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Nick's Garage, Inc. v. Nationwide Mut. Ins. Co.

United States District Court, N.D. New York

March 31, 2015

NICK'S GARAGE, INC., Plaintiff,
v.
NATIONWIDE MUTUAL INSURANCE COMPANY, NATIONWIDE AFFINITY INS. CO. OF AMERICA, NATIONWIDE GENERAL INSURANCE COMPANY, NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY, AND NATIONWIDE INSURANCE COMPANY OF AMERICA, Defendants

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[Copyrighted Material Omitted]

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For Nick's Garage, Inc., Plaintiff: Cecelia R. Cannon, LEAD ATTORNEY, Lawrence M. Ordway, Jr., Bousquet, Holstein Law Firm - Syracuse Office One Lincoln Center, Syracuse, NY.

For Nationwide Mutual Insurance Company, Defendant: Roy A. Mura, LEAD ATTORNEY, Eric T. Boron, Mura, Storm Law Firm, Buffalo, NY.

For Nationwide Affinity Ins. Co. of America, Nationwide General Insurance Company, Nationwide Mutual Fire Insurance Company, Natiowide Property and Casualty Insurance Company, One Nationwide Plaza, Columbus, OH, Nationwide Insurance Company of America, Defendants: Eric T. Boron, Mura, Storm Law Firm, Buffalo, NY.

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MEMORANDUM-DECISION AND ORDER

Mae A. D'Agostino, United States District Judge.

I. INTRODUCTION

On April 25, 2012, Plaintiff commenced this suit in New York State Supreme Court, in Onondaga County. See Dkt. No.

Page 189

1. In the complaint, Plaintiff asserts claims of breach of contract, quantum meruit, and violations of New York General Business Law § 349. See id. On May 10, 2012, Defendant removed the action to this Court based upon diversity of citizenship. See id. Defendant Nationwide Mutual Insurance Company, initially the only named Defendant, removed the action to this Court on May 29, 2012, and answered the complaint that same day. See id. On March 26, 2013, by leave of Court, Plaintiff filed an amended complaint naming five additional co-Defendants. See Dkt. No. 25.[1] Additionally, Plaintiff's amended complaint dropped the quantum meruit cause of action. See id.

Currently before the Court is Defendant's motion for summary judgment brought pursuant to Rule 56 of the Federal Rules of Civil Procedure.[2]

II. BACKGROUND

From 2007 through 2012, eighteen respective vehicles, described by their vehicle identification numbers (" VIN" ) in Plaintiff's amended complaint, suffered property damage. See Dkt. No. 59-41 at ¶ 7. Among the vehicles at issue, a vehicle owned by Andrew Foster suffered two incidents of property damage, one occurring on or about July 27, 2011, and the other occurring on or about February 7, 2012. See id. at ¶ 8. Property damage claims were eventually submitted to Defendant Nationwide by the respective owners of the vehicles. See id. at ¶ 9. Each of the vehicles was repaired at Plaintiff's auto collision repair shop. See id. at ¶ 10.

According to Plaintiff, these customers fall into two categories, the " First-Party Assignors" and the " Third-Party Assignors" (collectively, the " Assignors" ). Although the theories of recovery differ for these two types of assignors, Plaintiff alleges that Defendant was obligated to repair the vehicles of all of the Assignors to their pre-accident condition.

The first fourteen of the nineteen property damage claims listed in paragraph eleven of Plaintiff's amended complaint belong to the First-Party Assignors, i.e., the owners of the vehicles that Plaintiff repaired were auto insurance policy holders with Defendant Nationwide at the time of the property damage and repairs. See id. at ¶ 11. The remaining five property claims in the amended complaint belong to the Third-Party Assignors, i.e., these vehicles were damaged by Defendant Nationwide automobile insurance policy holders. See id. at ¶ 12. Defendant contends that each of the nineteen vehicles at issue were repaired and restored by Plaintiff to the vehicle's pre-accident condition, without the vehicle owners having to pay any money out of pocket, other than any deductible owed by the First-Party assignors. See id. at ¶ 13. While Plaintiff admits that the vehicles were repaired to their pre-accident condition and that the First-Party assignors were responsible for any deductibles, it denies " that the vehicle owners were not responsible for the cost of any repairs beyond what Defendants reimbursed."

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Dkt. No. 69 at ¶ 13. Specifically, Plaintiff contends that " the Authorization and Guidelines for Repairs signed by each customer explicitly stated that the customer was responsible for the full cost of the repairs, regardless of what any insurer might reimburse," and that " the Final Invoices for each repair show that each customer was billed the full amount of the repairs, not just what Defendants' paid." Id. Plaintiff then goes on to clarify that, " [a]s consideration for Plaintiff's customers assigning their claims against Defendants to Plaintiff, Plaintiff forgoes enforcing its rights to collect the repair costs from the customers." Id.

