Law § 349(a). To state a valid claim under § 349, a plaintiff must show “(1)
that the defendant’s conduct is ‘consumer oriented’; (2) that the defendant
is engaged in a ‘deceptive act or practice’; and (3) that the plaintiff was
injured by this practice.” Wilson v. Northwestern Mut. Ins. Co., 625 F.3d
54, 64 (2d Cir. 2010) (citation omitted). At issue here is the first prong.
Because a plaintiff must “demonstrate that the acts or practices have a
broader impact on consumers at large . . . private contract disputes” do not
fall under the purview of § 349. Id. (citation omitted).
Laskowski and Hall argue that Liberty impacts the broader public by,
inter alia, selling insurance policies without warning consumers that it
“regularly and routinely fails to live up to the promises to provide insurance
coverage,” fails to “observe fair and reasonable claim adjustment practices
and procedures” and when confronted with a significant loss by a
policyholder, “avoid[s] or inordinately delay[s] the settlement of the claim.”
(Compl. ¶¶ 56-57, Dkt. No. 1.) Laskowski and Hall rely principally on
Riordan v. Nationwide Mut. Fire Ins. Co., 756 F. Supp. 732 (S.D.N.Y. 1990)
to support their argument that such actions constitute a plausible § 349
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violation. Unlike the plaintiffs in Riordan, however, whose claim was
supported by factual allegations, Laskowski and Hall fail to provide a single
fact outside of their immediate experience to support their claims of
Liberty’s deceptive practices.
In alleging only factually-devoid conclusory statements, Laskowski
and Hall have failed to state a plausible § 349 claim. See Wilson, 625 F.3d
at 65 (finding that conclusory allegations substantiated only by plaintiff’s
experience were insufficient to state a § 349 claim); see also Perfect
Dental, PLLC v. Allstate Ins. Co., No. 04-cv-0586, 2006 WL 2552171, at *3
(E.D.N.Y. Aug. 31, 2006) (holding that “general allegations consisting of
catch phrases” were insufficient to state a plausible § 349 claim).
Accordingly, Liberty’s motion to dismiss is granted.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that Liberty’s motion to dismiss (Dkt. No. 13) is
GRANTED and Laskowski and Hall’s declaratory judgment; duty of good
faith and fair dealing; and N.Y. Gen Bus Law § 349 claims are DISMISSED;
and it is further
ORDERED that Liberty file the appropriate responsive pleadings
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within the time allotted by the rules; and it is further
ORDERED that the parties notify Magistrate Judge Baxter in order to
schedule further proceedings in accordance with this order; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
October 19, 2011
Albany, New York

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