motion to dismiss with respect to this claim.
1. Intentional Infliction of Emotional Distress
As the basis for her intentional infliction of emotional distress
claim, plaintiff's complaint alleges that defendants' termination of her
disability benefits was a malicious and reckless course of conduct that
caused Weiner to suffer great mental anguish and other physical and
emotional symptoms. In defining the elements of intentional infliction of
emotional distress, both New York and New Jersey follow the Restatement
2d of Torts, § 46 (1965). Howell v. New York Post Co.,
81 N.Y.2d 115, 121 (1993) (explaining that New York courts adopted the
Restatement formulation); Yourman v. People's Security Life Ins. Co.,
992 F. Supp. 696, 705 (D.N.J. 1998) (noting that New Jersey courts follow
the Restatement formulation). The elements of intentional infliction of
emotional distress are (1) extreme and outrageous conduct by the
defendants; (2) an intent to cause, or disregard of a substantial
probability of causing, severe emotional distress; (3) a causal connection
between the conduct and injury; and (4) severe emotional distress. Id.
The alleged conduct must be truly egregious to meet these required
elements, and "[l]iability 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." Murphy v. American Home Prod.
Corp., 58 N.Y.2d 293, 303 (N.Y. 1983)(citing the Restatement). Further,
"the emotional distress suffered by the plaintiff must be so severe that
no reasonable man could be expected to endure it." Restatement, supra,
§ 46 comment j.
The conduct alleged in plaintiff's complaint, even regarded in the
light most favorable to plaintiff and without challenging the sincerity
of plaintiff's distress, does not meet this standard. For example, in
MaGee v. Paul Revere Life Ins. Co., 954 F. Supp. 582 (E.D.N.Y. 1997), the
plaintiff alleged that the defendant insurance company wrongly terminated
plaintiff's ongoing disability benefits after contacting the plaintiff's
treating physicians in an attempt to influence their opinions about
plaintiff's need for continuing disability benefits. Applying New York
law, the court determined that the plaintiff's allegations were not
sufficiently outrageous to state a claim for intentional infliction of
emotional distress. Id. at 587. In another case, the Appellate Division
of the New York Supreme Court dismissed a claim of intentional infliction
of emotional distress where the plaintiff alleged that the defendant
insurance company had failed to timely compensate her for the destruction
of her home by fire, thereby leaving plaintiff without a home and
adequate possessions or funds for over a year, and accused plaintiff of
arson and of making false statements under oath. Cunningham v. Security
Mutual Ins. Co., 260 A.D.2d 983, 984, 689 N.Y.S.2d 290, 291 (3rd Dept.
1999). Similarly, applying New Jersey law, the court in Yourman v.
People's Security Life Insurance, 992 F. Supp. at 704-05, concluded that
the plaintiff failed to state a claim for intentional infliction of
emotional distress where she alleged that the defendant insurance company
initially wrongly refused to issue coverage, later granted coverage at a
lower deductible, and then threatened the plaintiff with a lawsuit.
As in these cases, the conduct here alleged by Wiener, while
troubling, does not rise to the level required by law to meet the
threshold of extreme and outrageous
conduct. See Howell, 81 N.Y.2d at 122
(noting that every claim of intentional infliction of emotional distress
ever heard by the Court of Appeals has failed because the conduct has not
been sufficiently outrageous) Further, courts considering similar facts
have characterized such claims for intentional infliction emotion
distress as true contract cases recast in tort. MaGee, 954 F. Supp. at
587 (noting that, "this case, at its core, is one for breach of contract
based on a failure to pay insurance benefits"); Harris v. Allstate Ins.
Co., 83 F. Supp.2d 423 (S.D.N.Y. 2000) (citing MaGee for this proposition
and dismissing a claim for intentional infliction of emotional distress
where plaintiff alleged defendant had discriminated based on race in the
denial of automobile insurance coverage); Cunningham, 260 A.D.2d at 984,
689 N.Y.S.2d at 291 (finding that the breach of the contract of insurance
does not create a cause of action in tort apart from the contractual
relationship between the insured and the insurer). For these reasons,
plaintiff's claim for intentional infliction of emotional distress is
2. Bad Faith Denial of Coverage
Plaintiff's claim for bad faith denial of coverage is crafted as an
independent cause of action in her complaint. Plaintiff alleges that
defendants denied her disability benefits without a reasonable basis and
in reckless disregard of their obligations under her insurance policy.*fn4
Plaintiff asserts damages in excess of $3,000,000, stating that
"[d]efendants' failure to make benefit payments is in bad faith and will
engender additional expenses and losses to Wiener."*fn5 See Compl.
¶ 39. Because Wiener has failed to state a claim as a matter of law
under both New York and New Jersey law, defendant's motion to dismiss her
bad faith cause of action is granted.
Under New York law, an independent tort action for bad faith denial of
insurance coverage is not recognized. See New York Univ., 87 N.Y.2d at
315-20 (discussing the unavailability of a tort remedy in the absence of
a duty apart from contractual obligations and dismissing bad faith-type
claim in the absence of an underlying tort duty). Further, punitive
damages are unavailable in breach of contract cases absent extraordinary
circumstances. As stated by the New York Court of Appeals regarding a
similar bad faith claim for punitive damages,
A complaint does not state a claim for compensatory or
punitive damages by alleging merely that the insurer
engaged in a pattern of bad-faith conduct. The
complaint must first state a claim of egregious
tortious conduct directed at the insured claimant.
