MEMORANDUM & ORDER Afire occurred at plaintiff Jose Jimenez’s home on July 25, 2020. Jimenez was not home, and the record does not reveal that anyone was injured. Jimenez does allege, however, that he suffered over $160,000 in damage to the contents of his house. In an application of Murphy’s Law, the fire occurred approximately a week after the expiration date of the insurance policy, issued by the defendant, under which Jimenez seeks coverage. But it occurred during a fifteen-day grace period mandated by New York law for late payment. Jimenez did not pay the premium during that grace period — or, it appears, ever. The question in this case is whether the coverage terminated at the end of the grace period, or whether such termination was retroactive to the end of the policy term. I read the applicable statute and case law to permit the retroactive cancellation that the defendant — Occidental Fire and Casualty Company of North Carolina — seeks. Nevertheless I hold that the policy Occidental actually wrote did not provide for that outcome. Accordingly, I deny Occidental’s motion to dismiss Jimenez’s main breach-of-contract claim. However, I grant Occidental’s motion to dismiss Jimenez’s estoppel claim, as well as a second contract claim that is duplicative (and, in any event, is predicated on an invalid legal theory). I. Background The following facts are taken from Jimenez’s Amended Complaint and other documents submitted in connection with the motion to dismiss — namely, the insurance policy that Occidental originally issued to Jimenez; the package of documents it sent inviting Jimenez to renew the policy; and Occidental’s subsequent notice of cancellation. Am. Compl., ECF No. 11; Insurance Policy, ECF No. 14-5; Renewal Package, ECF No. 14-3; Notice of Cancellation, ECF No. 14-4.1 In 2019, Jimenez purchased a homeowner’s insurance policy from Occidental. That policy provided coverage through July 17, 2020. See Am. Compl. 4 (stating that the successor policy ran “for the period July 17, 2020 to July 17, 2021″); see also Renewal Package 7; Notice of Cancellation 2.2 Pursuant to the policy, Occidental insured the contents of Jimenez’s residence in Bellrose, New York against fire damage and other types of loss. Insurance Policy 11. On June 8, 2020 — approximately five weeks before the policy was set to expire — Occidental issued Jimenez a renewal notice for the following year and an invoice for the renewal premium. Am. Compl. 4. The renewal notice called for payment of the new premium by July 17, 2020. Renewal Package 6. Jimenez’s Amended Complaint acknowledges that he did not pay the new premium by that date. Am. Compl. 8. Occidental then mailed a Notice of Cancellation dated July 21, 2020. Am. Compl. 6; Notice of Cancellation 2. That notice specified a “Date of Cancellation” of four days prior: July 17, 2020, the last day of coverage for which Jimenez had paid. The cancellation notice also provided for a 15-day grace period, as required by New York’s Insurance Law. It stated: “If payment is received and honored by a financial institution before August 06, 2020, the policy will remain in force and a notice rescinding this cancellation will be mailed to you.” Id. As noted, the fire occurred on July 25, 2020 — four days into the grace period. Am. Compl. 5. Jimenez has indicated that he was out of town and not receiving mail during this time. Id.
20, 23-24; Pl.’s Mem. of Law in Opp’n to Def.’s Mot. to Dismiss (“Pl. Opp’n”) 3, ECF No. 15. He apparently learned of the fire quickly, as he alleges that he called Occidental within two days of it to lodge his claim for coverage. See Id. 24. Still, Jimenez acknowledges that he did not pay the renewal premium by the end of the grace period; indeed, he concedes that he never paid the renewal premium. See Id. 8 (“[T]he premium payment was not made prior to August 6 or thereafter.”); id. 16 (“Payment was not received [by Occidental] before August 6 or thereafter.”). But he does allege that “the policy of insurance did not provide for retroactive cancellation.” Id. He seeks $160,156 in reimbursement from Occidental for his home’s contents. Id. 18.3 The question here, accordingly, is on what date Jimenez’s coverage lapsed. Occidental argues that coverage lapsed on July 17, when the prior policy period ended; Jimenez claims coverage remained in effect until August 6 — the end-date of the grace period. II. Legal Standards On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “the court’s task is to assess the legal feasibility of the complaint.” Lynch v. City of New York, 952 F.3d 67, 75 (2d Cir. 2020).4 In doing so, the Court “must take the facts alleged in the complaint as true, drawing all reasonable inferences in [the plaintiff's] favor.” In re NYSE Specialists Sec. Litig., 503 F.3d 89, 91 (2d Cir. 2007). