Nick’s Garage, Inc. v. Progressive Casualty Insurance

15-1426-cv
Nick’s Garage, Inc. v. Progressive Casualty Insurance
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
3
August Term, 2016 4
5
(Argued: September 19, 2016 Decided: November 8, 2017) 6
7
Docket No. 15‐1426‐cv 8
_____________________________________ 9
10
Nick’s Garage, Inc., 11
12
Plaintiff‐Appellant, 13
14
v. 15
16
Progressive Casualty Insurance Company, National Continental Insurance 17
Company, Progressive Advanced Insurance Company, Progressive Direct 18
Insurance Company, Progressive Max Insurance Company, Progressive 19
Northern Insurance Company, Progressive Preferred Insurance Company, 20
Progressive Specialty Insurance Company, 21
22
Defendants‐Appellees. 23
_____________________________________ 24
25
Before: LEVAL and LOHIER, Circuit Judges, and KORMAN, District Judge. * 26
* Judge Edward R. Korman, of the United States District Court for the Eastern
District of New York, sitting by designation.
27

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Plaintiff appeals from the judgment of the United States District Court 1
for the Northern District of New York (D’Agostino, J.) granting summary 2
judgment in favor of Defendants. Plaintiff, an automobile repair shop, 3
brought claims as assignee of its customers against Defendants, automobile 4
insurance companies, for breach of contract and deceptive business practices 5
under New York General Business Law § 349. Plaintiff alleges that 6
Defendants failed to fulfill their contractual obligation to pay sufficient funds 7
to repair vehicles to their pre‐accident condition, and engaged in deceptive 8
practices in claims processing. The district court’s grant of summary 9
judgment was premised on its conclusion that there were no genuine issues of 10
material fact on which Plaintiff could prevail, and, as to Plaintiff’s claims of 11
deceptive business practices, that such claims were in addition precluded by 12
New York Insurance Law § 2601. 13
Held, the district court erred in part in granting summary judgment in 14
favor of Defendants on Plaintiff’s breach of contract and deceptive practices 15
claims. The Judgment is AFFIRMED IN PART, VACATED IN PART, and 16
REMANDED. 17
18
C ECELIA R.S. C ANNON, Bousquet 19
Holstein PLLC, Syracuse, NY, for 20
Plaintiff‐Appellant. 21
22
K YMBERLY K OCHIS (Veronica M. Wayner 23
on the brief), Sutherland Asbill & 24
Brennan LLP, New York, NY, for 25
Defendants‐Appellees. 26
27
LEVAL, Circuit Judge: 28
Plaintiff, Nick’s Garage, Inc. (“Garage” or “Plaintiff”), appeals from the 29
judgment of the United States District Court for the Northern District of New 30
York (D’Agostino, J.) granting summary judgment in favor of the Defendants, 31
Progressive Casualty Insurance Company and related entities (collectively, 32

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the “Insurer”).1 Garage, an automobile repair shop, brought these claims as 1
assignee of its customers against the Insurer for breach of contract and 2
deceptive business practices under New York General Business Law (“GBL”) 3
§ 349. Garage alleges that Insurer failed to pay sufficient funds to fulfill its 4
obligation to return the damaged vehicles to pre‐accident condition, and 5
engaged in deceptive practices in claims processing. The district court granted 6
summary judgment in favor of Defendants, finding that there were no 7
genuine issues of material fact, and furthermore, as to its claims of deceptive 8
business practices, that such claims were also precluded by New York 9
Insurance Law § 2601. 10
We conclude that the district court erred in part in granting summary 11
judgment to Insurer on Garage’s breach of contract claims. Insurer failed to 12
show its entitlement to judgment for costs relating to labor hours, parts, labor 13
rates, electronic database access, and hazardous waste removal charges, and 14
the absence of genuine disputes of material fact on these issues. Summary 15
1 Defendants are Progressive Casualty Insurance Company, National
Continental Insurance Company, Progressive Advanced Insurance Company,
Progressive Direct Insurance Company, Progressive Max Insurance
Company, Progressive Northern Insurance Company, Progressive Preferred
Insurance Company, and Progressive Specialty Insurance Company.

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judgment should have been denied for those categories. On the other hand, 1
Insurer demonstrated its entitlement to judgment, and Garage failed to raise a 2
genuine dispute of material fact, on Insurer’s payments for paint material 3
costs; the district court properly granted summary judgment to Insurer on 4
that category of claims. 5
We also conclude that the district court erred in part in granting 6
summary judgment to Insurer on Garage’s GBL claims. There is a question of 7
material fact on Garage’s claim that Insurer engaged in deceptive practices 8
concerning its labor rates payments, and that claim is not precluded by N.Y. 9
Ins. Law § 2601. On the other hand, the district court properly granted 10
summary judgment to Insurer on Garage’s GBL claim that Insurer misled 11
customers regarding their ability to use the repair shop of their choice. 12
Accordingly, we affirm the judgment in part, vacate the judgment in 13
part, and remand to the district court for further proceedings. 14
I. BACKGROUND 15
Plaintiff Garage is an automobile repair shop in Syracuse, New York. 16
Defendant Insurer issues auto insurance policies in New York. From 2007 to 17

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2011, Garage repaired various vehicles that had suffered damage for which 1
the vehicle owners submitted damage claims to Insurer. 2
The vehicle owners made Garage their designated representative to 3
negotiate with Insurer for coverage of repairs, and assigned their insurance 4
claims to Garage. The assignors fall into two categories: (i) “First‐Party 5
Assignors” are Insurer policyholders; and (ii) “Third‐Party Assignors” are 6
owners of vehicles that were damaged by Insurer’s policyholders. Garage, as 7
assignee, brings claims on behalf of 26 First‐Party Assignors and 11 Third‐ 8
Party Assignors. All of the assignors signed a form captioned, Authorization 9
and Guideline for Repairs, undertaking to pay to Garage the balance of its 10
charges for the repairs if Insurer did not pay Garage’s full charges. All of the 11
assignors assigned to Garage related claims and rights arising from the 12
property damage insurance claims, and all First‐Party assignors assigned 13
their rights under the specified insurance policies to Garage. 14
Insurance Law § 2601 and Regulation 64, which is Part 216 of the New 15
York State Insurance Department Regulations, provide context for the 16
interactions between repair shops and insurance companies. Section 2601 17
prohibits insurers from “engag[ing] in unfair claim settlement practices,” and 18

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specifies various acts which, when “committed without just cause and 1
performed with such frequency as to indicate a general business practice, 2
shall constitute unfair claim settlement practices.” N.Y. Ins. Law § 2601(a). 3
Such acts include “knowingly misrepresenting to claimants pertinent facts or 4
policy provisions relating to coverages at issue,” and “not attempting in good 5
faith to effectuate prompt, fair and equitable settlements of claims 6
submitted.” Id. § 2601(a)(1), (4). 7
Under Regulation 64, when a claim is made, the insurer may inspect the 8
car, and must negotiate in good faith with the insured or the insured’s 9
designated representative and make “a good faith offer of settlement, 10
sufficient to repair the vehicle to its condition immediately prior to the loss.” 11
11 N.Y.C.R.R. § 216.7(b)(1). If after such negotiations the parties cannot reach 12
an “[a]greed price”—i.e., “the amount agreed . . . as the reasonable cost to 13
repair damages to the motor vehicle resulting from the loss,” id. § 14
216.7(a)(1)—then the insurer must send the insured a prescribed notice of 15
rights letter, which states the insurer’s offer and indicates that, upon the 16
insured’s request, the insurer is able to recommend a shop to perform the 17
repairs at the stated offer price, id. §§ 216.7(b)(14)(i), 216.12. 18

