MARC T. TREADWELL, District Judge.
Before the Court is Plaintiff New York Life Insurance Company's motion to dismiss (Doc. 12) Defendant Dean Grant's counterclaim (Doc. 7) and New York Life's motion to strike (Doc. 17) Grant's amended counterclaim (Doc. 15). For the following reasons, the motion to dismiss is
New York Life sells insurance products. (Doc. 1 at ¶ 19). Grant began working for New York Life as an Agent on October 7, 1988, and as a District Agent on March 6, 2000. (Doc. 15 at ¶¶ 1-4). As an Agent, Grant received commissions based on his own sales of New York Life products, and as a District Agent, he received override commissions ("Overrides") based on sales by other agents within his District Agency. (Docs. 1 at ¶ 10; 15 at ¶ 8). The relationship between New York Life and Grant, including the amount of commissions he
On April 14, 2014, Grant filed a counterclaim along with his answer and defenses to New York Life's complaint. (Doc. 7). New York Life timely moved to dismiss Grant's counterclaim for failure to state a claim upon which relief can be granted. (Doc. 12). Grant filed a consent motion for a four-week extension of time to file his response to New York Life's motion to dismiss, which the Court granted. (Doc. 14). Grant's response to New York Life's motion to dismiss was due on June 17, 2014. That day, Grant filed a brief in response to New York Life's motion to dismiss, as well as an amended counterclaim. (Doc. 15; 16). New York Life then filed a motion to strike Grant's amended counterclaim, arguing that the amended pleading was (1) untimely because it was filed without its consent or the leave of Court and after the deadlines set forth by Fed.R.Civ.P. 15; and (2) futile because, even as amended, it fails to state a claim upon which relief can be granted. (Doc. 17 at 2). Grant filed a response to New York Life's motion to strike, arguing the amended counterclaim was timely filed and addressing New York Life's futility arguments. (Doc. 19).
In his amended counterclaim, Grant alleges New York Life, as early as 2010, began interfering with the successful performance of Grant's Agency Contract and District Agency Agreement.
Based on these allegations, Grant asserts the following claims against New York Life: 1) breach of contract; 2) breach of implied covenant of good faith and fair dealing; 3) negligent misrepresentation;
Federal Rule of Civil Procedure 15(a) governs the amendment of pleadings before trial:
Under Rule 15(a)(2), the Court "need not, however, allow an amendment (1) where there has been undue delay, bad faith, dilatory motive, or repeated failure to cure deficiencies by amendments previously allowed; (2) where allowing amendment would cause undue prejudice to the opposing party; or (3) where amendment would be futile." Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir.2001) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).
New York Life argues the amended counterclaim is untimely because it did not consent to the amended counterclaim. New York Life also argues the amended counterclaim is futile because, even as amended, it fails to state a claim upon which relief can be granted. (Doc. 18 at 4-10). Finally, New York Life argues it will be prejudiced if the Court allows the amending pleading because it incurred expenses in moving to dismiss the counterclaim as originally pled. (Doc. 18 at 2). For this reason, New York Life requests the amended counterclaim be allowed only on the condition that Grant pay New York Life's reasonable attorney's fees.
Grant acknowledges the amended counterclaim was filed outside of the 21 days allowed by Rule 15(a)(1). Nevertheless, Grant "believes that his amended pleading is still timely as a matter of course" and "appreciates that he has exercised this right to amend as a matter of course and without leave of court pursuant to Rule 15(a) of the Federal Rules of Civil Procedure." (Doc. 16 at 3-4). Specifically, Grant cites to the consent motion that was agreed upon and filed by the Parties. Grant argues that he "has not attempted to use this extension of time in which to file this Response in order to circumvent the specific time periods established under Rule 15(a)." (Doc. 16 at 4). Grant also argues the filing of the amended counterclaim does not thwart the purpose of Rule 15. (Doc. 16 at 4).
On May 16, 2014, Grant filed a consent motion "to extend the time in which Defendant-Counterclaimant might file his response to Plaintiff's Motion to Dismiss Defendant's Counterclaims." (Doc. 14). The Court granted the motion on May 19. One response to a motion to dismiss is to file an amended pleading. See Fed.R.Civ.P. 15, Advisory Committee's Note (2009 Amendments) ("A responsive amendment may avoid the need to decide the motion or reduce the number of issues to be decided, and will expedite determination of issues that otherwise might be raised seriatim.").
