Summary
denying defendant's motion to dismiss plaintiff's claims because complaint supported a breach of contract theory
Summary of this case from Noury v. St. Paul Fire Marine Insurance CompanyOpinion
00 Civ. 3212 (MBM).
March 13, 2001.
DAVID S. FRYDMAN, ESQ., Schwarzfeld, Ganfer Shore New York, NY., (Attorney for Plaintiffs).
NORMAN L. TOLLE, ESQ. Rivkin, Radler Kremer, Uniondale, NY., (Attorney for Defendant).
OPINION AND ORDER
Plaintiffs Neil Marino and N.J. Marino Construction Company, Inc. ("Marino Construction") sue Northwestern Mutual Life Insurance Company ("Northwestern") to recover disability insurance benefits and other damages. Northwestern moves under Fed.R.Civ.P. 12(b)(6) to dismiss plaintiffs' first, fourth, fifth and sixth claims as well as plaintiffs' demands for attorneys' fees and punitive damages. Northwestern also moves under Fed.R.Civ.P. 12(f) to strike portions of plaintiffs' complaint. For the reasons set forth below, Northwestern's Rule 12(b)(6) motion is granted in part; its Rule 12(f) motion is denied.
I.
Neil Marino is a New York resident and the sole owner and manager of Marino Construction, a New York corporation with its principal place of business in New York. (Compl. ¶¶ 3, 4, 7) The complaint alleges that, at some time in January 1998, Marino applied to Northwestern for two insurance policies to cover lost personal income and overhead expenses for Marino Construction in the event Marino became disabled. (Id. ¶ 8) Northwestern subsequently issued two policies to Marino titled "Disability Income Policy" and "Disability Overhead Expense Policy" (together, the "Policies"). (Id.) The Policies were dated January 23, 1998. (Id.)
On January 9, 1999, Marino was injured when he slipped while getting out of a car. (Id. ¶ 9) The complaint alleges that, as a result of this injury, Marino suffered serious bilateral carpal tunnel syndrome, torn meniscus cartilage, nerve damage and other permanent injury to his left leg, left knee, both arms, both wrists and both hands. (Id.) The complaint further alleges that Marino has undergone four surgeries and has been unable to perform his job as owner and manager of Marino Construction. (Id. ¶¶ 9-10)
Following the accident, Northwestern made payments to Marina under the Policies. (Id. ¶¶ 15-16, 23) However, on or about March 6, 2000, Northwestern advised Marino that these payments would cease. (Id. ¶¶ 18, 24) Plaintiffs also allege that agents and employees of Northwestern harassed and defamed plaintiffs on numerous occasions in connection with the processing and investigation of plaintiffs' insurance claims. In particular, plaintiffs allege that Jerome Bonney, an agent of Northwestern, made false statements to Marino Construction's preengineered steel vendor defaming plaintiffs' business reputation. (Id. ¶ 61) Moreover, as a result of these conversations, plaintiffs allege that the vendor "constructively terminated" its credit agreement with Marino Construction. (Id. ¶¶ 91-92)
On April 26, 2000, plaintiffs sued, alleging numerous claims. Northwestern now moves to dismiss plaintiffs' claims for unfair claims practices, defamation and tortious interference with contractual relations. Northwestern moves also to dismiss plaintiffs' demands for an injunction, punitive damages and attorneys' fees, and to strike portions of the complaint.
II.
On a motion to dismiss, allegations in the complaint are liberally construed and considered in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). Moreover, a claim should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
A. Unfair Claims Practices
The first claim set forth in the complaint is styled "Unfair Claims Practice". (Compl. ¶ 68) Northwestern argues that this claim should be dismissed because New York Insurance Law § 2601, which forbids "unfair claim settlement practices," provides for no private right of action. See New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 639 N.Y.S.2d 283 (1995) However, plaintiffs explain in their brief that this first claim is not brought under New York Insurance Law § 2601, but rather is based on a breach of contract theory. The allegations contained in the complaint support this reading. For example, plaintiffs allege that "[Northwestern's] misconduct was a breach of (its] obligations under the parties' agreements." (Compl. ¶ 71) Moreover, plaintiffs allege that Northwestern, through its unfair claims practices, breached its duty of good faith and fair dealing. (Id.) Under New York law, every contract contains a covenant of good faith and fair dealing. See M/A COM Sec. Corp. v. Galesi, 904 F.2d 134, 136 (2d Cir. 1990). This covenant is separate and distinct from the duties imposed by New York Insurance Law, including § 2601. Processing claims in bad faith could constitute a breach of this covenant. See Continental, 639 N.Y.2d at 289 (allegation that insurer investigated claim in bad faith and failed to pay covered claim states a claim for breach of implied covenant of good faith and fair dealing) Accordingly, plaintiffs have stated a claim for breach of contract.
The parties' briefs assume that New York law controls, and as such "implied consent . . . is sufficient to establish choice of law." Tehran-Berkley Civil Envtl. Eng'rs v. Tippetts-Abbet-McCarthey-Stratton, 888 F.2d 239, 242 (2d Cir. 1989)
B. Defamation
Northwestern also moves to dismiss plaintiffs' defamation claim, arguing that the complaint fails to set forth facts with enough specificity to permit Northwestern to respond. I disagree. To state a claim for defamation in New York, a plaintiff must allege that: (1) the defendant made a false and defamatory statement of fact; (2) regarding the plaintiff; (3) to a third party; (4) resulting in injury to plaintiff. Weldy v. Piedmont Airlines, Inc., 985 F.2d 57, 61-62 (2d Cir. 1993). Here, although the "Slander and Libel Per Se" section of the complaint does not set forth specific facts relating to the alleged defamation, it incorporates by reference other portions of the complaint that do. For example, paragraph 61 of the complaint alleges that Jerome Bonney, an agent of Northwestern, defamed plaintiffs by falsely stating to Marino Construction's pre-engineered steel vendor that Marino was engaged in insurance fraud and that Marino Construction was unable to pay its debts. (Compl. ¶ 61) These allegations are specific enough to enable Northwestern to respond and, accordingly, are sufficient to withstand a motion to dismiss.
