FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
TENTH CIRCUIT December 22, 2011
Elisabeth A. Shumaker
Clerk of Court
PAUL BRULE,
Plaintiff - Appellant,
v. No. 11-2027
(D.C. No. 1:10-CV-00835-JAP-WDS)
BLUE CROSS AND BLUE SHIELD OF (D. N. Mex.)
NEW MEXICO, a Division of Health
Care Service Corporation, a mutual legal
reserve corporation,
Defendant - Appellee.
ORDER AND JUDGMENT*
Before HOLMES, EBEL, and MATHESON, Circuit Judges.
Plaintiff-Appellant Paul Brule appeals the district court’s dismissal of his claims
for tortious interference with prospective contractual relations and negligence pursuant to
Federal Rule of Civil Procedure 12(b)(6). Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm.
*This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I. BACKGROUND
A. Factual Background
Because we are reviewing a dismissal under Rule 12(b)(6), the following facts are
stated in the light most favorable to Mr. Brule. See Kerber v. Qwest Group Life Ins.
Plan, 647 F.3d 950, 959 (10th Cir. 2011). Mr. Brule is an independent insurance broker.
For twelve years, he acted as a broker for Henry Productions, Inc.’s (“Henry
Productions”) health, dental, vision, and related insurance policies, which were all issued
by Blue Cross Blue Shield of New Mexico (“BCBS”). Mr. Brule received brokerage
commissions, paid by Henry Productions, for his sales of BCBS policies.
On September 24, 2008, Mr. Brule and Albert Rhodes, an employee of BCBS, met
with Laurie Henry and Anita Peralta, both employees of Henry Productions, to discuss
the company’s annual health insurance renewal. Mr. Brule had never worked with Mr.
Rhodes before this meeting. Mr. Rhodes did not complete the renewal paperwork until
the night before the meeting. As a result, Mr. Brule was unable to review the documents
prior to the meeting. In prior years, BCBS’s employees had always given Mr. Brule time
to review the renewal documents before they were presented to the client.
The renewal documents prepared by Mr. Rhodes stated Mr. Brule’s commission
rate of five percent at the top of every page. BCBS had never before displayed Mr.
Brule’s commission rate in such a manner and, according to Mr. Brule, “[s]tandard
industry practice does not require disclosing that information in that manner.” Aplt. App.
at 2. “At the meeting, it was obvious that the Henry [Productions] representatives were
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unhappy with the proposal.” Complaint, at ¶ 9. After the meeting, Ms. Peralta told Mr.
Brule that the publication of his commission rate at the top of each document caused
Henry Productions to seek out a competing broker, Wood Agency, for its health
insurance. As a result, Mr. Brule lost his longstanding account with Henry Productions.
B. Procedural Background
In 2010, Mr. Brule filed a lawsuit against BCBS in state court. He claimed that
BCBS had tortiously interfered with existing or prospective contractual relations and also
that it had been negligent. BCBS removed the case to federal court pursuant to 28 U.S.C.
§§ 1332 and 1441. Following removal, BCBS moved to dismiss the complaint under
Rule 12(b)(6) of the Federal Rules of Civil Procedure. The district court granted BCBS’s
motion and dismissed Mr. Brule’s complaint with prejudice.
Mr. Brule filed a timely appeal challenging the district court’s order.
II. DISCUSSION
On appeal, Mr. Brule argues that the district court erred in dismissing his claims
for tortious interference with a prospective contract and negligence. He also contends
that the district court erred in dismissing his complaint with prejudice, rather than
granting him leave to amend.
Because this is a diversity case, we apply New Mexico’s choice-of-law rules to
determine what substantive law governs Mr. Brule’s claims. See Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 495-97 (1941); Pepsi-Cola Bottling Co. v. PepsiCo, Inc.,
431 F.3d 1241, 1255 (10th Cir. 2005). The New Mexico Supreme Court “generally . . .
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applies the law of the state in which the wrongful conduct occurred.” Torres v. State, 894
P.2d 386, 390 (N.M. 1995). Accordingly, because the injuries alleged by Mr. Brule
occurred in New Mexico, his claims are governed by New Mexico state law.1
A. Standard of Review
“We review de novo a district court’s dismissal of a complaint under Rule
12(b)(6).” Kerber v. Qwest Group Life Ins. Plan, 647 F.3d 950, 959 (10th Cir. 2011).
