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BURRELL v. STATE FARM AND CASUALTY CO.
September 3, 2002
MICHAEL BURRELL AND CHERIE BURRELL, INDIVIDUALLY AND JOINTLY (THE BURRELL FAMILY), PLAINTIFFS
STATE FARM AND CASUALTY CO., STATE FARM GENERAL INSURANCE CO., DEAN FITRAKIS, OFFICIALLY AND INDIVIDUALLY, M. VISGAUSS, OFFICIALLY AND INDIVIDUALLY, M. VISGOVICH, OFFICIALLY AND INDIVIDUALLY, DAVID VALES, OFFICIALLY AND INDIVIDUALLY, FLEET REAL ESTATE FUNDING CORP., ITS SUCCESSORS OR ASSIGNS ATIMA, DEFENDANTS.
The opinion of the court was delivered by: John G. Koeltl, United States District Judge.
This action arises out of the plaintiffs' disputes with their mortgage
lender, Fleet Real Estate Funding Corp. and its parent company Fleet Real
Estate Funding Corp. (collectively, "Fleet"), and the plaintiffs'
insurer, State Farm Fire and Casualty Co. and its parent company State
Farm General Insurance Co. (collectively, "State Farm"), after a fire
damaged their home and the plaintiffs attempted to obtain insurance
proceeds for-the losses allegedly sustained. The plaintiffs, Michael and
Cherie Burrell, proceeding pro se, claim that the defendants committed
intentional fraud and a number of related tortious or otherwise wrongful
acts, and discriminated against them in various ways after the fire.
The plaintiffs bring their claims of discrimination under federal and
state statutes including Title VIII of the Civil Rights Act of 1968 (the
"Fair Housing Act"), 42 U.S.C. § 3601, et seq. the Civil Rights
Acts, 42 U.S.C. § 1981, 1982, 1983 and 1986; the New York City Human
Rights Law, New York City Administrative Code § 8-101 et seq. and the
New York State Human Rights Law, N.Y. Executive Law § 296 et seq. The
plaintiffs also bring a number of state law claims against the
defendants, variously, for tortious interference with contract,
negligence, trespass, unjust enrichment, fraud
fraud, intentional fraud in violation of Sections 349 and 350 of the New
York General Business Law, and breach of the implied duty of good faith
and fair dealing. Finally, the plaintiffs bring claims against State Farm
for allegedly engaging in a pattern of racketeering activities in
violation of the Racketeer Influenced and Corrupt Organizations Act
("RICO"), 18 U.S.C. § 1961 et seq., as well as claims against both
Fleet and State Farm for conspiring to commit a number of the underlying
wrongful acts alleged in the Second Amended Complaint.
By Opinion and Order dated July 7, 2001, the Court granted in part and
denied in part the defendants' motions to dismiss a number of related
claims asserted in the plaintiffs' First Amended Complaint. See Burrell
v. State Farm Fire & Cas. Co., No. 00 Civ. 5733, 2001 WL 797461
(S.D.N.Y. July 12, 2001) ("Burrell I"). The Court denied the plaintiffs'
motion for a preliminary injunction suspending their obligation to make
mortgage payments to Fleet. The Court dismissed a number of the
plaintiffs' original claims without prejudice, a number of the plaintiffs'
claims survived, and the plaintiffs filed a Second Amended Complaint on
August 23, 2001.
There are currently several motions pending before the Court. The
plaintiffs move for the entry of partial judgment pursuant to Rule 54(b)
of the Federal Rules of Civil Procedure on the claims that were dismissed
with prejudice in the Court's Opinion and Order dated July 7, 2002 in
order to file an immediate appeal. The plaintiffs also move pursuant to
Rule 52(c) for judgment on the pleadings as a matter of law on a number
of the claims raised in the Second Amended Complaint. The defendants
St.ate Farm and Fleet move pursuant to Rule 12(b)(6) to dismiss a number
of claims raised in the Second Aftiended Complaint.
The first issue is whether to grant the plaintiffs' motion pursuant to
Rule 54(b) for the entry of partial judgment on the claims that were
dismissed with prejudice on July 7, 2001 in order to allow for an
immediate appeal of the Order dismissing those claims, despite the fact
that no final judgment disposing of all claims has been entered.
