The Honorable John R. Gibson, Circuit Judge, United States * Court of Appeals for the Eighth Circuit, sitting by designation. 07-1296-cv Fred Spagnola v. TheChubbCorporation,etal. 1 UNITED STATES COURT OF APPEALS 2 3 FOR THE SECOND CIRCUIT 4 5 August Term, 2008 6 7 (Argued: September 17, 2008 Decided: July 28, 2009) 8 9 Docket No. 07-1296-cv 10 -----------------------------------------------------------x 11 12 13 FRED SPAGNOLA, individually, and on behalf of all those 14 similarly situated, 15 16 Plaintiff-Appellant, 17 18 v. 19 20 THE CHUBB CORPORATION, FEDERAL INSURANCE COMPANY, GREAT 21 NORTHERN INSURANCE COMPANY, JOHN D. FINNEGAN AND THOMAS 22 F. MOTAMED, 23 24 Defendants-Appellees. 25 26 27 -----------------------------------------------------------x 28 29 Before:WALKER, KATZMANN, and JOHN R. GIBSON,Circuit Judges. * 30 31 Appeal from an order of the United States District Court for 32 the Southern District of New York (Harold Baer Jr., District 33 Judge) entered on March 27, 2007, granting Defendants-Appellees 34 Chubb Corporation’s and related entities’ motion to dismiss for 35 failure to state a claim upon which relief can be granted. 36 Plaintiff-Appellant Fred Spagnola brought a putative class action 37 claiming that the Chubb Corporation unlawfully increased hisSpagnola also named as defendants various affiliated 1 entities and persons related to Chubb. For the purpose of this appeal we will refer to the named defendants-appellees collectively as “Chubb.” 2 1 homeowner’s insurance premiums in violation of their insurance 2 contract and New York Law. The district court granted Chubb’s 3 motion to dismiss all claims. We conclude, however, that 4 Spagnola pled sufficient facts to state a claim for breach of 5 contract and we therefore reverse the district court’s dismissal 6 of that claim. We affirm the court’s dismissal of all other 7 claims. 8 ROGER W. KIRBY (David Kovel, on the 9 10 brief), Kirby McInerney & Squire, LLP, 11 Kenneth Elan, Harold Edgar, New York, NY 12 of counsel, for Plaintiff-Appellant. 13 14 15 KEARA M. GORDON, (Joseph G. Finnerty 16 17 III, Sara Z. Moghadam, on the brief), 18 DLA Piper US LLP, New York, NY and 19 Washington, DC, for Defendants20 Appellees. 21 22 23 24 25 JOHN R. GIBSON, Circuit Judge. 26 On July 13, 2001, Fred Spagnola and his wife purchased a 27 Chubb Masterpiece homeowner’s policy.The policy provided 1 28 dwelling coverage of $600,000, contents coverage of $300,000, and 29 liability coverage of $500,000.In contrast, a verified replacement cost policy covers the 2 reconstruction cost up to a specified amount of coverage, and a conditional replacement cost policy covers a portion of the reconstruction cost up to a stated amount. 3 1 The Masterpiece policy allows the insured to select one of 2 three types of coverage: extended replacement cost, verified 3 replacement cost, or conditional replacement cost. Spagnola 4 purchased the extended replacement coverage, which, in the event 5 of an insurable loss, pays the cost of reconstruction even if 6 that cost exceeds the stated coverage of the policy.The policy 2 7 defines “reconstruction cost” as the “amount required at the time 8 of loss to repair or rebuild the house whichever is less, at the 9 same location, with the same quality of materials and workmanship 10 which existed before the loss.” 11 The amount of coverage was listed in the policy’s Coverage 12 Summary and during each annual policy period, Chubb indicated 13 that the coverage amount: 14 will be increased daily to reflect the current effect 15 of inflation. At the time of a covered loss, your 16 amount of house coverage will include any increase in 17 the United States Consumer Price Index from the 18 beginning of the policy period. 19 20 The coverage amount could be changed: 21 22 With your consent, we may change [the amount of 23 coverage reflected in the coverage summary] when 24 appraisals are conducted and when the policy is 25 renewed, to reflect current costs and values. 26 27 The term “costs and values” is not further defined in theGrounds for cancellation include such events as nonpayment 3 of premium, conviction of a crime, or misrepresentation increasing the hazard assumed.

