Stein et al v. Northern Assurance Company of America et al

Filing 121

ORDER denying 91 Motion for Discovery. SEE ATTACHED ORDER. Ordered by Magistrate Judge A. Kathleen Tomlinson on 3/30/2012. (Sofio, Lisa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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JUDITH STEIN individually and as an Executor
of the Estate of Kenneth F. Stein, Jr. and as a
beneficiary of the Estate of Kenneth F. Stein, Jr.,
GWENDOLYN ZEGEL and JUDITH STEIN
in their capacities as trustees of a Testamentary
Trust crated under the Last Will and Testament
of Kenneth F. Stein, DAVID S. J. NEUFELD, as
an Executor of the Estate of Kenneth F. Stein, Jr.,
SAYVILLE FERRY SERVICE, INC., STEIN’S
MARINE LIFT, INC., and KFS CORP.,
Plaintiffs,
ORDER
- against CV 09-1029 (TCP) (AKT)
NORTHERN ASSURANCE COMPANY OF
AMERICA, ONEBEACON AMERICA
INSURANCE COMPANY, ONEBEACON
INSURANCE GROUP, LTD., JOHN DOE, and
JANE DOE NOS. 1-4,
Defendants.
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A. KATHLEEN TOMLINSON, Magistrate Judge:
Before the Court is Plaintiffs’ letter motion regarding their “right to obtain additional
discovery and why Plaintiffs are not required to plead ‘public harm’ in connection with their
claim for punitive damages.” DE 91. Defendants oppose the motion. DE 92. For the reasons
that follow, Plaintiffs’ motion is DENIED without prejudice.
On January 25, 2011 District Judge Thomas C. Platt entered an Order granting in part and
denying in part the Plaintiffs’ motion for summary judgment and the partial cross-motion for
summary judgment filed by Defendants Northern Assurance Company of America (“Northern

Assurance”) and OneBeacon America Insurance Company (“OneBeacon”).1 See DE 76 (“Summ.
J. Op.”). Judge Platt granted the non-corporate Plaintiffs’ motion for summary judgment on their
breach of contract claims and granted the Defendants’ motion for summary judgment on the
corporate Plaintiffs’ breach of contract claims. DE 76. A final judgment in favor of the noncorporate Plaintiffs was entered in the amount of $162,946.61. DE 104.
In their cross-motion for summary judgment, Defendants also sought dismissal of all of
Plaintiffs’ claims for punitive damages as a matter of law. See DE 58 at 22-25. Judge Platt ruled
that Plaintiffs had not alleged that Defendants committed an independent tort separate from their
breach of contract claim. Such allegation is required in order for punitive damages to go forward
in the context of a breach of contract action. Judge Platt granted Plaintiffs leave to amend in
accordance with the following guidelines:
(1) plaintiffs may amend their complaint to add a claim for the
independent tort of breach of fiduciary duty to the extent such a claim
is not frivolous; (2) plaintiffs’ complaint shall set forth plausible
allegations demonstrating their entitlement to punitive damages
guided by the elements set forth, supra, in New York University v.
Continental Ins. Company.
Summ. J. Op. at 42. Judge Platt explained that in order
[t]o sustain a claim for punitive damages on account of a breach of
contract claim, a party must establish that: “(1) defendant’s conduct
must be actionable as an independent tort; (2) the tortious conduct
must be of the egregious nature set forth in [Walker]; (3) the
egregious conduct must be directed to the plaintiff; and (4) it must be
part of a pattern directed at the public generally.”

1

Defendant OneBeacon Insurance Group, Ltd. was added as a Defendant after the crossmotion for summary judgment was filed. See DE 69.
2

Id. (quoting New York University v. Continental Ins. Co., 662 N.E.2d 763, 767 (N.Y. 1995))
(alteration in original).
Plaintiffs were given thirty (30) days to file an amended complaint, after which
Defendants were granted leave to renew their motion for summary judgment within thirty (30)
days of receiving the amended complaint. Id. at 43-44. Judge Platt also ruled that “[t]o the
extent plaintiffs require discovery limited to demonstrating that they are entitled to punitive
damages, they are to communicate with Magistrate Judge A. Kathleen Tomlinson’s chambers.”
Id. at 43.
Thereafter, counsel for Plaintiffs contacted the Court and requested certain discovery
related to their punitive damages claim. Plaintiffs sought: 1) certain communications which had
previously been submitted to the Court for in camera review; 2) documents regarding the general
guidelines and procedures utilized by Defendants in reviewing and declining claims and in the
selection and appointment of counsel; and 3) depositions of non-party Catherine Bolognone and
Defendant Northern Assurance’s representative, Vincent Corteselli regarding procedures
applicable to the underlying claim in this suit and in similar suits. DE 77. Defendants opposed
this request on the grounds that Plaintiffs had not yet filed an amended complaint as directed by
Judge Platt and, therefore, the discovery was merely a “fishing expedition.” DE 78. Because the
Court interpreted Judge Platt’s direction to communicate with Chambers regarding discovery to
mean discovery on a properly asserted punitive damages claim, as opposed to discovery in aid of
framing a punitive damages claim, I deferred ruling on the request until after the amended
complaint was filed. See Electronic Order Dated February 24, 2011.

