SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

683 

CA 15-01646 

PRESENT: WHALEN, P.J., SMITH, CENTRA, PERADOTTO, AND CARNI, JJ. 

 

JD&K ASSOCIATES, LLC, PLAINTIFF-RESPONDENT, 

V MEMORANDUM AND ORDER

SELECTIVE INSURANCE GROUP, INC., DEFENDANT, 

SELECTIVE INSURANCE COMPANY OF AMERICA AND 

SELECTIVE WAY INSURANCE COMPANY, 

DEFENDANTS-APPELLANTS. 

 

MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, NEW YORK CITY (RICHARD S.

MILLS OF COUNSEL), FOR DEFENDANTS-APPELLANTS.

LYNN LAW FIRM, LLP, SYRACUSE (PATRICIA A. LYNN-FORD OF COUNSEL), FOR

PLAINTIFF-RESPONDENT. 

 

Appeal from an order of the Supreme Court, Onondaga County

(Anthony J. Paris, J.), entered February 6, 2015. The order denied

the motion of defendants Selective Insurance Company of America and

Selective Way Insurance Company for summary judgment dismissing

plaintiff’s fourth cause of action and granted the cross motion of

plaintiff for leave to amend its complaint. 

It is hereby ORDERED that the order so appealed from is

unanimously reversed on the law without costs, the cross motion is

denied, the motion is granted and the fourth cause of action is

dismissed. 

Memorandum: As we stated on the prior appeal in this matter

(JD&K Assoc., LLC v Selective Ins. Group, Inc., 118 AD3d 1402, 1402),

plaintiff obtained a commercial insurance policy from defendant

Selective Way Insurance Company (Selective Way) that provided coverage

for, among other things, a building that plaintiff owned and leased to

a limousine service. Defendant Selective Insurance Company of America

(Selective Insurance) is an affiliate of Selective Way and serves as

its claims administrator. After two large depressions appeared in the

concrete slab floor of the building insured under the policy,

plaintiff submitted a claim for that loss. Selective Insurance hired

Peter Vallas Associates (Vallas) to investigate the loss. Selective

Way subsequently disclaimed coverage, relying upon the findings in the

“Investigative Engineering Analysis Report” (report) prepared by

Vallas’ investigator, who was not an engineer, as well as its

interpretation of the policy. Plaintiff commenced this action against

Selective Way and Selective Insurance (defendants) and another company

that is no longer a party. On the prior appeal, we concluded, among
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other things, that Supreme Court properly determined that plaintiff

was entitled to partial summary judgment on its breach of contract

cause of action inasmuch as an extension of coverage in the policy

unambiguously provided coverage for plaintiff’s loss (id. at 1403). 

We further concluded that the court properly denied as premature that

part of defendants’ motion seeking summary judgment dismissing

plaintiff’s fourth cause of action, alleging deceptive acts and

practices under General Business Law § 349, because certain discovery

related to that cause of action remained outstanding (id.). In that

cause of action, plaintiff alleged, among other things, that

defendants retained a non-engineer to conduct the investigation and

misrepresented the investigator’s credentials to plaintiff in

disclaiming coverage for the property loss. Upon completion of such

discovery, defendants again moved for summary judgment dismissing

plaintiff’s section 349 cause of action, and plaintiff cross-moved for

leave to amend the complaint with respect to that cause of action. We

conclude that the court erred in denying defendants’ motion and, thus,

in granting plaintiff’s cross motion.

Pursuant to General Business Law § 349, “[d]eceptive acts or

practices in the conduct of any business, trade or commerce or in the

furnishing of any service in this state” are unlawful (§ 349 [a]), and

the statute provides an injured party with a private right of action

to enjoin such unlawful acts or practices and to recover for

violations of the statute (see § 349 [h]). “A plaintiff under section

349 must prove three elements: first, that the challenged act or

practice was consumer-oriented; second, that it was misleading in a

material way; and third, that the plaintiff suffered injury as a

result of the deceptive act” (Stutman v Chemical Bank, 95 NY2d 24, 29;

see Electrical Waste Recycling Group, Ltd. v Andela Tool & Mach.,

Inc., 107 AD3d 1627, 1629-1630, lv dismissed 22 NY3d 1111).

We agree with defendants that they met their initial burden of

establishing as a matter of law that their conduct was not

consumer-oriented. It is well settled that, although the conduct need

not be repetitive or recurring to qualify as consumer-oriented, a

plaintiff “must demonstrate that the acts or practices have a broader

impact on consumers at large” and, thus, “[p]rivate contract disputes,

unique to the parties, . . . [do] not fall within the ambit of the

statute” (Oswego Laborers’ Local 214 Pension Fund v Marine Midland

Bank, 85 NY2d 20, 25; see New York Univ. v Continental Ins. Co., 87

NY2d 308, 321). Defendants established that the conflict here stems

from “a ‘private’ contract dispute over policy coverage and the

processing of a claim which is unique to these parties, not conduct

which affects the consuming public at large” (New York Univ., 87 NY2d

at 321). Indeed, the record establishes that defendants’ decision to

disclaim coverage was based on the particular facts concerning the

nature of plaintiff’s property damage and the language in the policy

(see Security Mut. Life Ins. Co. of N.Y. v DiPasquale, 283 AD2d 182,

182, lv dismissed 97 NY2d 653, 700), and that the alleged deceptive

practice here, i.e., defendants’ use of the report from a non-engineer

in disclaiming coverage, had the potential to affect only a single

commercial property loss claim between plaintiff and defendants (see

Canario v Gunn, 300 AD2d 332, 333). Contrary to plaintiff’s
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contention, the information concerning defendants’ prior use of

