## Facts

- Purchasers of New York City taxi medallions bought medallions at city-run auctions in late 2013 and early 2014.
- Plaintiffs alleged the City and the Taxi and Limousine Commission (TLC) overstated medallion value and failed to disclose that values were already declining due to known factors.
- Plaintiffs further alleged that after the auctions, the City and TLC, through regulatory actions and inaction affecting app-based for-hire vehicle services, caused a dramatic loss in medallion value.
- Plaintiffs sought damages and/or rescission, asserting (among other theories) deceptive business practices under General Business Law (GBL) § 349 and breach of the implied covenant of good faith and fair dealing.
- The auction bid materials included disclaimers that the City made no representations about the present or future value of medallions or future laws and regulations affecting taxicab operations.

## Issues

1. Whether the GBL § 349 claim was barred for failure to serve a timely notice of claim under General Municipal Law (GML) § 50-e and, independently, whether plaintiffs stated a consumer-oriented deceptive practices claim.
2. Whether plaintiffs stated a claim for breach of the implied covenant of good faith and fair dealing (and a rescission remedy based on that breach) notwithstanding express disclaimers in the auction documents.

## Decision

- The Appellate Division affirmed dismissal of the GBL § 349 cause of action.
- The Appellate Division reversed the order denying dismissal of the implied-covenant claim and the rescission portion of a related claim, and granted dismissal of those claims.
- As a result of the appeal and cross-appeal rulings, plaintiffs’ challenged claims were dismissed at the pleading stage.

## Legal Principles

- A plaintiff seeking damages against a municipality or its agencies must comply with GML § 50-e’s notice-of-claim requirement; noncompliance warrants dismissal.
- A GBL § 349 claim requires materially misleading conduct that is consumer-oriented; a specialized governmental auction for a license may fail this requirement where the allegations chiefly concern a private contractual dispute and economic loss.
- The implied covenant of good faith and fair dealing aids the contract’s express terms and does not create independent duties or override the parties’ express allocation of risk.
- Where contract documents disclaim representations about value and future regulatory conditions, an implied-covenant theory cannot be used to impose duties to protect investment value or maintain a favorable regulatory regime.

## Conclusion

The court held that the medallion purchasers could not proceed under GBL § 349 due to the notice-of-claim defect and insufficient consumer-oriented deception allegations, and that express auction disclaimers foreclosed implied-covenant and rescission theories premised on alleged nondisclosure and later regulatory choices that reduced medallion value.


Singh v. City of New York, 189 A.D.3d 1697, 139 N.Y.S.3d 307 (N.Y. App. Div. 2d Dep’t 2020)