Doyle v. Hoyle Ins. CV-94-244-SD 03/14/95 UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Diana Doyle

v. Civil No. 94-244-SD

Wayne F. Hoyle; Hoyle Insurance Agency

O R D E R

In this diversity action, plaintiff Diana F. Doyle asserts

various state law claims against Hoyle Insurance Agency, Inc.,

and its president, Wayne F. Hoyle, based upon the defendants'

purported failure to obtain insurance for an apartment building

owned by plaintiff in Littleton, New Hampshire.

Presently before the court are defendants' motion for

partial summary judgment, two motions filed by defendants for

protective orders, plaintiff's motion to compel discovery, and

plaintiff's motion for an enlargement of time to produce expert

reports. Also before the court are defendant Wayne F. Hoyle's

motion for leave to file a reply brief and plaintiff's motion for

leave to file a supplemental memorandum, which are herewith

granted. Background

In December of 1992, plaintiff purchased an apartment

building in Littleton, New Hampshire, and retained Donald McStay

to manage the property. McStay's duties included obtaining

insurance coverage for the building.

In order to obtain insurance coverage for the Littleton

property, McStay contacted defendant Wayne F. Hoyle at the Hoyle

Insurance Agency in Wrentham, Massachusetts. Plaintiff alleges

that McStay "acguired a fire loss and liability protection binder

on the Littleton property" from Hoyle that "was effective for one

year, commencing on December 29, 1992." Complaint 55 8-9.

Plaintiff further alleges that "in several conversations with

McStay from December 1993 through February 1994, Defendant Hoyle

assured McStay that a fire loss and liability protection

insurance policy was forthcoming and that the Littleton property

continued to be covered." Id. 5 12.

On February 9, 1994, the Littleton property was destroyed by

fire. After receiving notification of the fire loss, Hoyle

Insurance Agency allegedly advised plaintiff's mortgagee that a

premium notice for an insurance policy on plaintiff's Littleton

property had been mailed to McStay on November 24, 1993, and that

the policy was canceled on January 28, 1994, due to nonpayment of

the premium. Complaint 55 15, 18. Plaintiff alleges that the

2 premium was mailed to the wrong address by the Hoyle Insurance

Agency and that neither plaintiff nor McStay received the premium

notice. Id. 55 15-16.

Plaintiff now brings suit against the defendants for breach

of contract, breach of express warranty, negligence, negligent

and intentional misrepresentation, and violation of the

Massachusetts Consumer Protection Act, M a s s . G e n . L. ch. 93A

(chapter 93A), which prohibits unfair and deceptive trade

practices.

Discussion

A. Defendants' Motion for Partial Summary Judgment

1. Summary Judgment Standard

Under Rule 56(c), Fed. R. Civ. P., summary judgment is

appropriate "if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment

as a matter of law."

Summary judgment is a procedure that involves shifting burdens between the moving and the nonmoving parties. Initially, the onus falls upon the moving party to aver "'an absence of evidence to support the nonmoving party's case.'" Garside v. Osco Drug, Inc.,

(1st Cir. 1990) (guoting Celotex Corp. v. Catrett,

, 325

3 (1986)). Once the moving party satisfies this requirement, the pendulum swings back to the nonmoving party, who must oppose the motion by presenting facts that show that there is a "genuine issue for trial." Anderson v. Liberty Lobby, Inc.,

(1986) (citing Fed. R. Civ. P. 56(e)) . . . .

LeBlanc v. Great American Ins. Co.,

(1st Cir.

1993), cert, denied. ___ U.S. , 114 S. C t . 1398 (1994).

When a party fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party bears the burden of proof at trial, there can no longer be a genuine issue as to any material fact: the failure of proof as to an essential element necessarily renders all other facts immaterial, and the moving party is entitled to judgment as a matter of law.

Smith v. Stratus Computer, Inc.,

(1st Cir. 1994)

(citing Celotex Corp., supra,

).

In determining whether summary judgment is appropriate, the

court construes the evidence and draws all justifiableinferences

in the nonmoving party's favor.

.

2. Personal Liability of Wavne F. Hoyle

Defendants move for summary judgment as to plaintiff's

breach of contract, breach of warranty, and unfair trade

practices claims on the ground that defendant Wayne F. Hoyle

4 cannot be held personally liable for said claims because he was

acting in his capacity as a corporate officer and employee of

Hoyle Insurance at all relevant times.1

a. The Contract Claims

Defendant Hoyle Insurance Agency, Inc., has operated as a

Massachusetts corporation since November 5, 1971. See

Certification of Incorporation (attached to Defendants' Motion as

Exhibit B ) . Defendant Wayne F. Hoyle is the President, the

Treasurer, and a stockholder of Hoyle Insurance.

