Nationwide Life Insurance Company v. Steiner et al, No. 1:2009cv00235 - Document 25 (D.R.I. 2010)
Court Description: OPINION AND ORDER denying 12 Motion for Judgment on the Pleadings; granting in part and denying in part 16 Motion for Judgment on the Pleadings. So Ordered by Judge William E. Smith on 7/13/10. (Jackson, Ryan)
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Nationwide Life Insurance Company v. Steiner et al Doc. 25 UNITED STATES DISTRICT COURT DISTRICT OF RHODE ISLAND ____________________________________ ) NATIONWIDE LIFE INSURANCE COMPANY, ) ) Plaintiff, ) ) vs. ) ) MANFRED STEINER and SHEILA STEINER, ) ) Defendants. ) ____________________________________) C.A. No. 09-235 S OPINION AND ORDER WILLIAM E. SMITH, United States District Judge. Plaintiff Nationwide Life Insurance Company ( Nationwide ) brought this action seeking a declaratory judgment issued that to it has Defendants validly Sheila terminated and Manfred an annuity Steiner it (the Steiners ). The Steiners have counterclaimed for breach of contract. Both parties now move for judgment on the pleadings. The question to be resolved is whether a termination clause invoked by Nationwide in revoking the policy authorized that action. Because the Court concludes that it did not, it finds that Nationwide is liable for breaching the agreement. Dockets.Justia.com I. Background The question Steiners from applied Nationwide to on purchase March the 18, annuity 2008. On in the application form, they listed Manfred Steiner as the owner, Sheila Steiner as the beneficiary, and a woman named Sheryl Stroup as the annuitant. life is designated policy. (See as a Compl. Application ).) The beneficiary to list Annuitant, but the (Id. at 2.) An annuitant is the person whose measuring Ex. B at application his or her Steiners tool for 1-2 an annuity (hereinafter expressly asked Relationship to left that question the [the] blank. Nationwide accepted the application anyway. In exchange for an initial payment of $1 million, it issued the Steiners annuity on March 20, 2008. (See Compl. Ex. A (hereinafter Steiner Annuity ).) The features of the annuity in this case resemble those recently described by the Court in Western Reserve Life Assurance Co. of Ohio v. Conreal LLC, C.A. Nos. 09-470 S, 09-471 S, 09-472 S, 09-473 S, 09-502 S, 09-549 S, 09-564 S, --- F. Supp. 2d ---, 2010 WL 2222409, (D.R.I. June 2, 2010).1 Specifically, under the policy the owners are able 1 The Western Reserve matters transactions in which the owners of 2 involved annuity the policies had to invest the premiums in securities, and a death benefit provision guarantees the return of the cost of the policy upon redemption. can recover Thus, when the annuitant dies, the owners whatever they paid in, even if plummets and their investment has lost value. the market Stroup died on April 28, 2008, but the Steiners did not seek to redeem the policy until almost a year later, on March 19, 2009. At that time, the value of their investment had dropped substantially, and they demanded the death benefit to cover the loss. Nationwide balked. After request, it made two discoveries. receiving the Steiners First, it observed that her death certificate showed she had been suffering from metastatic lung cancer for months. at 5.) (See Pl. s Mot. Ex. 1 That meant the diagnosis must have been made before the Steiners sent their application a little more than a month earlier. In other words, she was terminally ill when they applied for the policy. Second, Nationwide realized it had issued a second annuity for which Stroup was the recruited terminally-ill strangers to serve as annuitants. While it is not clear how the Steiners found the annuitant, it ultimately does not matter. As fully explained below, unlike in the Western Reserve disputes, which touched on questions of state insurance regulation and public policy, the claims in this case are squarely governed by the terms of the annuity contract itself. 