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Courts “are not bound to accept as true a legal conclusion couched as a factual allegation,” and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. III. Discussion The first two “Causes of Action” listed in Jimenez’s Amended Complaint assert that Occidental breached its contractual obligations under the policy because it remained in force on the day of loss. The two claims assert separate theories: that Occidental sent the notice of cancellation too late, and that the terms of the policy did not provide for retroactive cancellation. Occidental’s motion to dismiss Jimenez’s Second Cause of Action claim is denied because I find the theory it embodies — that the provisions of the policy do not contemplate retroactive cancellation — to be viable. But Occidental’s motion to dismiss Jimenez’s First Cause of Action is granted because it is duplicative of his Second Cause of Action and because, in any event, it is predicated on a meritless legal theory. Jimenez also claims that Occidental should be equitably estopped from denying coverage under the policy. But for the reasons set forth below, his complaint does not set forth sufficient factual content to sustain that claim. Occidental’s motion to dismiss the estoppel claim is therefore granted. A. The Motion to Dismiss Jimenez’s Second Cause of Action, for Breach of Contract, Is Denied Because His Policy Did Not Permit Retroactive Cancellation As noted, Jimenez’s “Second Cause of Action” asserts that Occidental impermissibly cancelled his policy retroactively. Occidental responds that it was permitted to cancel Jimenez’s policy for nonpayment with retroactive effect. Specifically, Occidental contends that given Jimenez’s failure to pay the renewal premium by the end of the grace period — August 6, 2020 — coverage lapsed on July 17. Def.’s Mem. of Law in Supp. of Its Mot. to Dismiss (“Def. Mem.”) 6-7, ECF No. 14. Whether this is true depends on a reading of both the New York Insurance Law and the language of the policy itself — specifically, the provision governing cancellation for nonpayment. Because this is the only viable theory that Jimenez has pleaded, I address it first. 1. New York Insurance Law Allows Retroactive Cancellation The first issue is whether the New York Insurance Law permits retroactive cancellation in this context. Under Section 3425 of that law, Occidental’s mailing of a renewal notice had the effect of renewing the policy.5 The Appellate Division explained this (perhaps counterintuitive) effect in Victor v. Turner, 496 N.Y.S.2d 761, 765 (App. Div. 2d Dep’t 1985). In Victor, the court interpreted the old Section 167-a of the Insurance Law, which was the predecessor to Section 3425 and contained functionally identical language.6 The court explained that although “[i]t is undoubtedly correct that the plain language of the [statute] appears to condition renewal upon payment,…an examination of the definitions contained in Insurance Law §167-a indicates otherwise.” Id. at 765. This indication otherwise comes from the statute’s definition of “renew”: “To renew” or “renewal” is defined as “the issuance and delivery by an insurer, at the end of the policy period, of a policy superseding a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term. Id. at 765-66 (quoting Insurance Law §167-a(1)(b)). As Victor goes on to explain, “[t]his language clearly contemplates a renewal (i.e., superseding) policy which is in effect upon issuance and delivery at the ‘end of the policy period.’” Id. at 766. Accordingly, the court held that “in the absence of a notice of nonrenewal in compliance with §167-a(4)(a), renewal is automatic upon billing for the renewal term, and a notice of cancellation is required to terminate coverage.” Id. at 767 (emphasis added). Jimenez’s policy was thus “renewed” by operation of law when Occidental mailed the renewal notice on June 8, 2020. Once renewed, the policy can be canceled only as permitted by statute. Section 3425 provides that “upon the effective date if the policy is a renewal, no notice of cancellation shall be issued to become effective” unless one of several listed events transpires. N.Y. Ins. Law §3425(c). One such event is nonpayment of premium. Id. §3425(c)(2)(A); see also id. §3425(a)(10) (defining “nonpayment of premium”). Even in the event of non-payment, however, the law provides a grace period. That period is triggered by the issuance of a notice of cancellation. “Payment to the insurer, or to an agent or broker authorized to receive such payment, shall be timely, if made within fifteen days after the mailing to the insured of a notice of cancellation for nonpayment of premium.” Id. §3425(a)(10); see Victor, 496 N.Y.S.2d at 766 (referring to the 15-day period as a “grace period”). Despite the auto-renewal upon billing and the statutory grace period, New York cases make clear that retroactive cancellation is permitted under the statute. For example, the Third Department approved a termination date that preceded the expiration of the grace period in Gannon v. New York Mutual Underwriters, 435 N.Y.S.2d 163 (App. Div. 3d Dep’t), aff’d, 430 N.E.2d 1318 (N.Y. 1981). In that case, the insurer issued a notice of cancellation that, by its terms, was to become effective “14 days and 12 hours” later — half a day less than the 15 days’ required grace period. Id. at 164-65. Applying former Section 167-a, the court rejected the insured’s