THYROFF v. NATIONWIDE MUTUAL INSURANCE COMPANY

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Supreme Court, Appellate Division, Fourth Department, New York.

Louis E. THYROFF and Valerie P. Thyroff, Plaintiffs-Respondents, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Sharon Eastman, Randy Ferraro and Duane Weldon, Defendants-Appellants.

Decided: December 31, 2008

PRESENT:  SCUDDER, P.J., HURLBUTT, PERADOTTO, GREEN, AND GORSKI, JJ. Bingham McCutchen LLP, Hartford, CT (Ben M. Krowicki of Counsel), for Defendants-Appellants. William P. Tedards, Jr., Washington, D.C., of the Washington, D.C. Bar, Admitted ProHac Vice, and Brown & Tarantino, LLC, Rochester, for Plaintiffs-Respondents.

Plaintiffs commenced this action (second action) in Supreme Court for conspiracy and malicious prosecution relating to a counterclaim asserted by defendant Nationwide Mutual Insurance Company (Nationwide) in an action previously commenced by plaintiffs in federal court (first action) after Nationwide terminated its employment agreement with plaintiff Louis E. Thyroff (plaintiff husband).   The course of the litigation in the first action is set forth in the decision of the Second Circuit Court of Appeals (Thyroff v. Nationwide Mut. Ins. Co., 493 F.3d 109), and is not relevant herein.   The second action was transferred to federal court on defendants' motion, whereupon plaintiffs filed an amended complaint and moved to remit the second action back to Supreme Court. Defendants opposed the motion and moved to dismiss the amended complaint.   The federal court granted plaintiffs' motion to remit and consequently denied defendants' motion to dismiss as moot.

 We conclude that Supreme Court, upon remittal, erred in denying defendants' motion for summary judgment dismissing the amended complaint in the second action.   We conclude at the outset that, contrary to the court's determination, denial of the motion is not required based on the doctrine of collateral estoppel.   As noted, the federal court denied defendants' motion to dismiss the amended complaint in the second action on the ground that it was rendered moot based on the remittal of the action to Supreme Court.   Thus, the issue whether dismissal was warranted was never “ ‘actually litigated, squarely addressed [or] specifically decided’ ” (Zayatz v. Collins, 48 A.D.3d 1287, 1290, 851 N.Y.S.2d 797, quoting Ross v. Medical Liab. Mut. Ins. Co., 75 N.Y.2d 825, 826, 552 N.Y.S.2d 559, 551 N.E.2d 1237;  see B.F. Yenny Constr. Co., Inc. v. One Beacon Ins. Group, 50 A.D.3d 1477, 1479, 856 N.Y.S.2d 762).

 We further conclude that defendants established their entitlement to judgment as a matter of law with respect to the merits of their motion in Supreme Court in the second action.   According to plaintiffs, Nationwide entered into a conspiracy with the remaining three defendants, each of whom was an insurance agent under contract with Nationwide.   Pursuant to that alleged conspiracy, Nationwide promised those defendants, at no cost to them, a portion of the business of plaintiff husband, who was also an insurance agent under contract with Nationwide.   Plaintiff husband then commenced the first action in federal court, and defendants asserted a compulsory counterclaim against him (see generally Baker v. Gold Seal Liqs., 417 U.S. 467, 469 n. 1, 94 S.Ct. 2504, 41 L.Ed.2d 243;  Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320, 1324-1325).   In that counterclaim, Nationwide alleged that plaintiff husband was directly and indirectly inducing Nationwide's policyholders to allow their policies to lapse or to cancel them and that Nationwide in fact terminated his employment based on his violation of the regulations of the Securities and Exchange Commission.   In addition, Nationwide alleged that plaintiff husband was violating the noncompete clause of his agreement with Nationwide.   Plaintiffs now allege in the second action that the counterclaim was filed and pursued “without probable cause and with malice.”  “To prove malicious prosecution based upon a prior civil action, a plaintiff must show that a prior proceeding terminated in [his or her] favor, a patent lack of probable cause for that proceeding, malice and special damages” (Rossi v. Attanasio, 48 A.D.3d 1025, 1028-1029, 852 N.Y.S.2d 465;  see Purdue Frederick Co. v. Steadfast Ins. Co., 40 A.D.3d 285, 286, 836 N.Y.S.2d 28;  Black v. Green Harbour Homeowners' Assn., Inc., 37 A.D.3d 1013, 1014, 829 N.Y.S.2d 764).   Here, even assuming, arguendo, that Nationwide's compulsory counterclaim in the first action in federal court constituted the commencement of an action, we conclude that defendants met their initial burden on their motion in the second action in Supreme Court, and plaintiffs failed to raise an issue of fact (see generally Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   With respect to the cause of action for malicious prosecution, defendants presented evidence establishing that Nationwide had independent information that plaintiff husband was violating the noncompete clause of the agreement, and thus it cannot be said that the counterclaim was asserted with “a patent lack of probable cause ․ and malice” (Rossi, 48 A.D.3d at 1028-1029, 852 N.Y.S.2d 465;  see generally Nardelli v. Stamberg, 44 N.Y.2d 500, 502, 406 N.Y.S.2d 443, 377 N.E.2d 975). Defendants thus are also entitled to summary judgment dismissing the cause of action for conspiracy, inasmuch as “New York does not recognize civil conspiracy to commit a tort as an independent cause of action” (Sokol v. Addison, 293 A.D.2d 600, 601, 742 N.Y.S.2d 311;  see Romano v. Romano, 2 A.D.3d 430, 432, 767 N.Y.S.2d 841).

It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs, the motion is granted and the amended complaint is dismissed.

MEMORANDUM: