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BROWN v. AXA RE

United States District Court, S.D. New York


May 3, 2004.

THOMAS W. BROWN, MARGUERITE SWITZGABLE, FORESIGHT FILMS, INC., and THOMAS W. BROWN d/b/a BOUQUET ONE LIMITED PARTNERSHIP (formerly known as PASSING THRU LINDEN LIMITED PARTNERSHIP), Plaintiffs, -v- AXA RE, Defendant

The opinion of the court was delivered by: LAURA TAYLOR SWAIN, District Judge

OPINION AND ORDER

In their Second Amended Complaint in this diversity case, Plaintiffs allege that Defendant AXA Re ("AXA") reneged on its commitment to reinsure a direct insurance policy which, in turn, had backed up the financing necessary for Plaintiffs to produce a film called "Passing Thru Linden." According to the Second Amended Complaint, the project's financing structure collapsed completely as a result of AXA's decision to renege on its commitment. Plaintiffs allege that, as a result of AXA's actions, they were denied the opportunity to produce the film, which, in turn, caused them to suffer damage to their individual reputations and business relationships as well as lose years of sweat equity they had invested in the project. The Second Amended Complaint asserts the following causes of action: (1) breach of contract damaging intended third-party beneficiaries; (2) bad faith and breach of the covenant of good faith and fair dealing; (3) tortious interference with contract and tortious interference with prospective contractual/business relations; and (4) prima facie tort. AXA moves to dismiss the Second Amended Complaint pursuant to Rules 9(a), 12(b)(6) and 17(b) of the Federal Rules of Civil Procedure, contending that the Second Amended Complaint fails to state a claim upon which relief may be granted and that Plaintiffs lack capacity and/or standing to sue. The Court has jurisdiction of this action pursuant to 28 U.S.C. § 1332.

  For the reasons stated below, Defendant's motion to dismiss is granted in part and denied in part. BACKGROUND*fn1

  In the mid-1990's, Plaintiffs Thomas W. Brown ("Brown"), a film industry veteran, and Marguerite S. Switzgable ("Switzgable"), an Academy and Emmy Award nominated producer/writer/director dedicated to the making of environmentally and socially important films, began working together to create a self-sustaining economic structure for the development and production of films of "substance." (Second Amended Complaint ("Complaint") at ¶¶ 3-4.) Brown and Switzgable decided to focus their efforts on the production of a feature film entitled "Passing Thru Linden" ("Linden"), which would portray the lives of people exposed to environmental disaster in Linden, New Jersey. (Id. at 4.)

  The script for the film was written by Switzgable and owned by Plaintiff Foresight Films, Inc. ("Foresight"), a not-for-profit tax-exempt Internal Revenue Code Section (501)(1)(3) corporation. Foresight received project development grants from major foundations to fund the Linden project. (Id. at ¶¶ 4, 15.) Brown and Switzgable lacked the personal resources to finance the making of the film and, therefore, spent years assembling a coalition of persons and companies that would provide the financial backing and aid in the preparation for the film's production. (Id. at ¶ 4.)

  In 1996, Brown and Switzgable learned of Jean Michel Guillot ("Guillot"), who was then the head of Special Risks Underwriting at AXA. Guillot's unit specialized in political and entertainment risks, such as insuring the weather at Wimbledon or the appearance of a rock star at a concert. (Id. at ¶ 5.) Beginning in mid-1996, AXA engaged in an aggressive strategy to become a market leader in motion picture finance contingency insurance. Consistent with this strategy, AXA issued reinsurance commitments to numerous film production companies, financial institutions and other insurers. (Id. at ¶¶ 6, 22-24.) As part of this effort, Guillot signed and stamped a reinsurance slip for the Linden project in November or December 1996. (Id. at ¶¶ 5, 26.) Subsequent to the signing of that initial agreement, Guillot spoke via telephone and met in person with Brown and Switzgable, touring Foresight's movie planning facility on two different occasions. (Id. at ¶¶ 5-6, 26.) Plaintiffs agreed that AXA and other reinsurers would be net profit participants in the Linden project. (Id. at ¶ 6.)