4 1 policy. Spagnola’s policy originally had a one year policy 2period. Chubb, however, was obligated to renew the policy for 3 three years and could decline to renew the policy “only on 4 grounds for which [Chubb] could cancel it.”The policy also 3 5 contained a conditional renewal provision. Under this provision, 6 if Chubb had grounds to cancel or refuse to renew the policy, it 7 could instead make continued coverage conditional on a change in 8 policy limits or on eliminating any coverage not required by law. 9 As far as renewing coverage, the policy stated that at the 10 time of renewal, Chubb “may offer to renew [the policy], at the 11 premiums and under the policy provisions in effect at the date of 12 renewal . . . by mailing [the insured] a bill for the premium 13 . . . along with any changes in the policy provisions or amounts 14 of coverage.” If Spagnola did not pay the new premium, the 15 policy would automatically terminate at the end of the current 16policy period. “Failure to pay the required renewal premium when 17 due shall mean that you have not accepted our offer.” 18 Over the next five years, Chubb annually increased 19 Spagnola’s coverage and likewise his premiums.The coverage 20 amount for house and contents was increased each year by 21 approximately ten percent, well in excess of the Consumer Price5 1 Index (“CPI”). Chubb sent the annual premium summary renewals 2 with the bill for the next year’s coverage describing it as an 3 “annual premium savings.” In 2006, Spagnola discovered that the 4 increases in his premiums had risen faster than the CPI and he 5 filed suit on behalf of a putative class, in state court, later 6 removed to federal court, claiming that Chubb breached the terms 7 of the policy and violated New York Insurance Law by improperly 8 increasing coverage and premiums without his consent and in 9 excess of the CPI. In addition, Spagnola brought an unjust 10 enrichment claim as well as a deceptive business practices claim 11 under New York General Business Law § 349. Chubb responded by 12 filing a motion to dismiss under Federal Rule of Civil Procedure 13 12(b)(6). 14 The district court granted Chubb’s motion to dismiss all 15 claims. First, the court held that the complaint failed to state 16 a claim under New York Insurance Law § 3425 because the coverage 17 adjustments at issue were properly made pursuant to a mechanism 18 established in the policy. The court concluded that the policy 19 established that the premium increases were tied to “current 20 costs and values.” The court concluded that the original policy 21 notified Spagnola that Chubb had the right to increase coverage 22 and premiums annually and that Spagnola’s payment of the annual 23 premium bill reflected Spagnola’s consent to each such increase. 24 The court also dismissed the breach of contract claim, bothSpagnola does not appeal the district court’s dismissal of 4 his unjust enrichment claim. At oral argument we questioned whether this issue should be 5 certified to the New York Court of Appeals. After reviewing New York case law and the opinions of the New York Insurance Department, we conclude that certification is unnecessary. But see Great N. Ins. Co. v. Mt. Vernon Fire Ins. Co., 143 F.3d 659, 662 (2d Cir. 1998) (certification appropriate where no state 6 1 because the contract terms upon which Spagnola relied “[did] not 2 exist,” and because the breach of contract claim was “barred by 3 the voluntary payment doctrine.” Finally, the court dismissed 4 the deceptive business practices claim under New York law, 5 holding that there were not sufficient facts to support a finding 6 that the policy was “misleading in a material respect” or that 7 Spagnola or any other member of the putative class was injured as 8 a result. Spagnola now appeals.4 9 We review a Rule 12(b)(6) order of dismissal de novo. Amron 10 v. Morgan Stanley Inv. Advisors Inc., 464 F.3d 338, 343 (2d Cir. 11 2006). In reviewing such an order, we take all well-pled factual 12 allegations as true and draw all reasonable inferences in the 13 plaintiff’s favor to decide whether the plaintiff has pled a 14plausible claim for relief. See Ashcroft v. Iqbal, 129 S.Ct. 15 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 16 544, 555 (2007)). 