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PINO v. PRUDENTIAL INS. CO. OF AMERICA

June 1, 1988

Anthony P. Pino, Plaintiff
v.
The Prudential Insurance Company of America, Defendant v. Limerick Garden of Memories, Inc., Third Party Defendant



The opinion of the court was delivered by: TROUTMAN

 TROUTMAN, SENIOR UNITED STATES DISTRICT JUDGE

 Presently before the Court are defendant Prudential Insurance Company's motion for partial summary judgment, plaintiff Anthony Pino's and third party defendant Limerick Garden's appeal from an order of the Magistrate and their motion for summary judgment on defendant's counterclaim/third party complaint.

 I FACTS

 Plaintiff Anthony Pino is a licensed insurance broker and president of the third party defendant corporation, Limerick Garden of Memories. This lawsuit arose from Pino's activities in connection with both of his business activities.

 Joseph and Viola Arch, who had made "pre-need" burial arrangements with Limerick Garden of Memories, were also Prudential life insurance policy holders. In August, 1985, Pino visited the Arches in their home to discuss the possibility of their purchasing space in a new mausoleum being constructed in Limerick Garden. The Arches ultimately decided to exchange their prior arrangements for the mausoleum option. There was, however, a discrepancy in the costs of the two burial plans. Either in response to Pino's suggestion or because they had already decided to do so, the Arches determined to cash in their Prudential policies and use at least part of the proceeds thereof to pay for the new burial arrangements. To implement their decision, they assigned their policies to Limerick Garden. Pino, on behalf of Limerick Garden, directed Prudential to cancel the Arches' policies and remit all cash values to Limerick Garden, the assignee.

 Subsequently, Pino, as an authorized agent for Northwestern National Life Insurance Company, sold the Arches new life insurance policies written by that company.

 Upon receipt of the surrender requests, the Prudential home office contacted Luci Gerhard, its agent who serviced the area where the Arches lived. She met with them on several occasions. As a result of their initial meeting, the Arches stopped payment on the check they had given Pino to purchase the new policies and sought to rescind their transaction with Pino with respect to the surrender of their Prudential policies.

 After further contact with Pino, however, and additional meetings with Gerhard, the Arches concluded that they would continue on the course they had begun after their original contacts with Pino, i.e., the surrender of the Prudential policies and purchase of Northwestern policies.

 As a result of Gerhard's contacts with the Arches and complaints she made about Pino to the Pennsylvania Insurance Department and professional organizations of insurance underwriters, Pino brought this action against Prudential in which he alleges a cause of action for defamation. Pino originally claimed to have suffered financial losses as a result of Gerhard's activities on behalf of Prudential, but has now abandoned that allegation as well as his claim for interference with contract. He still seeks damages for injury to his reputation which resulted in emotional distress.

 Prudential filed a counterclaim against Pino and a third party complaint under Fed.R.Civ.P. 13(h) against Limerick Garden alleging intentional interference with business relations through a pattern and practice of inducing Prudential policy holders to cash in their Prudential policies for burial expenses and purchase alternative life insurance policies from companies represented by Pino.

 II APPEAL FROM THE MAGISTRATE'S ORDER

 Since a portion of the Magistrate's order from which plaintiff and third party defendant have appealed directly impacts their motion for summary judgment against Prudential, the Court will address that motion first.

 Prudential sought discovery of four kinds of information which became the subject of the Magistrate's order when plaintiff resisted the requests. Claiming that his abandonment of any damage claim for economic injury rendered the information sought irrelevant for purposes of this case, Pino has refused to disclose information regarding his income. With respect to a second category of information, transactions with Prudential policy holders other than the Arches, Pino contended before the Magistrate, and contends here, that such information is not readily available to him and that an already produced list of Prudential policy holders who assigned their policies to Limerick Garden is sufficiently responsive. With respect to Limerick Garden price lists for burial items from 1985 to 1987, Pino and Limerick Garden contend that those lists have been produced. Defendant Prudential seeks a sworn statement from Pino and/or his counsel to that effect if all such price lists have been produced as contended in unsworn documents. Finally, Pino objects to the Magistrate's order that he produce to Prudential copies of various reports which are required by state regulatory agencies, arguing that such information is readily available to Prudential as public records.

 As noted earlier, Pino and Limerick Garden do not assert any new or additional legal grounds for resisting the discovery ordered by the Magistrate. Rather, they reiterate the same arguments advanced previously and do not even attempt to demonstrate any way in which the Magistrate's rejection of those arguments is clearly erroneous or contrary to law. This Court regularly refers discovery matters to the Magistrate pursuant to Fed.R.Civ.P. 72(a) and, when called upon to do so, reviews orders arising from those referrals according to the standards set forth in Rule 72(a). Consistent with the rule and its purpose, however, the Court does not consider de novo the arguments of counsel raised before the Magistrate and rejected by him, nor do we consider additional arguments which do not demonstrate that his decision is clearly erroneous or contrary to law. Consequently, having had no such errors cited and finding none upon our consideration of the order and its legal bases, we will affirm the order of the Magistrate in all respects.