We accept as true “all well-pleaded factual allegations in a complaint and view these
allegations in the light most favorable to the plaintiff.” Id. (quotations omitted). To
survive a motion to dismiss under Rule 12(b)(6), a complaint must contain “enough facts
to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
We review a district court’s decision to dismiss with prejudice for abuse of
discretion. See U.S. ex rel. Stone v. Rockwell Int’l Corp., 282 F.3d 787, 809 (10th Cir.
2002). “A dismissal with prejudice is appropriate where a complaint fails to state a claim
. . . and granting leave to amend would be futile.” Brereton v. Bountiful City Corp., 434
1
In a diversity case involving an unresolved question of state substantive law, we
may either determine what the state’s courts would do or certify the question to the state
supreme court for review. See Lehman Bros. v. Schein, 416 U.S. 386, 390-91 (1974)
(explaining that the decision to certify a question “rests in the sound discretion of the
federal court”). “[W]e will not trouble our sister state courts every time an arguably
unsettled question of state law comes across our desks. When we see a reasonably clear
and principled course, we will seek to follow it ourselves.” Pino v. United States, 507
F.3d 1233, 1236 (10th Cir. 2007).
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F.3d 1213, 1219 (10th Cir. 2006).
B. Mr. Brule’s Tortious Interference with Prospective Contract Claim2
Mr. Brule argues that BCBS tortiously interfered with his prospective contractual
relationship with Henry Productions by using improper means when it published his five
percent commission rate at the top of every page of Henry Productions’s insurance
renewal documents. In response, BCBS asserts that the disclosure of truthful
information—such as an insurance broker’s commission rate—cannot constitute
improper means under New Mexico law and cannot be the basis for liability. We agree.3
To establish liability for tortious interference with a prospective contract under
New Mexico law, a plaintiff must demonstrate that: (1) the defendant induced or
otherwise caused a third party not to enter into or continue in a prospective contractual
relation or prevented the plaintiff from acquiring or continuing the prospective relation;
and (2) the defendant interfered through “improper means.” 4 M&M Rental Tools, Inc. v.
2
Mr. Brule does not appeal the district court’s dismissal of his claim for tortious
interference with an existing contract. We therefore limit our analysis to his claim for
interference with a prospective contract.
3
Mr. Brule also argues that BCBS acted through improper means when it
published his commission rate on the renewal paperwork because this was contrary to the
established business practices of the insurance industry in New Mexico. We need not
and do not address this argument because we conclude that BCBS’s disclosure of truthful
information cannot be the basis for tort liability.
4
New Mexico law also allows a plaintiff to allege that the defendant acted with
“improper motive,” which is defined as motivation solely to harm the plaintiff. M&M
Continued . . .
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Milchem, Inc., 612 P.2d 241, 244 (N.M. Ct. App. 1980).
Here, the parties concede that there was a prospective contractual relationship and
that there was interference with that relationship. Our analysis of Mr. Brule’s claim for
interference with prospective contractual relations therefore focuses exclusively on
whether BCBS acted through improper means.
New Mexico’s formulation of the tort of interference with prospective contractual
relations draws heavily on the Restatement (Second) of Torts. See M&M Rental Tools,
612 P.2d at 245-46. Section 767 of the Restatement establishes a seven-factor balancing
test for determining whether a defendant’s interference is improper. 5 The New Mexico
Supreme Court has stated that the section 767 factors should be used to evaluate whether
a defendant’s interference is “improper.” Anderson v. Dairyland Ins. Co., 637 P.2d 837,
841 (N.M. 1981). Section 767 also identifies seven specific situations for which
consensus has emerged as to the proper application of the section 767 factors. See
Restatement (Second) of Torts § 767 cmt. a (1979) (“Sections 769-773 deal with . . .
special situations in which application of the factors enumerated in this Section have
Rental Tools, 612 P.2d at 244. The parties concede that BCBS did not act with improper
motive, and so our analysis is limited to the issue of “improper means.”