17 I. 18 Spagnola first argues that the district court erred in 19 dismissing his claim under New York Insurance Law § 3425.5court decisions interpret relevant provision). 7 1 Section 3425 restricts when and how an insurer may condition 2 renewal or changes of limits or elimination of coverage. With 3 respect to a “personal lines” insurance policy, such as this one, 4 § 3425(e) provides: “[N]o notice of nonrenewal or conditional 5 renewal of a covered policy shall be issued to become effective 6 during the required policy period unless it is based upon a 7 ground for which the policy could have been cancelled.” N.Y. 8 Ins. Law § 3425(e). The statute defines “required policy period” 9 in this instance as “a period of three years from the date as of 10 which a covered policy is first issued or is voluntarily 11 renewed.” Id. at § 3425(a)(7). Spagnola contends that, if Chubb 12 wanted to change the limits of the policy, it was obligated under 13 § 3425(d)(1) to issue a conditional notice that provided the 14 “specific reason or reasons” for the changes. Id. at § 15 3425(d)(1). Since Chubb did not follow the notice requirement of 16 § 3425(d)(1), Spagnola contends that any unilateral increases by 17 Chubb violated the statute. 18 Spagnola’s § 3425 argument is essentially twofold. First he 19 argues that under the protections of § 3425 he was entitled to 20 three years of continuous coverage unless he failed to pay the 21 premiums due under the policy. See N.Y. Ins. Law § 3425(a)(7). 22 He goes on to assert that Chubb could only increase his premiums 23 and coverage during the three-year period by providing the8 1 required notice and statement of reasons required by § 2 3425(d)(1). Spagnola concedes that under § 3425 an insurer may 3 increase coverage limits (and premiums) during the three-year 4 required policy period if the policy itself provides for an 5 “automatic increase” or a “mechanism” to determine the increase, 6 such as a predetermined figure or the CPI. Spagnola argues, 7 however, that § 3425 bars the increases Chubb imposed because the 8 policy did not provide for an automatic increase or specify a 9mechanism by which the increase could be measured. Spagnola 10 alleges that the policy’s provision permitting a change in the 11 amount of coverage “when the policy’s renewed to reflect current 12 costs and values” is not a “mechanism” by which the increase 13 could be measured because the insured cannot look to the policy 14 itself to determine the amount of an increase which could be 15 subject to the “whim” of the insurer. 16 Chubb and Spagnola agree that § 3425 permits an insurer to 17 increase coverage limits (and therefore premiums) when the policy 18 itself provides for such periodic increases. The two disagree on 19 whether there is such a provision in this policy. Chubb 20 characterizes the policy as an “inflation guard” policy which 21 permits periodic coverage increases upon renewal to reflect 22 current costs and values. In his complaint, Spagnola similarly 23 characterizes the policy: “Annual premiums for replacement cost 24policies theoretically are based on the home’s estimated9 1 replacement cost, not its market value. These premiums are 2 subject to limited annual cost increases, sometimes referred to 3 in the industry as ‘inflation guard coverage.’” 4 It is well established that we defer to an agency’s 5 construction of a statute when “the interpretation of a statute 6 or its application involves knowledge and understanding of 7 underlying operational practices.” N.Y. State Ass’n of Life 8 Underwriters, Inc. v. N.Y. State Banking Dep’t, 632 N.E.2d 876, 9 879 (N.Y. 1994) (quoting Kurcsics v. Merchants Mut. Ins. Co., 403 10N.E.2d 159 (N.Y. 1980)). Several opinions from the New York 11 Department of Insurance are instructive. 