McGrath v. Nationwide Mutual Insurance Company et al

Filing 90

OPINION and ORDER granting in part and denying in part 79 Defendants' Motion for Summary Judgment. Signed by Judge George C. Smith on 2/7/18. (sem)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

DEBRA McGRATH,
Plaintiff,
v.

Case No.: 2:16-cv-284
JUDGE GEORGE C. SMITH
Magistrate Judge Vascura

NATIONWIDE MUTUAL INSURANCE
COMPANY, et al.,
Defendants.

OPINION AND ORDER
This matter is before the Court upon the Motion of Defendants Nationwide Mutual
Insurance Company and Nationwide Insurance Company of America for Summary Judgment
(“Nationwide’s Motion for Summary Judgment”) (Doc. 79). The motion is fully briefed and ripe
for disposition. For the following reasons, Nationwide’s Motion for Summary Judgment is
GRANTED IN PART and DENIED IN PART.
I.
A.

FACTUAL BACKGROUND

McGrath works for various Nationwide agents
In 2005, Plaintiff Debra McGrath was hired by Anthony Colosimo, a Nationwide agent,

as an associate in his agency in Sewickley, Pennsylvania. (Doc. 83-1, McGrath Dep. at 14–15,
18). Shortly after McGrath began working for him, Colosimo was diagnosed with cancer.
McGrath operated Colosimo’s agency in his absence, and Colosimo passed away in February
2006. (Id. at 16–17). McGrath continued to operate the Colosimo agency and was also asked by
Nationwide to service policies that had previously been serviced by another agency, until

Nationwide transitioned both books of policies to two other agents, Scott Diemert and Richard
Marnic, in May 2006. (Id. at 19–20, 31–32). McGrath expressed interest in buying the servicing
rights for one of the books, and Nationwide’s Sales Manager for the Western Pennsylvania
territory, Jim Montelone, told her that she would be offered the servicing rights to one of the two
books if either Diemert or Marnic declined. (Id.). However, both accepted. (Id. at 33).
One of these agents, Marnic, hired McGrath as an associate at his agency in Beaver,
Pennsylvania in June 2006.

(Id. at 34, 36–37).

About this time, McGrath alleges that

Montelone promised her that she would receive the servicing rights to the next available book of
policies. (Id. at 35). However, Montelone did not make any representations regarding the
location of the book or how large it would be. (Id. at 36).
In February 2007, McGrath learned that the servicing rights to a book of policies that had
been serviced by an agency in Chippewa, Pennsylvania had been sold to another agent. (Id. at
38–39). McGrath contacted Darryl Hohlbaugh, who had taken over as Sales Manager from Jim
Montelone, to express her interest in obtaining the servicing rights for those policies. McGrath
alleges that Hohlbaugh told her the servicing rights had already been sold, but that McGrath
would receive the next available book of policies. (Id. at 39–40). In the meantime, McGrath
continued to work for Marnic. (Id.).
In the spring of 2007, Emmett Santillo, another Sales Manager for Nationwide,
approached McGrath to discuss her possible participation in Nationwide’s Agency Capital
Builder Program (“ACB Program”). (Id. at 43–44). Nationwide describes this program as “a 24month agent training program that allowed individuals like McGrath a pathway toward
potentially owning and operating a Nationwide agency.” (Doc. 79, Mot. for Summ. J. at 6).
Participants in the ACB Program “worked as a Nationwide employee in an existing Nationwide

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agency, acquiring additional skills and training” needed for Nationwide’s other agent programs.
(Id.). “Once an agent met the requirements of the ACB Program, the agent could then become
eligible to participate in one of Nationwide’s Successor Programs. This is the next step for
agents desiring to transition toward becoming a non-program ‘career agent.’” (Id.)
McGrath says that during this meeting with Santillo, she noted Montelone’s and
Hohlbaugh’s promises that she would receive the servicing rights to the next available book of
policies. (Id.). Santillo allegedly told McGrath that she was not required to participate in the
ACB Program before purchasing a book of servicing rights because she already had experience
working with Nationwide. (Id. at 44).
In November 2007, McGrath learned that another book of policies had become available,
and although she was in frequent contact with Hohlbaugh about her desire to purchase the
servicing rights to this book, the rights were ultimately sold to another agent. (Id. at 44–45).
B.

McGrath enters and successfully completes the ACB Program
In late 2007 or early 2008, Santillo visited McGrath and told her that she would now be

required to participate in the ACB program before she would be permitted to purchase the
servicing rights to a book of policies. (Id. at 49–50). McGrath interviewed for the ACB
Program with Santillo and Carol Miller, then a Nationwide Assistant Vice President of Sales in
Pennsylvania. (Id. at 50). During this interview, McGrath alleges that Miller expressed “that she
didn’t think [McGrath] was a good candidate for the ACB Program because it was a very
difficult and stringent program, and it took a lot—it was going to take a lot of energy and
stamina was the word she used, and she was concerned because of [McGrath’s] age.” (Id. at 52).
Nationwide denies these remarks were made.
McGrath was accepted into the ACB Program in July 2008. (Id. at 53, 64). On July 25,
2008, McGrath and Nationwide entered into an Agency Capital Builder Agreement (“ACB
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Agreement”) (Doc. 79-1 at PAGEID #1513–29).

The ACB Agreement set forth various

production goals that McGrath was required to achieve within the 24-month term of the
Program. (Id. at Exhibit B). Three other provisions of the ACB agreement are pertinent here:


Section 4, stating that “Except as provided in Section 16, [McGrath] agrees and
understands that Nationwide has exclusive use and control of all expirations and
therefore has the right and obligation to service Nationwide customers at any and
all times, even to the exclusion of [McGrath].”



Section 16, stating that “In the event [McGrath] satisfies [certain production
goals], applies to participate in a Successor Program, and is approved by
Nationwide, [McGrath] shall also, at Nationwide’s discretion, earn the right to
service either: (1) the book of business [McGrath] has developed while working
as a Nationwide employee, or (2) a book of business with an equivalent value in a
different location.”



Section 34, stating that “The terms and conditions contained in this Agreement
supersede all prior oral or written understandings between [McGrath] and
Nationwide and constitute the entire agreement between them concerning the
subject matter of [the ACB Agreement].”