3 annuitant on April 23, 2008; the owner of that policy is not a party to this action. These two facts, Nationwide decided, gave it the right to back out of the contract. Nationwide therefore wrote to Manfred Steiner that it was rescinding the annuity, and enclosed a check for the surrender value of the contract. This consisted of the purchase price minus market losses notably, without the addition of any death benefit to make up for the decline. (See Steiner Annuity at 4 (defining surrender value ).) The total amount was $481,418.15. Thus, at stake in this dispute is this: who eats the half-million dollar hit to the annuity portfolio, the Steiners or Nationwide? To justify its actions, Nationwide relies on termination clause in the annuity that provides as follows: In issuing this Contract, Nationwide intends to offer only annuity and related benefits (including death benefits) to single individuals and their beneficiaries. These benefits result in Nationwide assuming certain risks. This Contract is not intended for use by institutional investors, people trying to cover risks involving multiple lives with a single contract or by someone trying to cover a single life with multiple Nationwide contracts. If Nationwide discovers that the risk it intended to assume in issuing this Contract has been altered by any of the following, then Nationwide will take any action it feels is necessary to mitigate or eliminate the altered risk including, 4 a but not limited to, rescinding the Contract and returning the Surrender Value: (1) Information provided by the Contract Owner(s) is materially false, misleading, incomplete or otherwise deficient. (2) The Contract is being used contracts issued by Nationwide single life or risk. with other to cover a . . . . Nationwide s failure to detect, mitigate or eliminate altered risk does not act as a waiver of its rights and does not bar Nationwide from asserting its rights at a future date. (Steiner annuity at 7-8.) Nationwide asserts two grounds for termination under this provision. One, the Steiners application was materially . . . incomplete or otherwise deficient, because it did not state the between the annuitant and the beneficiary. Steiners issued annuity by was Nationwide being to used cover a with single (Id.) other life because of the second policy on Stroup s life. Nationwide judgment filed validating this action its relationship for actions. Two, the contracts or risk, (Id.) a declaratory The Steiners counterclaimed for breach of contract, bad faith refusal to pay under contractual emotional the policy, relations, distress. tortious and As interference intentional noted 5 above, the infliction parties with of have cross-moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure on the issue of whether Nationwide breached the contract. also declare that their tort claims are Defendants trial-worthy; Plaintiff argues they should be dismissed. II. Legal Standard The standard of review of a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is the same as that for a motion to dismiss under Rule 12(b)(6). Marrero-Gutierrez v. Molina, 491 F.3d 1, 5 (1st Cir. 2007). [T]o survive a motion to dismiss (or a motion for judgment on the pleadings), the complaint must plead facts that raise a right to relief above the speculative level. Citibank Global Markets, Inc. Santana, 573 F.3d 17, 23 (1st Cir. 2009). v. RodrÃguez In reviewing a motion under Rule 12(c), as in reviewing a Rule 12(b)(6) motion, [the court] may consider documents the authenticity of which are not disputed by the parties; documents central to plaintiffs' claim; and documents sufficiently referred to in the complaint. (1st Cir. 2007) Curran v. Cousins, 509 F.3d 36, 44 (quotation marks, alterations omitted). 6 citation and internal The dispute here turns on the contract under Rhode Island law. interpretation of a In general, the Court s primary task . . . is to attempt to ascertain the intent of the parties. at the In ascertaining the intent, we must look instrument 734, 736 a whole and not at some detached Colonial Penn Ins. Co. v. Mendozzi, 488 portion thereof. A.2d as (R.I. 1985) (quoting Woonsocket Teachers Guild, Local 951 v. School Comm. of Woonsocket, 367 A.2d 203, 205 (R.I. 1976)) (alterations omitted). III. Contract Claims Neither part of the termination clause Nationwide authorized escaping the contract. Nationwide s rejected, request and the for a declaratory Steiners succeed cited Therefore, judgment on their by must claim be for breach of contract. A. The Other Contracts Provision Nationwide s language reasons. in the reliance on termination First, the the clause Steiners other falls contracts flat, propose a for two reasonable interpretation of the clause that requires construing the policy against the insurer. Second, accepting Nationwide s argument would mean the contract was illusory. 