Source: https://openjurist.org/112/f3d/226/saglioccolo-v-eagle-insurance-company
Timestamp: 2019-12-14 21:00:43
Document Index: 323854647

Matched Legal Cases: ['§ 767', '§ 1332', '§ 1332', '§ 1332', '§ 1367', '§ 1367']

112 F. 3d 226 - Saglioccolo v. Eagle Insurance Company
112 F3d 226 Saglioccolo v. Eagle Insurance Company
112 F.3d 226
Frank SAGLIOCCOLO, Plaintiff-Appellant,
EAGLE INSURANCE COMPANY, Defendant-Appellee.
Argued Feb. 7, 1997.
In H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 240, 109 S.Ct. 2893, 2901, 106 L.Ed.2d 195 (1989), the Supreme Court explained that the pattern requirement is satisfied by showing (1) a relationship between the predicate acts and (2) the threat of continued activity. Id. at 240, 109 S.Ct. at 2901. Expanding on the continuity component, the Court stated:
Id. at 241-42, 109 S.Ct. at 2901-02 (emphasis added) (internal citation omitted).
In the present dispute, the alleged predicate acts at issue extended for one month, and the complaint contains no allegation that there is any future threat of this conduct by Eagle. Thus, this case easily falls within the above-cited language from H.J. Moreover, we have affirmed a Rule 12(b)(6) dismissal of a RICO claim containing much more continuity than appellant's claim. In Vemco, Inc. v. Camardella, 23 F.3d 129, 134-35 (6th Cir.), cert. denied, 513 U.S. 1017, 115 S.Ct. 579, 130 L.Ed.2d 495 (1994), we stated:
In order to state a claim for tortious interference with prospective contract relations under New York law,3 "a plaintiff is required to show 'the defendant's interference with business relations existing between the plaintiff and a third party, either with the sole purpose of harming the plaintiff or by means that are 'dishonest, unfair or in any other way improper.' ' " PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 269 (2d Cir.1987) (emphasis added) (citations omitted). In this case, as the district court correctly found, appellant's complaint sufficiently alleges the knowing interference with prospective business relations. Because appellant does not allege that Eagle acted "with the sole purpose of harming the plaintiff" the issue is whether Eagle's conduct as alleged in the complaint was "dishonest, unfair or in any other way improper."4
Two factors compel us to conclude that a Rule 12(b)(6) dismissal was inappropriate on appellant's intentional interference with prospective contract claim. First, although Eagle asserts that the Governing Committee of the New York Automobile Insurance Plan, a subdivision of the Insurance Department of the State of New York, concluded that Eagle was entitled to the disputed premium amount, the committee's decision was not attached to Eagle's motion to dismiss and is not even in the record. Thus, to affirm the district court's decision, we would have to conclude that regardless of whether the debt actually was owed, Eagle's attempt to use that debt as leverage was not wrongful--a conclusion we are unwilling and unable to reach at this pleading stage of the litigation.
Second, appellant's complaint suggests that it is industry custom for insurance companies to issue tort letters when there are no tort actions pending against their insureds. The parties have not presented us with--nor have we found--any New York law addressing an insurance company's obligation to issue tort letters. Because of this absence of legal authority, if appellant's contention is in fact true, the prevalence of an industry custom would be a relevant factor in determining whether Eagle's refusal to issue the tort letter was wrongful. See RESTATEMENT (SECOND) OF TORTS § 767 cmt. i (1977) (stating that, when the courts have yet to approve or disapprove of a certain practice, "[r]ecognized standards of business ethics and business customs and practices are pertinent" in determining whether interference with a contract was improper). Although Eagle denies that it is industry custom for insurance companies to issue tort letters under the facts of this case, it has not pointed to any evidence to support its view; moreover, because this case is before us on an appeal from the district court's Rule 12(b)(6) dismissal, we could not consider such evidence even if Eagle had presented it to us. Because appellant's complaint properly alleges a claim for tortious interference with prospective contract relations, we hold that the district court erred by dismissing this claim.
V. INFLICTION OF EMOTIONAL DISTRESS CLAIM
The New York Court of Appeals has taken a rather restrictive view with respect to this tort. See, e.g., Murphy v. American Home Prods. Corp., 58 N.Y.2d 293, 461 N.Y.S.2d 232, 236, 448 N.E.2d 86, 90 (1983) (" 'Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.' ") (citation omitted); Howell, 596 N.Y.S.2d at 353, 612 N.E.2d at 702 ("[T]he requirements of the rule are rigorous, and difficult to satisfy. Indeed, of the intentional infliction of emotional distress claims considered by this Court, every one has failed because the alleged conduct was not sufficiently outrageous.") (quotations and internal citations omitted).
The New York Court of Appeals has affirmed the dismissal of intentional infliction of emotional distress claims in cases presenting allegations much more severe than those found in appellant's complaint. In Burlew v. American Mut. Ins. Co., 63 N.Y.2d 412, 482 N.Y.S.2d 720, 472 N.E.2d 682 (1984), the plaintiff, who had suffered a serious injury on the job, alleged that her employer intentionally had waited a number of months before authorizing her surgery and that this action constituted intentional infliction of emotional distress. When the defendant employer moved to dismiss the complaint, the plaintiff submitted an affidavit stating that one of the defendant's agents had yelled at her: "You're crazy if you think we're going to support you for the rest of your life." Id. 482 N.Y.S.2d at 722, 472 N.E.2d at 684. The court held that her complaint, even when coupled with the affidavit, does "not describe any conduct remotely approaching the standard of behavior necessary to establish such a claim." Id. at 723, 472 N.E.2d at 685. In Murphy, the plaintiff contended that he had been fired because he had disclosed to top management improprieties on the part of others and because of his age. He asserted that "defendant's top financial officer told him on various occasions that he wished he could fire plaintiff but that, because to do so would be illegal due to plaintiff's age, he would make sure by confining him to routine work that plaintiff did not advance in the company." 461 N.Y.S.2d at 233, 448 N.E.2d at 87. Affirming the dismissal of plaintiff's intentional infliction of emotional distress claim, the court concluded that "[t]he facts alleged by plaintiff regarding the manner of his termination fall far short of this strict standard [for intentional infliction of emotional distress]." Id. at 236, 448 N.E.2d at 90.
