Varela v. Investors Ins. Holding Corp., 81 N.Y.2d 958 (1993)
New York’s General Business Law Article 29-H, regulating debt collection practices, does not create a private right of action; only the Attorney General or a District Attorney can bring such actions.
Summary
Varela sued Investors Insurance and their law firm after the firm initiated a collection action and obtained a default judgment based on the mistaken belief that Varela was delinquent on insurance premiums. Even after being informed of the error, the law firm refused to issue a satisfaction of judgment until Varela paid a $60 fee. Varela then sued, claiming damages and alleging violations of New York consumer protection statutes. The New York Court of Appeals held that Article 22-A of the General Business Law (deceptive acts) did not apply because the firm’s actions were not materially deceptive, and that Article 29-H (debt collection practices) does not provide for a private right of action. The court affirmed the dismissal of Varela’s claims.
Facts
Investors Insurance Company mistakenly believed that the Varelas were delinquent in paying their insurance premiums.
The law firm representing Investors commenced a collection action against the Varelas and obtained a default judgment.
Investors informed the law firm that the collection action was a mistake and that the Varelas did not owe the premium.
The law firm refused to enter a satisfaction of judgment until the Varelas paid $60 for issuing and filing the satisfaction.
The Varelas paid the $60 and then sued Investors and the law firm, alleging substantial damages and asserting claims under New York consumer protection statutes.
Procedural History
The lower courts dismissed Varela’s claims.
The Appellate Division affirmed the dismissal.
The New York Court of Appeals reviewed the Appellate Division’s decision.
Issue(s)
1. Whether the law firm’s actions constituted “deceptive acts” under Article 22-A of the General Business Law, thereby entitling plaintiffs to a private right of action?
2. Whether Article 29-H of the General Business Law creates a private right of action for violations of its provisions?
Holding
1. No, because the law firm’s actions, even if improper, did not materially mislead the plaintiffs and thus did not constitute deceptive acts under Article 22-A.
2. No, because Article 29-H authorizes only the Attorney General or a District Attorney to commence an action for violation of its provisions; it does not create a private right of action.
Court’s Reasoning
Regarding Article 22-A, the court reasoned that even if the law firm’s actions were improper, they did not materially mislead the Varelas. The statute prohibits “[deceptive acts or practices in the conduct of any business, trade or commerce” (General Business Law § 349). The court cited Genesco Entertainment v Koch, stating that the plaintiffs were not “injured by reason of any violation” of section 349 because the alleged misrepresentations did not constitute a deceptive practice within the meaning of the act.
Regarding Article 29-H, the court emphasized the absence of an express provision for a private cause of action, contrasting this with Article 22-A (which was amended to expressly provide for one) and other sections of the General Business Law. The court stated, “Given the Legislature’s action in amending article 22-A to expressly provide for a private cause of action in that article… its provision for private causes of action in other portions of the General Business Law… and the absence of a similar provision for enforcing article 29-H, we conclude the Legislature did not intend to create a private cause of action for violations of article 29-H.” The court applied the principle that when a statute omits a specific remedy, particularly when other related statutes include it, the omission is intentional.