7 1. The Other Contracts Provision Is Ambiguous Nationwide provision contracts. proclaims confers broad that the authority other on it contracts to terminate If, after selling an annuity, it discovers that the risk it intended to assume in issuing [the policy] has been altered because it sold any other contracts . . . to cover [the] life referenced in the first annuity, it may revoke either. (Steiner annuity at 7-8.) It does not matter when or in what sequence the two annuities were issued, or whether Nationwide could or should have known it was entering two contracts based on the same annuitant. This is because Nationwide s failure to detect, mitigate or eliminate altered risk, such as a second annuity based on the same life, does not waive its rights. (Id. at 8.) The Steiners argue the termination clause cannot be that sweeping. interpretation They arising pinpoint from the a flaw need to in Nationwide s harmonize termination clause with the rest of the contract. the The introduction to the termination clause explains, [t]his Contract is not intended for use . . . by someone trying to cover a single life with multiple Nationwide contracts. (Id. at 7.) However, a separate purchase payments, states: 8 provision, titled [T]otal cumulative [p]urchase [p]ayments under the Contract and any other annuity contract issued by Nationwide with the same Annuitant may not exceed $1,000,000 (and will be returned to the Contract Owner), unless Nationwide agrees in writing to accept [payments] exceeding $1,000,000. (Id. at 11 (emphasis added).) Without question, this clause contemplates multiple contracts on the same life. Otherwise, there would be no reason to mention any other annuity contract [a]nnuitant. This issued by Nationwide with the same (Id.) creates a puzzle: how can Nationwide not intend[] to offer multiple . . . contracts on a single life, and yet at the same time anticipate other annuity contract[s] . . . with the same [a]nnuitant? 11.) (Id. at 7, The Steiners answer is that the termination clause only applies when one person buys several annuities on the same life. It does not, they say, apply when two or more people each buy an annuity on one life. clause specifies that the annuity is The termination not intended for someone trying to cover a single life with multiple . . . contracts contracts. in other words, a single (Id. at 7 (emphasis added).) owner of those With that in mind, the best view of the purchase payments clause is that it envisions multiple owners of contracts on the same life, 9 but not single owners. This averts any collision between the two clauses. Under this view, the two clauses together mean that Nationwide permits multiple contracts on a life as long as the owners are different. they do not own the The Steiners contend that since second Stroup annuity, it did not trigger the other contracts provision in the termination clause. Nationwide responds by highlighting terms of the termination clause. the operative It cites the common principle of contract construction . . . that a specific term will control over a conflicting general term. Newharbor Partners, Inc. v. F.D. Rich Co., 961 F.2d 294, 299 (1st Cir. 1992) (noting that specific terms control over conflicting general terms). Thus, Nationwide continues, the general rationale for reserving revocation rights stated in the introduction to the termination clause cannot trump the subparagraph (2). 563 F.2d 588, specific privileges granted in See Gulf Oil Corp. v. Fed. Power Comm n, 598 (3d Cir. 1977) ( [A] recital in a preamble, although part of the contract, must give way in case of conflict contract. ). with That the operative paragraph 10 refers provisions to of a Nationwide s discovery that [t]he Contract is being used with other contracts issued by Nationwide to cover a single life or risk. (Steiner annuity at 8.) distinction between single It does not make any owners and multiple owners. Therefore, Nationwide concludes, it does not restrict the grounds for notwithstanding termination the to one reference to or the other, someone in the introduction. The purchase payments clause is even less relevant to the meaning of the other contracts provision, according to Nationwide. It addresses the distinct topic Nationwide s right to limit the total risk on a life. of Any tacit authorization of multiple contracts on a life in that clause, Nationwide reasons, can have no effect on its discretionary right to terminate if multiple contracts are issued on the same annuitant. (Pl. s Opp. to Def. s Mot. 18-19.) These withstand arguments the have Steiners some plausibility, attack. The rule but of cannot contra proferentum, which means against the drafter, requires this Court to construe