JANET BOND ARTERTON, District Judge.
Plaintiffs RBS Citizens Financial Group, Inc. and RBS Securities, Inc. (collectively "RBS") filed this suit against Defendant Hewitt Associates, LLC ("Hewitt") on November 14, 2013, alleging breach of contract (Count One) and negligence (Count Two), arising out of Hewitt's performance under the Master Consulting Agreement signed by the parties. The parties now bring cross motions for summary judgment. Oral argument was held on June 14, 2016. For the following reasons, Plaintiffs' Motion [Doc. # 32] for Summary Judgment is granted in part and denied in part, and Defendant's Motion [Doc. # 35] for Summary Judgment is granted in part and denied in part.
In 2007, RBS and Hewitt entered into a Master Consulting Agreement ("MCA"), under which, effective January 2008, Hewitt agreed to perform Leave Administration services for RBS, pursuant to a Delivery Model incorporated by reference into the MCA. (See MCA, Ex. A to Stip. Facts [Doc. # 32-3] ¶ 7(d); id., Attachment B, Delivery Model.) Under the Delivery Model, Hewitt agreed to provide the following services related to the Family and Medical Leave Act ("FMLA") and analogous state statutes:
(Delivery Model at 4.)
The MCA obligated Hewitt to perform these services "in a professional manner . . . with the training, skills, and professional credentials as may be necessary to perform such Services in accordance with customary industry standards and practices." (MCA ¶ 7(c).) Additionally, Hewitt agreed to "indemnify and hold [RBS] . . . harmless from and against any and all claims, demands, actions, damages, losses, liabilities, and expenses of any nature (including reasonable attorneys' fees and expenses) arising from Hewitt's performance of the Services resulting from: Hewitt's or its Consultants' negligence. . . ." (Id. ¶ 8(a).) However, the MCA provided that "[i]n no event will either party be liable to the other party for incidental, consequential, special, or punitive damages (including loss of profits, data, business or goodwill, or government fines, penalties, taxes, or filing fees), regardless of whether such liability is based on breach of contract, tort, strict liability, breach of warranties, failure of essential purpose or otherwise, and even if advised of the likelihood of such damages." (Id. ¶ 8(c).)
The FMLA provides that eligible employees may take up to twelve weeks of job-protected unpaid leave for qualifying reasons in a twelve month period. 29 U.S.C. § 2612. The Connecticut analog to the FMLA ("CT FMLA") provides employees with up to sixteen weeks of job-protected unpaid leave in a twenty-four month period. Conn. Gen. Stat. § 31-51ll. The twelve and twenty-four month periods can be calculated several different ways. See Dep't of Labor, Fact Sheet #28H: 12-Month Period under the Family and Medical Leave Act (FMLA), http://www.dol.gov/whd/regs/compliance/whdfs28h.pdf. Under the "rolling year" method, leave availability is measured backward from the date an employee uses any FMLA/CT FMLA leave. Id. Thus, each time an employee takes leave, the remaining leave entitlement is the balance of the 12 (or 16, in the case of the CT FMLA) weeks which has not been used in the immediately preceding 12 (or 24, for the CT FMLA) months. Id. Under the calendar year method, the 12 and 24-month periods run from January 1 through December 31. Id.
Although prior to January 1, 2010, some RBS divisions utilized a calendar year method, at all times relevant to this case, the Global Banking and Markets ("GBM") division utilized a rolling year method. (Stip. Facts ¶¶ 8-9; see Ex. B to Stip. Facts.)
The seeds of this dispute were sown on October 5, 2009, when RBS (GBM) Senior Operations Analyst (Reconciliation and Control department) Louis Ridgeway fell off an office chair and injured himself. (Stip. Facts ¶ 15.) Mr. Ridgeway requested, and was granted, FMLA leave. (Id. ¶ 15; see Oct. 2009 Ltr., Ex. D to Stip. Facts.) Because Mr. Ridgeway had previously taken FMLA/CT FMLA leave in May and June 2009, "under a rolling method of calculating leave[,] his available federal FMLA leave . . . extend[ed] until December 3, 2009, and his available CT FMLA . . . extend[ed] until December 31, 2009." (Stip. Facts ¶ 16; see May 2009 Ltr., Ex. C to Stip. Facts.)
