In Wilner v. Allstate Ins. Co., decided by the Second Department on January 12, 2010 and reported at 2010 NY Slip Opinion 00248, the Second Department denied Allstate's motion to dismiss the causes of action alleging a violation of General Business Law §349, which included a claim for punitive damages and attorneys' fees, as well as dismissal of the second cause of action sounding in breach of contract based upon the insurer's refusal to provide a defense to the insured after the Village of Roslyn instituted criminal proceedings against them.

The coverage dispute originated from claims that an October 8, 2005 storm allegedly caused a hillside on the plaintiff's property to collapse, destroying their retaining wall and causing other damages. Allstate had issued a Deluxe Plus Homeowner's policy to the Wilners. The crux of plaintiff's claim under GBL §349 was the policy's inclusion of a subrogation provision which obligated an insured person to protect the insurer's subrogation rights and to
"…help us enforce them." The plaintiffs had also served a discovery demand seeking documents referable to other claims filed under the Deluxe Plus Homeowner's policy resulting from the October 2005 storm. In response, the trial court issued an order directing Allstate to produce, in camera, all property damage claims under the Allstate Deluxe Plus Homeowner's policy for damages resulting from the storm which occurred on October 8, 2005 in Nassau County, as well as all claims that resulted in litigation, limited to property damage claims between October 7, 2005 and January 7, 2007 in Nassau County.

After discussing the parameters of the court's analysis on a motion to dismiss, the court concluded that as the subrogation provision is contained in every Allstate Deluxe Plus Homeowner's policy, "any consumer holding this policy, who has losses potentially attributable to a third party, is required to protect the defendant's rights." The court, thus, concluded that the conduct complained of has a broad impact on consumers at large, a requirement under GBL §349. Further, accepting plaintiff's allegation that Allstate, by refusing to reach a timely decision on coverage, compelled the plaintiffs to comply with the subrogation provision and they were forced to incur the expense of hiring an attorney to prevent forfeiture of coverage for a covered loss, as true, as required on a motion to dismiss, the court determined that the plaintiff properly pled that Allstate had engaged in deceptive acts and practices under the General Business Law, which were misleading in a material way,

With respect to an award of punitive damages, which were sought only on the plaintiff's claim under GBL §349, the court found that the plaintiff's allegation that the defendant intentionally did not reach a final decision on their claim so as to force them commence a suit against The Village, could be considered so flagrant as to transcend mere carelessness, thereby supporting a claim for punitive damages.

With respect to the breadth of the discovery demand, the court noted that since no objection to the demand was made within 20 days, the court's review was limited to determining whether the requested material was privileged or the demand was palpably improper. The court concluded that the information sought, regarding claims the defendant handled for other insureds, related to the plaintiff's attempt to establish that the defendant engaged in a pattern of deception and thus, the request was proper.