Northwestern argues that a claim that "generically references the first 93 paragraphs of the Complaint as the basis for [the] claim" is too general to enable the defendant to respond. (Def. Reply Mem. at 6) However, a careful reading of the complaint makes clear that Bonney's conversations with Marino Construction's vendor, set forth in paragraph 61, formed the basis for plaintiffs' defamation claim. Accordingly, Northwestern had adequate notice of the factual basis of this claim.
C. Tortious Interference
To state a claim for tortious interference with contractual relations, a plaintiff must allege (1) the existence of a valid contract between itself and a third party for a specific term; (2) defendant's knowledge of that contract; (3) defendant's intentional procuring of its breach; (4) damages. See Foster v. Churchill, 87 N.Y.2d 744, 642 N.Y.S.2d 583 (1996). Here, plaintiffs allege that Northwestern "intentionally, and without justification interfered with Marino Construction's contractual relations with [its] vendor," and that, as a result of this interference, the vendor "constructively terminated" its credit agreement with Marino Construction. (Compl. ¶¶ 91-92) However, these allegations, without more, are insufficient to state a claim for tortious interference with contractual relations. Most notably, plaintiffs have failed to allege, as required, that Marino's contract with its vendor was breached. See D'Andrea v. Rafla-Demetrious, 146 F.3d 64, 65 (2d Cir. 1998) (holding that tortious interference requires an allegation of an actual breach of contract). Moreover, the conspicuous absence of the word "breach" from the complaint supports the inference that the contract was not, in fact, breached, and that the vendor was exercising its right to terminate its credit agreement with Marino Construction. Accordingly, plaintiffs' claim for tortious interference with contractual relations is dismissed.
D. Injunction
In their complaint, plaintiffs seek an injunction (1) directing Northwestern to make future payments under the Policies, and (2) ordering Northwestern to refrain from contacting third parties concerning plaintiffs. (Compl. ¶¶ 86-88) Northwestern argues that plaintiffs' injunctive remedy should be dismissed because plaintiffs have an adequate remedy at law. (Def. Mem. at 5-6) However, a request for permanent injunctive relief should not be dismissed at the pleading stage unless the underlying claim upon which relief is sought is dismissed. See In re Lloyd's Am. Trust Fund Litig., 954 F. Supp. 656, 682 (S.D.N.Y. 1997) (citingTanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1576 (5th Cir. 1988)). Here, with the exception of the claim for tortious interference with contractual relations, the underlying claims for which injunctive relief is sought remain intact. Accordingly, Northwestern's motion to dismiss plaintiffs' demand for an injunction is denied.
E. Punitive Damages and Attorneys' Fees
Northwestern's motion to dismiss plaintiffs' demand for punitive damages and attorneys' fees also is denied. First, although plaintiffs appear to concede that they are not entitled to punitive damages for their breach of contract claim (see P1. Mem. at 13), plaintiffs have alleged facts which, if proved, could support an award of punitive damages for their defamation claim. Under New York law, punitive damages may be awarded in a defamation suit if a plaintiff establishes that the defendant's statements were made out of "hatred, ill will or spite." See Celle v. Filipino Reporter Enterprises, Inc., 209 F.3d 163, 184 (2d Cir. 2000) (internal quotation and citation omitted). Here, plaintiffs allege that defendant's conduct was motivated by, inter alia, defendant's animus towards Italian-Americans, women and persons with disabilities. (Compl. ¶ 1) This allegation is sufficient to withstand a Rule 12(b)(6) motion. Moreover, although plaintiffs have not set forth a statutory basis for attorneys' fees, and it is unlikely that they will be entitled to such fees if they are successful on their claims, it is premature to dismiss plaintiffs' demand for attorneys' fees at the pleading stage. See In re Motel 6 Securities Litigation, 2000 WL 322782, at *6 (No. 93 Civ. 2183 S.D.N.Y. March 28, 2000); see also Fort Howard Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 794 (2d Cir. 1986) (noting that recovery may be limited to proper amount after plaintiff has proved his claim) (emphasis added).
III.
Northwestern moves under Rule 12(f) to strike more than 25 paragraphs of the complaint as "immaterial, impertinent and scandalous." (Def. Mem. at 14) However, as one of the cases cited by Northwestern notes, "motions to strike are generally disfavored and will not be granted unless the matter asserted clearly has no bearing on the issue in dispute." Kountz v. Slaatten, 901 F. Supp. 650, 658 (S.D.N.Y. 1995) (citing Burger v. Health Ins. Plan of Greater New York, 684 F. Supp. 46, 52 (S.D.N.Y. 1988)). The allegations Northwestern seeks to strike, set forth in Exhibit C to Norman L. Tolle's Affidavit, are too voluminous to reproduce here. Nevertheless, I have reviewed these allegations and I find that they are not immaterial, impertinent or scandalous. Rather, these allegations bear on issues that remain in dispute, particularly plaintiffs' claim that Northwestern breached its duty of good faith and fair dealing under the Policies. of course, whether they are provable or not is an entirely separate matter.
* * *
For the reasons set forth above, Northwestern's motion to dismiss plaintiffs' tortious interference claim is granted. Northwestern's motion to dismiss plaintiffs' other claims and to strike portions of the complaint is denied.