| Ural v Encompass Ins. Co. of Am. |
| 2012 NY Slip Op 05407 [97 AD3d 562] |
| July 5, 2012 |
| Appellate Division, Second Department |
| Thomas P. Ural, Appellant, v Encompass InsuranceCompany of America et al., Respondents, et al., Defendant. |
—[*1] Bruno, Gerbino & Soriano, LLP, Melville, N.Y. (Charles W. Benton of counsel), forrespondents.
In an action, inter alia, to recover damages for breach of an insurance contract, the plaintiffappeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County(Mahon, J.), dated December 13, 2010, as granted those branches of the motion of the defendantsEncompass Insurance Company of America and Encompass Insurance Company which werepursuant to CPLR 3211 (a) (7) to dismiss the second, third, eighth, and ninth causes of action, thefirst cause of action to the extent it sought to recover damages for alleged violations of InsuranceLaw § 2601, and the claims for punitive damages insofar as asserted against them, deniedthose branches of his motion which were to compel the defendants Encompass InsuranceCompany of America and Encompass Insurance Company to comply with his first and secondnotices for discovery and inspection and to produce certain witnesses to be deposed, and grantedthat branch of the cross motion of the defendants Encompass Insurance Company of America andEncompass Insurance Company which was for a protective order pursuant to CPLR 3103 (a).
Ordered that the order is modified, on the law and the facts, (1) by deleting the provisionthereof granting those branches of the motion of the defendants Encompass Insurance Companyof America and Encompass Insurance Company which were pursuant to CPLR 3211 (a) (7) todismiss the third cause of action, which sought damages for an alleged violation of GeneralBusiness Law § 349, the first cause of action to the extent it sought damages for allegedviolations of Insurance Law § 2601, and the claims for punitive damages insofar asasserted against them, and substituting therefor a provision denying those branches of the motion,(2) by deleting the provision thereof denying that branch of the plaintiff's motion which was tocompel the defendants Encompass Insurance Company of America and Encompass InsuranceCompany to produce the documents contained within the plaintiff's claim file which werewithheld by those defendants based upon work product privilege, and substituting therefor aprovision granting that branch of the motion to the extent of directing those defendants toprovide the Supreme Court with a detailed privilege log, (3) by deleting the provision thereofgranting the cross motion of the defendants Encompass Insurance Company of America andEncompass Insurance Company for a protective order pursuant to CPLR 3103 (a), andsubstituting therefor a provision denying the cross motion, and (4) by adding a provision theretodenying that branch of the motion of Encompass Insurance Company of America and EncompassInsurance Company which was for summary judgment dismissing the third cause of actioninsofar as asserted against them; as so modified, the order is affirmed insofar as appealed [*2]from, without costs or disbursements, and the matter is remitted tothe Supreme Court, Nassau County, for an in camera review of the allegedly privilegeddocuments in accordance herewith.
On February 10, 2006, a water pipe burst in the second floor of the plaintiff's house, causingextensive water damage. The home was covered by a homeowners' insurance policy issued by thedefendants Encompass Insurance Company of America and Encompass Insurance Company(hereinafter together Encompass). Following the occurrence, the plaintiff filed an insurance claimwith Encompass. However, after a year of attempting to negotiate a settlement, and afterreceiving what he considered inadequate offers and improper mold remediation efforts fromEncompass, the plaintiff commenced this action alleging, inter alia, that Encompass breached theinsurance policy in the manner in which it handled his claim, and engaged in deceptive businesspractices through a general policy of denying, delaying, and defending against such claims withrespect to him and other similarly situated policy holders, in order to force him and other policyholders into woefully inadequate claim settlements. Encompass moved, inter alia, pursuant toCPLR 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.
"On a motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure to state acause of action, the court must afford the pleading a liberal construction, accept all facts asalleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, anddetermine only whether the facts as alleged fit within any cognizable legal theory" (Breytman v Olinville Realty, LLC, 54AD3d 703, 703-704 [2008]; see Leon v Martinez, 84 NY2d 83, 87 [1994]).
To state a cause of action under General Business Law § 349, the complaint mustallege that the defendant engaged in a deceptive act or practice, that the challenged act or practicewas consumer-oriented, and that the plaintiff suffered an injury as a result of the deceptive act orpractice (see Stutman v Chemical Bank, 95 NY2d 24, 29 [2000]; Oswego Laborers'Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [1995]). Contrary to theSupreme Court's determination, the plaintiff's third cause of action, as amplified by the affidavitand documents he submits in opposition to the motion, states a cognizable cause of action torecover damages for unfair practices under General Business Law § 349, including ageneral practice of inordinately delaying the settlement of insurance claims against policyholders(see Wilner v Allstate Ins. Co., 71AD3d 155, 161 [2010]; Acquista v New York Life Ins. Co., 285 AD2d 73, 82[2001]). Accordingly, the Supreme Court erred in granting that branch of Encompass's motionwhich was pursuant to CPLR 3211 (a) (7) to dismiss the third cause of action insofar as assertedagainst it. In addition, contrary to Encompass's contention, a claim for punitive damages may beasserted in the context of a cause of action predicated upon an alleged violation of GeneralBusiness Law § 349 (see Wilner v Allstate Ins. Co., 71 AD3d at 167).
