29 F.3d 1244 (7th Cir. 1994), 93-3619, Wright v. Associated Ins. Companies Inc.

Docket Nº:93-3619.
Citation:29 F.3d 1244
Party Name:Stephen R. WRIGHT, Plaintiff-Appellant, v. ASSOCIATED INSURANCE COMPANIES INCORPORATED, Associated State Government Contracts Incorporated, also known as Adminastar Solutions Incorporated, L. Ben Lytle, et al., Defendants-Appellees.
Case Date:July 21, 1994
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 1244

29 F.3d 1244 (7th Cir. 1994)

Stephen R. WRIGHT, Plaintiff-Appellant,

v.

ASSOCIATED INSURANCE COMPANIES INCORPORATED, Associated

State Government Contracts Incorporated, also

known as Adminastar Solutions

Incorporated, L. Ben Lytle, et

al., Defendants-Appellees.

No. 93-3619.

United States Court of Appeals, Seventh Circuit

July 21, 1994

Argued May 11, 1994.

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[Copyrighted Material Omitted]

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William Sparrenberger (argued), Indianapolis, IN, for plaintiff-appellant.

Hudnall A. Pfeiffer (argued), Christopher G. Scanlon, Baker & Daniels, Indianapolis, IN, for Associated Ins. Companies Inc., Associated State Government Contracts Inc., L. Ben Lytle, Ronald E. Rosenberg, Robert Reig, H. William Scott.

Terry G. Duga, Dist. Atty. Gen. (argued), Office of the Atty. Gen., Agency Litigation, Indianapolis, IN, for John J. Dillon, III, Morris L. Melloy.

Before POSNER, Chief Judge, and CUDAHY and ROVNER, Circuit Judges.

CUDAHY, Circuit Judge.

The Indiana Comprehensive Health and Insurance Association (ICHIA) is a non-profit organization created by the insurance industry to assure the availability of health insurance to eligible residents of Indiana who apply to the association for coverage. See

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Ind.Code Sec. 27-8-10-2.1(a). The ICHIA operates under a plan that must be approved by the Commissioner of Insurance, and it is governed by a board of directors. Id. In October 1988 the ICHIA solicited offers from various private companies for the provision of administrative services. Associated Insurance Companies, Inc. (AICI) presented a proposal that the ICHIA accepted. In April 1989 the ICHIA and AICI entered into a "Health Insurance Risk Plan Administration Agreement" (Agreement) under which AICI agreed to provide a manager who would be "100% dedicated" to administering the ICHIA plan. AICI offered the position of this "dedicated manager" to the plaintiff, Stephen Wright.

According to Wright, before he accepted the position, he met with and received assurances from H. William Scott, who at the time was the Government Medicaid Administrator for AICI, that Wright's term of employment as the "dedicated manager" would be three years and that only the ICHIA's board of directors could affect Wright's tenure in that position. Wright sought these assurances because he was concerned that insurance companies would try to influence him and that conflict of interest problems might arise.

After Wright had accepted the position of "dedicated manager," AICI and the ICHIA amended the Agreement. By this amendment, AICI assigned its rights and obligations under the Agreement to Associated State Government Contracts, Inc. (ASGCI), an AICI subsidiary, and AICI transferred Wright from the "dedicated manager" position to the position of ASGCI vice president of risk pools. Wright's new position, like the "dedicated manager" position, was committed solely to administration of the ICHIA plan. The amendment took effect in May 1990.

In July 1990 Wright received and rejected an application to the ICHIA for insurance that he deemed incomplete. Wright maintains that two months later, Commissioner of Insurance John Dillon III and his assistant, Morris Melloy, complained to Ben Lytle, the president of AICI, about this rejection of the application. Subsequently, Ronald Rosenberg, the executive vice president of AICI, Robert Reig, the human resources government sector manager of AICI and Scott directed Wright to accept the application and issue the policy. Wright referred the matter to ICHIA's board of directors, which approved his decision to reject the application.