ambiguous terms in an insurance contract in favor of the insured. Open Software Found., Inc. v. U.S. Fidelity & Guar. Co., 307 F.3d 11, 17 (1st 11 Cir. 2002); see Zifcak v. Monroe, 249 A.2d 893, 896 (R.I. 1969) ( [I]f the terms of an agreement are doubtful and uncertain, they shall be construed most strongly against the author thereof. ); accord Lifespan/Physicians Prof l Servs. Org., Inc. v. Combined Ins. Co. of Am., 345 F. Supp. 2d 214, 222 (D.R.I. 2004) (denying summary judgment to insurer where language was ambiguous and contra proferentum doctrine applied). There is no escaping the conclusion that the other contracts provision is ambiguous in light of the purchase payments clause. The Steiners reading of the annuity is, at a minimum, equally plausible to Nationwide s. See Sea Fare's Am. Café, Inc. v. Brick Market Place Assoc., 787 A.2d 472, 476 (R.I. 2001) ( A contract is ambiguous if . . . it is reasonably constructions. ) Their view (quotation dispels any susceptible marks conflict and of different citation between clause and the purchase payment clause. the omitted). termination This works in their favor, given that the Court should strive to make sense of the instrument as a whole. A.2d at 736. faithful paragraph, to Colonial Penn, 488 True, Nationwide s interpretation is more the which language says of nothing 12 the about other single contracts or multiple owners. But walking through Nationwide s argument step by step also reveals a glitch in its logic. Nationwide maintains that it possesses a discretionary right to terminate multiple contracts on an annuitant. (Pl. s Opp. to Def. s Mot. 19.) It also does not dispute that the purchase payments clause nevertheless allows it exceeding life. to agree[] $1,000,000 in on writing to multiple (Steiner annuity at 11.) accept contracts [payments] on the disallow case, Nationwide multiple has contracts the on owners, in its sole discretion. that theory. First, it same The number of owners, it says, makes no difference under either provision. is the ability a life, to to one If this allow or or more There are two defects in ignores the use of the word someone in the introduction to the termination clause, silently converting it to anyone. Second, it fails to explain the purpose of the introduction to the termination clause. That is, why say the annuity is not intended for use . . . by someone trying to cover a single life with multiple . . . contracts if Nationwide intends to permit such use on a case-by-case basis? (Steiner annuity at 7.) Nationwide could have eliminated ambiguity by deleting the introduction altogether, but it is now stuck with it. 13 Consequently, clause creates interpretation the a to the termination to Nationwide s reasonable alternative the of other contracts reject Nationwide s Court must therefore apply the contract understanding. introduction in accordance Accordingly, provision. with because the The proposal, the and Steiners second Stroup policy belongs to a different owner, the other contracts clause did not entitle Nationwide to revoke the Steiners annuity. 2. The that, Nationwide s Interpretation Contract Illusory second if flaw in Nationwide s correct, Nationwide there was attests that the never interpretation a only Renders real the is contract. prerequisite to termination is issuing more than one annuity on a single life. is The sequence in which Nationwide sells the policies irrelevant. So too is whether Nationwide knows or should know there is an outstanding annuity based on the same life at the time of the second sale: failure to detect . . . altered risk has no effect on termination rights. (Steiner annuity at 8.) Thus, at any time after issuing the second contract, Nationwide says, it may invoke the termination clause against 14 either the first or the second buyer. But this proves too much: if Nationwide can cancel the annuity based on its own subsequent action, then it was never contractually bound to anything. The Steiners argue persuasively that if Nationwide is correct, its promises were illusory since [it] reserved the unfettered discretion to thwart the agreement unilaterally invoking the termination clause. by Centerville Builders, Inc. v. Wynne, 683 A.2d 1340, 1341 (R.I. 1996). The question is whether the termination provision provides sufficient limits and restrictions constituting the necessary legal detriment of consideration and conditions so as not to render the agreement illusory. Holliston Mills, Inc. v. Citizens Trust Co., 604 A.2d 331, 336 (R.I. 