  The initial agreement signed by Guillot was the key financial commitment that laid the foundation for others to add their own commitments to the project. (Id. at ¶ 7.) As time went on, the identity and precise roles of the participants in the transaction changed. (Id. at ¶ 30.) When Guillot made his original commitment to the project in 1996, Passing Thru Linden Limited Partnership, a partnership to be formed by Brown and Switzgable,*fn2 was designated as the insured. Later in 1996 and early 1997, Chase Manhattan Bank ("Chase") became the lead lender and, at its insistence, assumed the role of the insured. Subsequent to that, Dresdner Bank AG of Barbados took Chase's place as the lead lender and was designated as the insured. (Id. at ¶ 31.)

  AXA had to participate in the Linden project as a reinsurer rather than a direct insurer because it was not qualified to write direct insurance in the United States. As a result, Underwriters Reinsurance Company and its affiliates ("URC") were brought in to issue an insurance policy to the bank, and AXA and the other reinsurers reinsured URC's policy. (Id. at ¶ 32.)

  After the signing of the initial agreement with AXA, Brown and Switzgable devoted virtually all of their time over the next three years to assembling the coalition they needed to finance and produce the project. Through their efforts, Brown and Switzgable were able to put together a deal structure that was accepted by a production lender, lead receivables lender, an insurer, a lead reinsurer (AXA), several other reinsurers, a leading insurance broker and several equity investors. AXA's commitment as lead reinsurer was made prior to the commitment made by the insurer. (Id.)

  By the summer of 1999, Brown and Switzgable had secured a firm loan commitment from an affiliate of Dresdner Bank AG, the stamped reinsurance slips of AXA and other reinsurers to backstop the bank financing, a signed commitment from an affiliate of URC to front an insurance policy that would be reinsured by AXA and the other reinsurers, sufficient commitments and interest from equity investors in BouQuet One*fn3 to produce the film, and sufficient interest from creative and technical people willing to defer part of their compensation. As a result of these arrangements, securing the financing necessary to produce the film was a virtual certainty. (Id. at 8.)

  Then, in early February 1999, Guillot was terminated suddenly and replaced by Erick Derotte. (Id. at 9.) When Derotte took over, claims were being asserted by other film industry insureds/reinsureds of AXA. Derotte announced to the press in the spring of 1999 that AXA was "evaluating its portfolio." Around that time, AXA turned over its portfolio to lawyers so that AXA could receive advice regarding which of the commitments entered into by Guillot could be avoided. (Id.)

  In October 1999, Derotte, acting on advice of counsel, inquired of insurance brokers representing Brown and Switzgable as to whether AXA could renege on its commitments to the Linden project. The brokers told Derotte that the commitments were binding and had been relied upon by numerous people. (Id. at ¶ 10.)

  In December 1999, "consistent with its global declination to honor its commitments to the motion picture industry," AXA terminated its outstanding commitments to Plaintiffs relating to the Linden project. Brown and Switzgable's insurance brokers, reacting to earlier questioning by Derotte regarding the lack of a temporal limit on its commitments to Plaintiffs, recommended that Brown and Switzgable offer that a time limit be imposed on AXA's commitments. Such an offer was made and AXA refused, using the offer as a further excuse for its withdrawal. (Id. at ¶ 11.)

  As a result of AXA's termination of its commitments, the entire financial structure buttressing the Linden project fell apart. Plaintiffs lost the opportunity to make the film. Foresight lost over $1 million worth of funding donated by foundations and individuals, as well as more than $500,000 in equipment donations made by corporate sponsors. Plaintiffs also forewent millions of dollars in equity and "sweat equity" invested in the project. Thousands of hours of work went to waste. (Id. at ¶ 12.) DISCUSSION

 Rule 12(b)(6) Standard

  When deciding a motion to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), "a court is required to accept the material facts alleged in the complaint as true," and must construe the complaint liberally and draw all inferences from the allegations in the complaint in the light most favorable to plaintiffs. Easton v. Sundram, 947 F.2d 1011, 1014-15 (2d Cir. 1991); Gregory v. Daly, 243 F.3d 687, 691 (2d Cir. 2001). A court should not grant the motion to dismiss "`unless it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief" Easton, 947 F.2d at 1015 (2d Cir. 1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). "`The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Kforce, Inc. v. Alden Personnel, Inc., 288 F. Supp.2d 513, 516 (S.D.N.Y. 20002) (quoting Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995) (internal quotation marks and citation omitted)).

