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Nick's Garage, Inc. v. Progressive Casualty Insurance Co.

United States District Court, N.D. New York

March 31, 2015

NICK'S GARAGE, INC., Plaintiff,
v.
PROGRESSIVE CASUALTY INSURANCE COMPANY; NATIONAL CONTINENTAL INSURANCE COMPANY; PROGRESSIVE ADVANCED INSURANCE COMPANY; PROGRESSIVE DIRECT INSURANCE COMPANY; PROGRESSIVE MAX INSURANCE COMPANY; PROGRESSIVE NORTHERN INSURANCE COMPANY; PROGRESSIVE PREFERRED INSURANCE COMPANY; AND PROGRESSIVE SPECIALTY INSURANCE COMPANY, Defendant.

CECELIA R. CANNON, ESQ., LAWRENCE M. ORDWAY, JR., ESQ., BOUSQUET HOLSTEIN PLLC, Syracuse, New York, Attorneys for Plaintiff.

NELSON, LEVINE, DE LUCA & HAMILTON KYMBERLY KOCHIS, ESQ, New York, New York, Attorneys for Defendants.

MEMORANDUM-DECISION AND ORDER

MAE A. D'AGOSTINO, District Judge.

I. INTRODUCTION

On March 30, 2012, Plaintiff commenced this suit in New York State Supreme Court, in Onondaga County. See Dkt. No. 1. In the complaint, Plaintiff asserts claims of breach of contract, quantum meruit, and violations of New York General Business Law § 349. See Dkt. No. 1-1. On May 10, 2012, Defendant Progressive Casualty Insurance Company, initially the only named defendant, removed the action to this Court based upon diversity of citizenship. See Dkt. No. 1. Defendant made a motion to dismiss, brought pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Dkt. No. 7. The Court dismissed Plaintiff's quantum meruit cause of action and those General Business Law claims that were barred by the three-year statute of limitations, but Plaintiff's cause of action for breach of contract and the remaining General Business Law claims were permitted to go forward. See Dkt. No. 22. Defendant Progressive Casualty Insurance Company filed an answer on March 13, 2013. See Dkt. No. 23. Subsequently, Plaintiff, by leave of Court, filed an amended complaint naming Progressive Casualty Insurance Company together with National Continental Insurance Company, Progressive Advanced Insurance Company, Progressive Direct Insurance Company, Progressive Max Insurance Company, Progressive Northern Insurance Company, Progressive Preferred Insurance Company, and Progressive Specialty Insurance Company (collectively "Defendant"). See Dkt. No. 35. Defendant filed an answer on October 23, 2013. See Dkt. No. 39.[1] Currently before the Court are Defendant's motion for summary judgment brought pursuant to Rule 56 of the Federal Rules of Civil Procedure and Defendant's three motions to strike portions of Plaintiff's opposition papers. See Dkt. Nos. 98, 100, 106.

II. BACKGROUND

Plaintiff, a corporation with its principal place of business in New York, is an automobile repair shop located in Syracuse, New York. See Dkt. No. 88 at ¶¶ 1-2. Defendant consists of insurance companies that are each engaged in the business of selling auto insurance policies in New York. See id. 88 at ¶ 3.

From 2007 through 2011, respective vehicles, described by their vehicle identification numbers ("VIN") in Plaintiff's amended complaint, suffered property damage. See Dkt. No. 35 at ¶ 15. Property damage claims were eventually submitted to Defendant by the respective owners of the vehicles. See Dkt. No. 88 at ¶¶ 6-7. Each of the vehicles was repaired at Plaintiff's auto collision repair shop. See Dkt. Nos. 86-5, 86-6, 86-7, 86-8. According to Plaintiff, these customers fall into two categories, the "First-Party Assignors" and the "Third-Party Assignors" (collectively, the "Assignors"). See Dkt. No. 88 at ¶¶ 8-9 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. See Dkt. No. 35 at ¶ 19.

The first twenty-nine of the forty property damage claims - by twenty-six assignors - listed in paragraph fifteen 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 at the time of the property damage and repairs. See id. at ¶ 16; Dkt. No. 88 at ¶ 6. The remaining eleven property damage claims in the amended complaint belong to the Third-Party Assignors, i.e., these vehicles were damaged by automobile insurance policy holders of Defendant. See Dkt. Nos. 35 at ¶ 18; 88 at ¶ 7.