5
The section 767 factors are: (1) the nature of the defendant’s conduct; (2) the
defendant’s motive; (3) the interests of the plaintiff with which the defendant’s conduct
interferes; (4) the interests sought to be advanced by the defendant; (5) the social interests
in protecting the defendant’s freedom of action and the contractual interests of the
plaintiff; (6) the proximity or remoteness of the defendant’s conduct to the interference;
and (7) the relationship between the parties.
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produced more clearly identifiable decisional patterns . . . [and] therefore supplant the
generalization expressed in this Section.”).
Restatement section 772 is one of the specific situations for which consensus has
emerged. See Restatement (Second) of Torts § 767 cmt. a (1979). Section 772 states that
a party who “intentionally causes a third person . . . not to enter into a prospective
contractual relation with another does not interfere improperly with the other contractual
relation, by giving the third person (a) truthful information, or (b) honest advice within
the scope of a request for the advice.” Comment b to section 772 provides that “[t]here is
of course no liability for interference with a . . . prospective contractual relation on the
part of one who merely gives truthful information to another.”
The New Mexico Supreme Court has explicitly adopted the factors established in
Restatement section 767. See Anderson, 637 P.2d at 841. And it has arguably implicitly
adopted, and would likely explicitly adopt, section 772’s rule that disclosure of truthful
information cannot constitute interference by improper means. In reaching this
conclusion, we note that many other courts have adopted section 772 and have refused to
find improper means based on a defendant’s disclosure of truthful but embarrassing or
damaging facts about the plaintiff.6
6
Courts that have considered whether disclosure of truthful information can
qualify as improper means have frequently adopted section 772 of the Restatement. See,
e.g., David L. Aldridge Co. v. Microsoft Corp., 995 F. Supp. 728, 742 (S.D. Tex. 1998);
Int’l City Mgmt. Ass’n Ret. Corp. v. Watkins, 726 F. Supp. 1, 6 (D.D.C. 1989); Francis v.
Dun & Bradstreet, Inc., 4 Cal. Rptr. 2d 361, 364 (Cal. Ct. App. 1992); Kutcher v.
Continued . . .
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BCBS disclosed only truthful information about Mr. Brule’s commission rate to
Henry Productions. We therefore hold that BCBS’s disclosure of Mr. Brule’s
commission rate cannot be the basis for liability for tortious interference with a
prospective contract under New Mexico law.
C. Mr. Brule’s Negligence Claim
In his second claim, Mr. Brule argues that BCBS acted negligently when it
published his five percent commission rate at the top of Henry Productions’s renewal
documents. Under New Mexico law, a plaintiff alleging negligence must demonstrate:
(1) a duty owed by the defendant to the plaintiff, (2) a breach of that duty as measured by
a standard of reasonable care, and (3) that the breach was the proximate cause and cause
in fact of the plaintiff’s injuries. Herrera v. Quality Pontiac, 73 P.3d 181, 186 (N.M.
2003).
Whether a duty exists is a matter of law. Id. To establish that a duty exists, the
plaintiff must demonstrate that his or her injuries were foreseeable by the defendant and
Zimmerman, 957 P.2d 1076, 1091 (Haw. Ct. App. 2009); Soderlund Bros., Inc. v. Carrier
Corp., 663 N.E.2d 1, 10 (Ill. App. Ct. 1995); Cohen v. Battaglia, 202 P.3d 87, 98 (Kan.
Ct. App. 2009); Glass Serv. Co., Inc. v. State Farm Mut. Ins. Co., 530 N.W.2d 867, 871
(Minn. Ct. App. 1995); Macke Laundry Serv. Ltd. P’ship v. Jetz Serv. Co., 931 S.W.2d
166, 181 (Mo. Ct. App. 1996); Montrone v. Maxfield, 449 A.2d 1216, 1217-18 (N.H.
1982); E. Penn Sanitation, Inc. v. Grinnell Haulers, Inc., 682 A.2d 1207, 1218 (N.J.
