United States District Court, N.D. New York
March 22, 2004.
ROBERT C. GONZALSKI, Plaintiff,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA and LESTER D. PRICE,[fn1] Defendants
The opinion of the court was delivered by: FREDERICK SCULLIN, Chief Judge, District Page 2
*fn1 Defendant Lester D. Price has been deceased for more than
twenty years. Thus, Rule 25 of the Federal Rules of Civil Procedure does
not apply, and, therefore, the Court dismisses Plaintiff's claims against
Defendant Price for lack of jurisdiction. See Fed.R.Civ.P.
MEMORANDUM-DECISION AND ORDER
Plaintiff Robert Gonzalski commenced this action against Defendants
Prudential Insurance Company of America (hereinafter "Prudential" or "the
Company") and Lester Price on June 5, 2002, alleging state law claims of
fraud, breach of contract and negligence.*fn2
Plaintiff held three life insurance policies with Defendant Prudential,
which were purchased on March 15, 1959 ("1959 policy"), September 11,
1963 ("1963 policy") and February 16, 1967 ("1967 policy"), respectively.
On May 27, 1979, and after an unsuccessful attempt to borrow money on
his life insurance policies, Plaintiff wrote to Defendant Prudential
stating his dissatisfaction with the Company and that he was unable to
borrow money from his policies. Defendant Prudential responded in a July
3, 1979 letter, stating that two of Plaintiff's policies had already
lapsed for nonpayment of premiums but that they could be reinstated.
Plaintiff did not again contact Defendant Prudential regarding the
matter, however, until July 15, 1996, when he wrote a letter in which he
stated that he cancelled his three existing
policies after Defendant's agent convinced him to purchase a new
policy for $50,000.00 at an annual premium of $292.00. In addition,
Plaintiff stated that he later found out that the premium price for the $
50,000.00 policy was actually $1,099.00 per year and that no new $
50,000.00 policy was ever put into place for him. Defendant Prudential
responded to the concerns outlined in Plaintiff's July 15, 1996 letter on
August 20, 1996, and sent Plaintiff a proposal whereby it agreed either
to issue Plaintiff a new $50,000.00 life insurance policy for $292.00 a
year or to issue Plaintiff a $30,000.00 life insurance policy with no
payment of premiums in settlement of Plaintiff's complaints. Plaintiff
did not inform Defendant Prudential that its offer was unacceptable,
however, until August 13, 1997, approximately one year later.*fn4 On
June 23, 1998, Plaintiff contacted Defendant Prudential, requesting
copies of the $30,000.00 and $50,000.00 policies referenced in the
August 20, 1996 proposal. Defendant Prudential stated, in a letter dated
July 1, 1998, that, since Plaintiff had not accepted its proposal,
despite numerous opportunities and extensions to do so, the offer was
withdrawn and the file closed. Plaintiff then commenced the instant
lawsuit on June 5, 2002, approximately four years later.
Presently before the Court is Defendant Prudential's motion for summary
judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
Defendant asserts that Plaintiff's claims for breach of contract, fraud
and negligence are time-barred under their respective
statute-of-limitations periods.*fn6 Plaintiff, on the other hand,
argues that, since there was continual communication between the
parties and reliance on the part of Plaintiff, the statute-of-limitations
periods are tolled and, therefore, his claims are not time-barred.
A. Plaintiff's Breach of Contract Claim
Plaintiff purports to allege a breach of contract claim against
Defendant, claiming that Defendant's agent's actions amounted to a breach
of contract. Specifically, Plaintiff alleges that Defendant's agent
induced him to replace his three existing life insurance policies with a
new $50,000.00 policy for an annual premium of $292.00.*fn7 Moreover,
Plaintiff contends that Defendant altered the premium for the $50,000.00
policy to $1,099.00 and that no new $50,000.00 policy was ever put into
place at the agreed-upon premium price of $292.00.
