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Violet Realty, Inc. v. Affiliated FM Insurance Co.

United States District Court, W.D. New York

August 28, 2017

VIOLET REALTY, INC., doing business as Main Place Liberty Group, Plaintiff,
v.
AFFILIATED FM INSURANCE COMPANY, Defendant.

          DECISION AND ORDER

          ELIZABETH A. WOLFORD, UNITED STATES DISTRICT JUDGE.

         INTRODUCTION

         Plaintiff Violet Realty, Inc. ("Plaintiff) filed this action on September 20, 2016, alleging New York state causes of action for breach of contract, failure to act in good faith, violation of New York insurance law, and deceptive business practices. (Dkt. 1). Defendant Affiliated FM Insurance Company ("Defendant") answered and countersued for breach of contract, fraud, and reimbursement, on November 3, 2016. (Dkt. 9). Plaintiff answered the counterclaims on November 30, 2016. (Dkt. 13).

         Presently before the Court is Defendant's motion for judgment on the pleadings[1]regarding Plaintiffs second, third, and fourth causes of action. (Dkt. 23). For the reasons stated below, Defendant's motion is granted.

         FACTUAL BACKGROUND[2]

         Plaintiff owns a 26-story commercial office tower in downtown Buffalo, New York. (Dkt. 1 at ¶ 6). Pursuant to the terms of a written insurance policy, Defendant provided fire insurance for Plaintiff. (Id. at ¶ 7; see also Dkt. 6 (showing the policy)). The policy limit for both the office tower and other buildings owned by Plaintiff was $342 million. (Dkt. 1 at ¶7). The policy was in effect from September 1, 2014, to September 1, 2015. (Id. at ¶¶ 7-8).

         On February 20, 2015, the building "suffered a fire that originated on the 15th floor, causing damage to numerous floors of the building." (Id. at ¶ 10). Damage was caused by the fire itself, smoke, and water pumped into the building by firefighters in an effort to stem the blaze. (Id. at ¶¶ 10-11, 40). The policy requires that, in the event of a fire, Defendant pay "the lesser amount of either: (1) the actual cash value of the property at the time of the loss, or (2) the amount which it would cost to repair or replace the property with the material of like kind and quality within a reasonable time after such loss." (Id. at ¶ 9).

         On the day of the fire, Defendant sent representatives to observe the damage. (Id. at ¶ 14). Thereafter, Plaintiff hired an adjuster and began remediating the damage. (Id. at ¶¶ 13-15). In its first estimate, Plaintiffs adjuster estimated the loss to be approximately $2.5 million. (Id. at ¶ 18). This early estimate did not include all of the repairs Plaintiff later determined to be necessary. (Id.). The most recent damage estimate totaled almost $6.5 million. (Id. at ¶20). Defendant has paid approximately $2.2 million for direct losses from the fire. (Id. at ¶ 22).

         Plaintiff claimed additional business interruption losses totaling over $700, 000, for lost rental income; such claims are allowed under the policy. (Id. at ¶¶ 24-31). Defendant has not made any payment on Plaintiffs business interruption claim. (Id. at ¶32).

         Plaintiff alleges that Defendant "failed to adequately investigate the scope of the loss, " (id. at ¶ 33), and that its representatives were "absent from the site for a lengthy and important period of time immediately following the fire." (Id. at ¶ 35). Plaintiff complains that Defendant denied payment "for several aspects of [Plaintiff s] remediation efforts, " (id. at ¶ 37), reasoning that the remediation efforts are unnecessary. (Id. at ¶ 39). Plaintiff points to Defendant's refusal to pay remediation of smoke or water damage beyond the cost of cleaning the affected areas. (Id. at ¶¶ 40-41).

         Plaintiff further complains that Defendant refuses to sufficiently cover remediation of the exterior of the building. (Id. at ¶¶ 42-43). The building's exterior has the "unique wearing effect of a half century of exposure to the elements, " and new material is not of "like kind and quality." (Id. at ¶ 42). The fire caused damage to certain parts of the exterior, and no new materials can be made to match the old ones that remain in place. (Id.). Plaintiff proposed cleaning all of the panels on the building and then adding the new materials. (Id. at ¶ 43). This procedure would be cheaper than fully replacing the entire outer structure of the building to make the panels uniform. (See Id. at ¶¶ 42-43). Defendant refused to pay for the cleaning. (Id. at ¶ 43).

         Plaintiff asserts four causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) violation of New York Insurance Law § 2601; and (4) deceptive business practices in violation of New York General Business Law § 349. (Id. at ¶¶ 52-78).

         DISCUSSION

         I. Stand ...


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