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Wednesday, 24 October 2012 17:27

Greg Coccaro Wins Significant Appeal from Progressive Insurance, Changes Case Law

North State Autobahn Inc., a Westchester-NY-based body shop owned by Greg Coccaro, has been allowed to move forward with its lawsuit that accuses Progressive Insurance Group Company and its affiliates of deceptive acts and practices.

The ruling by the Appellate Division of the Supreme Court of New York denied Progressive Insurance’s motion for a summary judgment, allowing the lawsuit filed by the North State Autobahn Inc. to move forward.

This is an important victory for North State against Progressive Northeast Insurance Company, Progressive Casualty Insurance Company, Progressive Direct Insurance Company, Progressive Specialty Insurance Company, and Nicholas Stanton. The result likely creates a case law basis for deceptive acts and practices claims against auto insurance companies that divert policyholders away from repair shops outside their DRP networks.

In a fifteen page decision, the court went into great lengths explaining the history of “Business Law Section 349, Deceptive Business Practices” and the intent of it, writing: “This case presents us with the question of whether a business entity [North State] has stated a valid cause of action for violation of General Business Law §349(h) where it alleges that another business entity [Progressive] deceived and misled prospective customers, causing it to sustain direct economic loss in the form of more than $5 million in lost business sales. We conclude that it does.”

North State sued Progressive under New York’s deceptive acts and practices statute, General Business Law section 349, for misleading consumers into taking their damaged vehicles away from North State to competing body shops within Progressive’s “network.” North State’s suit alleges that the insurance company coaxed customers away by maligning the shop’s work and pricing.

In North State Autobahn v. Progressive Insurance, the Second Department’s ruling, denying Progressive’s motion for summary judgment and allowing North State’s suit to go forward, confirmed a business’ standing to recover for direct harm caused to it by another business’ deceptive acts and practices—even if that business is a competitor.
Justice Robert Miller, writing for a unanimous panel, held that North State’s allegations concerning Progressive’s acts depriving consumers of their choice of body shop satisfied the statute’s requirement that the deceptive acts at issue have an impact on consumers at large. The court further held that the law does not require that North State identify specific consumers who were harmed.

The court also rejected Progressive’s argument that North State’s injury was merely derivative of that of the injured consumers, finding that North State adequately alleged direct harm the instant customers were misled into taking their vehicles to a network shop, regardless of whether such customers ultimately suffered pecuniary injury. The fact that North State was a business competitor and not the consumer in the transaction was held to be irrelevant for purposes of standing under the statute, under which punitive damages and attorneys’ fees are recoverable.

“This is a significant decision that enables businesses to pursue ‘deceptive acts and practices’ claims in business-to-business disputes—even between competitors—that have an impact on consumers at large,” said Dennis Artese, a shareholder at Anderson Kill & Olick who represented North State. “That’s critically important because it allows well-funded businesses to police deceptive practices where the state attorney general does not, and where individual consumers cannot, because they just do not have the financial means to fight an insurance goliath like Progressive in the legal system.”

Along with Artese, North State was represented by Finley Harckham of Anderson, Kill & Olick and solo practitioners Anthony J. Mamo, Jr. and Richard P. Stone.
The Progressive Group was represented by Nelson Levine de Luca & Horst, LLC, New York, N.Y. (Michael R. Nelson, Kymberly Kochis, and Francis X. Nolan IV of counsel), for appellants.

Background
In 2007, North State Autobahn, Inc. commenced this action against the Progressive defendants and a number of Progressive employees, including the defendant Nicholas Stanton. Asserted in the complaint, was that the Progressive defendants had violated General Business Law §349. Specifically, the complaint alleged that the Progressive defendants deceived claimants who sought to have their vehicles repaired at the plaintiffs’ and other repair shops that did not participate in their DRP by making misrepresentations as to [Coccaro’s shop’s] workmanship, price, timeliness of service, and character. North State also alleged that the Progressive defendants issued damage repair appraisals well below fair-market value at about one-half the estimate of the plaintiffs’ estimate, and that the Progressive defendants represented to claimants that the plaintiffs would make only partial payments for repairs which would necessarily require claimants who had their vehicles repaired by the plaintiffs or other independent shops to incur out-of-pocket expenses.

The plaintiffs further alleged that the Progressive defendants engaged in such deceptive practices in order to mislead customers of the plaintiffs and other independent shops to believe that they must have their vehicles repaired at repair shops that were members of the DRP. The Progressive defendants allegedly failed to inform these claimants that the repair shops that participated in the DRP used inferior aftermarket parts, or were not registered or qualified to work on specific vehicle models. As a result of the Progressive defendants’ actions, the plaintiffs alleged that they sustained direct economic loss in the form of more than $5 million in lost business sales, and that the public at large sustained other damages. For more on the case, search on “Coccaro” at www.autobodynews.com.

 

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