Thus, based upon these allegations, the Court finds that Plaintiff's
claim is more properly designated as a breach of contract in the
inducement claim. In order to establish a cause of action for inducing a
breach of contract, there must be (1) a valid contract between the
plaintiff and the other contracting party; (2) the defendant's knowledge
of that contract; (3) the defendant's intentional and improper
procurement of the breach of that contact; and (4) damages. See Forty
Exchange Co. v. Cohen, 125 Misc.2d 475, 481-82 (Civil Ct. N.Y.
County 1984) (citations omitted). Since a breach of contract in the
inducement cause of action is a tort, a three-year
statute-of-limitations period applies. See Hanrihan v.
Parker, 19 Misc.2d 467, 469 (Sup.Ct. N.Y. County 1959) (citations
In ascertaining whether Plaintiff's breach of contract in the
inducement claim is time-barred under the applicable three-year
statute-of-limitations period, the Court must first determine its date of
accrual. Generally, a tort claim does not accrue until the injury is
sustained. See Kronas, Inc. v. AVXCorp., 595 N.Y.S.2d 931, 934
(1993) (citations omitted). In other words, a breach of contract in the
inducement claim "accru[es]. . . when the claim becomes enforceable,
i.e., when all elements of the tort can be truthfully alleged in a
complaint." Id. (citations omitted). Thus, "since damage is an
essential element of the tort, the claim is not enforceable until damages
are sustained." Id.
In the present case, Plaintiff addressed the damage he allegedly
sustained as a result of Defendant's agent's actions in his May 27, 1979
letter to the chairman of Prudential, when he stated that he could not
borrow from his life insurance policies. Furthermore, it is clear that
Plaintiff was aware of such damage when he stated, in his July 15, 1996
letter, that the new $50,000.00 policy that Defendant's agent convinced
him to purchase, in exchange for his three existing policies, was never
put into place. Thus, Plaintiff's breach of contract in the inducement
claim expired in 1999, at the very latest. Since Plaintiff did not
commence the instant action until 2002, the Court holds that Plaintiff's
breach of contract in the inducement claim is time-barred under the
applicable three-year statute-of-limitations period.*fn9
B. Plaintiff's Fraud Claim
Plaintiff alleges that Defendant's agent induced him to exchange his
three existing life insurance policies for a new and different life
insurance policy, which was allegedly never established for the
agreed-upon premium cost.
Defendant asserts that Plaintiff's fraud claim is also time-barred
under its six-year statute-of-limitations period. Specifically,
Defendant alleges that Plaintiff's fraud claim accrued in July 1979, when
it informed Plaintiff, by letter, that two of his policies had lapsed,
barring his breach of contract claim in 1985. Alternatively, Defendant
argues that Plaintiff was indeed aware of, or with reasonable diligence
should have been aware of, any alleged fraud that Defendant committed
with respect to the three policies when they lapsed for nonpayment of
premiums, which also would ultimately prevent the adjudication of
Plaintiff's claim on statute-of-limitations grounds.
Plaintiff, on the other hand, states that his fraud claim is not
time-barred since there was a continuous course of dealings between the
parties. Specifically, Plaintiff alleges that the statute of limitations
runs anew when there is a written acknowledgment of a debt owing as well
promise to pay that debt.*fn10 Plaintiff alleges that such conduct
can be inferred in this case namely by Defendant's August 20,
1996 proposal, which was made in settlement of Plaintiff's complaints.
Although the date of the alleged fraudulent misrepresentations that
Defendant Prudential's agent made is unknown, it is undisputed that
Plaintiff became aware of, and indeed addressed Defendant's alleged
fraudulent behavior in a May 27, 1979 letter to the chairman of
Prudential. See Affidavit of Robert C. Ciolek, sworn to June 11,
2003 ("Ciolek Aff."), at Exhibit "B." At the very least, Plaintiff was
aware of the alleged fraud when he received Defendant's July 3, 1979
letter, in which Defendant stated that Plaintiff's 1963 and 1970 policies
had lapsed for nonpayment of premiums. Since the statute of limitations
for fraud is six years from its accrual or two years from the date of
discovery, whichever is later, see N.Y. C.P.L.R. § 213(8);
Glynwill Invs., 1995 WL 362500, at *3, and the "alleged . . .
fraud occurred . . .[when] [De]fendants failed to obtain the allegedly
requested" policy for the agreed-upon premium price, Plaintiff's fraud
claim is clearly time-barred. Lamendola v. Mossa, 190 Misc.2d 147,
149 (2d Dep't 2001).*fn11
Accordingly, the Court holds that Plaintiff's fraud claim is untimely
under the applicable
six-year statute-of-limitations period.