Encompass also moved for summary judgment dismissing the third cause of action insofar asasserted against it. However, the Supreme Court did not decide that branch of Encompass'smotion. In the interest of judicial economy, we hold that the branch of Encompass's motionwhich was for summary judgment dismissing the third cause of action insofar as asserted againstit must be denied. Not only was that branch of the motion premature, having been made in theearliest phase of discovery in this action (see Elbaz v New York City Hous. Auth., 90 AD3d 986 [2011]), butEncompass's attorney's affirmation and exhibits were insufficient to establish its prima facieentitlement to judgment as a matter of law with respect to that cause of action (see Alvarez vProspect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr.,64 NY2d 851, 853 [1985]; Sellino vKirtane, 73 AD3d 728 [2010]; Lampkin v Chan, 68 AD3d 727 [2009]).
The Supreme Court also erred in granting that branch of Encompass's motion which waspursuant to CPLR 3211 (a) (7) to dismiss the first cause of action to the extent it sought torecover damages for violations of Insurance Law § 2601. Contrary to the Supreme Court'sdetermination and Encompass's contention, the plaintiff did not seek to add a separate cause ofaction alleging violations of Insurance Law § 2601 but, rather, sought to amplify his causeof action to recover damages for breach of contract with allegations of such violations (seeBristol Harbour Assoc. v Home Ins. Co., 244 AD2d 885 [1997]).[*3]
Contrary to the plaintiff's contention, the Supreme Courtcorrectly granted that branch of Encompass's motion which was pursuant to CPLR 3211 (a) (7) todismiss the eighth and ninth causes of action insofar as asserted against it alleging intentional andnegligent infliction of emotional distress, respectively. Accepting the allegations of the complaintas true, and affording the plaintiff the benefit of every favorable inference, the complained ofconduct did not so transcend the bounds of decency as to be regarded as atrocious and intolerablein a civilized society (see Tartaro vAllstate Indem. Co., 56 AD3d 758 [2008]; Rohrlich v Consolidated Bus Tr., Inc., 15 AD3d 561, 562 [2005]).
With respect to the parties' discovery issues, CPLR 3101 (a) broadly mandates "fulldisclosure of all matter material and necessary in the prosecution or defense of an action." Thisprovision is liberally interpreted in favor of disclosure (see Kavanagh v Ogden AlliedMaintenance Corp., 92 NY2d 952, 954 [1998]; Allen v Crowell-Collier Publ. Co., 21NY2d 403, 406 [1968]; Matter ofSkolinsky, 70 AD3d 845 [2010]; Riverside Capital Advisors v First Secured CapitalCorp., 292 AD2d 515 [2002]). However, the discovery sought must be relevant to the issuesat bar, with the test employed being "usefulness and reason" (Allen v Crowell-Collier Publ.Co., 21 NY2d at 406). Regarding an entire set of discovery demands which are "palpablyimproper in that they are overbroad, lack specificity, or seek irrelevant or confidentialinformation, the appropriate remedy is to vacate the entire demand rather than to prune it" (Bell v Cobble Hill Health Ctr., Inc., 22AD3d 620, 621 [2005]). "The burden of serving a proper demand is upon counsel, and it isnot for the courts to correct a palpably bad one" (id. at 621 [internal quotation marksomitted]).
Here, the plaintiff's discovery demands included production of Encompass's entire claim filefor the subject water damage. The plaintiff asserts that Encompass only produced part of theclaim file. In response, Encompass asserts that it withheld only those parts of the claim file thatwere produced in anticipation of litigation and thus were protected by work product privilege (see Veras Inv. Partners, LLC v Akin GumpStrauss Hauer & Feld LLP, 52 AD3d 370 [2008]). However, the party asserting theprivilege that material sought through discovery was prepared exclusively in anticipation oflitigation or constitutes attorney work product bears the burden of demonstrating that the materialit seeks to withhold is immune from discovery (see Koump v Smith, 25 NY2d 287, 294[1969]) by identifying the particular material with respect to which the privilege is asserted andestablishing with specificity that the material was prepared exclusively in anticipation oflitigation (see Chakmakjian v NYRAC, Inc., 154 AD2d 644, 645 [1989]; CrazytownFurniture v Brooklyn Union Gas Co., 145 AD2d 402 [1988]). Here, Encompass's attorney'sconclusory assertions were insufficient to satisfy this burden (see Bombard v Amica Mut. Ins. Co., 11 AD3d 647, 648 [2004];see also Agovino v Taco Bell 5083, 225 AD2d 569 [1996]). Accordingly, the SupremeCourt should have granted that branch of the plaintiff's motion which was to compel Encompassto produce the documents contained in the plaintiff's claim file to the extent of directingEncompass to provide the Supreme Court with a detailed privilege log (see CPLR 3122;Clark v Clark, 93 AD3d 812[2012]), and the matter must be remitted to the Supreme Court, Nassau County, for an in camerareview of the allegedly privileged documents.
Although Encompass also failed to meet its burden of demonstrating that certain discoverydemands involved undiscoverable trade secrets (see Hunt v Odd Job Trading, 44 AD3d 714, 716 [2007]), asidefrom the claim file, the remaining discovery demands were nevertheless palpably improper inthat they were overbroad, lacked specificity, or sought irrelevant information. Accordingly, theSupreme Court correctly denied that branch of the plaintiff's motion which was to compelEncompass to comply with these discovery demands (see Bell v Cobble Hill Health Ctr.,Inc., 22 AD3d at 621).
Under the circumstances of this case, Encompass was not entitled to a protective order(see CPLR 3103).
The plaintiff's remaining contentions are without merit. Dillon, J.P., Florio, Lott and Sgroi,JJ., concur.