Acquista v. New York Life Insurance

Andrias, J.

(dissenting in part). I agree that, although defendants’ documentary evidence tends to support the IAS court’s finding that, even though plaintiff was unable to perform bronchoscopies and other radiology-using procedures during the relevant time period, he was able to practice internal medicine as well as aspects of pulmonary medicine that do not necessitate exposure to radiation, there are questions of fact presented, which cannot be determined as a matter of law on this dismissal motion, as to whether plaintiff was “totally disabled” within the meaning of the three subject in*84sur anee policies, each of which, read as a whole, provides that plaintiff is to be considered totally disabled only if he cannot perform any of the substantial and material duties of both his regular jobs, pulmonary medicine and internal medicine (compare, Taterka v Nationwide Mut. Ins. Co., 91 AD2d 568, affd 59 NY2d 743). Thus, plaintiffs claims for breach of contract should not have been dismissed pursuant to CPLR 3211 (a) (1).

However, plaintiffs remaining claims, sounding in tort, for bad faith and unfair practices, fraud and fraudulent inducement, and negligent infliction of emotional distress, were properly dismissed pursuant to CPLR 3211 (a) (7) since, giving the complaint every favorable intendment, plaintiff is “merely seeking to enforce [his] bargain” (see, New York Univ. v Continental Ins. Co., 87 NY2d 308, 316). Moreover, plaintiff could not have been defrauded or fraudulently induced to purchase policies the plain terms of which could have been readily ascertained upon a reading of their clear and unambiguous language, and his allegations do not allege conduct that was so outrageous and extreme as to support a claim for emotional distress (see, Dillon v City of New York, 261 AD2d 34, 41).

Plaintiffs tort claims are based upon his allegations that, even though he provided all requested documentation, New York Life continued to delay in determining his claim; that he made a reasonable settlement demand, which New York Life wrongfully and unjustifiably refused to accept; and, that New York Life’s dilatory tactics in delaying processing of his claim included shuttling plaintiff from employee to employee. Such, allegations, however, describe what “is essentially a ‘private’ contract dispute over policy coverage and the processing of a claim which is unique to these parties, not conduct which affects the consuming public at large” (see, New York Univ. v Continental Ins. Co., supra, 87 NY2d, at 321). Militating against any causes of action based upon New York Life’s alleged bad faith in processing and denying plaintiffs claim is our finding that there are issues of fact as to whether plaintiffs ailments qualify him for coverage under the subject policies. The majority questions the validity of the foregoing statement in the context of a motion to dismiss. However, such finding is significant in that it undermines his claim of bad faith denial of benefits by demonstrating that despite defendant’s thorough investigation and evaluation of plaintiffs claim there is still uncertainty as to its merits. As noted in Pavia v State Farm Mut. Auto. Ins. Co. (82 NY2d 445, 455), encouraging premature *85settlement of claims would contravene as insurer’s “contractual right and obligation of thorough investigation.”

Plaintiff claims that New York Life’s conduct constitutes a public wrong in that he was in a weaker bargaining position than New York Life because of its superior knowledge and his reliance upon the Kho defendants, who sold him the policies. He also attempts to distinguish Continental Insurance (supra) on the ground that there the insured received expert representation and advice in the procurement of the policy. Such arguments are unavailing inasmuch as plaintiff’s dealings with the Khos and New York Life were at arm’s length and there is no allegation, let alone any evidence, of a confidential relationship sufficient to justify any such reliance (see generally, Batas v Prudential Ins. Co., 281 AD2d 260; Gaidon v Guardian Life Ins. Co., 255 AD2d 101, mod on other grounds 94 NY2d 330, upon remittitur 272 AD2d 60). Nor, is there any basis in certain dicta from Batas (supra) or in cases from sister states, which were neither cited nor relied upon by plaintiff at nisi prius or on appeal, for disregarding stare decisis and deviating from the Court of Appeals clear holding, in Continental Insurance (supra), that a similar claim based on an alleged breach of the implied covenant of good faith and fair dealing should be dismissed as duplicative of a cause of action for breach of contract. “[T]he use of familiar tort language in the pleading does not change the cause of action to a tort claim in the absence of an underlying tort duty sufficient to support a claim for punitive damages” (id. at 319-320 [citations omitted]).

Any suggestion by plaintiff that his bad faith claim has much in common with the law regarding insurers’ bad faith refusal to settle liability claims and his reliance upon Pavia (supra) is unavailing.