On December 1, 2009, Mr. Ridgeway called Hewitt's Florida office to find out how much federal and state leave he had left because his doctor had informed him that his condition could be improved through an elective surgery (for which he would require additional leave). (Stip. Facts ¶ 18.) He spoke to a Hewitt representative named Eddie Nieto. (Id; see Ridgeway Dep., Ex. Z to Passarella Decl. [Doc. # 32-4] at 114.) Hewitt's records indicate that Mr. Nieto (erroneously) advised Mr. Ridgeway that he was eligible for "state leave . . . through [the] end of [the] year, and advised [him] that his state leave renew[ed] in 2010." (Hewitt Records, Ex. E to Stip. Facts at 3.) In other words, Mr. Nieto told Mr. Ridgeway that as of January 2010, his "CT FMLA would refresh . . . and he would have the full 16 weeks of entitlement and therefore would have job protection" through April 2010. (Id. at 6; see also Ridgeway Dep. at 114.)
In fact, utilizing a rolling year method, as of January 1, 2010, Mr. Ridgeway's state leave was exhausted, and he no longer had job protection. (Stip. Facts ¶ 16.) Hewitt, however, did not inform RBS of Mr. Nieto's conversation with Mr. Ridgeway on December 1, 2009. (Id. ¶ 21.)
As a result, on December 3, 2009, RBS approved the recruitment of an analyst from the Principal and Interest ("P & I") division to replace Mr. Ridgeway, who RBS apparently believed, had overstayed his leave. (Id. ¶ 22; see Ex. F to id.) On December 7, 2009, Mr. Ridgeway's manager, Koren Horsey, emailed her RBS Human Resources Partner, Dawn Hughes, about Mr. Ridgeway's leave status, noting that the last she had heard from Hewitt was that Mr. Ridgeway was only approved for leave until December 3, 2009. (Stip. Facts ¶¶ 23-24; see Ex. G to id. at 2-3.) Ms. Hughes forwarded the email to Erika House, a Hewitt representative, who responded that Mr. Ridgeway's "short-term disability was extended through 01/27/2010. [His] Family Medical Leave Act exhausted on 12/3/09, so as of 12/4/09 [he] remain[s] on Connecticut FMLA until 12/31/2009. Connecticut FMLA will run up to 16 weeks. As of 01/01/2010 [he] will no longer be eligible for job protection but will remain on short-term disability." (Ex. G to Stip. Facts at 2.)
Mr. Ridgeway, in reliance on the information he had received from Hewitt, failed to return from his leave on December 31, 2009. (Stip. Facts ¶ 27.) As a result, on January 6, 2010, Mr. Horsey declared, by email to several RBS employees, "We are going to officially replace Louis Ridgeway. I would like to transfer Scott Fabbri from P & I to [Reconciliation and Control (`Rec & Control')] to replace Louis. This will open a role in P & I." (Horsey Email re Fabbri, Ex. H to Stip. Facts.) "No one from RBS — including Ms. Horsey — made any attempt to telephone, email or otherwise contact [Mr.] Ridgeway, directly or indirectly, when he did not return to work in January 2010 until January 25, 2010." (Stip. Facts ¶ 32.) On January 25, 2010, Ms. Hughes sent Mr. Ridgeway a letter notifying him that his "Family Medical Leave allowance has exhausted as of January 1, 2010 and [his] position as a Senior Operations Analyst has been put into the posting process/is no longer available." (Ex. I to id.) By email dated February 9, 2010, Hewitt informed Ms. Hughes that Mr. Ridgeway's short-term disability leave had been extended to February 7, 2010, but his job protection remained exhausted. (Ex. J to Stip. Facts.)
