Opinion
1514 CA 17–00915
03-16-2018
Lori E. ULLMAN, M.D., Plaintiff–Respondent, v. MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Defendant–Appellant, et al., Defendants.
BOND SCHOENECK & KING, PLLC, BUFFALO (SHARON M. PORCELLIO OF COUNSEL), FOR DEFENDANT–APPELLANT. GOLDBERG SEGALLA LLP, BUFFALO (MICHAEL E. APPELBAUM OF COUNSEL), FOR PLAINTIFF–RESPONDENT.
BOND SCHOENECK & KING, PLLC, BUFFALO (SHARON M. PORCELLIO OF COUNSEL), FOR DEFENDANT–APPELLANT.
GOLDBERG SEGALLA LLP, BUFFALO (MICHAEL E. APPELBAUM OF COUNSEL), FOR PLAINTIFF–RESPONDENT.
PRESENT: CENTRA, J.P., PERADOTTO, LINDLEY, CURRAN, AND TROUTMAN, JJ.
MEMORANDUM AND ORDER
Memorandum:
Plaintiff, a licensed physician, commenced this action against Medical Liability Mutual Insurance Company (defendant), her medical malpractice insurer, seeking to recover damages that allegedly resulted when defendant settled a malpractice claim on her behalf. In her complaint, plaintiff asserted, inter alia, two causes of action seeking declarations voiding her written consent to settle and vacating the settlement, respectively. Plaintiff alleged, inter alia, that defendant's employees fraudulently misrepresented the effect of her refusal to consent to settle, thereby inducing her to consent. We agree with defendant that Supreme Court erred in denying its motion pursuant to CPLR 3211(a)(1), (5) and (7) to dismiss the complaint against it.
We agree with defendant that the court erred in denying that part of its motion seeking to dismiss the cause of action for a violation of General Business Law § 349. The allegations in the complaint demonstrate that this "is merely a private contract dispute over [insurance] policy coverage, which does not affect[ ] the consuming public at large, and therefore falls outside the purview of General Business Law § 349" ( Carlson v. American Intl. Group, Inc., 30 N.Y.3d 288, 309, 67 N.Y.S.3d 100, 89 N.E.3d 490 [2017] [internal quotation marks omitted]; see Shou Fong Tam v. Metropolitan Life Ins. Co., 79 A.D.3d 484, 486, 913 N.Y.S.2d 183 [1st Dept. 2010] ).
We also agree with defendant that the court erred in denying that part of its motion seeking to dismiss the cause of action for breach of contract. Plaintiff did not identify the provisions that defendant allegedly breached, and thus she has failed to state a cause of action for breach of contract (see Reznick v. Bluegreen Resorts Mgt., Inc., 154 A.D.3d 891, 893, 62 N.Y.S.3d 460 [2d Dept. 2017] ; Sutton v. Hafner Valuation Group, Inc., 115 A.D.3d 1039, 1042, 982 N.Y.S.2d 185 [3d Dept. 2014] ). We nevertheless acknowledge that every contract contains an implied covenant of good faith and fair dealing encompassing any promise that a reasonable party would understand to be included (see Rowe v. Great Atl. & Pac. Tea Co., Inc., 46 N.Y.2d 62, 68–69, 412 N.Y.S.2d 827, 385 N.E.2d 566 [1978] ; Waterways at Bay Pointe Homeowners Assn., Inc. v. Waterways Dev. Corp., 132 A.D.3d 975, 977, 19 N.Y.S.3d 536 [2d Dept. 2015] ), but we conclude that plaintiff likewise failed to state a cause of action for breach of the implied covenant of good faith and fair dealing (see Aventine Inv. Mgt. v. Canadian Imperial Bank of Commerce, 265 A.D.2d 513, 514, 697 N.Y.S.2d 128 [2d Dept. 1999] ). In the context of an insurance contract, "a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims" ( New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318, 639 N.Y.S.2d 283, 662 N.E.2d 763 [1995] ; see Bi–Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187, 194, 856 N.Y.S.2d 505, 886 N.E.2d 127 [2008] ; Gutierrez v. Government Empls. Ins. Co., 136 A.D.3d 975, 976, 25 N.Y.S.3d 625 [2d Dept. 2016] ). "An insured may also bargain for the peace of mind, or comfort, of knowing that it will be protected in the event of a catastrophe" ( Bi–Economy Mkt., Inc., 10 N.Y.3d at 194, 856 N.Y.S.2d 505, 886 N.E.2d 127 ). Here, it is undisputed that plaintiff received the benefit of defendant investigating the claim, negotiating the settlement, paying the settlement in full, and securing a general release.