"Under the Federal Rules, an amended complaint supersedes the original complaint." Fritz v. Standard Sec. Life Ins. Co. of N.Y., 676 F.2d 1356, 1358 (11th Cir.1982). "As a result, motions directed at the superseded pleading generally are to be denied as moot." Mize v. Blue Ridge Bank, No. 8:12-CV-2763, 2013 WL 1766659, at *1 (D.S.C.). Nevertheless, the Court may consider New York Life's motion to dismiss the original counterclaim as being directed towards the amended counterclaim. See 6 Charles Alan Wright et al., Federal Practice and Procedure § 1476 (3d ed. 2011) ("[D]efendants should not be required to file a new motion to dismiss simply because an amended pleading was introduced while their motion was pending. If some of the defects raised in the original motion remain in the new pleading, the court simply may consider the motion as being addressed to the amended pleading."); Chavez v. Credit Nation Auto Sales, Inc., 966 F.Supp.2d 1335, 1345 n. 2 (N.D.Ga.2013). "To hold otherwise would be to exalt form over substance." 6 Charles Alan Wright et al., Federal Practice and Procedure § 1476 (3d ed.2011).
New York Life filed a consolidated reply brief in response to Grant's amended counterclaim, arguing that the counterclaim, even as amended, fails to state a claim upon which relief can be granted. (Doc. 18 at 2). Because New York Life has responded to the merits of the amended counterclaim and continues to allege that Grant's counterclaim fails to state a claim, the Court will consider New York Life's original motion to dismiss as being directed towards Grant's amended counterclaim.
To avoid dismissal pursuant to Fed. R.Civ.P. 12(b)(6), a complaint must contain specific factual matter to "`state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 697, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell
Grant alleges he entered into an Agency Contract and a District Agency Agreement with New York Life. He contends New York Life breached these agreements by 1) failing to provide written notice and 2) modifying the agreements in such a way as to make performance impractical and impossible. (Doc. 15 at ¶¶ 23-28).
A breach of contract claim in Georgia requires "(1) breach and the (2) resultant damages (3) to the party who has the right to complain about the contract being broken." Norton v. Budget Rent A Car Sys., Inc., 307 Ga.App. 501, 502, 705 S.E.2d 305, 306 (2010). "The breach must be more than de minimus and substantial compliance with the terms of the contract is all that the law requires." Kuritzky v. Emory Univ., 294 Ga.App. 370, 371, 669 S.E.2d 179, 181 (2008). "A breach occurs if a contracting party repudiates or renounces liability under the contract; fails to perform the engagement as specified in the contract; or does some act that renders performance impossible." UWork.com, Inc. v. Paragon Techs., Inc., 321 Ga.App. 584, 590, 740 S.E.2d 887, 893 (2013) (citation omitted).
Grant alleges New York Life breached the express terms of both the Agency Contract and the District Agency Agreement because New York Life "failed to provide the proper written notice of changes to the compensation schedule[s] as required under the respective agreements." (Doc. 15 at ¶ 26). According to Grant, the District Agency Agreement provides: "New York Life will have the right to change or modify [Compensation] Schedule A, including Exhibits I, II and III, by giving the District Agent thirty (30) days' written notice." (Doc. 15 at ¶ 9). Similarly, the Agency Contract provides: "The Company reserves the right to change such [compensation] schedules, in whole or in part, at any time by giving written notice to the Agent and the new rates, policy years, rules and conditions will apply as set forth in the Schedules." (Doc. 15 at ¶ 10).
In Grant's view, "the written notice is what triggers [New York Life's] right to amend the terms of the agreement[,]" and "the failure of [New York Life] to provide written notice of the alteration of the material terms of both agreements is a complete failure of compliance with such provisions."
