American National Insurance v. JPMorgan Chase & Co. , 164 F. Supp. 3d 104 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________
)
AMERICAN NATIONAL INSURANCE )
COMPANY, AMERICAN NATIONAL )
PROPERTY AND CASUALTY )
COMPANY, FARM FAMILY LIFE )
INSURANCE COMPANY, FARM )
FAMILY CASUALTY INSURANCE )
COMPANY, and NATIONAL )
WESTERN LIFE INSURANCE )
COMPANY, )
)
Plaintiffs, )
)
v. ) Civil Action No. 1:09-cv-1743 (RMC)
)
JPMORGAN CHASE & CO. )
and JP MORGAN CHASE BANK )
NATIONAL ASSOCIATION, )
)
Defendants. )
_________________________________ )
MEMORANDUM OPINION
We return to a long-running dispute between Plaintiffs, former bondholders of
Washington Mutual Bank, and Defendant JPMorgan Chase, the company that acquired
Washington Mutual’s assets from a federal receivership. Defendants move to dismiss the
operative complaint for failure to state a claim upon which relief can be granted. They are
correct: despite years spent in discovery, Plaintiffs can allege no conduct that is actionable under
New York law as tortious interference with an existing contract. Defendants’ motion will be
granted and the case dismissed.
1
I. FACTS
The Court presumes general familiarity with the background of this case.1 The
well-pleaded facts alleged in Plaintiffs’ operative complaint must be taken as true in this
procedural posture. Baird v. Gotbaum, 792 F.3d 166, 169 n.2 (D.C. Cir. 2015).
The 2008 financial crisis has yielded a host of lawsuits, of which this case is one.
Plaintiffs were bondholders of Washington Mutual Bank (WaMu) who saw their bond values
deteriorate after the federal government seized WaMu through the Office of Thrift Supervision
(OTS), put WaMu into receivership with the Federal Deposit Insurance Corporation (FDIC), and
promptly sold all of WaMu’s assets—but not all of its liabilities—to Defendant JPMorgan Chase
Bank National Association and its parent company, Defendant JPMorgan Chase & Co.
(collectively JPMC).2 Plaintiffs’ bonds were among the liabilities not sold to JPMC, and thus
became essentially worthless.3
Plaintiffs first sued in Texas state court, naming only the JPMC defendants. See
1
The factual background of this case has been set forth in three reported decisions: Am. Nat. Ins.
Co. v. F.D.I.C., 642 F.3d 1137, 1139-41 (D.C. Cir. 2011); Am. Nat. Ins. Co. v. JPMorgan Chase
& Co., 893 F. Supp. 2d 218, 221-24 (D.D.C. 2012); Am. Nat. Ins. Co. v. JPMorgan Chase &
Co., 705 F. Supp. 2d 17, 18-19 (D.D.C. 2010). Only the necessary facts will be recapped here.
2
Plaintiff American National Insurance Company (ANICO) is a Texas insurance company with
its principal place of business in Galveston, Texas. 2d Am. Compl. ¶ 1. Plaintiff American
National Property and Casualty Company (ANPAC) is a Missouri insurance company with its
principal place of business in Springfield, Missouri. Id. ¶ 2. Plaintiff Farm Family Life
Insurance Company (FFLIC) is a New York insurance company with its principal place of
business in Glenmont, New York. Id. ¶ 3. Plaintiff Farm Family Casualty Insurance Company
(FFCIC) is a New York insurance company with its principal place of business in Glenmont,
New York. Id. ¶ 4. Plaintiff National Western Life Insurance Company (NWL) is a Colorado
insurance company with its principal place of business in Austin, Texas. Id. ¶ 5.
3
On September 29, 2008, FDIC provided an informational sheet which stated: “The FDIC as
Receiver for Washington Mutual Bank does not anticipate that subordinated debt holders of the
bank will receive any recovery on their claims.” 2d Am. Compl. ¶ 87.
