OPINION
WRIGHT, Judge.
In this appeal pursuant to Minn. R.Crim. P. 28.04, subd. 1(2), appellant State of Minnesota challenges respondent's sentence as "based upon a guilty plea that is per se invalid," arguing that the district court improperly inserted itself into plea negotiations by promising respondent a probationary sentence. We affirm.
FACTS
The state charged respondent Benjamin Hannibal with first-degree and second-degree assault, in violation of Minn. Stat. §§ 609.221, subd. 1, 609.222, subd. 1 (2008), and terroristic threats, in violation of Minn. Stat. § 609.713, subd. 1 (2008), based on an altercation with his wife on July 23, 2009. Shortly thereafter, the state offered Hannibal the presumptive 86-month executed sentence in exchange for Hannibal's guilty plea to first-degree assault. Hannibal rejected the offer, and the state rejected his counteroffer to plead guilty in exchange for a probationary sentence.
Hannibal also was charged with making terroristic threats against his daughter during the same incident, but the charge was subsequently dismissed. The dismissal of that charge is not at issue in this appeal.
While the charges were pending, the district court permitted Hannibal to participate in a chemical-dependency program and ordered a preplea investigation. The parties met with the district court in chambers on November 17, 2009 to discuss the preplea investigation. A record of this conference was not made. Because the preplea investigation recommended the presumptive sentence, the state reiterated its 86-month offer. Once again, Hannibal rejected the state's offer.
Hannibal subsequently pleaded guilty to the charged offenses. The prosecutor objected, arguing that the district court had improperly promised Hannibal a probationary sentence during the November 17 conference. The district court overruled the objection and accepted Hannibal's guilty pleas. At sentencing, the state sought an upward durational departure and Hannibal sought a downward dispositional departure. The district court subsequently imposed concurrent sentences of 86 months and 21 months on the assault convictions, stayed the execution of the sentences, and placed Hannibal on probation for five years. This appeal followed.
The district court concluded that count three, terroristic threats, merged with count two, second-degree assault.
ISSUES
1. May the state challenge the propriety of the district court's involvement in guilty-plea negotiations under Minn. R.Crim. P. 28.04, subd. 1(2)?
II. Did the district court improperly insert itself into the guilty-plea negotiations?
ANALYSIS I.
We first address Hannibal's argument that the state's challenge to the propriety of the district court's involvement in Hannibal's plea negotiations "is outside the purview of a sentencing appeal." In a criminal case, the state's right to appeal is limited. State v. Rourke, 773 N.W.2d 913, 923 (Minn. 2009). "There must be a statute or court rule that permits the appeal, or the issue must `arise by necessary implication' from an issue where the State's right to appeal is expressly provided." Id. (quoting In re C.W.S., 267 N.W.2d 496, 498 (Minn. 1978)). We strictly construe the rules governing the state's right to appeal in a criminal case. State v. Baynes, 766 N.W.2d 343, 346 (Minn.App. 2009) (citing State v. Barrett, 694 N.W.2d 783, 786 (Minn. 2005)).
The state may "appeal as of right to the Court of Appeals . . . in felony cases, from any sentence imposed or stayed by the [district] court." Minn. R.Crim. P. 28.04, subd. 1(2). In such an appeal, we may review "whether the sentence is inconsistent with statutory requirements, unreasonable, inappropriate, excessive, unjustifiably disparate, or not warranted by the findings of fact issued by the sentencing court." Minn. R.Crim. P. 28.05, subd. 2.
To determine whether the state's argument falls within the scope of a sentencing appeal, as defined by rule 28.05, subdivision 2, we look to the nature of the decision being challenged. Although both Hannibal and the state characterize this appeal as a challenge to the validity of Hannibal's guilty plea, that characterization is insufficient. That Hannibal could plead guilty is not in dispute. And the state does not challenge the district court's authority to accept that guilty plea and impose a probationary sentence. Rather, the state asserts that the district court improperly engaged in plea negotiations with Hannibal by promising to impose a probationary sentence in exchange for Hannibal's guilty plea. See State v. Vahab, 529 N.W.2d 359, 361 (Minn.App. 1995) (stating that it is improper for district court to promise a particular sentence in advance). When the district court promises a particular sentence in advance of the defendant's guilty plea, it is "the arrangement itself [that] is impermissible." State v. Anyanwu, 681 N.W.2d 411, 414 (Minn. App. 2004). The state, therefore, does not challenge Hannibal's guilty plea so much as asserts error based on the imposition of a judicially promised — and, therefore, inappropriate — sentence. See Minn. R.Crim. P. 28.05, subd. 2 (permitting consideration of whether sentence is "inappropriate"). Because the state's argument falls within the parameters of rule 28.05, subdivision 2, it is within the scope of a sentencing appeal. Minn. R.Crim. P. 28.04, subd. 1(2).
