Preview
(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020
NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021
SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY
PRESENT: HON. NANCY BANNON PART 42
Justice
worroseerontontasnasoncascasoataenseasonsaseec canon ena x INDEX NO. 652321/2020
E.E. CRUZ & COMPANY, INC. ON DATE NIA
Plaintiff,
MOTION SEQ. NO. 001
“Ve
STARR SURPLUS LINES INSURANCE COMPANY, DECISION + ORDER ON
MOTION
Defendant.
nnneeee nec e ne ennnnn ence eee ennnennneen ncaa nnnnnnnennnennnnnnnennnnes secennnnnnnene, x
The following e-filed documents, listed by NYSCEF document number (Motion 001) 13, 14, 15, 16, 17,
18, 19, 20, 21, 22, 23, 27, 28, 30, 31
were read on this motion to/for DISMISSAL
The defendant’s motion to dismiss is decided in accordance with the attached
memorandum Decision and Order.
S.C.
1082021 HON. NANCY M. BANNON
DATE
(CHECK ONE: ‘CASE DISPOSED X | NON-FINAL DISPOSITION
GRANTED X | DENIED GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
(CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
652321/2020 E.E. CRUZ & COMPANY, INC. vs. STARR SURPLUS LINES Page lof 1
Motion No. 001
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SUPREME COURT OF STATE OF NEW YORK
COUNTY OF NEW YORK: IAS PART 42
E.E. CRUZ & COMPANY, INC.,
Index No.: 652321/2020
Plaintiff,
Motion Sequence No. 001
-against-
DECISION AND ORDER
STARR SURPLUS LINES INSURANCE COMPANY,
Defendant.
HON. NANCY M. BANNON, J.S.C.:
This action involves an insurance dispute arising from the construction of three bridges in
Westchester County. In its complaint dated September 4, 2020 (Complaint), E. E. Cruz &
Company, Inc. (Cruz or Plaintiff) alleges, inter alia, that defendant Starr Surplus Lines Insurance
Company (Starr or Defendant) breached the terms of the insurance policy by failing to pay Cruz
for monetary losses suffered in connection with a construction project. The Complaint asserts
five causes of action: (1) declaratory judgement; (2) and (3) breach of contract and breach of the
implied covenant of good faith and fair dealing; (4) negligent misrepresentation; and (5)
deceptive business practices under GBL § 349.
By the instant motion (sequence number 001), Starr seeks dismissal, pursuant to CPLR
3211 (a) (7), of the first, fourth and fifth causes of action, as well as breach of the implied
covenant of good faith and fair dealing portion (but not the breach of contract portion) of the
second and third causes of action. For the reasons stated herein, the motion is denied.
L Background
The factual allegations for this action, unless otherwise indicated herein, are based
primarily upon the Complaint (NY SCEF Doc. No. 4).
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In May 2017, Cruz entered into a contract with the New Y ork State Department of
Transportation for the repair and replacement of three bridges in Westchester County, New Y ork
(Complaint, 3). The construction project (Project) required Cruz, among other things, to
replace the three existing bridges and to construct twenty drilled shafts in order to provide the
foundation for the new bridges (id., 4). By November 2018, Cruz had successful completed
installation of seventeen drilled shafts without incident, but after quality control testing, the
eighteenth drilled shaft (Subject Shaft) showed physical damage due to water and silt infiltration
(id., 16-8). As a result, the Subject Shaft needed to be removed and replaced, and Cruz
incurred significant additional costs for the Project (id., {1 9-10).
Starr issued a “Construction All Risks Policy” to Cruz for the period of June 1, 2017 to
April 10, 2019 (Policy; Complaint, 13). The Complaint alleges that the Policy covers “all
fortuitous losses that an insured peril causes, including increased costs to complete construction
of undamaged property, unless such losses are expressly excluded,” and the Policy “does not
contain an exclusion for the increased costs to complete construction of undamaged property”
(id., 119-20). It also alleges that, based upon the Policy language, the loss to Cruz includes
both the costs to repair the Subject Shaft and the increased costs to continue construction on the
Project, and thus “the entirety of Cruz’s claim is covered” (id., 1 21-23).
On November 15, 2019, Cruz produced to Starr “a complete analysis and summary” of its
loss, but on November 18, 2019, Starr issued a letter to Cruz “requesting additional information”
and “reserving rights with respect to specific exclusions contained in the Policy” (id., {| 27-28).
After Cruz produced “additional available information” in response, on May 12, 2020, Starr
denied coverage for the increased costs of construction arising in connection with the Subject
Shaft (id., 929-30). Starr also argued that Cruz could have purchased the “Contractor’s Extra
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Expense Coverage” as additional coverage under the Policy, and that the “omission from the
Policy operated as a de facto exclusion” (id., 4 31).
The Complaint further alleges that Cruz determined, after investigation, that (1) Starr
routinely provides “Contractor Extra Expense” clarification for no additional premium; (2) it was
intended to be included in the Policy; (3) its omission from the Policy was never identified in the
Policy quote or binder, a document that evidences temporary insurance coverage until a formal
policy is issued; and (4) Cruz never “declined” to purchase it, as Starr contended (id., 134). It
also alleges that “Starr unilaterally changed the Policy terms — after it was bound and in effect —
without Cruz’s knowledge, by issuing a declarations page that indicated, for the first time and
buried in a laundry list of approximately 20 items, the words ‘not covered’ next to the phrase
‘Contractor’s Extra Expense” (id., 35). Despite Cruz’s many demands, Starr did not pay for
Cruz’s “Covered Losses” (id., 437). After negotiations failed, the instant action ensued.