2
generally Am. Nat. Ins. Co. v. JPMorgan Chase & Co., 705 F. Supp. 2d 17, 18 (D.D.C. 2010)
(ANICO I). Plaintiffs posited a conspiracy among JPMC, federal regulators, and some WaMu
employees to drive down WaMu’s value and expose it to federal takeover. Id. at 18-19. The
alleged conspiracy arose after JPMC’s efforts to acquire WaMu were rebuffed. Id. The goal of
the alleged conspiracy was to engineer WaMu’s downfall, drive it into FDIC receivership, and
thereby allow the sale of its valuable assets to JPMC at a “fire sale price” without liabilities. Id.
at 20. The conspirators allegedly leaked confidential information about WaMu, defamed it in the
media and before ratings agencies, encouraged federal regulators to seize WaMu, and
discouraged others from bidding for WaMu out of receivership. Id. at 18-19.
FDIC intervened as a defendant in the Texas court, removed the case to federal
court, and obtained a transfer to this Court, which dismissed Plaintiffs’ case on April 13, 2010.
See generally id. Reasoning that Plaintiffs’ claims were not fairly traceable to JPMC but rather
to FDIC, this Court held that Plaintiffs’ sole recourse was the administrative claim process
prescribed by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12
U.S.C. § 1821(d) (FIRREA). Id. at 21 (“Having failed to invoke and exhaust this administrative
process, Plaintiffs’ claims are barred by the Act.”) (citing Freeman v. FDIC, 56 F.3d 1394, 1400
(D.C. Cir. 1995); Village of Oakwood v. State Bank & Tr. Co., 539 F.3d 373, 386 (6th Cir.
2008)).
The D.C. Circuit reversed. See Am. Nat. Ins. Co. v. F.D.I.C., 642 F.3d 1137 (D.C.
Cir. 2011) (ANICO II). Holding that Plaintiffs’ suit vis-à-vis JPMC was not a “claim” under
FIRREA, 12 U.S.C. § 1821(d)(13)(D)(ii), the Circuit found that the suit was not barred by that
provision. Id. at 1142. Nor was it barred by § 1821(d)(13)(D)(i), which “reaches more broadly
than (ii)” but does not reach claims that are purely against the assuming entity such as JPMC. Id.
3
The case was remanded to this Court for further proceedings. Plaintiffs soon
amended their complaint, Dkt. 131 (1st Am. Compl.), to focus singularly on JPMC. The gist of
the tortious interference alleged in the First Amended Complaint was that JPMC caused “the
value of Plaintiffs’ [WaMu] bonds [to be] reduced during the summer of 2008 up to September
25, 2008,” the day before WaMu’s seizure by OTS. Id. ¶ 124. Plaintiffs also alleged that JPMC
caused OTS to seize WaMu and sell its assets “under circumstances in which the Plaintiffs’ bond
contracts would not be honored.” Id.
This Court dismissed two of Plaintiffs’ three counts. See generally Am. Nat. Ins.
Co. v. JPMorgan Chase & Co., 893 F. Supp. 2d 218, 233 (D.D.C. 2012) (ANICO III). Count II
(alleging breach of a confidentiality agreement between WaMu and JPMC) and Count III
(alleging unjust enrichment on JPMC’s part) were both deemed “derivative” under the law of
Washington State, where WaMu was headquartered. Id. at 230-32. As such, they needed to be
brought by WaMu itself or, after it was put into receivership, by FDIC. Id. at 232 (citing 12
U.S.C. § 1821(d)(2)(A); Fed. R. Civ. P. 17(a)).
Discovery ensued for almost two and a half years, until Plaintiffs amended their
complaint once again. See 2d Am. Compl. [Dkt. 197]. One count remains: tortious interference
with an existing contract. Id. ¶¶ 108-16. The gravamen of this sole count is that JPMC knew
about Plaintiffs’ WaMu bonds and nevertheless interfered with them. Plaintiffs allege that JPMC
“procured [WaMu’s] breach of the[se] contract[s] without justification.” Id. ¶ 112. JPMC
allegedly took various steps to make WaMu’s performance on Plaintiffs’ bonds “more
burdensome, more difficult[,] more expensive,” and thus “impossible.” Id. ¶ 113. JPMC is
alleged to have accomplished this by “gaining access to [WaMu]’s confidential financial
information under false pretenses, breaching an agreement to maintain the confidentiality of such
4
information, breaching a stand-still agreement, driving down the credit ratings of [WaMu], and
misusing the information” in the months before the seizure by OTS. Id. JPMC is also alleged to
have “obstructed efforts to sell [WaMu]’s assets under circumstances in which the Plaintiffs’
bond contracts would be honored” and “used [JPMC’s] insider status and financial strength to
work to bring about a regulatory seizure of [WaMu] and obtain the sale of [WaMu’s] assets from
federal regulators.” Id.