During the ACB Program, Santillo allegedly referred to McGrath as “Mother Hen,”
because she “had three years of Nationwide experience and nobody else did in the office, as far
as the program and underwriting and all that kind of stuff, he would always tell them to go ask
[McGrath].” (Doc. 83-1, McGrath Dep. at 103). Other agents also allegedly referred to her as
“Yoda,” whom they explained to her was “this little old guy, but he was really smart.” (Id. at
104).
McGrath successfully completed the requirements of the ACB Program in 19 months,
allowing her to complete the ACB Program early, and for which she received a $40,000 bonus.
(Id. at 72). McGrath admits that no adverse employment actions were taken against her during
the ACB Program. (Id. at 104).

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C.

McGrath enters Nationwide’s Agency Executive (AE) Program
Following completion of the ACB Program, agents may become eligible to participate in

one of Nationwide’s Successor Programs.

Two such Successor Programs are the Agency

Executive Program (“AE Program”) and the Replacement Agency Executive Program (“RAE
Program”). (Doc. 79, Mot. for Summ. J. at 8). In the AE Program, agents open a scratch agency
(that is, they “start from scratch” with no or few policies), while agents in the RAE Program
purchase the servicing rights to a Nationwide-owned book of policies, which they begin
servicing right away. (Id.).
In June 2010, Nationwide invited McGrath to participate in the AE Program. McGrath
accepted, and on June 29, 2010, McGrath and Nationwide entered into an Agency Executive
Program Performance Agreement (the “AE Agreement”).

(Doc. 83-6).

McGrath’s

understanding was that, since there were no available books of policies at that time, her only
option to “avoid ending her career as a Nationwide agent” was to enter into the AE Agreement.
(Doc. 83, Mem. in Opp. to Mot. for Summ. J. at 7; Doc. 83-1, McGrath Dep. at 115).
The AE Agreement provided that McGrath was an independent contractor, responsible
for paying all business expenses and federal, state, and local income and self-employment taxes,
and having “independent judgment as to time, place, and manner of soliciting insurance [and]
servicing policyholders.” (Doc. 83-1, AE Agreement §§ 2–3). The AE Agreement also reserves
to Nationwide “exclusive use and control of all policies and policy expirations and [Nationwide]
therefore has the right to service Nationwide customers at any time.” (Id. § 2).
McGrath was also subject to a Minimum Production Plan, performance under which was
“calculated on a 12 month moving basis,” and Nationwide “reserve[d] the right to change the
Minimum Production Plan during the term of [the AE Agreement].” (Id. §§ 7–8). Finally, the
AE Agreement also contained an integration clause, stating, “[t]he terms and conditions
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contained in this Agreement supersede all prior oral or written understandings between
[McGrath] and Nationwide and constitute the entire agreement between them concerning the
subject matter of [the AE Agreement].” (Id. §38).
McGrath alleges that she was concerned “at the very beginning” with the production
requirements for the second year of the AE program, as it entailed a substantial increase from the
production requirements in the first year. (Doc. 83-1, McGrath Dep. at 140). However, Santillo
allegedly told her she “didn’t have to worry about that because by that time, [she] would be
offered an agency to purchase.” (Id.)
During her first year in the AE Program (July 2010 to July 2011), McGrath learned that
at least four other agents had been given the opportunity to purchase the servicing rights to
existing books of policies. (Doc. 83-1, McGrath Dep. at 172). McGrath contacted Hohlbaugh
several times to express that she was “troubled that [she was] not getting the opportunity that
[she saw] everybody else getting.” (Id. at 173). McGrath viewed Nationwide’s inability or
refusal to sell her the servicing rights to an existing book of policies as “a breach of a promise.”
(Id. at 175).
D.

McGrath and Nationwide enter into an Amendment to the AE Agreement
On February 24, 2012, Hohlbaugh emailed McGrath to say that he would be visiting her

agency to have her sign “an addendum related to a possible tax liability[,] not a big deal” and
that “all program agents have the same addendum change.” (Doc. 83-10, Emails, at PAGEID
#2322–23). On March 1, 2012, Hohlbaugh visited McGrath’s agency, presented her with an
Amendment to Agency Executive Program Performance Agreement (“AE Amendment,” Doc.
83-10 at PAGEID #2324–26), and asked her to sign it. (Doc. 83-1, McGrath Dep. at 189).
Hohlbaugh again stated that the amendment related to tax liability and wasn’t a big deal. (Id.)

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McGrath requested time to study the AE Amendment, but she alleges that Hohlbaugh
refused, telling McGrath that he needed to leave her office with the signed amendment that day,
and that if she did not sign it immediately, she would be terminated from the AE Program. (Id.
at 189–91). McGrath then executed the AE Amendment without having read it. (Id.)
The AE Amendment includes provisions related to compliance with Section 409A of the
Internal Revenue Code. One of these provisions altered the calculation for any early termination
payment that might be due to McGrath in the event of cancellation of the AE Agreement before
the end of its otherwise four-year term. (Doc. 83-10, AE Amendment § 4).
E.

Nationwide cancels its AE Agreement with McGrath
Nationwide amended McGrath’s production goals at various points during the term of the

AE Agreement. The amounts McGrath was required to meet fluctuated, but they never exceeded
the production requirements in the original schedule. (Doc. 83-1, McGrath Dep. at 163–64; Doc.
79-1, AE Minimum Production Schedules, PAGEID #1567–75).
McGrath was able to meet her monthly production requirements during the first year of
the AE Agreement term, in part because she was credited with the approximately $343,000 in
premium she had achieved during the ACB Program. (Doc. 83-1, McGrath Dep. at 137–38;
Doc. 79-1, PAGEID #1587–1613, Program Agent Performance Reports). But starting in July
2011, McGrath failed to meet her monthly production requirements and was never able to get
back on track. (Id.).

On September 1, 2011, McGrath signed a production shortfall program

coaching plan stating that “failure to show progress above minimal requirements after one month
on the coaching plan will result in your being moved to a formal Administrative (Performance)
Action Plan.” (Doc. 79-1, PAGEID #1576–78, Production Shortfall Program—Coaching Plan,
at 2).

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McGrath’s inability to meet her production goals continued, and on October 27, 2011,
she signed an Administrative Action Plan, which stated, “Please remember that failure to meet
the minimum production requirements by the end of this Administrative (Performance) Action
Plan period may result in cancellation of your Agent’s Agreement with Nationwide.” (Doc. 791, PAGEID #1579–80, Production Shortfall Program—Administrative Action Plan, at 2).
As a result of McGrath’s further inability to meet her production requirements into 2012,
Nationwide terminated McGrath’s AE Agreement on July 23, 2012. (Doc. 79-1, PAGEID
#1586, Letter from Darryl Hohlbaugh dated July 23, 2012). Nationwide then hired McGrath as
an employee (paid at an hourly rate, rather than on commission) to continue servicing her
agency’s policies until the servicing rights to that book of policies was sold to another agent in
December 2012. (Doc. 83-1, McGrath Dep. at 203–04).
II.