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For the vehicles in the instant case, the typical interaction between 1
Garage and Insurer proceeded as follows: Owners brought the damaged 2
vehicles to Garage seeking an estimate on the necessary repairs; Garage 3
inspected the vehicles and sent Insurer an estimate of the repairs Garage 4
determined were necessary to return the vehicles to their pre‐accident 5
condition. Insurer then sent a Managed Repair Representative (“MRR”) to 6
inspect the vehicle and provided an estimate as to the cost to repair the 7
vehicle to pre‐loss condition. Garage responded by sending Insurer a notice of 8
deficiencies, identifying items that were omitted or insufficient in Insurer’s 9
estimates and informing Insurer that there was no agreed upon amount for 10
the repairs. This process was sometimes repeated with supplements if 11
additional damage was discovered during the course of the repair. Garage 12
would repair the vehicles after it had received the estimate from Insurer. 13
As relevant to this appeal, Garage brings two categories of claims. For 14
Plaintiff’s first category of claims, which it brings as assignee of First‐Party 15
Assignors, Garage claims that Insurer breached its contractual obligations to 16
the First‐Party Assignors by failing to pay the amount necessary to return the 17
vehicles to their pre‐accident condition, leaving the First‐Part Assignors liable 18

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to Garage for the balance of the repair cost to the extent that Garage’s charge 1
exceeded Insurer’s payment. Garage alleges five categories of under‐ 2
payments: (1) failing to allow for sufficient labor hours to make necessary 3
repairs; (2) failing to pay for original equipment manufacturer (“OEM”) parts 4
when the non‐OEM parts suggested by Insurer were inadequate to return the 5
vehicle to pre‐accident condition; (3) paying insufficient labor rates; (4) failing 6
to pay the amount necessary for paint materials; (5) failing to pay for charges 7
for accessing an electronic database and removing hazardous waste. 8
As relevant here, Insurer’s insurance policy provides: 9
Limits of Liability 10
1. The limit of liability for loss to a covered auto, non‐owned auto, or 11
custom parts or equipment is the lowest of: 12
*** 13
c. the amount necessary to repair the damaged property to its pre‐ 14
loss condition reduced by the applicable deductible; or . . . . 15
*** 16
2. Payments for loss to a covered auto, non‐owned auto, or custom parts 17
or equipment are subject to the following provisions: 18
*** 19
d. In determining the amount necessary to repair damaged 20
property to its pre‐loss condition, the amount to be paid by 21
[Insurer]: 22
i. will not exceed the prevailing competitive labor rates 23
charged in the area where the property is to be repaired 24
and the cost of repair or replacement parts and equipment, 25
as reasonably determined by [Insurer]; and 26

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ii. will be based on the cost of repair or replacement parts and 1
equipment which may be new, reconditioned, 2
remanufactured, or used, including, but not limited to: 3
(a) original manufacturer parts or equipment; and 4
(b) nonoriginal manufacturer parts or equipment. 5
6
Confidential App. 31–32 (emphasis omitted). 7
For its second category of claims, Garage alleges that Insurer violated 8
GBL § 349 by engaging in deceptive acts in handling the claims of both the 9
First‐Party Assignors and Third‐Party Assignors. Specifically, Garage claims 10
Insurer misled consumers by falsely representing to them that it was willing 11
to pay prevailing competitive labor rates, and by misrepresenting consumers’ 12
ability to obtain repairs at the shop of their choice. 13
Garage originally filed this suit in New York State Supreme Court. On 14
May 10, 2012, Insurer removed to federal court, which had diversity 15
jurisdiction pursuant to 28 U.S.C. § 1332. On February 27, 2013, the district 16
court granted in part Insurer’s motion to dismiss, dismissing Garage’s claims 17
for quantum meruit and those GBL § 349 claims that were barred by the statute 18
of limitations. Nickʹs Garage, Inc. v. Progressive Cas. Ins. Co., No. 5:12‐CV‐777, 19
2013 WL 718457 (N.D.N.Y. Feb. 27, 2013). 20

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On September 23, 2013, Garage filed an amended complaint. On March 1
31, 2015, the district court granted Insurer’s motion for summary judgment as 2
to all of Garage’s claims. Nickʹs Garage, Inc. v. Progressive Cas. Ins. Co., No. 3
5:12‐CV‐777, 2015 WL 1481683 (N.D.N.Y. Mar. 31, 2015). The district court 4
found that Garage failed to raise a genuine dispute of material fact that could 5
support its claims that Insurer breached its contractual obligations to the 6
First‐Party assignors as to any of the categories of costs identified. Id. at *6–10. 7
As to Garage’s GBL § 349 claims, the district court found that Garage failed to 8
raise a genuine dispute of material fact that could support its claims that 9
Insurer engaged in materially misleading practices, and found in the 10
alternative that these claims were precluded by N.Y. Ins. Law § 2601. Id. at 11
*10–15. 12
II. DISCUSSION 13
We review a district courtʹs grant of summary judgment de 14
novo, “resolv[ing] all ambiguities and draw[ing] all [reasonable] factual 15
inferences in favor of the party against whom summary judgment is sought.” 16
Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (per curiam) (quoting Terry 17
v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)). For the court to grant summary 18

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judgment, the movant must “show[ ] that there is no genuine dispute as to 1
any material fact and the movant is entitled to judgment as a matter of 2
law.” Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if “the 3
evidence is such that a reasonable jury could return a verdict for the 4
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 5
The movant bears the burden of “demonstrat[ing] the absence of a 6
genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 7
“Where, as here, the burden of persuasion at trial would be on the non‐ 8
moving party . . . the party moving for summary judgment may satisfy his 9
burden of production under Rule 56 in either of two ways: (1) by submitting 10
evidence that negates an essential element of the non‐moving party’s claim, 11
or (2) by demonstrating that the non‐moving party’s evidence is insufficient 12
to establish an essential element of the non‐moving party’s claim.” Farid v. 13
Smith, 850 F.2d 917, 924 (2d Cir. 1988) (citing Celotex, 477 U.S. at 331 (Brennan, 14
J., dissenting)). 15
A. Breach of Contract 16
Garage alleges that Insurer failed to pay sufficient sums to fulfill its 17
contractual policy obligations to cover the reasonable costs necessary to repair 18

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the damaged vehicles to their pre‐loss condition. To state a claim for breach of 1
contract under New York law, “the complaint must allege: (i) the formation of 2
a contract between the parties; (ii) performance by the plaintiff; (iii) failure of 3
defendant to perform; and (iv) damages.” Johnson v. Nextel Commc’ns, Inc., 660 4
F.3d 131, 142 (2d Cir. 2011). Insurer does not dispute that prongs (i) and (ii) 5
have been met. 6
1. Damages 7
Insurer argues that the First‐Party Assignors (whose claims are asserted 8
by Garage as their assignee) suffered no damages because their vehicles were 9
repaired by Garage to their pre‐loss condition. Insurer misunderstands the 10
theory of this category of claim. Insurer was obligated to pay its insureds the 11
“loss” on a covered vehicle, i.e., the amount of money sufficient to return the 12
vehicles to their pre‐loss condition. Thus, the difference between what Insurer 13
paid to Garage and the amount necessary to return the vehicles to their pre‐ 14
loss condition constitutes damages suffered by the insureds on which Garage, 15
as assignee, can bring suit.2 See Citibank, N.A. v. Tele/Resources, Inc., 724 F.2d 16
2 In any event, the First‐Party Assignors remained financially responsible to
pay Garage for the difference between Insurer’s payment and the full cost of
repairs under the terms of the Authorization and Guidelines for Repairs.

