CASTLEPOINT INSURANCE COMPANY v. STATE DRUG STORES, INC et al
Filing
72
MEMORANDUM OPINION filed. Signed by Judge Freda L. Wolfson on 12/5/2011. (eaj)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
____________________________________
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CASTLEPOINT INSURANCE
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COMPANY,
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Civil Action No.: 10-1209
Plaintiff,
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v.
:
MEMORANDUM
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OPINION
STATE DRUG STORES, INC., et al., :
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Defendants.
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___________________________________ :
This matter having been opened to the Court by Michael Dolish, Esq., counsel
for Defendants/Third Party Plaintiffs Ricky and Jay, Inc. and Ramish Patel
(collectively, “RJI” or “Third Party Plaintiff”), moving to dismiss, pursuant to Federal
Rule of Civil Procedure 12(b)(6), Count Thirteen of Third-Party Defendant/FourthParty Plaintiff Lupe Munoz’s Counterclaim and Fourth Party Complaint against RJI;
it appearing that:
1.
This suit was initiated by Plaintiff Castlepoint Insurance Company
(“Castlepoint”) as a subrogation action for $238,000.00 it paid to its insured,
Paramount Property Management, Inc., for fire damage resulting from a May 26, 2008
fire at 68-70 Main Street, South Bound Brook, New Jersey. Compl., ¶¶ 1, 3. The
complaint does not specify exactly where the fire allegedly originated.
2. Castlepoint claims that the tenants that occupied 68-70 Main Street, South
Bound Brook, New Jersey, negligently caused the fire, and breached their contractual
duties under their tenancy agreements. Id. at ¶¶ 17-30. These tenants are Defendants
RJI, State Drug Stores, Inc. d/b/a Scrub Board Wash and Dry, and 70 Main
Laundromat. See id.
3. After answering Castlepoint’s Amended Complaint, RJI filed a Third Party
Complaint against Lupe Munoz (“Munoz” or “Third Party Defendant”) claiming that
Castlepoint contends the fire started in the laundromat controlled and operated by RJI
at 70 Main Street, South Bound Brook, New Jersey. Third Party Compl., ¶ 2.
According to the Third Party Complaint, Munoz was performing construction work on
a bakery located adjacent to the laundromat. Id. at ¶ 4. RJI alleges that Munoz
negligently, careless, and/or recklessly performed that construction work, thereby
causing or contributing to the fire at the laundromat. Id. at ¶¶ 10-11. RJI seeks
judgment, contribution, and indemnity.
4. In response to RJI’s Third Party Complaint, Munoz filed a Counterclaim and
Fourth Party Complaint (“Munoz Complaint”) against RJI. The thirteenth count of the
Munoz Complaint asserts a claim under New Jersey’s Frivolous Litigation Statute,
N.J.S.A. 2A:15–59.1, alleging that RJI’s claims against Munoz are “frivolous and
lacking in merit and filed simply for the purposes of harassment or otherwise in bad
faith.” Munoz Complaint, Thirteenth Count, ¶ 2. In addition, the thirteenth count
seeks treble damages under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8–1 et
seq. (“NJCFA”). The Munoz Complaint does not plead any facts in support of this
count. Now, RJI moves to dismiss the thirteenth count of the Munoz Complaint.1
1
While Munoz had initially cross-moved for leave to file an amended fourth
party complaint to add additional parties, he withdrew that motion.
2
5. In Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167
L.Ed.2d 929 (2007), the Supreme Court clarified the 12(b)(6) standard. Specifically, the
Court “retired” the language contained in Conley v. Gibson, 355 U.S. 41, 45–46, 78
S.Ct. 99, 2 L.Ed.2d 80 (1957), that “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.” Id. at 561 (quoting Conley,
355 U.S. at 45–46). Instead, the factual allegations set forth in a complaint “must be
enough to raise a right to relief above the speculative level.” Id. at 555. As the Third
Circuit has stated, “[t]he Supreme Court's Twombly formulation of the pleading
standard can be summed up thus: ‘stating ... a claim requires a complaint with enough
factual matter (taken as true) to suggest ‘the required element. This ‘does not impose
a probability requirement at the pleading stage,’ but instead ‘simply calls for enough
facts to raise a reasonable expectation that discovery will reveal evidence of ‘the
necessary element’.” Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 556).