PROCEDURAL HISTORY

McGrath filed a complaint with the Pennsylvania Human Relations Commission (PHRC)
on February 7, 2013, alleging that Nationwide discriminated against her on the basis of her age
and sex. (Doc. 1-1, PAGEID #90, PHRC Right to Sue Letter). The PHRC issued a right to sue
letter to McGrath on April 9, 2013, finding that her allegations failed to state a cause of action
under the Pennsylvania Human Relations Act (PHRA). (Id.).
On April 15, 2014, McGrath filed a praecipe for a Writ of Summons from the Court of
Common Pleas of Allegheny County, Pennsylvania, and filed her Complaint in the same court on
January 27, 2015. The Complaint contains nine counts: (1) breach of contract; (2) breach of the
duty of good faith and fair dealing; (3) fraud in the inducement; (4) intentional
misrepresentation/fraud; (5) unjust enrichment; (6) discrimination on the basis of age and sex
under the PHRA; (7) wrongful discharge in violation of the PHRA and of public policy;

8

(8) negligent infliction of emotional distress; and (9) intentional infliction of emotional distress.
(Doc. 1-1, Compl.).
Nationwide timely removed the action on the basis of diversity of citizenship to the U.S.
District Court for the Western District of Pennsylvania on February 27, 2015. (Doc. 1, Notice of
Removal). Subsequently, the Western District of Pennsylvania granted Nationwide’s motion to
transfer the action to the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a) and a forum
selection clause in the AE Agreement designating Franklin County, Ohio as the proper forum for
“any action or proceeding arising from a dispute concerning the AE Program.” (Doc. 59,
Transfer Order; Doc. 83-6, AE Agreement § 40).
On May 30, 2017, Nationwide filed the present Motion for Summary Judgment, seeking
judgment in its favor on all nine counts in Plaintiff’s Complaint. (Doc. 79). On July 12, 2017,
McGrath filed a brief in opposition (Doc. 83) in which she relied heavily on the Ohio appellate
decision Lucarell v. Nationwide Mut. Ins. Co., 2015-Ohio-5286, 44 N.E.3d 319 (7th Dist.) in
arguing against summary judgment on her contract claims. Nationwide filed a reply brief on
August 9, 2017 (Doc. 86).

On January 9, 2018, Nationwide filed a notice of supplemental

authority noting that the Seventh District Court of Appeals’ decision in Lucarell had been
overturned by the Ohio Supreme Court. (Doc. 89). The Court has considered all of these filings
in reaching its decision on Nationwide’s Motion for Summary Judgment.
III.

SUMMARY JUDGMENT STANDARD

Nationwide moves for summary judgment pursuant to Rule 56 of the Federal Rules of
Civil Procedure. Summary judgment is appropriate when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a);
Berryman v. SuperValu Holdings, Inc., 669 F.3d 714, 716–17 (6th Cir. 2012). The Court’s
purpose in considering a summary judgment motion is not “to weigh the evidence and determine
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the truth of the matter” but to “determine whether there is a genuine issue for trial.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). A genuine issue for trial exists if the Court finds
a jury could return a verdict, based on “sufficient evidence,” in favor of the nonmoving party;
evidence that is “merely colorable” or “not significantly probative,” however, is not enough to
defeat summary judgment. Id. at 249–50.
The party seeking summary judgment shoulders the initial burden of presenting the court
with law and argument in support of its motion as well as identifying the relevant portions of
“‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56). If this initial
burden is satisfied, the burden then shifts to the nonmoving party to set forth specific facts
showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e); see also Cox v. Ky.
Dep’t of Transp., 53 F.3d 146, 150 (6th Cir. 1995) (after burden shifts, nonmovant must
“produce evidence that results in a conflict of material fact to be resolved by a jury”).
In considering the factual allegations and evidence presented in a motion for summary
judgment, the Court “views factual evidence in the light most favorable to the non-moving party
and draws all reasonable inferences in that party’s favor.” Barrett v. Whirlpool Corp., 556 F.3d
502, 511 (6th Cir. 2009). But self-serving affidavits alone are not enough to create an issue of
fact sufficient to survive summary judgment. Johnson v. Washington Cty. Career Ctr., 982 F.
Supp. 2d 779, 788 (S.D. Ohio 2013) (Marbley, J.). “The mere existence of a scintilla of evidence
to support [the non-moving party’s] position will be insufficient; there must be evidence on
which the jury could reasonably find for the [non-moving party].” Copeland v. Machulis, 57
F.3d 476, 479 (6th Cir. 1995); see also Anderson, 477 U.S. at 251.

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IV.

DISCUSSION

Nationwide has moved for summary judgment on all nine of McGrath’s claims. The
Court will discuss each claim in turn.
A.

Breach of contract and breach of the implied duty of good faith and fair dealing
(Counts I and II)
McGrath claims that Nationwide breached both the express terms of the ACB and AE

Agreements and the duty of good faith and fair dealing that is implied in every contract. (Doc. 11, Compl. ¶¶ 57–61). Nationwide argues that even accepting McGrath’s version of the facts,
there is no evidence that Nationwide breached any of its express or implied contractual
obligations. (Doc. 79, Mot. for Summ. J. at 14–22). The Court agrees.
1.

Breach of the ACB Agreement

McGrath alleged in her Complaint that Nationwide breached the ACB agreement “by
refusing to allow Ms. McGrath to either 1) acquire the book of business she built in the ACB
Program, or 2) acquire a similar book of business in a different location pursuant to the ACB
Agreement.” (Doc. 1-1, Compl. ¶ 57). Nationwide responds that the ACB agreement contains
no promises to do either of these things, and even if it did, McGrath admitted at her deposition
that she did, in fact, receive the servicing rights to the book of policies she built during the ACB
Program when she entered the AE Program. (Doc. 79, Mot. for Summ. J. at 14–15; Doc. 79-1,
ACB Agreement, PAGEID #1513–29; Doc. 83-1, McGrath Dep. at 81, 137–38).
McGrath does not address her claim for breach of the ACB agreement in her opposition
brief and appears to have abandoned it. Upon review of the ACB agreement and McGrath’s
testimony confirming Nationwide’s factual assertions, Nationwide is entitled to summary
judgment on the claim for breach of the ACB agreement.

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2.