[0]ne of the desirable and legitimate attributes of the

corporate form of doing business is the limitation of the

liability of the owners to the extent of their investment.'"

Ashland Lumber Co. v. Haves,

,

(1979) (guoting Peter R. Previte, Inc. v. McAllister Florist,

Inc.,

,

(1973)). However, New

Hampshire courts have "'not hesitated to disregard the fiction of

the corporation as being independent of those who are associated

with it as stockholders'" when the circumstances of a particular

defendants' motion appears to move for summary judgment on all counts in the complaint, including the tort claims. However, in defendants' reply memorandum, defendants clarify that their motion for partial summary judgment does not include the tort claims. Reply Memorandum at 1. Accordingly, the court limits its discussion herein to plaintiff's contract and chapter 93A claims.

5 case warrant a piercing of the corporate veil.

(quoting

,

). Such

circumstances have been found to exist where the defendant has

"suppressed the fact of [his] incorporation or misled the

plaintiff as to the corporate assets,"

,

, or where "the corporate identity has

been used to promote an injustice or fraud on the plaintiffs,"

Terren v. Butler,

,

(1991)

(citing Druding v. Allen,

,

(1982)) .2

Plaintiff contends that the corporate form should be

disregarded here because Hoyle was conducting his business out of

his home in Wrentham, Massachusetts, and because at no time did

Hoyle "advise" or "alert" McStay "that he was conducting business

with [McStay] merely as an agent for a corporation." Affidavit

of Donald McStay 5 5 (attached to Plaintiff's Objection as

Exhibit A ) .

New Hampshire courts will not disregard the corporate form

2A corporate officer may also "'make himself personally liable . . . for a corporate debt by an express agreement, provided the agreement is supported by valuable consideration.'" Ashland Lumber Co., supra,

,

(quoting 3A W i l l i a m M. F l e t c h e r , F l e t c h e r 's C y c l o p e d i a o f t h e L a w o f P r i v a t e C o r p o r a t i o n s § 1119 (perm. ed. 1975)) [hereinafter F l e t c h e r 's C y c l o p e d i a o n C o r p o r a t i o n s ]) . However, there is no evidence that such an agreement was made here.

6 "solely because a corporation is a one-man operation." Village

Press v. Stephen Edward Co.,

,

(1980); see also 1 F l e t c h e r 's C y c l o p e d i a on Corporations § 25, at

514 (perm. ed. rev. vol. 1990) ("the close nature of the

corporation is not by itself enough to justify piercing the

corporate veil"). Similarly, the court here finds the fact that

Hoyle operated Hoyle Insurance Agency out of his home does not

warrant a piercing of the corporate veil.

The court further finds that Hoyle's purported failure to

"alert" or "advise" McStay that Hoyle Insurance Agency was

incorporated is not the eguivalent of suppressing the fact of

incorporation. New Hampshire law reguires a showing of

misrepresentation or fraudulent concealment of incorporation. No

such showing has been made by the plaintiff in response to

defendants' summary judgment motion. Indeed, attached to the

affidavit of defendant Wayne F. Hoyle are copies of several

letters between Hoyle Insurance and McStay and Doyle. All of

these letters, including those sent by McStay or Doyle to Hoyle,

clearly identify Hoyle Insurance as "Hoyle Insurance, Inc." or

"Hoyle Insurance Corp." Affidavit of Wayne F. Hoyle, Sr., 55 5-8

(attached to Defendants' Reply Memorandum). Based on the

evidence before it, the court finds that no reasonable jury could

conclude that defendant Wayne F. Hoyle suppressed from plaintiff

7 the fact that Hoyle Insurance was incorporated.

Plaintiff further asserts that defendants' failure to carry

errors and omissions insurance,3 coupled with the agency's likely

undercapitalization, amounts to fraud on the agency's customers.

However, plaintiff maintains that she has been unable to

determine the extent of the agency's undercapitalization because

defendants have delayed the taking of Hoyle's deposition.

Accordingly, plaintiff reguests, under Rule 56(f), Fed. R. Civ.