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266, 269 (2d Cir. 1983). There is no merit to Insurer’s contention that the First‐ 1
Party Assignors suffered no damages regardless of whether Insurer paid less 2
than the cost of returning the vehicles to pre‐accident condition. The District 3
Court properly rejected Insurer’s contention on this issue. Nick’s Garage, 2015 4
WL 1481683, at *6. 5
2. Breach 6
The remaining question then is whether Insurer breached its 7
contractual obligations to its First‐Party Assignor insureds. The insured bears 8
the burden at trial of establishing the reasonable cost of the repairs necessary 9
to bring the vehicle to its pre‐loss condition. See Rizzo v. Merchants and 10
Businessmen’s Mut. Ins. Co., 727 N.Y.S.2d 250, 252 (2d Dep’t 2001). However, 11
on a motion for summary judgment, the burden is on the movant to show 12
that it “is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 13
Accordingly, upon Insurer’s motion for summary judgment, Insurer bears the 14
burden of showing either that Garage lacked evidence needed to prove any 15
element of its claims, or that the amount paid by Insurer was reasonably 16
sufficient to repair the vehicle to its condition prior to the loss. 17

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Insurer’s motion papers were deficient in their attempt to satisfy this 1
burden. In support of its entitlement to judgment, at times Insurer merely 2
asserted—without support or explanation—that Garage had not produced 3
evidence to support its claims. See, e.g., J.A. 136 (“Plaintiffs have not produced 4
any evidence . . . as to why the more expensive original manufacture parts 5
were necessary”); Dkt. 103, at 1 n.13 (“Because Plaintiff failed to submit any 6
admissible evidence relating to labor hour deficiencies, no material issue of 7
fact[] exists with respect to this cost category.”). Statements like these 8
misperceive the allocation of burdens upon a motion for summary judgment. 9
The argument that Garage “has not produced evidence” would have force at 10
trial, or in other circumstances where the plaintiff bears the burden of proving 11
every essential element of its claim. However, on a motion for summary 12
judgment, it is the moving party’s burden to show in its motion papers “that 13
there is no genuine dispute as to any material fact and the movant is entitled 14
to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Thus, when a defendant 15
moves for summary judgment, it is the defendant who must show entitlement 16
3 All docket entries refer to the district court docket, No. 12 Civ. 777
(N.D.N.Y.).

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to judgment, notwithstanding that, at trial, the plaintiff will have the burden 1
of proving every element of its claim. 2
The mere assertion by a defendant moving for summary judgment that 3
the plaintiff “has not produced any evidence” to support an essential element 4
of the plaintiff’s claim does not satisfy the burden that Rule 56(a) imposes. See 5
10A Fed. Prac. & Proc. Civ. § 2727.1, at 491–92 (“[T]he party moving for 6
summary judgment cannot sustain its burden . . . merely by asserting that the 7
nonmovant lacks evidence to support its claim.”). A plaintiff is under no 8
obligation to “produce” its evidence prior to trial, unless such an obligation 9
arose in response to a discovery demand (or a court order) requiring the 10
plaintiff to set forth the evidence supporting its claim. A moving defendant’s 11
mere assertion that a plaintiff “has not produced” evidence that could prove 12
its claim fails to show that the plaintiff lacks the necessary evidence, unless 13
defendant also shows that plaintiff was obligated by discovery demand or 14
court order to produce the evidence or that he voluntarily undertook to make 15
the showing. 16
There are many ways in which a defendant moving for summary 17
judgment can satisfy the burden of showing entitlement to judgment. Among 18

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them, defendant may, prior to moving for summary judgment, make a 1
discovery demand requiring plaintiff to reveal the evidence that supports an 2
essential element of the plaintiff’s case. If, as in Celotex, 477 U.S. at 320, the 3
plaintiff, in response, fails to show evidence capable of sustaining the 4
plaintiff’s burden of proof on that element, then the defendant can prevail on 5
its motion, as provided in Rule 56(c)(1)(A), by “citing to [those] particular 6
parts of materials in the record” that demonstrate the insufficiency of 7
plaintiff’s evidence. Or, if the plaintiff has made an admission in the record of 8
the limited extent of its evidence, the moving defendant can satisfy the 9
showing required by Rule 56(a) by pointing to the plaintiff’s admission. 10
However, unless the moving defendant cites portions of the record that 11
show its entitlement to judgment, an assertion by the defendant that the 12
plaintiff “has not produced any evidence,” without more, does not show that 13
the plaintiff has insufficient evidence. Such a statement fails to show either 14
that there is no genuine dispute as to any material fact or that the defendant is 15
entitled to judgment as a matter of law. A defendant’s motion for summary 16
judgment based on such a statement should be subject to a motion to dismiss 17
by reason of its facial deficiency, or to denial. 18

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A plaintiff confronted with such a facially deficient motion sometimes 1
cures defendant’s error by undertaking to set forth the totality of its evidence 2
in its opposition papers. Assessing the sufficiency of the evidence thus set 3
forth, a court might conclude that there is no dispute over material fact and 4
that defendant is entitled to judgment as a matter of law. However, absent 5
such an undertaking on the part of a plaintiff, entry of judgment on the basis 6
of a facially deficient summary judgment motion is not warranted. We see no 7
reason why such a motion should not be subject to a motion to dismiss by 8
reason of facial inadequacy, or simply to denial. 4 9
4 Of course, a district court is not compelled to dismiss or deny an
inadequately supported motion for summary judgment. The court has
numerous alternative available options. Among them, it may give the
moving defendant time to make additional submissions that would cure the
deficiency in its papers by citing to evidence that shows its entitlement to
judgment (with a reasonable opportunity to the plaintiff to respond). See Fed.
R. Civ. P. 56(e)(1)(“[T]he court may . . . give an opportunity to properly
support or address the fact [that has not been properly supported]).”
Alternatively, if the court is aware of record evidence not cited in the
defendant’s motion papers that appears to justify grant of summary judgment
to the defendant, the court may give notice to the plaintiff citing those
portions of the record (with reasonable time to respond) and then grant
judgment to the defendant if the plaintiff’s response to the court’s notice
confirms the inadequacy of its evidence or fails to show that there is a
genuine dispute as to a material fact. See Fed. R. Civ. P. 56(f)(3)(“After giving
notice and a reasonable time to respond, the court may . . . consider summary
judgment on its own after identifying for the parties material facts that may
(Continued . . . )

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What we say here applies the Supreme Court’s cornerstone summary 1
judgment ruling in Celotex. The Supreme Court made clear that the defendant 2
supported its motion for summary judgment by “not[ing] that [the plaintiff] 3
had failed to identify, in answering interrogatories specifically requesting 4
such information, any witnesses who could testify about the decedent’s 5
exposure to [defendant’s] asbestos products.” Id. at 320. In that circumstance, 6
the moving party was “entitled to a judgment as a matter of law because the 7
nonmoving party [had] failed to make a sufficient showing on an essential 8
element of her case with respect to which she [had] the burden of proof.” Id. 9
at 323 (internal quotation marks omitted). The Court emphasized that “a 10
party seeking summary judgment always bears the initial responsibility of 11
informing the district court of the basis for its motion, and identifying those 12
portions of [the record] which it believes demonstrate the absence of a 13
genuine issue of material fact.”5 Id. The same point was further emphasized 14
not be genuinely in dispute.”). Or the court may dismiss the defendant’s
motion without prejudice to its subsequent resubmission with proper
support. As provided in Fed. R. Civ. P. 56(e)(4), the court may “issue any
other appropriate order.”
5 This Court has often quoted Celotex’s holding that “the burden on the
moving party may be discharged by ‘showing’—that is, pointing out to the
district court—that there is an absence of evidence to support the nonmoving
(Continued . . . )