Moreover, the state's right to challenge a defendant's sentence necessarily implies the right to challenge the validity of the plea negotiations that resulted in that sentence because the state has a constitutional interest in the propriety of plea negotiations. When the district court promises the defendant a particular sentence over the prosecutor's objection, the district court abandons its neutral judicial role and takes on the role of the prosecutor in plea negotiations. See State v. Johnson, 279 Minn. 209, 215-16 n. 11, 156 N.W.2d 218, 223 n. 11 (1968) (declaring that district court should not abandon its role of "independent examiner" and "usurp" responsibility of counsel by participating directly in plea negotiations). A district court's improper involvement in plea negotiations, therefore, raises constitutional concerns regarding separation of powers, for which the state is entitled to a remedy. See Johnson v. State, 641 N.W.2d 912, 917-18 (Minn. 2002) (stating that "separation of powers doctrine gives the state the authority to enter into plea agreements with a defendant," although district court may, in its discretion, refuse to accept them); Vahabi, 529 N.W.2d at 361 (reversing sentence in state's appeal because district court "imposed a plea agreement, including an anticipated sentencing result, to which the prosecution objected"). But a challenge based on the district court's promise to impose a particular sentence is not ripe until the district court imposes the promised sentence. See Minn. R.Crim. P. 27.03, subd. 7 (stating that a sentence is "an adjudication of guilt"); cf. Rourke, 773 N.W.2d at 923-24 (holding that challenge to district court's decision regarding which issues to present to Blakely jury could be asserted in pre-trial appeal and, therefore, could not be asserted in sentencing appeal). Because an appellate court's refusal to consider such a challenge in a sentencing appeal would leave the separation-of-powers violation unremedied, we conclude that the state must be entitled to present this challenge in its sentencing appeal.
Finally, we share the state's concern that precluding the state from raising this issue also would present finality concerns. The state argues that, because a defendant's guilty plea is per se invalid when the district court impermissibly injects itself into guilty-plea negotiations, Anyanwu, 681 N.W.2d at 414, a defendant who receives a stayed sentence and probation may raise the invalidity of the guilty plea to challenge execution of the defendant's sentence if threatened with probation revocation. As a result, the finality of such a case could be in question indefinitely. See Minn. R.Crim. P. 27.03, subd. 9 (authorizing district court at any time to "correct a sentence not authorized by law"). By raising the issue immediately, the state furthers the interests of finality.
Because a contention that the district court improperly promised a particular sentence in exchange for the defendant's guilty plea and imposed that sentence over the prosecutor's objection necessarily challenges the appropriateness of the defendant's sentence, it falls within the scope of a sentencing appeal.
II.
When facilitating plea negotiations, the district court may not "usurp the responsibility of counsel or . . . improperly inject itself into plea negotiations." Anyanwu, 681 N.W.2d at 414 (citing Johnson, 279 Minn, at 215-16, 156 N.W.2d at 223). A district court also may not "offer the defendant an anticipated sentencing result that is not part of an existing agreement between the defendant and the prosecutor." Melde v. State, 778 N.W.2d 376, 378 (Minn.App. 2010).
The state claims that the district court promised Hannibal a probationary sentence during off-the-record discussions on November 17. The prosecutor raised this issue at Hannibal's guilty-plea hearing when he asserted that the district court had promised Hannibal "that it would provide a probationary sentence in exchange for a straight plea." The prosecutor recalled "that the language in Chambers on [that] date was unequivocal and I'm certain that defense counsel clearly understood that the Court made a promise to depart from an executed prison sentence and order a probationary sentence." The district court disagreed:
I would like to note for the record that on November 17th when the preplea [report] was returned and the Court had the information, and I believe either on the 17th or at some point, in speaking with [the probation officer] in chambers, she indicated that her recommendation was solely based on the harm caused here and had nothing to do with Mr. Hannibal's amenability to probation.
At that point I indicated that, based upon Mr. Hannibal's progress in treatment and particularly on the letter that was signed by [a representative of the treatment] program, I thought that Mr. Hannibal was amenable to probation and treatment, and that was the statement that the Court made.
