CONTINENTAL CASUALTY COMPANY v. Michael O'Reilly, et al., Defendants-Appellants.

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Supreme Court, Appellate Division, First Department, New York.

CONTINENTAL CASUALTY COMPANY, et al., Plaintiffs-Respondents, v. NATIONWIDE INDEMNITY COMPANY, et al., Defendants, Michael O'Reilly, et al., Defendants-Appellants.

Decided: March 31, 2005

ELLERIN, J.P., NARDELLI, WILLIAMS, GONZALEZ, SWEENY, JJ. Collier, Halpern, Newberg, Nolletti & Bock LLP, White Plains (William A. Walsh of counsel), for appellants. Grippo & Elden, Chicago, IL (Gary M. Elden, of the Illinois Bar, admitted pro hac vice, of counsel), for respondents.

Order, Supreme Court, New York County (Richard F. Braun, J.), entered March 26, 2004, which, in a declaratory judgment action involving, inter alia, plaintiffs insurers' obligations to persons claiming asbestos injuries arising out of the operations of plaintiffs' insured, a dissolved insulation contractor, granted plaintiffs' motion to dismiss, for failure to state a cause of action, defendants claimants' counterclaims for violation of General Business Law § 349 and breach of the covenant of good faith and fair dealing, unanimously affirmed, with costs.

 Defendants claimants' counterclaim for violation of General Business Law § 349 alleges that plaintiffs insurers have repeatedly misrepresented the meaning of their standard comprehensive general liability policies, both to the businesses they sold the policies to, including the dissolved insulation contractor, and to defendants themselves, and that defendants sustained injury as a direct result of such misrepresentations.   These allegations, liberally construed, at best show a private contract dispute over policy coverage and the processing of defendants' claims, not conduct affecting the consuming public at large, and thus do not state a cause of action under § 349 (see New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 320-321, 639 N.Y.S.2d 283, 662 N.E.2d 763 [1995];  Fekete v. GA Ins. Co. of N.Y., 279 A.D.2d 300, 719 N.Y.S.2d 52 [2001];  Medical Socy. of State of N.Y. v. Oxford Health Plans, 15 A.D.3d 206, 206-207, 790 N.Y.S.2d 79 [2005] ).

 Defendants' counterclaim for breach of the implied covenant of good faith and fair dealing alleges that the vast majority of their claims arose out of the insured's installation of asbestos and therefore fall under the unaggregated premises/operations coverage, and that no reasonable insurer would have denied coverage, as plaintiffs did, on the ground that such claims fall under the limited products or completed operations hazards coverage.   This counterclaim was properly dismissed since there is no separate cause of action in tort for an insurer's bad faith failure to perform its obligations under an insurance policy (see Acquista v. New York Life Ins. Co., 285 A.D.2d 73, 78, 730 N.Y.S.2d 272 [2001] ), and until they obtain a judgment against the insulation contractor that goes unsatisfied, defendants lack standing to enforce insurance policies to which they were not parties (see Stainless, Inc. v. Employers' Fire Ins. Co., 69 A.D.2d 27, 33-34, 418 N.Y.S.2d 76 [1979], affd. 49 N.Y.2d 924, 428 N.Y.S.2d 675, 406 N.E.2d 490 [1980];  Tower Ins. Co. of N.Y. v. Skate Key, 273 A.D.2d 158, 712 N.Y.S.2d 352 [2000];  see Taggart v. State Farm Mut. Auto. Ins. Co., 272 A.D.2d 222, 707 N.Y.S.2d 452 [2000] ).