This action arises from a 2023 motor-vehicle accident. Plaintiff, Hahkien Spencer, seeks no-fault benefits from defendant, LM General Insurance Company.^[FN1] After conducting an examination under oath (EUO), defendant cancelled plaintiff's insurance policy and denied him no-fault benefits. Defendant contends that plaintiff misrepresented where his vehicle was principally garaged.

In this action, plaintiff has brought multiple claims against defendant, including breach of contract and breach of the covenant of good faith and fair dealing. On motion sequence 001, defendant moved to dismiss plaintiff's claim for breach of the covenant of good fair and fair [*2]dealing. This court granted the motion in May 2024. (See Spencer v LM Gen. Ins. Co., 2024 WL 2000595, *1 [Sup Ct, NY County 2024].) The court concluded that plaintiff's breach-of-covenant claim did not identify damages distinct from those available under his breach-of-contract claim, because the only other form of asserted damages supported by the allegations of the complaint, namely attorney fees, were not available here. (See id.)

Plaintiff now moves to reargue this court's May 2024 decision and also seeks leave to amend his complaint. Plaintiff's request for leave to reargue is granted; on reargument this court adheres to its prior decision. The request for leave to amend is granted in part and denied in part.

I. Plaintiff's Request to Renew and Reargue

Plaintiff moves to renew and reargue this court's decision dismissing his cause of action for breach of the covenant of good faith and fair dealing. He argues that the court's reliance on the similarity of damages in determining whether his breach-of-covenant claim was duplicative of his breach-of-contract claim is misplaced and that the court should have considered, instead, whether the claims stem from the same conduct. The court agrees, but nonetheless, adheres to its prior decision on reargument.

The implied covenant of good faith and fair dealing "provides that no party to a contract shall take any actions to spoil the rights of another party to receive the fruits of the contract." (AEA Middle Mkt. Debt Funding LLC v Marblegate Asset Mgt., LLC, 214 AD3d 111, 132 [1st Dept 2023].) This cause of action does not lie, however, when it duplicates a cause of action for breach of contract. (Id.) This occurs when the breach-of-covenant claim "is based on the same operative facts and seeks the same damages as a cause of action for breach of contract." (Id. at 132-133.) The two causes of action will not be duplicative, however, if they are premised on separate conduct. (See id.) Thus, in its decision, this court erred in relying solely on the issue of damages to determine whether the breach-of-covenant claim was duplicative. This court therefore grants plaintiff's request for leave to reargue.

On reargument, plaintiff contends that his two claims stem from distinct underlying conduct; and also that he may recover attorney fees in connection with his breach-of-covenant claim. That is, plaintiff alleges that defendant breached the contract by cancelling his policy.

Separately, plaintiff pleads that defendant breached the covenant of good faith and fair dealing by conducting an EUO in an unfair manner—i.e., in bad faith.

This court agrees that the claims rest on different allegations. (See New York Botanical Garden v Allied World Assur. Co. (U.S.) Inc., 206 AD3d 474, 475 [1st Dept 2022] [holding breach-of-covenant claim was not duplicative of breach-of-contract claim when it was based on distinct conduct evidencing "that defendant did not conduct a complete or fair investigation of its claim, had no meritorious basis for denying the claim, and simply denied it in accordance with a business policy of denying COVID-related business interruption claims."]; accord Rockefeller Univ. v Aetna Cas. & Sur. Co., 231 AD3d 457, 547 [1st Dept 2024] [describing similar circumstances as demonstrating bad faith].)

That the breach-of-covenant claim is not subject to dismissal as duplicative does not resolve whether that claim should be permitted to proceed. This court concludes on reargument that the claim may not proceed, because plaintiff has neither sufficiently alleged nor shown that [*3]defendant conducted the EUO in bad faith.

Plaintiff represents that defendant badgered him and misconstrued his testimony when asking follow-up questions at the EUO, causing plaintiff to "misrepresent that he actually resided in New York City but registered his vehicle in Buffalo." (NYSCEF No. 25 at 7 [memo of law].) But that defendant's counsel asked plaintiff multiple times where he resided and when was reasonable given the inconsistencies within plaintiff's responses. (Compare e.g. NYSCEF No. 9 at 49 with id. at 66 [EUO transcript].) Moreover, plaintiff was represented by counsel at the EUO. And plaintiff's counsel did object (albeit only once) to the attorney's repeated questions about his residency. (Id. at 54.) Under these circumstances, plaintiff's allegations of bad faith are insufficient to support a cause of action for breach of the covenant of good faith and fair dealing. Thus, on reargument, this court adheres to its original ruling dismissing that cause of action.^[FN2]

II. Branch of Motion to Amend Complaint

Plaintiff also moves for leave to amend his complaint. According to plaintiff, the proposed amended complaint will be "the same as the original complaint except it omits defendant Liberty Mutual Insurance Company, pursuant to an October 19, 2023 stipulation between the parties (ECF No. 3), it adds paragraph 34 which sets forth the plaintiff's damages in greater detail in order to remedy what the Court saw as a deficiency, and it adds a fifth cause of action for attorney's fees under the common law, Insurance Law 5106, and the no-fault regulations set forth at 11 NYCRR 65-3.10 and 11 NYCRR 65-4.6." (NYSCEF No. 25 at ¶ 7.) Defendant opposes this branch of the motion to the extent that the new paragraph on damages would serve to resuscitate the claim for breach of the covenant of good faith and fair dealing. Defendants also argue that plaintiff may not raise claims for consequential damages

Based on the court's conclusion above, the branch of the motion to add a common-law claim for attorney fees is denied. The branches of the motion seeking to omit Liberty Mutual as a defendant and to add a cause of action for statutory attorney fees under the Insurance Law and applicable regulations are granted as unopposed. The branch of the motion to add additional details about the damages plaintiff incurred is granted to the extent that those allegations augment plaintiff's breach-of-contract claim. (See Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of New York, 10 NY3d 187, 192 [2008] [noting that consequential damages are permissible in breach-of-contract actions]; see Devonshire Surgical Facility v Natl. Cont. Ins. Co., 2010 NY Slip Op 50042(U), *1 [App Term 1st Dept 2010] [no-fault].)

Accordingly, it is

ORDERED that the branch of plaintiff's motion to renew and reargue is granted; and on reargument, the court adheres to its prior determination dismissing the breach-of-covenant-of good faith; and it is further

ORDERED that the branch of plaintiff's motion to amend the complaint to add proposed paragraph 34 (detailing damages) is granted; and it is further

ORDERED that the branch of plaintiff's motion to amend the complaint to omit Liberty Mutual Insurance Company as a defendant is granted; and it is further

ORDERED that the branch of plaintiff's motion to amend the complaint to include a cause of action for attorney fees under the Insurance Law and applicable regulations is granted; and it is further

ORDERED that the branch of plaintiff's motion to add a claim for common-law attorney fees is denied; and it is further

ORDERED that plaintiff shall, within 20 days of entry of this order, serve and file an amended complaint consistent with the determinations above, which, upon service, shall be deemed plaintiff's operative pleading in this matter;

ORDERED that defendant serve a copy of this order with notice of its entry on plaintiff and on the office of the General Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nyco urts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall amend the caption and update its records accordingly.