Grant also alleges New York Life's modification to the terms of the District Agency Agreement "rendered the performance thereunder by Grant impractical and impossible, thus frustrating the intended purpose of such agreements as a whole." (Doc. 15 at ¶ 27). Grant alleges New York Life modified the amount of Overrides he received in such a way as to place significant limitations on the profitability of Grant's District Agency. (Doc. 15 at ¶ 19). He further alleges New York Life modified the number of agents allowed in his District Agency, which similarly resulted in a substantial decrease in profitability. (Doc. 15 at ¶ 20). New York Life argues "such `conclusory . . . sweeping allegations with no factual information to support [the] claims' are not sufficient to state a claim for breach of contract." (Doc. 18 at 5).
It may be that the breach of contract was de minimis and did not cause damages. However, the Court cannot decide that issue at the motion to dismiss stage. And it may be that New York Life's allegedly improper modification of the terms did not cause damages by rendering performance of the agreement impractical or impossible. The Court cannot decide that issue at this stage of the litigation. Because Grant has pled a breach and damages therefrom, he has alleged sufficient facts to state a claim for breach of contract.
Grant asserts New York Life "has breached the implied covenant of good faith and fair dealing by acting in bad faith when exercising those rights within its sole discretion under the terms of the contracts thereby rendering Grant's performance impossible." (Doc. 16 at 7). Specifically, Grant alleges "New York Life's conduct in the performance of these agreements by, among other things, arbitrarily, unilaterally, and unreasonably altering the material terms of the agreements constitutes a breach of the implied covenant of good faith and fair dealing arising from these express terms." (Doc. 15 at ¶ 33). In response, New York Life argues this claim is based on the same alleged conduct as Grant's breach of contract claim, and "[b]ecause Grant's cause of action for breach of the implied covenant of good faith and fair dealing cannot be asserted independently of his breach of contract claim, it should be dismissed." (Doc. 18 at 6).
Under Georgia law, "[e]very contract implies a covenant of good faith and fair dealing in the contract's performance and enforcement." Myung Sung Presbyterian Church, Inc. v. N. Am. Ass'n of Slavic Churches & Ministries, Inc., 291 Ga.App. 808, 810, 662 S.E.2d 745, 748 (2008). "It is a doctrine that modifies the meaning of all explicit terms in a contract, preventing a breach of those explicit terms de facto when performance is maintained de jure." Alan's of Atlanta, Inc. v. Minolta Corp., 903 F.2d 1414, 1429 (11th Cir. 1990).
Grant alleges New York Life entered into two written agreements and violated the implied covenant of good faith and fair dealing in modifying the terms of these agreements. Grant has set forth a claim
In Count III, Grant alleges New York Life negligently supplied false information pertaining to 1) conversion credits, 2) compensation schedules, and 3) agent placements. (Doc. 15 at ¶ 37). But Count III contains no facts supporting these claims. In his brief, Grant says the factual bases are found in paragraphs 18, 21, and 22 of his amended counterclaim. (Doc. 19 at 9). The Court will turn to those paragraphs to determine whether Grant has sufficiently alleged claims for negligent misrepresentation.
To state a claim for negligent misrepresentation claim, Grant must allege facts showing "(1) the defendant's negligent supply of false information to foreseeable persons, known or unknown; (2) such persons' reasonable reliance upon that false information; and (3) economic injury proximately resulting from such reliance." Marquis Towers, Inc. v. Highland Group, 265 Ga.App. 343, 346, 593 S.E.2d 903, 906 (2004) (citation and quotation marks omitted). To be liable for a negligent misrepresentation, it is not necessary that the misrepresentation be made directly to the complaining party, but it is necessary that the complaining party reasonably rely on the misrepresentation and be injured as a result. See, e.g., Wingate Land, LLC v. ValueFirst, Inc., 314 Ga.App. 24, 27, 722 S.E.2d 868, 870 (2012); Spellman v. Harrell Ins. Agency, Inc., 292 Ga.App. 249, 251, 663 S.E.2d 816, 818 (2008); White v. BDO Seidman, LLP, 249 Ga.App. 668, 671, 549 S.E.2d 490, 493 (2001). Additionally, under Georgia law it is necessary that the maker of the statement actually be aware that the third party-here Grant-will rely on the information and that the "known third party's reliance was the desired result of the misrepresentation." Martha H. West Trust v. Market Value of Atlanta, Inc., 262 Ga.App. 90, 92, 584 S.E.2d 688, 691 (2003) (internal quotation marks and citations omitted). The Eleventh Circuit has not expressly ruled that Rule 9(b)'s heightened pleading standard applies to claims for negligent misrepresentation under Georgia Law, and district courts differ over whether the standard should apply. See DIRECTV, LLC v. Stanley Wells, No. 1:13-CV-28 WLS, 2013 WL 6036686, at *2 n. 2 (M.D.Ga.) (collecting cases).
