author: ELLEN B. BURNS, District Judge.

text:
    Peggy Ravich ZAMORE v. James E. DYER, Individually and as Mayor of the City of Danbury, et al.
    Civ. No. B82-389.
    United States District Court, D. Connecticut.
    Oct. 1, 1984.

      Thomas W. Bucci, Bridgeport, Conn., Arthur H. Goldsmith, Boston, Mass., for plaintiff.
    Dion W. Moore, Bridgeport, Conn., Theodore H. Goldstein, Danbury, Conn., James J. Maher, Thomas M. Murtha, Bridgeport, Conn., for defendants.
   RULING ON PLAINTIFF’S MOTION FOR SUMMARY AND DECLARATORY JUDGMENT AND FOR REINSTATEMENT RELIEF

ELLEN B. BURNS, District Judge.

This civil action arises from the alleged wrongful termination of plaintiff as Community Health Educator for the City of Danbury. The plaintiff has moved for summary and declaratory judgment on her complaint of unlawful sex discrimination and denial of her due process rights. She requests reinstatement to her former position or, alternatively, to be given an equivalent position. She has further asked for compensatory damages of $55,877 in back pay ($34,557 adjusted gross wages through August, 1983, and $1,640 per month thereafter) and an award of reasonable attorney’s fees.

The action was brought pursuant to Title VII of the Civil Rights Act of 1964, codified at 42 U.S.C. § 2000e-5(g), the Connecticut Human Rights Act, Conn.Gen.Stat. § 46a-60(a)(1) and (7)(D) and 42 U.S.C. § 1983, by virtue of alleged due process and equal protection violations. The plaintiff also alleged various tort and contract claims which are not subject to the motion for summary judgment. Plaintiff has represented that she would not pursue these state law claims for damages if successful on this motion.

The defendants are James E. Dyer, individually and as Mayor of the City of Danbury, Thomas F. Draper, individually and as Acting Director of Health for the City of Danbury, and The City of Danbury. Plaintiff has alleged the court’s jurisdiction under 42 U.S.C. § 1983, 28 U.S.C. § 1343(3) and (4), and § 1331 as well as under 42 U.S.C. § 2000e et seq., Title VII of the Civil Rights Act of 1964, as amended by The Equal Opportunities Act of 1972, and the doctrine of pendent jurisdiction.

Plaintiff’s motion is granted in part and denied in part.

A. Statement of the Facts

The following facts are set forth in plaintiff’s affidavit and not disputed by any counter-affidavit of defendants:

Plaintiff Peggy Ravich Zamore, having passed a Civil Service examination, was hired in October, 1979, as the Community Health Educator for the City of Danbury. Prior to her employment in Danbury, Mrs. Zamore was awarded a B.A. degree in nutrition from Simmons College, Boston, Massachusetts, in 1973 and a Masters Degree in Public Health from the University of Michigan in 1975. In October, 1980, the plaintiff applied for a maternity leave, as provided for in the collective bargaining agreement between the City of Danbury and its employees. The Danbury Civil Service Commission denied the plaintiff’s request for a year’s leave, granting her instead a six-month maternity leave to commence December 1, 1980. On or about May 21, 1981, the plaintiff wrote to her supervisor, defendant Thomas Draper, Acting Director of Health for the City of Dan-bury, to inform him of her intention to return to her position on Monday, June 1. On Friday, May 29, 1981, around 5:00 p.m., defendant James Dyer, Mayor of Danbury, sent a letter by hand to the plaintiff informing her that her position had not been funded in the 1981-1982 budget and that he was immediately abolishing the position of Community Health Educator and terminating her services as an employee of the City of Danbury. Defendant Dyer did not offer plaintiff an equivalent position at that time. Defendant Draper’s role in the abolition of plaintiff’s position is a matter that is factually disputed.

Plaintiff’s termination took place less than one business day before she expected to return to work. At no time was the plaintiff given a hearing or an opportunity to challenge, inquire into, or contest her dismissal.