II. _—_ Applicable Legal Standards
As noted above, Starr seeks to dismiss the various causes of action pursuant to CPLR
3211 (a) (7). In considering a CPLR 3211 (a) (7) motion to dismiss, the court is to determine
whether the pleading states a cause of action. “The motion must be denied if from the pleadings’
four comers, factual allegations are discemed which taken together manifest any cause of action
cognizable at law” (Richbell Info. Servs., v Jupiter Partners, 309 AD2d 288, 289 [1st Dept
2003], quoting 511 W. 232nd Owners Corp. v Jennifer Realty Corp., 98 NY 2d 144, 151-152
[2002]). The pleadings are afforded a liberal construction, and the courts “accord plaintiffs the
benefit of every possible favorable inference” (Leon v Martinez, 84 NY 2d 83, 87 [1994]; see
also Nonnon v City of New York, 9 NY 3d 825, 827 [2007] [dismissal warranted only if pleading
failed to allege facts that fit within any cognizable legal theory]). On the other hand, while
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factual allegations are given a favorable inference, bare legal conclusions and inherently
incredible facts are not entitled to preferential treatment (Matter of Sud v Sud, 211 AD2d 423,
424 [1st Dept 1995]). Moreover, whether the complaint or claim will later survive a motion for
summary judgment, or whether the plaintiff will ultimately prove its claim, is irrelevant to the
determination of a pre-discovery CPLR 3211 motion to dismiss (12 Baker Hill Rd., Inc. v
Miranti, 130 AD3d 1425, 1426 [3d Dept 2015).
(A) Declaratory Judgment
As to the Complaint’s first cause of action that seeks a declaratory judgment, Starr argues
in its brief (Def. Brief; NY SCEF Doc. No. 14) that this claim should be dismissed because it is
“unnecessary, inappropriate, and wholly duplicative” of the breach of contract claim (Def. Brief
at 7-8). Starr also argues that because a breach of contract claim provides an “adequate remedy,”
thus “obviating the necessity for any declaration as to [insurance] coverage” (id.).
In its opposition brief (Plf. Opp.; NY SCEF Doc. No. 28), Cruz contends that the
declaratory judgment claim seeks a “different relief “from the breach of contract claim, and is
“necessitated by Starr’s conduct in the procurement and binding of the Policy” because “Starr
issued a policy that was materially different from the policy that was negotiated and purchased
by Cruz” (Plf. Opp. at 8). Cruz also contends that this declaratory judgment addresses a “unique
nature” because in the event that the breach of contract claim “is incongruous with the relief
sought,” it provides “a remedy by which Cruz’s rights may be vindicated” (id.; citing Kalisch-
Jarcho, Inc. v City of New York, 72 NY 2d 727, 731 [1988] [Kalisch-Jarcho]).
In reply (Def. Reply; NY SCEF Doc. No. 30), Starr asserts, without any explanation, that
Plaintiff's breach of contract claim is a better and more effective remedy,” and “Plaintiff fails to
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identify exactly what the requested declaratory judgment should declare” (Def. Reply, 5). In
sum, Starr asserts that “Plaintiff utterly fails to explain how Plaintiff's current claim for
declaratory relief differs from Plaintiff's breach of contract claim” (id., 16).
Starr’s assertion is unpersuasive. In Kalish-Jarcho, the Court held that when a contract
provides reasonable means of resolving the parties’ disputes, they “may not seek a declaration of
their contract rights” (72 NY 2d at 732). Here, Starr neither identifies which Policy provision
addresses Cruz’s allegation that “Starr issued a policy that was materially different from the
policy that was negotiated and purchased by Cruz,” nor discusses if any such provision affords a
reasonable way of resolving the parties’ dispute. Also, contrary to Starr’s assertion that Cruz
fails to specify the substance of the requested declaratory judgment, Cruz states that this
declaratory judgment seeks a “judicial determination that Starr is required to provide coverage
under the Policy for the Covered Losses” (Plf. Opp. at 8). Cruz’s statement largely complies
with CPLR 3017 (b), which provides that a demand for declaratory relief “shall specify the rights
and other legal relations on which a declaration is requested.” Accordingly, the Complaint’s first
cause of action (declaratory judgment) should not be dismissed, particularly in the pre-discovery
stage of this case (Tooma v Grossbarth, 121 AD3d 1093, 1095 [2d Dept 2014] [denied CPLR
3211 (a) (7) motion because “whether the complaint will later survive a motion for summary
judgment, or whether the plaintiff will ultimately be able to prove (his or her) claims, of course,
plays no part in the determination of a pre-discovery CPLR 3211 motion to dismiss”]).
(B) Breach of Implied Covenant of Good Faith and Fair Dealing
As noted above, with respect to the second and third causes of action, Starr does not
currently seek to dismiss the breach of contract claim portion, but only the breach of implied
covenant of good faith and fair dealing portion.
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Starr argues that the breach of implied covenant of good faith and fair dealing claim
should be dismissed because (1) the Complaint lacks specific allegations to support this claim;
(2)
even if the pleading standards were met, the allegations detail a breach of contract claim, as
the parties just disagree on insurance coverage issues, which only represents a “difference of
opinion” and not a breach of the implied covenant; and (3) the Complaint fails to plead that
consequential damages were “foreseeable and contemplated by the parties” at the time of
contracting, and fails to quantify the claimed consequential damages (Def. Brief at 8-14).
In opposition, Cruz contends that the Complaint adequately pled a claim for breach of
the implied covenant because (1) it alleges that Starr deprived Cruz of the Policy’s benefits by
refusing to pay “covered losses without just cause,” and by issuing a materially different policy
than the policy that was negotiated by the parties (Complaint, 50-59); (2) it does not allege a
difference in opinion between the parties, but the “intentional, malicious and fraudulent” conduct
by
Starr, which is separate and distinct from a breach of contract claim (Complaint, § 51); (3) it
asserts a viable consequential damages claim because it alleges that Starr engaged in improper
ant
sel
dilatory adjustment of the insurance claim, as well as its deception and misrepresentation in
ing and binding the Policy (i.e., the Policy was marketed as an “all-risks” policy, including
coverage for increased costs of construction arising from the Subject Shaft, and the Policy does
nol
ap
contain any exclusion), and the first mention of the “Contractor’s Extra Expense did not
ear until the Policy was issued” and then only appeared in “a list of twenty other coverage
sw
limits,” which Starr attempts to convert into an exclusion that does not exist in the Policy
(Complaint, 1] 30-35, 53-54, 60-61); and (4) Starr’s apparent attempt to preclude any
consequential damages is premature because Cruz has “no duty to definitely identify or quantify
its damages” until a full record is developed (Plf. Opp. at 9-14).