P., that defendants' motion be refused or continued for

additional discovery on the undercapitalization issue.

Rule 56(f) "describes a method of buying time for a party

who, when confronted by a summary judgment motion, can

demonstrate an authentic need for, and an entitlement to, an

additional interval in which to marshal facts essential to mount

an opposition." Resolution Trust Corp. v. North Bridge Assocs.,

Inc.,

(1st Cir. 1994) .4 "A litigant who

defendants have stated in response to plaintiff's second set of interrogatories that they were not insured against loss for the damages attributed to them by plaintiff.

4The rule states, in full, that

[s]hould it appear from the affidavits of a party opposing the motion [for summary judgment] that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just. desires to invoke Rule 56(f) must make a sufficient proffer."

This proffer must be "authoritative; it should be advanced

in a timely manner; and it should explain why the party is unable

currently to adduce the facts essential to opposing summary

judgment."

"[T]hese reguirements are not inflexible and . .

. district courts are vested with considerable discretion in

their administration. In the exercise of that discretion, one or

more of the reguirements may be relaxed, or even excused, to

address the exigencies of a given case."

(citation omitted).

Plaintiff has failed to support her Rule 56(f) reguest with

the reguired affidavit. However, in light of the fact that

plaintiff's failed attempt to depose Hoyle is well documented in

her motion to compel discovery, discussed infra pp. 14-16, the

court will exercise its discretion and overlook this failure.

Plaintiff's reguest is otherwise timely and properly details why

plaintiff is unable to present evidence regarding the defendant

corporation's purported undercapitalization.

Mindful that "[u]nless the movant has been dilatory, or the

court reasonably concludes that the motion is a stalling tactic

or an exercise in futility, it should be treated liberally,"

the court herewith grants plaintiff's Rule 56(f) reguest.

Plaintiff shall have 30 days from the date of this order to

Rule 56(f), Fed. R. Civ. P. depose defendant Wayne F. Hoyle and file a renewed response to

defendants' motion for summary judgment. Said response shall be

limited to the question of whether Hoyle should be held

personally liable for breach of contract or warranty because of

the corporation's undercapitalization. If defendants seek to

supplement their motion on this issue, they shall do so within

the same 30-day period.

b. Unfair and Deceptive Trade Practices

In Count I of her complaint, plaintiff asserts a claim for

unfair and deceptive trade practices in violation of chapter 93A.

Defendants move for summary judgment as to said claim, arguing

that defendant Wayne F. Hoyle cannot be held individually liable

for the allegedly deceptive acts of the defendant corporation.5

The court finds that resolution of this issue requires a

determination as to whether plaintiff's chapter 93A claim should

be treated as a tort claim or as a contract claim.

In Count I, plaintiff alleges that defendants, after

5In their reply brief, defendants also argue, under choice- of-law rules, that chapter 93A does not apply to this action. Although defendants reserved the right to object to the application of Massachusetts law to this action in their motion for summary judgment, defendants did not actually argue the choice-of-law issue as a basis for granting summary judgment. Accordingly, plaintiff did not have the opportunity to respond to such an argument in her objection, and the court declines to address the choice-of-law issue herein.

10 agreeing to obtain insurance for plaintiff's Littleton property,

"willfully and knowingly acted in an unfair and deceptive manner

by . . . assuring Plaintiff that the Littleton property was

covered by insurance, when it was not[, and] assuring Plaintiff

that a fire loss and liability insurance policy on the Littleton

property was forthcoming, when it was not." Complaint 5 27. The

remedies sought by plaintiff for this alleged violation of

chapter 93A include compensatory damages, multiple compensatory

damages, attorney's fees, and costs.

The court's review of the allegations contained in Count I

and the remedies sought therein leads the court to conclude that

plaintiff's chapter 93A claim is more akin to her tort claims

than to her contract claims. Accordingly, the court will treat

plaintiff's chapter 93A claim as a tort for the purpose of

determining whether Hoyle can be held individually liable. See,

e.g., Crellin Technologies, Inc. v. Eguipmentlease Corp.,

(1st Cir. 1994) (holding that a chapter 93A claim should be

treated as a tort when the "chapter 93A claim and the reguested

remedy are highly analogous to a tort claim and remedy").

