Saglioccolo v. Eagle Ins. Co.

• Decision Date: 21 April 1997
• Docket Number: No. 96-3284,96-3284
• Citation: 112 F.3d 226
• Parties: RICO Bus.Disp.Guide 9247 Frank SAGLIOCCOLO, Plaintiff-Appellant, v. EAGLE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 226

112 F.3d 226

RICO Bus.Disp.Guide 9247

Frank SAGLIOCCOLO, Plaintiff-Appellant, v. EAGLE INSURANCE COMPANY, Defendant-Appellee.

No. 96-3284.

United States Court of Appeals Sixth Circuit.

Argued Feb. 7, 1997.

Decided April 21, 1997.

Guy Saglioccolo (argued and briefed), Toledo, OH, for Plaintiff-Appellant.

G. Michael Curtin (argued and briefed), Keeler & Curtin, Cleveland, OH, for Defendant-Appellee.

Before: NORRIS and MOORE, Circuit Judges; RUSSELL, District Judge. ^*

MOORE, Circuit Judge.

Plaintiff-Appellant Frank Saglioccolo appeals the dismissal of his three-count complaint against Defendant-Appellee Eagle Insurance Company for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). His complaint alleged: (1) a civil claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"); (2) a claim under New York law for interference with prospective contract; and (3) a claim under New York law for intentional or negligent infliction of emotional distress. Because the district court properly dismissed the first and third claims but prematurely dismissed the second, we affirm in part and reverse in part. As a result of this conclusion, we also address whether, on remand, the district court will have subject matter jurisdiction over this remaining claim.

I. BACKGROUND

Frank Saglioccolo owned a New York City taxicab, which was insured by Eagle Insurance Company. He also owned a New York City taxi medallion, which is a license granted by the City of New York to operate a taxi business in that city. The rights in the medallion are separate and distinct from those in the taxicab itself. Appellant operated the taxicab until July 1989, at which time he moved to Toledo, Ohio. After moving to Toledo, he remained the owner of the cab, and Eagle continued to insure it. Because appellant was no longer driving the car himself, Eagle reclassified the insurance coverage as "other than driver." Disputing this classification, appellant continued to pay the original premium amount. Eagle then canceled his policy on November 29, 1993. The pertinent allegations in appellant's complaint are as follows:

[RICO Claim]

4. Plaintiff began the process of selling his medallion in June of 1994. The medallion was listed with a N.Y. broker for sale to residents of any state. Defendant was notified of this fact.

5. Defendant was notified or reasonably should have known that Plaintiff would incur substantial expense in the delay of Plaintiff's sale[,] due to interest payments accruing on a loan which financed the medallion.

6. A document commonly known as a "Tort Letter" is required for the completion of such a sale. The insurer in Defendant's position issues such "Tort Letters" upon request, where there are no outstanding tort claims against the insured.

7. Plaintiff requested a "Tort Letter" from Defendant on or about 6/28/94.

8. Defendant refused issuance of said "Tort Letter[,]"[ ] based on an alleged overdue insurance premium. Defendant further stated that no "Tort Letter" would issue until the alleged arrearage was paid. Defendant admitted that there were no outstanding tort claims against Plaintiff.

9. Defendant's refusal to issue the "Tort Letter"[ ] constituted extortion (18 U.S.C.1951). This extortion was intended to wrongfully place Plaintiff in fear of substantial economic harm by obstructing and delaying the sale of Plaintiff's medallion.

10. Defendant continued a pattern of such extortion activities against Plaintiff on or about 7/5/94, 7/25/94, 7/26/94 and 7/27/94. Furthermore, Defendant has committed a pattern of such extortionate activities in violation of 18 U.S.C.1962.

11. Said pattern of racketeering activity is the actual and proximate cause of economic harm to Plaintiff in the amount of $4,693.00. In addition, Plaintiff is entitled to treble damages, court costs and reasonable attorney's fees pursuant to 18 U.S.C.1964(c).