On or about July 6, 1981, plaintiff filed a complaint of sex discrimination with the Connecticut Commission on Human Rights and Opportunities (CCHRO) charging the defendants with violating the Connecticut Human Rights statutes, in particular Conn.Gen.Stat. § 46a-60(a)(7)(D) which provides that

It shall be a discriminatory practice in violation of this section: ...
(7) For an employer, by himself or his agent: ...
(D) to fail or refuse to reinstate the employee to her original job or to an equivalent position with equivalent pay and accumulated seniority, retirement, fringe benefits and other service credits upon her signifying her intent to return [after a pregnancy leave] unless, in the case of a private employer, the employer’s circumstances have so changed as to make it impossible or unreasonable to do so.

The state complaint was sent to and received by the federal Equal Employment Opportunity Commission (EEOC) which issued a right to sue letter on April 5, 1982. No further action was taken by either the state or federal agency.

Plaintiff’s motion for summary judgment is addressed to Counts One and Four of her complaint.

B. Federal Law Claims

1. Title VII

In Count One, plaintiff has alleged violation of her Title VII rights asserting that the defendants unlawfully discriminated against her on the basis of sex by refusing to reinstate her following a six-month maternity leave. The defendants allege as a special defense, allowable under Title VII that Mrs. Zamore was terminated because of a loss of funding which required the abolition of her position. Plaintiff maintains the defense is pretextual. The Title VII dispute is, therefore, factual and cannot be resolved as a matter of law. For this reason the court finds that plaintiff’s Title VII- claim is not suitable for resolution by way of a motion for summary judgment. Adickes v. S.H. Kress Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Fed.R.Civ.P. 56(c).

2. Due Process

In Count Four, the plaintiff has alleged violation of her due process rights as guaranteed by the Fourteenth Amendment and 42 U.S.C. § 1983, claiming entitlement to her position by virtue of the reinstatement provisions of Conn.Gen.Stat. § 46a-60(a)(7)(D). Her due process claims are substantial. She was discharged without effective notice and without a hearing from a job in which she had a state-created property interest. Although plaintiff’s property interest in continued employment after her maternity leave was granted by the provisions of Conn.Gen.Stat. § 46a-60(a)(7)(D), her right to minimum procedures before losing that property interest is a matter of federal law. Logan v. Zimmerman Brush Co., 455 U.S. 422, 432, 102 S.Ct. 1148, 1155, 71 L.Ed.2d 265 (1981); Vitek v. Jones, 445 U.S. 480, 490-91, 100 S.Ct. 1254, 1262, 63 L.Ed.2d 552 (1980); Arnett v. Kennedy, 416 U.S. 134, 166-67, 94 S.Ct. 1633, 1650, 40 L.Ed.2d 15 (1974).

The Supreme Court observed in Logan, supra:

As our decisions have emphasized time and again, the Due Process Clause grants the aggrieved party the opportunity to present his case and have its merits fairly judged. Thus it has become a truism that ‘some form of hearing’ is required before the owner is finally deprived of a protected property interest. Board of Regents v. Roth, 408 U.S. 564, 570-71 n. 8 [92 S.Ct. 2701, 2705-06 n. 8, 33 L.Ed.2d 548] (emphasis in original) ... To put it as plainly as possible, the State may not finally destroy a property interest without first giving the putative owner an opportunity to present his claim of entitlement.

Logan v. Zimmerman Brusk Co., 455 U.S. at 433-34, 102 S.Ct. at 1156.

In the instant case, plaintiff was given termination notiee less than one business day before she was scheduled to return to work. She was never given a hearing. The court finds that, as a matter of law, the plaintiff was denied minimum due process. The motion for summary judgment on plaintiffs due process claim is therefore granted, except as to defendant Draper, whose role is’ disputed.