Breach of the AE Agreement

McGrath alleges that Nationwide breached the AE Agreement in the following ways
(Doc. 1-1, Compl. ¶¶ 58-60):
a.

Failing to make correct payments for bonuses and commissions

McGrath alleges that Nationwide failed to make correct bonus and commission payments
to her. But McGrath admitted at her deposition that she does not know whether or to what extent
commissions were not paid, because she has not undertaken any calculations of what she claims
was due her. (Doc. 83-1, McGrath Dep. at 155–56). Accordingly, Nationwide argues this claim
should fail for lack of evidentiary support. (Doc. 79, Mot. for Summ. J. at 17).
b.

Failing to adhere to the production plan and goals as set forth in the
AE agreement

McGrath alleges that Nationwide unilaterally changed both the amounts of her
production requirements during the AE Program and the way they were measured—i.e., from a
cumulative to a rolling 12-month basis. However, as Nationwide points out, the AE Agreement
expressly permitted Nationwide to make unilateral changes to McGrath’s production
requirements. (Doc. 83-6, AE Agreement, § 8). Further, when the production requirements were
changed, they were lower than original production schedule, thus making it easier for McGrath
to achieve the production goals. (Doc. 83-1, McGrath Dep. at 163–64; Doc. 79-1, AE Minimum
Production Schedules, PAGEID #1567–75). Finally, the AE Agreement also expressly states
that McGrath’s production requirements would be “calculated on a 12 month moving basis.”
(Doc. 83-6, AE Agreement, § 7). McGrath confirmed she was aware her production would be
measured on a rolling basis during the ACB Program before she signed the AE Agreement.
(Doc. 83-1, McGrath Dep. at 94–101). Accordingly, Nationwide argues that these allegations of
breach are not supported by the evidence.

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c.

Failing to credit or pay McGrath in full under the agreements for
policies procured while enrolled in the ACB program

McGrath’s Complaint alleges that Nationwide breached the AE Agreement by “not
crediting nor paying McGrath in full under the agreements for policies procured while enrolled
in the ACB Program.” (Doc. 1-1, Compl. ¶ 60). Nationwide responds that nothing in the AE
Agreement requires this, and that McGrath did receive credit for the amount of premium she
generated during the ACB program. (McGrath Dep. at 125, 137–38).
In response to all of these arguments by Nationwide concerning lack of breach of the AE
Agreement, McGrath does not identify any disputed facts. Instead, she relies solely on the Ohio
appellate decision in Lucarell v. Nationwide Mut. Ins. Co., 2015-Ohio-5286, 44 N.E.3d 319 (7th
Dist.).1

In Lucarell, another agent who participated in Nationwide’s AE Program sued

Nationwide, alleging it had breached a similar AE Agreement “by (i) unilaterally imposing an
unrealistic business plan on her, (ii) forcing her to sign an amendment to her AE Agreement
which, among other things imposed a payment to Nationwide of $5,000, and (iii) misleading her
through false promises and information to entice her into contributing to the AE Program.”
(Doc. 83, Mem. in Opp. to Mot. for Summ. J. at 14). The Seventh District upheld a jury verdict
in favor of Lucarell on her breach of contract and breach of the duty of good faith and fair
dealing claims. Lucarell at ¶ 82. McGrath argues that if facts similar to hers were sufficient to
support a jury verdict in the agent’s favor, then her facts must be sufficient to prevent summary
judgment in Nationwide’s favor. (Doc. 83, Mem. in Opp. to Mot. for Summ. J. at 15).
There are two problems with McGrath’s approach to her breach of contract claim. First,
she has the obligation to identify specific facts that are in dispute that would preclude summary
1

Both parties’ briefs cite only Ohio case law in relation to McGrath’s contract claims, and the AE Agreement has a
choice of law provision stating that “this Agreement shall be governed by the laws of the State of Ohio.” (Doc. 83-6
at § 40). The Court will therefore apply Ohio law to McGrath’s claims for breach of contract and breach of the duty
of good faith and fair dealing.

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judgment in her case. Fed. R. Civ. P. 56(e); Cox, 53 F.3d at 150. She cannot discharge this
obligation simply by making a general analogy to another case with non-identical (albeit similar)
facts.
Second, the appellate Lucarell decision has since been overturned by the Ohio Supreme
Court. ___ Ohio St. 3d ___, Slip Opinion No. 2018-Ohio-15, ¶ 47. While the appellate court
determined it could not review the jury’s verdict in favor of the agent on the breach of contract
claims due to Nationwide’s failure to submit interrogatories to the jury regarding the basis for the
verdicts, the Ohio Supreme Court found this was reversible error. The appellate court still had
an obligation to determine whether sufficient evidence supported the jury’s verdicts and its
failure to do so required reversal. Id.
Overall, McGrath has failed to identify a genuine issue of material fact as to her breach of
contract claims, and the single case she relies on has now been overturned by the Ohio Supreme
Court.

Because the uncontroverted facts demonstrate no breach of the AE Agreement,

Nationwide is entitled to summary judgment on Count I.
3.

Breach of the implied duty of good faith and fair dealing

Count II of McGrath’s Complaint alleges that Nationwide breached the duty of good faith
and fair dealing implied in both the ACB and AE Agreements.