Citing Anyanwu, the prosecutor thereafter reiterated his objection, which the district court overruled. Hannibal entered a guilty plea, which the district court accepted. The district court found substantial and compelling reasons to grant Hannibal's motion for a downward dispositional departure, stayed the execution of Hannibal's sentence, and placed him on probation.
Contrary to the state's argument, the record does not establish that the district court promised Hannibal a probationary sentence. Hannibal's guilty-plea petition does not indicate any agreement between Hannibal and the district court. See Anderson v. State, 746 N.W.2d 901, 905-06 (Minn.App. 2008) (noting absence of any promise in written plea petition in rejecting claim of improper district court involvement in plea negotiation). And neither the defendant nor the district court referred to such a promise. Rather, the district court permitted both parties to advocate for their respective departure motions and made findings supporting its decision to depart downward dispositionally. Because this record does not reflect that the district court "directly and unequivocally promised [Hannibal] a particular sentence in advance" in exchange for a guilty plea, see Anyanwu, 681 N.W.2d at 415, the state's contention that the district court impermissibly injected itself into plea negotiations fails.
DECISION
The state's appeal asserting that the district court improperly promised a probationary sentence in exchange for appellant's guilty plea is permitted under Minn. R.Crim. P. 28.04, subd. 1(2). But because the record does not establish that the district court made any such promise, the state's challenge fails.
Affirmed.
d at 1144 ("Indeed, we have warned against the `potential for a tidal wave of litigation against business that was not intended by the Legislature.'" (quoting
Oswego Laborers', 647 N.E.2d at 745))).
The Court is aware of one other case in this circuit in which an auto-body shop sued insurers alleging that the insurers, inter alia, tortiously interfered with business relationships by steering customers away from the auto-body shop. See Jim Mazz Auto, Inc. v. Progressive Cas. Ins. Co., Nos. 08-CV-00494(A)(M), 08-CV-00541(A)(M), 08-CV-00566(A)(M), 08-CV-00583(A)(M), 2009 WL 891837 (W.D.N.Y. Feb. 5, 2009), Report and Recommendation modified by 2009 WL 910969 (W.D.N.Y. Mar. 31, 2009). The plaintiffs in Jim Mazz did not, however, bring a § 349 claim.
Although Allstate is concerned that there are aspects to plaintiff's lawsuit that seek to elevate normal interactions between insurers, insureds, and repair shops into a § 349 claim, such issues can be addressed by a motion in limine to preclude certain evidence from being offered during the trial. In other words, even though the Court has concluded that defendant is not entitled to summary judgment on its § 349 claim because certain evidence, if proven, would establish liability under § 349, that does not mean that the Court has likewise concluded that plaintiff can offer the long history regarding Allstate's dealings with hundreds of individual customers at Mid Island in support of this claim (or the tortious interference claim). This type of "kitchen-sink" approach, if utilized by Mid Island in this case at trial, clearly raises relevancy issues, as well as the real specter of unnecessary mini-trials, jury confusion, and unfair prejudice to Allstate under Rule 403 of the Federal Rules of Evidence. However, the Court need not resolve this evidentiary issue for purposes of the summary judgment motion.
Finally, Allstate claims that Mid Island cannot bring a § 349 claim because it is not a consumer or a competitor of Allstate. The Court disagrees. Notably, the Court of Appeals in Smokes-Spirits.com declined to hold that only consumers could bring a § 349 claim. 911 N.E.2d at 840 n. 3 ("The present case offers no occasion for us to opine upon the classes of potential plaintiffs who may or may not have standing to sue under [§ 349.]"). The Court went on to note that the statute's legislative history supported the position that "business competitors have standing under the statute." Id. Nothing in the opinion indicates, however, that only consumers and competitors have standing to sue under the statute. In fact, the plain text of the statute allows " any person who has been injured by reason of any violation of this section" to bring suit. In sum, Mid Island has standing to bring this § 349 claim.
b. No Private Right of Action
Allstate also argues that Mid Island's § 349 claim must fail because Mid Island is attempting to get around the fact that there is no private right of action under New York Insurance Law § 2601 and § 2610. Section 2601 prohibits insurers from engaging "in unfair claim settlement practices" by, for example, "knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue." N.Y. Ins. Law § 2601. As discussed in the background section of this opinion, § 2610 prohibits steering. Courts have held that a private right of action is not available under either statute. See, e.g., Jim Mazz Auto, Inc. v. Progressive Cas. Ins. Co., Nos. 08-CV-00494(A)(M), 08-CV-00541(A)(M), 08-CV-00566(A)(M), 08-CV-00583(A)(M), 2009 WL 891837, at *1 (W.D.N.Y. Feb. 5, 2009) (§ 2610), Report and Recommendation modified on other grounds, 2009 WL 910969 (W.D.N.Y. Mar. 31, 2009); GuideOne Specialty Mut. Ins. Co. v. Congregation Bais Yisroel, 381 F. Supp. 2d 267, 282 (S.D.N.Y. 2005) (§ 2601) (citing Rocanova v. Equitable Life Assurance Soc'y of U.S., 634 N.E.2d 940 (N.Y. 1994)).