Grant fails to allege that New York Life knew Grant would rely on the allegedly false information and intended him to do so. Indeed, Grant fails to allege how he relied on the information supplied by New York Life. Paragraph 18 of his amended counterclaim makes clear only clients received and acted on this information. Accordingly, Grant has failed to state a claim against New York Life for negligent misrepresentation to the clients, even under the more lenient Rule 8 pleading standards.
Grant, citing paragraph 22 of his amended counterclaim, alleges New York Life "arbitrarily refused" to honor a successor agreement Grant entered into with a current New York Life agent. The purpose of the successor agreement was to "insure that [Grant's] New York Life clients that would remain with New York Life were taken care of by a veteran and experienced agent who was geographically convenient to them." (Doc. 15 at ¶ 22). Instead, New York Life transferred Grant's former clients to "inexperienced agents," which "resulted in damages to Grant's business reputation in the local community." (Doc. 15 at ¶ 22). Because Grant fails to allege how New York Life supplied false information, and consequently fails to allege how he relied on such information, this claim for negligent misrepresentation fails.
Finally, citing paragraph 21 of his amended counterclaim, Grant alleges that Grant Financial Group acted as the "de facto District Agent office" for an agent identified as U.P. from approximately January 29, 2008, to July 31, 2013. (Doc. 15 at ¶ 21). According to Grant, he was "led to believe that U.P. would be officially transferred to his District Agency, thereby affording Grant the entitlement to Override compensation for U.P.'s production." (Doc. 15 at ¶ 21). However, U.P. was never officially transferred, Grant never received any Overrides, and New York Life "has not remitted any amounts to cover expenses or reimbursements for the training and supervision of U.P." (Doc. 15 at ¶ 21).
Again, Grant has failed to allege that New York Life negligently supplied false information, knew Grant would rely on such information, and intended him to do so. Nor does Grant allege how he relied on any false information. Rather, Grant alleges New York Life promised to do something that it did not do. This could be a fraud claim if New York Life had no
Grant argues, in the alternative, he had an implied contract or contracts with New York Life whereby he "performed, both as an Agent and District Agent, in accordance with his obligations, which implied contractor contracts were breached by New York Life through its improper conduct." (Doc. 15 at ¶ 39). New York Life responds that this claim fails as a matter of law "[b]ecause [Grant] alleges that he had express contracts on the very subjects forming the basis for his implied contract . . . claim[]." (Doc. 18 at 8).
New York Life's argument is without merit. Georgia law allows a party to plead a claim for breach of an implied contract in the alternative to a claim for breach of an express contract. See Fed. Ins. Co. v. Westside Supply Co., 264 Ga.App. 240, 248, 590 S.E.2d 224, 232 (2003); Clark v. Aaron's, Inc., 914 F.Supp.2d 1301, 1309-10 (N.D.Ga.2012). This is precisely what Grant has done. He has disputed the validity of the express contracts, "to the extent that they were unilaterally modified by [New York Life]," and has pled, in the alternative, a claim for breach of an implied contract. (Docs. 15 at ¶ 39; 16 at 8). Accordingly, the Court cannot say the claim fails as a matter of law.