 Breach of Contract Damaging Intended Third-Party Beneficiary

  Plaintiffs claim that they are entitled to third-party beneficiary status with respect to the contractual arrangement made by AXA in connection with the Linden project.*fn4 Under New York law, which has adopted the rule set forth in the Restatement (Second) of Contracts, "a party is a third party beneficiary entitled to assert rights under a contract if it is an `intended' beneficiary, as opposed to an `incidental' beneficiary, of a promise." Houbigant, Inc. v. Development Specialists, Inc., et al., 229 F. Supp.2d 208, 217 (S.D.N.Y. 2002).

 

[A] beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either: (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
Restatement (Second) of Contracts § 302(1)(1981); see also Houbigant, 229 F. Supp.2d at 217; IBS Ketel, Ltd. v. Hanlil Bank, Korea, et al., No. 98 Civ. 3507 (DC), 1999 WL 639696, at *1 (S.D.N.Y. Aug. 23, 1999). "While a third-party beneficiary need not be named in the contract, under New York law, the face of the contract must show the parties' intent to benefit the third party." IBS Ketel, Ltd., 1999 WL 639696, at *2 (citing Muhlrad v. Mitchell, No. 96 Civ. 3568, 1997 WL 182614, at *5 (S.D.N.Y. Apr. 14, 1997)).

  Pursuant to section 302(1)(b) of the Restatement (Second) of Contracts, the circumstances surrounding the contract must indicate that the promisee intends to give the beneficiary the benefit of the promised performance. While Plaintiffs have alleged facts indicating that Guillot, on behalf of AXA, the promisor, may have intended to benefit Plaintiffs, Plaintiffs have failed to allege any facts at all regarding the intentions of the promisee.*fn5 In addition, the case law makes it clear that under New York law, the parties' intent to benefit the third party must be evident on the face of the contract for that third party to be considered an "intended beneficiary." Although the initial version of the contract, stamped November 27, 1996, named one of the Plaintiffs, Passing Thru Linden Limited Partnership, as the insured, Passing Thru Linden Limited Partnership was replaced by Chase as the insured a few months later. The identity of the insured was later changed again to Dresdner Bank AG of Barbados. (Complaint at par; 31.) None of the Plaintiffs' names has appeared on the face of the contract since Chase was substituted for Passing Thru Linden Limited Partnership and there is no other evidence on the face of the contract to indicate that the parties intended to benefit Plaintiffs. Plaintiffs thus have failed to state a claim under New York law for breach of contract damaging a third-party beneficiary.*fn6 Defendant's motion to dismiss is therefore granted as to Plaintiffs' third-party beneficiary breach of contract claim asserted in Count One of the Second Amended Complaint.

 Contractual Bad Faith and Breach of Covenant of Good Faith and Fair Dealing

  In Count Two of the Second Amended Complaint, Plaintiffs assert that they were damaged by AXA's failure to act in good faith and breach of an implied covenant of good faith and fair dealing. Since Plaintiffs have not plead any facts to indicate that any Plaintiff was an actual party to the reinsurance contract at issue in this case, and since Plaintiffs have failed to state a claim that any of them was an intended third-party beneficiary of that contract, there is no basis upon which a rational factfinder could determine that an enforceable agreement existed between AXA and any of the Plaintiffs. A cause of action for a breach of an implied covenant of good faith and fair dealing "is dependent upon the existence of an enforceable contract." United Magazine Co. v. Murdoch Magazines Distribution. Inc., 146 F. Supp.2d 385, 405 (S.D.N.Y. 2001).*fn7 Hence, Plaintiffs' breach of the covenant of good faith and fair dealing claim is dismissed for failure to state a claim.

 Prima Facie Tort

  Plaintiffs have also failed to state a claim for prima facie tort. The elements of a cause of action for prima facie tort under New York law are "(1) intentional infliction of harm; (2) resulting in special damages; (3) without excuse or justification; (4) by an act that would otherwise be lawful." Twin Laboratories, Inc. v. Weider Health & Fitness, 900 F.2d 566, 571 (2d Cir. 1990). "`Disinterested malevolence'" is the touchstone, "meaning that the plaintiff[s] cannot recover unless the defendant's conduct was not only harmful, but done with the sole intent to harm." Id. (quoting Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 332 (1983)). "[M]otives other than disinterested malevolence, `such as profit, self-interest, or business advantage' will defeat a prima facie tort claim." Twin Laboratories, Inc. 900 F.2d at 571 (citing Marcella v. ARP Films, Inc., 778 F.2d 112, 119 (2d Cir. 1985) (citations omitted)).