All of the Assignors brought their vehicles to Plaintiff for repairs after being damaged during accidents. See Dkt. Nos. 74-6; 74-7; 74-8. Each of the Assignors made Plaintiff his or her "designated representative" pursuant to New York regulation. See Dkt. No. 86-14. 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 addition to the designated representative authorization, all the Assignors signed an authorization and guideline for repairs, see Dkt. No. 86-4, and a consumer consent, see Dkt. No. 86-13. All the First-Party Assignors signed an authorization for assignment of claim and proceeds. See Dkt. No. 74-5. All the Third-Party Assignors signed both an authorization for assignment of claim and proceeds form and an assignment of property damage claim only form. See Dkt. Nos. 74-6, 74-7.

In connection with each vehicle, Plaintiff sent Defendant an estimate of the repairs necessary to return the vehicles to their pre-accident condition. See Dkt. No. 35 at ¶ 22. Defendant then submitted estimates to Plaintiff, which Plaintiff claims were insufficient to restore the vehicles to their pre-accident condition. See id at ¶¶ 23-24; Dkt. Nos. 86-5; 86-6; 86-7; 86-8. Thereafter, Plaintiff contends that it served upon Defendant notices of deficiencies informing Defendant "that there were omitted and/or insufficient items and that an agreed upon amount had not been reached for the repairs[.]" See Dkt. Nos. 35 at ¶ 32; 86-5; 86-6; 86-7; 86-8. Defendant contends that each of the 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 Dkt. No. 73. Plaintiff admits that the vehicles were repaired to their pre-loss condition and that the First-Party Assignors were responsible for any deductibles, but Plaintiff denies that it was not owed for the cost of repairs beyond what Defendant reimbursed. See Dkt. Nos. 35 at ¶¶ 19, 35, 42; 88 at ¶ 11.

Plaintiff contends that the First-Party Assignors were in privity of contract with Defendant, and Defendant was required by the listed insurance policies "to provide enough coverage to restore the Vehicles to the same condition they were in immediately prior to the Accidents." See Dkt. Nos. 88 at ¶¶ 6; 87-9. Plaintiff claims that the First Party-Assignors assigned their rights under the specified policies to Plaintiff. See Dkt. No. 35 at ¶ 19, 30. Plaintiff's first cause of action contends that Defendants breached the policies by providing an insufficient estimate to return the vehicles to their pre-accident condition and that Defendants owe Plaintiff $70, 642.18 for the deficiencies on the First-Party assignments. See id. at ¶ 41.

As to the Third-Party Assignors, Plaintiff repaired their vehicles, which were not directly insured by Defendant. See Dkt. No. 88 at ¶ 7. Rather, these vehicles were damaged by drivers who were insured by Defendant. See id. Defendant's contractual relationship was with its tort-feasor insured, not with the Third Party Assignors, and, according to Plaintiff, Defendant accepted liability on behalf of its insured for the repairs to the Third Party Assignors' vehicles by making partial payment for the claimed repairs. See Dkt. No. 35 at ¶ 18. Plaintiff claims that the assignments by the First-Party and Third-Party Assignors included the right to bring claims against Defendants under New York State General Business Law § 349, which is Plaintiff's second cause of action. See Dkt. No. 35 at ¶¶ 46-57.

In its second cause of action, Plaintiff maintains thirty-two assigned claims against Defendant. See Dkt. No. 35 at ¶¶ 46-55. Plaintiff contends that 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 ¶¶ 47-49. 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 ("GBL § 349"). See id. at ¶¶ 50-54. As such, Plaintiff alleges that it is entitled to damages in the amount of $73, 776.59, plus reasonable attorneys' fees, on its second cause of action. See id. at ¶ 57.[2]

In their motion for summary judgment, Defendant argues that the Court should dismiss Plaintiff's first cause of action because its process for determining labor rate is sound, it is not contractually obligated to pay for overhead expenses and original parts, its paint and material charges were not arbitrary and speculative, and Plaintiff has not put forth any evidence that there was a deficiency in labor hours. See Dkt. Nos. 74; 104. Further, Defendant argues that Plaintiff is not entitled to damages for any alleged breach of the auto insurance contracts because Plaintiff cannot prove that the Assignors suffered any loss or damage arising from any alleged breach of the auto insurance contracts. Defendant contends that 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. See Dkt. No. 73.