12 In a July 23, 2003 opinion, the Department unequivocally 13 concluded that the three-year policy period requirement of § 14 3425 “[does] not have any effect upon the ability of the insurer 15 to renew policies with a premium change, provided that the 16premium change conforms to its rate filing . . . .” Rate Changes 17 and N.Y. Ins. Law § 3425, Office of Gen. Counsel, N.Y. Ins. 18 Dep’t, No. 03-07-38 (Jul. 23, 2003) (informal opinion). Chubb 19 renewed the policy each year and the coverage increase at the 20 time of renewal does not facially violate the three-year required 21 policy period of § 3425(a)(7), nor does it run counter to the 22 purpose behind § 3425. See Rosner v. Metro. Prop. & Liab. Ins. 23 Co., 236 F.3d 96, 100 (2d Cir. 2000) (purpose behind § 3425 is 24 “to provide a three-year period of renewability” and “to10 1 establish guaranteed continuity of coverage”) (internal quotation 2marks omitted). 3 As to the notice requirement, the Department considered a 4policy provision similar to the one here and concluded that no 5 conditional renewal notice was required when a premium increase 6 was due to the application of an inflation guard mechanism 7 provided for in the policy. Conditional Renewal Notices, Office 8 of Gen. Counsel, N.Y. Ins. Dep’t, No. 02-04-10 (April 8, 2002) 9 (informal opinion). The Department reasoned that no notice was 10 required because the premium increase was attributable to the 11 operation of the inflation guard “required by and set forth in 12 the policy itself.” Spagnola argues that this opinion actually 13 supports his interpretation of § 3425 on two grounds. First, he 14 states this is not an inflation guard policy so the Department 15 opinion does not control. Spagnola distances himself from his 16 initial characterization of the policy, stating in his reply 17 brief that the clauses at issue are not “inflation guards as 18 conventionally defined” because they do not “automatically 19 adjust[] the coverage limit on the dwelling each time the policy 20 is renewed to reflect current construction costs.” Second, he 21 contends that the Chubb policy is different in any event because 22 its “costs and values” provision is not fixed or tied to a 23 recognized index within the policy. Spagnola points to the 24 Department’s clarification in that opinion: “Had the increase in11 1 coverage/premium not been solely attributable to a policy 2provision or a request by the insured, a conditional renewal 3 notice would be required under the statute . . . .” Although 4 this language is consistent with the conclusion that a 5 conditional notice is not required when the policy provides for 6 an annual increase, it does not affirmatively answer the question 7 of whether the costs and values provision is a sufficient 8 mechanism for increasing annual premiums upon renewal so as to 9 negate the conditional notice requirements. 10 Two other Department opinions help to resolve this issue. 11 In the first, the Department decided that a conditional renewal 12 notice was not required under New York Insurance Law § 3426 (the 13 commercial insurance counterpart to § 3425) because the increase 14 was tied to a provision in the policy which required the insured 15 to maintain coverage equal to the appraised value of the 16property. Conditional Renewal of Commercial Lines Insurance 17 Policies, Office of Gen. Counsel, N.Y. Ins. Dep’t, No. 9-9-96(#1) 18 (Sept. 9, 1996) (informal opinion). The Department concluded 19 that “appraised value,” a term we believe is substantially 20 similar to the “costs and values” term of Spagnola’s policy, is a 21 sufficient mechanism to provide the insured notice that the 22 coverage amount will change on a periodic basis. While this 23 opinion considers the provision of a commercial lines insurance 24policy and not a personal lines policy, the Department’s12 1 interpretation of a similar policy provision to the one in this 2 case supports our conclusion that the conditional notice 3 requirements do not apply to the renewals at issue here. 4 In contrast, another Department opinion decided that an 5 increase in the amount of deductible expenses for windstorm 6 coverage did require conditional notice under § 3425(d)(1). 7 Conditional Renewal under § 3425(d)(1), Office of Gen. Counsel, 8 N.Y. Ins. Dept., No. 06-08-17 (Aug. 24, 2006) (informal opinion). 