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by Justice White, who stated in his concurring opinion, “[i]t is not enough to 1
move for summary judgment . . . with a conclusory assertion that the plaintiff 2
has no evidence to prove his case.” Id. at 328 (White, J., concurring); see also id. 3
at 332 (Brennan, J., dissenting) (“Plainly, a conclusory assertion that the 4
nonmoving party has no evidence is insufficient. Such a ‘burden’ of 5
production is no burden at all and would simply permit summary judgment 6
procedure to be converted into a tool for harassment.”) (citation omitted).6 7
In this case, Insurer’s conclusory assertions that Garage had not 8
produced evidence to support particular elements of its claims did not 9
demonstrate the inadequacy of Garage’s evidence or Insurer’s entitlement to 10
judgment as a matter of law. In this regard, the motion was facially 11
inadequate. 12
party’s case.” See, e.g., PepsiCo, Inc. v. Coca‐Cola Co., 315 F.3d 101, 105 (2d Cir.
2002) (quoting Celotex, 477 U.S. at 325); Goenaga v. March of Dimes Birth Defects
Found., 51 F.3d 14, 18 (2d Cir. 1995). These decisions did not absolve the
movant of the obligation, articulated in Celotex, to “identify[] those portions of
[the record] which it believes demonstrate the absence of a genuine issue of
material fact.” Celotex, 477 U.S. at 323.
6 Justice Brennan’s analysis of the burdens did “not disagree with the
[majority’s] legal analysis.” 477 U.S. at 329. His disagreement was predicated
solely on a differing perception of its application to the facts of the case. Id. at
334.

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a. Labor Hours 1
In its Amended Complaint, Garage claimed that Insurer refused to pay 2
for the labor hours necessary to repair the vehicles to their pre‐loss condition. 3
J.A. 256. Insurer’s summary judgment motion with respect to this issue was 4
deficient and should have been denied. 5
Insurer’s motion for summary judgment, while demanding judgment 6
on all issues, referred to only four categories of claims made by Garage (labor 7
rates, parts, overhead expenses, and paint and materials charges). See Dkt. 73, 8
at 5. It made no mention whatsoever of Garage’s claims for deficiencies in 9
payment for labor hours. In opposition, Garage pointed out Insurer’s failure 10
to address in any way its claims for deficiencies as to labor hours, and pointed 11
out that its deficiency bills to Insurer included references to labor hour 12
deficiencies. See Dkt. 88 ¶ 27. Insurer replied by demanding summary 13
judgment as to labor hours “[b]ecause Plaintiff failed to submit any 14
admissible evidence relating to labor hour deficiencies,” Dkt. 103, at 1 n.1, and 15
the District Court granted judgment to the defendant on that basis. With 16
reference to the deficiency notices, the court observed that “Plaintiff has made 17
no attempt to explain these documents or why the alleged [labor hour] 18

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deficiencies identified therein were necessary to return the vehicles to their 1
pre‐loss condition.” Nick’s Garage, 2015 WL 1481683, at *10. 2
This was error. It reflected a misunderstanding of the respective 3
burdens upon a defendant’s motion for summary judgment. Because 4
Insurer’s motion failed to show entitlement to judgment with respect to labor 5
hours, Garage was under no obligation to set forth its evidence on this issue. 6
Garage merely pointed out to the court that Insurer’s papers claiming 7
entitlement to judgment on all of Garage’s claims had completely omitted any 8
mention of Garage’s claims for insufficient payment of labor hours, calling the 9
court’s attention to the inclusion of this issue in its deficiency notices. 10
The district court essentially treated the plaintiff, upon the defendant’s 11
motion for summary judgment, as obligated, by the mere fact of the motion, 12
to set forth evidence that could support the claim. As noted above, a plaintiff 13
has no such burden on the defendant’s motion for summary judgment. It is 14
the defendant’s burden to show entitlement to judgment. If the defendant had 15
done so, the plaintiff would need to show that there is a genuine dispute as to 16
a material fact. But if the defendant’s papers failed to show the insufficiency 17
of plaintiffs’ evidence and entitlement to judgment, the plaintiff is entitled to 18

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the dismissal of the motion without having to make any evidentiary showing. 1
The motion for summary judgment, to the extent it covered Garage’s claims 2
for labor hours, should have been denied by reason of its obvious facial 3
insufficiency. 4
b. Parts 5
The district court also granted summary judgment to Insurer on the 6
portion of Garage’s breach of contract claims based on Insurer’s payment for 7
non‐OEM repair parts rather than OEM repair parts. This, too, was error. 8
Insurer argued that it was entitled to pay for non‐OEM parts because 9
its policies provide: “In determining the amount necessary to repair damaged 10
property to its pre‐loss condition, the amount to be paid by [Insurer] . . . will 11
be based on the cost of repair or replacement parts and equipment which may 12
be new, reconditioned, remanufactured, or used, including, but not limited to: 13
(a) original manufacturer parts or equipment; and (b) nonoriginal 14
manufacturer parts or equipment.” Confidential App. 32. 15
Insurer’s argument is oversimplified. The fact that the policy permits 16
basing the cost of repair on non‐OEM parts does not mean that non‐OEM 17
parts will in all instances be sufficient to satisfy Insurer’s contractual 18

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obligations. Insurer is obligated to pay a sufficient sum to return the vehicle 1
to its “pre‐loss condition.” This may or may not be possible using non‐OEM 2
parts for a particular repair. The provision quoted above on which Insurer 3
relies means that Insurer may limit its payment to the price of non‐OEM parts 4
when the use of such parts will “repair the damaged property to its pre‐loss 5
condition.” Id. (emphasis added). It does not follow that Insurer may limit its 6
payments to the cost of non‐OEM parts regardless of whether the use of such 7
parts will, in the particular circumstance, repair the damaged property to its 8
pre‐loss condition. 9
While New York State law permits insurers to use the cost of non‐OEM 10
parts in their estimates, it requires that the part “shall equal or exceed the 11
comparable OEM crash part in terms of fit, form, finish, quality and 12
performance.” 11 N.Y.C.R.R. §216.7(b)(5)(iii). This state‐law requirement is 13
“deemed to [be] part of the insurance contract as though written into it.” 14
Salzman v. Prudential Ins. Co. of Am., 296 N.Y. 273, 277 (1947). Insurer’s 15
evidence failed to satisfy this requirement.7 16
7 The evidence Insurer relied upon—that its MRRs do not always choose the
lowest price part—falls far short. The testimony, from one of Insurer’s MRRs,
Corey Lee, showed only that he might choose to purchase a part from a more
(Continued . . . )

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24
Insurer argues that it satisfied its initial burden of production (on this 1
and other cost categories) by providing evidence that it engaged in good faith 2
settlement negotiations with Garage. The argument fails. Insurers are 3
statutorily required to make a good faith offer of settlement to the insured (or 4
the insured’s representative) to return the vehicle to its pre‐loss condition. 11 5
N.Y.C.R.R. § 216.7(b)(7). Good faith refers to the insurance company’s (or 6
those acting on its behalf’s) honest and fair state of mind. See Good Faith, 7
Black’s Law Dictionary (10th ed. 2014); cf. Chem. Bank of Rochester v. Haskell, 51 8
N.Y.2d 85, 91 (1980) (noting good faith under the UCC is defined as “honesty 9
in fact in the conduct or transaction concerned”). An Insurer’s good faith in 10
making an offer of settlement does not necessarily mean that the amount 11
offered is actually sufficient to cover the cost of repairing the vehicle to its 12
pre‐loss condition. The statutory requirement to negotiate in good faith is an 13
expensive supplier if it would reduce the amount of time it would take to do
the repair. That testimony addressed neither Insurer’s decision to use non‐
OEM parts for the First‐Party Assignors’ claims, nor whether those parts were
functionally sufficient to return the vehicles to pre‐loss condition.
Similarly, Garage’s acknowledgment that Insurer paid for OEM parts in
certain instances does not establish that Insurer always pays for OEM parts
when they are necessary for a particular repair, and therefore does not negate
breach for the times when Insurer did not pay for OEM parts.

