Raphael v. Aetna Cas. and Sur. Co.

• Decision Date: 04 September 1990
• Docket Number: No. 90 Civ. 0938 (RPP).,90 Civ. 0938 (RPP).
• Citation: 744 F. Supp. 71
• Parties: Alan RAPHAEL, Plaintiff, v. The AETNA CASUALTY AND SURETY COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

744 F. Supp. 71

Alan RAPHAEL, Plaintiff, v. The AETNA CASUALTY AND SURETY COMPANY, Defendant.

No. 90 Civ. 0938 (RPP).

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

September 4, 1990.

COPYRIGHT MATERIAL OMITTED

Solinger Grosz & Goldwasser, P.C. by John C. Grosz, New York City, for plaintiff.

Feldman & Rudy by Stuart D. Markowitz, Roslyn Heights, N.Y., for defendant.

Otto G. Obermaier, U.S. Atty., S.D.N.Y. (Craig A. Stewart, Asst. U.S. Atty., of counsel), New York City, for the Government.

OPINION AND ORDER

ROBERT P. PATTERSON, Jr., District Judge.

Plaintiff sues for breach of an insurance contract involving an alleged car theft. Defendant now moves pursuant to Fed.R. Civ.P. 12(b)(6), 12(c) and 12(h)(2) to dismiss the complaint insofar as it seeks $500,000 in punitive damages and any attorney's fees. The Government has intervened requesting an order quashing the subpoenas served by plaintiff on the Federal Bureau of Investigation ("FBI") and Special Agent Beekman or, in the alternative, an order staying discovery pending resolution of an ongoing criminal investigation. For the reasons set forth below, defendant's and the Government's motions are granted. The complaint is dismissed pursuant to Fed.R.Civ.P. 12(h)(3) for failure to meet the amount in controversy requirement.

BACKGROUND

On September 5, 1989, plaintiff alleges he discovered the theft of his 1987 black Jaguar, four-door sedan, Model XJ6 Vandem Plas. According to his deposition testimony, he last saw the vehicle on Friday, September 1, 1989, around 10:00 a.m. when he parked it across the street from his girlfriend's apartment located in Yonkers, New York. When he returned to Yonkers on the morning of Tuesday, September 5, 1989, to pick up the car, it was missing. The record does not disclose why he failed to use his car over the entire Labor Day weekend.

On September 5, plaintiff reported the theft to the Yonkers Police Department and to his insurer, Aetna. Two days later, plaintiff filed a statement of loss with Aetna claiming a loss of $46,827.60, equivalent to the purchase price of the Jaguar. Grosz Aff., Exh. C Aetna assigned investigator Donald Pisculli to the claim. By letter dated November 7, 1989, Aetna disclaimed all coverage under plaintiff's policy for loss of the Jaguar, stating, "Our investigation has determined discrepancies in the reported disappearance of your vehicle." Grosz Aff., Exh. D. At his deposition on May 10, 1990, Pisculli revealed that the basis for denying the claim was information provided to him by FBI Special Agent Mary Ellen Beekman. Pisculli Dep., Tr. at 58.

Beekman essentially informed Aetna that she had observed the Jaguar on September 1, 1989, at a garage located in the vicinity of 102nd Street and Tenth Avenue in Manhattan and that the vehicle was driven to Florida the following day, September 2, 1989, in connection with a "Dominican car theft ring." Grosz Aff. ¶ 7. Beekman had also learned from an informant facts suggesting that the vehicle may have been present at the garage for eight days prior to September 2, 1989, and that the car had been delivered as an "insurance give-up." Id. at ¶ 7.

Plaintiff Alan Raphael was subsequently indicted under seal by a federal grand jury on July 13, 1990, "for conduct that was the subject of the FBI investigation...." Maloney Supp.Decl. ¶ 2.

The parties agreed to waive oral argument on the Government's motion to quash the subpoenas.

DISCUSSION

MOTION TO QUASH

Plaintiff has served subpoenas on the Federal Bureau of Investigation and Special Agent Beekman seeking production of:

1. Each document relating or referring to the Jaguar, including: (a) all notes and memoranda relating or referring to the observation of the Jaguar by Beekman, the F.B.I., or any informant, on or about September 1, 1989 or at any time prior thereto; and (b) all notes and memoranda comprising, relating or referring to each communication with any person, or to any investigation, concerning the whereabouts of the Jaguar at any time after August 15, 1989.

2. Each document relating or referring to any investigation by Beekman or the F.B.I. concerning the Jaguar and/or Raphael.

3. Each document relating or referring to each communication between or among Beekman, the F.B.I., any informant and Aetna concerning the Jaguar and/or Raphael.

Beekman Decl., Exh. 1. The Government argues that enforcement of the subpoenas would compromise an ongoing criminal investigation of a major interstate automobile theft ring operating out of New York. The investigation is being conducted by FBI Agent Beekman in conjunction with the United States Attorney's Office for the Southern District of New York. A federal grand jury has indicted several persons including plaintiff in connection with the activities being investigated.