argument that the cancellation could not occur prior to the expiry of the grace period. Id. Rather, the court held that the statute “merely sets an outer limit for acceptable payment.” Id. (emphasis added). In other words, payment would have been timely, and the policy kept in force, had the insured made payment within fifteen days. But such payment not having been made on time, the court held that the cancellation could indeed take effect twelve hours before the end of the grace period. Id. Gannon thus stands for the proposition that the moment of termination can precede the expiry of the grace period — that is, that retroactive cancellation is permissible under Section 3425.7 Cases interpreting a similar provision of the Insurance Law, Section 3216(d)(1)(C), which governs the cancellation of certain health-insurance policies, also hold retroactive cancellation to be permissible. Section 3216 requires certain policies to state that (for quarterly billed policies, for instance) a “grace period of [at least thirty-one] days…will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force.” N.Y. Ins. Law §3216(d)(1)(C).8 Despite the requirement that coverage remain in effect during these grace periods to pay premiums, the First Department has held that after the “grace period expires and premiums have not been paid,” the “coverage terminates retroactively to the end of [the] last month for which the subscriber did pay.” Makastchian v. Oxford Health Plans, Inc., 721 N.Y.S.2d 351, 352 (App. Div. 1st Dep’t 2001). Similarly, another state court has explained that the grace period provided by Section 3216 “is provided to give a policy holder currently in arrears the opportunity to make a belated payment.” Zaitschek v. Empire Blue Cross & Blue Shield, 632 N.Y.S.2d 434, 436 (Civ. Ct. 1995), aff’d for reasons stated, 662 N.Y.S.2d 171, 172 (App. Term 2d Dep’t 1997). Where “[n]o payment was ever made,” however, the insurer was not “obligated to respond to any claim filed within that grace period.” Id.9 This position is consistent with various treatises. For example, Couch on Insurance explains: According to the general rule, when death or loss occurs during the extension or grace period, the death or loss is no bar to recovery even when the premiums have not been paid, provided that they are paid prior to the expiration of the extension or grace period, at least where this is the intent of the parties. 5 Couch on Insurance §76:58, Westlaw (3d ed. June 2022 Update) (emphasis added). Treatises specific to New York law state the same proposition; in their view, “[c]overage automatically stops retroactively to the due date of the premium if payment thereof is not received by the end of the grace period, as the grace period extends the time in which the insured may make a required payment but does not abrogate the need for such payment.” 31 Anne M. Payne & Joseph Wilson, New York Practice Series — New York Insurance Law §2:77 (2021-2022 ed.), Westlaw (Dec. 2021 Update); accord 69 New York Jurisprudence §1110 (2d ed.), Westlaw (Nov. 2022 Update) (same). Further support from this position came from the old New York State Department of Insurance, which opined “that retroactive termination of coverage back to the last day for which premium was paid is permitted when premium is not received during the grace period.” Makastchian, 721 N.Y.S.2d at 352-53 (citing the Department’s pronouncement). New York law provides that such an agency determination is to be “upheld in deference to [the Superintendent of Insurance's] special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision or is “irrational or unreasonable.” Med. Soc’y of State v. Serio, 800 N.E.2d 728 (N.Y. 2003). Makastchian explicitly upheld this pronouncement in its interpretation of the statute. See 721 N.Y.S.2d at 352-53. There is language in Victor that can be read to suggest the opposite conclusion. There, the Appellate Division concluded “that the procedure envisioned by the Legislature” was that the insurer could mail a notice of cancellation as early as the renewal date — here, July 17 — if the insured had not paid the new premium by then. 496 N.Y.S.2d at 766. The effect of sending the notice of cancellation, the court continued, would be “the cancellation becoming effective after the expiration of the 15-day grace period” — here, on August 6 — if the insured had not paid the premium by then. Id. (emphasis added). Jimenez relies heavily on this language in his briefing. But this language is not necessarily fatal to Occidental’s position. For starters, it is dicta; the insurance company in Victor had never mailed a notice of cancellation at all. See id. at 491 (framing “the question on appeal” as “whether, in the absence of nonrenewal, a notice of cancellation for nonpayment of premium is required to terminate coverage for the renewal term of a policy protected by” New York’s Insurance Law). In addition, it is possible that the cancellation could become effective on one day — say August 6 — but be effective as of another — say July 17. This position does not find especially strong support in Victor itself, but does in the cases and treatises cited above. This makes sense; otherwise, every policyholder would be insured for free during the grace period — an outcome that would be surprising, to say the least. The Zaitschek court expressly rejected this outcome: “A grace period is not intended as a free bonus month of insurance coverage added to every contract.” 