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25
additional requirement, over and above the contractual requirement to pay 1
the cost of repairing the vehicle to pre‐loss condition, not a substitute for it. 2
Insurer’s evidence of good faith negotiation therefore does not negate the 3
claim that the amounts Insurer paid failed to satisfy its contractual 4
obligations. 5
Insurer makes the further argument that it was entitled to summary 6
judgment as to non‐OEM parts because “[Garage] has not put forth evidence 7
demonstrating the necessity of specific OEM parts for the Assignors’ repairs.” 8
Appellee’s Br. 27–28. In its opposition to Insurer’s motion for summary 9
judgment, Garage had offered affidavits of Michael Orso, Garage’s President, 10
and Rocco Avellini, an expert in the automotive repair industry, explaining 11
that the use of OEM parts was necessary. See Dkt. 88 ¶ 44; J.A. 295–332 (Orso 12
Declaration); J.A. 265–73 (Avellini Declaration). Reviewing this evidence, the 13
district court characterized Orso’s declaration as amounting to the mere 14
assertion that Garage’s customers are “people who care about their cars” who 15
“would only accept a new OEM part.” Nick’s Garage, 2015 WL 1481683, at *9. 16
Accordingly, the court granted summary judgment on the issue of payment 17
for parts. Id. 18

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26
If it were true that those affidavits relied solely on customer preference, 1
the court might have been correct to conclude that summary judgment in 2
favor of Insurer was warranted. But in fact, Orso and Avellini pointed to 3
numerous deficiencies in non‐OEM parts needed for the repairs, which would 4
have prevented restoring the vehicles to pre‐loss condition. The district court 5
overlooked this evidence. J.A. 309–12. In addition to noting customer 6
preference for OEM parts, Orso noted, for example, that non‐OEM fenders are 7
made of lighter gauge sheet metal (which can affect the success of airbag 8
deployment), that the lenses of non‐OEM headlamps are often distorted, that 9
non‐OEM heaters and puddle lamps are prone to malfunction, and that 10
certain non‐OEM parts do not fit correctly and leave gaps. J.A. 310–11. He 11
went on to provide examples of instances in which non‐OEM fog lamp bulbs 12
and headlights did not fit. J.A. 312. Avellini explained that non‐OEM 13
bumpers have fewer fasteners, making it easier for them to become dislodged 14
in an accident. J.A. 269. He added that non‐OEM parts are not crash tested, 15
rendering uncertain their performance in a collision. J.A. 270. 16
The district court ignored this evidence, and further discredited Orso’s 17
testimony by asserting that he had a “clear bias against the use of non‐OEM 18

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27
parts.” Nick’s Garage, 2015 WL 1481683, at *9. This was error. The district court 1
was obligated to “draw all factual inferences in favor of the party against 2
whom summary judgment is sought,” not the other way around. Chambers v. 3
TRM Copy Ctrs. Corp., 43 F.3d 29, 36 (2d Cir. 1994). With respect to the issue of 4
non‐OEM parts, the district court’s grant of summary judgment was 5
improper. 6
c. Labor Rates 7
The district court ruled that Insurer was entitled to summary judgment 8
on labor rate costs because “[t]he evidence in the record establishes that 9
[Insurer’s] labor rate was reasonably calculated and within the prevailing 10
market rate at all relevant times,” and that Garage did not present sufficient 11
admissible evidence to raise “a material question of fact that [Insurer’s] labor 12
rate paid . . . was a breach of contract.” Nick’s Garage, 2015 WL 1481683, at *8. 13
We disagree. Insurer did not present evidence sufficient to negate Garage’s 14
claim that Insurer breached its contractual obligations; Insurer demonstrated 15
neither that the rates it paid were no lower than “the prevailing competitive 16
labor rates charged in the area . . . as reasonably determined by [it],” 17

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28
Confidential App. 32, nor the absence of a genuine dispute of material fact on 1
that question. 2
The First‐Party Assignors’ insurance policies obligated Insurer to pay 3
the amount necessary to repair the vehicle to its “pre‐loss condition,” subject 4
to the proviso that Insurer would not pay more than the “prevailing 5
competitive labor rate charged in the area where the property is to be 6
repaired . . . , as reasonably determined by [Insurer].” Id.8 Garage claims that 7
the rates Insurer paid for various categories of work performed were below 8
the prevailing labor rates. 9
Insurer argues, as the district court found, that its method for 10
determining the prevailing labor rates is reasonable so as to satisfy its 11
contractual obligations. Insurer presented evidence that it determines the 12
prevailing labor rates using its Labor Rate Reference Guide (“Reference 13
Guide”), which was finalized in January 2008. According to its Reference 14
Guide, Insurer “allow[s] the marketplace to determine what the prevailing 15
8 Throughout this discussion, unless otherwise specified, our reference to the
“prevailing labor rates” is shorthand for the policy language of “prevailing
competitive labor rates charged in the geographic area where the property is
to be repaired.” Because Insurer was obligated to pay the amount necessary
to repair the vehicle to its “pre‐loss condition,” paying “not more” than the
prevailing rates effectively meant paying the rates exactly.

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29
rate is as indicated by [Insurer’s] ability to reach agreed prices for repair with shops 1
in the marketplace.” Confidential App. 62. Garage counters Insurer’s evidence 2
with evidence of higher labor rates posted by repair shops in the area as 3
constituting the rates they charge, plus evidence of higher rates paid to it by 4
other insurers.9 5
We conclude that Insurer has failed to show that there is no genuine 6
dispute of material fact on the question and that it is entitled to judgment on 7
it as a matter of law. There is a fundamental flaw in Insurer’s approach to 8
demonstrating, for the purpose of summary judgment, that the labor rates it 9
paid to Garage were the prevailing competitive labor rate as reasonably 10
determined by Insurer. 11
Insurer’s evidence depends on the proposition that evidence of rates 12
that repair shops are willing to accept from Insurer shows the prevailing 13
competitive rate. But that is not necessarily so. An insurer such as Progressive 14
may command a very large volume of business. The fact that repair shops 15
may accept a labor rate paid by a particular insurer that may bring the shop a 16
9 Garage also noted multiple instances in which Insurer paid additional sums
as a “labor rate concession,” such that the effective labor rate paid for these
particular repairs exceeded the rates Insurer typically paid to Garage.

