| Excess Line Assn. of N.Y. (ELANY) v Waldorf &Assoc. |
| 2015 NY Slip Op 05637 [130 AD3d 563] |
| July 1, 2015 |
| Appellate Division, Second Department |
[*1]
| Excess Line Association of New York (ELANY),Appellant, v Waldorf & Associates et al., Respondents, et al.,Defendant. |
Law Offices of Curtis, Vasile P.C., Merrick, N.Y. (Michael G. Mehary of counsel),for appellant.
Ohrenstein & Brown, LLP, Garden City, N.Y. (Michael D. Brown and MatthewBryant of counsel), for respondents Waldorf & Associates, Waldorf Risk Solutions,LLC, Waldorf Special Risk, LLC, Waldorf Servicing, LLC, William G. Waldorf,Stephen M. Waldorf, Christopher V. Waldorf, Sr., Waldorf Family Foundation, Inc., anddefendant.
Rivkin Radler LLP, Uniondale, N.Y. (William M. Savino, Stephen J. Smirti, Jr., andFrank M. Misiti of counsel), for respondent Pamela J. Waldorf.
In an action, inter alia, to recover damages for fraud, the plaintiff appeals from anorder of the Supreme Court, Suffolk County (Emerson, J.), dated May 3, 2013, whichgranted the motion of the defendants Waldorf & Associates, Waldorf RiskSolutions, LLC, Waldorf Special Risk, LLC, Waldorf Servicing, LLC, William G.Waldorf, Stephen M. Waldorf, Christopher V. Waldorf, Sr., and Waldorf FamilyFoundation, Inc., and the separate motion of the defendant Pamela J. Waldorf, pursuantto CPLR 3211 (a) to dismiss the complaint insofar as asserted against each of them.
Ordered that the order is affirmed, with one bill of costs payable to the respondentsappearing separately and filing separate briefs.
The plaintiff, Excess Line Association of New York (ELANY) (hereinafterELANY), is a nonprofit association of excess line brokers statutorily created byInsurance Law § 2130. ELANY commenced this action alleging that thedefendants conspired to avoid their obligations under the Insurance Law bymischaracterizing policies issued by Lloyd's of London as non-excess line policies. Theythereby allegedly avoided excess line taxes as well as the requirement to send premiumbearing documents to ELANY for stamping and to pay related stamping fees. ELANYfurther alleged that the defendants frustrated its attempts to examine their records. Thecomplaint asserted causes of action sounding in fraud, negligence, and violation ofGeneral Business Law §§ 340 and 349, and seeking an accounting ofthe defendants' records. All of the served defendants except Pamela J. Waldorf(hereinafter collectively the New York defendants) moved to dismiss the complaintinsofar as asserted against them pursuant to CPLR 3211 (a) (1), (3), (5) and (7). PamelaJ. Waldorf separately moved to dismiss the complaint insofar as asserted against herpursuant to [*2]CPLR 3211 (a) based on lack of personaljurisdiction. She also adopted the New York defendants' arguments made in support oftheir motion. The Supreme Court granted both motions, and ELANY appeals.
The Supreme Court properly granted both motions inasmuch as ELANY both lackedcapacity to commence this action and failed to state a cause of action. Capacity to sue"concerns a litigant's power to appear and bring its grievance before the court"(Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148, 155[1994]). Entities created by statute "have neither an inherent nor a common-law right tosue. Rather, their right to sue, if it exists at all, must be derived from the relevantenabling legislation or some other concrete statutory predicate" (id. at 155-156;see Matter of Town ofRiverhead v New York State Bd. of Real Prop. Servs., 5 NY3d 36, 41-42[2005]; Matter of Flacke v Freshwater Wetlands Appeals Bd. of State of N.Y., 53NY2d 537 [1981]). Such an entity " 'has no power other than that given it by theLegislature, either explicitly or by necessary implication' " (Community Bd. 7of Borough of Manhattan v Schaffer, 84 NY2d at 156, quoting Matter of B. T.Prods. v Barr, 44 NY2d 226, 236 [1978]; see Matter of Graziano v County of Albany, 3 NY3d 475,479 [2004]).