  In their Second Amended Complaint, Plaintiffs allege that AXA's decision to renege on its commitments relating to the Linden project was part of a "worldwide disavowal of AXA RE's reinsurance commitments to the motion picture industry." (Complaint at ¶ 13.) Plaintiffs allege that in February 1999, Jean Michel Guillot, who, at the direction of his supervisors, had been aggressively pursuing a strategy to establish AXA as a market leader in insuring the motion picture industry, was fired and replaced by Erick Derotte. (Id. at ¶ 9.) Plaintiffs further allege that in the spring of 1999, Derotte announced to the press that AXA was "evaluating its portfolio." (Id.) Plaintiffs also allege that prior to the announcement, Derotte had secretly been reviewing Guillot's files while Guillot was traveling, and warned AXA's management about the various levels of exposure Guillot had created for the company. (Id. at ¶ 34.) According to the Complaint, Derotte ultimately was able to convince AXA's senior management that Guillot had violated his underwriting guidelines, a charge which eventually gave rise to Guillot's termination. (Id.) Plaintiffs further allege that AXA later "commenced its own litigation juggernaut," filing a number of lawsuits in an attempt to avoid the commitments it had made to the motion picture industry. (Id. at ¶ 10.)

  It is clear from these allegations and others in the Complaint that, even in Plaintiffs' view, AXA's decision to renege on its commitments relating to the Linden project was motivated in no small part by a desire to change its business strategy for self-interested reasons. Therefore, even drawing all reasonable inferences in favor of Plaintiffs, it is beyond doubt that Plaintiffs can prove no set of facts consistent with the Complaint that would allow the trier of fact to conclude that AXA was motivated solely by disinterested malevolence. Since Plaintiffs can prove no set of facts consistent with the complaint that would entitle them to relief on their prima facie tort claim set forth in Count Four of their Second Amended Complaint, Defendant's motion to dismiss is granted as to that claim.

 Tortious Interference with Contract

  Under New York law, a plaintiff asserting a claim of tortious interference with contract must establish four elements: "(1) a valid contract between plaintiff and a third party, (2) defendant's knowledge of the contract, (3) defendant's intentional inducement of the third party to breach the contract, and (4) damages." Wolff v. Rare Medium Inc., No. 01 CIV. 4279(VM), 2001 WL 1448476, *3 (S.D.N.Y. Nov. 15, 2001) (internal quotation marks and citations omitted). Plaintiffs have sufficiently plead the first, second and fourth elements, alleging in their Complaint that loan, insurance and other contracts had been secured with various third parties relating to the Linden project, that Guillot, acting on behalf of Defendant AXA, was informed of Plaintiffs' business plan and was generally aware of the existence of these contracts, that these commitments were not concluded because of AXA's actions, and that Plaintiffs have lost out on making their film and wasted years of sweat equity and resources as a result of AXA's decision to withdraw from the deal.

  As to the third element, "a tortious interference with contract claim must plead that a defendant used `wrongful means' to induce the third party to breach the contract." Id. at *3. The New York Court of Appeals has defined "wrongful or improper means" to include "physical violence, fraud, or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it is knowingly directed at interference with the contract." Id. (quoting Guard-Life Corp. v. S. Parker Manufacturing Corp., 406 N.E.2d 445, 449 (N.Y. 1980)). "[D]ishonesty and unfair means are [, however,] . . . sufficient to show wrongful means." Ivy Mar Co., Inc. v. C.R. Seasons Ltd., No. 95-CV-0508, 1998 WL 704112, at * 16 (E.D.N.Y. Oct. 7, 1998) (citing Wedeen v. Cooper, No. 97 Civ. 8621 (JSM), 1998 WL 391117, at *3 (S.D.N.Y. July 24, 1998)). Plaintiffs have alleged that Defendant was aware that the commitments made by other parties in connection with the Linden Project were contingent upon Defendant following through on its alleged reinsurance commitment. Plaintiffs have further alleged that Defendant, despite having confirmed to Plaintiffs on several occasions that it would live up to its bellwether commitment, walked away from its obligations in order to pursue a new business strategy. Such facts, if proven true, could reasonably be viewed as sufficient to satisfy this element. Thus, drawing all reasonable inferences in favor of Plaintiffs, it does not appear beyond doubt that Plaintiffs can prove no set of facts in support of their tortious interference with contract claim that would entitle them to relief. Defendant's motion to dismiss therefore is denied with respect to Plaintiffs' tortious interference with contract claim (Count Three) insofar as the motion is brought pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