As to the second cause of action, Defendant argues that Plaintiff cannot prove that Defendant engaged in deceptive or misleading practices in its estimates and claims handling associated with the thirty-two insurance claims and the corresponding vehicle repair jobs. See id. Further, Defendant maintains that the alleged deceptive acts were fully disclosed and, as a matter of law, cannot be deceptive. See id. Defendant contends that Plaintiff cannot prove that either it or the Assignors have been injured by reason of any alleged deceptive act and that the alleged deceptive practice does not have the requisite consumer impact required under GBL § 349. See id. Additionally, Defendant asserts Plaintiff has no standing to bring GBL § 349 claims and that Plaintiff is seeking the very same damages it seeks in its first cause of action, and, therefore, are not independent of any loss suffered by the alleged breach of contract. See 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 be tried and that the facts as to which there is no such issue warrant judgment for the movant as a matter of law. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 36 (2d Cir. 1994) (citations omitted). When analyzing a summary judgment motion, the court "cannot try issues of fact; it can only determine whether there are issues to be tried." Id. at 36-37 (quotation and other citation omitted). Moreover, it is well-settled that a party opposing a motion for summary judgment may not simply rely on the assertions in its pleading. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (quoting Fed.R.Civ.P. 56(c), (e)).

In assessing the record to determine whether any such issues of material fact exist, the court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Chambers, 43 F.3d at 36 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 (1986)) (other citations omitted). Where the non-movant either does not respond to the motion or fails to dispute the movant's statement of material facts, the court may not rely solely on the moving party's statement of material facts; rather, the court must be satisfied that the citations to evidence in the record support the movant's assertions. See Giannullo v. City of N.Y., 322 F.3d 139, 143 n.5 (2d Cir. 2003) (holding that not verifying in the record the assertions in the motion for summary judgment "would derogate the truth-finding functions of the judicial process by substituting convenience for facts").

B. Motions to strike

After Plaintiff filed its papers in opposition to summary judgment, Defendant brought three separate motions to strike Plaintiff's opposition papers, which include: (1) motion to strike the declaration of Plaintiff's counsel, Ceclia Cannon, because the declaration included legal arguments, in violation of Fed.R.Civ.P. 56 (c)(4), see Dkt. No. 101; (2) motion to strike portions of the declaration of Michael Orso because the declaration contains conclusory statements, legal arguments, hearsay, contradictory testimony, and improper expert testimony in violation of the Federal Rules of Evidence, Federal Rules of Civil Procedure, and Local Rules, see Dkt. No. 107; and (3) motion to strike the declaration of Rocco Avellini because the declaration contains new opinions in violation of Fed.R.Civ.P. 37 and contains inadmissible evidence in violation of Fed.R.Civ.P. 56(c)(4), see Dkt. No. 99.

If a party wishes to argue that an asserted material fact is not supported by the evidence, that party may do so in its summary judgment briefing. Likewise, although a motion to strike has sometimes been used to call to courts' attention questions about the admissibility of proffered' evidentiary material, such a motion is best viewed as an invitation by the [party] to consider whether the record... may properly be relied upon.' Since such an invitation is readily extended as part of that party's briefing, a separate motion to strike is unnecessary.

Ricci v. Destefano, No. 3:04 CV 1109, 2006 WL 2666081, *2 (D. Conn. Sept. 15, 2006) (quoting Monroe v. Bd. of Ed. of Wolcott, 65 F.R.D. 641, 645 (D. Conn. Sept. 15, 1975). The Court will consider only evidence shown to be admissible at trial. "Parties should assume that courts will undertake this obligation faithfully and fully review the proffered evidence of record and draw appropriate conclusions." Ricci, 2006 WL 2666081, at *3. Therefore, the Court denies Defendant's motions to strike.

C. Relevant regulatory framework

Part 216 of the New York State Insurance Department Regulations ("Regulation 64"), entitled "Unfair Claims Settlement Practices and Claim Cost Control Measures, " governs an insurer's conduct in the automobile repair process, and provides rules for the processing of first party motor vehicle physical damage claims and third party property damage claims arising under motor vehicle liability insurance contracts. See 11 N.Y.C.R.R. § 216.0(a). Section 216.7 sets forth ...


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