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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: January 6, 2019

Court Erred in Dismissing GBL Section 349 Claim

On January 3, 2019, the Third Department issued a decision in Belair Care Ctr., Inc. v. Cool Insuring Agency, Inc., 2019 NY Slip Op. 00015, holding that a motion court erred in dismissing a GBL Section 349 claim, explaining:

The threshold requirement of consumer-oriented conduct is met by a showing that the acts or practices have a broader impact on consumers at large in that they are directed to consumers or potentially affect similarly situated consumers. The amended complaint alleged that defendants aggressively marketed and advised the trust and self-insurance trusts to the public at large in general as a safe and less expensive alternative to traditional insurance and that the information disseminated by defendants was likely to mislead reasonable employers. The amended complaint further alleged that defendants’ actions injured and harmed plaintiffs, other members of self-insured trusts and the general public and have jeopardized the workers’ compensation benefits of New York employers and their employees. Construing these allegations liberally, as we must, we find that plaintiffs sufficiently alleged that the misconduct at issue was consumer oriented. Accordingly, the General Business Law ยง 349 cause of action should not have been dismissed . . . .

(Internal quotations and citations omitted).

Commercial litigation frequently involves fraud-based claims. This decision relates a statute-based fraud claim brought by under General Business Law Section 349. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a fraud-based claim, including one brought pursuant to a state or federal statute.

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