VI. SUBJECT MATTER JURISDICTION
Normally we would address issues of jurisdiction before reaching the merits of a case. In the present dispute, however, it is our resolution of the merits that creates a jurisdictional problem. In light of the fact that only the intentional interference with prospective contract claim remains, we must determine whether the district court will have subject matter jurisdiction to entertain this lone claim. Although the parties have diverse citizenship, appellant conceded at oral argument that the amount in controversy with respect to this claim was no more than $3,000. Had we not upheld the dismissal of the intentional infliction of emotional distress claim, for which appellant was seeking $2,000,000, an amount well over the amount-in-controversy requirement, original jurisdiction over both claims definitely would have existed under 28 U.S.C. § 1332.5 See, e.g., Klepper v. First Am. Bank, 916 F.2d 337, 341 (6th Cir.1990) ("It is well established that claims [brought by a single plaintiff against a single defendant] can be aggregated to satisfy the jurisdictional amount requirement."); Davis H. Elliot Co. v. Caribbean Utils. Co., 513 F.2d 1176, 1183 (6th Cir.1975) ("[U]nder 28 U.S.C. § 1332(a) a plaintiff can aggregate his causes of action against a defendant and it is not required that each claim against a defendant exceed [the amount-in-controversy requirement].").
To determine whether the Rule 12(b)(6) dismissal of the intentional infliction of emotional distress claim affects the jurisdictional analysis, we turn to the traditional rule: "A court must not dismiss an action for failure to meet the amount in controversy requirement unless it appears 'to a legal certainty that the claim is really for less than the jurisdictional amount.' " Basicomputer Corp. v. Scott, 973 F.2d 507, 510 (6th Cir.1992) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938)). If the pleadings themselves reveal to a legal certainty that plaintiff cannot recover enough to satisfy the amount in controversy requirement, then dismissal for lack of subject matter jurisdiction is proper. St. Paul Mercury Indem. Co., 303 U.S. at 289, 58 S.Ct. at 590.
In this case, we agree with the district court that appellant's complaint failed to state a claim for intentional infliction of emotional distress. Because of this conclusion, appellant will not be able to recover any amount for this claim, much less enough to satisfy the amount-in-controversy requirement. Although we are mindful that "[o]nce jurisdiction has properly attached, it cannot be ousted by subsequent events," Klepper, 916 F.2d at 341, appellant's intentional infliction of emotional distress claim was defective from the start. In other words, it was clear "from the face of the pleadings, ... to a legal certainty, that the plaintiff cannot recover the amount claimed." St. Paul Mercury Indem. Co., 303 U.S. at 289, 58 S.Ct. at 590. In this situation we believe that it would be improper for us to allow appellant to aggregate his remaining state-law claim with the defective ab-initio state-law claim to satisfy the amount-in-controversy requirement. See Crouch v. Atlas Van Lines, Inc., 834 F.Supp. 596, 604 (N.D.N.Y.1993) (refusing to aggregate remaining state-law claims with claims that were dismissed for lack of personal jurisdiction). A contrary conclusion would give plaintiffs an incentive to insert in complaints meritless intentional infliction of emotional distress claims--claims for which the amount in controversy often is difficult to determine--to create federal court subject matter jurisdiction over other state-law claims that, on their own, would fail to satisfy the amount-in-controversy requirement. We thus conclude that original jurisdiction over appellant's intentional interference with prospective contract claim does not exist.
This conclusion, that original jurisdiction under § 1332 is lacking, does not end our analysis, for we must consider supplemental jurisdiction as well. Because appellant's complaint also alleges a federal RICO claim, there is supplemental jurisdiction over the intentional interference with prospective contract claim, a claim forming part of the same Article III case or controversy, since it arises out of the same transaction or occurrence. See 28 U.S.C. § 1367(a).6 But the presence of supplemental jurisdiction does not mean that the district court in this case must entertain this claim. Under 28 U.S.C. § 1367(c)(3), the district court may decline to exercise supplemental jurisdiction over a claim if "the district court has dismissed all claims over which it has original jurisdiction[.]" Indeed, " 'if the federal claims are dismissed before trial, ... the state claims [generally] should be dismissed as well.' " Taylor v. First of Am. Bank-Wayne, 973 F.2d 1284, 1287 (6th Cir.1992) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966)) (omission in Taylor ). On remand, the district court should therefore determine whether, in its discretion, it wishes to exercise supplemental jurisdiction over the intentional interference with prospective contract claim, since that is all that remains in this case.
Both parties correctly agree that New York law applies. A district court sitting in diversity must apply the conflict-of-laws rules of the state in which it sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). Ohio courts apply the principles in the Restatement (Second) of Conflict of Laws, directing courts to apply the law of the state with the most significant contacts to the dispute. See Lewis v. Steinreich, 73 Ohio St.3d 299, 652 N.E.2d 981, 984-85 (1995). In this case it is clear that the overwhelming majority of contacts are in New York