Plaintiffs claim damages “consisting of loss of their rights and benefits inherent in
their [WaMu] bond contracts.” Id. ¶ 115. Critically, their claim is “based on JPMC’s pre-
receivership misconduct which caused diminution of their WMB bond values pre-receivership.”
Id. ¶ 116 (emphasis added).4
II. LEGAL STANDARD
A motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil
Procedure 12(b)(6) challenges the adequacy of a complaint on its face. Fed. R. Civ. P. 12(b)(6).
A complaint must be sufficient “to give a defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Although a complaint does not need detailed factual allegations, a plaintiff=s
4
This claim of pre-receivership injury and damages was effectively dictated by the D.C. Circuit:
despite some allegations to the contrary, Plaintiffs cannot allege conduct by WaMu or FDIC or
else Plaintiffs would meet FIRREA’s jurisdictional bar:
Where a claim is functionally, albeit not formally, against a depository institution
for which the FDIC is receiver, it is a ‘‘claim’’ within the meaning of FIRREA’s
administrative claims process. . . . Here, in contrast, appellants allege that JPMC,
not the FDIC-as-receiver or Washington Mutual, itself committed the tortious acts
for which they claim relief. . . . [W]e read the complaint to allege that JPMC alone
committed the wrongdoing for which appellants sue and find no agreement between
JPMC and the FDIC.
ANICIO II, 642 F.3d at 1144 (emphasis in original).
5
obligation to provide the grounds of his entitlement to relief “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to state a claim for relief that is “plausible on its face.” Id. at 570. A court must treat the
complaint=s factual allegations as true, “even if doubtful in fact.” Id. at 555. A court need not
accept as true legal conclusions set forth in a complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). In deciding a motion under Rule 12(b)(6), a court may consider the facts alleged in the
complaint, documents attached to the complaint as exhibits or incorporated by reference, and
matters about which the court may take judicial notice. Abhe & Svoboda, Inc. v. Chao, 508 F.3d
1052, 1059 (D.C. Cir. 2007).
JPMC moves in the alternative for summary judgment. Discovery is complete
and a fully developed record is available to the Court, cited by both sides. That evidence need
not be considered, however, as Plaintiffs’ complaint fails for purely legal reasons. The Court
will decide the pending motion under Rule 12(b)(6).
III. ANALYSIS
The Court concludes first that New York law applies. Under that law, the Court
concludes further that Plaintiffs have failed to state a viable claim for tortious interference with
an existing contract.
A. Choice of Laws
The Court previously held that New York law applied to the question of whether
Plaintiffs stated a tortious-interference claim “because that is the law that expressly governed the
bond contracts pursuant to its offering circular, two of the Bondholders have their principal
places of business in New York, JPMC is in New York and its alleged conduct centered there.”
ANICO III at 233 n.7. The Court left open the possibility that the parties might argue, after
6
discovery, that the law of Texas (where two of seven Plaintiffs reside) applies. Id. The question
is critical because tortious interference under New York law requires an actual breach of
contract, whereas tortious interference under Texas law does not. The parties agree that the
District of Columbia’s choice-of-law principles apply here. Compare Mem. in Support of Mot.
Summ. J. [Dkt. 200-1] (Mem.) at 18-19 (citing Oveissi v. Islamic Republic of Iran, 573 F.3d 835,
842 (D.C. Cir. 2009)) with Opp’n [Dkt. 209] at 17 (citing Oveissi, 573 F.3d at 842).