6. Under New Jersey’s Frivolous Litigation Statute, a claim may be deemed
frivolous if “on the basis of the pleadings, discovery, or . . . evidence presented,” one of
two instances is apparent, either:
(1) The complaint, counterclaim, cross-claim or defense was
commenced, used or continued in bad faith, solely for the
purpose of harassment, delay or malicious injury; or
(2) The nonprevailing party knew, or should have known,
that the complaint, counterclaim, cross-claim or defense was
without any reasonable basis in law or equity and could not
be supported by a good faith argument for an extension,
modification or reversal of existing law.
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N.J.S.A. 2A:15-59.1b. “Because the statutory language is phrased disjunctively, a valid
claim in law or equity, could be frivolous if it were brought for the improper purposes
cited [in] N.J.S.A. 2A:15-59.1b(1). Conversely, even without an improper purpose, a
claim could be frivolous if it utterly lacks a “reasonable basis in law or equity” and
lacks a good-faith argument for extension of the law ....”
Segal v. Lynch, 413
N.J.Super. 171 (App. Div. 2010).
7. As noted, there are no factual allegations in the Munoz Complaint. It
appears from Munoz’s opposition to the instant motion to dismiss, that he contends
RJI’s Third Party Complaint is frivolous on its face. See Munoz Opp. at 7. Moreover,
Munoz does not dispute that he was hired to perform construction work at the bakery,
rather, he argues, he had completed his construction work at the bakery on May, 6,
2008, which was several weeks before the fire occurred on Sunday, May 26, 2008 at
2:46 a.m.2 This alleged fact, however, is not in the Munoz Complaint, and a party may
not amend his pleading through his brief. Commonwealth of Pennsylvania, Ex Rel.
Leroy S. Zimmerman, v. Pepsico, Inc., 836 F.2d 173, 182 (3d Cir. 1988). Perhaps
recognizing this, Munoz seeks leave to file an amended counterclaim and fourth party
complaint.
8. The lack of allegations in the Munoz Complaint, and the paucity of Munoz’s
2
Munoz also attached several documents to his opposition, including and
prior correspondence he mailed to RJI’s counsel. Munoz has not specified, however,
what aspects of these letters he would incorporate into his frivolous pleading
allegations if granted leave to amend.
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proposed allegations, lead the Court to conclude that amendment would be futile. To
state a claim under the frivolous pleading statute, Munoz would have to assert either
that RJI sued him in bad faith, solely for the purpose of harassment, delay or malicious
injury, or that RJI had no reasonable basis in law or equity for bringing suit against
him. If the Court permitted Munoz to amend his pleading to allege that he completed
his construction work twenty days before the fire, that one fact would not sufficiently
demonstrate that RJI acted solely for the purpose of harassment. Nor would it, alone,
suggest that RJI had no basis in law or equity for claiming that Munoz’s construction
work caused or contributed to the fire. RJI’s Third Party Complaint alleges that
Munoz’s construction work was completed in a building adjacent to the laundromat
where RJI contends the fire originated. Munoz has not alleged any facts that would
demonstrate that RJI’s allegations are wholly without merit.
9. Munoz further argues that RJI’s counsel states, in RJI’s moving papers for
this motion, that additional discovery must be completed to determine if there is a
viable claim against Munoz. See Munoz Opp. at 7. In Munoz’s view, this statement
demonstrates that the RJI pleading is frivolous. It is true that RJI”s counsel states
that the Magistrate Judge presiding over this matter extended the discovery period in
order to allow RJI to “conduct discovery relative to whether there was a viable claim
as alleged in the Third Party Complaint.” RJI Notice of Motion, ¶ 10. In arguing that
this statement demonstrates frivolity, however, Munoz takes the statement out of
context. I read RJI’s statement as simply noting that the discovery period has been
extended—not an admission that it has no factual basis to support its claims.
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10.
Lastly, while the Munoz Complaint seeks treble damages under the
frivolous pleading statute, no such damages are available. The statute provides only
for an award of “all reasonable litigation costs and reasonable attorney fees.” N.J.S.A.
2A:15-59.1a. Munoz’s reference in count thirteen to the NJCFA’s treble damage
provision is inapposite.
11. For the foregoing reasons, RJI’s motion to dismiss count thirteen of the
Munoz Complaint is hereby granted, and count thirteen is dismissed with prejudice.
An appropriate Order shall follow.
/s/ Freda L. Wolfson
Freda L. Wolfson, U.S.D.J.
Dated: December 5, 2011
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