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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
V.
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.

      OPINION AND ORDER

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 and/or constructive 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.

I.

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 omitted).

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, 1997) (same)

For all of these reasons, the plaintiff's motion for entry of partial judgment is denied.

II.

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 pursuant to Rule 56, the plaintiffs' motion for judgment as a matter of law is therefore denied.

III.

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. ¶ 4.)

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. ¶¶ 188-96.)

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 ...


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