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THERE IS NO HEIGHTENED PLEADING REQUIREMENT FOR CONSEQUENTIAL DAMAGES STEMMING FROM A BREACH OF AN INSURANCE CONTRACT, PLAINTIFF ALLEGED THE INSURER’S DELAY IN PAYING THE CLAIM FOR DAMAGE TO PLAINTIFF’S BUILDING, WHICH SHIFTED WHEN WORK WAS DONE ON AN ADJOINING BUILDING, RESULTED IN AN ARRAY OF CONSEQUENTIAL DAMAGES, THE CONSEQUENTIAL DAMAGES ASPECT OF THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff had sufficiently alleged consequential damages stemming from the insurer’s alleged delay in paying a claim for damage to plaintiff’s building which shifted after work on an adjoining building. The First Department noted that there is no heightened pleading requirement for consequential damages stemming from a breach of contract. The consequential damages aspect of the  complaint should not have been dismissed:

The complaint alleges that rather than pay the claim, defendant has made unreasonable and increasingly burdensome information demands throughout the three year period since the property damage occurred. Plaintiff contends that this was a tactic by defendant to make the claim so expensive to pursue that plaintiff would abandon it altogether. Plaintiff contends defendant’s investigatory process has taken so long and become so attenuated that the structural damage to the building has worsened. Among the consequential damages alleged are engineering costs, painting, repairs, monitoring equipment, and moisture abatement to address water intrusion, loss of rents, and other expenses attributable to mitigating further damage to the property. …

A plaintiff may sue for consequential damages resulting from an insurer’s failure to provide coverage if such damages (“risks”) were foreseen or should have been foreseen when the contract was made … . … [T]he inquiry is not whether plaintiff will be able to establish its claim, but whether plaintiff has stated a claim.

Here, plaintiff’s allegations meet the pleading requirements of the CPLR with respect to consequential damages, whether in connection with the first cause of action or the second cause of action for breach of the covenant of good faith and fair dealing in the context of an insurance contract … . … [T]here is no heightened pleading standard requiring plaintiff to explain or describe how and why the “specific” categories of consequential damages alleged were reasonable and forseeable at the time of contract. There is no heightened pleading requirement for consequential damages …. Furthermore, an insured’s obligation to “take all reasonable steps to protect the covered property from further damage by a covered cause of loss” supports plaintiff’s allegation that some or all the alleged damages were forseeable … . D.K. Prop., Inc. v National Union Fire Ins. Co. of Pittsburgh, Pa., 2019 NY Slip Op 00347, First Dept 1-21-19

 

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