Plaintiff contends that all of the Assignors brought their vehicles to Plaintiff for repairs after being damaged during accidents. Each of the Assignors made Plaintiff his or her " designated representative" pursuant to New York regulation. A designated representative is authorized to negotiate with an insurer on behalf of a customer for repairs to a vehicle. See 11 N.Y.C.R.R. § 216.7(a)(2). In connection with each vehicle, Plaintiff sent Defendant an estimate of the repairs necessary to return the vehicles to their pre-accident condition. Plaintiff alleges that Defendant then submitted estimates to Plaintiff which were insufficient to restore the vehicles to their pre-accident condition. Thereafter, Plaintiff contends that it served upon Defendant Notices of Deficiencies informing Defendant that an agreed upon amount had not been reached for the repairs. Plaintiff alleges that, although it still completed the repairs necessary to return the vehicles to their pre-accident condition, Defendant failed to fully pay for those repairs, thereby violating its contractual and regulatory obligations to put the vehicles in their pre-accident condition.

The parties agree that most of the deficiencies Plaintiff claims that it is owed is due to the hourly labor rates Defendant allowed and paid for in the repairs at issue. See Dkt. No. 69 at ¶ 18. Defendant contends, and Plaintiff agrees, that Plaintiff " knew from past experience ('past' meaning relating to interactions with Nationwide having occurred prior to the earliest of the 19 claims/repair jobs at issue in the instant action) that Nationwide would not pay the hourly labor rate plaintiff would charge on the collision repair jobs[.]" Id. at ¶ 24.

In its first cause of action, Plaintiff alleges that " Defendants have refused to pay the Deficiencies for repairs on the First Party Assignors' Vehicles and thereby has violated its obligation under the Policies and New York Insurance Law and regulations to repair the Vehicles to their pre-accident condition." Dkt. No. 25 at ¶ 27. As such, Plaintiff contends that it is entitled to damages as to that claim in the amount of $24,624.14. See id. at ¶ 28. In its second cause of action, with respect to the Third-Party Assignors, Defendant limited the costs it would cover to repair the vehicles to less than the full amount necessary to repair the vehicles to their pre-accident condition. See id. at ¶ 32. Plaintiff contends that " Defendant's limitation of costs was a material deceptive action because it knew when it made its limitation that it was not providing the full amount necessary" and that Defendant's failure to negotiate all elements of the specified claims was a deceptive business practice within the meaning of New York General Business Law § 349. See id. at ¶ 34. As such, Plaintiff alleges that it is entitled to damages in the amount of $18,093.04, plus attorneys' fees, on its second cause of action. See id. at ¶ 36.[3]

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In their motion for summary judgment, Defendant argues that the Court should dismiss Plaintiff's first cause of action because " it is well-settled New York law that there is no private right of action for damages caused by alleged violations of New York Insurance Law § 2610 or Regulation 64 (11 NYCRR Part 216)." Dkt. No. 59-40 at 7. Further, Defendant argues that, " as assignee of the Nationwide auto insurance policyholders in the 14 First-Party claims plaintiff acquired no enforceable rights against Nationwide beyond the rights that the Nationwide auto insurance policyholders had." As such, Defendant argues that, " under the indisputable facts of the instant action plaintiff is not entitled as a matter of law to damages for any alleged breach of the auto insurance contracts because plaintiff cannot prove in this action . . . that the policyholders/assignors suffered any loss or damage arising from any alleged breach of the auto insurance contracts, and proving the existence of damage caused by an alleged breach of a contract is an essential and required element of proving a breach of contract action under established New York contract law." Id. at 8.

As to Plaintiff's second cause of action, Defendant argues that Plaintiff cannot prove that it was materially misled or deceived by Defendant's estimates and claims handling associated with the nineteen insurance claims and the corresponding vehicle repair jobs at issue in this action. See id. Further, Defendant contends that Plaintiff cannot prove that either it or its assignors have been injured by reason of any alleged violation by Defendant of New York General Business Law § 349. See id. Additionally, Defendant asserts that, with the exception of the five Third-Party Assignor claims, Plaintiff's second cause of action seeks the very same damages it seeks in its first cause of action, and are therefore not independent of any loss suffered by the alleged breach of contract. See id. Additionally, Defendant contends that six of the New York General Business Law § 349 claims are time barred by the applicable statute of limitations. See id. at 9.[4] Finally, Defendant argues that " this Court cannot permit plaintiff to use New York General Business Law § 349 to make an 'end-run' around the rule that there is no private cause of action for alleged violations of New York Insurance Law § 2601 or Regulation 64." Id.

III. DISCUSSION

A. Standard of review

A court may grant a motion for summary judgment only if it determines that there is no genuine issue of material fact to ...


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