Hunter v Hereford Ins. Co.
Annotate this CaseDecided on August 14, 2015
Civil Court of the City of New York, Queens County
Mary V. Hunter, Plaintiff,
against
Hereford Insurance Company AND SHERI GORDON, Defendants
27686QTS2014
For Plaintiff:
Noe Jaruda, Esq.
Garbanzos Law Firm, PC
39-16 63 Street
Woodside, NY 11377
Phone: (718) 725-7324
For Defendants:
Cary Maynard, Esq.
Suretsky Katz & Dranoff, LLP
478 Park Avenue South
New York, NY 10016
Phone: (718) 973-9797
Cheree A. Buggs, J.
Defendant Hereford Insurance Company ("Hereford") moved to dismiss the action: 1) against Hereford herein under Civil Practice Law and Rules (CPLR) §3211 (a)(7) for plaintiff's failure to state a cause of action, or in the alternative on grounds that plaintiff lacks standing to file the action for lack of privity of contract; 2) against defendant Sheri Gordon ("Gordon"), as she is an agent of Hereford, the disclosed principal; 3) for failure to state a cause of action for unfair claims practices; and Hereford seeks 4) costs and sanctions against plaintiff for filing a frivolous action; and 5) such other relief as this Court may deem just and proper.
The motion is decided as follows: the matter herein is dismissed against both defendants; and the branch of the motion seeking costs and sanctions is granted to the extent that the matter herein is set down for a hearing to determine whether plaintiff's filing of this action was frivolous, serving as a basis for the imposition of sanctions and/or costs pursuant to the Rules of the Chief Administrative Judge (22 NYCRR §§130.1-1).
Plaintiff Mary Hunter ("Hunter") brought this action against Hereford and Gordon for insurance bad faith and unfair claim settlement practices between Hunter, who calls herself a "third-party insurance claimant" and Hereford and Gordon. Hereford, through its claims examiner, Gordon, offered Hunter $3,000 to settle a case involving allegations of bodily injuries as a result of a vehicular accident between Hunter and Hereford's insured, Herman Charles. Hereford determined that Hunter's alleged injuries fell short of the "serious injury" threshold under New York State Insurance Law §5102(d). Hunter deemed the settlement offer to be insufficient, and filed suit seeking damages of $21,500, the amount to which she believed she was "entitled to for injuries...incurred as a result of the accident caused by defendant's insured on November 23, 2014."
At the outset, the motion to dismiss is granted as to Gordon, who, as a claims examiner, is an agent of the principal, insurance company Hereford. It is well-settled law in this state that "...[u]nless the agent has assumed authority and responsibility, as if he were acting on his own account, then the duty which the agent fails to perform is a duty owing to his principal and not to the third party, to whom he has assumed no obligation" (Jones v Archibald, 45 AD2d 532 [1974]). Hunter presents no argument or evidence that Gordon in any way assumed the "authority and responsibility" case law requires to make her potentially liable in this matter. Accordingly, the action is dismissed as to Gordon.
In her opposition papers, Hunter cites two cases in support of a third-party claimant's cause of action for unfair claim practices, Bi-Economy Market v Harleysville, 10 NY3d 187 (2008), and Pavia v State Mut. Auto Ins. Co., 82 NY2d 455 (1993). However, neither case stands for the proposition she contends.
In Bi-Economy, the issue was an insured's consequential damages as a result of the insurance company's failure to fulfill its contractual obligations. Not only does that case involve an issue between an insured and the insurance company—no third parties are in issue—it involves "consequential damages," defined in the text of that case as those damages "which do not so directly flow from the breach.'" (Id. at 192.) Most incredible of all, however, is the opposition papers' citing of non-existent language in Bi-Economy. Hunter's opposition papers reference language in the case stating that consequential damages can "place the third-party in the position it would have been [sic] had the contract with the insured been performed." Instead, what the case says is that limiting an [*2]insured's recovery to the policy limits, instead of considering additional consequential damages "...does not place the insured in the position it would have been in had the contract been performed." (Id. at 195.)