Grant argues, in the alternative, "[he] is entitled to quantum meruit for the work he performed and actions taken on behalf of New York Life and accepted by New York Life." (Doc. 15 at ¶ 44). Specifically, Grant argues he is entitled to "the value of the work he performed and expenses incurred on behalf of New York Life in serving as a District Agent for U.P. for which Grant was not paid, compensated or reimbursed." (Doc. 15 at ¶ 41). Grant alleges "New York Life consented to and knew that Grant was performing work and engaging in conduct to the benefit of New York Life." (Doc. 15 at ¶ 42). Moreover, Grant alleges "New York Life accepted the value of [his] work and actions." (Doc. 15 at ¶ 43). In response, New York Life argues this claim fails as a matter of law because Grant alleges he had express contracts on the subjects forming the basis for his quantum meruit claim. (Doc. 18 at 8; 12-1 at 12).
To recover under a quantum meruit theory, a party must prove four elements: "(1) his performance as agent of services valuable to the defendants; (2) either at the request of the defendants or knowingly accepted by the defendants; (3) the defendants' receipt of which without compensating [claimant] would be unjust; (4) [and] expectation of compensation at the time of the rendition of the services. . . ." Allen v. T.A. Commc'ns, Inc., 181 Ga.App. 726, 727, 353 S.E.2d 569, 570 (1987). Although "there cannot be an express and implied contract for the same thing existing at the same time between the same parties," the existence of an employment contract does not automatically invalidate an employee's quantum meruit claim. Fonda Corp. v. Southern Sprinkler Co., Inc., 144 Ga.App. 287, 292, 241 S.E.2d 256, 260 (1977). A plaintiff can recover "[t]he reasonable value of extra work performed in addition to what the contract contemplated." Gerdes v. Russell Rowe Commc'ns, Inc., 232 Ga.App. 534, 537, 502 S.E.2d 352, 355 (1998) (citation and internal quotations omitted).
Grant raises a claim, in the alternative, for "promissory estoppel in that the Agency Contract and District Agency Agreement, to the extent such contracts were unilaterally modified by New York Life, were not supported by sufficient consideration." (Doc. 15 at ¶ 45). According to Grant, he was induced to perform by New York Life, based on misrepresentations made by New York Life, and "under the impression that he would be adequately compensated for such services." (Doc. 15 at ¶ 47). New York Life acknowledges "a party is generally permitted to plead both promissory estoppel and breach of contract claims in the alternative," but argues Grant's counterclaim "does not indicate that its claims are asserted as alternative theories of recovery." (Doc. 12-1 at 13). In response, Grant argues he "has disputed the validity of the contracts at issue." (Doc. 16 at 8).
Under Georgia law, a claim for promissory estoppel "requires a showing that (1) the defendant made certain promises, (2) the defendant should have expected that the plaintiffs would rely on such promises, and (3) the plaintiffs did in fact rely on such promises to their detriment." Adkins v. Cagle Foods JV, LLC, 411 F.3d 1320, 1326 (11th Cir.2005); see also O.C.G.A. § 13-3-44(a). Moreover, a promise is "a manifestation of an intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made." F & W Agriservices, Inc. v. UAP/Ga. Ag. Chem., Inc., 250 Ga.App. 238, 241, 549 S.E.2d 746, 749 (2001) (citation and quotation marks omitted).
Grant alleges New York Life made certain promises—namely, that U.P. would be transferred to his District Agency if Grant trained and groomed the agent. Over a five year period, Grant relied on such promises. Grant "incurred numerous expenses for the training and grooming of U.P." as a result of New York Life's inducement. (Doc. 15 at ¶ 21). Grant has alleged sufficient facts to state a claim for promissory estoppel. It may be that this claim fails because a valid express contract exists on the very subject. But at this stage of the litigation, the Court cannot say that the claim fails as a matter of law.
Grant alleges New York Life "interfered with . . . relationships between Grant Financial Group and its clients by engaging in pretextual and improper conduct through the improper solicitation of these clients." (Doc. 15 at ¶ 50). As a result, Grant alleges New York Life "imposed undue and improper economic pressure on Grant and his company, Grant Financial Group." (Doc. 15 at ¶ 50). In response, New York Life argues Grant "does not allege that New York Life `induced a third party or parties not to enter into or continue a business relationship' with him, and he has no standing to assert this claim on behalf of Grant Financial
To maintain a claim for tortious interference with business relations, a plaintiff must prove:
Onbrand Media v. Codex Consulting, Inc., 301 Ga.App. 141, 150, 687 S.E.2d 168, 176 (2009). Moreover, to be liable, the defendant "must be a stranger" to the relationship; that is, parties to a relationship cannot be liable for tortious interference with that relationship. See id. (citation omitted). See also H & R Block E. Enters., Inc. v. Morris, 606 F.3d 1285, 1295 (11th Cir.2010) ("[I]t is well-established under Georgia law a party cannot tortiously interfere with its own business relationships.").
