Judges Garcia, Singas and Cannataro concur. Judge Halligan concurs in result in an opinion, in which Chief Judge Wilson and Judge Rivera concur. In this action, plaintiffs bring claims for breach of contract and a violation of General Business Law §349 against defendant AXA Equitable Life Insurance Company in connection with the purchase of a universal life insurance policy in 2007 and defendant’s decision to increase the effective cost of that policy in 2015. Before us are plaintiffs’ challenges to the trial court’s grant of defendant’s summary judgment motion on plaintiffs’ contract claim and several of their damages theories and denial of plaintiffs’ cross-motion for summary judgment. We agree with the decisions of the courts below and affirm. I.
In early 2007, the Hobish Irrevocable Trust purchased an Athena Universal Life Insurance II (AULII) life insurance policy from defendant to insure Toby Hobish, then 82 years old. The policy provided for a $2 million death benefit if the policy remained in effect at the time of Ms. Hobish’s death. Upon purchase of such a policy, an AULII policyholder opened a “Policy Account” with defendant and could make flexible premium payments into the account at their discretion. Defendant deducted a monthly charge, known as a “COI charge” (cost of insurance), from the account. The account accrued interest, and the COI charge applicable to the account would increase as the balance decreased, creating incentives for the policyholder to make premium payments in sums higher than the minimum necessary to pay the COI charge on a month-to-month basis. While the policy imposed no mandatory scheduled premium payment, the account would enter a grace period before ultimately lapsing if the account balance became insufficient to meet the monthly COI charge. At that point, the policyholder would become ineligible to receive the death benefit upon the insured’s death. The policy did not allow the Trust to withdraw money deposited into the Policy Account at will. Rather, upon Ms. Hobish’s death, any money remaining in the Policy Account would revert to defendant. While defendant also sold AULII policies pursuant to which any money remaining in the account would revert to the policyholder upon death but imposed a higher monthly COI charge, the Trust chose the option with a lower COI charge. During the insured’s lifetime, the policyholder could surrender the Policy Account, at which point defendant would return the account balance to the policyholder, less a surrender fee, and terminate the policy. The monthly COI charges were determined by a formula known as the “COI Rate Scale.” The rate scale in effect when the Trust purchased the policy in 2007 had been set by defendant in 2004. The terms of the policy expressly provided that defendant maintained the right to alter the COI Rate Scale and increase COI charges, but provided that any such increase must be “equitable to all policyholders of a given class.” The policy also included a cap on monthly COI charges, which was linked to the insured’s age. In late 2015, defendant announced plans to change the COI Rate Scale that would apply to two groups of policies: those with death benefits above $1 million where the insured was 70-79 years old at the time of inception, and those above the same death benefit threshold where the insured was 80 or older at the time of inception. The parties sharply dispute the reasons for this change in the COI Rate Scale and the timing of defendant’s decision to develop and implement the new scale. Defendant alleges that under the new scale, the COI charges applicable to the Trust’s Policy Account would increase from approximately $7,000 to approximately $10,500 per month. Plaintiffs claim that this change would result in a drastic increase in the annual premium payments necessary to keep the policy in force. Plaintiffs do not contend, however, that the new COI Rate Scale exceeded the policy’s cap on monthly charges. Defendant began applying the new COI Rate Scale to the Trust’s account in March 2016. After COI charges were imposed for four successive months, the Trust elected to surrender the policy “under protest.” Pursuant to the terms of the policy, $412,688.01 was returned to the Trust, representing the remaining account balance less a $35,586.49 surrender fee. In 2017, plaintiffs commenced this action in Supreme Court, alleging that defendant had breached the contract and violated General Business Law §349, which prohibits “[d]eceptive acts or practices in the conduct of any business” (General Business Law §349 [a]). With respect to their breach of contract claim, plaintiffs alleged that defendant’s altered COI Rate Scale failed to increase rates in a manner “equitable to all policyholders of a given class,” as the policy required. Plaintiffs noted that the policy described Ms. Hobish’s “Rating Class” as “STANDARD NON-SMOKER,” and argued that this category (“STANDARD NON-SMOKER”) was the proper “class” for purposes of applying any COI charge increase, rather than the age-based groups that defendant had utilized. With respect to their section 349 claim, plaintiffs alleged that defendant had specifically marketed and sold AULII policies to elderly consumers with a representation that the likelihood of a COI Rate Scale change was minimal, all the while intending to raise COI charges in the future. Plaintiffs sought “compensatory, consequential, and punitive damages” for breach of contract; actual damages, attorney’s fees, and punitive damages on their section 349 claim; and “other and further relief as the Court deems just and proper.” Supreme Court denied each party’s motions for summary judgment on liability. On the contract claim, the court concluded that the contractual term in question—”a given class”—was ambiguous within the four corners of the contract, and that the parties had submitted relevant, competing extrinsic evidence that raised a triable issue of fact. As for the section 349 claim, the court held plaintiffs had sufficiently alleged they were affected by a deceptive business practice. Supreme Court rejected various damages theories that plaintiffs had asserted as to both causes of action. Plaintiffs offered only one theory of consequential or compensatory damages: that they were entitled to the full value of the policy’s $2 million death benefit, minus the surrender value, for a total of approximately $1.6 million. The court held that these damages were precluded because they did not “relate to any actual harm that resulted from AXA’s alleged breach” (2022 NY Slip Op 32321[U], *14 [Sup Ct, NY County 2022]). Plaintiffs’ claim for “actual damages” under General Business Law §349 rested on the same theory, and Supreme Court held that the same logic precluded those damages (id. at *16-17). Plaintiffs also sought approximately $250,000 in restitutionary damages under section 349, which Supreme Court found was a “speculative” calculation as to what “would have been left on the Policy Account upon Ms. Hobish’s hypothetical death,” and was thus unavailable to plaintiffs (id. at *17-18). Finally, Supreme Court held that plaintiffs’ allegations were insufficient as a matter of law to establish the availability of punitive damages for either claim, noting that plaintiffs had not pointed to any evidence of “AXA’s scienter” or of evidence of actions “intended to defeat the contract” (id. at *18-19 [emphasis and internal quotation marks omitted]). Plaintiffs appealed, and the Appellate Division affirmed. On damages, the Court held that Supreme Court properly dismissed plaintiffs’ demand for damages in the amount of the full face value of the policy minus the surrender amount because plaintiffs “chose to exercise the surrender provisions of the policy” and thus “were no longer entitled to the $2 million death benefit” (225 AD3d 487, 488 [1st Dept 2024]). While precluding this measure of damages, the Appellate Division noted that “we do not…address the issue…of what damages may still be available for the alleged breach” (id.). The Court further held that restitutionary damages had been properly dismissed because they were too speculative and “never realized” (id. at 489). It affirmed dismissal of plaintiffs’ punitive damages demand based on the breach of contract, and held that General Business Law §349 (h) only allows for “limited punitive damages” of three times actual damages (id., quoting Karlin v. IVF Am., 93 NY2d 282, 291 [1999]). The Appellate Division granted leave to appeal, and we now affirm.