Popkin v. National Ben. Life Ins. Co.

• Decision Date: 27 April 1989
• Docket Number: No. 86 Civ. 4109 (WCC).,86 Civ. 4109 (WCC).
• Parties: Gerald H. POPKIN, Plaintiff, v. NATIONAL BENEFIT LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

711 F. Supp. 1194

Gerald H. POPKIN, Plaintiff, v. NATIONAL BENEFIT LIFE INSURANCE COMPANY, Defendant.

No. 86 Civ. 4109 (WCC).

United States District Court, S.D. New York.

April 27, 1989.

Burns & Levinson, Boston, Mass., Irving Levin, New York City, for plaintiff; John A. Donovan, Jr., Michael Weinberg, of counsel.

Kelley, Drye & Warren, New York City, for defendant; Jeffrey S. Cook, Neil Merkl, of counsel.

OPINION AND ORDER

WILLIAM C. CONNER, District Judge:

Defendant National Benefit Life Insurance ("National Benefit") moves to dismiss the Complaint and for summary judgment pursuant to Rules 12 and 56, Fed.R.Civ.P. The motion is granted in part, and denied in part.

BACKGROUND

In 1972, plaintiff Gerald H. Popkin ("Popkin") was asked by the Alumni Association of the University of Massachusetts at Amherst ("Amherst") to start a group life insurance program as a means of raising money to support its activities. Initially, Popkin and Amherst engaged Bankers Security Life Insurance Society as the group insurer.

When Amherst became dissatisfied with that insurer, Popkin met with Ralph Patton, and subsequently Larry Schwartz, vice presidents at National Benefit, to discuss the possibility of transferring Amherst's business to National Benefit. Popkin strongly recommended National Benefit's insurance program to Amherst. Amherst accepted the recommendation.

In 1978, three documents relating to National Benefit's underwriting of the Amherst group insurance program were drafted and executed. A letter agreement, executed by Amherst and National Benefit on February 23, 1978 (the "Underwriting Agreement"), purported to establish "the terms and conditions pursuant to which the University of Massachusetts Alumni Association ... and its members ... will participate in a program ... of life insurance sponsored by the University of Massachusetts Alumni Association and underwritten by National Benefit." Plaintiff's Exhibit 10. The Underwriting Agreement would be "construed and enforced as a contract under seal in accordance with the laws of the Commonwealth of Massachusetts." Id. ¶ 7. According to this agreement, the group insurance program could be "terminated by Amherst at anytime upon thirty days prior written notice to National Benefit." Id. ¶ 6. Amherst and National Benefit contemplated that they would develop and promote the group insurance program "through one or more licensed agents of National Benefit designated from time to time by Amherst upon the terms and conditions" set out in the Underwriting Agreement. Id. ¶ 1. The Underwriting Agreement would not "take effect" until "completion by Amherst of arrangements with the Agent satisfactory to Amherst." Id. ¶ 6.

These "arrangements" were made on the same day; Popkin and Amherst executed a letter agreement (the "Administrator Agreement") concerning the "terms and conditions under which Popkin will serve as agent and administrator with respect to the group life ... insurance policy ... and program ... to be underwritten by National Benefit and sponsored by Amherst for the benefit of its members." Plaintiff's Exhibit 12. Like the Underwriting Agreement, the Administrator Agreement would be "construed and enforced as a contract under seal in accordance with the laws of the Commonwealth of Massachusetts." Id. ¶ 9. Either party could terminate it "upon 12 months prior written notice." Id. ¶ 7. The Administrator Agreement did not "take effect" until "completion by Amherst of satisfactory arrangements with National Benefit relating to the group insurance program." Id. ¶ 9.

On April 20, 1978, Popkin and National Benefit executed a form agreement drafted by National Benefit entitled "General Agent's Group Insurance Commission Agreement" (the "Agency Agreement"), which authorized Popkin to solicit applications for group insurance in Massachusetts. Plaintiff's Exhibit 12. The agreement could be "terminated without cause by either party upon written notice." Id. § 4(A). It called for the application of New York law: "In all matters concerning the validity, interpretation, performance, effect or otherwise, of this Agreement, the laws of the state of New York shall govern and be applicable. Any actions or proceedings instituted by the General Agent under this Agreement, with respect to any matters arising under or growing out of this Agreement, shall be brought and tried only in courts located in the county of New York, State of New York." Id. § 5(B).

Plaintiff alleges that up until May, 1980, Amherst was satisfied with both National Benefit and Popkin. After that time, a dispute arose between Amherst and National Benefit over "rate credit" calculations. As a result, Amherst began looking at other group plans to see what dividend income benefits they were offering. On October 19, 1982, Amherst decided to transfer their group life insurance program to another insurance carrier. On November 30, 1982, it sent Popkin a notice of termination.