District of Columbia courts blend a “governmental interests analysis” with a
“most significant relationship” test in order to decide choice-of-law issues. Oveissi, 573 F.3d at
842 (quoting Hercules & Co., Ltd. v. Shama Rest. Corp., 566 A.2d 31, 40-41 & n. 18 (D.C.
1989)); see also Jaffe v. Pallotta TeamWorks, 374 F.3d 1223, 1227 (D.C. Cir. 2004); Stephen A.
Goldberg Co. v. Remsen Partners, Ltd., 170 F.3d 191, 193-94 (D.C. Cir. 1999). Under the
“governmental interests analysis,” the Court “must evaluate the governmental policies
underlying the applicable laws and determine which jurisdiction's policy would be most
advanced by having its law applied to the facts of the case under review.” Oveissi, 573 F.3d at
842 (citing Hercules, 566 A.2d at 41). Under the “most significant relationship” test, this Court
considers the following factors: (1) the place where the injury occurred; (2) the place where the
conduct causing the injury occurred; (3) the domicile, residence, nationality, place of
incorporation and place of business of the parties; and (4) the place where the relationship, if
any, between the parties is centered. Oveissi, 573 F.3d at 842 (citing Restatement (Second) of
Conflict of Laws § 145(2) (1971) (Restatement)).
1. Governmental interests analysis
Competing State policies necessitate a conflict of laws analysis: New York law
has always required an actual breach of contract as an element of a claim of tortious interference
7
with contract, because in New York “the determinative factor is the nature of the relationship
that suffered the interference, with greater protection accorded enforceable contract rights.”
NBT Bancorp Inc. v. Fleet/Norstar Fin. Grp., Inc., 87 N.Y.2d 614, 622, 664 N.E.2d 492 (1996)
(emphasis added). Texas law perceives a greater separation between the underlying contract
and the tort of interference; it allows recovery for interference with contract even if the
interference did not provoke an actual breach. See, e.g., AKB Hendrick, L.P. v. Musgrave Enter.,
Inc., 380 S.W.3d 221, 236 (Tex. App.—Dallas 2012, no pet.). These two principles are
inescapably different. The Court concludes that Texas has a strong interest in resolving claims
brought by Texas resident corporations (ANICO & NWL), but that New York has the stronger
interest in resolving claims among its resident corporations (the two Farm Family plaintiffs vs.
JPMorgan Chase & Co.) and between its resident corporations and foreign corporations
(Plaintiffs ANICO, NWL & ANPAC vs. JPMorgan Chase & Co.).
Plaintiffs argue in opposition that “New York has no interest in protecting JPMC
from Texas law, and does not provide immunity or otherwise relieve JPMC of liability from
Plaintiffs’ allegations.” Opp’n at 18. To the contrary, New York law immunizes the conduct
alleged—at least in civil actions for tortious interference—by foreclosing liability absent an
actual breach of contract. And it is not “Texas law” against which New York protects its
residents, but liability for actions that New York does not consider tortious. That is a significant
governmental interest that applies to parties on both sides of this dispute.
2. Significant relationship test
New York also has the most significant relationship to the dispute here. The
Court examines the four Restatement factors in turn.
Plaintiffs argue that it is “logical to determine” that the place of their injuries was
8
in Texas because payments on the bonds were directed to a Texas broker, who had purchased
some of Plaintiffs’ bonds on their behalf. Opp’n at 20-21. The Court does not follow the logic.
The broker is not a party here and its status is not determinative. The fact that a non-party bank
in Texas held money for some Plaintiffs does not add to the balance. It is true that “the state
where the injury occurred [is] often the state where the plaintiff resides.” Restatement § 145 cmt.
c.5 But these Plaintiffs are seeking money damages, in which cases the “principal location of
defendant’s conduct is the contact that will usually be given the greatest weight.” Id. cmt. f.
Plaintiffs cannot seriously dispute that the alleged conduct occurred in New York.
