Cook & Company Insurance Services, Inc. v. Volunteer Firemen's Insurance Services, Inc.

Filing 14

Judge Richard G. Stearns: ORDER entered granting 4 Motion to Dismiss; granting 4 Motion to Dismiss for Failure to State a Claim (RGS, law2)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 15-12342-RGS
COOK & COMPANY INSURANCE SERVICES, INC.
v.
VOLUNTEER FIREMEN’S INSURANCE SERVICES, INC.
MEMORANDUM ON DEFENDANT’S MOTION TO DISMISS FOR
FAILURE TO STATE A CLAIM
UPON WHICH RELIEF CAN BE GRANTED
September 17, 2015
STEARNS, J.
Plaintiff Cook & Company Insurance Services, Inc. (Cook) is an
insurance brokerage corporation that offers both “injured on duty” (IOD)
insurance and third-party claims administration to municipalities.
Defendant Volunteer Firemen’s Insurance Services, Inc. (VFIS) is an
insurance broker that underwrites coverage for IOD insurance. From 2002
until 2013, Cook sold a number of IOD policies purchased from VFIS, and
was VFIS’s exclusive third-party claims administrator for IOD policies. Brad
Preston is VFIS’s “regional director.”

His insurance business, Gowrie,

Barden & Brett Inc. (Gowrie) competes with Cook.

BACKGROUND
In 2012, Gowrie learned from a Cook employee, Roy McNamee, that
Cook planned to move IOD business away from VFIS to other insurers. Cook
claims that VFIS and Gowrie, acting in concert, hired McNamee and two
other employees away from Cook, in order to establish an in-house claims
administration service at Gowrie. Gowrie promoted its new service with
advertisements featuring VFIS’s licensed trademark. Cook claims that this
advertisement, coupled with other communications by Gowrie, misled
customers into believing that VFIS had replaced Cook with Gowrie as its
exclusive third-party claims administrator, and that the ensuing confusion
damaged Cook’s business.

Cook alleges tortious interference with

contractual relations (Count I), civil conspiracy (Count II), and violations of
Mass. Gen. Laws ch. 93A §§ 2 and 11 (Count III), all against VFIS (but not
Gowrie).
In a related case, Cook & Company Insurance Services v. Volunteer
Firemen’s Insurance Services, No. 1:14-cv-14384 (D. Mass. Mar. 12, 2015),
this court dismissed without prejudice virtually identical claims brought by
Cook against VFIS, based upon essentially the same facts. Undaunted, Cook
then filed the instant action on June 16, 2015. VFIS subsequently moved to

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dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which
relief can be granted. 1
DISCUSSION
To survive a motion to dismiss pursuant to Rule 12(b)(6), the factual
allegations of the complaint must “state a claim to relief that is plausible on
its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This standard
requires more than “labels and conclusions” or “naked assertions devoid of
further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal citations and quotation marks omitted).
In ruling on a motion to dismiss, the court may consider, inter alia,
“documents central to plaintiffs’ claim; or documents sufficiently referred to
in the complaint.” Alt. Energy, Inc. v. St. Paul Fire and Marine Ins. Co., 267
F.3d 30, 33 (1st Cir. 2001). Cook’s Complaint includes a series of exhibits