Mr. Ridgeway, after receiving the January 25, 2010 letter from Ms. Hughes, called Hewitt on February 17, 2010 to clarify whether he did in fact have job protection through April, as Hewitt had previously told him. (See Hewitt Records at 3-4.) The Hewitt representative confirmed that "he was eligible for job protection to 4/22/10 and after that date RBS was no longer required to hold his position." (Id. at 4.) RBS did not learn that Hewitt had told Mr. Ridgeway that he was on job-protected leave until April 9, 2010, when Mr. Ridgeway contacted Ms. Hughes.
Shortly thereafter, Heidi Lane, a representative of the Connecticut Department of Labor ("CT DOL") contacted Amy Gare, RBS's in-house employment attorney, and told her that she believed RBS was required by law to reinstate Mr. Ridgeway. (Id. ¶ 40; see 2012 Gare Dep., Ex. K to id. at 59.) Ms. Gare testified that based on her conversation with Ms. Lane, she "understood that there may be an obligation to reinstate Mr. Ridgeway if it was possible." (2012 Gare Dep. at 59.)
Nonetheless, RBS did not reinstate Mr. Ridgeway. Rather, "[f]ollowing its policy for employees returning from additional leave after the expiration of FMLA leave, RBS gave [Mr.] Ridgeway 45 days to find a new position within the company and sent him a link to all available jobs." (Stip. Facts ¶ 42; see Ex. BB to Passarella Decl.) Mr. Ridgeway did not seek other employment with RBS, and RBS and Mr. Ridgeway failed to reach a separation agreement. (Stip. Facts ¶ 43.) Mr. Ridgeway's employment with RBS ended on July 1, 2010. (Id. ¶ 44.)
On October 10, 2010, Mr. Ridgeway filed a complaint with the CT DOL, claiming that RBS had interfered with his rights under the CT FMLA. (Id. ¶ 46.) Eight months later, on June 16, 2011, Mr. Ridgeway filed a complaint against RBS in federal court, alleging interference and retaliation under the FMLA, wrongful termination in violation of public policy, termination in violation of Conn. Gen. Stat. § 31-51q, promissory estoppel, and negligent misrepresentation. See Ridgeway v. RBS, 3:11cv976 (D. Conn.), Compl. [Doc. #1].
By decision dated March 27, 2012, Judge Vanessa Bryant dismissed Mr. Ridgeway's claims of wrongful termination and termination in violation of § 31-51q, but permitted his remaining claims to go forward. See id., Mem. Decision Def.'s Mot. Dismiss [Doc. # 40]. The parties proceeded to discovery, during the course of which RBS made two admissions relevant here: (1) "[i]n the conversation with Hewitt Associates on or about December 1, 2009, Hewitt granted Ridgeway's FMLA leave to begin on January 1, 2010" and (2) "[i]n December of 2009, Hewitt granted Ridgeway an FMLA leave to begin on January 1, 2010 and to run for twelve weeks." Id., Mem. Decision Mot. Withdraw Judicial Admissions and Mot. Summ. J. [Doc. # 135] at 11.
RBS subsequently sought to withdraw these admissions, arguing that the summaries provided by Hewitt of its phone calls with Mr. Ridgeway revealed that Hewitt had only advised Mr. Ridgeway that his CT FMLA would refresh in January 2010 and not his FMLA. Id. Judge Bryant, however, denied RBS's motion, reasoning:
Id. at 29-30.
The court granted summary judgment in RBS's favor on Mr. Ridgeway's FMLA retaliation claim, finding that "no reasonable trier of fact could conclude that RBS's decision to terminate him was influenced by [Mr.] Ridgeway contacting the CTDOL." Id. at 46. However, the court denied summary judgment on Mr. Ridgeway's FMLA interference, promissory estoppel, and negligent misrepresentation claims. Id. at 60. On August 12, 2013, Mr. Ridgeway and RBS settled the case for $400,000, including attorneys' fees. (Stip. Facts ¶ 62.) RBS now seeks indemnification from Hewitt for the costs of that settlement.