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30
large volume of business does not demonstrate that the shop, or shops 1
generally, would accept the same rate in dealing with another insurer or a 2
customer who has only one car to be repaired. In other words, Insurer’s 3
evidence that it pays labor rates based on its own ability to get repair shops to 4
agree to those rates does not demonstrate that it pays what it is contractually 5
obligated to pay—the rates that actually prevail in the market in the area 6
where the repairs are performed. Indeed, Insurer’s Reference Guide explicitly 7
acknowledges that Insurer does not “conduct a formal market survey of rates 8
in most states.” Id. 9
Garage countered with two types of evidence: first, that higher labor 10
rates than those paid by Insurer were posted by other repair shops; second, 11
that other insurers have agreed to pay Garage higher rates. The evidence of 12
rates posted at repair shops is of debatable persuasive value because it fails to 13
show that the posted rates are actually paid, much less that the posted rates 14
represent the prevailing labor rates. On the other hand, the fact that other 15
insurers—and in some instances, even Insurer itself—paid rates higher than 16
the rate typically paid by Insurer is sufficient to support a genuine dispute as 17
to a relevant fact. 18

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31
In any event, where the defendant Insurer is moving for summary 1
judgment, plaintiff Garage does not need to demonstrate that the prevailing 2
labor rate is in fact higher than the rate Insurer regularly demands and sets. 3
Garage succeeds in defeating Insurer’s motion for summary judgment if its 4
evidence supports the existence of a genuine dispute as to a material fact on 5
that question. Especially given the illogic of Insurer’s proposition that the rate 6
it can regularly command demonstrates the prevailing rate in the market— 7
including rates paid by other insurers and uninsured individuals—Garage’s 8
evidence of higher rates paid to it is sufficient to show a genuine dispute.10 9
d. Paint 10
The district court also granted Insurer summary judgment on Garage’s 11
claims that Insurer failed to pay sufficient sums for paint and refinishing 12
10 We further find that the district court erred in concluding that Garage’s
expert report supported Insurer’s position that its rates were “within the
prevailing market rate.” Nick’s Garage, 2015 WL 1481683, at *8. Garage’s
expert report showed that, of the shops surveyed, the average posted or most
typical hourly rates for various forms of labor were all higher than the rates
Insurer offered to pay the First‐Party Assignors. In concluding that this
evidence supported the Insurer’s position, the district court failed to draw
reasonable factual inferences in favor of Garage, the non‐moving party.

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32
material costs. On this point, we conclude that the district court properly 1
granted summary judgment to Insurer. 2
On its motion, Insurer demonstrated that it complied with its 3
contractual obligations with respect to paint and refinishing material costs, 4
and Garage failed to raise a genuine dispute of material fact on that issue. 5
Insurer’s policy limits the amount to be paid to the cost of “repair or 6
replacement parts and equipment, as reasonably determined by [Insurer].” 7
Confidential App. 32. In its motion, Insurer provided evidence that it 8
reasonably determines paint and refinishing material costs through the use of 9
estimating software. In response, Garage did not dispute the reasonableness 10
of Insurer’s use of estimating software, but rather pointed to its own use of 11
different estimating software. 12
Garage’s reliance on its own assertedly reasonable method for 13
determining the cost of paint and refinishing materials is insufficient to raise a 14
genuine dispute of material fact. The relevant question under the policy is not 15
whether Insurer reached the most accurate estimate but whether its method 16
for determining its costs was reasonable. The mere fact of showing that 17
another reasonable estimating method could produce a higher cost is 18

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33
insufficient, standing alone, to create a genuine dispute of material fact as to 1
the unreasonableness of Insurer’s method. 2
On appeal, Garage argues that the phrase “as reasonably determined 3
by [Insurer]” in the policy language applies only to the prevailing labor rates. 4
That argument misreads the clear contractual language. The district court 5
properly construed the contract to require Insurer to pay the costs of paint 6
and refinishing materials as reasonably determined by Insurer, and properly 7
concluded that Insurer had demonstrated that it complied with that 8
requirement through the use of estimating software. 9
Therefore, Insurer was entitled to summary judgment on Garage’s 10
breach of contract claims based on the costs of paint and refinishing materials. 11
e. Hazardous Waste Disposal and Database Access 12
We vacate the district court’s grant of summary judgment as to 13
Insurer’s treatment of charges related to hazardous waste disposal and 14
accessing the ALLDATA database.11 We conclude that summary judgment 15
was inappropriate for those two types of charges. 16
11 The district court granted summary judgment to Insurer on all of Garage’s
breach of contract claims. Insofar as these claims included other “overhead
expenses” which were raised by Insurer below, including energy surcharges,
(Continued . . . )

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34
With respect to hazardous waste disposal, Insurer once again failed to 1
satisfy its burden under Rule 56. In its briefs before the district court and 2
statement of material facts below, Insurer did not mention, let alone show 3
that it was entitled to judgment on, Garage’s charges for hazardous waste 4
removal. 12 In its opening brief, it made the conclusory assertion that Garage’s 5
contract claims are “riddled with charges that are extraneous and 6
unnecessary to repair the First‐Party Assignors’ vehicles to their pre‐loss 7
condition,” without specification of the hazardous waste charges specifically 8
or demonstration that it was entitled to judgment on those charges. Dkt. 73, at 9
7–8. On this issue, Insurer’s motion for summary judgment was facially 10
insufficient. 11
With respect to the ALLDATA charges, there is a genuine dispute of 12
material fact as to whether such charges constituted “overhead” so as to be 13
outside of Insurer’s contractual obligations. ALLDATA is an electronic 14
processing lienholder’s checks, or charges for photocopy and fax expenses,
Garage has failed to challenge those aspects of the district court’s judgment in
its briefs on appeal, and therefore has abandoned such claims. See Hughes v.
Bricklayers & Allied Craftworkers Local No. 45, 386 F.3d 101, 104 n.1 (2d Cir.
2004) (claims advanced below but not raised on appeal were abandoned).
12 It was Garage that, on the summary judgment motion, first identified
hazardous waste removal as a category of line‐item charges it was owed.

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35
database that contains repair information. In its motion for summary 1
judgment, Insurer argued that Garage’s charges for ALLDATA were 2
overhead charges “unrelated to the actual repair of motor vehicles,” and 3
therefore were not covered by the policy. Id. at 7. The testimony upon which 4
Insurer relied, however, presents a genuine dispute of material fact as to how 5
ALLDATA was used and whether it is properly considered overhead. Larry 6
Zaleppa, who writes estimates for Garage, testified with respect to a 7
particular line‐item charge on a single estimate that it signified “[t]he time it 8
takes . . . to go get the information off the car, the [vehicle identification 9
number], the year, make and model for the technician to go in and look it up 10
in [ALLDATA] and print it out, [and] read it so he’s aware of what’s going 11
on.”Confidential App. 833. Zaleppa further explained that the information 12
provided by ALLDATA explains “how to repair vehicles” and is “put out by 13
the manufacturers of the vehicle.” Id. 829. 14
Drawing all reasonable inferences in favor of Garage, Zaleppa’s 15
testimony could establish that, to repair properly a particular vehicle to its 16
pre‐loss condition, a technician must review the specifications and procedures 17
provided by the vehicle manufacturer for that specific make and model 18

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36
vehicle. If that is the case, a jury could conclude that a technician needs to 1
expend time to access and familiarize herself with the information provided 2
by the database for a specific vehicle to perform a particular repair. Such 3
efforts and costs are potentially distinguishable from those that might need to 4
be expended generally for the operation of a business or the performance of 5
technician work, which might properly be considered overhead and not 6
chargeable to a particular client. Resolving the issue of how ALLDATA costs 7
should be treated under the policy thus turns on a factual assessment of how 8
the database operates and is used in practice. 9
There is, therefore, a genuine dispute of material fact as to whether 10
Insurer’s failure to pay Garage’s ALLDATA charges breached its contractual 11
obligations to pay the charges necessary to return the vehicles to their pre‐loss 12
condition. 13
* * * 14
In sum, we conclude that summary judgment should have been denied 15
on Garage’s breach of contract claims with respect to the cost categories of 16
labor hour deficiencies, parts, labor rates, hazardous waste removal, and 17
ALLDATA, but that summary judgment was properly granted on the issue of 18
paint material costs. We also affirm the grant of summary judgment on the 19

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37
issues noted in footnote 11, supra, which Garage has not challenged on 1
appeal. 2
B. GBL 3
The district court also granted Insurer summary judgment on Garage’s 4
claims brought under GBL § 349. The district court found that there was no 5
dispute as to a material fact on whether Insurer engaged in materially 6
misleading conduct and that Insurer was entitled to judgment as a matter of 7
law. In the alternative, the court found that Garage’s GBL claims were 8
precluded by N.Y. Ins. Law § 2601. On appeal, Garage contends that the 9
district court erred in entering judgment on two of its claims: that Insurer 10
misled customers about (i) its labor rate payments and (ii) customers’ ability 11
to take their vehicles to the shop of their choice. 13 We conclude that the 12
district court erred in granting summary judgment on Garage’s claim that 13
Insurer engaged in materially misleading acts with respect to its labor rate 14
payments, and that such claims are not precluded by N.Y. Ins. Law. However, 15
the district court properly granted summary judgment to Insurer on Garage’s 16
13 Before the district court below, Garage made other claims that Insurer
engaged in deceptive practices in its claims processes and other categories of
costs, but does not address, and thus has abandoned, those claims on appeal.

