Sunday, November 30, 2008

Second Department Grants Dismissal of Punitive Damages and Infliction of Emotional Distress Causes of Action Against Insurer

Tartaro v. Allstate Indem. Co.

(2nd Dept., decided 11/25/2008)

I'm guessing that this is a homeowners coverage case.  Couldn't find any further information on the core facts on eCourts or through New York State Law Reporting Bureau's Slip Decisions Search page.

Plaintiff-insureds sued Allstate for breach of contract.  Their verified complaint also asserted causes of action for punitive damages and negligent and intentional infliction of emotional distress.  Allstate unsuccessfully moved to dismiss those causes of action.

In REVERSING Nassau Supreme's order and dismissing the punitive damages and infliction of emotional distress causes of action, the Second Department held:
Contrary to the plaintiffs' contention, punitive damages are not recoverable in an ordinary breach of contract case, as their purpose is not to remedy private wrongs but to vindicate public rights. Punitive damages are only recoverable where the breach of contract also involves a fraud evincing a high degree of moral turpitude, and demonstrating such wanton dishonesty as to imply a criminal indifference to civil obligations, and where the conduct was aimed at the public generally (see New York Univ. v Continental Ins. Co, 87 NY2d 308, 315-316; Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603, 613). Punitive damages are available where the conduct associated with the breach of contract is first actionable as an independent tort for which compensatory damages are ordinarily available, and is sufficiently egregious to warrant the additional imposition of exemplary damages. A party must demonstrate not only egregious tortious conduct, but also that such conduct was part of a pattern of similar conduct directed at the public generally (see New York Univ. v Continental Ins. Co, 87 NY2d at 316; Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d at 613). Here, the defendant showed that its conduct was not egregious or of high moral turpitude, and thus was not actionable as an independent tort. Furthermore, there is no evidence of a pattern of egregious conduct directed toward the public at large. 

The Supreme Court also erred in denying that branch of the defendant's motion which was pursuant to CPLR 3211(a)(7) to dismiss the third cause of action, alleging negligent and intentional infliction of emotional distress, for failure to state a cause of action. To establish liability for the intentional infliction of emotional distress, the plaintiffs were required to show that the defendant's conduct was "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency" (Ruggiero v Contemporary Shells, 160 AD2d 986, 987; see Freihofer v Hearst Corp., 65 NY2d 135, 143). That same test has been applied to causes of action for the negligent infliction of emotional distress (see Chime v Sicuranza, 221 AD2d 401; Burrell v International Assn. of Firefighters, 216 AD2d 346). Here, accepting the allegations of the complaint as true, they do not allege conduct so outrageous in character, and so extreme in degree, as to state a cause of action for negligent or intentional infliction of emotional distress (see Curry v Dollard, 52 AD3d 642).
Nothing really new here.  New York remains a jurisdiction in which insurance coverage disputes do not ordinarily support causes of action for either punitive damages or negligent/intentional infliction of emotional distress.


David M. Gottlieb, Esq. said...

Strange that they didn't cite to Bi-Economy.

Roy A. Mura said...

Bi-Economy is more about consequential damages, not punitive damages. Judge Piggott said so in his opinion. That's probably why. Without access to the verified complaint, we can't tell whether the plaintiffs also asserted a claim for consequential damages which, of course, would not constitute a separate cause of action, but would form part of their claim for relief.