As Allstate correctly points out, the Second Circuit has held that "[p]laintiffs cannot circumvent" the lack of a private right of action under a statute "by claiming [that a violation of the statute] is actionable under § 349." Conboy v. AT T Corp., 241 F.3d 242, 258 (2d Cir. 2001). In Conboy, for example, the plaintiffs brought a § 349 claim in which the alleged deceptive act was the violation of another New York state statute, New York General Business Law § 601, which prohibited creditors from engaging in certain practices. The New York Court of Appeals, however, had previously held that § 601 did not include a private right of action. See Conboy, 241 F.3d at 258 (citing Varela v. Investors Ins. Holding Corp., 615 N.E.2d 218 (N.Y. 1993)). Therefore, the Second Circuit declined to let the plaintiff use § 349 to assert a violation of § 601. Id.; see also Broder v. Cablevision Sys. Corp., 418 F.3d 187, 199-200 (2d Cir. 2005) (holding that plaintiff could not assert a § 349 claim predicated on a section of the New York Public Service Law for which there was no private right of action).
However, Conboy and Broder are distinguishable from the situation here. Neither case held that a § 349 claim is barred simply because some overlap exists between the deceptive practices at issue and a state statute for which there is no private right of action. Indeed, in Broder, when the Second Circuit affirmed dismissal of the plaintiff's § 349 claim, it noted that the plaintiff did "not make a free-standing claim of deceptiveness under GBL § 349 that happens to overlap with a possible claim under [the Public Service Law provision]." Broder, 418 F.3d at 200.
Here, by contrast, there is evidence of a "free-standing claim of deceptiveness" that simply "happens to overlap" with a claim under the Insurance Law. Specifically, the deceptive practices at issue here extend beyond "unfair claim settlement practices," see § N.Y. Insurance Law 2601, or steering. N.Y. Insurance Law § 2610. As discussed infra, the deceptive practice at issue here is an alleged retaliatory scheme to dissuade Allstate insureds from going to Mid Island. The alleged scheme involved not only "unfair settlement practices" and steering but also, inter alia, alleged retaliatory totaling of vehicles, defamatory comments, and threats that insureds would "wind up in civil remedies if they took their car to Mid Island Collision." ( See Jesberger Dep. 434:12-16.) Thus, there is evidence that the scheme extended beyond steering, beyond settlement practices, and, accordingly, beyond § 2601 and § 2610. Cf. Sotheby's Inc. v. Minor, No. 08 Civ. 7694 (BSJ) (HBP), 2009 WL 3444887, at *5 (S.D.N.Y. Oct. 26, 2009) (distinguishing Conboy because, although plaintiff's § 349 claim relied in part on regulation for which there was no private right of action, plaintiff's "allegation of deceptive practices does not rest solely on an alleged violation of [the regulations]").
Additionally, other Second Circuit case law counsels against reading Conboy and Broder too broadly in the insurance context. In Riordan v. Nationwide Mutual Fire Insurance Co., 977 F.2d 47 (2d Cir. 1992), the Second Circuit rejected the defendant's argument that the New York Insurance Law preempted § 349 suits against insurance companies. 977 F.2d at 51-52. Although decided before the Second Circuit's decisions in Conboy and Broder and the New York Court of Appeals' decision in Varela, Riordan has never been overruled.
In sum, because plaintiff's § 349 claim merely "happens to overlap" with provisions of the New York Insurance Law, it is not an improper attempt to circumvent the lack of private right of action under Insurance Law § 2601 and § 2610.
c. Consumer-Oriented Conduct
Allstate also argues that Mid Island has not provided evidence "consumer-oriented conduct" sufficient to survive summary judgment. The Court disagrees.
As noted above, this Court held in denying Allstate's partial motion to dismiss that Mid Island had stated a plausible claim that the challenged practices were "consumer-oriented." Specifically, the Court explained that "[w]here, as here, a defendant enters into contractual relationship[s] with customers nationwide via a standard form contract and has allegedly committed the challenged actions in its dealings with multiple insureds, courts have held that such behavior affects the public generally and therefore satisfies the requirement of `consumer-oriented' conduct within the meaning of Section 349." 2007 WL 2288046, at *4 (quotation omitted).
