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Baunach v. Liberty Mutual Fire Insurance Co.

United States District Court, E.D. New York

March 27, 2014

CHRISTOPHER BAUNACH, Plaintiff,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant.

MEMORANDUM AND ORDER

DORA L. IRIZARRY, District Judge.

Plaintiff Christopher Baunach ("Plaintiff" or "Baunach") brings this action against Liberty Mutual Fire Insurance Company ("Liberty Mutual" or "Defendant"), claiming that Defendant violated New York Criminal Procedure Law § 160.50. Liberty Mutual moves to dismiss all of the claims asserted against it pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff opposes. For the reasons set forth below, Defendant's motion is granted in its entirety.

BACKGROUND

The following facts are taken from the complaint and are assumed true for the purposes of this motion. Defendant Liberty Mutual issued an automobile liability insurance policy (the "Policy"), under which Plaintiff was an insured party. (Compl. ¶¶ 3, 6, Docket Entry No. 1.) The Policy included an "uninsured motorist coverage endorsement, " which provided that Liberty Mutual would pay benefits to insured parties for damages sustained during an accident with an uninsured motor vehicle. ( Id. ¶ 5.) On November 6, 2011, Plaintiff was injured as a result of an accident caused by the owner of an uninsured vehicle. ( Id. ¶ 7.) Plaintiff presented a claim for benefits under the Policy ( id. ¶ 9), but Liberty Mutual denied the claim. ( Id. ¶ 10.) On January 9, 2013, Plaintiff's insurance claim was referred to arbitration for resolution. ( Id. ¶ 11.)

On April 25, 2013, Plaintiff filed suit in New York State Supreme Court, Queens County. On May 24, 2013, the case was removed to this Court. The complaint alleges that: 1) in connection with the arbitration of Plaintiff's insurance claim, Liberty Mutual "conspired to unlawfully obtain [and obtained] certain records relating to the [P]laintiff which had been sealed pursuant to Criminal Procedure Law 160.50" (the "Records") ( id. ¶¶ 12-13); 2) Liberty Mutual unlawfully "disclose[d] to others, including the... arbitrator, the aforesaid records" ( id. ¶ 14); and 3) by "conspiring to obtain, obtaining and disclosing" the Records, Liberty Mutual "violated the covenant of good faith and fair dealing imposed... by virtue of the [Policy]." ( Id. ¶¶ 18-19.) Plaintiff seeks compensatory and punitive damages. ( Id. )

Liberty Mutual moves to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, claiming that New York Criminal Procedure Law § 160.50 does not create a cause of action against private entities. (Def.'s Mem., Docket Entry No. 5.) Plaintiff opposes. (Pl.'s Mem., Docket Entry No. 8.) For the reasons stated below, Defendant's motion to dismiss is granted in its entirety.

DISCUSSION

I. Legal Standard

Under Rule 8(a) of the Federal Rules of Civil Procedure, pleadings must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Pleadings are to give the defendant "fair notice of what the claim is and the grounds upon which it rests." Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957), overruled in part on other grounds by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). "The pleading standard Rule 8 announces does not require detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Id. (quoting Twombly, 550 U.S. at 555).

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may move, in lieu of an answer, for dismissal of a complaint for "failure to state a claim upon which relief can be granted." To resolve such a motion, courts "must accept as true all [factual] allegations contained in a complaint, " but need not accept "legal conclusions." Iqbal, 556 U.S. at 678. For this reason, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to insulate a claim against dismissal. Id. "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). Notably, courts may only consider the complaint itself, documents that are attached to or referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, and matters of which judicial notice may be taken. See, Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007).

II. Analysis

Defendant Liberty Mutual argues that the complaint should be dismissed in its entirety, because "a private claim for relief based on a violation of New York Criminal Procedural Law § 160.50 ("Section 160.50" or the "Statute") may only be maintained against governmental entities..." (Def.'s Mem. at 4.) Plaintiff counters that the purpose of Section 160.50 "would be completely undermined if private entities were allowed to obtain and disclose sealed records without consequence." (Pl.'s Mem. at 3.) The New York State Court of Appeals has not addressed the question at issue here - whether Section 160.50 creates a civil remedy against a private entity that obtains and discloses sealed criminal records. Where district courts are faced with a novel state law issue, they must "try to predict how a state court would rule." State Farm Mut. Auto. Ins. Co. v. Schepp, 616 F.Supp.2d 340, 346 (E.D.N.Y. 2008) (quoting Salve Regina College v. Russell, 499 U.S. 225, 241 (1991)).

Section 160.50 provides for the sealing of an individual's criminal records upon the termination of a criminal action in the individual's favor. The relevant provisions of Section 160.50 read as follows:

Upon the termination of a criminal action or proceeding against a person in favor of such person... the record of such action or proceeding shall be sealed and the clerk of the court wherein such criminal action or proceeding was terminated shall immediately notify the commissioner of the division of criminal justice services and the heads of all appropriate police departments and other law enforcement agencies that the action has been terminated in favor of the accused, and unless the court has directed ...

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