The problem confronting the court is what remedy can be granted to the plaintiff. To give her notice and a hearing years after termination appears to be inadequate. The Connecticut Supreme Court considered this question in Adamchek v. Board of Education, 174 Conn. 366, 387 A.2d 556 (1978), noting that:

... [A] court-ordered hearing held years after a plaintiffs employment was improperly terminated does not make good the wrong done. The wrong which such a plaintiff suffers is not merely the denial of a proper hearing — he also suffers the deprivation of his employment without procedural due process and in violation of the statute. ‘[W]here ... protected rights have been invaded, it has been the rule from the beginning that courts will be alert to adjust their remedies so as to grant the necessary relief.’ Bell v. Hood, 327 U.S. 678, 684, 66 S.Ct. 773 [777] 90 L.Ed. 939. The proper relief for the present wrongs is to grant reinstatement. See Coppolla v. Personnel Appeal Board, 174 Conn. 271, 386 A.2d 228 (1978).

174 Conn. at 371, 387 A.2d 556. According to Adamchek, if the plaintiff were, in fact, wrongfully discharged without a hearing, she would be entitled to reinstatement. However, this court need not reach this question, for reinstatement is also proper under her state statutory cause of action.

C. State Law Claim

1. Statutory Requirement of Reinstatement

In Count One plaintiff has also alleged violation of the state human rights act, specifically, Conn.Gen.Stat. § 46a-60(a)(1) and (7)(D),

Unlike Title VII, the Connecticut statute explicitly provides that a public employer must reinstate an employee to her original or an equivalent position following maternity leave, if one is granted. Conn.Gen.Stat. § 46a-60(a)(7)(D). Although the statute would allow a private employer to raise the “changed business circumstances” defense to a charge of unjust refusal to reinstate, that defense is not available to the defendants in the instant case. The plain meaning of the statute precludes the court from considering the merits of the defendants’ claim of compelling financial reasons for its action in terminating Mrs. Zamore. The defendants’ excuse may be raised and proven in the Title VII action, but the language of the Connecticut statute clearly indicates that an employee on maternity leave from her job with a public employer such as the City of Danbury must be reinstated in her original or an equivalent position. This the defendants admittedly refused to do. There is, therefore, ho factual dispute concerning the violation of state law.

Defendants have urged the court to consider Connecticut case law which has held that the Connecticut Human Rights Act is co-extensive with Title VII as being dispositive of the instant case. Wroblewski v. Lexington Gardens, Inc., 188 Conn. 44, 448 A.2d 801 (1982); Board of Education v. Commission on Human Rights and Opportunities, 176 Conn. 533, 409 A.2d 1013 (1979); Pik-Kwik Stores, Inc. v. Commission on Human Rights & Opportunities, 170 Conn. 327, 365 A.2d 1210 (1976). However, the cases cited dealt with those parts of Conn.Gen.Stat. § 46a-60 which do track the language of the federal law, although they may “differ slightly.” Pik-Kwik Stores, Inc. v. Commission on Hu man Rights & Opportunities, 170 Conn. at 331, 365 A.2d 1210.

In the instant case, however, the plaintiff has alleged violation of Conn.Gen.Stat. § 46a-60(a)(7)(D), a provision that was not at issue in any of the cases cited by the defendants. Nor has that subsection been interpreted by the Connecticut courts. The exact protection afforded by subsection (a)(7)(D) does not appear in the federal act. An important distinction between the state and federal law on return from maternity leave is that the federal law and regulations would allow any employer to raise changed business circumstances as a legitimate reason for termination, but the Connecticut law restricts this defense to private employers.

The defendants’ contention that the Connecticut statute cannot exceed the mandate of Title VII is erroneous. A state may grant its citizens greater protection than Congress has granted in Title VII, 42 U.S.C. § 2000e-7. See also Huron Portland Cement Co. v. Detroit, 362 U.S. 440, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960) (absent preemption, states may impose stricter standards than do the federal statutes). The state statute on its face indicates that Connecticut has exercised this prerogative.

It is clear, from the facts as alleged by the parties that there has been a violation of Conn.Gen.Stat. § 46a-60(a)(7)(D), despite the fact that defendant Draper alleged and defendants Mayor Dyer and the City of Danbury have asserted belatedly in their memorandum of February 16,1984, that an equivalent position was offered to the plaintiff. The facts as stated by the defendants themselves do not support their claim. The court finds, as a matter of law, that the plaintiff did not receive a firm offer of an equivalent position, see, note 1, supra, nor was she reinstated in her original position.