 Tortious Interference with Prospective Contractual Relations/Business Relations

  Under New York law, tortious interference with prospective contractual relations and tortious interference with business relations are terms that are used interchangeably to refer to the same cause of action. See, e.g. Wedeen, 1998 WL 391117, at *2. To state a claim for tortious interference with prospective contractual or business relations, Plaintiffs must establish: "(1) the existence of business relations with a third party; (2) defendant's interference with those business relations; (3) that defendant acted with the sole purpose of harming the [plaintiffs] or used dishonest, unfair or improper means; and (4) injury to the business relationship." Phlo Corp. v. Stevens, No. 00 Civ. 3619(DC), 2001 WL 630491, *7 (S.D.N.Y. June 7, 2001).

  Plaintiffs have alleged that they had business relations with a number of third parties in connection with the Linden project, that AXA's actions interfered with those relations by causing the financial backing of the Linden project to crumble, which, in turn, prevented Plaintiffs from making their movie, and that their business relationships with third parties collapsed as a result. Such allegations are sufficient to satisfy elements one, two and four. As to the third element, a finding that AXA's sole purpose was to harm Plaintiffs would clearly be inconsistent with the allegations in the Complaint because Plaintiffs allege that AXA's decision to renege on its commitments was motivated by a self-interested desire to alter its business strategy. Plaintiff may still satisfy this element even absent a showing of malice, however, by showing that Defendant used dishonest, unfair or improper means. Courts have applied the same "wrongful or improper means" standard discussed above in the section relating to Plaintiffs' tortious interference with contract claim in determining whether a defendant has used dishonest, unfair or improper means. Id. Plaintiffs have alleged facts sufficient to meet that standard and thus have stated a claim of tortious interference with prospective contractual or business relations (Count Three). Accordingly, Defendants' motion to dismiss is denied as to that claim insofar as the motion is brought pursuant to Rule 12(b)(6).

 Capacity and/or Standing

  Defendant further contends, citing Rules 9(a) and 17(b) of the Federal Rules of Civil Procedure, that the Second Amended Complaint should be dismissed because the four Plaintiffs identified in the caption have not alleged facts sufficient to enable the Court to determine that they have the capacity and/or standing to sue. (Def's Mem. of Law In Support of Motion to Dismiss the Second Am. Compl. at 3-6.)

  Fed.R.Civ.P. 9(a), which concerns the capacity of an individual or entity to sue or be sued, provides as follows:

It is not necessary to aver the capacity of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, except to the extent required to show the jurisdiction of the court. When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, the party desiring to raise the issue shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge.
Fed.R.Civ.P. 9(a). Fed.R.Civ.P. 17(b) provides guidelines for a Court to determine which state's law governs whether a particular individual or entity has the capacity to sue or be sued.

  Defendant has raised an issue pursuant to Rule 9(a) as to the legal existence of BouQuet One, to the extent it is intended to be a party plaintiff in this action.*fn8 The Court finds that Plaintiffs have failed to allege facts sufficient to establish the basis for legal recognition of BouQuet One's capacity to sue. It is undisputed that BouQuet One never became a limited partnership, and Plaintiffs have failed to allege facts sufficient to establish that BouQuet One was actually formed and acted as a general partnership during the relevant period. Therefore, any claims asserted by BouQuet One are dismissed without prejudice because Plaintiffs have failed to allege facts demonstrating that BouQuet One was in existence as a separate entity during the relevant period and therefore has the capacity to sue.

  Defendant also contends that Plaintiffs Foresight, Brown and Switzgable lack standing to assert any of the claims alleged in the Complaint. "To establish Article III standing, a plaintiff must . . . allege, and ultimately prove, that he has suffered an injury-in-fact that is fairly traceable to the challenged action of the defendant, and which is likely to be redressed by the requested relief." Baur v. Veneman, 352 F.3d 625, 632 (2d Cir. 2003) (citing Bennett v. Spear, 520 U.S. 154, 162 (1997)).