In this case, Grant complains New York Life disrupted the relationship it had with clients of Grant Financial Group. However, the clients of Grant Financial Group appear to be New York Life's clients. Grant has not alleged any facts suggesting that New York Life was a stranger to the business relations Grant shared with the clients of Grant Financial Group. Accordingly, Grant cannot sustain a claim for tortious interference with business relations.
Grant asserts claims against New York Life for negligent and intentional infliction of emotional distress. He alleges New York Life "interfered with contracts between Grant Financial Group and its clients, and personally targeted Grant which resulted in physical manifestations for Grant including anxiety, memory loss, and stress." (Doc. 15 at ¶ 53). Grant alleges this conduct "was so extreme and outrageous in its nature to which it caused Grant severe emotional distress for which New York Life is liable." (Doc. 15 at ¶ 54). In response, New York Life argues "Grant has not asserted how New York Life's alleged conduct was so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society." (Doc. 18 at 9). The Court agrees.
To prevail on a claim for intentional infliction of emotional distress, the burden is "stringent." Grant must demonstrate that:
Steed v. Fed. Nat. Mortg. Corp., 301 Ga.App. 801, 810, 689 S.E.2d 843, 851-52 (2009) (citation omitted). See also Roddy v. City of Villa Rica, Ga., 536 Fed.Appx. 995, 1003 (11th Cir.2013).
"[T]o recover under a claim of negligent infliction of emotional distress a plaintiff must establish `(1) a physical impact to the plaintiff; (2) the physical impact causes physical injury to the plaintiff; and (3) the physical injury to the plaintiff causes the plaintiff's mental suffering or emotional distress.'" Garrett v. Unum Life Ins. Co. of Am., 427 F.Supp.2d 1158, 1163 (M.D.Ga.2005) (citation omitted).
Although Grant alleges New York Life interfered with contracts between Grant Financial Group and its clients, as discussed above, Grant has alleged no facts indicating that these clients were individuals other than New York Life's clients. Moreover, Grant fails to allege how New York Life personally targeted him. These allegations fail to establish the extreme and outrageous conduct necessary to plead a claim of intentional infliction of emotional distress. See Odem v. Pace Acad., 235 Ga.App. 648, 655-56, 510 S.E.2d 326, 332 (1998) ("Liability for intentional infliction of emotional distress does not extend to mere insults, indignities, threat, annoyances, petty oppressions, or other trivialities.") (citation and internal quotation marks omitted). Moreover, Grant cannot sustain a claim for negligent infliction of emotional distress because he has not alleged that he was physically injured as a result of New York Life's actions.
Grant also raises a claim for attorney's fees under O.C.G.A. § 13-6-11 and incorporates all of his previous allegations by reference.
O.C.G.A. § 13-6-11 authorizes attorney's fees "where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense." However, "a plaintiff-in-counterclaim cannot recover attorney's fees under O.C.G.A. § 13-6-11 unless he asserts a counterclaim which is
New York Life contends this claim should be denied because all of Grant's other claims fail. (Docs. 12-1 at 21; 18 at 10). Because the Court has ruled that all of Grant's claims do not fail, New York Life's motion to dismiss Grant's claim for attorney's fees is denied on this ground. However, the Court notes the Parties' briefs on this issue miss the main point. See Singh v. Sterling United, Inc., 326 Ga.App. 504, 512-13, 756 S.E.2d 728, 736-37 (2014); Tri-State Consumer Ins. Co. v. LexisNexis Risk Solutions, Inc., 858 F.Supp.2d 1359, 1372-75 (N.D.Ga.2012). If New York Life wants to move to dismiss on other grounds, it should do so.
For the reasons explained above, New York Life's motion to strike (Doc. 17) is