1992). Nationwide points to the grounds specified in the termination provision meaning the clause as sufficient limitations. Mot. 22.) explaining However, what the as the other Court other contracts (Pl. s Opp. to Defs. discussed contracts above, clause in means, Nationwide itself cites only one condition to termination entirely within its own control: the sale of two policies on one life. In effect, Nationwide has in its argument disavowed any limitations [or] restrictions 15 that would forge a binding agreement under its view of the annuity. Mills, 604 A.2d at 336. Holliston To be clear, the Court s holding is that Nationwide breached the contract and must pay the death benefit; the foregoing discussion merely illustrates that Nationwide would end up in a similar position if the Court accepted its contention: the Court would have to rescind the agreement, rather than let Nationwide exercise the remedies in the termination clause. Centerville Builders, 683 A.2d at 1342 (explaining that the lack of an enforceable contract requires rescinding the purported agreement). B. The Blank Application Question Nationwide next claims the Steiners failure to state the beneficiary s relationship to Stroup on the annuity application activated Nationwide s termination rights. It fares no better in this effort, because it waived the right to challenge any omission in the application when it issued the policy. Subparagraph Nationwide provided by to the (1) revoke of the the Contract termination contract Owner(s) is if clause [i]nformation materially misleading, incomplete or otherwise deficient. annuity at 7.) allows false, (Steiner The Court will assume, for the sake of 16 argument, that the Steiners admitted lack of any pre- existing relationship to Stroup was material information.2 A full and truthful answer to that question would have revealed what Nationwide says it needed to know: the Steiners did not know Stroup before buying the annuity, and only used her as an expedient for their investment. The question thus zeroed in on what Nationwide says created altered risk under the termination clause. The blank, Steiners but left Nationwide the did space not next follow to up. that question Instead, it accepted the Steiners purchase payment of $1 million and issued the policy. The Court agrees with the Steiners that, by doing so, Nationwide waived the right to rely on the blank application question as a basis for termination under the incomplete or otherwise deficient information provision. Under Rhode Island law, an insurer waives the 2 In debating whether Sheila Steiner s relationship to Stroup is material, the parties dispute whether an annuity owner must have an insurable interest in the annuitant. In the Western Reserve cases, the Court concluded that Rhode Island s insurable interest rule applies to insurance, but not annuities. Western Reserve Life Assurance Co. of Ohio v. Conreal LLC, C.A. Nos. 09-470 S, 09-471 S, 09-472 S, 09473 S, 09-502 S, 09-549 S, 09-564 S, --- F. Supp. 2d ---, 2010 WL 2222409, (D.R.I. June 2, 2010). That issue, however, is not relevant here, because the terms of the contract would require finding for the Steiners even if there were an applicable insurable interest requirement. 17 right to deny coverage by accepting a premium payment with full knowledge of grounds obligations under the policy. for not fulfilling its Imperial Cas. & Indem. Co. v. Bellini, 888 A.2d 957, 963-64 (R.I. 2005). Similarly, the First Circuit has recognized that an insurer may lose its right to rescind the coverage of an insurance contract if it knows of the facts that may warrant rescission and fails to disclaim within a reasonable time, or if it acts in any way inconsistent with an intention to disclaim. Gen. Star Indem. Co. v. Duffy, 191 F.3d 55, 59 (1st Cir. 1999). Nationwide objects that it lacked full knowledge of the particular facts that the Steiners omitted, which of course cannot be disputed. its termination rights. That, however, does not salvage The question is whether an insurer must honor its policy when the application was incomplete, but the insurer retained contract anyway. The the vast premium weight and of delivered authority insurers to their commitments in this situation. the binds See 6 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 85:18 (3rd ed. insured 2005) is ( When obviously the not information satisfactory supplied or by the adequate, the acceptance thereof by the insurer without a protest is a 18 waiver of the requirement of a