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Plaintiffs were granted an extension of time to file their amended complaint and it was
ultimately filed on March 25, 2011. See DE 81; DE 82. Thereafter, the Court scheduled a
conference during which Defendants raised the issue of whether the recently filed complaint (the
Second Amended Complaint) sufficiently alleged a claim for punitive damages. I ruled that
“[b]efore determining the scope of any discovery concerning punitive damages, this issue must
be resolved.” DE 84. Plaintiffs took the position that they were not required to plead the fourth
prong of the test enunciated in New York University pertaining to a pattern of harm directed at
the public. Id. I directed the parties to submit further letter briefing on this issue.
Upon reviewing the letter briefs submitted by the parties, the Court concludes that it
would be inappropriate for this Court to rule on whether Plaintiffs must plead public harm.
Plaintiffs essentially assert that they have not set forth in the Second Amended Complaint the
fourth element addressed to “public harm” in conformity with Judge Platt’s directions. Instead,
while submitted as a request for a discovery ruling, the Plaintiffs ask this Court to revisit Judge
Platt’s decision and rule that it is unnecessary to plead public harm. The Court notes that this
issue was fully briefed by the parties in connection with Defendants’ renewed motion for
summary judgment. DE 107, 115, 117. Judge Platt heard oral argument on that motion and has
reserved decision. Therefore, it would be inappropriate for this Court to rule on whether
Plaintiffs have properly pled a claim for punitive damages in light of the dispositive nature of the
relief sought and the fact that this issue is the subject of a pending motion before Judge Platt.
Given the representations made by the Plaintiffs in their papers requesting a ruling, this Court
will not permit the discovery Plaintiffs seek to proceed at this time. Should Judge Platt rule that
Plaintiffs have stated a valid claim for punitive damages, this issue can be revisited. The parties
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are directed to contact the Court within five (5) days of a decision on Defendants’ renewed
motion for summary judgment if the decision permits the punitive damages claim to go forward.
The Court disagrees with Plaintiffs’ statement that Judge Platt’s Order on summary
judgment “seemed to contemplate that Plaintiffs would be permitted additional discovery for use
in framing their amended complaint.” See DE 91.2 Plaintiffs were aware that this Court did not
interpret Judge Platt’s Order as allowing for pre-complaint discovery since: (1) I deferred ruling
on Plaintiffs’ discovery requests until after the Second Amended Complaint was filed; and (2) I
advised the parties at the April 7, 2011 status conference that the sufficiency of the pleading had
to be resolved before any discovery rulings would be issued. See DE 84. Plaintiffs did not seek
clarification from Judge Platt on this issue prior to filing their Second Amended Complaint, nor
did they appeal my rulings. Therefore, the Court sees no reason to revisit its interpretation of
Judge Platt’s Order.3
For the sake of clarification, the Court notes that this Order denying discovery also
encompasses the documents previously submitted to the Court for in camera review. The Court
previously issued an Order addressing some of these documents and advised the parties that a
further Order would be forthcoming once Defendants submitted additional documents for the
Court’s review. See DE 85, Electronic Order Dated April 4, 2011. Although these documents
were requested prior to Judge Platt’s ruling on the parties’ motions for summary judgment, given

2

Similar statements were made in Plaintiffs’ opposition to Defendants’ renewed motion
for summary judgment. See DE 115 at 15-18.

3

Discovery is only permitted on a “matter relevant to any party’s claim or defense,” see
Fed. R. Civ. P. 26(b), thus Plaintiffs’ interpretation of the Order as permitting discovery on a
claim not yet asserted would be unusual.
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that the breach of contract claims are no longer at issue in this case, the only use Plaintiffs have
for these documents is in connection with their claim for punitive damages. Therefore, as with
the other punitive damages discovery, the Court will refrain from ruling on these documents until
the viability of the claim is determined.
SO ORDERED.

Dated: Central Islip, New York
March 30, 2012
/s/ A. Kathleen Tomlinson
A. KATHLEEN TOMLINSON
U.S. Magistrate Judge

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