They concede that the Project West “war room,” from which JPMC orchestrated the entire effort
to obtain WaMu, was set in New York. See 2d Am. Compl. ¶ 21; Opp’n at 21. JPMC’s alleged
meetings with credit agencies were also in New York. 2d Am. Compl. ¶¶ 69-70. Any meeting
between JPMC and federal regulators would have occurred in New York or Washington, D.C.;
Plaintiffs allege no such meeting in Texas. Any meeting between JPMC and WaMu would have
occurred in New York, Chicago or Seattle (WaMu’s “primary executive and business office,” id.
¶ 16); Plaintiffs allege no such meeting in Texas. Thus, most of JPMC’s allegedly tortious
conduct occurred in New York and none is alleged in Texas. As between New York and Texas,
this factor supports application of New York law.
The residences and domiciles of the parties further bolster this conclusion. There
are five Plaintiffs and two Defendants, all corporations. Two of the Plaintiffs are incorporated
and based in New York. While incorporated elsewhere, Defendant JPMorgan Chase & Co. (the
5
As corporate entities, Plaintiffs reside in either their state of incorporation or the state that is the
“nerve center” controlling the corporate business, usually where its officers are located. Hertz
Corp. v. Friend, 130 S. Ct. 1181, 1192-93 (2010); Restatement § 145. The Court concludes that
two Plaintiffs were injured in New York, one in Missouri, and two in Texas. Since the locus of
injury varies by Plaintiff, it is not as important as Plaintiffs contend.
9
defendant most frequently targeted by the Second Amended Complaint) is headquartered in New
York City. Two Plaintiffs have their principal places of business in Texas; the remaining
Plaintiff is located and incorporated in Missouri, and the second Defendant is headquartered in
Illinois.6 Once again, the balance of the State interests favors New York.
Plaintiff ANICO argues that it was the parent corporation of ANPAC, FFLIC and
FFCIC at the relevant time period so that ANICO’s presence in Texas with NWL, an
independent business, should govern. Because of the importance of choice-of-laws to the
outcome here, the Court has considered this argument carefully. Ultimately, however, it is not
persuasive. ANICO “errs by confusing the . . . [three] separate legal entities” when it “conflates”
its subsidiaries with the parent for choice of law purposes. City of Harper Woods Emps. Ret.
Sys. v. Olver, 577 F. Supp. 2d 124, 130 (D.D.C. 2008). The Restatement looks to the “domicile,
residence, nationality, place of incorporation and place of business of the parties” when resolving
conflicts of laws. Restatement §145. Corporate parenthood is not among the relevant factors.
The locus of the “relationship, if any, between the parties” is inapplicable.
Restatement § 145(2). That is only “another contact to be considered” in a case where “there is a
relationship between the plaintiff and the defendant and when the injury was caused by an act
done in the course of the relationship.” Id. § 145 cmt. e. There is no alleged relationship
between JPMC and the Plaintiff bondholders, and no injury alleged to have been suffered during
the course of such a relationship. This factor simply does not apply.
Finally, the bond contracts themselves specified that New York law is to be
applied. See ANICO III, 893 F. Supp. 2d at 233 n.7. While this contract language does not
6
Although JPMorgan Chase Bank is a National Association, its “nerve center”—where its
executives work—is in Chicago. See Hertz Corp., 130 S. Ct. at 1192-93.
10
govern Plaintiffs’ tort claims, it does serve to illustrate the parties’ expectations and the
significance of a New York venue.
* * *
In summary, the Court finds that New York has the most significant relationship
to the dispute because most of the conduct at issue occurred in New York; the place of each
Plaintiff’s injuries is neither localized in Texas nor sufficiently weighty to countermand the first
factor; there are more parties residing or domiciled in New York than in Texas; and the opposing
parties had no prior relationship out of which the injury arose. The Court also concludes that
New York, which immunizes competitive behavior that stops short of causing a breach of
contract, and where three of the litigating corporations have principal places of business, has the
greater interest in having its law apply.