complete or full answer. ); Pete Roy Ford, Inc. v. Lachney, 390 So.2d 248, 249-50 (La. Ct. App. 1980) ( [I]f the insurer intends to rely on the [in]formation . . . called for in the blanks provided, it is its duty to make sure that the blanks are filled in properly; otherwise, the information called for is waived. ); Leonardo v. State Farm Fire & Cas. Co., 675 So.2d 176, 178 (Fla. Dist. Ct. App. 1996) ( [A]n insurer who accepts an application which is not fully completed accepts that application at its risk. ); Mattia v. N. Ins. Co. of N.Y., 114 A.2d 582, 586 (N.J. Super. Ct. App. Div. 1955) ( The defendant accepted plaintiff s premium money and filed without away any his patently indication to deficient plaintiff application of blank dissatisfaction therewith or disclaimer of coverage . . . . In such a case waiver by the insurer will be inferred. ); Liberty Hall Ass'n v. Housatonic Mut. Fire Ins. Co., 73 Mass. 261, 265, 1856 WL 3288, at *5 (Mass. 1856) ( The defendants, having issued the policy without requiring any answer to the eleventh interrogatory contained in the application . . . it was fair to infer that they waived information on that point . . . [and] they cannot now avoid the policy. ); Bloom v. Wolfe, 547 P.2d 934, 937 (Colo. Ct. App. 1976) 19 ( It is well established that when an insurer accepts an application for insurance with an unanswered question, liability cannot be denied on this ground. ). But see Chicago Ins. Co. v. Kreitzer & Vogelman, 265 F. Supp. 2d 335, 344 (S.D.N.Y.,2003) ( The Defendants argue that [the plaintiff] essentially avoided knowledge with its failure to investigate why [the defendant] did not answer the pertinent questions on the applications. Such argument is unavailing. An insurer is not required to verify or investigate information provided by an insured. ). The Rhode Island Supreme Court has not addressed this issue. However, it is no stretch to conclude it would follow the general rule, given that it already recognizes insurers may waive accepting premiums dispute. See therefore concludes the right with Bellini, to knowledge 888 that A.2d Rhode litigate of at the 963-64. Island law coverage basis for The by a Court supports a finding of waiver in these circumstances. As a second line of defense against such a finding, Nationwide falls back termination clause. on the last paragraph of the It states, Nationwide s failure to detect, mitigate or eliminate altered risk does not act as a waiver of its rights and does not bar Nationwide from 20 asserting its rights at a future date. at 8.) (Steiner annuity Nationwide did not figure out the Steiners had no relationship to Stroup, other than through the annuity, until after they sought to redeem the death benefit. This, it claims, was a failure to detect altered risk, which preserves its termination rights under the no-waiver provision quoted above. The no-waiver clause cannot fix Nationwide s mistake. It does not fit either of the two potential reasons that Nationwide accepted the Steiners incomplete application. The first is that Nationwide decided the information it had requested was unimportant. not fail truthfully to detect answered, the If that is true, Nationwide did unanswered would have question revealed which, exactly Nationwide now says it should have been told. what It just judged the absence of a response to be irrelevant to its underwriting, and chose not to follow up. The second possibility is that no one at Nationwide read the application. It would be absurd to characterize this as a failure to detect. The ordinary meaning of detect is to discover the true character of, or to discover or determine the existence, presence, or fact of. Merriam-Webster s Collegiate 21 Dictionary 314 (10th ed. 2002). The unanswered question was obvious on the face of the application. space, Put or There was no need to detect the blank discover differently, its the true failure character to or detect existence. clause cannot protect Nationwide for ignoring the answers, or lack of answers, to questions it asks.3 For these reasons, the Steiners omission also did not empower Nationwide to invoke the termination clause.4 3 Rather, fairly read, that provision relieves Nationwide from having to investigate vague, ambiguous, misleading, or incomplete answers to its questions as opposed to application forms that are incomplete as a whole because some questions are just left blank. For instance, if the Steiners had written that Stroup was a business associate of Sheila Steiner, that statement would arguably misrepresent the facts if they had no dealings with her other than through the annuity itself. In that circumstance, if Nationwide granted the application without further investigation, it might be able to rely on the failure to detect clause to argue it had not waived termination rights. 