United States District Court, W.D. New York
VIOLET REALTY, INC., doing business as Main Place Liberty Group, Plaintiff,
AFFILIATED FM INSURANCE COMPANY, Defendant.
DECISION AND ORDER
ELIZABETH A. WOLFORD, UNITED STATES DISTRICT JUDGE.
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).
before the Court is Defendant's motion for judgment on
the pleadingsregarding Plaintiffs second, third, and
fourth causes of action. (Dkt. 23). For the reasons stated
below, Defendant's motion is granted.
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
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).
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).
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).
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 ¶¶
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).
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 ¶¶