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38
claim that Insurer misled consumers regarding their ability to use the repair 1
shop of their choice. 2
1. Labor Rate Practices 3
General Business Law § 349 makes unlawful “deceptive acts or 4
practices in the conduct of any business, trade or commerce or in the 5
furnishing of any service in this state.” N.Y. Gen. Bus. Law § 349(a). To state a 6
claim for a § 349 violation, “a plaintiff must allege that a defendant has 7
engaged in (1) consumer‐oriented conduct that is (2) materially misleading 8
and that (3) plaintiff suffered injury as a result of the allegedly deceptive act 9
or practice.” City of New York v. Smokes‐Spirits.com, Inc., 12 N.Y. 3d 616, 621 10
(2009); see Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 126 (2d Cir. 2007). 11
“Whether a representation or an omission, the deceptive practice must be 12
likely to mislead a reasonable consumer acting reasonably under the 13
circumstances.” Stutman v. Chemical Bank, 95 N.Y.2d 24, 29 (2000) (internal 14
quotation marks and citation omitted); see also Oswego Laborers’ Local 214 15
Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 25 (1995) 16
(defendant’s conduct must be “deceptive or misleading in a material way”). 17
The New York Court of Appeals’ adoption of an “objective definition of 18

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39
deceptive acts and practices . . . which may be determined as a matter of law 1
or fact (as individual cases require),” was intended to avoid “a tidal wave of 2
litigation against businesses that was not intended by the Legislature.” 3
Oswego, 85 N.Y.2d at 26. 4
There is a genuine issue of fact as to whether Insurer engaged in 5
misleading practices concerning the labor rates it paid repair shops. Insurer’s 6
policy provides that it is obligated to pay labor rates up to “the prevailing 7
competitive labor rates charged in the area where the property is to be 8
repaired.” Confidential App. 32. However, as discussed above in section 9
II.A.2.c, Garage has put forth evidence that could establish that Insurer 10
routinely refused to pay the prevailing competitive labor rates, and that the 11
rates Insurer agreed to pay reflected not the prevailing competitive rates in 12
the market but rates that a potentially large volume customer could prevail 13
on repair shops to accept. Garage’s evidence is sufficient to raise a genuine 14
issue of fact on Garage’s GBL claims that Insurer, as a matter of practice, paid 15
labor rates below those it was obligated to pay pursuant to its insurance 16
policy. Cf., e.g., Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 53 (2d Cir. 17
1992) (affirming jury verdict where insurer engaged in deceptive tactics in 18

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40
processing homeowner’s claim following fire, including “refus[ing] to 1
estimate, much less pay, the replacement cost value of the [insured’s] 2
personal effects as required by the policy”). 3
Insurer’s arguments on appeal are not persuasive. First, Insurer argues 4
that its practice of good faith negotiation with Garage defeats the claim. The 5
argument is inapposite. Insurer’s readiness to negotiate with Garage in good 6
faith is not incompatible with its having misled its policyholders about its 7
payment of prevailing labor rates. Moreover, the irrelevance of Insurer’s 8
subsequent readiness to negotiate with Garage in good faith is underscored 9
by the fact that New York law defines deceptive practices under § 349 by 10
reference to the capacity of the practice to mislead, regardless of intent to 11
deceive. “[I]t is not necessary under [GBL § 349] that a plaintiff establish the 12
defendant’s intent to defraud or mislead,” Oswego, 85 N.Y.2d at 26; see also 13
Stutman, 95 N.Y.2d at 29. 14
Second, Insurer argues that its practice cannot be deceptive because its 15
practice is fully disclosed to consumers in the policy stating that the repair 16
costs are limited to the prevailing competitive labor rate, and in Insurer’s 17
estimates stating the labor rates to be paid. Once again, the argument is 18

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41
inapposite. These disclosures do not show Insurer’s entitlement to judgment 1
on Garage’s GBL claims. The essence of Garage’s claims is that Insurer did not 2
do what its policy said it would do and that the rates listed on Insurer’s 3
estimates did not represent the prevailing competitive labor rates, as they 4
purported to do. The cases on which Insurer relies are therefore 5
distinguishable because, while Insurer does not concede the fact that the rates 6
it pays are lower than the prevailing rate it represents it will cover, the 7
defendants in those cases actually disclosed the very practices that were 8
alleged to be deceptive. See Ludl Elecs. Prods., Ltd. v. Wells Fargo Fin. Leasing, 9
Inc., 6 A.D.3d 397, 398 (2d Dep’t 2004) (including an automatic renewal 10
provision in lease of equipment not deceptive under GBL § 349 because it was 11
fully disclosed in the lease); Sands v. Ticketmaster‐N.Y., Inc., 207 A.D.2d 687, 12
687 (1st Dep’t 1994) (dismissing GBL § 349 claim for excessive fees because 13
record showed Ticketmaster always disclosed the fees charged). 14
Insurer also argues that there was no dispute as to a material fact 15
concerning the other elements of a GBL § 349 claim. We disagree. 16
First, Plaintiff’s evidence that Insurer, as a matter of practice, misled 17
consumers and paid insufficient sums on claims pursuant to its standard form 18

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42
contract “affects the public generally and, therefore, satisfies the requirements 1
of ‘consumer‐oriented’ conduct within the meaning of Section 349.” Nick’s 2
Garage, 2015 WL 1481683, at *11–12; see Oswego, 85 N.Y.2d at 26–27 3
(“[P]laintiffs have satisfied the threshold test in that the acts they complain of 4
are consumer‐oriented in the sense that they potentially affect similarly 5
situated consumers.”); N. State Autobahn, Inc. v. Progressive Ins. Grp. Co., 102 6
A.D.3d 5, 12 (2d Dep’t 2012) (describing conduct that is and is not 7
“sufficiently consumer‐oriented”). 8
Second, Garage raised a question of material fact as to a GBL injury. As 9
discussed above in section II.A.1, the vehicle owners were entitled to receive a 10
sufficient amount of money to repair their vehicles to pre‐loss condition, and 11
Insurer’s alleged failure to pay sufficient sums, if proved, constitutes a 12
sufficient injury. 13
Third, Insurer argues that the § 349 claims of First‐Party Assignors fail 14
because they do not allege an injury independent of their contract damages.14 15
The cases on which Insurer relies, however, do not establish such a 16
14 Because only the First‐Party Assignors have asserted contract claims, this
argument does not impact the viability of the Third‐Party Assignors’ GBL
claims.