RBS claims that Hewitt breached the MCA by failing to provide the services specified in the Delivery Model and by refusing to indemnify RBS, and that Hewitt was negligent in giving Mr. Ridgeway inaccurate information and in failing to inform RBS that it had done so. Each of these claims is discussed in turn.
RBS's breach of contract claim is governed by Rhode Island law, as established in the MCA. (See MCA ¶ 13(j).) "`To succeed on a breach of contract claim under Rhode Island law, a plaintiff must prove that (1) an agreement existed between the parties, (2) the defendant breached the agreement, and (3) the breach caused (4) damages to the plaintiff.'" Charles Place Assocs. v. Carrier Corp., No. CA 09-535 M, 2013 WL 3716650, at *5 (D.R.I. July 12, 2013) (quoting Barkan v. Dunkin' Donuts Inc., 627 F.3d 34, 39 (1st Cir. 2010)). There is no dispute here that an agreement existed between the parties. However, the other elements are in dispute.
As clarified at oral argument, Plaintiffs contend that Hewitt breached the MCA by failing to comply with the provisions of the Delivery Model and by failing to indemnify RBS.
Plaintiffs allege that Defendant breached the following provisions of the Delivery Model (which is incorporated into the MCA) after Mr. Ridgeway's December 1, 2009 phone conversation with Eddie Nieto: (1) the duty to verify Mr. Ridgeway's eligibility for leave and send him an FMLA confirmation letter; (2) the duty to notify RBS of Mr. Ridgeway's intent to take leave; (3) the duty to send an FMLA approval or denial letter to Mr. Ridgeway and notify RBS it has done so; and (4) the duty to send an updated employment status to the Human Resources Service Center. (Id.)
Hewitt does not deny that it did not perform the above services. However, it maintains that its failure to do so did not constitute a breach because: (1) Hewitt did not grant or deny Mr. Ridgeway leave during the December 1, 2009 phone call, and it is unclear whether Mr. Ridgeway even requested additional leave during that call or if he was "simply exploring his options"; and (2) if Hewitt did extend Mr. Ridgeway's leave into January 2010, it was not a breach of contract to do so because "[n]othing in the Master Consulting Agreement contains a guarantee of accuracy." (Def.'s Opp'n [Doc. # 33] at 12.)
These claims are unavailing. With respect to the first argument, as Plaintiffs note in reply
(Pls.' Reply [Doc. # 34] at 7-8 (internal citations omitted).) Indeed, this is consistent with what Mr. Ridgeway himself testified. (See Ridgeway Dep. at 114.)
Hewitt's second argument is plainly belied by the provision of the MCA requiring Hewitt to "verify" the eligibility of an employee seeking leave under the FMLA or a state equivalent. Where, as here, "contract language is clear and unambiguous, words contained therein will be given their usual and ordinary meaning." Andrukiewicz v. Andrukiewicz, 860 A.2d 235, 238 (R.I. 2004) (internal quotation marks omitted). Under the ordinary meaning of "verify" — "to establish the truth, accuracy, or reality of," Merriam-Webster Dictionary, http://www.merriam-webster.com/dictionary/verify — Hewitt's failure to ensure that Mr. Ridgeway was eligible for leave before approving such leave is a breach of the contract.
Moreover, because there is no dispute that Hewitt failed to: notify RBS of Mr. Ridgeway's intent to take leave from January to April; send Mr. Ridgeway an FMLA approval letter and notify RBS it had done so; and send the Human Resources Service Center an updated employment status for Mr. Ridgeway reflecting that he had been granted leave for January to April, no reasonable jury could find that Hewitt did not breach the Delivery Model provisions of the MCA.
