Order dated February 24, 1984 affirmed insofar as appealed from.
Appeal from the order dated June 12, 1984 dismissed. That order was superseded by the order dated September 18, 1984, made upon reargument.
Order dated September 18, 1984 reversed insofar as appealed from, on the law, order dated June 12, 1984 vacated, and motion to dismiss the second cause of action of the amended complaint granted.
Defendants are awarded one bill of costs.
Plaintiffs commenced this action to recover under a fire insurance policy issued by defendants upon plaintiffs' auto parts warehouse following a fire which destroyed the warehouse and its contents.
Defendants have presented sufficient evidence of the fire's incendiary origin and plaintiffs' motive to recover insurance proceeds to support their affirmative defenses of fraud and arson, and, therefore, to defeat plaintiffs' cross motion for summary judgment (see, R.C.S. Farmers Mkts. Corp. v Great Am. Ins. Co., 56 N.Y.2d 918; V.F.V. Constr. Co. v Aetna Ins. Co., 56 A.D.2d 598).
The allegations of the second cause of action seeking compensatory and punitive damages in substance paraphrase the provisions of Insurance Law § 2601 (formerly Insurance Law § 40-d as renum by L 1984, ch 367) relating to unfair claim settlement practices. The prohibitions of section 2601 are included within Insurance Law article 24 governing unfair trade practices in the business of insurance, under the definition of "Defined violation" (Insurance Law § 2402 [b]).
Plaintiffs' second cause of action raises the question of whether Insurance Law § 2601 may be read to create a private right of action. In addressing claims arising under Insurance Law former § 40-d, the predecessor to section 2601, the Court of Appeals appears to have left open the possibility of private litigants asserting such a claim (see, e.g., Dano v Royal Globe Ins. Co., 59 N.Y.2d 827, 829; Hubbell v Trans World Life Ins. Co., 50 N.Y.2d 899, 901). However, the Appellate Division, First Department, has explicitly ruled that former section 40-d affords to the State Insurance Department a public right of redress, but does not create a private right of action (Royal Globe Ins. Co. v Chock Full O'Nuts Corp., 86 A.D.2d 315, 316, lv. dismissed 58 N.Y.2d 800; Cohen v New York Prop. Ins. Underwriting Assn., 65 A.D.2d 71, 78-79).
We agree with the position taken by our colleagues in the First Department. One of the primary purposes of punitive damages is to deter the wrongdoer as well as others from engaging in similar conduct in the future (Walker v Sheldon, 10 N.Y.2d 401, 404). A cause of action brought pursuant to section 2601 would essentially perform a disciplinary function and, hence, would serve the same purpose as a private right of action for recovery of punitive damages (see, Cohen v New York Prop. Ins. Underwriting Assn., supra, p. 79; Cosmopolitan Mut. Ins. Co. v Nassau Ins. Co., 99 Misc.2d 1018, 1019). Viewed in this way, enforcement of the provisions of section 2601 is more appropriately within the province and jurisdiction of the State Superintendent of Insurance. Moreover, since no private right of action exists under section 2601, the administrative review procedures provided under Insurance Law § 2403 et seq. are the exclusive remedies for determining violations of section 2601. Gibbons, J.P., Thompson, Weinstein and Kunzeman, JJ., concur.