Vallas’ investigative services contained in the affidavit of

defendants’ in-house complex claims counsel, which was based upon his

personal knowledge, established that defendants had not implemented

any type of practice of hiring an unqualified site investigator and

then misrepresenting his or her qualifications to render an

investigative report as a method of deceiving unsuspecting

policyholders and improperly disclaiming coverage. We further

conclude that the fact that defendants may have disclaimed coverage

based in part on reports drafted by Vallas in a few commercial

property cases closed within the last 15 years is insufficient to

raise a material issue of fact whether the allegedly deceptive

practice was standard or routine such that it potentially affected

similarly situated consumers (cf. Oswego Laborers’ Local 214 Pension

Fund, 85 NY2d at 26-27; North State Autobahn, Inc. v Progressive Ins.

Group Co., 102 AD3d 5, 14), or whether the alleged conduct had a broad

impact on consumers at large as contemplated by the statute (see

Anesthesia Assoc. of Mount Kisco, LLP v Northern Westchester Hosp.

Ctr., 59 AD3d 473, 479-480). Furthermore, we reject plaintiff’s

contention that the court properly determined that the investigator’s

deposition testimony indicating that he prepared a significant number

of engineering analysis reports for defendants in the past raises a

material issue of fact whether the allegedly deceptive conduct

impacted consumers at large. The underlying inference supporting that

determination is that, if the investigator had prepared other reports

for defendants, then defendants must have also misrepresented the

investigator as an engineer to other policyholders, and such an

inference is purely speculative and unsupported by the evidence in the

record (see generally Edelman v O’Toole-Ewald Art Assoc., Inc., 28

AD3d 250, 251, lv denied 7 NY3d 706; Drepaul v Allstate Ins. Co., 299

AD2d 391, 392-393; Teller v Bill Hayes, Ltd., 213 AD2d 141, 149, lv

dismissed in part and denied in part 87 NY2d 937).

Even assuming, arguendo, that there is an issue of fact whether

defendants’ conduct was materially misleading, we nonetheless further

agree with defendants that the record establishes that plaintiff was

not injured as a result of the allegedly deceptive act or practice. 

“[W]hile the statute does not require proof of justifiable reliance, a

plaintiff seeking compensatory damages must show that the defendant

engaged in a material deceptive act or practice that caused actual,

although not necessarily pecuniary, harm” (Oswego Laborers’ Local 214

Pension Fund, 85 NY2d at 26; see generally Small v Lorillard Tobacco

Co., 94 NY2d 43, 55-56). Here, the submissions establish as a matter

of law that the alleged misrepresentation of the investigator’s

credentials, and/or any reliance on the conclusions set forth in the

report, did not cause actual harm to plaintiff. With respect to the

claimed injury arising from the disclaimer of coverage, the record

establishes that defendants’ decision was based upon the factual

observations contained in the report, i.e., that the depressions in

the concrete slab were caused by settling of the fill with water

discharge from a drain pipe as a contributing factor, coupled with

defendants’ interpretation of the policy exclusions as applied to

those facts. The disclaimer was wholly unrelated to any
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misrepresentation made by defendants to plaintiff regarding the

investigator’s credentials. That conclusion is further supported by

the fact that defendants erroneously continued to disclaim coverage

even after the policy extension applicable to certain water damage was

brought to their attention (see JD&K Assoc., LLC, 118 AD3d at

1402-1403). To the extent that plaintiff contends that it suffered

actual harm because it was compelled to retain a professional engineer

to investigate the cause of the property damage, that decision

resulted from defendants’ adherence to the disclaimer given its

interpretation of the policy despite the investigator’s factual

observations that supported coverage under the applicable policy

extension (see id.). We note that the factual findings in the report

are not challenged by plaintiff and are essentially indistinguishable

from the findings made by plaintiff’s professional engineer. We thus

conclude that plaintiff’s alleged injuries were caused by a disclaimer

made on the basis of the undisputed factual circumstances of the

property damage and defendants’ adherence to its erroneous

interpretation of the policy language, and did not result from any

misrepresentation to plaintiff about the investigator’s credentials

(see Amalfitano v NBTY, Inc., 128 AD3d 743, 746, lv denied 26 NY3d

913).

In light of our determination, defendants’ remaining contention

is academic.

Entered: October 7, 2016 Frances E. Cafarell

Clerk of the Court