632 N.Y.S.2d at 164; see also id. at 165 (“No [belated] payment was ever made, and this court will not hold that an insurance company must maintain its coverage regardless of whether or not premiums are paid.”). For these reasons, the relevant statute permits retroactive cancellation. 2. Jimenez’s Insurance Policy Did Not Clearly Provide for Retroactive Cancellation Still, the New York insurance statute is only an overlay to the policy. Jimenez alleges, in paragraph 16 of his Amended Complaint, that Occidental’s policy “did not provide for retroactive cancellation,” and thus he was covered until the end of the grace period — August 6, 2020. Am. Compl. 16. Put differently, according to Jimenez, the “policy of insurance was in full force and effect” when the fire occurred on July 25, having been renewed by law (as described above) and not canceled retroactively. Id. 17. On this argument, he is correct. To effectuate retroactive cancellation, the cancellation provisions of the policy have to provide for it. “[T]he plain language of [an insurance] policy is determinative, and a court cannot rewrite the agreement by disregarding that language.” ABM Mgmt. Corp. v. Harleysville Worcester Ins. Co., 977 N.Y.S.2d 330, 332 (App. Div. 2d Dep’t 2013). The insurer cannot deploy a statute to rewrite (in its own favor) the contract it wrote its insured. As the New York Court of Appeals has explained (albeit in a different context), statutory provisions “cannot be implied as part of the agreement so as to make a different contract from that which the parties intended nor override the agreement which the parties, in fact, made.” Bailey v. Fish & Neave, 868 N.E.2d 956, 960 (N.Y. 2007) (interpreting the New York Partnership Law). Illustrating this point in the health-insurance context, one court granted summary judgment because it found the defendant insurers’ practice of terminating policies without 30 days’ notice to be “in violation of the plain terms of the policy.” Makastchian v. Oxford Health Plans, Inc., 704 N.Y.S.2d 44, 45 (App. Div. 1st Dep’t 2000). Zaitschek is instructive here. That case began with an assessment of the policy language, which was critically different from the policy language here in that it expressly provided for retroactive cancellation. 632 N.Y.S.2d at 435. It stated: “If we don’t receive your payment within a 30 day grace period after the due date [of the renewal premium], your coverage will end automatically, and without notice, as of the due date.” Id. (emphasis added); see also id. at 436 (holding that the defendant insurer was permitted to cancel the contract retroactively “in accordance with both contract and statute“) (emphasis added); id. at 437 (characterizing the contract as “unambiguously stat[ing] that…termination would be retroactively effective”). Here, in contrast, Occidental’s policy did not specify any effective, or “as of,” date of cancellation. It stated simply: “When you have not paid the premium, we may cancel the entire policy at any time by mailing to you at least 15 days’ notice of cancellation.” Policy Documents 30. This language is ambiguous — at best — on whether cancellation may be retroactive. And it is axiomatic that ambiguities in the policy are to be interpreted against the insurer in New York. See, e.g., Victor, 496 N.Y.S.2d at 767 (notice provisions “must be literally complied with and any ambiguities in language are construed against the insurer”; citing cases). Ultimately, this appears to be a case of imperfect drafting: the policy could easily have said that upon nonpayment, the insurer “can cancel at any time by mailing a notice of cancellation, and such cancellation will be retroactive to” or “effective as of” an earlier date — either the date the policy expired, or the date the notice of cancellation was mailed. But that is not the policy that Occidental wrote, and therefore retroactive cancellation is unavailable. The motion to dismiss Jimenez’s breach-of-contract claim on this ground is denied. B. The Motion to Dismiss Jimenez’s First Cause of Action, Also for Breach of Contract, is Granted Jimenez’s Amended Complaint also contains what he styles a “First Cause of Action.” Like his Second Cause of Action, the First Cause of Action asserts a breach of contract. This latter cause of action is dismissed both because it is duplicative of the former, and because it is legally flawed. 1. Jimenez’s First Cause of Action Is Duplicative of His Second Jimenez’s First and Second causes of action are duplicative. They are predicated on the same provisions in the same insurance policy; they both allege that Occidental was contractually obligated to cover the same loss but did not; and they seek recovery of the same $160,156 for the contents of Jimenez’s house. Am. Compl.