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In New York, “{i]mplicit in all contracts is a covenant of good faith and fair dealing in
the course of contract performance” (Dalton v Educational Testing Serv., 87 NY 2d 384, 389
[1995]). “While the duties of good faith and fair dealing do not imply obligations inconsistent
with other terms of the contractual relationship, they do encompass any promises which a
reasonable person in the position of the promisee would be justified in understanding were
included” (511 W. 232nd Owners Corp. v Jennifer Realty Corp., 98 NY 2d 144, 153 [2002]
[internal citations and quotation marks omitted]). “The implied covenant of good faith and fair
dealing is breached when a party acts in a manner that would deprive the other party of the right
to receive the benefits of their agreement” (1357 Tarrytown Rd. Auto. LLC v Granite Prop., LLC,
142 AD3d 976, 977 [2d Dept 2016] [citations omitted]).
Based upon the Complaint’s allegations, which are amplified in Plaintiff's Opposition (as
summarized above), Cruz has sufficiently pled a claim for breach of the implied covenant of
good faith and fair dealing. Indeed, in view of these allegations, contrary to Starr’s argument,
Cruz does not simply allege a “difference of opinion” between the insurer and the insured, but
rather the “intentional, malicious, fraudulent, and oppressive conduct” allegedly undertaken by
Starr in its issuance of “a materially different policy to Cruz than the policy that was negotiated
for, agreed upon, and bound,” which deprived Cruz of the benefits of its agreement with Starr as
a result of the alleged bad faith conduct (Plf. Opp. at 10, referencing Complaint, {| 56-59).
Next, Starr argues that because the Complaint fails to allege “consequential damages
were foreseeable, probable or contemplated by the parties at the time the Policy was issued,” the
failure to plead is “fatal to Plaintiff's claim for consequential damages” (Def. Reply, §{ 12-13).
It is settled-law that in breach of contract actions, the non-breaching may recover damages that
are the “natural and probable consequence of the breach,” but consequential damages that “do
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not so directly flow from the breach” are recoverable in limited situations (Bi-Economy Mkt.,
Inc. v Harleysville Ins. Co. of N. Y., 10 NY 3d 187, 192 [2008] [Bi-Economy] [internal citations
omitted]). To determine whether consequential damages are reasonably contemplated by the
parties, the courts look to the nature and purpose of the contract, as well as “what liability the
defendant fairly may be supposed to have assumed consciously, or to have warranted the
plaintiff reasonably to suppose that it assumed, when the contract was made” (id. at 193
[citations omitted]). Here, Cruz asserts that, because “Starr was well-aware of the financial
consequences of its flawed and dilatory adjustment and investigation, coupled with the ultimate
wrongful denial of the claim,” any argument that consequential damages were not foreseeable “is
disingenuous at best” (Pf. Opp. at 13-14; citing Bi-Economy, 10 NY 3d at 195 [“the very purpose
of business interruption coverage would have made Harleysville aware that if it breached its
obligations under the contract to investigate in good faith and pay covered claims it would have
to respond in damages to Bi-Economy for the loss of its business as a result of the breach”
[internal citations omitted]). Indeed, the Court noted that if an insurer failed to promptly adjust
and pay the claimed loss, which resulted in the insured’s business collapse, the insurer should be
liable for consequential damages (id.). Hence, Cruz’s assertion is persuasive.
Starr’s additional argument that Cruz’s failure to quantify or identify consequential
damages requires denial of the claimed damages (Def. Reply, 14-16) is equally unavailing.
As noted by Cruz, it is “premature” at the pre-discovery stage of this case to determine the
amount of its consequential damages, as such damages should await a fully developed record
(Plf. Opp. at 14, citing Esposito v Weiner, 160 AD3d 930, 931 [2d Dept 2018] [“It would be
premature, at this stage of the litigation, to conclude that the allegations were insufficient to
support a claim for [consequential] damages,” particularly in the context of a motion to dismiss
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pursuant to CPLR 3211 (a) (7)]). Starr’s failure to address or distinguish Esposito significantly
undermines its argument.
Accordingly, Starr’s motion to dismiss the breach of the implied covenant of good faith
and fair dealing portion of the second and third causes of action in the Complaint is denied.
(C) Negligent Misrepresentation
Starr argues that the negligent misrepresentation claim should be dismissed because
‘Plaintiff's Complaint fails to plead that there was a special relationship between Plaintiff and
Starr,” which requires a showing of “trust and confidence between the parties” and creates a
“duty in one party to impart correct information to another” (Def. Brief at 14-16). Starr also
asserts that “the First Department has consistently held that insurers do not have the ‘special
relationship’ with their insureds needed to support a claim for negligent misrepresentation” (id.,
citing, Cooperative Centrale Raiffeisen-Boerenleenbank B.A. v Atradius Credit Ins. N.V., 149
AD3d 416 [1% Dept 2017] [CCRB] and Batas v Prudential Ins. Co. of Am., 281 AD2d 260, 264
[1% Dept 2001] [Batas]).
In opposition, Cruz cites to Parrott v Cooper & Lybrand, LLP, 95 NY 2d 479, 148 (2000),
which stated in relevant part: “before a party may recover in tort for pecuniary loss sustained as a
result of another's negligent misrepresentations there must be a showing that there was either
actual privity of contract between the parties or a relationship so close as to approach that
of privity” (Plf. Opp. at 15). The foregoing rule of law was repeated by the Court of Appeals in
J.A.O. Acquisition Corp. v Stavitsky, 8 NY 3d 144, 148 (2007) (citing Parrott). Because the
Policy reflects the privity of contract between the parties, Cruz contends that the negligent
misrepresentation claim is adequately pled (Plf. Opp. at 16). Cruz also points out that Starr’s
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reliance on Batas is misplaced because that case did not involve a negligent representation claim,
but rather was based upon fraud and breach of fiduciary duty (id. at 16 n 4).
In reply, Starr argues that Cruz “disregards First Department caselaw” and then repeats
the arguments made in its moving brief (Def. Reply, 1] 18-19). The arguments are unavailing.
First, it is noteworthy that Starr fails to address the Court of Appeals caselaw! cited by Cruz.
