Royal Globe Insurance v. Chock Full O'Nuts Corp.
Plaintiff, an insurer named Royal, sued its insured, Chock Full O'Nuts Corporation, for unpaid insurance premiums and service charges. Chock counterclaimed, alleging unfair claim settlement practices under Insurance Law § 40-d, breach of contractual and fiduciary duties, and sought punitive damages and attorneys' fees. The Special Term dismissed the fourth counterclaim. The appellate court affirmed the dismissal of the counterclaim for punitive damages, holding that Insurance Law § 40-d does not create a private right of action for punitive damages, and such damages require a showing of morally culpable and wanton dishonesty beyond mere breach of contract or negligence. The court also found attorneys' fees were not recoverable. The lower court's order was modified to remove the option for Chock to replead the punitive damages counterclaim.