While the Pavia case does involve a third-party suing an insurance company on an issue of "bad faith," even a cursory reading of that matter makes clear that the third-party had standing to sue in that instance because the insured parties had "...assigned all causes of action they might have against..." their insurance company to the third parties. Pavia in no way supports Hunter's contention that as a third-party, she has a claim against Hereford for not settling the case in which she alleges that she suffered a "serious injury" under the New York State Insurance Law.
New York State Insurance Law §2601 prohibits unfair claim settlement practices; however, that statute regards oversight by the New York State Department of Financial Services (NYSDFS) of insurance companies which might be engaging in such practices, and provides for penalties which NYSDFS might impose. The statute makes no provision for an insured to have a cause of action against his or her insurance company under that section of law. In New York University v Continental Insurance Co. (87 NY2d 308 [1995]), the Court of Appeals found that §2601 "...does not give rise to a private cause of action," and that in absence of such a private cause of action, the statute "...cannot be construed to impose a tort duty of care flowing to the insured separate and apart from the insurance contract." (Id. At 317.) It follows that if the insured has no private cause of action for unfair claim settlement practices, there is also no such cause of action for a third party.
Further, any cause of action against an insurer for "bad faith" would sound in contract; the common law duty of good faith is one that arises from the insurance contract. (See Gordon v Nationwide Mut. Ins . Co., 30 NY2d 427 [1973], cert denied 410 US 931 [1973].) Hunter, as a third party, has no privity with Hereford, and therefore would not be able to bring such an action. New York case law is consistent that in absence of privity, a cause of action may not be maintained for breach of contract (Plaisir v Royal Home Sales, 81 AD3d 799 [2d Dept 2011]; CDJ Builders Corp v Hudson Group Construction, 67 AD3d 720 [2009]; Grinnell v Ultimate Realty, LLC, 38 AD3d 600 [2007]; M. Paladino, Inc. v Lucchese & Son Contracting Corp., 247 AD2d 515 [1998]). Hereford owed no duty to Hunter.
Movant Hunter's opposing papers state that she brought this action based on a letter from an NYSDFS Customer Assistance Unit Examiner stating that Hunter's claim involved "a question of fact as to the level of the injury, and degree of liability held by the insurance company" and that "[s]uch issues are best determined by a court of competent jurisdiction." [FN1] In no way could that letter be construed to indicate that Hunter had a cause of action against the insurance company for not settling the case to her liking; and in any event, it would not be the place of NYSDFS to tell an individual whether or not she has a cause of action against an insurance company. In fact, the appropriate action would have been for Hunter to bring an action against the policyholder, Herman Charles, since any issues of fact regarding liability and damages would have been between the parties involved in the accident, not between the insurance company and the person who alleges she was injured.
Based on the foregoing, the Court grants the motion to dismiss the action against both Hereford Insurance Company and its agent, Sheri Gordon. The case is dismissed against Hereford for failure to state a cause of action and for lack of privity; it is dismissed against Gordon, as she was acting as an agent for her employer, Hereford.
The motion for costs and sanctions is granted to the extent of setting this matter down for a hearing in the Civil Court of the County of Queens, Part 39, Room 102 on November 10, 2015 at 2 p.m. to determine whether Hunter's bringing this action, which according to opposition papers, was based on a letter from a NYSDFS Examiner not intended to dispense legal advice, was frivolous, and therefore a basis for sanctions and/or costs. In further consideration of sanctions and/or costs, the opposition papers misquote both case law and the NYSDFS letter, and cite cases which in no way support the argument that a third-party has a cause of action for unfair claims practices.
Dated: August 14, 2015
/s/_________________________________
HON. CHEREÉ A. BUGGS
Judge of the Civil Court of the City of New York
County of Queens Footnotes
Footnote 1:Although the meaning is not materially altered, here again, movant's papers misquote a source—in this instance the NYSDFS letter—as follows: "Your complaint involves a question of fact concerning the liability of the insurance company. Such matters can only be decided by a court of law."
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