"It is well established that an officer of a corporation is

liable for any tort of the corporation in which he participates

or authorizes, even though he was acting for the corporation in

the commission of the tortious activity." Pacific & Atlantic

11 Shippers v. Schier,

,

(1969)

See also Bolan v. Paragon Plastics, Inc.,

(D. Mass. 1990) (holding that corporate officers can be held

liable under chapter 93A for participating in unfair and

deceptive practices). Accordingly, because Wayne F. Hoyle is

alleged to have personally participated in the tortious conduct

that forms the basis of plaintiff's chapter 93A claim, the court

finds that he can be held individually liable for that conduct.

Defendants' motion for summary judgment is therefore denied as to

Count I .

B. The Discovery Motions

The parties have filed a plethora of motions, objections,

and replies regarding the deposition of defendant Wayne F. Hoyle,

Sr., the deposition of Wayne Hoyle, Jr., and the inspection of

Hoyle Insurance Agency's computer files. The court addresses

each discovery dispute in turn.

1. Deposition of Wayne Hoyle, Jr.

On December 27, 1994, plaintiff noticed the deposition of

Wayne Hoyle, Jr.,6 for January 13, 1995, at the offices of

6Wayne Hoyle, Jr., is the son of defendant Wayne F. Hoyle and is an employee of defendant Hoyle Insurance. He is not a party to this action.

12 plaintiff's counsel in Hanover, New Hampshire. See Notice of

Deposition (attached to Defendants' Motion as Exhibit A ) . In

response thereto, defendants filed the instant motion for a

protective order under Rule 26(c), Fed. R. Civ. P.,7 to prevent

the deposition of Wayne Hoyle, Jr., on the ground that he was not

subpoenaed.

Rule 30(a)(1), Fed. R. Civ. P., permits a party to depose

"any person." However, if the person to be deposed is not a

party, his presence at a deposition cannot be compelled by using

a notice of deposition. Instead, the deposing party must

subpoena the nonparty deponent in accordance with Rule 45, Fed.

R. Civ. P.

Plaintiff contends that Wayne Hoyle, Jr.'s deposition was

properly noticed because Hoyle, Jr., should be considered a

"managing agent" of defendant Hoyle Insurance. However, Rule

30(b)(6) does not permit the plaintiff to choose the managing

agent who will speak on a defendant corporation's behalf. See

Rule 30(b) (6), Fed. R. Civ. P.; see also 8A C h a r l e s A. W r i g h t et

al ., Federal Practice and Procedure § 2103 (1994) [hereinafter W r i g h t &

7Rule 26(c) provides in pertinent part that "[u]pon motion by a party or by the person from whom discovery is sought . . . and for good cause shown, the court . . . may make any order which justice reguires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense

13 M iller] .

A defendant corporation's failure or refusal to name a

specific employee as a managing agent under Rule 30(b)(6) does

not preclude a plaintiff from taking the deposition of such an

employee. However, the presence of such a person at a

deposition, as with any other nonparty, must be obtained by

subpoena rather than by notice of deposition. See Rules 30(a) (1)

and 30(b) (6), Fed. R. Civ. P.; see also 8A W r i g h t & M iller § 2103,

at 36-37.

Accordingly, defendants' motion for a protective order is

granted, and plaintiff's motion to compel the deposition of Wayne

Hoyle, Jr., is denied. If plaintiff wishes to depose Wayne

Hoyle, Jr., she must subpoena him in accordance with Rules

30(a) (1) and 45, Fed. R. Civ. P. With respect to the place of

said deposition, the court refers the parties to the limitations

set forth in Rules 45(b)(2) and 45(c)(3)(A)(ii).

2. Deposition of Defendant Wayne F. Hoyle, Sr.

On December 27, 1994, plaintiff noticed the deposition of

defendant Wayne F. Hoyle, Sr., for January 12, 1995, at the

offices of plaintiff's counsel in Hanover, New Hampshire. See

Notice of Deposition (attached to Defendants' Motion as Exhibit

A) .

14 Defendant Hoyle Insurance moves for a protective order to

prevent plaintiff from compelling the deposition of Hoyle, Sr.,

in Hanover. Instead, defendant requests that said deposition

take place at the offices of Attorney Introcaso in Manchester,

New Hampshire; at the offices of Attorney O'Leary in Boston,

Massachusetts; or in Wrentham, Massachusetts, where Hoyle

Insurance is located. Defendants' Consolidated Memorandum at 11.