We further agree with defendant that the court erred in denying that part of its motion seeking to dismiss the causes of action for fraudulent misrepresentation, negligent misrepresentation, and fraudulent inducement. Actual pecuniary damage is an element of any cause of action asserting fraud (see Connaughton v. Chipotle Mexican Grill, Inc., 135 A.D.3d 535, 539, 23 N.Y.S.3d 216 [1st Dept. 2016], affd 29 N.Y.3d 137, 53 N.Y.S.3d 598, 75 N.E.3d 1159 [2017] ), or negligent misrepresentation (see White v. Guarente, 43 N.Y.2d 356, 362–363, 401 N.Y.S.2d 474, 372 N.E.2d 315 [1977] ; Mega Group, Inc. v. Pechenik & Curro, P.C., 32 A.D.3d 584, 587, 819 N.Y.S.2d 796 [3d Dept. 2006] ; see generally Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94, 595 N.Y.S.2d 931, 612 N.E.2d 289 [1993] ). Here, the medical malpractice claim was settled with no admission of wrongdoing by plaintiff, no monetary payment by her, and no liability attributed to her. Moreover, to the extent that plaintiff alleges that she lost staff privileges at a hospital, we conclude that the loss of those privileges did not result from the settlement itself, but from plaintiff's own actions in failing to disclose it. Plaintiff thus failed to allege that she suffered any actual pecuniary damage as a result of defendant's conduct, and she therefore failed to state a cause of action for fraud (see Connaughton, 135 A.D.3d at 539–540, 23 N.Y.S.3d 216 ) or negligent misrepresentation (see generally White, 43 N.Y.2d at 362–363, 401 N.Y.S.2d 474, 372 N.E.2d 315 ). With respect to the two causes of action seeking declarations, defendant contends that plaintiff cannot obtain that relief based on the absence of necessary parties (see CPLR 3211[10] ; see also CPLR 1001 ), and we agree. As a preliminary matter, we note that, contrary to plaintiff's assertion, defendant's contention is properly before us inasmuch as "[t]he absence of a necessary party may be raised at any stage of the proceedings, by any party or by the court on its own motion"
( Matter of Hudson Riv. Sloop Clearwater, Inc. v. Town Bd. of the Town of Coeymans, 144 A.D.3d 1274, 1275, 41 N.Y.S.3d 170 [3d Dept. 2016] [internal quotation marks omitted]; see Matter of Jim Ludtka Sporting Goods, Inc. v. City of Buffalo Sch. Dist., 48 A.D.3d 1103, 1103–1104, 850 N.Y.S.2d 319 [4th Dept. 2008] ). Although the medical malpractice claimants were initially joined as defendants in this action, the court in the order on appeal dismissed the complaint against them, and plaintiff has not cross-appealed. Here, the medical malpractice claimants were parties to the settlement agreement and received a monetary payment pursuant to it, and thus they are necessary parties to any declaration as to its validity. In the absence of those necessary parties, we will not issue a declaration in favor of any party (see Wood v. City of Salamanca, 289 N.Y. 279, 283, 45 N.E.2d 443 [1942] ; White v. Nationwide Mut. Ins. Co., 228 A.D.2d 940, 941, 644 N.Y.S.2d 590 [3d Dept. 1996] ). We therefore dismiss the two causes of action seeking a declaration.
In light of our determination, we do not consider defendant's remaining contentions.
It is hereby ORDERED that the order insofar as appealed from is unanimously reversed on the law without costs, the motion of defendant Medical Liability Mutual Insurance Company is granted, and the complaint against it is dismissed.