In November 1990 Wright was dismissed from his position with ASGCI. Wright filed a complaint pursuant to 42 U.S.C. Secs. 1983 and 1985(3), against various defendants, in which he claimed that his dismissal violated his rights under the First and Fourteenth Amendments to the Constitution. For purposes of this discussion, we classify the defendants in two groups: the "Associated Group" (AICI/ASGCI, Lytle, Rosenberg, Reig and Scott); and the "state defendants" (Dillon and Melloy). Wright alleged that the state defendants unlawfully conspired with the Associated Group defendants to fire him on account of his rejection of the application for insurance described above. He further alleged that, because he was dismissed without prior notice and a hearing, he was deprived of a property interest in his employment with AICI/ASGCI without due process of law. Wright also brought three pendent claims under Indiana law. He alleged that all the defendants intentionally interfered with his employment contract and his business relationship with the ICHIA. And he alleged that Rosenberg and Scott defamed him by telling William Brown, the Chairman of the Board of Directors of the ICHIA, that Wright had resigned when in fact he had been fired. According to Wright, Brown would have reinstated him but for this false information.

The district court dismissed Wright's suit for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). We affirm the judgment of the district court insofar as it dismissed the Sec. 1983 and Sec. 1985(3) claims and the pendent state claims of intentional interference with a contractual relationship and defamation. Nevertheless, we vacate the judgment with respect to the claim of intentional interference with an advantageous business relationship and leave that claim for the state courts.

I

Wright's first argument on appeal relates to the district court's consideration of the

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text of the entire Agreement in ruling on the Associated Group's motion to dismiss. Wright had not attached a copy of the Agreement to his complaint. The Associated Group defendants attached to their motion to dismiss a copy of the Agreement, as it had been amended. They also appended to their motion the affidavit of David Baird, an ASGCI vice president, authenticating the copies of the documents submitted. Wright moved to exclude the affidavit on the ground that it was not made on personal knowledge and to exclude the copy of the Agreement on the ground that, because it was not an integral part of the pleadings, it could not be considered in the context of a motion to dismiss.

The district court denied Wright's motion and, in ruling on the Associated Group's motion to dismiss, considered the text of the entire Agreement. Wright contends that the district court should either have excluded the copy of the Agreement that the Associated Group submitted through the Baird affidavit or converted the motion to dismiss into a motion for summary judgment. He relies on Fed.R.Civ.P. 12(b), which provides, in pertinent part, that "[i]f, on a motion asserting the ... failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56 and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Consideration of matters outside the pleadings without allowing opposing litigants to supplement the record constitutes error. See Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234, 31 L.Ed.2d 569 (1972) (per curiam). According to Wright, the district court erred by considering the copy of the entire Agreement without affording him the opportunity to supplement the record with affidavits and exhibits in support of his interpretation of those portions of the Agreement to which he did not refer in his complaint. The issue therefore is whether the copy of the entire Agreement is "outside the pleading."

In Venture Associates v. Zenith Data Systems, 987 F.2d 429, 431 (7th Cir.1993), we held that documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim. Such documents may be considered by a district court in ruling on the motion to dismiss. That is the situation here. Wright repeatedly quotes from and refers to the Agreement in his complaint. The Agreement is central to the Sec. 1983 claim; Wright alleges that the Agreement grants him a property interest in his employment, of which the defendants deprived him without due process of law. The Agreement is also central to Wright's pendent claim of tortious interference with his contractual relationship with the ICHIA since the Agreement is the contract with which the defendants allegedly interfered. The Agreement therefore was not a matter "outside the pleading," and the district court properly considered its contents without converting the motion to dismiss to a motion for summary judgment.

Wright also contends that Baird's affidavit was insufficient to allow consideration of the Agreement because the affidavit does not demonstrate that Baird has personal knowledge of the original version of the Agreement between AICI and the ICHIA. But Baird states in his affidavit that as the vice president charged with administering the Agreement, he has personal knowledge that the attached documents are accurate copies of the original Agreement and its subsequent amendments. This is adequate.

II

The balance of Wright's appeal relates to the dismissal of the Sec. 1983 claim and the pendent claims. 1 Our review of the dismissal

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of the Sec. 1983 claim is de novo. Dimmig v. Wahl, 983 F.2d 86, 87 (7th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 176, 126 L.Ed.2d 135 (1993). To state a claim under 42 U.S.C. Sec. 1983, Wright must allege facts sufficient to show that he was deprived of an interest secured by the Constitution or laws of the United States, and that the deprivation was visited upon him by a person or persons acting under color of state law. Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct....

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