But as pointed out by

Nationwide, Ohio does not recognize a standalone claim for breach of the implied duty of good
faith and fair dealing. E.g., Frisch v. Nationwide Mut. Ins. Co., 553 F. App’x 477, 482 (6th Cir.
2014) (although Ohio law recognizes the existence of an implied duty of good faith and fair
dealing in every contract, “the duty does not create an independent basis for a cause of action.”)
(quoting Wendy’s Int’l, Inc. v. Saverin, 337 F. App’x 471, 476 (6th Cir. 2009)).
The implied duty may give rise to a breach of contract claim when the term allegedly
breached is the implied duty of good faith and fair dealing. Eggert Agency, Inc. v. NA Mgmt.
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Corp., No. C2-07-1011, 2008 WL 3474148, at *4 (S.D. Ohio Aug. 12, 2008) (Sargus, J.). And
McGrath did allege that “Nationwide breached its duties of good faith and fair dealing towards
Ms. McGrath with respect to the [ACB and AE] agreements” in her breach of contract claim in
Count I of her Complaint. (Doc. 1-1, ¶ 61).
However, “[t]here can be no implied covenants in a contract in relation to any matter
specifically covered by the written terms of the contract itself.” Hamilton Ins. Serv., Inc. v.
Nationwide Ins. Co., 86 Ohio St. 3d 270, 274 (1999) (citing Kachelmacher v. Laird, 92 Ohio St.
324 (1915), paragraph one of the syllabus). This is especially true in the presence of an
integration clause, such as those in both the ACB and AE Agreements. Interstate Gas Supply,
Inc. v. Calex Corp., 10th Dist. No. 04AP-908, 2006-Ohio-638, ¶¶ 99–101; Gilchrist v. Saxon
Mtge. Servs., 10th Dist. No. 12AP-556, 2013-Ohio-949, ¶ 24. Here, McGrath claims Nationwide
lured her into participating in its agent programs through false promises regarding her ability to
purchase the servicing rights to an existing book of policies. But her written agreements with
Nationwide specifically spoke to her obligations to earn commissions through her generation of
new policies, not through servicing existing policies. Therefore, there could be no implied
covenants on this point for Nationwide to breach.
Finally, “a party to a contract does not breach the implied duty of good faith and fair
dealing by seeking to enforce the agreement as written or by acting in accordance with its
express terms, nor can there be a breach of the implied duty unless a specific obligation imposed
by the contract is not met.” Lucarell, ___ Ohio St. 3d ___, 2018-Ohio-15, ¶ 5. “Thus, there is
no violation of the implied duty unless there is a breach of a specific obligation imposed by the
contract, such as one that permits a party to exercise discretion in performing a contractual duty
or in rejecting the other party’s performance.” Id., ¶ 43. Because McGrath has not identified

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any specific contract term, express or implied, that Nationwide breached, her claim for breach of
the implied duty of good faith and fair dealing must also fail.
B.

Fraud and fraudulent inducement (Counts III and IV)
McGrath bases her fraud claim on the alleged multiple misrepresentations by Nationwide

that she would be permitted to purchase the servicing rights to an existing book of policies.
(Doc. 1-1, Compl. ¶¶ 93–94). She also alleges that she was fraudulently induced to enter into the
ACB Agreement and AE Agreement (based on the same promises that she would receive
servicing rights to an existing book) as well as the AE Amendment (based on Hohlbaugh’s
statements that it related to “tax liability,” was “not a big deal,” had to be executed immediately,
and that failure to execute it immediately would result in Nationwide’s cancellation of the AE
Agreement). (Id. ¶¶ 72–87).
1.

Choice of law regarding statute of limitations

Nationwide argues that McGrath’s fraud and fraudulent inducement claims (excepting
McGrath’s claims regarding the AE Amendment) are barred by Pennsylvania’s two-year statute
of limitations for fraud claims. 42 Pa. Cons. Stat. § 5524(7). McGrath does not dispute that her
fraud claims are governed by Pennsylvania’s two-year limitation period (rather than Ohio’s fouryear limitation period under O.R.C. 2305.09(C)). Indeed, the result is the same no matter which
state’s statute of limitations is applied, due to Ohio’s “borrowing statute.” O.R.C. 2305.03(B).
The borrowing statute provides that “[n]o civil action that is based upon a cause of action
that accrued in any other state . . . may be commenced and maintained in this state if the period
of limitation that applies to that action under the laws of that other state . . . has expired.” Id.
The Sixth Circuit has outlined the factors used to evaluate where a fraud claim accrues for
purposes of Ohio’s borrowing statute, namely, “(1) the place where plaintiff acted in reliance on
defendant’s representations, (2) the place where plaintiff received the representation, (3) the
16

place where defendant made the representation, and (4) the place of business of the parties.”
Frisch v. Nationwide Mut. Ins. Co., 553 F. App’x 477, 484 (6th Cir. 2014) (citing Carder Buick–
Olds Co. v. Reynolds & Reynolds, Inc., 148 Ohio App.3d 635, 775 N.E.2d 531, 544 (2002)
§ 148(2) of the Restatement (Second) of Conflict of Laws).
Thus, even if Ohio law applied to the limitation period for McGrath’s fraud claims, those
fraud claims accrued in Pennsylvania—all alleged misrepresentations were made there;
McGrath, her agency, and the Nationwide representatives she dealt with were located there; and
McGrath executed agreements in alleged reliance on Nationwide’s misrepresentations there.
Ohio law would therefore “borrow” Pennsylvania’s two-year limitation period. Frisch, 553 F.
App’x at 484.
2.

Application of Pennsylvania’s two-year statute of limitations

Nationwide argues McGrath’s fraud claims are largely time-barred because any alleged
misrepresentations (other than those in connection with McGrath’s execution of the AE
Amendment in 2012) were made and discovered to be false more than two years before McGrath
commenced this action. McGrath alleges that:


She was told by Montelone in June 2006 that she would offered the next available
book of policies, but Michelle Whitman received the rights to policies in
Chippewa, Pennsylvania in February 2007 (Doc. 83-1, McGrath Dep. at 35–40);



She was told by Hohlbaugh in February 2007 that she would offered the next
available book of policies, but another available book was sold to a different agent
in November 2007 (id. at 39–45);



She was told by Santillo in the spring of 2007 that she would be able to purchase
the rights to a book of policies without completing the ACB Program, but was

17

later told she would need to first complete the ACB Program in late 2007 or early
2008 (id. at 43–50);


She was told by Santillo in mid-2010 that she needn’t worry about her production
goals for the second year of her AE Program, because she would be offered the
servicing rights to an existing book of policies before those goals took effect;
however she was not offered a book of policies after her first year which ended
mid-2011 (id. at 140).

As McGrath knew or should have known these representations were false no later than July
2011, and McGrath did not commence this action until April 14, 2014 when she filed a praecipe
for a writ of summons,2 Nationwide argues that any claims based on these misrepresentations are
time-barred.
In response, McGrath asserts for the first time in her opposition brief that in “May 2012,
Mr. Hohlbaugh, acting as Nationwide’s sales manager, continued to assure Ms. McGrath that she
would be offered the opportunity to purchase the servicing rights to a Nationwide book of
business as soon as one became available.” (Doc. 83, Mem. in Opp. to Mot. for Summ. J. at 11).
McGrath supports this assertion with an affidavit executed by her. (Doc. 83-7, McGrath Aff.
¶ 4). An alleged misrepresentation made in May 2012 would fall within the two-year limitation
period preceding the commencement of McGrath’s action on April 14, 2014.
Nationwide argues this new allegation is merely a “self-serving, eleventh hour affidavit”
that “contradicts McGrath’s own prior allegations, sworn discovery responses, and sworn
testimony that these supposed representations occurred in and before 2011.” (Doc. 86, Reply in
Supp. of Mot. for Summ. J. at 6). The Court disagrees with this characterization.