Following discovery, plaintiff produced evidence to support its claim. For example, an Allstate adjuster, John Pluchino, testified in a case in New York State court that Allstate had a policy of totaling cars at Mid Island even though the damage to those cars fell short of the 75 percent threshold. (Jesberger Decl. Ex. BB at 11:7-18.) Additionally, Mid Island has produced declarations from customers who assert that Allstate attempted to convince them to have their cars repaired at shops other than Mid Island. These customers assert, inter alia, that Allstate stated that Mid Island's prices were "ridiculous," stated that Allstate had a "big problem" with Mid Island; stated that Allstate could not give into "extortion" by Mid Island; stated that Mid Island was a "bad facility that was engaged in price gouging and illegal activities," and made unsolicited suggestions regarding other auto repair shops.
(Welch Aff.)
(Ercolano Aff. ¶¶ 5-6.)
(Marquez Aff. ¶ 5.)
(Rouse Aff. ¶ 6)
(Assaf Aff. ¶¶ 6-7; Ayres Aff. ¶ 5; Cracolici Aff. ¶¶ 5-6.)
At oral argument, counsel for Allstate argued that this evidence fails as a matter of law to establish that Allstate's conduct was consumer oriented. Specifically, counsel asserted that the evidence demonstrated only a dozen or so cases where Allstate agents had allegedly engaged in deceptive conduct.
This argument, however, misapprehends what the consumer-oriented element requires. There is no "magic number" of consumers who must be deceived before conduct can become "consumer oriented." As the New York Court of Appeals has stated, "[c]onsumer-oriented conduct does not require a repetition or pattern of deceptive behavior. [Section 349] itself does not require recurring conduct." Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 647 N.E.2d 741, 744 (N.Y. 1995). Instead, the critical question is whether "the acts or practices have a broad [] impact on consumers at large." See id.
Here, construing the evidence most favorably to Mid Island, a rational trier of fact could find that Allstate had a practice of dissuading or preventing consumers from using Mid Island and that this practice had a broad impact on consumers at large, i.e., any Allstate customer who brought his car to Mid Island. Cf. Ng v. HSBC Mortg. Corp., No. 07-cv-5434 (RRM) (VVP), 2010 WL 889256, at *15 (E.D.N.Y. Mar. 10, 2010) (denying defendant judgment on the pleadings on § 349 claim because although "the deceptive practices were aimed at [plaintiff] in this particular instance, nothing suggests that similarly vulnerable consumers could not fall victim to similar practices, and there is nothing especially unique or unusual about this transaction"). As such, Mid Island has produced sufficient evidence to survive summary judgment on the consumer-oriented element of its § 349 claim.
d. Materially Deceptive Practices
Additionally, there are triable issues of fact as to whether Allstate engaged in materially misleading or deceptive practices. As this Court explained in its opinion denying Allstate's motion to dismiss, "where an insurer engages in a scheme `to force . . . insureds into using Allstate-affiliated contractors by means of misrepresentations, threats, and various retaliatory measures,' such behavior is `indicative of the deceptive practices that General Business Law § 349 was designed to prevent.'" M.V.B. Collision, 2007 WL 2288046, at *5 (quoting Scavo v. Allstate Ins. Co., 657 N.Y.S.2d 193, 194-95 (App. Div. 1997)). Here, as discussed above, it is undisputed that, in some instances, Allstate adjusters "totaled" cars and attempted to "steer" cars away from Mid Island. Mid Island has also produced declarations from customers who assert that Allstate representatives stated that Mid Island, inter alia, engaged in "price gouging" and "extortion." Furthermore, Robert Jesburger testified that he heard an Allstate adjuster tell insureds that Mid Island was "overcharging," that its work was "inferior," and that the insureds would "wind up in civil remedies if they took their car to Mid Island Collision." (Jesberger Dep. 434:12-16.) In short, there are triable issues of fact as to whether Allstate engaged in a materially misleading and deceptive scheme to pressure insureds into not using Mid Island.
(Rouse Aff. ¶ 6.)