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43
requirement. Rather, those cases found no GBL injury “where the plaintiffs 1
alleged damages in the amount of the purchase price of their contracts, but 2
failed to allege that defendants had denied them the services for which they 3
contracted.” Orlander v. Staples, Inc., 802 F.3d 289, 302 (2d Cir. 2015) (emphasis 4
omitted) (distinguishing Spagnola v. Chubb Corp., 574 F.3d 64, 74 (2d Cir. 2009), 5
and Sokoloff v. Town Sports Intʹl, Inc., 6 A.D.3d 185, 185 (1st Dep’t 2004)). 6
Therefore, as to Garage’s claim under the GBL that Insurer engaged in 7
materially misleading conduct with respect to labor rates, Insurer failed to 8
show entitlement to judgment as a matter of law. Summary judgment should 9
have been denied. 10
2. Right to Choose Repair Shops 11
On the other hand, we agree with the district court’s grant of summary 12
judgment on Garage’s claim that Insurer misled the Assignors as to their right 13
to use the repair shop of their choice. Insurer’s motion papers show that it 14
clearly disclosed this right to consumers and that Garage has no evidence that 15
would support a genuine dispute as to that fact. 16
Garage argues that, notwithstanding Insurer’s revelation to consumers 17
that they have the right to use the repair shop of their choice, it misleads them 18

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44
on that question by limiting payment to what Insurer could pay at other 1
repair shops and refusing to pay Garage’s reasonable charges, effectively 2
inducing consumers to use Insurer’s favored shops in order to secure full 3
coverage. 4
Garage’s argument fails. Insurer clearly advised consumers of their 5
right to use the shop of their choice. We affirm the grant of summary 6
judgment dismissing Garage’s GBL § 349 claim on this theory.15 7
* * * 8
We therefore conclude that summary judgment was properly granted 9
to Insurer on Garage’s GBL claims based on customers’ ability to choose 10
repair shops, but should be denied on the GBL claims based on Insurer’s 11
labor rate practices. 12
15 Garage offered declarations of consumers averring that they were misled by
Insurer as to their right to choose the repair shop. This evidence is insufficient
to sustain Garage’s claim of deceptive practices under § 349. Insurer’s
evidence of its statements to consumers shows that, under the objective
standard that governs § 349, its conduct was not deceptive, even if individual
consumers claim to have been misled. Unlike the labor rate disclosures,
Insurer here makes no representations about itself or its own conduct; it
simply discloses its customers’ rights, without any representations about
what it will do with respect to those rights.

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45
3. Preclusion 1
The district court also ruled, in the alternative, that Garage’s GBL 2
claims were precluded by N.Y. Ins. Law § 2601. Nick’s Garage, 2015 WL 3
1481683, at *15. We conclude that Garage’s claim of misleading practices as to 4
prevailing labor rates is not precluded. 5
Section 2601 of the Insurance Law prohibits insurers from “engag[ing] 6
in unfair claim settlement practices,” and specifies various acts that constitute 7
such unfair practices. N.Y. Ins. Law § 2061(a). Although Section 2601 makes 8
the covered acts illegal, it does not allow for a private cause of action based on 9
those acts. See id. §§ 2601(a)–(c); Rocanova v. Equitable Life Assurance Soc’y of the 10
U.S., 83 N.Y.2d 603, 614 (1994). By contrast, GBL § 349 generally makes 11
unlawful “deceptive acts or practices in the conduct of any business, trade or 12
commerce . . . in this state,” N.Y. Gen. Bus. L. § 349(a), and explicitly provides 13
for a broad private right of action for “any person who has been injured by 14
reason of any violation of this section” to recover “actual damages or fifty 15
dollars, whichever is greater.” Id. § 349(h). 16
Insurer argues that where § 2601 of the Insurance Law prohibits a 17
certain action by insurers, but does not allow for a private right of action, and 18

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46
GBL § 349, which covers deceptive commercial practices generally, prohibits 1
the same action and does provide a private right of action, the Insurance Law 2
takes precedence as to a claim against an insurer, and no private claim may be 3
brought under GBL § 349. This misunderstands the law of New York. We 4
therefore vacate the district court’s ruling. 5
In Riordan, 977 F.2d at 51, an insurer argued to us that § 2601, forming 6
part of a “pervasive statutory scheme regulating unfair and deceptive acts 7
and practice by insurance companies,” precludes a private claim against 8
insurance companies under GBL § 349. We rejected the argument, observing 9
that it “ignores the plain language of GBL § 349(g), which states that ‘[t]his 10
section shall apply to all deceptive acts or practices declared to be unlawful, 11
whether or not subject to any other law of this state.’” Id. at 52. The New York 12
courts agree. See New York Univ. v. Contʹl Ins. Co., 87 N.Y.2d 308, 321 (1995) 13
(“[R]elief under [GBL § 349] is not necessarily foreclosed by the fact that the 14
transaction involved an insurance policy . . . .” (citing Riordan)); see also 15
Joannou v. Blue Ridge Ins. Co., 289 A.D.2d 531, 532 (2d Dep’t 2001) (“An 16
insurance carrier’s failure to pay benefits allegedly due its insured under the 17

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terms of a standard insurance policy can constitute a violation of General 1
Business Law § 349.”). 2
In subsequent cases, we have recognized a limited preclusion of 3
liability under § 349, which would not apply in the circumstances now before 4
us. In Conboy v. AT & T Corp., 241 F.3d 242 (2d Cir. 2001), the plaintiff argued 5
that the defendant’s harassing communications with a debtor (and family 6
members), in violation of GBL § 601, which does not supply a private cause of 7
action, constituted a “deceptive act” within the meaning of GBL § 349, 8
rendering the defendant’s conduct actionable under the latter statute. Because 9
the harassing communications were not inherently deceptive and therefore 10
could not qualify as a violation of § 349 (unless on the theory that they 11
constituted violations of § 601), we ruled that a plaintiff “cannot circumvent” 12
§ 601’s prohibition of a private claim by characterizing the violation of § 601 13
as a deceptive act in violation of § 349. Id. at 258. 14
Then, in Broder v. Cablevision Sys. Corp., 418 F.3d 187 (2d Cir. 2005), a 15
plaintiff claimed that conduct by the defendant in violation of federal 16
statutes—which did not depend on a deceptive practice and did not allow a 17
private cause of action—was actionable under New York law if the violation 18

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of federal law were characterized as a deceptive act that violates GBL § 349. 1
We rejected that argument. Interpreting our earlier Conboy ruling, we held 2
that when the challenged acts are not inherently deceptive so as to violate 3
GBL § 349, regardless of whether they violate another statute, such acts 4
cannot be re‐characterized as “deceptive” simply on the grounds that they 5
violate another statute which does not allow for private enforcement; 6
otherwise, GBL § 349 would be permitted to derogate the policy embodied in 7
the other statute precluding private enforcement. We explained that a GBL 8
claim is viable where the plaintiff “make[s] a free‐standing claim of 9
deceptiveness under GBL § 349 that happens to overlap with a possible 10
claim” under another statute that is not independently actionable, but fails 11
where the violation of the other statute by conduct that is not inherently 12
deceptive is claimed to constitute a deceptive practice that serves as the basis 13
for the GBL § 349 claim. Id. at 200; see also Schlessinger v. Valspar Corp., 21 14
N.Y.3d 166, 173 (2013) (citing Broder with approval). 15
These precedents do not help Insurer. Garage’s plausible evidence that 16
Insurer engaged in inherently deceptive conduct relating to labor rates 17
supports a viable claim of violation of GBL § 349, regardless of whether the 18

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conduct also violated § 2601 of the N.Y. Ins. Law. Our rulings in Riordan, 1
Conboy, and Broder all sustain Garage’s position on this question. 2
We conclude that the district court erred in ruling that the GBL § 349 3
claim relating to labor rates is precluded by N.Y. Ins. Law § 2601. 4
CONCLUSION 5
Having considered all of the parties’ arguments (whether or not 6
discussed above), we conclude, for the foregoing reasons, and to the extent set 7
forth above, the district court’s grant of Insurer’s motion for summary 8
judgment is AFFIRMED IN PART, VACATED IN PART, and the matter is 9
REMANDED. 10

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