On September 21, 1984, Popkin brought a Massachusetts state action against National Benefit. National Benefit removed the action to federal court on October 23, 1984, and moved to dismiss on the ground that venue was improper, since Popkin's contract with National Benefit specified that any action brought by Popkin "with respect to any matters arising under or growing out of this Agreement, shall be brought and tried only in courts located in the county of New York, State of New York." Plaintiff's Exhibit 12 § 5(B). The parties agreed at oral argument that the motion should be treated as one for summary judgment, and, on December 31, 1985, the Massachusetts district court dismissed the action "without prejudice to further litigation in the courts of New York." Plaintiff's Exhibit 4 at 5.

Plaintiff brought this action on May 23, 1986. He alleges seven causes of action: (1) negligence; (2) breach of contract; (3) fraud; (4) misrepresentation; (5) unfair or deceptive trade practices within the meaning of Mass.Ann.Laws ch. 93A § 2(a) (Law Co-op 1985); (6) damage to business reputation; and (7) interference with contractual relations.

DISCUSSION

Defendant asks this Court to dismiss the entire Complaint on the grounds that (1) four of the causes of action are barred by the statute of limitations; and (2) each cause of action lacks merit. Defendant's arguments are addressed individually below.

I. The Statute of Limitations

Defendant contends that four of plaintiff's causes of action (negligence, misrepresentation, damage to business reputation, and interference with contractual relations) are barred by a three-year statute of limitations. See N.Y.Civ.Prac.Law § 214(4) (McKinney Supp.1988).¹ According to defendant, these causes of action accrued, at the latest, when Popkin's contract was terminated by written notice on November 30, 1982. See Plaintiff's Exhibit 27. Plaintiff responds that the causes of action did not accrue until he was injured by the loss of Amherst's business. He contends that he did not receive the notice of termination until December 9, 1982, and that he was thus not discharged under the contract until December 9, 1983. See Plaintiff's Exhibit 12 ¶ 7 (under Administrator Agreement, either party could terminate "upon 12 months prior written notice"). Alternatively, plaintiff contends that the limitations period was tolled by the action he brought in Massachusetts.

Popkin's first argument turns on whether the limitations period begins to run when the acts causing the injury occur or when the injury is suffered. I hold that plaintiff's tort claims accrued when the acts causing the injury occurred. "In a negligence action without fraud," the limitation period set forth in Section 214(4) "ordinarily runs from the time of the commission of the wrong or injury." Icelandic Airlines, Inc. v. Canadair, Ltd., 104 Misc. 2d 239, 244, 428 N.Y.S.2d 393, 397 (Sup.Ct. 1980).

Judge Sweet recently rejected the contention that, for the purposes of Section 214(4), a claim accrues when an injury is suffered. Texas Eastern Transmission v. General Electric Co., 601 F.Supp. 627, 629 (S.D.N.Y.1985). He observed that the New York Court of Appeals in Sears, Roebuck & Co. v. Enco Associates Inc., 43 N.Y.2d 389, 372 N.E.2d 555, 401 N.Y.S.2d 767 (1977), "began to run the tort statute of limitations from the date of contract, not the date of injury." Texas Eastern, 601 F.Supp. at 629. I agree with Judge Sweet, that the contention that "the tort statute should not begin to run until the date of injury.... does not square with" the Court of Appeals' decision in Sears. Id. The cases cited by plaintiff are inapposite. See, e.g., Murphy v. St. Charles Hospital, 35 A.D.2d 64, 66, 312 N.Y.S.2d 978, 980 (2d Dep't 1970) (malpractice). Plaintiff's claim against National Benefit was mature as of the time Popkin received the notice of termination from Amherst.

Plaintiff also contends that the statutory period was tolled by the Massachusetts action. First, Popkin argues that the Court should rely on N.Y.Civ.Prac.Law § 205(a) (McKinney Supp.1989)² despite the fact that it "may not be directly applicable." Plaintiff's Brief at 33. As defendant points out, however, Section 205(a) "has no application where the first action is brought in a sister state, whether the court be state or federal." N.Y.Civ.Prac.Law, practice commentary 205:2 (McKinney 1972) (Citing Baker v. Commercial Travelers Mutual Accident Ass'n, 3 A.D.2d 265, 161 N.Y.S.2d 332 (4th Dep't 1957)). It may be that the policy underlying this statute justifies extending its reach to actions commenced outside New York. Yet the merits of such an extension of the law are for the New York legislature to address, not for this Court.

Plaintiff also argues that defendant's conduct, in moving for dismissal for want of proper venue in Massachusetts, estops defendant from asserting the statute of limitations defense. A defendant will be estopped from raising the defense, if it made misrepresentations which...