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Encompass could not save themselvesJuly 9, 2012

Ural v Encompass Ins. Co. of Am.,  2012 NY Slip Op 05407 (2d Dept. 2012)

This was a rough opinion.  I am glad not to be on the receiving end of this one.  Here are the pertinent parts:

“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.”

“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 cognizable cause 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 AD3d 155, 161; Acquista v New York Life Ins. Co., 285 AD2d 73, 82). 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″

This is the most lethal part of the opinion:

“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 Law § 2601. Contrary to the Supreme Court’s determination and Encompass’s contention, the plaintiff did not seek to add a separate cause of action alleging violations of Insurance Law § 2601 but, rather, sought to amplify his cause of action to recover damages for breach of contract with allegations of such violations”

2 Responses

  1. Captain America says:

    Maybe the title should be: “Encompass Should Have Honored its Contract with a New York Citizen”

    • JT says:

      As an insurance carrier, it is quite scary that 2601 can be bootstrapped into 349. That is wild. There was a Judge in Supreme Kings (Demhurst?) who held that the violation of the 30-day claims determination period in 2601 is actionable in its own right. I am wondering if this can be read for the proposition that a violation of 2601, in and of itself, will not form a basis to commence a breach of contract action against the carrier.

      What I know is that his case has ramifications that we have not yet seen.

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