C. Plaintiff's Negligence Claim*fn12
Plaintiff also claims that Defendant's agent's actions were negligent.
Moreover, he asserts that Defendant's continuous activities in defrauding
policy holders, such as Plaintiff, amounted to gross negligence.*fn13
Since Plaintiff's negligence claim is identical to his fraud claim and
is asserted in the context of the performance of a contractual
obligation, New York's six-year statute-of-limitations period applies.
See Lamendola, 190 Misc.2d at 149; Von Hoffmann v. The
Prudential Ins. Co. of Am., 202 F. Supp.2d 252, 263 (S.D.N.Y.
2002). Plaintiff's negligence claim began to run on the date that
Plaintiff signed up for the new policy and Defendant failed to provide
it. See Lamendola, 190 Misc.2d at 149. Plaintiff's negligence
claim is, therefore, also time-barred.
After carefully considering the file in this matter, the parties'
submissions, and the applicable law, and for the reasons stated herein,
the Court hereby
ORDERS that Defendant Prudential's motion for summary
judgment is GRANTED in its entirety; and the Court further
ORDERS that Plaintiff's claims against Defendant Price are
DISMISSED; and the Court further
ORDERS that the Clerk of the Court enter judgment in favor of
Defendants and close this case.
IT IS SO ORDERED.
*fn2 Although Plaintiff asserts that this Court has diversity
jurisdiction over his claims pursuant to 28 U.S.C. § 1332, the Court
questions whether Plaintiff has met the required $75,000.00 amount in
controversy necessary for such jurisdiction.
*fn3 Since Plaintiff failed to file a response to Defendant's
Statement of Material Facts in accordance with Local Rule 7.1, the Court
adopts the facts as set forth in Defendant's Statement of Material Facts.
See L. R. 7.1(a)(3)
*fn4 Plaintiff wrote to Defendant Prudential several times, informing
it that its August 20, 1996 proposal was an unacceptable settlement
offer. Although Defendant Prudential informed Plaintiff that the
proposal's terms would not be altered, it extended the time in which
Plaintiff could accept its terms on three separate occasions.
*fn5 As a preliminary matter, Plaintiff contends, throughout his
papers, that dismissal is premature because there has been no discovery
and, without discovery, there can be no determination as to the merits of
Plaintiff essentially makes a Rule 56(f) argument. "Federal Rule of
Civil Procedure 56(f) provides an opportunity to postpone consideration
of a motion for summary judgment and to obtain . . . discovery by
describing: (i) the information sought and how it will be obtained; (ii)
how it is reasonably expected to raise a genuine issue of material fact;
(iii) prior efforts to obtain the information; and (iv) why those efforts
were unsuccessful." Oneida Indian Nation of N.Y. V. City of
Sherrill, 337 F.3d 139, 167 (2d Cir. 2003) (citation omitted).
Plaintiff has failed to meet the necessary requirements to warrant relief
under Rule 56(f). Plaintiffs alleged factual issues are not factual but,
instead, are legal issues that the Court must determine. He alleges only
one material issue of fact namely, the dates on which the
policies lapsed. See Plaintiff's Memorandum of Law at 2.
However, since Plaintiff offers no facts to dispute the lapse dates that
Defendant has provided, has failed to file a response to Defendant's
Statement of Material Facts as Local Rule 7.1 requires, and does not
state how discovery will aid him in obtaining another set of lapse dates
for the respective policies, he ultimately fails to meet the necessary
requirements of Rule 56(f). Thus, to the extent that Plaintiff's papers
can be read to argue, in the alternative, that the Court should provide
him with the opportunity to conduct discovery, rather than grant
Defendant's motion for summary judgment, the Court denies his request.