Secondly, Starr also fails to rebut Cruz’s assertion that Batas is inapplicable in that it did not
involve a negligent misrepresentation claim. Thirdly, the CCRB decision dealt primarily with
fraudulent concealment and breach of fiduciary duty claims, and the negligent misrepresentation
claim appeared to arise in connection with the defendant’s marketing materials (CCRB, 149
AD3d at 416 [citing Batas, court held that ‘defendants’ publicly available marketing materials
and links to its website do not create a special relationship”]). Further, Cruz asserts that this
claim arises in connection with the “quotes and policy binder,” which were “relied upon by Cruz
as confirmation of coverage available under the Policy” (Plf. Opp. at 16), and “Starr’s argument
that a special relationship cannot arise out of marketing materials is irrelevant since Cruz’s claim
is focused on Starr’s course of conduct and contractual relationship”)(id. at 17, n 5). Starr’s
failure to address Cruz’s assertions significantly weighs against dismissal. Therefore, the fourth
cause of action (negligent misrepresentation) is not dismissed.
(D) Violation of General Business Law (GBL) Section 349
The Complaint alleges that Starr, in its “usual and customary practice,” (1) issued a
Policy to Cruz without setting forth its terms nor advising Cruz that Starr did not intend to
provide a “clarification for Contractors’ Extra Expense;” (2) failed to respond to Cruz’s claim in
+ See also Prudential Ins. Co. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 382 (1992) (“before a
party may recover in tort for pecuniary loss sustained as a result of another's negligent misrepresentations there
must be a showing that there was either actual privity of contract between the parties or a relationship so close
as to approach that of privity”) (emphasis added; internal citations omitted).
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a timely matter; (3) represented to Cruz that Starr was not denying the claim, yet ultimately
denied the bulk of the claim without a factual basis and after much delay; and (4) Starr’s conduct
in handling the claim is “harmful to Cruz and the general public at large,” and Starr committed
“deceptive acts and practices in violation of N.Y. Gen. Bus. Law § 349” (Complaint, 1] 69-75).
To state a violation of GBL §349, the complaint needs to allege that the defendant has
engaged in a “consumer-oriented conduct” that is “materially misleading,” and that the plaintiff
“suffered injury” as a result of the deceptive practice (GBL §349); see also Plavin v Group
Health Inc., 35 NY 3d 1, 10 (2020) (defendant’s misconduct must be “consumer-oriented” or its
practices must cause a “broader impact on consumers at large”).
Starr argues that this claim should be dismissed because the Complaint (1) fails to
sufficiently allege “consumer-oriented” conduct; (2) fails to allege Starr’s acts or practices were
“misleading in a material way,” and (3) fails to allege an injury due to such acts or practices
(Def. Brief at 16-19; citing, among other cases, Oswego Laborers’ Local 214 Pension v Marine
Midland Bank, 85 NY 2d 20 [1995] [Oswego]).
Cruz contends that the ““consumer-oriented” element is met where the complaint alleges
that the defendant’s practice involves an “extensive marketing scheme that has a broader impact
on consumers at large” (PIf. Opp. at 17-18, citing, inter alia, Gaidon v Guardian Life Ins. Co. of
Am., 94 NY 2d 330, 344 [1990]). As to the second element, Cruz contends that an analysis of
whether the defendant’s conduct is “materially misleading” must be based upon an “objective
assessment” of whether such conduct would likely mislead a “reasonable consumer,” and that
this element is also met (PIf. Opp. at 19, citing M&T Mtge. Corp. v White, 736 F Supp 2d 538,
570 (ED NY 2010] and Oswego, 85 NY 2d at 26 [adopted an “objective definition of deceptive
acts” and focused on whether such acts would likely “mislead a reasonable consumer”]). With
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respect to the last element, Cruz contends that the Complaint alleges significant injuries resulting
from Starr’s deceptive practices, including the loss of funds and business opportunities due to the
delay in completing the bridge Project (Plf. Opp. at 20, referencing Complaint, { 76).
Cruz’s contentions are persuasive. First, as to the “consumer-oriented” element, the
Court of Appeals has stated that a plaintiff “need not show that the defendant committed the
complained-of acts repeatedly,” and the legislative history showed that this law is intended to
halt “consumer frauds at their incipiency without the necessity to wait for the development of
persistent frauds“ (Oswego, 85 NY 2d at 25). Based on the allegations, Cruz has adequately pled
that Starr’s allegedly deceptive practices could “potentially affect similarly situated consumers”
(id. at 27). As to whether Cruz acted reasonably, Starr asserts that Cruz is a “sophisticated
business entity” and should have “a full understanding of the terms and conditions of the Policy
prior to execution” (Def. Reply, § 25). As discussed above, caselaw counsels that the courts
should adopt an “objective definition” of deceptive acts; and in any event, whether Cruz acted as
a “reasonable consumer” cannot be decided at the pre-discovery stage of this litigation (Oswego,
85 NY 2d at 27 [claim survived motion to dismiss because record was “inconclusive as to
whether a reasonable consumer in plaintiffs’ circumstances might have been misled by the
Bank’s conduct”]). Indeed, the law requires the courts to afford plaintiffs, such as Cruz, the
benefit of every possible favorable inference in a CPLR 3211 (a) (7) motion to dismiss. Lastly,
with respect to the third element, Starr asserts that even if Cruz suffered a monetary loss, the
“loss must be independent of the loss caused by the alleged breach of contract,” and that this
dispute arises out of a breach of contract claim rather than a violation of GBL § 349 (Def. Brief
at 19; Def. Reply, {| 26-27). As noted above, the Complaint alleges, among other things, that
Starr issued the Policy “without fully setting forth its terms” or advising Cruz that Starr “did not
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intend to provide a clarification for Contractor’s Extra Expense” (Complaint, 70). Because
Starr fails to address or refute this allegation in its papers, it cannot be said that the parties’
dispute arises solely out of a breach of contract claim. Therefore, the Complaint states a
cognizable claim under GBL § 349.2
IV. _Condusion
For the foregoing reasons, it is hereby
ORDERED that defendant’s motion to dismiss is denied in its entirety, and it is further
ORDERED that counsel for the parties shall appear for a remote status conference on
December 16, 2021, at 10:30 a.m., as previously scheduled.
