PSI Metals, Inc. v. Firemen's Ins. Co. of Newark, N.J.

• Decision Date: 05 February 1988
• Docket Number: No. 576,D,576
• Citation: 839 F.2d 42
• Parties: PSI METALS, INC., and D. Christopher McDermott, Plaintiffs-Appellants, v. FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, Defendant-Appellee. ocket 87-7772.
• Court: U.S. Court of Appeals — Second Circuit

Page 42

839 F.2d 42

PSI METALS, INC., and D. Christopher McDermott, Plaintiffs-Appellants, v. FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, Defendant-Appellee.

No. 576, Docket 87-7772.

United States Court of Appeals, Second Circuit.

Argued Feb. 4, 1988.

Decided Feb. 5, 1988.

Michael Kelley Maggs, Schenectady, N.Y., for plaintiffs-appellants.

Lawrence E. Becker, Albany, N.Y. (McClung, Peters and Simon, Albany, N.Y., of counsel), for defendant-appellee.

Before TIMBERS, WINTER and ALTIMARI, Circuit Judges.

PER CURIAM:

This appeal presents the question whether our interpretation of the elements of an abuse of process claim under New York law in Alexander v. Unification Church of America, 634 F.2d 673, 677-78 (2d Cir.1980), remains valid after the intervening decision of the New York Court of Appeals in Curiano v. Suozzi, 63 N.Y.2d 113, 469 N.E.2d 1324, 480 N.Y.S.2d 466 (1984). Because we agree with the district court that it does not, we affirm.

Plaintiff-appellant Christopher McDermott is a principal shareholder in appellant PSI Metals, Inc., as well as in another corporation, Phelps Steel, Inc. Defendant-appellee Firemen's Fund Insurance Company acted as Phelps Steel's surety on certain construction projects. On or about May 22, 1985, Phelps Steel commenced a state court action against Firemen's Fund in Massachusetts. Firemen's responded in part by filing a third-party complaint in the Massachusetts action against McDermott seeking, among other things, indemnity from McDermott for losses and expenses arising from its dealings with Phelps, including legal fees. Sometime after Phelps' filing of the Massachusetts action, PSI brought an action against Firemen's in state court in New York. Firemen's filed an answer and counterclaim in the New York action once again seeking indemnity for costs expended in the Massachusetts action as well as asserting a right to set-off monies otherwise owed to PSI.

These state court actions are apparently still pending. Nevertheless, PSI and McDermott filed a diversity action in the Northern District of New York (Neal P. McCurn, Judge), claiming that Firemen's third-party complaint in the Massachusetts action and its counterclaim in the New York action constituted abuse of process. The district court held that New York law applied to the abuse of process claim arising out of the New York litigation and that Massachusetts law applied to the abuse of process claim arising out of the Massachusetts litigation. The district court then dismissed the entire complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted.

Under New York law, an abuse of process claim "has three essential elements: (1) regularly issued process, either civil or criminal, (2) an intent to do harm without excuse or justification, and (3) use of the process in a perverted manner to obtain a collateral objective." Curiano, 63 N.Y.2d at 116, 469 N.E.2d at 1326, 480 N.Y.S.2d at 468.

In Unification Church, a case decided four years before Curiano, we focused on the third element under New York law, namely the requirement that a party begin an action or cause process to issue for a purpose for which litigation may not properly be instituted. 634 F.2d at...