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Schlessinger v. Valspar Corp.

United States Court of Appeals, Second Circuit

July 24, 2013

Lori Schlessinger, Brenda Pianko, Plaintiffs-Appellants,
v.
Valspar Corporation, Defendant-Appellee.

Submitted: March 29, 2012

Appeal from an Order of the United States District Court for the Eastern District of New York (Denis R. Hurley, Judge) dated September 23, 2011 granting Defendant-Appellee's motion to dismiss for failure to state a claim upon which relief can be granted. Recognizing that this case involved unresolved issues of New York State law, we certified to the New York Court of Appeals the following two questions: (1) May parties seek to have contractual provisions that run contrary to General Business Law § 395-a declared void as against public policy? And (2) May plaintiffs bring suit pursuant to § 349 on the theory that defendants deceived them by including a contractual provision that violates § 395-a and later enforcing this agreement?

Daniel A. Edelman, (Cathleen M. Combs on the brief), Edelman, Combs, Latturner & Goodwin, LLC, Chicago, IL, Lawrence Katz, Cedarhurst, NY, for Plaintiffs-Appellants.

Paula J. Morency, (Aphrodite Kokolis, Jeannice D. Williams on the brief), Schiff Hardin LLP, Chicago, IL, David Jacoby, Schiff Hardin LLP, New York, NY, for Defendant-Appellee.

Before: STRAUB, POOLER, Circuit Judges, and KORMAN, Senior District Judge [1]

Per Curiam:

This case returns to us after our certification of two questions to the New York Court of Appeals. Our certification order sets forth the relevant background of this dispute, see Schlessinger v. Valspar Corp., 686 F.3d 81 (2d Cir. 2012) ("Schlessinger II"), which we summarize only as necessary to explain our decision to AFFIRM.

Plaintiffs Lori Schlessinger and Brenda Pianko separately purchased furniture from the Fortunoff Department Store and a Furniture Protection Plan ("the Plan") issued and maintained by Defendant Valspar Corporation. Pursuant to each Plan, Valspar agreed to repair or replace the covered furniture in the event that it suffered certain kinds of damage. Schlessinger II, 686 F.3d at 83. The Plan's so-called "store closure provision" provided that, in the event that the store location where the furniture was purchased closed, Valspar would provide a refund of the original purchase price of the Plan. Id. Fortunoff subsequently went bankrupt, and when Plaintiff Pianko[2] submitted her claim, Valspar refunded her payment of the Plan's purchase price. Id.

Plaintiffs argue that that the store closure provision is contrary to New York General Business Law ("GBL") § 395-a which provides that, barring exceptions not applicable here, "No maintenance agreement covering parts and/or service shall be terminated at the election of the party providing such parts and/or service during the term of the agreement unless prior to or upon delivery of a copy of the agreement." N.Y. Gen. Bus. Law § 395-a(2). We assume, as did the District Court and the New York Court of Appeals, that the store closure provision violates § 395-a. Plaintiffs' first claim alleges that, after the store closure provision is struck from the contract as against public policy, Valspar breached the contract when it refused to service Pianko's furniture. See Schlessinger II, 686 F.3d at 85. Plaintiffs' second claim seeks damages under New York GBL § 349 under the theory that by selling the Plan containing the store closure provision and denying claims based on that provision, Valspar engaged in an actionable deceptive practice. Id. at 88.

By opinion dated September 23, 2011, the District Court granted Valspar's motion to dismiss in its entirety. See Schlessinger v. Valspar Corp., 817 F.Supp.2d 100 (E.D.N.Y. 2011) ("Schlessinger I"). According to the District Court's analysis, no private right of action exists under § 395-a, and Plaintiffs could not create one by alleging a breach of contract claim or by invoking the private right of action in § 349. Id. at 105, 111.

After hearing oral argument, we noted that this appeal turned on unresolved issues of New York law, and therefore certified two questions to the New York Court of Appeals:

1. May parties seek to have contractual provisions that run contrary to General Business Law § 395-a declared void as against public policy?
2. May plaintiffs bring suit pursuant to § 349 on the theory that defendants deceived them by including a contractual provision that violates § ...

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