Plaintiffs claims of bad faith and unfair practices are based solely upon his allegation that defendant undertook a conscious campaign to delay rendering a decision on his claims. Such allegations are simply insufficient to “establish that the insurer’s conduct constituted a ‘gross disregard’ of the insured’s interests — that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer * * *. In other words, a bad-faith plaintiff must establish that the defendant insurer engaged in a pattern of behavior evincing a conscious or knowing indifference to the probability that an insured would be held personally accountable for a large judgment if a settlement offer within the policy limits were not accepted” (Pavia, supra, 82 NY2d, at 453-454).

*86Pavia was specifically limited to the well-settled principle that an insurer may be held liable for the breach of its duty of “ ‘good faith’ in defending and settling claims over which it exercise [d] exclusive control on behalf of its insured” (id. at 452 [citations omitted]). The Court specifically rejected, as a matter of law, the idea of a “bad faith” claim based solely upon an insurer’s failure to respond to a time-limited settlement offer, which came at a relatively early point in the litigation, and its overall delay in offering the policy limits. In so ruling, the Court held that “[p]ermitting an injured plaintiff’s chosen timetable for settlement [or in this case payment of the claim] to govern the bad-faith inquiry would promote the customary manufacturing of bad-faith claims.” (id. at 455).

As to claims of the insurer’s delay in evaluating whether or not to accept a time-limited settlement offer, the Court stated: “That defendant could have acted more expeditiously does not convert inattention into a gross disregard for the insured’s rights, particularly where, as here, there is no contention that the insurer failed to carry out an investigation, to evaluate the feasibility of settlement * * * or to offer the policy limits before trial after the weakness of the insured’s litigation position was clearly and fully assessed” (id.). Thus, the Court essentially held that, in order to satisfy the necessary “gross disregard for the insured’s rights” standard, a plaintiff would have to allege and ultimately prove that the insurer unreasonably “failed to carry out an investigation,” failed to “evaluate” the feasibility of settlement (in this case plaintiff’s claim), or failed to offer the policy limits (in this case pay plaintiff’s claim), after the merits of the claim were “clearly and fully assessed.” Here, on the other hand, plaintiff’s complaint is really the opposite: that defendant took too much time in investigating and evaluating his claim before denying it, after its merits were “clearly and fully assessed.”

Because plaintiffs complaint fails to state a cognizable “bad faith” cause of action, there are no relevant factual issues. We would note, however, without deciding the issue, that plaintiff does not appear to be entirely blameless with regard to any delay in processing his claim. The record reflects that plaintiffs proof of claim was submitted to defendant on February 13, 1997; that his Confirmation of Interview form is dated November 25, 1997; that copies of plaintiffs personal income tax returns for the years 1990 through 1996 were provided to defendant on December 2, 1997; that, at defendant’s request, additional financial information regarding plaintiff was submit*87ted on January 27, 1998; that an independent medical examination of plaintiff was conducted sometime before July 20, 1998; that the parties met on June 16, 1998, at which time plaintiff was “willing to provide you with this additional time to review the claim” based upon defendant’s assurance that a determination of plaintiff’s claim would be made no later than July 15, 1998; and, that, although the July 15th deadline was not met, plaintiff was notified, by letter dated July 28, 1998, that, under the terms of the relevant polices he was not entitled to total disability benefits because his earnings for 1996 were significantly greater than in any of the five years immediately preceding the onset of his disability. Thus, contrary to plaintiffs attorney’s argument in his January 6, 1998 letter that the issue was medical not financial, the financial aspects of his claim appear to have been determinative. There is also some indication in his attorney’s correspondence, where claims of bad faith were raised as early as his January 6, 1998 letter to defendant, just over a month after plaintiff provided his income tax returns, that this is the type of manufactured claim warned against in Pavia.

With respect to the fourth cause of action that was not dismissed, for breach of contract for denial of residual or partial disability benefits, plaintiffs demands for punitive damages and attorneys’ fees were properly dismissed, since the allegations support only a claim for breach of contract (see, Continental Ins., supra, at 315-316, 324).

Accordingly, I would modify the order only to the extent of denying the motion with regard to the first, second and third causes of action.

Mazzarelli and Wallace, JJ., concur with Saxe, J.; Tom, J. P., and Andrias, J., dissent in part in a separate opinion by Andrias, J.

Order, Supreme Court, New York County, entered on or about November 5, 1999, modified, on the law, to deny defendant-respondent’s motion to dismiss the complaint with respect to the first, second, third, fifth and sixth causes of action and to reinstate those causes of action, and otherwise affirmed, without costs.