Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-23-2005

Sonecha v. New England Life Ins
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-1448




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"Sonecha v. New England Life Ins" (2005). 2005 Decisions. Paper 1436.
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                                                   NOT PRECEDENTIAL

            UNITED STATES COURT OF APPEALS
                 FOR THE THIRD CIRCUIT


                           No. 04-1448


        JAY SONECHA, TRUSTEE OF THE DUA FAMILY
           MULTIPLE POWERS LIQUIDITY TRUST,

                                Appellant

                                 v.

       NEW ENGLAND LIFE INSURANCE COMPANY
                         ta
NEW ENGLAND FINANCIAL; NEW ENGLAND FINANCIAL GROUP;
          ROBERT WERMUTH; ANIL MINOCHA


ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
           EASTERN DISTRICT OF PENNSYLVANIA

                    (Dist. Court No. 03-cv-03757)
         District Court Judge: Honorable Legrome D. Davis


                     Argued January 20, 2005

        Before: ALITO, McKEE, and SMITH, Circuit Judges

                (Opinion Filed: March 23, 2005 )

                       DAVID KRAUT (Argued)
                       BRIAN R. BARLOW
                       Kraut, Harris, Maliszewski & Barlow, P.C.
                       1777 Sentry Parkway West
                       Abington Hall, Suite 200
                       Blue Bell, PA 19422
                                  Counsel for Appellant

                                  MICHAEL CONLEY (Argued)
                                  Anderson Kill & Olick, P.C.
                                  1600 Market Street
                                  Suite 2500
                                  Philadelphia, PA 19103

                                  Counsel for Appellees New England Financial Group,
                                  New England Life Insurance Company, and Robert
                                  Wermuth

                                  LAWRENCE H. POCKERS (Argued)
                                  THOMAS B. K. RINGE, III
                                  Duane Morris LLP
                                  One Liberty Place
                                  Philadelphia, PA 19103

                                  Counsel for Appellee Anil Minocha


                              OPINION OF THE COURT


PER CURIAM:

      Because we write for the parties only, we do not set forth the facts of this case. Jay

Sonecha, as trustee of the Dua Family Multiple Powers Liquidity Trust (the “Trust”),

appeals from a final order of the District Court dismissing his complaint under Federal

Rule of Civil Procedure 12(b)(6). For the reasons that follow, we affirm.

                                            I.

      When a complaint is dismissed for failure to state a claim, our review is plenary.

See Carino v. Stefan, 

, 159 (3d Cir. 2004). We apply the same standard on


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review that the District Court should have applied. 

to dismiss pursuant to

Rule 12(b)(6) may be granted only if, accepting all well pleaded allegations in the

complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not

entitled to relief.” In re Burlington Coat Factory Sec. Litig., 

, 1420 (3d Cir.

1997).

                                             II.

         The District Court concluded that Sonecha’s claim for negligence was deficient

because it failed to allege that any of the defendants had ever served as trustee of the

Trust. Since only the trustee owed the Trust a fiduciary duty, the Court reasoned, then

only the trustee could be a proper defendant in a negligence action by the Trust. The

problem with this reasoning is that a trustee’s fiduciary obligations do not exhaust the

possible duties that a trust may be owed. The law of tort creates independent duties that

an individual must observe even if he has no fiduciary obligations. Since it is undisputed

that Pennsylvania provides the substantive law for this diversity case, we turn to that

state’s common law of tort to determine whether any of the defendants owed the Trust a

duty under the facts alleged in the complaint.

                                             A.

         Count I of the complaint alleges that Robert Wermuth caused the Trust’s loss by

failing, in various ways, to ensure that the policy remained in effect. Because inaction is

not tortious absent a duty to act, these omissions would not lead to liability unless



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Wermuth had a special relationship with the Trust that justified imposing an affirmative

duty on him. See Melendez ex rel. Melendez v. City of Philadelphia, 

,

1063 & n.3 (Pa. Super. Ct. 1983); Prosser and Keeton on the Law of Torts § 56, at 373-74

(W. Page Keeton general ed., 5th ed. 1984). Sonecha argues that the Trust and Wermuth

had just such a relationship, since the Trust as policy beneficiary was counting on Dr.

Dua’s insurance agent to see that the insured had appropriate coverage.

       The cases Sonecha cites, however, involve insurance agents who either

misrepresented the extent of coverage, see Fiorentino v. Travelers Ins. Co., 

, 1366 (E.D. Pa. 1978), or failed to inform the insured of a lapse, see Jarvis v.

