North State Autobahn, Inc. v. Progressive Insurance Group Co.

102 A.D.3d 5, 953 N.Y.S.2d 96

This text of 102 A.D.3d 5 (North State Autobahn, Inc. v. Progressive Insurance Group Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
North State Autobahn, Inc. v. Progressive Insurance Group Co., 102 A.D.3d 5, 953 N.Y.S.2d 96 (N.Y. Ct. App. 2012).

Opinion

OPINION OF THE COURT

Miller, J.

This case presents us with the question of whether a business entity has stated a valid cause of action for violation of General Business Law § 349 (h) where it alleges that another business entity deceived and misled prospective customers, causing it to sustain direct economic loss in the form of more than $5 million in lost business sales. We conclude that it does.

I. Factual And Procedural Background

The defendants Progressive Insurance Group Company, Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, and Progressive Specialty Insurance Company (hereinafter collectively the Progressive defendants) are involved in underwriting automobile insurance policies in the State of New York. In approximately 2000, the Progressive defendants initiated, internally promoted, and advertised a direct repair program (hereinafter the DRP) by which they contracted with numerous vehicle repair shops regarding rates and terms of repairs for [9]*9claimants. The plaintiffs, North State Autobahn, Inc. and North State Autobahn, Inc., doing business as North State Custom, operated a vehicle repair shop that was not a member of the DRE

In 2007, the plaintiffs commenced this action against the Progressive defendants and a number of Progressive employees, including the defendant Nicholas Stanton. The first cause of action asserted in the complaint alleged that the Progressive defendants had violated General Business Law § 349. Specifically, the complaint alleged that the Progressive defendants engaged in practices which deceived claimants who sought to have their vehicles repaired at the plaintiffs’ and other repair shops that did not participate in the DRP by making misrepresentations as to their workmanship, price, timeliness of service, and character. The plaintiffs also alleged that the Progressive defendants issued damage repair appraisals well below fair-market value at about one half the estimate of the plaintiffs’ estimate, and that the Progressive defendants represented to claimants that the plaintiffs would make only partial payments for repairs which would necessarily require claimants who had their vehicles repaired by the plaintiffs or other independent shops to incur out-of-pocket expenses.

The plaintiffs further alleged that the Progressive defendants engaged in such deceptive practices in order to mislead customers of the plaintiffs and other independent shops to believe that they must have their vehicles repaired at repair shops that were members of the DRE The Progressive defendants allegedly failed to inform these claimants that the repair shops that participated in the DRP used inferior aftermarket parts, or were not registered or qualified to work on specific vehicle models. As a result of the Progressive defendants’ actions, the plaintiffs alleged that they sustained direct economic loss in the form of more than $5 million in lost business sales, and that the public at large sustained other damages.

The fifth and sixth causes of action in the complaint were asserted against both the Progressive defendants and Stanton. The fifth cause of action alleged tortious interference with prospective business advantage. The sixth cause of action alleged injurious falsehood. With respect to the cause of action alleging injurious falsehood, the plaintiffs alleged, inter alia, that the Progressive defendants made numerous derogatory statements about the plaintiffs to their insureds.

The Progressive defendants moved for summary judgment dismissing the complaint insofar as asserted against them, and [10]*10Stanton separately moved for summary judgment dismissing the complaint insofar as asserted against him. The Supreme Court, inter alia, denied that branch of the Progressive defendants’ motion which was for summary judgment dismissing the cause of action alleging violation of General Business Law § 349 (32 Misc 3d 798 [2011]). The court also denied that branch of Stanton’s motion which was for summary judgment dismissing the cause of action alleging tortious interference with prospective business advantage insofar as asserted against him.

With respect to that branch of the Progressive defendants’ motion which was for summary judgment dismissing the cause of action alleging injurious falsehood, the Supreme Court classified the allegedly derogatory statements into three general categories: (1) statements indicating that the plaintiffs were a difficult shop and were difficult to deal with; (2) statements indicating that the plaintiffs overcharged their customers and did not do good work; and (3) statements to the effect that the plaintiffs were a “bunch of crooks.” The court concluded that the statements identified under “category 1” were statements of opinion which were not actionable. However, the court concluded that the plaintiffs had submitted sufficient evidence to raise a triable issue of fact with respect to so much of the cause of action alleging injurious falsehood as was based on the statements identified as “category 2” and “category 3.” Accordingly, the court denied that branch of the Progressive defendants’ motion which was for summary judgment dismissing so much of the cause of action alleging injurious falsehood as was based on allegations other than “category 1” insofar as asserted against them. The court granted that branch of Stanton’s motion which was to dismiss that cause of action insofar as asserted against him. The Progressive defendants and Stanton jointly appeal from stated portions of the order.