Piecemeal appeals of this kind are generally disfavored. See
Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10 (1980); Sears,
Roebuck & Co. v. Mackey, 351 U.S. 427, 435-38 (1956). Rule 54(b)
does, however, permit a district court to enter separate final judgment
on any claim or counterclaim after making "an express determination that
there is no just reason for delay." Fed.R.Civ.P. 54(b); see also
Cuoco v. Moritsuqu, 222 F.3d 99, 110 (2d Cir. 2000). This power is
largely discretionary, see CurtissWright Corp., 446 U.S. at 10, but is to
be exercised in light of "judicial administrative interests as well as
the equities involved," and giving due weight to "the historic federal
policy against piecemeal appeals." Id. at 8 (internal quotation marks
Rule 54(b) motions should not be granted" routinely; they should be
granted "only in the infrequent harsh case," where there exists "some
danger of hardship or injustice through delay which would be alleviated
by immediate appeal." Citizens Accord, Inc. v. The Town of Rochester,
235 F.3d 126, 128 (2d Cir. 2000) (per curiam) (internal citations and
quotation marks omitted). Certification should not be granted solely at
the request of the parties, and must instead be justified by a reasoned
explanation for a departure from the normal practice of consolidating all
claims and parties for review in a single
appellate proceeding. See
Cullen v. Margiotta, 618 F.2d 226, 228 (2d Cir. 1980).
In this case, there is no basis for an entry of partial judgment. The
plaintiffs' arguments for entry of partial judgment are limited to
contentions that the Court erred in some of its rulings and that these
allegedly erroneous rulings may have consequences with regard to some of
the claims raised in the Second Amended Complaint. However, the claims
that have been dismissed with prejudice arise out of the same facts and
circumstances as those raised in the Second Amended Complaint and are
sufficiently intertwined with these new claims that an immediate appeal
is not justified. As the Supreme Court has stated, the district court's
"proper guiding star" in determining whether to grant a Rule 54(b) motion
is "the interest of sound judicial administration." Curtis-Wricrht, 446
U.S. at 8; Ginett v. Computer Task Group, Inc., 962 F.2d 1085, 1095 (2d
Cir. 1992). Where, as here, the claims that were dismissed arise out of
the same facts and circumstances as the remaining claims, and are so
closely intertwined, it will rarely advance judicial economy to allow for
piecemeal appeals, which can require two (or more) three-judge panels to
familiarize themselves with the operational facts and factual background
to this case. See Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 631
(2d Cir. 1991) ("It does not normally advance the interests of sound
judicial administration or efficiency to have piecemeal appeals that
require two (or more) three-judge panels to familiarize themselves with a
given case, instead of having the trial judge, who sits alone and is
intimately familiar with the whole case, revisit a portion of the
case . . .
The plaintiffs have also raised a number of new claims in the Second
Amended Complaint that may, if meritorious, render the dismissal of the
claims in the First Amended Complaint moot, and a decision on the merits
of the plaintiffs' remaining claims will provide the Court of Appeals
with a more detailed record against which to evaluate any appeal by the
plaintiffs. Where the resolution of the remaining claims could conceivably
affect an appellate court's decision of the claims on appeal, a district
court should be reluctant to grant a Rule 54(b) motion. Cf. Hogan v.
Consolidated Rail Corp., 961 F.2d 1021, 1025 (2d Cir. 1992) (discussing
the dismissal of claims against fewer than all defendants); In re Blech
Secs. Litig., No. 94 Civ. 7696, 1997 WL 20833, at *2 (S.D.N.Y. Jan. 21,
For all of these reasons, the plaintiff's motion for entry of partial
judgment is denied.