This constitutes the Decision and Order of the court.
Dated: October 8, 2021
ENTER:
iV ie
HON. NANCY M. BANNON
2 Because discovery is ongoing, it is unnecessary to address the plaintiffs argument that punitive damages should
be awarded in connection with this claim.
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(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. NANCY BANNON PART 42 Justice worroseerontontasnasoncascasoataenseasonsaseec canon ena x INDEX NO. 652321/2020 E.E. CRUZ & COMPANY, INC. ON DATE NIA Plaintiff, MOTION SEQ. NO. 001 “Ve STARR SURPLUS LINES INSURANCE COMPANY, DECISION + ORDER ON MOTION Defendant. nnneeee nec e ne ennnnn ence eee ennnennneen ncaa nnnnnnnennnennnnnnnennnnes secennnnnnnene, x The following e-filed documents, listed by NYSCEF document number (Motion 001) 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 27, 28, 30, 31 were read on this motion to/for DISMISSAL The defendant’s motion to dismiss is decided in accordance with the attached memorandum Decision and Order. S.C. 1082021 HON. NANCY M. BANNON DATE (CHECK ONE: ‘CASE DISPOSED X | NON-FINAL DISPOSITION GRANTED X | DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER (CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE 652321/2020 E.E. CRUZ & COMPANY, INC. vs. STARR SURPLUS LINES Page lof 1 Motion No. 001 1 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 SUPREME COURT OF STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 42 E.E. CRUZ & COMPANY, INC., Index No.: 652321/2020 Plaintiff, Motion Sequence No. 001 -against- DECISION AND ORDER STARR SURPLUS LINES INSURANCE COMPANY, Defendant. HON. NANCY M. BANNON, J.S.C.: This action involves an insurance dispute arising from the construction of three bridges in Westchester County. In its complaint dated September 4, 2020 (Complaint), E. E. Cruz & Company, Inc. (Cruz or Plaintiff) alleges, inter alia, that defendant Starr Surplus Lines Insurance Company (Starr or Defendant) breached the terms of the insurance policy by failing to pay Cruz for monetary losses suffered in connection with a construction project. The Complaint asserts five causes of action: (1) declaratory judgement; (2) and (3) breach of contract and breach of the implied covenant of good faith and fair dealing; (4) negligent misrepresentation; and (5) deceptive business practices under GBL § 349. By the instant motion (sequence number 001), Starr seeks dismissal, pursuant to CPLR 3211 (a) (7), of the first, fourth and fifth causes of action, as well as breach of the implied covenant of good faith and fair dealing portion (but not the breach of contract portion) of the second and third causes of action. For the reasons stated herein, the motion is denied. L Background The factual allegations for this action, unless otherwise indicated herein, are based primarily upon the Complaint (NY SCEF Doc. No. 4). 2 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 In May 2017, Cruz entered into a contract with the New Y ork State Department of Transportation for the repair and replacement of three bridges in Westchester County, New Y ork (Complaint, 3). The construction project (Project) required Cruz, among other things, to replace the three existing bridges and to construct twenty drilled shafts in order to provide the foundation for the new bridges (id., 4). By November 2018, Cruz had successful completed installation of seventeen drilled shafts without incident, but after quality control testing, the eighteenth drilled shaft (Subject Shaft) showed physical damage due to water and silt infiltration (id., 16-8). As a result, the Subject Shaft needed to be removed and replaced, and Cruz incurred significant additional costs for the Project (id., {1 9-10). Starr issued a “Construction All Risks Policy” to Cruz for the period of June 1, 2017 to April 10, 2019 (Policy; Complaint, 13). The Complaint alleges that the Policy covers “all fortuitous losses that an insured peril causes, including increased costs to complete construction of undamaged property, unless such losses are expressly excluded,” and the Policy “does not contain an exclusion for the increased costs to complete construction of undamaged property” (id., 119-20). It also alleges that, based upon the Policy language, the loss to Cruz includes both the costs to repair the Subject Shaft and the increased costs to continue construction on the Project, and thus “the entirety of Cruz’s claim is covered” (id., 1 21-23). On November 15, 2019, Cruz produced to Starr “a complete analysis and summary” of its loss, but on November 18, 2019, Starr issued a letter to Cruz “requesting additional information” and “reserving rights with respect to specific exclusions contained in the Policy” (id., {| 27-28). After Cruz produced “additional available information” in response, on May 12, 2020, Starr denied coverage for the increased costs of construction arising in connection with the Subject Shaft (id., 929-30). Starr also argued that Cruz could have purchased the “Contractor’s Extra 3 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 Expense Coverage” as additional coverage under the Policy, and that the “omission from the Policy operated as a de facto exclusion” (id., 4 31). The Complaint further alleges that Cruz determined, after investigation, that (1) Starr routinely provides “Contractor Extra Expense” clarification for no additional premium; (2) it was intended to be included in the Policy; (3) its omission from the Policy was never identified in the Policy quote or binder, a document that evidences temporary insurance coverage until a formal policy is issued; and (4) Cruz never “declined” to purchase it, as Starr contended (id., 134). It also alleges that “Starr unilaterally changed the Policy terms — after it was bound and in effect — without Cruz’s knowledge, by issuing a declarations page that indicated, for the first time and buried in a laundry list of approximately 20 items, the words ‘not covered’ next to the phrase ‘Contractor’s Extra Expense” (id., 35). Despite Cruz’s many demands, Starr did not pay for Cruz’s “Covered Losses” (id., 437). After negotiations failed, the instant action ensued. II. _—_ Applicable Legal Standards As noted above, Starr seeks to dismiss the various causes of action pursuant to CPLR 3211 (a) (7). In considering a CPLR 3211 (a) (7) motion to dismiss, the court is to determine whether the pleading states a cause of action. “The motion must be denied if from the pleadings’ four comers, factual allegations are discemed which taken together manifest any cause of action cognizable at law” (Richbell Info. Servs., v Jupiter Partners, 309 AD2d 288, 289 [1st Dept 2003], quoting 511 W. 232nd Owners Corp. v Jennifer Realty Corp., 98 NY 2d 144, 151-152 [2002]). The pleadings are afforded a liberal construction, and the courts “accord plaintiffs