RBS next argues that Hewitt breached the contract by failing to indemnify RBS for Hewitt's negligence. For purposes of the breach of contract count, Hewitt "concede[s] that it was negligent in giving incorrect advice to [Mr.] Ridgeway concerning the 2010 renewal of his CT FMLA eligibility." (Def.'s Opp'n at 10.) However, it denies that this negligence caused Plaintiffs' damages, and thus argues that it had no obligation under the indemnification clause to indemnify Plaintiffs, and its failure to do so was not a breach of the contract. Because the Court's analysis of this argument necessarily turns on its finding with respect to causation, the Court turns to that issue now.
Defendant contends that even if it breached the MCA, it nonetheless is not liable for breach of contract because Plaintiffs' claimed damages were not proximately caused by that breach.
"In order to establish proximate causation, a plaintiff must establish that the harm would not have occurred but for the [act] and that the harm [was a] natural and probable consequence of the [act]."
Here, Defendant claims it is not liable for RBS's damages because RBS's own actions were intervening causes.
Defendant asserts that RBS's failure to call Mr. Ridgeway in January 2010 before replacing him
Defendant next contends that RBS's failure to submit a claim to its employment practices liability insurer for the damages it seeks to recover here constitutes an intervening cause of RBS's damages.
Finally, Hewitt asserts that RBS's judicial admission in the underlying case (that Mr. Ridgeway received incorrect information about his FMLA — as opposed to his CT FMLA — rights) was negligent and severed the causal chain between Hewitt's negligence and RBS's damages. (See Def.'s Mem. Supp. at 17-18.) RBS responds that "[b]ased on Mr. Ridgeway's testimony" (that he could not recall whether the Hewitt representative had told him he was covered under the FMLA or CT FMLA) and the May and October 2009 letters from Hewitt (in which Hewitt erroneously wrote that FMLA leave was calculated on a calendar year basis), Mr. Ridgeway's "FMLA interference claim would have survived summary judgment regardless of the admissions." (Pls.' Opp'n at 17.) Further, Plaintiffs argue, "Mr. Ridgeway's negligent misrepresentation and promissory estoppel claims focused on the promise of protected leave until April 22," whether under the CT FMLA or the FMLA, "and therefore, any issues regarding the admission and/or distinctions between the FMLA or CT FMLA leave are immaterial for these claims." (Id.)
Initially, the Court is not persuaded that RBS's admission, whether negligent or not, was an "independent and unforeseeable intervening . . . act of negligence" which "becomes the sole proximate cause of the plaintiff's injuries." Oden, 71 A.3d at 450. Moreover, the Court finds merit in Plaintiffs' contention that Mr. Ridgeway's negligent misrepresentation and promissory estoppel claims likely would have survived summary judgment irrespective of RBS's admission.
For the foregoing reasons, no reasonable jury could find that Hewitt's conduct was not a proximate cause of RBS's damages or that RBS's negligence was an intervening cause.
Hewitt raises two arguments with respect to the final element of breach of contract: (1) RBS failed to mitigate its damages; and (2) the damages for which RBS seeks indemnification are consequential damages, explicitly excluded by the MCA. (See Def.'s Mem. Supp. at 20; Def.'s Opp'n at 15; Def.'s Reply [Doc. # 37] at 6.)
Defendant claims that RBS is barred from collecting damages because its damages were avoidable, and under Rhode Island law, a party "is prohibited from recovering damages that it could have reasonably avoided." (Def.'s Opp'n at 10.) Indeed, "[t]he law in Rhode Island is well settled that a party claiming injury has a duty to exercise reasonable diligence and ordinary care in attempting to minimize its damages." McFarland v. Brier, 769 A.2d 605, 610 (R.I. 2001) (internal quotation marks omitted). "The law commands reasonable efforts and ordinary care in the circumstances, not Herculean exertion." Tomaino v. Concord Oil of Newport, Inc., 709 A.2d 1016, 1026 (R.I. 1998) (internal citations omitted). "When mitigation of damages is at issue the defendant has the burden of proving by affirmative evidence[] that the plaintiff failed to adequately mitigate his or her damages." McFarland, 769 A.3d at 610 (citing Bibby's Refrigeration, Heating & Air Conditioning, Inc. v. Salisbury, 603 A.2d 726, 729 (R.I. 1992)). Here, Hewitt argues that Plaintiffs failed to satisfy their duty to mitigate by failing to make reasonable efforts to a) find or b) create an opening for Mr. Ridgeway between April and July 2010. (See Def.'s Mem. Supp. at 21-23.)
As a preliminary matter, it appears self-evident that if there were an open position in Mr. Ridgeway's department for which he was qualified between April 9, 2010 (when RBS learned of Hewitt's errors) and July 1, 2010 (when Mr. Ridgeway was terminated), reasonable efforts to mitigate would have included RBS offering Mr. Ridgeway that position. Plaintiffs do not appear to argue otherwise, contending instead that no such position existed.
The parties agree that when Mr. Ridgeway initially went on leave in October 2009, RBS hired Scott Fabbri to perform Mr. Ridgeway's job functions on a temporary basis. (Stip. Facts ¶ 29.) However, what happened after that is the subject of dispute. Ms. Horsey offers one version of events, while two sets of personnel records appear to set out two alternative pictures of what occurred.
One set of personnel records, which apparently traces all movements in and out of Mr. Ridgeway's position in the Rec & Control department (OED# OPSAM13305), show that: (1) on January 11, 2010, Mr. Ridgeway's role was assigned to John Woods, who held the position until April 9, 2010, when he left the firm; (2) Mr. Woods was replaced by Theresa Boccio on June 29, 2010, and she held the position until August 4, 2010, when she left the firm; and (3) on January 3, 2011, Ms. Boccio was replaced by Richard Huber. (See 13305 Employees, Ex. L to Stip. Facts.) Relying on this record, a reasonable jury could find that as of April 9, 2010, there was an open position in Rec & Control that could have been given to Mr. Ridgeway.
A second set of personnel records, which lists all transfers in and out of Operations between April 2010 and June 2011, shows that Mr. Woods was hired as a temporary employee on January 11, 2010 in place of Mr. Ridgeway in Rec & Control. (See Reconciliation Dep't Records, Ex. G to Marks Decl. at 1.) The records do not reveal that Mr. Woods was ever transferred out of Rec & Control, but perplexingly, when Mr. Woods departed and was replaced by Theresa Boccio (another temporary employee), the records indicate that his position was in the P & I department. (Id.) Adding to the confusion, when Ms. Boccio was replaced by Mr. Huber (a permanent employee) on January 3, 2011, the records appear to show that Mr. Huber was in the Rec & Control department.
In Ms. Horsey's telling, Mr. Woods and Ms. Boccio did not replace Mr. Ridgeway in Rec & Control, but rather Scott Fabbri in P & I. (Horsey Dep. 2012, Ex. 1 to Marks Reply Decl. [Doc. # 37-1] at 172.) Specifically, Ms. Horsey avers: (1) in December 2009 (when P & I employee John Gaudino left), Scott Fabbri was made a permanent employee in the P & I department, although he continued to do Rec & Control work (Horsey Dep. 2012, Ex. R to Passarella Decl. at 137); (2) on January 6, 2010, when Mr. Ridgeway still had not returned to work, RBS moved Mr. Fabbri to Rec & Control to formally replace Mr. Ridgeway, thereby opening a position in the P & I group (see Horsey Dep. 2012 at 138; Horsey Email re Fabbri); and (3) John Woods was hired as a temp in P & I on January 11, 2010, and Ms. Boccio replaced him as a temp in P & I thereafter (Horsey Dep. 2012 at 172). A reasonable jury relying on Ms. Horsey's testimony could conclude that there was no open position in Rec & Control that RBS could have given to Mr. Ridgeway.