The plaintiffs also purport to move pursuant to Rule 52(c) for judgment
as a matter of law on their various claims against State Farm. However,
Rule 52(c) allows for the entry of judgment as a matter of law only
during nonjury trials, and not in the present circumstances, where the
parties seek a jury trial on their claims. See Fed.R.Civ.P. 52(c). The
appropriate mechanism for an entry of judgment as a matter of law in favor
of the plaintiffs before trial is a motion for summary judgment pursuant
to Rule 56. However, the plaintiffs have not met the prerequisites for
filing a motion for summary judgment, including the provision of a
statement of purportedly undisputed facts. The parties also have not yet
conducted discovery, and, as discussed more fully below, there are
plainly disputed facts in this case that would preclude the entry of
summary judgment at this time. Whether construed as a motion for judgment
as a matter of law pursuant to Rule 52(c) or for summary judgment
to Rule 56, the plaintiffs' motion for judgment as a matter of
law is therefore denied.
The remaining motions are motions to dismiss on the part of the
defendants. On a motion to dismiss, the allegations in the Second Amended
Complaint are accepted as true. See Grandon v. Merrill Lynch & Co.,
147 F.3d 184, 188 (2d Cir. 1998). In deciding a motion to dismiss, all
reasonable inferences must be drawn in the plaintiffs' favor. See Gant
v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995); Cosmas v.
Hassett, 886 F.2d 8, 11 (2d Cir. 1989). The Court's function on a motion
to dismiss is "not to weigh the evidence that might be presented at trial
but merely to determine whether the complaint itself is legally
sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985).
Therefore, the defendants' present motions to dismiss should only be
granted if it appears that the plaintiffs can prove no set of facts in
support of their claim that would entitle them to relief. See
Swierkiewicz v. Sorema, N.A., 122 S.Ct. 992, 998 (2002); Conley v.
Gibson, 355 U.S. 41, 45-46 (1957); Grandon, 147 F.3d at 188; Goldman, 754
F.2d at 1065.
In deciding the motion, the Court may consider documents that are
referenced in the Second Amended Complaint, documents that the plaintiffs
relied on in bringing suit and that are either in the plaintiffs'
possession or that the plaintiffs knew of when bringing suit, or matters
of which judicial notice may be taken. Chambers v. Time Warner, Inc.,
282 F.3d 147, 153 (2d Cir. 2002); see also Brass v. Am. Film Techs., Inc.,
987 F.2d 142, 150 (2d Cir. 1993); Cortec Indus., Inc. v. Sum Holding
L.P., 949 F.2d 42, 47-48 (2d Cir. 1991); I. Meyer Pincus & Assoc.,
P.C. v. Oppenheimer & Co., Inc., 936 F.2d 759, 762 (2d Cir. 1991);
Skeete v. IVF, Inc., 972 F. Supp. 206, 208 (S.D.N.Y. 1997); Vtech
Holdings Ltd. v. Lucent Techs., Inc., 172 F. Supp.2d 435, 437 (S.D.N.Y.
2001). Where, as here, the plaintiffs are proceeding pro se, the Court is
required to "read [the plaintiffs'] pleadings . . . liberally and
interpret them to raise the strongest arguments that they suggest."
McPherson v. Coombe, 174 F.3d 276, 280 (2d Cir. 1999) (internal citation
and quotations omitted).
The Second Amended Complaint repeats a number of factual allegations
irom the First Amended Complaint, which the Court has already set forth
in the prior Opinion and Order in Burrell I, familiarity with which is
assumed. The Second Amended Complaint ("Compl.") also contains a number
of new factual allegations that are relevant to the present motions to
dismiss. The following facts are set forth in the Second Amended
Complaint and are accepted as true for the purposes of the defendants'
motions to dismiss.
The plaintiffs are residents of the City and State of New York and have
two children. (Compl. ¶ 1.) The defendant Fleet is a corporation
incorporated in South Carolina. (Compl. ¶ 6.) The defendant State
Farm is a corporation incorporated in Illinois that is authorized to
issue insurance policies in New York. (Compl. ¶¶ 2-3.) The defendants
Dean Fitrakis ("Fitrakis"), M. Visgauss ("Visgauss"), M. Visgovich
("Visgvich"), and David Vales ("Vales") are all employees of State Farm
(collectively with State Farm the "State Farm Defendants"). (Compl.