 III SUMMARY JUDGMENT

 As we begin our consideration of the remaining motions, for summary judgment on various issues, it is helpful to set forth the applicable standards. Although recently clarified by the Supreme Court in Anderson v. Liberty Lobby, 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) and Celotex v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986), the basic principles governing the grant of summary judgment pursuant to Fed.R.Civ.P. 56(c) remain unchanged. Summary judgment may be granted only when there are no material issues of fact in dispute and the moving party is entitled to judgment as a matter of law. In Anderson, the Supreme Court noted that a factual issue is genuine only if a reasonable jury could return a verdict for the nonmoving party upon its consideration of the conflicting facts and is material when it might affect the outcome of the case under the substantive law applicable to the claim. Moreover, under Celotex, when a motion for summary judgment has been made and properly supported by the party which does not bear the burden of proof, the party opposing the motion must demonstrate that it can produce sufficient evidence to establish every element of its case in order to avoid summary judgment. The Court of Appeals for the Third Circuit has recently construed that requirement to mean that the party defending against a summary judgment motion based upon an issue as to which it bears the burden of proof, also bears the burden of culling from the evidence of record and identifying for the Court facts sufficient to contradict the facts identified by the movant which suggest that there are no genuine issues of fact in dispute. Childers v. Joseph, 842 F.2d 689, slip op. at 10 (3d Cir. 1988).

 IV MOTION BY PINO AND LIMERICK GARDEN

 With the foregoing standards in mind, we first consider Pino's and Limerick Garden's motions for summary judgment on Prudential's counterclaim/third party complaint. The movants argue that because the Prudential policies could be cashed in at will and policy holders are free to terminate their relationship with Prudential at any time, there can be no intentional interference with business relations; that where a third party with an at-will contract was induced to terminate it for his own financial benefit, the conduct of the alleged inducer is absolutely privileged; that the facts reveal that, as to the Arches, the decision to cash in the Prudential policies was made before Pino contacted them in August, 1985, so that he merely implemented their prior decision. Consequently, neither he nor Limerick Garden interfered with the contract as a matter of fact. Finally, Pino and Limerick Garden assert that any incidents or contacts other than with the Arches should be excluded by the Court as irrelevant to the counterclaim and third party complaint.

 Consistent with the standards governing the disposition of summary judgment motions, as set forth above, we must determine, for this diversity action, the law of Pennsylvania applicable to claims for interference with business relations to determine, in light of the substantive law, whether the movants are entitled to judgment as a matter of law with respect to the legal arguments made in support of summary judgment. We will, of course, also determine whether there are any genuine issues of material fact in dispute which would preclude summary judgment.

 Since 1978, Pennsylvania courts have relied upon the Restatement (Second) of Torts § 767 in adjudicating claims for interference with existing contracts or prospective contractual relations. See Adler, Barish, Daniels, Levin, Etc. v. Epstein, 482 Pa. 416, 393 A.2d 1175, (1978), Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d 466 (1979), Yaindl v. Ingersoll Rand Co., Etc, 281 Pa. Super. 560, 422 A.2d 611, (1980). In Franklin Music v. American Broadcasting Companies, 616 F.2d 528 (3d Cir. 1979), the Court of Appeals for the Third Circuit indicated that the Pennsylvania courts would, in the appropriate case, also apply Restatement (Second) of Torts § 768, which sets forth specifically when competition is proper and improper.

 Under § 768, where a contract is terminable at will and concerns a matter over which two persons compete for the business of a third person, the inducement not to enter into a contract or to terminate an existing contract at will is not improper so long as, "the actor does not employ wrongful means and his action does not create or continue an unlawful restraint of trade." Restatement (Second) of Torts § 768(1),(1)(b),(c)(1979). It is obvious here that, with respect to Pino, the relation in issue concerns a matter over which Prudential and he compete, viz., selling life insurance policies. The contract at issue is terminable at the will of the third person, the insured. Consequently, there can be no improper interference unless Pino employed wrongful means, his actions created an unlawful restraint of trade or his purpose was simply to injure Prudential rather than to advance his interest in competing with it. § 768(1)(a)(d).

 Prudential alleges only that Pino employed wrongful means to induce its policy holders to cash in their existing policies and purchase other policies from him. Specifically, it points to Pino's failure to supply to the Arches certain documents required by Pennsylvania law and enumerates other statements that he made to them, characterized by Prudential as misrepresentations, which caused them to cease dealing with Prudential.

 Prudential correctly contends that Limerick Garden, the assignee of the Arches' policies cannot invoke the competition privilege of § 768 since it does not sell life insurance policies. Thus, Limerick Garden's conduct must be measured against the standards set forth in Restatement (Second) of Torts § 767, adopted by the Pennsylvania Supreme Court in Adler, Barish, 393 A.2d at 1184. The inquiry focuses on the propriety of the actor's conduct with reference to the following factors:

 
(a) the nature of the actor's conduct,
 
(b) the actor's motive,
 
(c) the interests of the other with which the actor's ...

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