Workmen’s Comp. Appeal Bd., 

, 1189 (Pa. 1981). The complaint, by

contrast, frankly admits that Wermuth informed both the insured and the beneficiary of

the lapse and then arranged to reinstate the policy. We have found no authority that

Wermuth’s duty extended any further, and we question how it could. An insurance agent

does not have a right, much less a duty, to collect a premium from one who will not pay

it. The complaint’s averments to the contrary, see Complaint ¶ 30(a)-(b), are “bald

assertions” of law which the Court, even at this stage of the proceedings, need not

indulge. See Morse v. Lower Merion Sch. Dist., 

, 906 & n.8 (3d Cir. 1997).

       Count I also alleges that Wermuth is liable for the negligent misrepresentation of

his assistant. Pennsylvania’s law of negligent misrepresentation is provided by section

552 of the Second Restatement of Torts, which reads in pertinent part:



                                             4
                       One who, in the course of his business, profession or
                employment, or in any other transaction in which he has a
                pecuniary interest, supplies false information for the guidance
                of others in their business transactions, is subject to liability
                for pecuniary loss caused to them by their justifiable reliance
                upon the information, if he fails to exercise reasonable care or
                competence in obtaining or communicating the information.

Restatement (Second) of Torts § 552(1) (1977); see also Bilt-Rite Contractors, Inc. v. The

Architectural Studio, No. 74 MAP 2002, 

, at *17 (Pa. Jan. 19, 2005).

Liability extends only to injuries suffered by those who justifiably rely on information and

whose reliance the defendant could have reasonably foreseen. See Bilt-Rite Contractors,

, at *16; Mill-Mar, Inc. v. Statham, 

, 552 (Pa. Super. Ct.

1980).

         The complaint fails to state a claim within these parameters because it does not

allege that the assistant’s misinformation was relied on, or even received by, the Trust.

Nor can the complaint be saved by assuming that Meena Dua was acting as the Trust’s

agent. Although the receipt of the information could then be imputed to the trustee, the

trustee still could not show justifiable reliance because the complaint admits that she

knew the policy had lapsed. See Su v. M/V S. Aster, 

, 473 (9th Cir. 1992)

(“[I]f the principal knows the true facts, the attempted deception may not be imputed to

the principal.”). The authorities Sonecha marshals, which deal almost exclusively with

fraudulent misrepresentations, see, e.g., Restatement (Second) of Agency § 315 & illus. 4

(1958), do not persuade us of the viability of his agency argument in the negligence



                                                5
context. We conclude that Count I alleged no actionable omissions or misrepresentations

under Pennsylvania law and thus was properly dismissed. It follows that Counts II and

III, which alleged vicarious liability based on Count I, were also properly dismissed.

                                             B.

       Turning to Sonecha’s claim against Anil Minocha, we find section 323 of the

Second Restatement of Torts right on point. Section 323 provides:

                     One who undertakes, gratuitously or for consideration,
              to render services to another which he should recognize as
              necessary for the protection of the other’s person or things, is
              subject to liability to the other for physical harm resulting
              from his failure to exercise reasonable care to perform his
              undertaking, if
                             (a) his failure to exercise such care increases the
                     risk of such harm, or
                             (b) the harm is suffered because of the other’s
                     reliance upon the undertaking.

Restatement (Second) of Torts § 323 (1965). The Restatement defines physical harm as

“the physical impairment of the human body, or of land or chattels.” 

see also

cmt. e (“The words ‘physical harm’ are used to denote physical impairment of the

human body, or of tangible property, which is to say land or chattels.”). This distinction

between tangible and intangible injuries has been carefully observed by Pennsylvania’s

courts. See Pascarella v. Kelley, 

, 73 (Pa. 1954) (duty to avoid damage to

building); Carlotti v. Employees of Gen. Elec. Fed. Credit Union No. 1161, 

, 567 (Pa. Super. Ct. 1998) (no duty to ensure coverage under insurance policy);

Caldwell v. City of Philadelphia, 

, 1301 (Pa. Super. Ct. 1986) (no duty to

                                              6
preserve evidence necessary for lawsuit); Sharon Steel Corp. v. DeLaval Turbine, Inc., 

, 330-31 (Pa. Ct. Com. Pl. 1977) (no duty to prevent factory shutdown

and loss of profits). Since neither the policy nor its expected proceeds were tangible

property, Minocha’s alleged undertaking could not expose him to liability for their loss.

The claim against him was properly dismissed.

                                            III.

       After careful consideration of the parties’ submissions and oral arguments, we

conclude that Sonecha’s complaint failed to state a legally sufficient claim for negligence

against any named defendant. The District Court’s order dismissing the complaint is

accordingly affirmed.




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