2

In Pennsylvania, a plaintiff may commence an action by filing either a praecipe for writ of summons or a
complaint. Pa.R.C.P. No. 1007.

18

While it is true that “[a] party cannot avoid summary judgment through the introduction
of self-serving affidavits that contradict prior sworn testimony,” the Court finds no material
contradiction here. U.S. ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296, 303 (6th
Cir. 1998). Nationwide argues the contradiction arises out of McGrath’s sworn response to one
of Nationwide’s interrogatories, in which she identified only James Montelone, Kevin Keto, and
Emmett Santillo as having made promises to her regarding the opportunity for her to purchase
the servicing rights to an existing book of policies. (Doc. 86-2, McGrath’s Interrog. Resps. at 6).
While it is certainly curious that McGrath failed to list Hohlbaugh in this response, she identified
Hohlbaugh multiple times as having made such a promise in her Complaint and sworn deposition
testimony. (Doc. 1-1, Compl. ¶ 47; Doc. 83-1, McGrath Dep. at 35–40). Indeed, Nationwide
included Hohlbaugh’s alleged promises in 2007 in its statement of facts in support of the present
Motion. (Doc. 79 at 4). McGrath also never asserted in her Complaint, interrogatory responses,
or deposition testimony that Hohlbaugh never repeated those promises after 2011. Thus, her
affidavit is not inconsistent with her prior submissions.
Nationwide also contends that even if the Court may consider the affidavit, it does not
help McGrath because she cannot demonstrate any detrimental reliance on Hohlbaugh’s alleged
May 2012 promise. (Doc. 86, Reply in Supp. of Mot. for Summ. J. at 8). Here, Nationwide is
correct.
Both fraud and fraud in the inducement require a plaintiff to have justifiably relied upon a
misrepresentation in order to succeed. Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.
3d 494, 2010-Ohio-2057, 929 N.E.2d 434, ¶ 27 (fraud); McCarthy v. Ameritech Pub., Inc., 763
F.3d 469, 478 (6th Cir. 2014) (fraudulent inducement).3 McGrath states that Nationwide’s “false

3

In contrast to the statute of limitations, neither party makes a definitive argument that the substantive law of either
Ohio or Pennsylvania should apply to McGrath’s tort claims. Sitting in diversity, this Court must apply the choice

19

promises convinced Ms. McGrath to continue to run the Colosimo and Helkowski agencies,
enter and complete Nationwide’s ACB Program, and enter Nationwide’s AE Program.” (Doc.
83, Mem. in Opp. to Mot. for Summ. J. at 17). However, McGrath took all of those actions no
later than June 2010; therefore, she could not have relied on Hohlbaugh’s May 2012 promise in
taking those actions.
Accordingly, Nationwide is correct that McGrath’s fraud and fraudulent inducement
claims (excepting those related to McGrath’s entering into the AE Amendment in March 2012)
have “either a fatal statute of limitations problem or a fatal reliance problem.” (Doc. 86, Reply
in Supp. of Mot. for Summ. J. at 9). All alleged misrepresentations were either proven false
outside the limitations period, or made after the actions that McGrath allegedly took in reliance
on those representations. Therefore, Nationwide is entitled to summary judgment on McGrath’s
fraud and fraudulent inducement claims, with the exception of the fraudulent inducement claim
related to the execution of the AE Amendment in March 2012. The Court considers this claim
next.
3.

Fraudulent inducement to enter into the AE Amendment

McGrath alleges that Hohlbaugh made several misrepresentations that fraudulently
induced her to enter into the AE Amendment on March 1, 2012. Namely, McGrath alleges that
Hohlbaugh falsely stated:

of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). And even
though this case was originally in federal court in Pennsylvania, and the transferor state’s choice of law rules
typically follow a case transferred under 28 U.S.C. § 1404(a), this case falls under the exception for transfers
pursuant to a contractual forum selection clause. Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas,
134 S. Ct. 568, 582 (2013). Thus, applying Ohio’s conflicts of law rules, “if two jurisdictions apply the same law,
or would reach the same result applying their respective laws, a choice of law determination is unnecessary because
there is no conflict, and the laws of the forum state apply.” DRFP, LLC v. Republica Bolivariana de Venezuela, 945
F. Supp. 2d 890, 908–09 (S.D. Ohio 2013) (Sargus, J.).
Neither the parties nor the Court have identified any relevant ways in which Ohio and Pennsylvania law differ on
McGrath’s tort claims. It is therefore unnecessary to undertake a choice of law analysis, and the Court will apply
Ohio law to McGrath’s tort claims.

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

The AE Amendment related to a possible tax liability;



The AE Amendment was “not a big deal”;



The AE Amendment needed to be executed by the time Hohlbaugh left
McGrath’s office that day; and



If McGrath did not execute the AE Amendment that day, Nationwide would
cancel its AE Agreement with McGrath.

(Doc. 83-1, McGrath Dep. at 189–90).
Nationwide argues that McGrath cannot maintain a claim for fraudulent inducement
because she admits she did not read the AE Amendment before she signed it. McGrath testified
at her deposition that she did not read the AE Amendment because she was running late for an
important business meeting and Hohlbaugh would not allow her read the Amendment and fax an
executed copy to him later that evening. (Id.)
Ohio law does limit the ability to recover for fraudulent inducement in cases of failure to
read. ABM Farms, Inc. v. Woods, 81 Ohio St.3d 498, 501, 503, 692 N.E.2d 574 (1998) (“A
person of ordinary mind cannot be heard to say that he was misled into signing a paper which
was different from what he intended, when he could have known the truth by merely looking
when he signed.”). Be that as it may, failure to read would bar only those claims based on
misrepresentations as to the contents of the agreement. Even if McGrath had read the AE
Amendment before signing, it would not have revealed the truth or falsity of Hohlbaugh’s
statements that the Amendment needed to be signed immediately upon pain of cancellation of the
AE Agreement.
Nationwide contends, however, that “any supposed threat of cancelation does not
constitute fraudulent inducement.”

(Doc. 79, Mot. for Summ. J. at 29) (citing Frisch v.