9 The Department based its conclusion on the fact that the 10 “deductible in the original policy was fixed and was not subject 11 to any provision that would provide for an automatic increase of 12 any kind.” Id. These opinions suggest that the determinative 13 factor for the Department in deciding whether conditional notice 14 requirements are necessary is whether the policy contemplates a 15 periodic change in the policy’s coverage or terms. 16 Here, the policy provided that Chubb could condition 17 annual renewal on the payment of increased premiums based on 18 current “costs and values,” and thus, the conditional notice 19 requirements of § 3425 are not triggered. That the increase 20 cannot be specifically measured from the policy itself is not 21 determinative. As the district court wrote: “An extended 22 replacement cost policy is designed to keep pace with inflation 23 and prevent underinsurance, and therefore, does not and for the 24 insured’s protection, cannot specify” the amount of the futureThe complaint also asserted a third breach of contract 6 claim, based on Chubb’s alleged violation of § 3425, which Spagnola claims was incorporated by reference into the policy. However, because we conclude that Chubb did not violate § 3425, this claim also fails. 13 1 coverage increases in the original policy. Spagnola v. Chubb 2 Corp., No. 06 CIV 9960, 2007 WL 927198, at *4 (S.D.N.Y. Mar. 27, 3 2007) (emphasis omitted). 4 We therefore affirm the district court’s dismissal of 5 Spagnola’s § 3425 claim. 6 II. 7 Spagnola next argues that the district court erred in 8 dismissing his breach of contract claim. He claims that Chubb 9 violated the insurance contract by: (1) not obtaining his 10 consent to increase the amount of his coverage, and (2) 11 increasing his coverage by an amount that does not reflect 12 current costs and values.6 13 14 A. 15 Spagnola contends that Chubb breached the insurance policy 16by failing to obtain his consent to the annual policy renewals. 17 Spagnola states that his payment of the increased premiums did 18 not amount to consent because the payment was not “knowing and 19 voluntary.” He complains that: (1) Chubb never told him that it 20 was increasing his coverage; (2) Chubb never asked for his14 1 consent; (3) Chubb did not provide an explanation for the 2 increased coverage; and (4) Chubb never told him the amount of 3 the annual change in premiums and coverage. 4 We easily resolve this argument. First, the amount of 5 coverage was shown in the coverage summary that Spagnola received 6 with each reissue of the policy. This summary notified Spagnola 7 that “[w]ith your consent, we may change this amount . . . when 8 the policy is renewed, to reflect current costs and values.” The 9 policy provided that renewal each year would be at the premiums 10 and under the policy provisions in effect on the date of renewal. 11 It would be effectuated when Chubb mailed a bill for the premium 12 “along with any changes in the policy provisions or amounts of 13 coverage.” The policy provided: “Failure to pay the required 14 renewal premium when due shall mean that you have not accepted 15 our offer.” Thus, the offer was contained in each new policy 16 reissue and coverage summary, and acceptance occurred if and when 17 Spagnola paid the renewal premium. Each of these occasions 18 resulted in a new contract between the parties, and Spagnola’s 19 payment was his consent. 20 Spagnola directs us to a New Jersey Supreme Court case from 21 1961 which held that “[a]bsent notification that there have been 22 changes in the restrictions, conditions or limitations of [an 23 insurance policy], the insured is justly entitled to assume that 24 they remain the same and that his coverage has not in anywise15 1 been lessened.” Bauman v. Royal Indem. Co., 174 A.2d 585, 592 2 (N.J. 1961). We need not address the precedential value of 3 Bauman, as there is nothing here to suggest that Spagnola was 4 “entitled to assume” that the coverage amounts remained the same 5 year to year. As the Bauman Court pointed out, an insured is 6 “expected to [have] read” the restrictions, conditions and 7 limitations in his original policy. Id. at 591-92. Spagnola 8 does not dispute that the original policy included language 9 permitting Chubb to adjust coverage amounts. In addition, Bauman 10 involved an exclusion of insurance coverage that was added for 11 the first time in a renewal policy with nothing to draw the 12 insured’s attention to such a change. See id. at 586. That is a 13 different situation than a dispute centered around premium 14 amounts that are always contained in a renewal notice. 