  As to Plaintiffs' remaining claims (the tortious interference claims), Plaintiffs have plead facts sufficient to establish that Foresight, Brown and Switzgable have standing to assert these claims. Plaintiffs have alleged injuries suffered by all three of these Plaintiffs as a result of contractual and other arrangements that fell through as a result of Defendant's alleged decision to renege on its reinsurance commitment in connection with the Linden Project. For instance, as a result of Defendant's alleged breach, Brown and Switzgable allegedly lost years of sweat equity poured into the project and suffered damage to their individual professional reputations, while Foresight allegedly lost more than $1 million in donations from various individuals and foundations and more than $500,000 in equipment donations. (Pls' Mem. of Law in Opp. to Motion to Dismiss at 10; Compl. at ¶ 12.)

  Defendant's motion to dismiss is therefore denied to the extent it seeks dismissal of Plaintiffs' remaining tortious interference with contract and tortious interference with prospective contractual relations/business relations claims for lack of standing.

 Punitive Damages

  Plaintiffs seek punitive damages in connection with their causes of action for breach of duty of good faith and fair dealing, tortious interference with contract, tortious interference with prospective contractual relations/business relations and prima facie tort. Defendant contends that Plaintiffs' claims for punitive damages should be dismissed because Plaintiffs have failed to allege any conduct "aimed at the public generally," and Plaintiffs have failed to allege facts sufficient for a reasonable jury to conclude that Defendant acted with wanton or reckless disregard for Plaintiff's rights.

  "Punitive damages may be awarded in instances where a defendant is found liable of tortious interference with contract and/or business relations." Int'l Minerals & Res. S.A. v. Am. Gen. Res., Inc., et al., No. 87 Civ. 3988(HB), 2000 WL 97613, *2 (S.D.N.Y. Jan. 27, 2000). According to New York law, "`an injured party can recover punitive damages when the tortious act complained of involved a wanton or reckless disregard of the plaintiff's rights.'" Id. (quoting Universal Studios, Inc. v. Nintendo Co., 797 F.2d 70, 77 (2d Cir. 1986). cert. Denied, 479 U.S. 987 (1986)). Punitive damages can also be recovered "when defendant's actions amounts to `gross, wanton, or willful fraud or other morally culpable conduct.'" Int'l Minerals & Res. S.A., 2000 WL 97613, at *2 (quoting Cohen v. Davis, 926 F. Supp. 399, 405 (S.D.N.Y. 1996)). Punitive damages are allowable in tort cases "even if there is no harm aimed at the general public `so long as the very high threshold of moral culpability is satisfied.'" Blank v. Baronowski, 959 F. Supp. 172, 179 (S.D.N.Y. 1997) (quoting Giblin v. Murphy, 73 N.Y.2d 769, 772 (N.Y. 1988)).

  Here, in their remaining tortious interference claims, Plaintiffs have alleged conduct on the part of AXA that a reasonable jury could find to be morally culpable such that the imposition of punitive damages would be warranted. Defendants' motion to dismiss is therefore denied with respect to Plaintiffs' request for punitive damages in connection with its tortious interference with contract and tortious interference with prospective contractual relations/business relations claims.

 Dismissal is Without Prejudice

  Defendant contends that the Court should dismiss Plaintiffs' Second Amended Complaint with prejudice. Plaintiffs argue that, if the Court dismisses any of their claims, Plaintiffs should be granted further leave to amend.

  "Leave to amend should be granted freely, but the district court has the discretion to deny leave if there is a good reason for it, such as futility, bad faith, undue delay, or undue prejudice to the opposing party." Jin v. Metropolitan Life Ins. Co., 310 F.3d 84, 101 (2d Cir. 2002). Here, the Court finds it in the interest of justice to grant Plaintiffs one further opportunity to amend their pleading. Hence, any claims dismissed herein are dismissed without prejudice.

  CONCLUSION

  For the foregoing reasons, Defendant's motion to dismiss Plaintiffs' Second Amended Complaint is granted in part, without prejudice, and denied in part. Plaintiffs shall serve and file any Third Amended Complaint no later than May 17, 2004. If Plaintiffs fail to file and serve their Third Amended Complaint by May 17, 2004, the claims asserted in Counts One, Two and Four, and all claims asserted herein by BouQuet One Limited Partnership, will be deemed abandoned and dismissed with prejudice without further order of the Court. The final pre-trial conference is adjourned to June 8, 2004, at 4:00 p.m.


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