As an initial matter, the Progressive defendants are not aggrieved by so much of the order appealed from as denied that branch of Stanton’s motion which was for summary judgment dismissing the cause of action alleging tortious interference with prospective business advantage insofar as asserted against him (see CPLR 5511; Mixon v TBV, Inc., 76 AD3d 144 [2010]). Accordingly, the appeal by the Progressive defendants from that portion of the order must be dismissed.

Similarly, Stanton is not aggrieved by so much of the order as denied those branches of the Progressive defendants’ motion which were for summary judgment dismissing the cause of ac[11]*11tion alleging violation of General Business Law § 349 and so much of the cause of action alleging injurious falsehood as was based on allegations other than “category 1” insofar as asserted against them (see CPLR 5511; Mixon v TBV, Inc., 76 AD3d 144 [2010]). Accordingly, the appeal by Stanton from those portions of the order must be dismissed as well.

Turning to the merits, we conclude that the Supreme Court properly denied those branches of the Progressive defendants’ motion which were for summary judgment dismissing the causes of action alleging violation of General Business Law § 349 and so much of the cause of action alleging injurious falsehood as was based on allegations other than “category 1” insofar as asserted against them. However, we conclude that the court should have granted that branch of Stanton’s motion which was for summary judgment dismissing the cause of action alleging tortious interference with prospective business advantage insofar as asserted against him. Accordingly, we modify.

II. General Business Law § 349

General Business Law § 349 declares unlawful all “ [deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state” (General Business Law § 349 [a]).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Gaidon v. Guardian Life Insurance Co. of America
725 N.E.2d 598 (New York Court of Appeals, 1999)
Goshen v. Mutual Life Insurance
774 N.E.2d 1190 (New York Court of Appeals, 2002)
Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N. A.
647 N.E.2d 741 (New York Court of Appeals, 1995)
Karlin v. IVF America, Inc.
712 N.E.2d 662 (New York Court of Appeals, 1999)
Blue Cross & Blue Shield of New Jersey, Inc. v. Philip Morris USA Inc.
818 N.E.2d 1140 (New York Court of Appeals, 2004)
Carvel Corp. v. Noonan
818 N.E.2d 1100 (New York Court of Appeals, 2004)
Genesco Entertainment, a Div. of Lymutt v. Koch
593 F. Supp. 743 (S.D. New York, 1984)
Small v. Lorillard Tobacco Co.
720 N.E.2d 892 (New York Court of Appeals, 1999)
Stutman v. Chemical Bank
731 N.E.2d 608 (New York Court of Appeals, 2000)
Koch v. ACKER, MERRALL & CONDIT COMPANY
967 N.E.2d 675 (New York Court of Appeals, 2012)
M.V.B. Collision, Inc. v. Allstate Insurance
728 F. Supp. 2d 205 (E.D. New York, 2010)
City of New York v. Smokes-Spirits.Com, Inc.
911 N.E.2d 834 (New York Court of Appeals, 2009)
Zuckerman v. City of New York
404 N.E.2d 718 (New York Court of Appeals, 1980)
Liberman v. Gelstein
605 N.E.2d 344 (New York Court of Appeals, 1992)
Gilliam v. Richard M. Greenspan, P.C.
17 A.D.3d 634 (Appellate Division of the Supreme Court of New York, 2005)
Biancone v. Bossi
24 A.D.3d 582 (Appellate Division of the Supreme Court of New York, 2005)
Elacqua v. Physicians' Reciprocal Insurers
52 A.D.3d 886 (Appellate Division of the Supreme Court of New York, 2008)
Thome v. Alexander & Louisa Calder Foundation
70 A.D.3d 88 (Appellate Division of the Supreme Court of New York, 2009)
Wilner v. Allstate Insurance
71 A.D.3d 155 (Appellate Division of the Supreme Court of New York, 2010)

Cite This Page — Counsel Stack

Bluebook (online)
102 A.D.3d 5, 953 N.Y.S.2d 96, Counsel Stack Legal Research, https://law.counselstack.com/opinion/north-state-autobahn-inc-v-progressive-insurance-group-co-nyappdiv-2012.