Insurance coverage attorneys take note! The Appellate Division, First Department in The Rockefeller Univ. v Aetna Cas. & Sur. Co. recently discussed claims of breach of the implied covenant of good faith and fair dealing and a violation of the General Business Law sec. 349 within the context of a motion to dismiss the complaint. The First Department affirmed the Supreme Court’s denial of the insurer defendants’ motion to dismiss the following two causes of action:  

• Breach of Good Faith and Fair Dealing: The plaintiff alleged that the insurers acted in bad faith by frustrating the purpose of their insurance policies, particularly to claims stemming from the 2019 Child Victims Act. The insurer’s actions included failing to resolve claims, withholding decades-old policies, delaying coverage decisions, and refusing to pay settlements. The court found these allegations distinct from the breach of contract claims because the damages for the breach of good faith could extend beyond the policy limits, potentially including financial strain caused by the plaintiff’s need to self-fund over $700 million in settlements and costs.

• Violation of General Business Law § 349 (a): The plaintiff also alleged that the insurers engaged in deceptive practices by adopting a “wait-and-see” strategy that harmed the plaintiff, policyholders, sexual abuse survivors, and the insurers’ investors. The court found that this cause of action was valid because the plaintiff sufficiently alleged consumer harm beyond a private dispute, noting that the insurance policies were standard forms provided to multiple consumers.

The complaint and amended complaint are attached here Download 20241002 – Summons and Complaint w Notice of Electronic Filing and here  Download 654425_2019.