4 Even if the Court had interpreted the nonwaiver clause in Nationwide s favor, it might still have found that Nationwide lost the right to rely on that provision. See Miller v. Phoenix Assur. Co., Ltd., of London, 191 P.2d 993, 996 (N.M. 1948) (finding waiver in the face of nonwaiver agreement because insurer did not act in accordance with terms of nonwaiver provision); Blair v. Nat l Reserve Ins. Co., 199 N.E. 337, 338 (Mass. 1936) ( [A] company cannot contract itself out of the legal consequences of its subsequent acts. ). 22 C. Remedy Since annuity, Nationwide it Steiners. is had liable no authority for breach of to terminate contract to the the [I]t is well settled that a court may award damages for breach of contract to place the injured party in as good a position as if the parties fully performed the contract. 504, 508 Guzman v. Jan-Pro Cleaning Sys., Inc., 839 A.2d (R.I. 2003) (quotation internal alteration omitted). marks, citation, and The Steiners were entitled to receive the death benefit provided for in the annuity. Nationwide admits the Steiners allegation that the death benefit totals approximately $1,059,685.48. Reply to Counterclaim ¶ 17.) (See Pl. s It thus appears there is no material factual dispute about damages.5 However, the Court is willing to entertain any submissions the parties may wish to make on this point. Accordingly, they are granted 5 Nationwide cites equitable principles that it claims would prevent making it bear the full market loss on the Steiners policy in the event of rescission. Because the Court is not rescinding the contract, but instead enforcing it, those principles are not relevant. The Court also notes that the Steiners requests for pain and suffering and punitive damages are not viable because their bad faith and tort claims are dismissed. Cf. Bibeault v. Hanover Ins. Co., 417 A.2d 313, 319 (R.I. 1980) (explaining that an insurer s bad faith entitles a plaintiff to consequential damages for . . . emotional distress ). 23 thirty days in which to either stipulate to damages or explain the need for any additional briefing or evidence. VI. The Steiners Tort Claims The Steiners offer little to rebut challenge to their tort counterclaims. insists it cannot be liable for position is fairly debatable. bad Nationwide s First, Nationwide faith because its Imperial Cas. & Indem. Co. v. Bellini, 947 A.2d 886, 894 (R.I. 2008) ( [A]n insurer is entitled to dispute a claim when it is fairly debatable. ). The need for this Opinion explaining why the clause termination Nationwide is correct. does not apply demonstrates that The bad faith claim must therefore be dismissed. Next, the Steiners tortious interference claim does not work because there is no contract at issue other than the annuity between the Steiners and Nationwide. While Nationwide breached that agreement, it cannot tortiously interfere with its own contract. See URI Cogeneration Partners, L.P. v. Bd. of Governors for Higher Educ., 915 F. Supp. 1267, 1289 (D.R.I. 1996) ( [T]ortious interference with contract applies only to parties agreement. ) (emphasis in original). have not plead extreme and outrageous 24 outside the Last, the Steiners conduct, physical symptoms, or decency, behavior as they exceeding would all have to possible for infliction of emotional distress claim. an bounds of intentional Fudge v. Penthouse Int l, Ltd., 840 F.2d 1012, 1021 (1st Cir. 1988). These two claims therefore must be dismissed as well. V. Conclusion For the reasons stated above, the Court DENIES Plaintiff s motion for judgment on its declaratory judgment claim, but GRANTS Plaintiff s motion to dismiss Defendants bad faith and tort counterclaims. It GRANTS Defendants motion for judgment on the pleadings with respect to their breach of contract counterclaim, and DENIES their motion in all other respects. letter whether they The parties shall inform the Court by intend to stipulate to damages or dispute that issue within thirty days of the entry of this Order; Judgment shall issue after damages are determined. IT IS SO ORDERED. /s/ William E. Smith William E. Smith United States District Judge Date: July 13, 2010 25
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