21

Nationwide, 553 F. App’x at 482). In Frisch, another Nationwide agent challenged the same AE
Amendment that McGrath asserts she was fraudulently induced to sign. In that case, the Sixth
Circuit stated that “[i]f Plaintiff did not like the terms of the [AE Amendment], he should have
declined to execute it, and if Defendant refused to continue performing under the AE, sued for
breach of contract at that time.” 553 F. App’x at 482. However, this statement was not made in
the context of a fraudulent inducement claim—rather, Frisch was attempting to maintain a claim
for breach of the unmodified AE Agreement and had not alleged fraudulent inducement with
regard to the AE Amendment. Id. The Frisch court made the statement quoted by Nationwide
as part of its conclusion that Frisch could not recover for breach of a contract no longer in effect.
The Frisch decision therefore does not speak to whether threat of cancelation can constitute
fraudulent inducement.
All McGrath must establish in order to succeed on her fraudulent inducement claim is:
“(1) a false representation concerning a fact . . . material to the transaction; (2) knowledge of the
falsity of the representation or utter disregard for its truthfulness; (3) an intent to induce reliance
on the representation; (4) justifiable reliance upon the representation under circumstances
manifesting a right to rely; and (5) injury proximately caused by the reliance.” McCarthy, 763
F.3d at 478 (quoting Metro. Life Ins. Co. v. Triskett Ill., Inc., 97 Ohio App.3d 228, 646 N.E.2d
528, 532 (1st Dist. 1994)). McGrath has alleged in her Complaint and testified at her deposition
that Hohlbaugh falsely stated that the AE Amendment needed to be signed immediately, or else
Nationwide would cancel the AE Agreement; that Hohlbaugh intended her to rely on this
statement; that she in fact relied on that statement in executing the AE Amendment; and that she
was injured as a result of the AE Amendment’s changes to the calculation of her early
cancelation payments.

22

Nothing in Nationwide’s Motion either forecloses McGrath’s ability to prove these
allegations at trial or establishes that these allegations cannot constitute fraudulent inducement as
a matter of law. Accordingly, Nationwide is not entitled to summary judgment on McGrath’s
claims of fraudulent inducement regarding the AE Amendment.
C.

Unjust enrichment (Count V)
McGrath alleges in her Complaint that Nationwide “assumed control over the business

that Ms. McGrath had built” and that “[a]s a result of its conduct toward Ms. McGrath,
Nationwide unjustly kept the benefits of Ms. McGrath’s work and profited off of the sale of the
business which Ms. McGrath had built, with no compensation to Ms. McGrath.” (Doc. 1-1,
Compl. ¶¶ 101–02).
Nationwide argues that McGrath cannot maintain an unjust enrichment claim where the
relationship between the parties was governed by an express contract whose terms cover the
subject matter of the unjust enrichment claim. (Doc. 79, Mot. for Summ. J. at 30–31). The
Court agrees.
Although a plaintiff may plead claims for breach of contract and unjust enrichment in the
alternative, a plaintiff may not recover on both claims. Aultman Hosp. Ass’n v. Cmty. Mut. Ins.
Co., 46 Ohio St. 3d 51, 55, 544 N.E.2d 920, 924 (1989) (in the absence of fraud, illegality, or
bad faith, plaintiffs may not recover in unjust enrichment and their only recourse is
compensation in accordance with the terms of the written agreement).
Here, the ownership of the servicing rights to the book of policies built by McGrath
always remained with Nationwide per the ACB and AE Agreements. (Doc. 79-1 at PAGEID
#1513–29, ACB Agreement § 4; Doc. 83-6, AE Agreement § 2). The AE Amendment, which
may or may not be invalid due to fraudulent inducement, did not alter these terms. Accordingly,
since Nationwide’s ownership of the policy servicing rights was governed by valid express
23

contracts, McGrath cannot, as a matter of law, maintain an unjust enrichment claim for
Nationwide’s retention of those ownership rights. Nationwide is therefore entitled to summary
judgment on Count V of McGrath’s Complaint.
D.

Age and sex discrimination under the PHRA (Count VI)
McGrath alleges that she was passed over for the opportunity to purchase the servicing

rights to an existing book of policies on the basis of her age and sex in violation of
Pennsylvania’s Human Relations Act (PHRA), 43 P.S. § 955(a). (Doc. 1-1, Compl. ¶ 116). To
bring suit under the PHRA, a plaintiff must first have filed an administrative complaint with the
Pennsylvania Human Relations Commission (PHRC) within 180 days of the alleged act of
discrimination. 43 P.S. §§ 959(h), 962; Woodson v. Scott Paper Co., 109 F.3d 913, 925 (3d Cir.
1997). Nationwide argues that because the last alleged “act of discrimination” occurred when
Nationwide terminated McGrath’s AE Agreement on July 23, 2012, and McGrath’s complaint
with the PHRC was not filed until 199 days later on February 7, 2013, McGrath’s PHRA claims
are time-barred. (Doc. 79, Mot. for Summ. J. at 33–35).
“Pennsylvania courts have strictly interpreted [the 180-day] time requirement, and have
repeatedly held that ‘persons with claims that are cognizable under the Human Relations Act
must avail themselves of the administrative process of the Commission or be barred from the
judicial remedies authorized in Section 12(c) of the Act.’” Yeager v. UPMC Horizon, 698 F.
Supp. 2d 523, 535 (W.D. Pa. 2010) (quoting Woodson, 109 F.3d at 925 and Vincent v. Fuller
Co., 532 Pa. 547, 616 A.2d 969, 974 (Pa. 1992)). “By necessary implication, ‘one who files a
complaint with the Commission that is later found to be untimely cannot be considered to have
used the administrative procedures provided in the Act.’” Garner v. SEPTA, 116 A.3d 1190 (Pa.
Commw. Ct. 2015). Accord Zysk v. FFE Minerals USA Inc., 225 F. Supp. 2d 482, 493 (E.D. Pa.
2001); Vandergrift v. Atl. Envelope Co., No. CIV.A. 02-9215, 2004 WL 792384, at *3 (E.D. Pa.
24

Apr. 6, 2004); Allen v. Best Foods Baking Co., No. CIV.A. 02-CV-3663, 2003 WL 22858351, at
*3 (E.D. Pa. Oct. 22, 2003).
McGrath concedes that she filed her complaint with the PHRC more than 180 days after
the termination of her AE Agreement. However, McGrath argues that her PHRC complaint was
nevertheless timely because “Nationwide finally terminated their relationship with Ms. McGrath
on December 31, 2012.” (Doc. 83, Mem. in Opp. to Mot. for Summ. J. at 19). But although
Nationwide terminated McGrath’s employment as an hourly employee on December 31, 2012,
when it sold the servicing rights to the policies associated with McGrath’s scratch agency to
another agent, McGrath has not alleged any discrimination in connection with that action.
McGrath alleges discrimination based only on “Nationwide’s refusal to offer Ms. McGrath the
opportunity to purchase an existing agency” and “Nationwide’s termination of Ms. McGrath as
an insurance agent.” (Doc. 1-1, Compl. ¶¶ 116–17). Both of those actions were taken no later
than July 23, 2012, when Nationwide terminated McGrath’s AE Agreement.
As a result, McGrath has failed to properly invoke the PHRA’s administrative procedures
that are prerequisite to maintaining a PHRA claim in this Court. Nationwide is therefore entitled
to summary judgment on Count VI of McGrath’s Complaint.
E.