[Interference With Contract Claim]

12. Paragraphs # 1-11 are integrated herein as though fully restated.

13. Defendant intentionally and maliciously interfered with the prospective sale of Plaintiff's medallion[ ] by the means described above.

14. Defendant's conduct was the actual and proximate cause of economic harm to Plaintiff.

[Infliction of Emotional Distress Claim]

15. Paragraphs # 1-14 are integrated herein as though fully restated.

16. Defendant's conduct as described above was extreme and outrageous.

17. Defendant's conduct intentionally or negligently caused severe emotional distress to Plaintiff.

J.A. at 9-10 (Compl. at 2-3).

The district court granted Eagle's motion to dismiss for failure to state a claim on which relief could be granted. Dismissing the RICO claim, the court stated that because "the worst Defendant has done is to exert financial pressure on Plaintiff to recover its own property," Saglioccolo "has not sufficiently alleged racketeering activity under the statute." J.A. at 16 (District Ct. Op. at 4) (emphasis in original). As for the intentional interference with prospective contract claim, the court, relying on New York law, found that plaintiff failed to show that Eagle (1) acted with the sole purpose of harming Saglioccolo and (2) used wrongful means to collect its debt. J.A. at 18-19 (District Ct. Op. at 6-7). The court then dismissed the infliction of emotional distress claim because Eagle's actions did not rise to the level of "outrageous conduct" and because the retention of a debtor's property by a creditor does not constitute "reckless disregard to a substantial probability of causing severe emotional distress." J.A. at 20 (District Ct. Op. at 8). This appeal ensued.

II. STANDARD OF REVIEW

We review de novo whether a district court properly dismissed a complaint under Federal Rule of Civil Procedure 12(b)(6). Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995), cert. denied, 516 U.S. 1158, 116 S.Ct. 1041, 134 L.Ed.2d 189 (1996). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). "When an allegation is capable of more than one inference, it must be construed in the plaintiff's favor. Hence, a judge may not grant a Rule 12(b)(6) motion based on a disbelief of a complaint's factual allegations." Tatum, 58 F.3d at 1109 (internal citations omitted).

III. THE RICO CLAIM

Appellant contends that Eagle's refusal to issue the tort letter until appellant fully paid his alleged debt amounted to a pattern of extortion and racketeering under 18 U.S.C. § 1962. That section provides in relevant part:

(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in ... any enterprise which is engaged in ... interstate or foreign commerce....

(b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in ... any enterprise which is engaged in ... interstate or foreign commerce.

(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in ... interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. § 1962. ¹

Under the plain language of § 1962, the alleged racketeering activity must constitute a "pattern." In this case, appellant contends that the pattern requirement was satisfied by the five different times Eagle allegedly refused to issue the tort letter, the first rejection occurring on or about June 28, 1994, and the last on July 27, 1994. Even if we assume that these refusals constitute separate predicate acts, ² they fall far short of the pattern requirement.

In H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 240, 109 S.Ct. 2893, 2901, 106 L.Ed.2d 195 (1989), the Supreme Court explained that the pattern requirement is satisfied by showing (1) a relationship between the predicate acts and (2) the threat of continued activity. Id. at 240, 109 S.Ct. at 2901. Expanding on the continuity component, the Court stated:

"Continuity" is both a closed and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition. It is, in either case, centrally a temporal concept--and particularly so in the RICO context, where what must be continuous, RICO's predicate acts or offenses, and the relationship these predicates must bear one to another, are distinct requirements. A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement: Congress was concerned in RICO with long-term criminal conduct. Often a RICO action will be brought before continuity can be established in this way. In such cases, liability depends on whether the threat of continuity is demonstrated.

Id. at 241-42, 109 S.Ct. at 2901-02 (emphasis added) (internal citation omitted).

In the present dispute, the alleged predicate acts at issue extended for one month, and the complaint contains no allegation that there is any future threat of this conduct by Eagle. Thus, this case easily falls within the above-cited language from H.J. Moreover, we have affirmed a Rule 12(b)(6) dismissal of a RICO claim containing much...