On March 30, 2020, Judge Lawrence E. Kahn of the Northern District of New York granted a carrier’s 12(b)(6) motion seeking dismissal of the insured’s extra-contractual claims. The case was filed by a homeowner seeking payment for alleged water damages at her home. She alleged that the water damage loss occurred January 6, 2017, but acknowledged that she had not reported the claim until a year later.
Plaintiff alleged that the carrier wrongfully denied her claim, although the carrier pointed out that it never actually issued any denial, but had been waiting for the plaintiff to provide the requested information – specifically, information demonstrating that plaintiff fulfilled her policy obligation to maintain heat in the home. Plaintiff alleged in her complaint that she was entitled to extra-contractual damages because she had to hire a lawyer and that it was foreseeable that the carrier’s conduct would result in additional monetary loss.
The court explained that to warrant consequential damages, an insured must demonstrate that the damages were contemplated by the parties at the time of contracting and that those damages resulted from the carrier’s bad faith failure to pay. In granting the carrier’s motion to dismiss, the court explained and that the conclusory allegations regarding foreseeability were insufficient. The court then explained that even if extra-contractual damages were foreseeable, the allegations suggested merely a typical breach of contract claim. The court also rejected plaintiff’s argument that she had suffered severe illnesses after the water damage claim. The court pointed out that there was no allegation that her illnesses were caused by the burst pipe or that the carrier was aware of her illnesses. The court also acknowledged that the language in the complaint alleging consequential damages was nearly identical to another complaint filed by the same attorney, and in that case the extra-contractual claims were also dismissed in a 12(b)(6) motion.
The court also determined that the plaintiff had not plead her extra-contractual claims with sufficient particularity. The court again pointed out that plaintiff’s allegations were conclusory and noted that plaintiff had not explained what injury the consequential damages would compensate. Ultimately, with the extra-contractual claims dismissed, the breach of contract claims against the carrier will go forward, and the authors are litigating the case. The case is Dahlinger v. First Am. Specialty Ins. Co., No. 119CV0020LEKTWD, 2020 WL 1511261 (N.D.N.Y. Mar. 30, 2020).