The party issuing a notice of deposition "may unilaterally

choose the place for deposing an opposing party, subject to the

granting of a protective order by the Court pursuant to Rule

26(c), Fed. R. Civ. P., designating a different place." Turner

v. Prudential Ins. Co. of America,

(M.D.N.C.

1988) (citing 8 W r i g h t & M iller § 2112, at 403); see also Payton v.

Sears. Roebuck & C o .,

(N.D. G a . 1993).

The first basis for defendants' motion is that Wayne F.

Hoyle, Sr., is being deposed under Rule 30(b)(6) as president of

Hoyle Insurance and the deposition of a corporation should

ordinarily be taken at its principal place of business. See 8A

W right & M iller § 2112, at 81-82; Salter v. Upjohn Co.,

(5th Cir. 1979) . However, in light of this court's

partial ruling on defendant's motion for summary judgment, supra

pp. 10-12, Wayne F. Hoyle, Sr., remains a defendant in this

action. Further, plaintiff did not notice the deposition of

15 Hoyle Insurance Agency under Rule 30(b)(6); she noticed the

deposition of Wayne F. Hoyle, Sr. Accordingly, the court treats

plaintiff's notice of deposition as naming Hoyle to be deposed in

his individual capacity rather than as an officer designated to

testify on behalf of Hoyle Insurance under Rule 30(b)(6).

The second basis for defendants' motion is that reguiring

Hoyle "to travel well in excess of 100 miles to attend this

deposition places an undue burden on Mr. Hoyle, Sr. as he is

heavily involved in the day to day operation of his small

business." Defendants' Motion at 4.

Acknowledging that Hoyle Insurance is a small, closely held

corporation that reguires defendant Wayne F. Hoyle, Sr.'s daily

attention, and noting that plaintiff has exhibited some

willingness to alter the place of defendant's deposition to

ensure that said deposition take place, the court finds and rules

that the deposition of defendant Wayne F. Hoyle, Sr., shall take

place at the offices of Attorney Introcaso in Manchester, New

Hampshire, at a date and time mutually convenient to the parties

within 30 days of the date of this order.

3. Plaintiff's Notice of Inspection and Copying of Computer

Files

On January 23, 1995, plaintiff noticed the inspection and

16 copying of computer files at Hoyle Insurance relating to this

litigation. On February 2, 1995, plaintiff filed a motion to

compel this inspection.

Defendants object to plaintiff's motion as premature on the

ground that Rule 34(b), Fed. R. Civ. P., gives them 30 days to

serve a written response to plaintiff's reguested inspection.

The court agrees that plaintiff's February 2, 1995, motion to

compel was premature at the time it was filed. However, no other

objection to the inspection has been raised by the defendants,

and plaintiff represents in her reply brief dated February 24,

1994, that no response from defendants had been received as of

that date, which is just over 30 days from the date of the notice

of inspection.

Accordingly, the court will treat plaintiff's reply brief as

a timely renewal of her motion to compel the inspection.

Defendants shall have 10 days from the date of this order to file

an objection thereto or, in the alternative, to arrange for the

inspection to take place within 30 days of the date of this

order.

C. Plaintiff's Motion to Enlarge Time

Plaintiff moves for an enlargement of time to produce expert

reports from March 1, 1995, to June 1, 1995. Defendants pose no

17 objection to this motion. In light of the discovery problems

addressed herein, said motion is granted. Plaintiff shall

disclose her experts and produce the experts' written reports by

June 1, 1995. Defendants shall disclose their experts and the

experts' written reports by September 1, 1995.

Conclusion

For the reasons stated herein, defendants' motion for

partial summary judgment (document 14) is denied as to Count I.

The remainder of the motion shall be ruled on after receipt of

any additional submissions from the parties following the

deposition of defendant Wayne F. Hoyle. Defendants' motion to

file a reply brief (document 22) is granted; defendants' motion

for a protective order regarding Wayne Hoyle, Jr. (document 16)

is granted; defendants' motion for a protective order regarding

defendant Wayne F. Hoyle, Sr. (document 15) is granted;

plaintiff's motion to compel (document 19) is granted in part and

denied in part; plaintiff's assented-to motion for enlargement of

time (document 23) is granted; and plaintiff's motion for leave

to file a supplemental memorandum (document 24) is granted.

SO ORDERED.

Shane Devine, Senior Judge United States District Court

March 14, 1995

18 cc: Sheldon M. Katz, Esq. Anthony L. Introcaso, Esq. Edward P. O'Leary, Esq.

19