the benefit of every possible favorable inference” (Leon v Martinez, 84 NY 2d 83, 87 [1994]; see also Nonnon v City of New York, 9 NY 3d 825, 827 [2007] [dismissal warranted only if pleading failed to allege facts that fit within any cognizable legal theory]). On the other hand, while 4 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 factual allegations are given a favorable inference, bare legal conclusions and inherently incredible facts are not entitled to preferential treatment (Matter of Sud v Sud, 211 AD2d 423, 424 [1st Dept 1995]). Moreover, whether the complaint or claim will later survive a motion for summary judgment, or whether the plaintiff will ultimately prove its claim, is irrelevant to the determination of a pre-discovery CPLR 3211 motion to dismiss (12 Baker Hill Rd., Inc. v Miranti, 130 AD3d 1425, 1426 [3d Dept 2015). (A) Declaratory Judgment As to the Complaint’s first cause of action that seeks a declaratory judgment, Starr argues in its brief (Def. Brief; NY SCEF Doc. No. 14) that this claim should be dismissed because it is “unnecessary, inappropriate, and wholly duplicative” of the breach of contract claim (Def. Brief at 7-8). Starr also argues that because a breach of contract claim provides an “adequate remedy,” thus “obviating the necessity for any declaration as to [insurance] coverage” (id.). In its opposition brief (Plf. Opp.; NY SCEF Doc. No. 28), Cruz contends that the declaratory judgment claim seeks a “different relief “from the breach of contract claim, and is “necessitated by Starr’s conduct in the procurement and binding of the Policy” because “Starr issued a policy that was materially different from the policy that was negotiated and purchased by Cruz” (Plf. Opp. at 8). Cruz also contends that this declaratory judgment addresses a “unique nature” because in the event that the breach of contract claim “is incongruous with the relief sought,” it provides “a remedy by which Cruz’s rights may be vindicated” (id.; citing Kalisch- Jarcho, Inc. v City of New York, 72 NY 2d 727, 731 [1988] [Kalisch-Jarcho]). In reply (Def. Reply; NY SCEF Doc. No. 30), Starr asserts, without any explanation, that Plaintiff's breach of contract claim is a better and more effective remedy,” and “Plaintiff fails to 5 of 14(FILED: NEW YORK COUNTY CLERK 1071272021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 identify exactly what the requested declaratory judgment should declare” (Def. Reply, 5). In sum, Starr asserts that “Plaintiff utterly fails to explain how Plaintiff's current claim for declaratory relief differs from Plaintiff's breach of contract claim” (id., 16). Starr’s assertion is unpersuasive. In Kalish-Jarcho, the Court held that when a contract provides reasonable means of resolving the parties’ disputes, they “may not seek a declaration of their contract rights” (72 NY 2d at 732). Here, Starr neither identifies which Policy provision addresses Cruz’s allegation that “Starr issued a policy that was materially different from the policy that was negotiated and purchased by Cruz,” nor discusses if any such provision affords a reasonable way of resolving the parties’ dispute. Also, contrary to Starr’s assertion that Cruz fails to specify the substance of the requested declaratory judgment, Cruz states that this declaratory judgment seeks a “judicial determination that Starr is required to provide coverage under the Policy for the Covered Losses” (Plf. Opp. at 8). Cruz’s statement largely complies with CPLR 3017 (b), which provides that a demand for declaratory relief “shall specify the rights and other legal relations on which a declaration is requested.” Accordingly, the Complaint’s first cause of action (declaratory judgment) should not be dismissed, particularly in the pre-discovery stage of this case (Tooma v Grossbarth, 121 AD3d 1093, 1095 [2d Dept 2014] [denied CPLR 3211 (a) (7) motion because “whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove (his or her) claims, of course, plays no part in the determination of a pre-discovery CPLR 3211 motion to dismiss”]). (B) Breach of Implied Covenant of Good Faith and Fair Dealing As noted above, with respect to the second and third causes of action, Starr does not currently seek to dismiss the breach of contract claim portion, but only the breach of implied covenant of good faith and fair dealing portion. 6 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 Starr argues that the breach of implied covenant of good faith and fair dealing claim should be dismissed because (1) the Complaint lacks specific allegations to support this claim; (2) even if the pleading standards were met, the allegations detail a breach of contract claim, as the parties just disagree on insurance coverage issues, which only represents a “difference of opinion” and not a breach of the implied covenant; and (3) the Complaint fails to plead that consequential damages were “foreseeable and contemplated by the parties” at the time of contracting, and fails to quantify the claimed consequential damages (Def. Brief at 8-14). In opposition, Cruz contends that the Complaint adequately pled a claim for breach of the implied covenant because (1) it alleges that Starr deprived Cruz of the Policy’s benefits by refusing to pay “covered losses without just cause,” and by issuing a materially different policy than the policy that was negotiated by the parties (Complaint, 50-59); (2) it does not allege a difference in opinion between the parties, but the “intentional, malicious and fraudulent” conduct by Starr, which is separate and distinct from a breach of contract claim (Complaint, § 51); (3) it asserts a viable consequential damages claim because it alleges that Starr engaged in improper ant sel dilatory adjustment of the insurance claim, as well as its deception and misrepresentation in ing and binding the Policy (i.e., the Policy was marketed as an “all-risks” policy, including coverage for increased costs of construction arising from the Subject Shaft, and the Policy does nol ap contain any exclusion), and the first mention of the “Contractor’s Extra Expense did not ear until the Policy was issued” and then only appeared in “a list of twenty other coverage sw limits,” which Starr attempts to convert into an exclusion that does not exist in the Policy (Complaint, 1] 30-35, 53-54, 60-61); and (4) Starr’s apparent attempt to preclude any consequential damages is premature because Cruz has “no duty to definitely identify or quantify its damages” until a full record is developed (Plf. Opp. at 9-14). 