B. Failure to State a Claim
Once the choice-of-law issue is decided, the balance of the analysis is
straightforward. New York law requires four elements to recover damages for tortious
interference: (1) the existence of a valid contract between the plaintiff and a third party; (2)
defendant’s knowledge of that contract; (3) defendant’s intentional procurement of the third-
party’s breach of the contract without justification; (4) and actual breach of the contract. Israel
v. Wood Dolson Co., 1 N.Y.2d 116, 120 (1956); see also B&M Linen, Corp. v. Kannegiesser,
USA, Corp., 679 F. Supp. 2d 474, 485 (S.D.N.Y. 2010) (citing Kirch v. Liberty Media Corp., 449
F.3d 388, 401-02 (2d Cir. 2006)). JPMC makes no argument as to the first two elements, but
moves for dismissal for failure to plead the third or fourth adequately. Mem. at 21-27.
1. Actual breach of contract
The fourth element—an actual breach of contract—presents the highest hurdle
11
that Plaintiffs must overcome. “Ever since tortious interference with contractual relations made
its first cautious appearance in the New York Reports . . . breach of contract has repeatedly been
listed among the elements of a claim for tortious interference with contractual relations.” NBT
Bancorp Inc., 87 N.Y.2d at 620-21. If “there was no breach of contract” resulting in damages to
Plaintiffs, their “tortious interference with contractual relations claim must fail.” D’Andrea v.
Rafla-Demetrious, 146 F.3d 63, 66 (2d Cir. 1998) (per curiam).
Plaintiffs do not allege an actual breach of their bond contracts. While they allege
that JPMC “intentionally procured WMB’s breach of the contract without justification,” 2d Am.
Compl. ¶ 112, that allegation depends on post-receivership events. Thus, it is inconsistent with
Plaintiiffs’ circumscription of their claims to “JPMC’s pre-receivership misconduct which
caused diminution of [Plaintiffs’ WaMu] bond values pre-receivership.” 2d Am. Compl. ¶ 116
(emphasis added). The D.C. Circuit has already confined Plaintiffs’ case to JPMC’s alleged
conduct prior to WaMu’s receivership. See ANICO II, 642 F.3d at 1144 (“[W]e read the
complaint to allege that JPMC alone committed the wrongdoing for which appellants sue . . . .”).
Because Plaintiffs necessarily confine the alleged conduct and their damages to pre-receivership
events, and because those events did not include an actual breach of their WaMu bond contracts,
Plaintiffs’ tortious-interference claim cannot succeed.
Plaintiffs barely address this hurdle in their opposition memorandum. Their entire
argument is that JPMC has conceded the point. Opp’n at 24-25. Not so. JPMC has made no
such concession; it stakes the bulk of its motion to dismiss on Plaintiffs’ failure to allege a
breach or resulting damages. See Mem. at 21-27.
Failing to answer the charge that they did not allege a breach of contract,
Plaintiffs retreat to the proposition that they “suffered clear diminution of their bonds’ values
12
before WaMu was placed into receivership, damages proximately caused by JPMC’s tortious
conduct.” Opp’n at 26. While this proposition is consistent with the Second Amended
Complaint, it is inconsistent with New York law. State and federal courts interpreting New York
law have repeatedly emphasized that recoverable damages must result from a breach of contract.
E.g., CAC Group Inc. v. Maxim Group LLC, 523 Fed. App’x 802, 806 (2d Cir. 2013); Oddo
Asset Mgmt. v. Barclays Bank PLC, 19 N.Y.3d 584, 594 (N.Y. 2012). For that reason, “in order
to survive a motion to dismiss under Rule 12(b)(6), sufficient facts must be plead in the
complaint to support the conclusion that the contract was actually breached, not only that
damages have resulted due to a defendant's interference.” Dorsett-Felicelli, Inc. v. Cnty. of
Clinton, No. 1:04-CV-01141, 2011 WL 1097859, at *3 (N.D.N.Y. Mar. 22, 2011) (citing NBT
Bancorp Inc., 87 N.Y.2d at 620-21 (emphasis added)). Damages without a breach of contract are
insufficient under New York law. Plaintiffs’ argument cannot succeed.7
Indeed, the Court of Appeals of New York has rejected precisely the argument
that Plaintiffs advance here:
[Plaintiff] urges that, as a matter of precedent and policy, a
defendant's deliberate interference with plaintiff’s contractual rights
that causes damage should be punishable as tortious interference
whether or not the contract was actually breached.