Wrongful discharge in violation of the PHRA and public policy (Count VII)
McGrath further challenges her termination as a Nationwide insurance agent as violating

the PHRA and Pennsylvania’s public policy against age and sex discrimination. To the extent
Count VII of the Complaint relies on the PHRA, the Court has already determined that those
claims are time barred. And as Nationwide correctly points out, Pennsylvania’s tort of wrongful
discharge in violation of public policy is precluded when a statutory remedy exists for the
wrongful discharge. Clay v. Advanced Computer Applications, Inc., 522 Pa. 86, 89, 559 A.2d
917, 918 (1989) (“[T]he PHRA provides a statutory remedy that precludes assertion of a
25

common law tort action for wrongful discharge based upon discrimination.”); Preobrazhenskaya
v. Mercy Hall Infirmary, 71 F. App’x 936, 941 (3d Cir. 2003) (“Pennsylvania law does not
recognize a common law cause of action for violating public policy when there is a statutory
remedy.”).
“Furthermore, it is the existence of a statutory claim, and not the success of one that
determines preemption.” Palazzolo v. Damsker, No. 10-CV-7430, 2011 WL 2601536, at *7
(E.D. Pa. June 30, 2011). Thus, it makes no difference that McGrath’s claims under the PHRA
happen to be time-barred. The Pennsylvania legislature has set forth a clear procedure for
victims of alleged discrimination to follow, and that procedure requires invoking the PHRA’s
administrative and judicial remedies. Because the allegations underlying McGrath’s claim for
wrongful discharge are the province of the PHRA, she may not assert a common law claim for
wrongful discharge based on those same allegations.

Nationwide is therefore entitled to

summary judgment on Count VII of McGrath’s Complaint.
F.

Negligent infliction of emotional distress (Count VIII)
Nationwide contends that McGrath’s negligent infliction of emotional distress claim must

fail because she has not alleged the basic elements of the claim. “Ohio courts have limited
recovery for negligent infliction of emotional distress to such instances as where one was a
bystander to an accident or was in fear of physical consequences to his own person.” Heiner v.
Moretuzzo, 73 Ohio St. 3d 80, 85, 1995-Ohio-65, 652 N.E.2d 664, 669. That is, some element of
physical danger must underlie a claim for negligent infliction of emotional distress. While
McGrath’s Complaint alleges that she suffered emotional distress as a result of Nationwide’s
actions, she nowhere suggests any element of physical peril as required to succeed on this claim.
McGrath does not contest that her allegations are inadequate and, in fact, does not
address her claim for negligent infliction of emotional distress at all in her opposition brief.
26

Because McGrath’s allegations do not satisfy the elements of this claim, Nationwide is entitled
to summary judgment on Count VIII of McGrath’s Complaint.
G.

Intentional infliction of emotional distress (Count IX)
In order to prevail on a claim for intentional infliction of emotional distress, a plaintiff

must establish, inter alia, that the defendant’s conduct “was so extreme and outrageous as to go
‘beyond all possible bounds of decency’ and was such that it can be considered as ‘utterly
intolerable in a civilized community.’” Williams v. York Int’l Corp., 63 F. App’x 808, 813 (6th
Cir. 2003) (quoting Pyle v. Pyle, 11 Ohio App.3d 31, 463 N.E.2d 98, 103 (8th Dist. 1983) and
Restatement (Second) of Torts § 46 cmt. d (1965)). It is for the Court in the first instance to
determine whether Nationwide’s conduct may be regarded as so extreme and outrageous as to
permit recovery. White v. Honda of Am. Mfg., Inc., 191 F. Supp. 2d 933, 954–55 (S.D. Ohio
2002) (Sargus, J.) (citing Crawford v. ITT Consumer Financial Corp., 653 F. Supp. 1184, 1192
(S.D. Ohio 1986) (Spiegel, J.) and Restatement (Second) of Torts § 46 cmt. h (1965)).
Both the Ohio Supreme Court and the Sixth Circuit have adopted Section 46 of the
Second Restatement of Torts for determining whether the “extreme and outrageous” requirement
has been met. Yeager v. Local Union 20, 6 Ohio St.3d 369, 453 N.E.2d 666 (1983); Polk v.
Yellow Freight System, 801 F.2d 190 (6th Cir. 1986). That section notes that a defendant “is
never liable, for example, where he has done no more than to insist upon his legal rights in a
permissible way, even though he is well aware that such insistence is certain to cause emotional
distress.” Restatement (Second) of Torts § 46 cmt. g (1965). Although such conduct may be
“heartless,” the defendant “has done no more than the law permits him to do, and he is not liable
to [the plaintiff] for her emotional distress.” Id.
Viewing the facts in the light most favorable to McGrath, the Court does not find
Nationwide’s conduct to be so outrageous as to support a claim for intentional infliction of
27

emotional distress. McGrath has described at most a standard business relationship that went
sour, not a course of conduct stretching “beyond all possible bounds of decency” or “utterly
intolerable in a civilized community.” See Klusty v. Taco Bell Corp., 909 F. Supp. 516, 523
(S.D. Ohio 1995) (Merz, M.J.) (no viable claim for intentional infliction of emotional distress
where the plaintiff alleged only a “breach of contract and then [tried] to make that into an
intentional infliction case merely by adding that Taco Bell did it to cause emotional distress and
that Taco Bell was successful.”). Accordingly, Nationwide is entitled to summary judgment on
Count IX of McGrath’s Complaint.
V.

CONCLUSION

For the foregoing reasons, Nationwide’s Motion for Summary Judgment is GRANTED
IN PART and DENIED IN PART. The Motion is denied as to McGrath’s claim for fraudulent
inducement regarding her execution of the AE Amendment on March 1, 2012. All other claims
are DISMISSED.
The Court further recommends that the parties engage in mediation to resolve McGrath’s
remaining claim.

If the parties wish to participate in mediation, they may contact Judge

Vascura’s chambers to schedule a mediation through the Court.
The Clerk shall remove Document 79 from the Court’s pending motions list.
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT

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