(Marquez Aff. ¶ 5.) Allstate also argues that many of the customers referenced by Mid Island nevertheless still had their cars repaired there. That may be true. However, it is well settled that a plaintiff need not prove reliance on a deceptive statement to succeed on a § 349 claim. Wilner v. Allstate Ins. Co., 893 N.Y.S.2d 208, 214 (App. Div. 2010) ("Intent to defraud and justifiable reliance by the plaintiff are not elements of [a § 349] claim.'" (quoting Small v. Lorillard Tobacco Co., 720 N.E.2d 892, 897 (N.Y. 1999)); Pelman ex rel. Pelman v. McDonald's Corp., 396 F.3d 508, 511 (2d Cir. 2005) ("[A] private action brought under § 349 does not require proof of actual reliance.").
IV. MOTION TO AMEND
Mid Island has also moved to amend its complaint to add a defamation claim and a claim for prima facie tort. Under Rule 15(a), leave to amend "shall be freely granted when justice so requires." Motions for leave to amend should be denied only for reasons such as undue delay, bad faith, futility of the amendment or prejudice to the other party. See Foman v. Davis, 371 U.S. 178, 182 (1962); Aetna Cas. Sur. Co. v. Aniero Concrete Co., 404 F.3d 566 (2d Cir. 2005). Additionally, as discussed below, some of the allegations in the proposed amended complaint may have occurred after the filing of the initial complaint in this action. As such, they are more properly considered as a "motion to supplement" under Federal Rule of Civil Procedure 15(d). The same standard, however, applies to both motions to amend and motions to supplement. See, e.g., Roller Bearing Co. of Am., Inc. v. Am. Software, Inc., 570 F. Supp. 2d 376, 383 n. 1 (D. Conn. 2008) ("[T]he standards for permitting additional pleading under Rule 15(a) and Rule 15(d) are the same.").
A. Defamation Claims
The proposed amended complaint alleges the following incidents of defamation:
• "[I]n or around May 2005, a new Mid Island client, Hope DiFazio informed Jesberger that she had been told by Allstate that she would be `involved in litigation' if her car was repaired there." (PAC ¶ 39.) • "In or around, September 2005, a long-time Mid Island client, Annette Ercolano informed Jesberger that Allstate pressured her not to bring her car to Mid Island because Mid Island was `overpriced' and `did not do good work.'" (PAC ¶ 40.) • "In April 2006, Christopher Bailey . . ., a Mid Island customer, spoke with Vincent Veshetta . . . of Allstate regarding his car's repair. Veshetta attempted to dissuade Bailey from using Mid Island to repair his car by claiming that Mid Island overcharges on labor rate and that Allstate has had problems with Mid Island with the quality of its work in the past." (PAC ¶ 41.) • "On multiple occasions between 2003 and 2007, Allstate employee John DiGiose made knowingly, recklessly[,] and/or negligently false statements to customers of Mid Island, including but not limited to Dorothy Groh-Tompsett, indicating that Mid Island overcharges its customers and performs unnecessary work on its customers vehicles." (PAC ¶ 58.) • "On multiple occasions between 2003 and 2007, Allstate employee John DiGiose made knowingly, recklessly[,] and/or negligently false statements to customers of Mid Island, including but not limited to Karyn Marquez, indicating that Mid Island was engaging inactions [sic] that amounted to extortion." (PAC ¶ 59.) • "On multiple occasions between 2003 and 2007, Allstate employee Norman Wong made knowingly, recklessly[,] and/or negligently false statements to customers of Mid Island, including but not limited to Janet Rouse, that Mid Island is `a bad facility' that is `engaged in price gouging and illegal activities.'" (PAC ¶ 60.) Only the third allegation is not either (1) clearly time barred or (2) inadequately pled. The first two allegations, which occurred in 2005, are time barred. A one-year statute of limitations applies to defamation claims brought under New York law. See, e.g., McKenzie v. Dow Jones Co., Inc., 355 F. App'x 533, 535 (2d Cir. 2009) ("Under New York law, the statute of limitations for a defamation claim is one year." (citing N.Y. C.P.L.R. § 215.3))). The original complaint in this case was filed on January 12, 2007. Therefore, even if the allegations in the proposed amended complaint "relate back" to the date of the original complaint, events occurring in 2005 are beyond the one-year statute of limitations. Thus, amending the complaint to include these allegations would be futile.