15 We reject Spagnola’s argument that the district court erred 16 insofar as it dismissed the breach of contract claim based on 17 lack of consent. 18 19 B. 20 Spagnola also claims that Chubb breached the insurance 21 contract by increasing his coverage amounts and premiums in a way 22 that did not reflect current costs and values. The policy does 23 not define the term “current costs and values.” According to16 1 Spagnola, the policy could reasonably be interpreted to base 2 costs and values on either actual reconstruction costs or the 3 CPI. He alleges that Chubb breached this term by increasing the 4 coverage amount without using either as a basis. Spagnola points 5 out that his contents coverage increased at the same percentage 6 rate as his dwelling coverage each year, and this automatic 7 coupling alone supports an inference that Chubb increased 8 coverage in a manner that did not accurately reflect current 9 costs and values. 10 Chubb concedes that the premiums were not increased in an 11 amount determined by the CPI. Chubb argues that this fact is 12 irrelevant, and that it is to be expected that the increases 13 would have exceeded the CPI because the CPI only applies to 14 interim period adjustments, and not the annual increases at issue 15 here. Chubb states: “No fact is pled to permit the inference 16 that the increased coverage amounts were inconsistent with the 17 reconstruction costs of the plaintiff’s home in any of the last 18 five years.” Chubb characterizes Spagnola’s home and contents 19 comparison analysis as a “red herring” built on ‘multiple layers 20 of unreasonable assumptions.” Chubb asserts that under 21 Spagnola’s interpretation of “costs and values,” one assumes that 22 contents and dwelling coverage must increase at different rates 23 based on the additional assumption that the amount of contents 24 coverage equals the sum of the value of each personal possession,17 1 and that such an interpretation is inconsistent with industry 2practice and at odds with the policy terms. 3 Spagnola directs us to Beller v. William Penn Life Insurance 4 Co. of N.Y., 778 N.Y.S.2d 82 (App. Div. 2004). The plaintiff in 5 Beller purchased a life insurance policy that set out a number of 6 factors the insurer would evaluate in setting premiums to 7maintain the policy’s coverage. Id. at 84. After paying the 8 premiums for several years, the insured realized that the insurer 9 was determining premiums on a basis different than the one 10 required by the policy’s language. Id. The court suggested in 11 dicta that the insured’s allegations, if true, constituted a 12 breach of contract as well as a deceptive business practices 13 claim. Id. at 85-86. The reasoning of Beller convinces us that 14 Spagnola’s breach of contract claim should survive a motion to 15 dismiss. Chubb’s explanation that the fixed proportion of home 16 and contents coverage is standard industry practice does not 17 address Spagnola’s allegation that the annual increases were not 18 based on current costs and values as required by the express 19 terms of the policy. Cf. id. at 85 (insurer’s customary filed 20 rates do not insulate insurer from contract claim). Chubb does 21 not tell us the basis for its costs and values determination, but 22 only tells us what the calculation is not based on. Chubb’s 23 explanation neither resolves the ambiguity of the term “current 24 costs and values” nor adequately refutes Spagnola’s claim that18 1 the increases were not based on current costs and values. 2 Spagnola has therefore met the standard necessary to resist 3 Chubb’s motion to dismiss. See Iqbal, 129 S.Ct. at 1949 (“A 4 claim has facial plausibility when the plaintiff pleads factual 5 content that allows the court to draw the reasonable inference 6 that the defendant is liable for the misconduct alleged.”). 