VFIS makes two arguments in its motion to dismiss: first, that the
action is barred by the doctrine of res judicata; and second, that Cook has
failed to plead sufficient facts to support its claims. VFIS devotes the entirety
of its Reply to the first argument. Cook’s previous action was dismissed
“without prejudice,” which “does not operate as an adjudication on the
merits.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 396 (1990). VFIS’s
first contention is therefore without merit, and the court will consider the
second argument only.
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meant to bolster Cook’s factual allegations, some of which were not offered
in the previous action.
As before, Cook’s Complaint alleges that Gowrie poached Cook’s
employees; that it announced the hiring of those employees by way of an
advertisement containing VFIS’s licensed trademark; that Preston and
Gowrie sought to persuade VFIS’s customers to switch from Cook to Gowrie
for claims administration; that in so doing, Preston and Gowrie intimated
that Gowrie would ultimately become VFIS’s exclusive third-party
administrator (as Cook had previously been); and that VFIS did ultimately
terminate its business relationship with Cook. None of these alleged facts,
without more, suggests an “improper . . . motive or means” upon which the
viability of a claim for tortious interference depends. G.S. Enters. v.
Falmouth Marine, Inc., 410 Mass. 262, 272 (1991).
First, Cook has failed to plead any facts that would permit a reasonable
inference that VFIS “intentionally and knowingly misled” customers into
believing that Gowrie was to become the sole provider of VFIS claims
administration. Compl. ¶ 38. Cook cites only communications from Gowrie,
rather than from VFIS. These include no more than Preston’s speculation
that it was “likely” VFIS would require that customers switch to Gowrie in
the future. Compl. - Ex. 2. Moreover, given that VFIS did indeed terminate
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its business relationship with Cook, Preston’s musings can hardly be
considered false or even misleading. “One who intentionally causes a third
person not to perform a contract or not to enter into a prospective
contractual relation with another does not interfere improperly with the
other's contractual relation, by giving the third person . . . truthful
information.” Restatement (Second) of Torts § 772 (1979).
In opposing the motion to dismiss in the previous action, Cook
produced an advertisement placed by Gowrie, printed with VFIS’s
trademark, promoting Gowrie’s new claims handling service. As this court
stated in its decision in the related case, and will state again, “The circular
mailed by Gowrie . . . does not state or even remotely imply that it is the
exclusive provider of third-party claims administration services for VFIS.”
Order Granting Motion to Dismiss, Cook & Co. Ins. Servs. v. Volunteer
Firemen’s Ins. Servs., No. 14-cv-12621 (D. Mass. Mar. 12, 2015), Dkt. 21.
Cook now cites a letter from Preston to the Town of Braintree, also with
VFIS’s trademark, in which Preston “propos[ed] a change to our in-house
claims division, [to] Gowrie Claims Services.” Compl. - Ex. 4. Cook alleges
in its Opposition that this letter “created the impression . . . that Cook could
not provide TPA services.” Opp’n at 8. This is an exaggeration. While the
letter recommends that the municipality switch from Cook to Gowrie for
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claims administration, it does not state or imply that Cook was incapable of
providing those services. No objective recipient of the letter could possibly
draw the conclusion argued by Cook, that “no customer [taking the letter and
advertisement together] could have thought anything other than that Cook
was out of the claims business.” Id.
Cook supplements its previously rejected allegations that the poaching
of McNamee and the other at-will employees constituted tortious
interference by pointing to the timing of their hiring by Gowrie. Cook argues
that the timing was intended to “leave Cook without any staff competent to
solicit renewals in competition with Gowrie.” Id. Cook has failed, however,
to allege facts suggesting any improper motive that surpasses the permissible
bounds of rough-and-tumble business competition. That the timing of the
alleged poaching, even if carefully plotted, was unfortunate for Cook (and
consequently beneficial for Gowrie as one of Cook’s competitors) does not
make the conduct tortious or anticompetitive. See Pembroke Country Club,
Inc. v. Regency Sav. Bank, F.S.B., 62 Mass. App. Ct. 34, 39 (2004):
Because the defendant’s purpose was the legitimate
advancement of its own economic interest, that motive is not
“improper” for purposes of a tortious interference claim. That the
plaintiff may have suffered a loss as a consequence of the
defendant’s pursuit of its own interest is a by-product of a
competitive marketplace; it does not render the defendant's
effort tortious.
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As this court has previously stated, where no plausible claim for tort
liability (or coercion) has been pled, no action for conspiracy may lie. Cook
now alleges that the actions of VFIS and Gowrie constituted “wrongful
economic coercion,” but has alleged no facts which suggest that VFIS and
Gowrie, acting together, possessed any “peculiar power of coercion” which
the parties lacked individually. Aetna Cas. Sur. Co. v. P & B Autobody, 43
F.3d 1546, 1563 (1st Cir. 1994). With or without Gowrie, VFIS was free to use
its “own independent discretion” to terminate its brokerage arrangement
with Cook, and to replace Cook as its preferred third-party administrator, if
it so chose. United States v. Colgate & Co., 250 U.S. 300, 307 (1919).
ORDER
For the foregoing reasons, the Clerk will DISMISS the Complaint as to
all counts and close the case.

SO ORDERED.
/s/ Richard G. Stearns
UNITED STATES DISTRICT JUDGE

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