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Goshen v. Mut. Life Ins. Co.

Goshen v. Mut. Life Ins. Co.

Court of Appeals of New York

June 4, 2002, Argued ; July 2, 2002, Decided

No. 92, No. 93

Opinion

 [***861]  [**1193]  [*321]    Ciparick, J.

On these appeals we are once again called upon to determine the applicability of New York's Consumer Protection Act. ] General Business Law § 349 prohibits [****2]  "deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." An issue common to both appeals is whether an allegedly deceptive scheme that originates in New York, but injures a consumer in a transaction outside the state, constitutes an actionable deceptive act or practice under General Business Law § 349(a). An additional issue in Scott is whether the New York plaintiffs have sufficiently stated a claim for deceptive acts and practices, or false advertising, under General Business Law § 349(h) or § 350. In the circumstances presented, we answer the first question in the negative and the second in the affirmative.

A. The Goshen Action

Plaintiffs in this action are insurance policy purchasers who claim to be the victims of a deceptive scheme contrived and implemented by defendants Mutual Life Insurance Company of New York and its wholly owned subsidiary, MONY Life Insurance Company of America (MONY).  Defendants have extensive ties to New York and conduct business in the state. Plaintiffs purchased "vanishing premium" policies from defendants [****3]  at various times before starting this action. A "vanishing premium" would allegedly allow consumers to make periodic premium payments at a rate that would yield investment income to permit premium payments to decline until the obligation to make payments vanished entirely without affecting coverage (see Gaidon v Guardian Life Ins. Co. of America, 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598 [1999]). Plaintiffs claim that the vanishing premium is a deceptive scheme based on the artificial inflation of projected policy dividends.

Plaintiff Paul A. Goshen, a Florida resident, used the cash surrender proceeds of his MONY life insurance policy to purchase a vanishing premium policy. Plaintiff claims that a MONY sales agent induced him to surrender his prior policy in  [*322]  order to purchase the vanishing premium policy using a deceptive sales presentation to illustrate its potential economic benefits. Plaintiff, believing the sales information to be true, ultimately purchased a vanishing premium policy through a MONY representative in Florida.

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98 N.Y.2d 314 *; 774 N.E.2d 1190 **; 746 N.Y.S.2d 858 ***; 2002 N.Y. LEXIS 1900 ****

Paul A. Goshen, on Behalf of Himself and All Others Similarly Situated, Appellant, v. Mutual Life Insurance Company of New York et al., Respondents. Walter Scott et al., on Behalf of Themselves and All Others Similarly Situated, Appellants, v. Bell Atlantic Corporation et al., Respondents.

Subsequent History:  [****1]  As Corrected September 6, 2002.

Related proceeding at McLean v. Mut. Life Ins. Co. (In re Mut. Life Ins. Co. of N.Y. Premium Litig.), 295 F. Supp. 2d 140, 2003 U.S. Dist. LEXIS 20799 (D. Mass., 2003)

Subsequent appeal at, Sub nomine at DeFilippo v. Mut. Life Ins. Co., 2004 N.Y. App. Div. LEXIS 15351 (N.Y. App. Div. 1st Dep't, Dec. 16, 2004)

Prior History: Appeal, in the first above-entitled action, by permission of the Court of Appeals, from so much of an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered August 9, 2001, as affirmed that portion of an order of the Supreme Court (Beatrice Shainswit, J.), entered in New York County, granting a motion by defendants for summary judgment dismissing the claim of plaintiff Paul A. Goshen.

Appeal, in the second above-entitled action, by permission of the Court of Appeals, from so much of an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered May 10, 2001, as (1) reversed that portion of an order of the Supreme Court (Herman Cahn, J.), entered in New York County, denying a motion by defendants to dismiss the complaint, (2) granted the motion, and (3) directed the entry of judgment in favor of defendants dismissing the complaint.

Scott v. Bell Atl. Corp., 282 A.D.2d 180, 726 N.Y.S.2d 60, 2001 N.Y. App. Div. LEXIS 4822 (N.Y. App. Div. 1st Dep't, 2001)Goshen v. Mut. Life Ins. Co., 286 A.D.2d 229, 730 N.Y.S.2d 46, 2001 N.Y. App. Div. LEXIS 7924 (N.Y. App. Div. 1st Dep't, 2001)

Disposition: Appellate order in Goshen case affirmed in part; appellate order in Scott case affirmed in part and modified in part.

CORE TERMS

consumer, deceptive, defendants', premium, deceptive act, practices, vanishing, out-of-state, transactions, modified

Antitrust & Trade Law, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, General Overview, Federal Trade Commission Act, Banking Law, Federal Acts, Public Enforcement, State Civil Actions, Governments, Legislation, Statutory Remedies & Rights, False Advertising, Civil Procedure, Responses, Defenses, Demurrers & Objections, Motions to Dismiss, Evidence, Types of Evidence, Documentary Evidence