7 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 In New York, “{i]mplicit in all contracts is a covenant of good faith and fair dealing in the course of contract performance” (Dalton v Educational Testing Serv., 87 NY 2d 384, 389 [1995]). “While the duties of good faith and fair dealing do not imply obligations inconsistent with other terms of the contractual relationship, they do encompass any promises which a reasonable person in the position of the promisee would be justified in understanding were included” (511 W. 232nd Owners Corp. v Jennifer Realty Corp., 98 NY 2d 144, 153 [2002] [internal citations and quotation marks omitted]). “The implied covenant of good faith and fair dealing is breached when a party acts in a manner that would deprive the other party of the right to receive the benefits of their agreement” (1357 Tarrytown Rd. Auto. LLC v Granite Prop., LLC, 142 AD3d 976, 977 [2d Dept 2016] [citations omitted]). Based upon the Complaint’s allegations, which are amplified in Plaintiff's Opposition (as summarized above), Cruz has sufficiently pled a claim for breach of the implied covenant of good faith and fair dealing. Indeed, in view of these allegations, contrary to Starr’s argument, Cruz does not simply allege a “difference of opinion” between the insurer and the insured, but rather the “intentional, malicious, fraudulent, and oppressive conduct” allegedly undertaken by Starr in its issuance of “a materially different policy to Cruz than the policy that was negotiated for, agreed upon, and bound,” which deprived Cruz of the benefits of its agreement with Starr as a result of the alleged bad faith conduct (Plf. Opp. at 10, referencing Complaint, {| 56-59). Next, Starr argues that because the Complaint fails to allege “consequential damages were foreseeable, probable or contemplated by the parties at the time the Policy was issued,” the failure to plead is “fatal to Plaintiff's claim for consequential damages” (Def. Reply, §{ 12-13). It is settled-law that in breach of contract actions, the non-breaching may recover damages that are the “natural and probable consequence of the breach,” but consequential damages that “do 8 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 not so directly flow from the breach” are recoverable in limited situations (Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N. Y., 10 NY 3d 187, 192 [2008] [Bi-Economy] [internal citations omitted]). To determine whether consequential damages are reasonably contemplated by the parties, the courts look to the nature and purpose of the contract, as well as “what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made” (id. at 193 [citations omitted]). Here, Cruz asserts that, because “Starr was well-aware of the financial consequences of its flawed and dilatory adjustment and investigation, coupled with the ultimate wrongful denial of the claim,” any argument that consequential damages were not foreseeable “is disingenuous at best” (Pf. Opp. at 13-14; citing Bi-Economy, 10 NY 3d at 195 [“the very purpose of business interruption coverage would have made Harleysville aware that if it breached its obligations under the contract to investigate in good faith and pay covered claims it would have to respond in damages to Bi-Economy for the loss of its business as a result of the breach” [internal citations omitted]). Indeed, the Court noted that if an insurer failed to promptly adjust and pay the claimed loss, which resulted in the insured’s business collapse, the insurer should be liable for consequential damages (id.). Hence, Cruz’s assertion is persuasive. Starr’s additional argument that Cruz’s failure to quantify or identify consequential damages requires denial of the claimed damages (Def. Reply, 14-16) is equally unavailing. As noted by Cruz, it is “premature” at the pre-discovery stage of this case to determine the amount of its consequential damages, as such damages should await a fully developed record (Plf. Opp. at 14, citing Esposito v Weiner, 160 AD3d 930, 931 [2d Dept 2018] [“It would be premature, at this stage of the litigation, to conclude that the allegations were insufficient to support a claim for [consequential] damages,” particularly in the context of a motion to dismiss 9 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 pursuant to CPLR 3211 (a) (7)]). Starr’s failure to address or distinguish Esposito significantly undermines its argument. Accordingly, Starr’s motion to dismiss the breach of the implied covenant of good faith and fair dealing portion of the second and third causes of action in the Complaint is denied. (C) Negligent Misrepresentation Starr argues that the negligent misrepresentation claim should be dismissed because ‘Plaintiff's Complaint fails to plead that there was a special relationship between Plaintiff and Starr,” which requires a showing of “trust and confidence between the parties” and creates a “duty in one party to impart correct information to another” (Def. Brief at 14-16). Starr also asserts that “the First Department has consistently held that insurers do not have the ‘special relationship’ with their insureds needed to support a claim for negligent misrepresentation” (id., citing, Cooperative Centrale Raiffeisen-Boerenleenbank B.A. v Atradius Credit Ins. N.V., 149 AD3d 416 [1% Dept 2017] [CCRB] and Batas v Prudential Ins. Co. of Am., 281 AD2d 260, 264 [1% Dept 2001] [Batas]). In opposition, Cruz cites to Parrott v Cooper & Lybrand, LLP, 95 NY 2d 479, 148 (2000), which stated in relevant part: “before a party may recover in tort for pecuniary loss sustained as a result of another's negligent misrepresentations there must be a showing that there was either actual privity of contract between the parties or a relationship so close as to approach that of privity” (Plf. Opp. at 15). The foregoing rule of law was repeated by the Court of Appeals in J.A.O. Acquisition Corp. v Stavitsky, 8 NY 3d 144, 148 (2007) (citing Parrott). Because the Policy reflects the privity of contract between the parties, Cruz contends that the negligent misrepresentation claim is adequately pled (Plf. Opp. at 16). Cruz also points out that Starr’s 10 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 reliance on Batas is misplaced because that case did not involve a negligent representation claim, but rather was based upon fraud and breach of fiduciary duty (id. at 16 n 4). In reply, Starr argues that Cruz “disregards First Department caselaw” and then repeats the arguments made in its moving brief (Def. Reply, 1] 18-19). The arguments are unavailing. First, it is noteworthy that Starr fails to address the Court of Appeals caselaw! cited by Cruz. Secondly, Starr also fails to rebut Cruz’s assertion that Batas is inapplicable in that it did not involve a negligent misrepresentation claim. Thirdly, the CCRB decision dealt primarily with fraudulent concealment and breach of fiduciary duty claims, and the negligent misrepresentation claim appeared to arise in connection with the defendant’s marketing materials (CCRB, 149 AD3d at 416 [citing Batas, court held that ‘defendants’ publicly available marketing materials and links to its website do not create a special relationship”]). Further, Cruz asserts that this claim arises in connection with the “quotes and policy binder,” which were “relied upon by Cruz as confirmation of coverage available under the Policy” (Plf. Opp. at 16), and “Starr’s argument that a special relationship cannot arise out of marketing materials is irrelevant since Cruz’s claim is focused on Starr’s course of conduct and contractual relationship”)(id. at 17, n 5). Starr’s failure to address Cruz’s assertions significantly weighs against dismissal. Therefore, the fourth cause of action (negligent misrepresentation) is not dismissed. (D) Violation of General Business Law (GBL) Section 349 The Complaint alleges that Starr, in its “usual and customary practice,” (1) issued a Policy to Cruz without setting forth its terms nor advising Cruz that Starr did not intend to provide a “clarification for Contractors’ Extra Expense;” (2) failed to respond to Cruz’s claim in + See also Prudential Ins. Co. