972 F. Supp. 2d 850
E.D. Va.2013Background
- Ford had Aggregate Stop Loss insurance with Gerling/HDI-Gerling; Gerling/HDI-Gerling historically paid verified "Non-Batch" claims by wire transfer to a Ford bank account in Michigan.
- In 2007 HDI-Gerling entered into a retroactive reinsurance and Loss Portfolio Transfer with National Indemnity Company (NICO), which gave NICO control over claims handling; Ford was unaware of that arrangement initially.
- Mitigate, an auditor, verified Ford’s Non-Batch claims in March 2011; thereafter HDI-Gerling, at NICO’s direction, refused payment and sent a March 21, 2011 letter to Ford’s Virginia counsel saying the claims were unsubstantiated.
- Ford sued NICO asserting tortious interference with contract (Count I) and violation of Virginia’s Business Conspiracy statute, Va.Code § 18.2-499 (Count II). NICO moved for summary judgment, arguing Michigan substantive law applies and that, under Michigan law, an agent cannot be liable for tortious interference.
- The court applied Virginia choice-of-law rules (lex loci delicti), held Michigan law governs because the ‘‘place of performance’’ (Michigan bank account) was the site of the first causally-related injury, denied summary judgment on Count I (agency dispute raises factual issues), and granted summary judgment on Count II because Michigan law does not recognize the Virginia statutory conspiracy claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for tort claims | Virginia law applies because March 21 letter was sent to Ford in Virginia and caused Ford’s injury there | Michigan law applies because the first causally-related injury occurred where payment was to be made — Ford’s Michigan bank account | Michigan law applies (lex loci delicti: place of performance = place of wrong) |
| Applicability of Virginia Business Conspiracy statute (Count II) | Statute applies to conspiratorial scheme injuring Ford | Michigan substantive law governs and does not encompass Virginia statute | Count II dismissed because Michigan law governs and does not provide the Virginia statutory cause of action |
| Tortious interference liability under Michigan law | N/A (Ford argues NICO is liable) | NICO: as HDI-Gerling’s agent, it cannot be liable for interfering with its principal’s contract | Denied summary judgment on Count I — agency is disputed and is a factual question for the jury |
| Standard for summary judgment | N/A | N/A (parties invoked Rule 56) | Court applied Rule 56 standards and viewed facts in light most favorable to Ford; genuine issues of material fact preclude summary judgment on agency |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment burden and genuine-issue standard)
- Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (drawing inferences for summary judgment)
- Insteel Industries, Inc. v. Costanza Contracting Co., 276 F. Supp. 2d 479 (applying Virginia choice-of-law rules)
- Milton v. IIT Research Inst., 138 F.3d 519 (lex loci delicti in Virginia context)
- Equitable Trust Co. v. Bratwursthaus Mgmt. Corp., 514 F.2d 565 (place of performance governs contract questions)
- Hilb Rogal & Hobbs Co. v. Rick Strategy Partners, Inc., 230 Fed. Appx. 328 (choice-of-law for tortious interference tied to place of injury)
- Lawsuit Fin. LLC v. Curry, 261 Mich. App. 579 (Michigan rule that agent cannot be third party to principal’s contract)