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GONZALSKI v. PRUDENTIAL INSURANCE COMPANY OF AMERICA

United States District Court, N.D. New York


March 22, 2004.

ROBERT C. GONZALSKI, Plaintiff,
v.
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. 25(a).

MEMORANDUM-DECISION AND ORDER

  I. INTRODUCTION

  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

  II. BACKGROUND*fn3

  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 Page 3 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. Page 4

  III. DISCUSSION*fn5

  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, Page 5 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 Page 6 statute-of-limitations period applies. See Hanrihan v. Parker, 19 Misc.2d 467, 469 (Sup.Ct. N.Y. County 1959) (citations omitted).*fn8

  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 Page 7

 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 as a Page 8 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 Page 9 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.

  IV. CONCLUSION*fn14

  After carefully considering the file in this matter, the parties' submissions, and the applicable law, and for the reasons stated herein, the Court hereby Page 10

  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 his claims.

  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 case.

 *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 1996.

 *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.

20040322

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