1. Law Enforcement Investigatory Privilege

The law enforcement investigative privilege, a qualified common law privilege under Fed.R.Civ.P. 26(b), exists to prevent "the harm to law enforcement efforts which might arise from public disclosure of ... investigatory files." Black v. Sheraton Corp., 564 F.2d 531, 541 (D.C.Cir.1977). See, e.g., Friedman v. Bache Halsey Stuart Shields, Inc., 738 F.2d 1336 (D.C. Cir.1984); United States v. Winner, 641 F.2d 825, 831 (10th Cir.1981). The privilege serves to preserve the integrity of law enforcement techniques and confidential sources, to protect witnesses and law enforcement personnel, to safeguard the privacy of individuals under investigation and to prevent interference with the investigation. In re Department of Investigation of New York, 856 F.2d 481, 484 (2d Cir. 1988). Law enforcement operations have little hope of being effective if conducted in full public view.

When the government invokes the law enforcement investigative privilege, the court must balance the public interest in nondisclosure against the need of the particular litigant for access to the privileged information. Black v. Sheraton Corp., 564 F.2d at 545-547. The litigant's need is particularly strong where the litigant has no other means of obtaining the information. See Kinoy v. Mitchell, 67 F.R.D. 1, 12 (S.D.N.Y.1975). However, in this case, the Aetna investigator revealed at his deposition the substance of his conversations with Special Agent Beekman and how they influenced his decision to deny the claim. Any further disclosure of F.B.I. investigatory records threatens to compromise Agent Beekman's investigative procedures and the identity of the informants who provided her with information. It is clear to the Court that the requested records have a direct bearing on the ongoing F.B.I. car theft ring investigation, and therefore are not discoverable at this time in this civil action.

2. Criminal Prosecution

Where discovery documents are sought in connection with civil litigation while a criminal prosecution arising from the same facts is pending, courts will not permit the defendant to circumvent the restrictions placed upon criminal discovery by attempting to compel disclosure in the civil case. Campbell v. Eastland, 307 F.2d 478 (5th Cir.1962), cert. denied, 371 U.S. 955, 83 S.Ct. 502, 9 L.Ed.2d 502 (1963); United States v. One 1964 Cadillac Coupe DeVille, 41 F.R.D. 352, 354 (S.D.N.Y.1966). The court must determine the extent to which the civil discovery threatens the secrecy and integrity of the criminal proceedings, and, if the discovery could prove intrusive, whether to stay discovery entirely or to limit discovery so as not to impinge upon the criminal proceedings. See Founding Church of Scientology v. Kelley, 77 F.R.D. 378, 381 (D.D.C.1977). The pertinent factors to consider include: (1) whether broad disclosure of the prosecution's case may lead to perjury and manufactured evidence; (2) whether disclosure of the identity of prospective witnesses may create the opportunity for intimidation; and (3) the possibility that criminal defendants may surprise the prosecution at trial with information developed through the civil discovery, while the defendant's privilege against self-incrimination would effectively block any attempts by the Government to discover relevant evidence from the defendants. Id.

It is clear that Raphael cannot obtain discovery of the records of Special Agent Beekman in the criminal proceeding against him under Fed.R.Crim.P. 16(a)(2) which prohibits discovery by criminal defendants of "internal government documents made by ... government agents in connection with the investigation or prosecution of the case." Moreover, disclosure of Agent Beekman's records may lead to intimidation or interference with the confidential informants who may be witnesses in the criminal proceeding. The Court concludes that the Government's interest in protecting the secrecy and integrity of its criminal proceeding outweighs plaintiff's need for the information sought in this case. Accordingly, the Court hereby grants the Government's motion to quash the subpoenas.

MOTION TO DISMISS

In order to survive a motion to dismiss, a claim for punitive damages against a first-party insurer must contain "sufficient evidentiary allegations of ultimate facts of a fraudulent and deceitful scheme in dealing with the general public as to imply a criminal indifference to civil obligations." Holoness Realty Corp. v. New York Property Ins. Underwriting Ass'n, 427 N.Y.S.2d 264 (App.Div.1980). See, e.g., Cook v. Hartford Fire Ins. Co., 469 N.Y.S.2d 4, 97 A.D.2d 731 (App.Div.1983); Granato v. Allstate Ins. Co., 418 N.Y.S.2d 108, 70 A.D.2d 948 (App.Div.), appeal denied, 48 N.Y.2d 610, 425 N.Y.S.2d 1025, 401 N.E.2d 221 (1979).

The mere breach of a contract of insurance does not support a claim for punitive damages, even if the breach is alleged to have been willful and unjustified. Avnet, Inc. v. American Motorists Ins. Co., 684 F.Supp. 814 (S.D.N.Y.1988); Eccobay Sportswear, Inc. v. Providence Washington Ins. Co., 585 F.Supp. 1343 (S.D.N.Y. 1984).

Thus, New York courts routinely...