7 III. 8 The district court dismissed Spagnola’s breach of contract 9 claim on the alternative ground that the claim was barred by the 10 voluntary payment doctrine. According to the doctrine, a breach 11 of contract claim is barred if a party continues to pay amounts 12 charged under the contract without objection. The district court 13 found that Spagnola had full knowledge of the facts regarding 14 coverage and premiums at the time of his first renewal in 2002 15 and continued (without objection) to pay the increased premium 16 amounts on each of the five succeeding anniversary dates. The 17 district court reasoned: “It is a little late now, after 18 [Spagnola] has enjoyed the benefits and protections of [Chubb’s] 19 coverage for more than five years,” to challenge the “propriety 20 of [his] coverage.” Spagnola, 2007 WL 927198, at *3. 21 The voluntary payment doctrine precludes a plaintiff from 22 recovering payments “made with full knowledge of the facts” and 23 with a “lack of diligence” in determining his contractual rights 24 and obligations. See Dillon v. U-A Columbia Cablevision of 25 Westchester, Inc., 740 N.Y.S.2d 396, 397 (App. Div. 2002); see19 1 also Westfall v. Chase Lincoln First Bank, N.A., 685 N.Y.S.2d 2 181, 182 (App. Div. 1999); Gimbel Bros., Inc. v. Brook Shopping 3 Ctrs., Inc., 499 N.Y.S.2d 435, 438 (App. Div. 1986). The 4 doctrine does not apply, however, when a plaintiff made payments 5 under a mistake of fact or law regarding the plaintiff’s 6 contractual duty to pay. See Dillon, 740 N.Y.S.2d at 397; 7 Gimbel, 499 N.Y.S.2d at 438. 8 Spagnola claims that the voluntary payment doctrine does not 9 apply because he did not have full knowledge of the facts 10 relevant to his claim until he filed suit in 2006, and that his 11 lack of full knowledge was not due to a lack of diligence, but 12 instead due to being misled by Chubb as to the basis upon which 13 his coverage was increased. He points to, among other things, 14 renewal notices which stated that he was receiving an “annual 15 premium savings.” 16 Chubb points out that Spagnola renewed his policy five 17 times, and that “simple math” should have alerted Spagnola to the 18 notion that the increases were not based on the CPI as Spagnola 19 thought. In Dillon, a cable customer brought a putative class 20 action seeking to recover five-dollar late fees paid to her cable 21 company over the course of seven years. 740 N.Y.S.2d at 397. 22 The cable company represented that the fee was an administrative 23 fee reflecting costs it incurred from the “customers’ late 24payments or non-payments.” Id. (internal quotation marks 25 omitted). The plaintiff alleged that the fee substantially20 1 exceeded the cable company’s true cost for a late or non-payment 2 and instead constituted an improper penalty. Id. The trial court 3 granted the cable company’s motion to dismiss based on the 4voluntary payment doctrine, concluding that the customer should 5 have known that the five-dollar charge might be excessive simply 6because it constituted 19% of her total bill. Id. at 398. The 7Appellate Division affirmed. Id. 8 Although the voluntary payment doctrine may ultimately bar 9 Spagnola’s breach of contract claim, we decide that it is too 10 early in this case to conclusively answer that question. In some 11 years, Chubb sent Spagnola a renewal letter enclosing the policy 12 and stating that Spagnola was receiving an “annual premium 13 savings,” even while it increased his premiums. See Samuel v. 14 Time Warner, Inc., 809 N.Y.S.2d 408, 418 (Sup. Ct. 2005) 15 (voluntary payment doctrine not applicable when claim predicated 16 on lack of full disclosure). Chubb does not argue that the 17 increases were such that Spagnola should have been on notice that 18 they were not based on current costs and values. Cf. Dillon, 740 19 N.Y.S.2d at 397 (customer should have known based on degree of 20 increase). The pleadings before the district court do not 21 establish whether Spagnola knew or should have known that the 22 increased amounts were not based on current costs and values, and 23 Spagnola was not required to preemptively plead facts refuting 24 the voluntary payment doctrine. See Abbas v. Dixon, 480 F.3d 25 636, 640 (2d Cir. 2007) (not required to include facts in21 1 complaint in anticipation of affirmative defense). Thus, drawing 2 all reasonable inferences in Spagnola’s favor, we conclude that 3 the voluntary payment doctrine cannot stand at this time as an 4 alternate basis for dismissal of Spagnola’s claim. 