Second, the last three allegations, dealing with statements made "[o]n multiple occasions between 2003 and 2007," are not pled with sufficient specificity. Even under the liberal pleading standards of Federal Rule of Civil Procedure 8, a complaint alleging defamation must give the defendant "`sufficient notice of the communications complained of to enable him to defend himself.'" Ford v. Clement, 834 F. Supp. 72, 78 (S.D.N.Y. 1993) (quoting Kelly v. Schmidberger, 806 F.2d 44, 46 (2d Cir. 1986)). Under this standard, "a pleading is sufficient only if it `adequately identifies the purported communication, and an indication of who made the statement, when it was made, and to whom it was communicated.'" Amar v. Hillcrest Jewish Ctr., No. 05-CV-03290 (RRM) (RML), 2009 WL 891795, at *7 (E.D.N.Y. Mar. 31, 2009) (quoting Camp Summit of Summitville, Inc. v. Visinski, No. 06 Civ. 4994, 2007 WL 1152894, at *10 (S.D.N.Y. Apr. 16, 2007)). Here, the last three allegations do not adequately explain when the purported communications were made. As such, Allstate is deprived of an opportunity to defend itself because it is left to guess whether, for example, the statute of limitations may bar the alleged statements. Accordingly, the Court denies to motion to amend/supplement with respect to these allegations. However, this denial is without prejudice, and plaintiff may submit a more specific complaint under the schedule set forth below by the Court.
At oral argument, plaintiff's counsel indicated that plaintiff would be willing to provide more specificity for these allegations to address these issues.
B. Prima Facie Tort
Mid Island also seeks to amend to add a claim for prima facie tort. Under New York law, "`[t]he elements of prima facie tort are (1) the intentional infliction of emotional harm, (2) which results in special damages, (3) without any excuse or justification, (4) by act or series of acts that would otherwise be lawful.'" Fordham v. Islip Union Free Sch. Dist., 662 F. Supp. 2d 261, 277 (E.D.N.Y. 2009) (quoting T.S. Haulers, Inc. v. Town of Riverhead, 190 F. Supp. 2d 455, 465 (E.D.N.Y. 2002)).
Mid Island alleges that "[a]ll of the actions taken by Allstate against Mid Island that have been heretofore described have been taken with the express purpose of inflicting harm upon Mid Island," (PAC ¶ 66) and "[n]one of the actions taken by Allstate against Mid Island that have been heretofore described have been made with any reasonable business purpose, excuse[,] or justification.'" (PAC ¶ 67.)
Prima facie tort is not, however, an available remedy when the complaint states colorable allegations for other, more traditional tort claims. Siotkas v. LabOne, Inc., 594 F. Supp. 2d 259, 276 (E.D.N.Y. 2009) ("Because, as discussed above, the facts alleged in plaintiffs' complaints give rise to traditional common-law tort claims, plaintiffs' causes of action for intentional and prima facie tort should be dismissed."); Silver v. Kuehbeck, No. 05 Civ. 35 (RPP), 2005 WL 2990642, at *14 (S.D.N.Y. May 7, 2005) ("[Plaintiff's] prima facie tort claim must be dismissed because it alleges no facts not included in his other claims for relief, and it completely overlaps the other claims alleged in the Complaint. To the extent that allegations provide grounds for other causes of action included in the Complaint, those allegations cannot give rise to a prima facie tort claim."); Tasso v. Platinum Guild Int'l, No. 94 CIV. 8288 (LAP), 1997 WL 16066, at *5 (S.D.N.Y. Jan. 16, 1997) ("Because plaintiff has succeeded in stating claims for defamation and intentional interference, her prima facie tort claim must fail."). Here, as noted above, plaintiff's tortious interference with business relations claim has survived summary judgment. The allegations in plaintiff's prima facie tort claim appear to overlap completely with the tortious interference claim. As such, amending the complaint to add a prima facie tort claim would be futile.
At oral argument, plaintiff's counsel was unable to articulate any allegations of misconduct that, if proven, would fall outside the realm of tortious interference with business relations.
Furthermore, even if the prima facie tort claim did not overlap with the tortious interference claim, it would be subject to dismissal because plaintiff does not allege special damages. Kuklachev v. Gelfman, 600 F. Supp. 2d 437, 478-79 (E.D.N.Y. 2009) ("`Special damages' is defined as a `specific and measurable loss,' . . . and must be alleged with sufficient particularity to identify actual [losses] and be related causally to the alleged tortious acts." (internal citations and quotations omitted)); Leather Dev. Corp. v. Dun Bradstreet, Inc., 224 N.Y.S.2d 513, 514 (App. Div. 1962) (dismissing prima facie tort claim where "[t]he allegations of the amended complaint are ones of general damages, and not of special damages, asking the round sum of $500,000 on behalf of the corporate plaintiff and $1,000,000 for the individual plaintiff. . . . . [D]amages pleaded in such round sums, without any attempt at itemization, must be deemed allegations of general damages."); see also John Vincent Arduini Inc. v. NYNEX, 129 F. Supp. 2d 162, 174 (N.D.N.Y. 2001) ("Given that the purpose of the special damages pleading requirement is to put Plaintiff on notice as to the exact losses claimed, it is axiomatic that Plaintiff's failure to trace its alleged losses to specific contracts renders its prima facie tort claim invalid."). Here, the amended complaint does not itemize — or even quantify — Mid Island's alleged damages. Cf. Fordham, 662 F. Supp. 2d at 277 (explaining that "special damages must be alleged with sufficient particularity to identify actual losses and round sums without any attempt at itemization are insufficient" and dismissing prima facie tort claim (quotation omitted)). Because plaintiff has not alleged special damages, the prima facie tort claim would also be subject to dismissal on that ground. As such, any amendment would be futile.