New York law is to the contrary. Ever since tortious interference
with contractual relations made its first cautious appearance in the
New York Reports—decades after the seminal case Lumley v Gye
(2 El & Bl 216, 118 Eng Rep 749 [1853])—our Court has repeatedly
linked availability of the remedy with a breach of contract (see,
Posner Co. v Jackson, 223 NY 325; Lambv Cheney & Son, 227 NY
418). Indeed, breach of contract has repeatedly been listed among
the elements of a claim for tortious interference with contractual
relations (see, e.g., Gregoris Motors v Nissan Motor Corp., 80
7
This analysis does not “improperly appl[y] a contractual measure of damages to a tort claim,”
as Plaintiffs argue. Opp’n at 26. Rather, it is how New York courts measure damages for
tortious interference. That law applies and forecloses Plaintiffs’ claim.
13
AD2d 631, 632, affd 54 NY2d 634; Inselman & Co. v FNB Fin. Co.,
41 NY2d 1078, 1080; Israel v Wood Dolson Co., 1 NY2d 116, 120;
see also, Kronos, Inc. v AVX Corp., 81 NY2d 90, 94 [intentional
inducement to breach or render performance impossible]).
NBT Bancorp Inc., 87 N.Y.2d at 620-21. Because Plaintiffs have not alleged an actual breach—
and indeed, have carefully circumscribed their Second Amended Complaint so as not to allege a
pre-receivership breach—their claim for tortious interference cannot succeed.
2. Tortious conduct
JPMC also argues that the Second Amended Complaint should be dismissed for
failure to allege plausible tortious conduct. JPMC assails Plaintiffs’ allegations about disclosures
to ratings agencies (Mem. at 30-36) and to the media (id. at 36-38). As to the ratings agencies,
JPMC argues that no misrepresentation is alleged; that no impermissible intent on JPMC’s part is
alleged; that JPMC’s conduct is not plausibly alleged to be a but-for cause of any breach by
WaMu; and that there are “more likely explanations” and “obvious alternative[s]” within the
meaning of Iqbal and Twombly. As to the media, JPMC calls it rank speculation to allege that it
was the source of either article cited. Mem. at 36-37 (citing 2d Am. Compl. ¶ 53).
These questions are unnecessary to address due to the Court’s finding that
Plaintiffs have failed to allege facts to show a breach of contract, which is an indispensable
ingredient of tortious interference under New York law. The arguments above would be more
properly resolved at summary judgment, which JPMC urges in the alternative. The Court need
not, and will not, convert the pending motion to dismiss into one for summary judgment. Should
the need arise, the Court will reconsider JPMC’s arguments in the context of a summary
judgment motion. For now, JPMC’s motion will be denied without prejudice in this respect.
14
IV. CONCLUSION
Plaintiffs’ Second Amended Complaint, taken as true and given all justifiable
inferences, fails to state a claim under New York law for tortious interference with an existing
contract. Pursuant to the D.C. Circuit’s direction, Plaintiffs tailored the operative complaint to
avoid FIRREA’s bar by expressly confining the alleged conduct—and their measure of
damages—to events that predated FDIC’s receivership. The consequence is that they cannot
allege an actionable claim for tortious interference under New York law.
A second consequence of finding themselves between a rock (FIRREA) and a
hard place (New York tort law) is that Plaintiffs cannot amend their complaint to make out a
cause of action based on a breach of contract. In other words, “the allegation of other facts
consistent with the challenged pleading could not possibly cure the deficiency.” Rollins v.
Wackenhut Servs., Inc., 703 F.3d 122, 131 (D.C. Cir. 2012) (quoting Firestone v. Firestone, 76
F.3d 1205, 1209 (D.C. Cir. 1996)). Dismissal with prejudice is therefore warranted.
A memorializing Order accompanies this Opinion.
Date: March 4, 2016
/s/
ROSEMARY M. COLLYER
United States District Judge
15