5 The cases cited by Chubb do not change our view that the 6 complaint cannot be dismisssed based on the voluntary payment 7 doctrine. In Gimbel, the appellate court held that the plaintiff 8 could not receive restitution for certain payments made pursuant 9 to a mistake of fact when the record showed that “no mistake of 10 fact had been made.” 499 N.Y.S.2d at 438. In that case, the 11 plaintiff sought to recover certain extra rent payments it had 12made to its landlord for a year and a half. The court determined 13 that although the lease did not require the extra rent payments, 14 the plaintiff’s recovery was barred by the voluntary payment 15 doctrine. Because the plaintiff made the improper rent payments 16 for a year and a half before questioning them, it “displayed a 17marked lack of diligence in determining what its contractual 18 rights were, and is therefore not entitled to the equitable 19 relief of restitution.” Id. at 439. In Gimbel, however, the 20 judgment was entered denying plaintiff’s claim after discovery 21 and a bench trial, not on the basis of plaintiff’s complaint. 22 Id. at 436-37; see also Lavin v. Town of E. Greenbush, 843 23 N.Y.S.2d 484, 491-92 (Sup. Ct. 2007) (applying voluntary payment 24 doctrine on summary judgment motion). 2522 1 IV. 2 Finally, Spagnola appeals the district court’s dismissal of 3 his deceptive business practices claim under § 349 of the New 4 York General Business Law. 5 To state a claim under § 349, a plaintiff must allege: (1) 6 the act or practice was consumer-oriented; (2) the act or 7 practice was misleading in a material respect; and (3) the 8 plaintiff was injured as a result. Maurizio v. Goldsmith, 230 9 F.3d 518, 521 (2d Cir. 2000) (per curiam). “Deceptive practices” 10 are “acts which are dishonest or misleading in a material 11 respect.” Kramer v. Pollock-Krasner Found., 890 F. Supp. 250, 12 258 (S.D.N.Y. 1995). “‘Deceptive acts’ are defined objectively[] 13 as acts likely to mislead a reasonable consumer acting reasonably 14 under the circumstances.” Boule v. Hutton, 328 F.3d 84, 94 (2d 15 Cir. 2003) (internal quotation marks omitted). 16 The district court dismissed Spagnola’s claim because it 17 failed to plead either a deceptive act or requisite injury. 18 Although a monetary loss is a sufficient injury to satisfy the 19 requirement under § 349, that loss must be independent of the 20 loss caused by the alleged breach of contract. For example, in 21 Sokoloff v. Town Sports Int’l, Inc., 778 N.Y.S.2d 9, 10 (App. 22 Div. 2004), the Appellate Division dismissed a health club 23 member’s deceptive practice claim made against her health club. 24 The member sought the return of her initiation fee. Id. The 25 court held that the member did not claim a sufficient injuryWe also deny as without merit Spagnola’s calim that the 7 district court’s failure to consider certain authority “warrant[s] reassignment” of his case to a different judge. 23 1 because she alleged no other loss besides the payment of her 2membership fee. Id. She did not claim that the health club 3 failed to deliver services called for under the contract and “she 4 never sought to cancel the contract.” Id.; see also Small v. 5 Lorillard Tobacco Co., 720 N.E.2d 892, 897-98 (N.Y. 1999) (injury 6must be separate and distinct from the deceptive act). 7 Here, as in Sokoloff, Spagnola does not claim that he did 8 not receive adequate insurance coverage or that he did not 9 contract for the coverage he received. Cf. Samuel, 809 N.Y.S.2d 10 at 418 (requisite injury established when plaintiffs received 11 services never contracted for). Spagnola has therefore failed to 12 plead a sufficient injury under New York General Business Law § 13 349. 14 For the foregoing reasons, we reverse the district court’s 15 dismissal of Spagnola’s breach of contract claim and affirm the 16 district court’s dismissal of all other claims.We remand the 7 17 case to the district court for further proceedings consistent 18 with this opinion.