Orono Karate, Inc. v. F. VILLARI STUDIO OF SELF DEFENSE, INC.

• Decision Date: 18 October 1991
• Docket Number: Civ. No. 88-431-D.
• Citation: 776 F. Supp. 47
• Parties: ORONO KARATE, INC., Roger Fagan, individually v. FRED VILLARI STUDIO OF SELF DEFENSE, INC.
• Court: U.S. District Court — District of New Hampshire

776 F. Supp. 47

ORONO KARATE, INC., Roger Fagan, individually v. FRED VILLARI STUDIO OF SELF DEFENSE, INC.

Civ. No. 88-431-D.

United States District Court, D. New Hampshire.

October 18, 1991.

Stephen T. Jeffco, Portsmouth, N.H., for plaintiffs.

Robert P. Woodward, Concord, N.H., for defendant.

ORDER

DEVINE, Chief Judge.

In this diversity action, plaintiffs Orono Karate, Inc. ("Orono, Inc."), a Maine corporation, and its president and sole stockholder, Maine resident Roger Fagan, seek damages from defendant Fred Villari Studio of Self Defense ("Villari"), a Massachusetts corporation. Under both tort and contract theories, plaintiffs seek recovery for the alleged breach by Villari of a licensing agreement between the parties. Jurisdiction is properly founded on 28 U.S.C. § 1332. Presently before the court is defendant's motion to dismiss for failure to state a claim upon which relief can be granted as to both counts sounding in tort: Count I, negligent infliction of emotional distress, and Count II, intentional infliction of emotional distress. Rule 12(b)(6), Fed. R.Civ.P. Additionally, as to Count III, the contract claim, Villari seeks dismissal of that portion of the claim which seeks recovery for emotional distress as a result of any alleged breach of contract, contending that such damages are not permitted in a contract case. Plaintiffs oppose Villari's motion to dismiss, primarily arguing that defendant relies on the law of the wrong state and, furthermore, that any factual questions are for a jury to decide.

I. Background

Factually, this case remains confusing, despite an ever-growing file of amended complaints, motions, orders, and memoranda. The backdrop of information arising from allegations on both sides reveals a number of people, some parties to the within action and some not, who have, at various times in the pursuit of business interests, contracted with Villari for rights relative to Villari's martial arts methods. Orono, Inc., apparently entered into a variety of agreements in order to establish martial arts studios in as many as three locations in Maine and New Hampshire.

Specifically, plaintiffs allege to have bought franchise rights for the Westbrook, Maine, area in February 1986 in a deal brokered by Villari.¹ Subsequently, plaintiffs claim to have entered into other contracts in July 1986 — one, a licensing agreement with Villari regarding the Westbrook, Maine, territory, and another in which Villari agreed to manage any studio operated by plaintiffs.² Plaintiffs' More Definite Statement, ¶¶ 1-4, at 1-2. "Plaintiffs contend that on or about August 31, 1987, Orono was forced to close its studio in Westbrook as a direct and proximate result of Defendant's breach of the licensing agreement." Plaintiffs Memorandum of Law (document no. 35) at 1. As a result, Orono, Inc., seeks damages for lost profits, lost business opportunity, and diminished good will. Fagan seeks recovery for damage to his reputation in the business community, and also for his being "subjected to extensive humiliation, emotional distress and ridicule." Plaintiffs' Complaint, ¶ 22, at 5.

Various of the agreements referred to by the parties have choice-of-law provisions meant to be helpful in settling any disputes. However, notwithstanding these measures, confusion also runs rampant in this regard. Defendant initially seemed to assume New Hampshire law controls. Plaintiffs argued that either Maine law, the state in which the disputed contract was to be performed, or Massachusetts law, the state identified in the choice-of-law provision of the licensing agreement at issue, should control. To assist the court, the parties were ordered to fully brief the choice-of-law issue. In response, plaintiffs reiterated their contention that the licensing agreement underlying this action provides that the laws of the Commonwealth of Massachusetts govern the transaction. Plaintiffs' Memorandum at 3. Defendant argues, however, that since its request for a copy of the alleged contract for management services has not been honored by plaintiffs, it is unable to say that Massachusetts law applies. Rather, argues defendant, under the law of any of the three possible states, plaintiffs have not stated claims upon which relief can be granted. Defendant's Memorandum at 3.