Because the evidence regarding openings in the Rec & Control department is contradictory and could lead reasonable jurors to reach different conclusions regarding whether there was an opening for Mr. Ridgeway in the Rec & Control department, there is a genuine dispute of material fact on this issue and summary judgment is not appropriate.
Hewitt next asserts that even if there was no opening in Rec & Control for Mr. Ridgeway, RBS could have created a position for him or placed him in P & I, and its failure to do so is grounds for finding a failure to mitigate. Specifically, Hewitt argues that Scott Fabbri's transfer from P & I was merely a "paper transfer," and because no permanent replacement was hired in P & I until the fall of 2010, RBS could have easily undone that "paper transfer" and created a position for Mr. Ridgeway. (See Def.'s Mem. Supp. at 22; Def.'s Opp'n at 14; Def.'s Reply at 5-6.) While, as a general matter, reasonable efforts would not dictate that an employer create an entirely new position for an employee, from the summary judgment record in this case, it appears that a position in P & I may have been available (as discussed above), and that Mr. Ridgeway may have been qualified to take such a position.
Ms. Horsey testified that "Mr. Ridgeway was not qualified to perform positions within" P & I (Horsey Aff., Ex. 2 to Pls.' Opp'n ¶ 6), but as Defendant notes, she also testified that when Mr. Fabbri was doing Mr. Ridgeway's job in December 2009, he was working from the P & I department (Horsey Dep. 2012 at 138) (from which one could reasonably infer that Mr. Ridgeway, too, could have done Rec & Control work from the P & I department). Further, although Ms. Horsey testified that had Mr. Ridgeway returned to work in December 2009 (after Mr. Fabbri had been permanently assigned his role but before Mr. Ridgeway's job-protected leave expired), she would have "figured out how to allocate the work" between Mr. Ridgeway and Mr. Fabbri, she offered no explanation for why such an allocation could not have been made in April 2010. (Id. at 154.)
Because there is a genuine dispute of material fact regarding whether, through reasonable efforts, RBS could and should have given Mr. Ridgeway a position in P & I, summary judgment on this issue is not appropriate.
Defendant next contends that RBS's claimed damages were consequential damages, which the MCA does not permit parties to recover.
Having determined that no reasonable jury could find that Hewitt did not breach the contract, that Hewitt did not proximately cause damage to RBS, or that RBS's damages were consequential, summary judgment is granted in Plaintiffs' favor as to Hewitt's liability for breach of contract. However, because there are genuine disputes of material fact regarding whether RBS utilized reasonable efforts to mitigate its damages, summary judgment is not warranted on Defendant's affirmative defense of failure to mitigate.
Turning to the negligence count, as a preliminary matter, the Court must determine which state's law to apply to RBS's negligence claim. RBS asserts that Florida law should be applied (see Pls.' Mem. Supp. Mot. Summ. J. [Doc. # 32-1] at 29), while Hewitt advocates for application of Rhode Island or Connecticut law (see Def.'s Opp'n at 9-10). Because "[t]he threshold choice of law question in Connecticut, as it is elsewhere, is whether there is an outcome determinative conflict between the applicable laws of the states with a potential interest in the case," the Court begins with that question. Lumbermens Mut. Cas. Co. v. Dillon Co., 9 F. App'x 81, 83 (2d Cir. 2001).
RBS maintains that there is a conflict between Florida law on the one hand and Rhode Island and Connecticut law on the other because Rhode Island and Connecticut apply the "economic loss rule," while Florida does not. Compare Ulbrich v. Groth, 310 Conn. 375, 410 (2013) ("[T]he economic loss doctrine bars negligence claims that arise out of and are dependent on breach of contract claims that result only in economic loss.") and Franklin Grove Corp. v. Drexel, 936 A.2d 1272, 1275 (R.I. 2007) ("The economic loss doctrine provides that a plaintiff is precluded from recovering purely economic losses in a negligence cause of action." (internal quotation marks omitted)) with Tiara Condo. Ass'n, Inc. v. Marsh & McLennan Companies, Inc., 110 So.3d 399, 407 (Fla. 2013) ("[W]e now limit the application of the economic loss rule to cases involving products liability . . . ."). Defendant does not disagree that Florida has abrogated the economic loss doctrine in cases not involving products liability, but it claims that "Florida courts have re-affirmed that the same principles underlying the economic loss rule, though unnamed, continue to apply in contract-based cases." (Def.'s Opp'n at 7.) The Court agrees.
