Quick Response Commercial Division, LLC v. AON Risk Servs. of Illinois, Inc., 2012 U.S. Dist. LEXIS 171668 (N.D. N.Y., Dec. 4, 2012)

Plaintiff’s cause of action for breach of implied covenant of good faith and fair dealing dismissed where it merely restated the breach of contract claim and did not rely on tortious activity.

This matter arose from a property damage claim following fire and water damage to an Elks Lodge. The Lodge hired the plaintiff to inspect and repair the damages for $342,973.47. The Lodge paid the plaintiff $134,973.46, and was subsequently reimbursed for that amount by the defendant insurers. The Lodge assigned its rights under the policy to the plaintiff, who subsequently filed the instant action, seeking payment for the unpaid balance, as well as attorney fees and costs of litigation. The defendant insurer filed a motion to dismiss the plaintiff’s second cause of action—implied covenant of good faith and fair dealing, and the claim for attorney fees and costs. The court considered that the covenant of good faith and fair dealing is implied in every contract and is, therefore, duplicative of a breach of contract claim. However, an independent cause of action for the implied covenant claim may be sustained if there is an underlying, independent tort sufficient to support a claim that the insurer engaged in egregious conduct against the plaintiff, which was a pattern directed to the public in general. The court determined that the plaintiff has not alleged facts sufficient to indicate tortious activity, let alone the egregious conduct necessary to satisfy an implied covenant claim. Rather, the allegations in the second cause of action merely restated the breach of contract claim. Thus, the motion to dismiss the second cause of action was granted. The motion to dismiss was also granted with regard to the plaintiff’s claim for attorney fees since the New York courts have held that attorney fees are not recoverable for an alleged breach of an insurance policy. Furthermore, the complaint did not plead facts sufficient to support an independent claim for breach of the implied covenant claim or bad faith, warranting attorney fees.

Case Law Alert - 1st Quarter 2013