Moreover, after reviewing Plaintiff's complaint, the Court concludes
that it is unlikely that Plaintiff could prevail on any of his claims
even if Defendant had moved for dismissal under Rule 12(b)(6) of the
Federal Rules of Civil Procedure since the applicable statutes of
limitations, discussed infra, bar these claims.
*fn6 "A federal court sitting in diversity applies the statute of
limitations supplied by the forum state." Glynwill Invs., N.V. v.
Prudential Sec., Inc., No. 92 Civ. 9267, 1995 WL 362500, *3
(S.D.N.Y. June 16, 1995) (citation omitted). Thus, under New York law, a
breach of contract cause of action has a six-year statute-of-limitations
period. See N.Y. C. P. L. R § 213(2). The statute of
limitations governing fraud actions is six years from its accrual or two
years from the date of discovery, whichever is later, see N.Y.
C.P.L.R. § 213(8); Glynwill Invs., 1995 WL 362500, at *3
(citations omitted), while allegations of negligence in the context of
the performance of contractual obligations are governed by a six-year
statute-of-limitations period. See Lamendola v. Mossa, 190 Misc.2d 147,
149 (2d Dep't 2001) (citations omitted). Moreover, a claim for
negligent misrepresentation based on the same facts as a claim for fraud
is governed by a six-year statute-of-limitations period. See Von
Hoffmann v. The Prudential Ins. Co. of Am., 202 F. Supp.2d 252, 263
(S.D.N.Y. 2002) (citations omitted).
*fn7 Although not clear, this apparently happened on or about
September 15, 1970, i.e., the date of the $50,000.00 policy.
*fn8 The Court notes that, even if it were to treat Plaintiff's claim
as a breach-of-contract, the claim would still be time-barred under the
applicable six-year statute-of-limitations period.
*fn9 Plaintiff opposes Defendant's motion for summary judgment with
respect to his purported breach-of-contract claim on
statute-of-limitations grounds by applying the continuous-treatment
doctrine. However, whether the Court views his claim as one for breach of
contract or breach of contract in the inducement, Plaintiff's reliance
upon this doctrine is misplaced. The continuous-treatment doctrine
applies to a licensed professional's negligent conduct and allows for the
tolling of a malpractice action when the conduct is part of a continuous
course of treatment or advice or until the professional relationship is
terminated. See Borgia v. City of N.Y., 12 N.Y.2d 151, 155-56
(1962); T&N PLC v. Fred S. James & Co. of N.Y., Inc.,
29 F.3d 57 (2d Cir. 1994). This doctrine is inapplicable to the present
*fn10 Such a principle, however, is applicable to breach of contract
claims and not those grounded in fraud. See Sitkiewicz v. County of
Sullivan, 256 A.D.2d 884, 886 (3d Dep't 1998); N.Y. Gen. Oblig. Law
§ 17-101 (McKinney 2001).
*fn11 Although Plaintiff argues that the present case is
distinguishable from Lamendola because this case involves a
continuous course of dealings between the parties and an attempt by the
insurance company to settle, he cites no authority to support this
contention. Even assuming that the parties' continuous course of dealings
would toll the statute of limitations, there is no evidence of a
"continuous course of dealing" in the instant case. After receiving
Defendant Prudential's July 3, 1979 letter, Plaintiff did not initiate
contact with Defendant Prudential regarding the same issues until
*fn12 Although the parties have not identified the date of the alleged
inducement, the Court assumes that, based upon the policy date of the $
50,000.00 policy, such conduct occurred in 1970.
*fn13 Defendant does not address Plaintiff's negligence or gross
negligence claim in its memorandum of law.
*fn14 Although the Court has not addressed the merits of Plaintiff's
claims because they are clearly untimely, it questions whether
Plaintiff's claims have any merit.
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