Super. Ct. App. Div. 1996); Dryden v. Cincinnati Bell Tel. Co., 734 N.E.2d 409, 414
(Ohio Ct. App. 1999); Walnut St. Assocs., Inc. v. Brokerage Concepts, Inc., 982 A.2d 94,
101 (Pa. Super. Ct. 2009); Havsy v. Flynn, 945 P.2d 221, 223-24 (Wash. Ct. App. 1997);
Tiernan v. Charleston Area Med. Ctr., 506 S.E.2d 578, 592-93 (W.Va. 1998); Liebe v.
City Fin. Co., 295 N.W.2d 16, 18 (Wis. Ct. App. 1980); Allen v. Safeway Stores Inc., 699
P.2d 277, 280 (Wyo. 1985).
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that public policy favors the imposition of a legal duty. Id. We conclude that New
Mexico public policy would not impose a legal duty of nondisclosure regarding an
insurance broker’s commission rates. We therefore need not and do not address whether
Mr. Brule’s injuries were foreseeable by BCBS.
New Mexico law requires that public policy support the imposition of a legal duty.
See id. Mr. Brule argues that public policy should prohibit the disclosure of a broker’s
commission rate on renewal documents because such nondisclosure would protect the
broker from operating at a competitive disadvantage relative to other brokers. BCBS
argues that New Mexico public policy encourages full disclosure of all material
information in the context of insurance sales. We find BCBS’s argument persuasive.
New Mexico’s Unfair Insurance Practices Act (“UIPA”), NMSA 1978, §§ 59A-
16-1 to -30 (2009), seeks to prohibit unfair or deceptive acts and practices in the
insurance industry. The New Mexico Court of Appeals has held that insurance
companies have a duty to disclose material facts about the policies they sell under the
UIPA. Azar v. Prudential Ins. Co. of Am., 68 P.3d 909, 930 (N.M. Ct. App. 2003).
Additionally, New Mexico has long recognized that “both the insurer and the insured
have a duty not to misrepresent or withhold information material to an insurance
contract.” Id. (citing Modisette v. Found. Reserve Ins. Co., 427 P.2d 21 (N.M. 1967)).
Thus, New Mexico law strongly encourages open and transparent dealings in the
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insurance context, particularly with regard to material information. 7
Mr. Brule’s proposed solution—a legally recognized duty of confidentiality
regarding an insurance broker’s commission rate—would undermine New Mexico’s goal
of transparent dealings in the insurance context as evidenced in the UIPA and the state’s
common law. See UIPA, NMSA 1978, §§ 59A-16-1 to -30 (2009); Azar, 68 P.3d at 930.
Accordingly, we conclude that New Mexico’s public policy does not support imposing a
duty of confidentiality regarding an insurance broker’s commission rate and that Mr.
Brule’s negligence claim fails as a matter of law.
D. Dismissal with Prejudice
We next address whether the district court erred in dismissing Mr. Brule’s claim
with prejudice without granting him leave to amend. “A dismissal with prejudice is
appropriate where a complaint fails to state a claim under Rule 12(b)(6) and granting
leave to amend would be futile.” Brereton v. Bountiful City Corp., 434 F.3d 1213, 1219
(10th Cir. 2006).
We have already determined that the truthful disclosure of Mr. Brule’s
commission rate cannot be the basis for liability for tortious interference with prospective
contractual relations under New Mexico law. Mr. Brule is thus unable to establish a
7
We need not consider whether an insurance broker’s commission rate is, in fact,
material to the formation of an insurance contract. It is sufficient to note that New
Mexico law strongly encourages open and transparent dealings in the insurance context,
and New Mexico’s public policy would not support the imposition of a duty of
confidentiality regarding an insurance broker’s commission.
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required element of his first claim, and amendment would not save it. Likewise, we have
concluded that New Mexico’s public policy does not support the imposition of a duty of
confidentiality regarding an insurance broker’s commission rate. Thus, even if he were
allowed to amend, Mr. Brule would be unable to establish a legal duty under New
Mexico law. Because granting him leave to amend would be futile, we hold that the
district court did not abuse its discretion by dismissing Mr. Brule’s claims with prejudice.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s dismissal of Mr.
Brule’s claims with prejudice.
ENTERED FOR THE COURT
Scott M. Matheson, Jr.
Circuit Judge
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