As explained by the Rhode Island Supreme Court, under the economic loss rule
Franklin Grove, 936 A.2d at 1275 (internal quotation marks and citations omitted).
Although Florida has formally limited application of this rule to products liability cases, Defendant appears to be correct that Florida courts continue to adhere to the principles underlying the rule. See Burdick v. Bank of Am., N.A., 99 F.Supp.3d 1372, 1378 (S.D. Fla. 2015) ("`It is only when the breach of contract is attended by some additional conduct which amounts to an independent tort that such a breach can constitute negligence.'" (quoting Tiara Condo. Ass'n, 110 So. 3d at 408-09 (Pariente, J., concurring)); Tulepan v. Roberts, No. 14-CV-80574, 2015 WL 235441, at *6 (S.D. Fla. Jan. 16, 2015) ("Tiara Condominium does not overrule common law contract principles . . . [requiring a plaintiff to] prove the tort is independent of any breach of contract."); Kaye v. Ingenio, Filiale De Loto-Quebec, Inc., No. 13-61687 (CIV), 2014 WL 2215770, at *4 (S.D. Fla. May 29, 2014) ("[T]he fact that the economic-loss rule does not apply to cases where the parties are in contractual privity does not mean that parties in contractual privity may recast causes of action that are otherwise breach-of-contract claims as tort claims."). As Judge Pariente explained in concurrence in Tiara Condo. Ass'n,
110 So. 3d at 408-09 (Pariente, J., concurring) (internal quotation marks and citations omitted).
Indeed, Florida has long held, consistent with common law principles, that "[i]t is only when [a] breach of contract is attended by some additional conduct which amounts to an independent tort that such breach can constitute negligence." Elec. Sec. Sys. Corp. v. S. Bell Tel. & Tel. Co., 482 So.2d 518, 519 (Fla. Dist. Ct. App. 1986); see also Weimar v. Yacht Club Point Estates, Inc., 223 So.2d 100, 103 (Fla. Dist. Ct. App. 1969) ("The true question in any case involving tort liability is, `Has the defendant committed a breach of duty apart from the contract?'"). Because it appears that this remains good law in Florida, and because there is no dispute that the economic loss doctrine exists in Connecticut and Rhode Island, it is unimportant which state's law the Court applies to Plaintiffs' negligence claim; under any of these state's laws, to proceed on their negligence claim, Plaintiffs must demonstrate that the alleged breach of contract was "`attended by some additional conduct which amounts to an independent tort.'" Burdick, 99 F. Supp. at 1378 (quoting Tiara Condo. Ass'n, 110 So. 3d at 408-09 (Pariente, J., concurring)).
Plaintiffs admitted at oral argument that they can make no such additional showing, and as such, under Connecticut, Rhode Island, or Florida law, they are barred from bringing a claim of negligence. Summary judgment is therefore granted in Defendant's favor on the negligence count.
For the foregoing reasons, Plaintiffs' Motion [Doc. # 32] for Summary Judgment is GRANTED as to liability for breach of contract and DENIED as to the negligence count. Defendant's Motion [Doc. # 35] for Summary Judgment is DENIED as to the breach of contract count and as to its affirmative defense of failure to mitigate, and GRANTED as to the negligence count. A trial will be held on the limited issue of Defendant's affirmative defense of failure to mitigate.
IT IS SO ORDERED.