In sum, the Court denies the motion to amend. However, the denial is without prejudice to plaintiff on the defamation claims, and plaintiff may, within ten days of this Memorandum and Order, re-file a proposed amended complaint pleading its non-time barred defamation claims with greater specificity.
Because the Court denies the motion to amend on other grounds, it does not address at this juncture defendant's arguments that the statements, including the alleged April 2006 statement by "Vincent Vischetta," are non-actionable statements of opinion or whether a qualified privilege would apply to the statements. Should plaintiff submit a revised amended complaint, the Court will provide defendant an opportunity to renew any argument as to why the proposed amendment should be denied.
V. ALLSTATE'S MOTION TO STRIKE MID ISLAND'S EXPERT REPORT AND MID ISLAND'S MOTION TO AMEND ITS EXPERT REPORT
Allstate seeks to strike the report of Mid Island's damages expert, Dr. Frederic Jennings. At oral argument, Allstate's counsel acknowledged that the Jennings Report related solely to damages and, therefore, that the Court did not need to decide on its admissibility in order to rule on the summary judgment motion. Thus, the Court will reserve decision on this motion and make a determination following a pre-trial Daubert hearing.
Mid Island also seeks to amend the Jennings Report and to introduce "an extensive list" of procedures that Allstate failed to pay for but that were necessary "to [bring] a vehicle to its pre-accident condition." (Docket Entry 77, Letter from Christopher R. Invidiata to Hon. Joseph F. Bianco, Feb. 9, 2010.) It is undisputed that neither the amended Jennings Report nor the list of unpaid procedures was produced during discovery. Allstate argues that, irrespective of questions of admissibility, the Court should preclude use of the amended report and the list because Mid Island failed to produce these materials during discovery.
To preclude the materials, the Court would need to determine (1) whether Mid Island in fact failed to make a timely disclosure; (2) whether this failure was without substantial justification or excuse; (3) whether sanctions are warranted; and (4) whether preclusion is the appropriate sanction. See Design Strategy, Inc. v. Davis, 469 F.3d 284, 297 (2d Cir. 2006) (explaining that preclusion is not automatically required even when there has been an unjustified and unexcused late disclosure and that Rule 37(c)'s plain text allows the Court to consider alternative sanctions instead of preclusion).
See Fed.R.Civ.P. 37(c).
For reasons of judicial economy, the Court will address these questions at the same time that the Court addresses, after a Daubert hearing, whether Dr. Jennings's report(s) are admissible under the Federal Rules of Evidence. Thus, the Court reserves decision on the motions related to the amended expert report and the unpaid procedures list. The Court will decide whether these materials can be used at trial at the same time it decides defendant's Daubert motion and any other pre-trial motions in limine.
VI. CONCLUSION
For the reasons set forth above, the Court (1) denies Allstate's motion for summary judgment in its entirety; (2) denies Allstate's motion to strike Mid Island's Local Rule 56.1 counterstatement of material facts and other materials submitted in opposition to summary judgment; (3) denies the motion to amend to the extent it seeks to add a claim for prima facie tort; (4) denies the motion to amend to add defamation claims, without prejudice to Mid Island submitting a new proposed amended complaint within ten days of this Memorandum and Order containing greater specificity as to such claims, and (5) reserves decision on Allstate's motion to strike Mid Island's expert report and Mid Island's motion to serve an amended expert report and the list of unpaid procedures. The parties shall participate in a telephone conference on Tuesday, August 10, 2010 at 10:00 a.m. for the purpose of, among other things, setting a schedule for submission of a joint pre-trial order. Counsel for Allstate shall initiate the call and, once all parties are on the line, contact Chambers at (631) 712-5670.
SO ORDERED.