II. Defendant's Motion to Dismiss

In considering a Rule 12 motion to dismiss, the issue the court must address is whether, based on the claims contained in the complaint, the plaintiff is entitled to offer evidence. V.S.H. Realty v. Texaco, 757 F.2d 411, 414 (1st Cir.1985) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974)). The court's consideration is limited to the allegations contained within the complaint, Litton Indus. v. Colon, 587 F.2d 70, 74 (1st Cir.1978), and those allegations are to be "construed in the light most favorable to plaintiff and taken as admitted, with dismissal to be ordered only if the plaintiff is not entitled to relief under any set of facts he could prove," Chasan v. Village Dist. of Eastman, 572 F.Supp. 578, 579 (D.N.H.1983) (and cases therein cited), aff'd without opinion, 745 F.2d 43 (1st Cir.1984); see also Knight v. Mills, 836 F.2d 659, 664 (1st Cir.1987). This is not to say that an erstwhile plaintiff has unfettered discretion; the court is not required to give weight to "bald assertions, unsupportable conclusions, or opprobrious epithets." Royal v. Leading Edge Products, Inc., 833 F.2d 1 (1st Cir.1987) (citing Chongris v. Board of Appeals, 811 F.2d 36, 37 (1st Cir.), cert. denied, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 765 (1987)).

A. Choice of Law

Before turning to plaintiffs' tort claims and whether or not they can survive the within motion, the court must resolve the preliminary choice-of-law question. "It is undisputed that this Court must apply New Hampshire's choice-of-law rules."³Smith v. Morbark Indus., Inc., 733 F.Supp. 484, 487 (D.N.H.1990) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941), and Roy v. Star Chopper Co., 584 F.2d 1124, 1128 (1st Cir.1978), cert. denied, 440 U.S. 916, 99 S.Ct. 1234, 59 L.Ed.2d 466 (1979)). However, as to Counts I and II of plaintiffs' complaint, the court does not find it necessary to actually apply New Hampshire's balancing test⁴ because, as defendant suggests, no matter which state prevails, the results are the same. Thus, in accord with the teaching of the First Circuit, "we need not draw the threads of inquiry finer ... as our research reveals no material conflict between the three jurisdictions in terms of resolving the claims." Fashion House, Inc. v. K Mart Corp., 892 F.2d 1076, 1092 (1st Cir.1989). "Where a choice-of-law question has been reduced to the point where nothing turns on more precise refinement, that should be the end of the matter." Id. (citing Hart Eng'g Co. v. FMC Corp., 593 F.Supp. 1471, 1477 n. 5, 1481 (D.R.I.1984) (when result unaffected, court need not formally make a choice of law)).

Regarding the claims of negligent infliction of emotional distress and intentional infliction of emotional distress before the court, there is no material conflict as to the essential elements of these torts among the jurisdictions of New Hampshire, Maine, and Massachusetts.

B. Negligent Infliction of Emotional Distress

Plaintiff Fagan in Count I attempts to set forth a cause of action for negligent infliction of emotional distress, and toward that end avers that defendant knew or should have known that defendant's "negligent failure to fulfill the terms of the July 1, 1986, leasing agreement would cause the failure of" plaintiffs' Westbrook studio. Additionally, he alleges that defendant "knew or should have known that failure" of said studio "would affect Fagan's" business reputation and "cause him severe emotional and mental distress," Plaintiffs' Complaint at 3, and that, in fact, defendant's "negligent actions or inactions" caused such damage. Id. Plaintiffs' allegations do not get more specific.

In most jurisdictions, recovery for emotional distress is limited. However, recovery has been allowed for negligently caused mental distress when accompanied by a physical impact. See Rowe v. Bennett, 514 A.2d 802, 804 (Me.1986); Chiuchiolo v. New England, etc. Tailors, 84 N.H. 329, 150 A. 540 (1930) (court presented with challenge to impact rule). Furthermore, the courts have broadened the rule to allow recovery in the absence of physical impact, if plaintiff can prove physical injury, Rowe, supra, 514 A.2d at 804 (citations omitted), or "physical manifestations of his distress," Thorpe v. State, 133 N.H. 299, 303, 575 A.2d 351, 353 (1990) (citing Chiuchiolo, supra, 84 N.H. at 337-38, 150 A. at 544-45). Accord, Santana v. Registrars of Voters of Worcester, 398 Mass. 862, 867, 502 N.E.2d 132, 135 (1986) ("A person cannot recover for negligently caused emotional distress absent physical injuries.") (citation omitted). Additionally, the Supreme Judicial Court of Maine has allowed recovery for negligently inflicted emotional distress if there exists an underlying tort. Rowe, supra, 514 A.2d at 804; Rubin v. Matthews Intern. Corp., 503 A.2d 694, 698 (Me.1986) (mental distress alone insufficient to make negligence actionable, without either "accompanying physical consequences, or an independent underlying tort").⁵ In all three of the jurisdictions at issue, when recovery is allowed, it is not permitted for mere upset, humiliation, hurt feelings, or bad manners. See Thorpe, supra, 133 N.H. at 303, 575 A.2d at 353 (citing Corso v. Merrill, 119 N.H. 647, 652-53, 406 A.2d 300, 304 (1979)); Santana, supra, 398 Mass. at 867, 502 N.E.2d at 135; Rubin, supra, 503 A.2d at 698.

In the case at bar, the complaint does not allege a physical impact or any physical consequences flowing from defendant's alleged negligent conduct, even when construed in a light most favorable to plaintiff. The only...