ELANY was created by Insurance Law § 2130. The statute givesELANY certain duties, mostly relating to receipt of records and preparation of reports,and provides that the services ELANY performs are to be funded by a stamping feeassessed for premium bearing documents submitted to it in accordance with InsuranceLaw § 2118 (see Insurance Law § 2130 [a], [f]).Brokers' records are to be open to examination by ELANY and the Superintendent ofInsurance (now the Deputy for Insurance; hereinafter the Superintendent) (seeInsurance Law § 2118 [c]; Financial Services Law § 203).ELANY must perform its functions under the plan of operation established and approvedby the Superintendent and "shall be supervised by the superintendent" (Insurance Law§ 2130 [a]; see Insurance Law § 2130 [c]). TheSuperintendent may impose fines and may suspend or revoke an excess line broker'slicense for noncompliance with the Insurance Law (see Insurance Law§§ 109, 2105 [a]). Contrary to ELANY's contention, none of theprovisions of the statute confers upon it by necessary implication the capacity to sue toenforce the provisions of the Insurance Law. Rather, the broad enforcement powers ofthe Superintendent, the lack of enforcement powers granted to ELANY, and therequirement that ELANY function under the supervision of the Superintendent "negate[ ]any inference of a legislative intent to confer that power" (City of New York v Stateof New York, 86 NY2d 286, 293 [1995]; see Community Bd. 7 of Borough ofManhattan v Schaffer, 84 NY2d at 159).
Relatedly, ELANY has no private right of action under the Insurance Law, since it isnot one of the class for whose particular benefit the statute was enacted, and, further,because creation of such a right would be inconsistent with the legislative scheme, whichplaces enforcement in the Superintendent (see L 1988, ch 630, § 1;Cruz v TD Bank, N.A., 22NY3d 61, 70 [2013]; Carrier v Salvation Army, 88 NY2d 298, 302 [1996];HANYS Servs. v Empire Blue Cross & Blue Shield, 292 AD2d 61, 65[2002]; cf. Maimonides Med.Ctr. v First United Am. Life Ins. Co., 116 AD3d 207, 218 [2014]). "Where aninsurance law is 'intended as a general police regulation, and the violation madepunishable solely as a public offense,' the recognition of a private cause of action wouldbe improper" (Maimonides Med. Ctr. v First United Am. Life Ins. Co., 116 AD3dat 218, quoting Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d314, 324 [1983]). ELANY's common-law causes of action are predicated solely onalleged violations of the Insurance Law and its regulations, and thus fail to state a causeof action (see Assured Guar.[UK] Ltd. v J.P. Morgan Inv. Mgt. Inc., 18 NY3d 341, 353 [2011]; Kerusa Co. LLC v W10Z/515 RealEstate Ltd. Partnership, 12 NY3d 236, 245 [2009]). Further, the allegations ofthe complaint establish that ELANY does not have standing to maintain its causes ofaction asserted pursuant to General Business Law § 340, since it is "neithera consumer nor a competitor" in the excess line market (Continental Guest Servs. Corp. vInternational Bus Servs., Inc., 92 AD3d 570, 571 [2012]), or General BusinessLaw § 349, since it is not a consumer and the injury was not directly causedby the deceptive conduct (seeCity of New York v Smokes-Spirits.Com, Inc., 12 NY3d 616, 621-622 [2009];Blue Cross & Blue Shieldof N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200, 207 [2004]).
Accordingly, the Supreme Court properly granted the New York defendants' motionto dismiss the complaint insofar as asserted against them pursuant to CPLR 3211 (a)based on lack of capacity and failure to state a cause of action. Since Pamela J. Waldorf,in her separate motion, [*3]adopted the arguments madeby the New York defendants on their motion, her motion to dismiss the complaint insofaras asserted against her pursuant to CPLR 3211 (a) could also have been properly grantedon those bases, and we need not reach her proposed alternate ground for affirmance(see generally Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d539, 545 [1983]).
In light of this determination, the parties' remaining contentions have been renderedacademic. Balkin, J.P., Roman, Maltese and Barros, JJ., concur. [Prior Case History:40 Misc 3d 759.]