Only then does an alleged pattern of bad-faith conduct
attain legal significance insofar as it demonstrates
that a public wrong would be vindicated by the award
of punitive damages.
Rocanova v. Equitable Life Assurance Soc'y, 83 N.Y.2d 603, 613-16
(1994); New York Univ., 87 N.Y.2d at 316 ("Where a lawsuit has its
genesis in the contractual relationship between the parties, the
threshold task for a court considering defendant's motion to dismiss a
cause of action for punitive damages is to identify a tort independent of
the contract."). As New York does not recognize bad faith denial of
coverage as an independent tort, and because plaintiff has failed to
state an underlying tort cause of action upon which punitive damages
could be grounded, plaintiff fails to state a claim under New York
For different reasons, plaintiff's complaint fails to state a claim for
bad faith under New Jersey law as well. Unlike New York, the Supreme
Court of New Jersey has recognized a cause of action for bad faith denial
of insurance coverage where the denial is for reasons that are "not even
debatably valid and the economic losses sustained by the policyholder are
clearly within the contemplation of the insurance company." Pickett v.
Lloyd's, 131 N.J. 457, 461 (1993); see also Robeson Indust. Corp. v.
Hartford Accident & Indemnity Co., 178 F.3d 160, 168-69 (discussing bad
faith claim and dismissing it for failure to state a claim under both New
York and New Jersey law). However, because such an action "sound[s] more
in contract than in tort . . . the familiar principles of contract law
will suffice to measure damages." Id. at 474. Employing this reasoning,
the court held that reasonably foreseeable consequential damages may be
awarded for bad faith denial, but did not change the state of the law
with respect to the general unavailability of punitive damage awards in
such insurance coverage cases. Id. at 476 (citing with approval several
prior cases that have held that absent egregious circumstances, there
exists no right to recover punitive damages); Ellmex Construction Co.,
Inc. v. Republic Ins. Co., 202 N.J. Super. 195, 205-208, 494 A.2d 339,
344-46 (N.J. Super. App. Div. 1985) (cited with approval in Pickett and
holding insurer seeking to recover under builder's risk policy was not
entitled to punitive damages).
While plaintiff demands both compensatory and punitive damages on her
bad faith claim, plaintiff's complaint fails to demonstrate through "a
short and plain statement of the claim" that she "is entitled to relief"
under the bad faith theory as developed in Pickett. Fed. R. Civ. P.
In fact, the only relevant injury described with any clarity in the
complaint is the loss of the benefits under the policy. Further, as
discussed earlier, we find no circumstances distinguishing this case from
standard contract analysis that would justify the most exceptional award
of punitive damages for breach of contract. Therefore, we find that
plaintiff has failed to state a claim under the bad faith theory.
3. Breach of Contract
Defendants argue that because the plaintiff's benefits were reinstated
and all past due benefits paid, plaintiff's breach of contract claim is
moot. Plaintiff argues that her breach of contract claim is not moot
because she seeks consequential damages and because defendants never paid
interest on the withheld payments. Because standard recovery in such
insurance coverage cases includes past due benefits plus interest, see
Caiati of Westchester v. Glens Falls Ins. Co., 265 A.D.2d 286,
696 N.Y.S.2d 474 (2nd Dept. 1999), plaintiff's cause rise of action for
breach of contract is not entirely moot and is sustained.
E. Leave to Amend
Plaintiff has requested leave to amend her complaint in the event that
defendants' motion to dismiss is granted. While the District Court has
wide discretion whether to grant leave to amend, we are required to grant
leave "freely . . . when justice so requires." Ruffolo v. Oppenheimer &
Co., 987 F.2d 129, 131 (2d Cir. 1993). The Court may nonetheless deny
leave to amend when it appears that granting leave to amend would be
futile, or "unlikely to be productive." Id. In this case, with respect to
plaintiff's claims under GBL § 349, for intentional infliction of
emotional distress, and for punitive damages under the bad faith theory,
we deny plaintiff's motion for leave to amend because amendment would be
futile under the law of both New York and New Jersey.
Our resolution of plaintiff's motion for leave to amend is otherwise
with respect to plaintiff's possible claim for consequential damages.
While it is unclear from the face of plaintiff's complaint whether she in
fact demands consequential damages,*fn7 it is appropriate to allow
plaintiff an opportunity to clarify her demand for consequential damages
by submitting proposed amendments. Because the viability of any amendment
to the complaint with respect to consequential damages will require a
determination of applicable law, the submission, if any, is to first set
forth legal argument on whether the Court should apply New York or New
Jersey law to this action. Further, if plaintiff is in fact seeking
consequential damages, she is directed to submit two proposed
amendments. The first should be a proposed amendment to her contract
cause of action assuming the applicability of New York law. This
amendment should be accompanied by legal argument supporting plaintiff's
position that consequential damages are available for the breach of a
disability insurance contract under New York law. Second,
applicability of New Jersey law, plaintiff is to propose amendments and
relevant legal argument to support her claim for consequential damages
under the bad faith cause of action.
For the foregoing reasons, defendants' motion to dismiss is granted
with respect to plaintiff's claims under GBL § 349, for intentional
infliction of emotional distress, and for bad faith. Defendants' motion
is denied with respect to defendants' ERISA preemption argument and
plaintiff's breach of contract claim. Plaintiff is granted leave to amend
only as directed in Part E. If plaintiff chooses to so amend, she must
submit any proposed amendment in the form therein described no later than
March 15, 2002. Defendants should respond by March 29, 2002, and
plaintiff may submit a brief reply by April 1, 2002.
IT IS SO ORDERED.