On January 25, 1993, Fleet and the plaintiffs entered into a mortgage
agreement (the "Mortgage Agreement") in which the plaintiffs provided
Fleet a mortgage on their residence at 134-21 232nd Street, Queens, New
York, 11413 (the "Residence") as security for a loan. See
Burrell I, 2001
WI, 797461, at *1. The plaintiffs and Fleet are both named as insureds
under insurance policy 56-0807118-4 (the "Policy") issued by State Farm,
as is allegedly required by the terms of the Mortgage Agreement. (Compl.
¶¶ 16-17.) The Policy insures against all risks of loss to the
Residence and the plaintiffs' personal property in the Residence deriving
from certain enumerated perils and losses, including losses from fire,
flooding and weather-related damages. (Compl ¶ 16.)
On November 1, 1998, the Residence and its contents were damaged by
what the New York City Fire Department determined to be an electrical
fire. (Compl. ¶¶ 20-21.) Both State Farm and Fleet were timely
informed of the loss. The plaintiffs claim they suffered $212,187.00 in
damages to the Residence and $269,547.15 in damages to their personal
property. (Compl. ¶ 22.) The plaintiffs submitted a claim of loss to
State Farm. (Compl. ¶ 123.)
State Farm and Fitrakis subsequently made a number of attempts to
investigate the origin of the fire and the amount of loss. The plaintiffs
claim that they attempted to allow for such an investigation, but the
parties were unable to come to terms on an appropriate time and method for
completing the investigations. (Compl. ¶¶ 28-35, 37-38, 43-58, 61-65.)
On November 13, 1998, State Farm and Vales cancelled the plaintiffs
Policy and gave the p1aintiffs, notice of the cancellation by letter,
explaining that the Policy had been cancelled because the plaintiffs
"failed to cooperate with the fire investigation and with providing dates
for other investigations of the damage and losses" and had "impeded the
cause of origin investigation," such that "the cause of origin was
undetermined." (Compl. ¶ 65.) The Policy was subsequently reinstated
and cancelled on a number of occasions. (Compl ¶¶ 70-75.)
On February 12, 1999, State Farm issued the plaintiffs a letter
declining their claim of loss resulting from the fire, allegedly because
the plaintiffs had failed to provide appropriate statements under oath to
corroborate their claims. (Compl. ¶¶ 123-24.) On April 12, 1999, State
Farm provided Fleet with notice of the declination of the plaintiffs'
claim of loss. (Compl. ¶ 180.)
On August 2, 2000, the plaintiffs brought this action against the State
Farm defendants and Fleet. State Farm subsequently provided the
plaintiffs with an offer of settlement, which the plaintiffs declined, and
which Fleet subsequently accepted as a co-insured under the Policy.
(Compl. ¶¶ 188-89; see also Pls.' Opp. to Fleet Motion at 6.) The
plaintiffs allege that Fleet has mishandled these proceeds and used them
as leverage in this litigation, that Fleet's acceptane of the proceeds
has interfered with the plaintiffs' ability to obtain the full amounts
allegedly owed by State Farm, and that Fleet accepted the proceeds
without making any independent estimates of the losses involved. (Compl.
The plaintiffs' first five causes of action are against the State Farm
defendants. The first two raise a number of claims of discrimination,
including discriminatory cancellations of the Policy. The plaintiffs'
third claim is for negligent property damage, unlawful trespass and
conspiracy to engage in a number of the wrongs alleged in the Second
Amended Complaint. The plaintiffs' fourth cause of action is for willful
and deliberate fraud in violation of Sections 349 and 350 of New York
General Business Law, and the plaintiffs' fifth cause of action alleges
that the State Farm defendants engaged in a pattern of racketeering
activity in violation of the civil
RICO statute, specifically,
18 U.S.C. § 1962 (c) and (d).
The plaintiffs remaining claims are against Fleet. The plaintiffs'
sixth cause of action alleges bad faith, tortious interference with
contract, breach of fiduciary duty, negligence, unjust enrichment and
constructive fraud against Fleet. The plaintiffs' seventh cause of action
raises claims of discrimination, and the plaintiffs' eighth, and final,
cause of action alleges that Fleet conspired or ...