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 382 (1992) (“before a party may recover in tort for pecuniary loss sustained as a result of another's negligent misrepresentations there must be a showing that there was either actual privity of contract between the parties or a relationship so close as to approach that of privity”) (emphasis added; internal citations omitted). 10 11 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM NYSCEF DOC. NO. 34 a timely matter; (3) represented to Cruz that Starr was not denying the claim, yet ultimately denied the bulk of the claim without a factual basis and after much delay; and (4) Starr’s conduct in handling the claim is “harmful to Cruz and the general public at large,” and Starr committed “deceptive acts and practices in violation of N.Y. Gen. Bus. Law § 349” (Complaint, 1] 69-75). To state a violation of GBL §349, the complaint needs to allege that the defendant has engaged in a “consumer-oriented conduct” that is “materially misleading,” and that the plaintiff “suffered injury” as a result of the deceptive practice (GBL §349); see also Plavin v Group Health Inc., 35 NY 3d 1, 10 (2020) (defendant’s misconduct must be “consumer-oriented” or its practices must cause a “broader impact on consumers at large”). Starr argues that this claim should be dismissed because the Complaint (1) fails to sufficiently allege “consumer-oriented” conduct; (2) fails to allege Starr’s acts or practices were “misleading in a material way,” and (3) fails to allege an injury due to such acts or practices (Def. Brief at 16-19; citing, among other cases, Oswego Laborers’ Local 214 Pension v Marine Midland Bank, 85 NY 2d 20 [1995] [Oswego]). Cruz contends that the ““consumer-oriented” element is met where the complaint alleges that the defendant’s practice involves an “extensive marketing scheme that has a broader impact on consumers at large” (PIf. Opp. at 17-18, citing, inter alia, Gaidon v Guardian Life Ins. Co. of Am., 94 NY 2d 330, 344 [1990]). As to the second element, Cruz contends that an analysis of whether the defendant’s conduct is “materially misleading” must be based upon an “objective assessment” of whether such conduct would likely mislead a “reasonable consumer,” and that this element is also met (PIf. Opp. at 19, citing M&T Mtge. Corp. v White, 736 F Supp 2d 538, 570 (ED NY 2010] and Oswego, 85 NY 2d at 26 [adopted an “objective definition of deceptive acts” and focused on whether such acts would likely “mislead a reasonable consumer”]). With 11 12 of 14 INDEX NO. 652321/2020 RECEIVED NYSCEF: 10/12/2021(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 respect to the last element, Cruz contends that the Complaint alleges significant injuries resulting from Starr’s deceptive practices, including the loss of funds and business opportunities due to the delay in completing the bridge Project (Plf. Opp. at 20, referencing Complaint, { 76). Cruz’s contentions are persuasive. First, as to the “consumer-oriented” element, the Court of Appeals has stated that a plaintiff “need not show that the defendant committed the complained-of acts repeatedly,” and the legislative history showed that this law is intended to halt “consumer frauds at their incipiency without the necessity to wait for the development of persistent frauds“ (Oswego, 85 NY 2d at 25). Based on the allegations, Cruz has adequately pled that Starr’s allegedly deceptive practices could “potentially affect similarly situated consumers” (id. at 27). As to whether Cruz acted reasonably, Starr asserts that Cruz is a “sophisticated business entity” and should have “a full understanding of the terms and conditions of the Policy prior to execution” (Def. Reply, § 25). As discussed above, caselaw counsels that the courts should adopt an “objective definition” of deceptive acts; and in any event, whether Cruz acted as a “reasonable consumer” cannot be decided at the pre-discovery stage of this litigation (Oswego, 85 NY 2d at 27 [claim survived motion to dismiss because record was “inconclusive as to whether a reasonable consumer in plaintiffs’ circumstances might have been misled by the Bank’s conduct”]). Indeed, the law requires the courts to afford plaintiffs, such as Cruz, the benefit of every possible favorable inference in a CPLR 3211 (a) (7) motion to dismiss. Lastly, with respect to the third element, Starr asserts that even if Cruz suffered a monetary loss, the “loss must be independent of the loss caused by the alleged breach of contract,” and that this dispute arises out of a breach of contract claim rather than a violation of GBL § 349 (Def. Brief at 19; Def. Reply, {| 26-27). As noted above, the Complaint alleges, among other things, that Starr issued the Policy “without fully setting forth its terms” or advising Cruz that Starr “did not 12 13 of 14(FILED: NEW YORK COUNTY CLERK 10/12/2021 02:33 PM INDEX NO. 652321/2020 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 10/12/2021 intend to provide a clarification for Contractor’s Extra Expense” (Complaint, 70). Because Starr fails to address or refute this allegation in its papers, it cannot be said that the parties’ dispute arises solely out of a breach of contract claim. Therefore, the Complaint states a cognizable claim under GBL § 349.2 IV. _Condusion For the foregoing reasons, it is hereby ORDERED that defendant’s motion to dismiss is denied in its entirety, and it is further ORDERED that counsel for the parties shall appear for a remote status conference on December 16, 2021, at 10:30 a.m., as previously scheduled. This constitutes the Decision and Order of the court. Dated: October 8, 2021 ENTER: iV ie HON. NANCY M. BANNON 2 Because discovery is ongoing, it is unnecessary to address the plaintiffs argument that punitive damages should be awarded in connection with this claim. 13 14 of 14