2. Agency Inaction

A troublesome issue in the present case, raised by none of the parties, is whether the plaintiff’s motion for relief based on the defendants’ clear violation of the state Human Rights Act is suitable for judicial action. The court recognizes that Conn.Gen.Stat. § 46a-60 does not grant a private right of action such as that granted in Title VII or that granted in Conn.Gen.Stat. § 46a-98, the law forbidding sex discrimination in a determination to grant or withhold credit. Instead, the statute at issue provides only for an appeal from action or dismissal by the state agency charged with carrying out the mandate of the Act, the Connecticut Commission on Human Rights and Opportunities [CCHRO]. The problem that confronts this court is that the state agency has not acted. Thirty-eight months after filing her complaint, Peggy Zamore has yet to receive a ruling from the CCHRO.

The court must consider the effect of inaction and delay on the plaintiff. Courts have held that administrative inaction can be tantamount to dismissal or denial of a plaintiff’s claim. Houseton v. Nimmo, 670 F.2d 1375 (9th Cir.1982); Environmental Defense Fund v. Hardin, 428 F.2d 1093, 1098-99 (D.C.Cir.1970); see also K. Davis, Administrative Law § 8.08 at 282 (June 1976 Supp.); L. Jaffe, Judicial Control of Administrative Action 346, 358-59 (1965); V. Schwartz, Administrative Law § 10.18 (1982). As Judge Bazelon observed in Environmental Defense Fund v. Hardin, supra,

... when administrative inaction has precisely the same impact on the rights of the parties as denial of relief, an .agency cannot preclude judicial review by casting its decision in the form of inaction rather than in the form of an order denying relief.

428 F.2d 1099. See also British Airways Board v. Port Authority of New York, 564 F.2d 1002, 1010 (2d Cir.1977),

(“The law simply will not tolerate the denial of rights by unwarranted official inaction.”) ...

The Connecticut Supreme Court also has recognized that, in some cases, a plaintiff may seek judicial redress from agency inaction even though the ordinary statutory remedy is to appeal an explicitly adverse decision. Blum v. Lisbon Leasing Corp., 173 Conn. 175, 282, 377 A.2d 280 (1977). The Blum court denied defendants’ claims that plaintiff failed to exhaust administrative remedies and upheld the trial court’s grant of injunctive relief in the face of inaction by the zoning board of the Town of Lisbon.

The attempt to define an appropriate judicial response to agency delay or inaction is also often couched in terms of “finality” or “ripeness.” The Supreme Court , considered these issues in Abbott Laboratories v. Gardner, 387 U.S. 136, 137, 87 S.Ct. 1507, 1509, 18 L.Ed.2d 681 (1967). The Court noted that injunctive and declaratory judgment remedies are discretionary and must be used only when an issue is found to be “ripe” for adjudication, emphasizing that flexibility of approach was necessary to any determination of ripeness. Id. 387 U.S. at 148-50, 87 S.Ct. at 1515-16; accord Toilet Goods Assoc., Inc. v. Gardner, 387 U.S. 158, 162, 87 S.Ct. 1520, 1523, 18 L.Ed.2d 697 (1967).

To aid courts in determining whether a case is fit for judicial action, the Abbott court suggested a test calling for (1) concrete issues sufficiently defined so that the court does.not get entangled in “abstract disagreements over administrative policies”; (2) “a purely legal” issue requiring only statutory interpretation and application; and (3) a determination that the judicial action requested will not interfere with an ongoing administrative process. Id. 387 U.S. at 148-49, 87 S.Ct. at 1515. Once these criteria for fitness are found, a court, according to Abbott, must evaluate the harm to the petitioner of withholding judicial review. Id. at 149, 87 S.Ct. at 1515.

The Second Circuit has applied the Abbott standards, and has emphasized the Court’s admonition to be flexible and pragmatic in making a determination of ripeness or finality. “The law of ripeness is now very much a matter of common sense, .... whether one speaks in the related terms of ‘ripeness,’ of satisfying the ‘final agency action’ requirement ... or of the exhaustion requirement____” (citations omitted). Seafarers International Union of North America, AFL-CIO v. United States Coast Guard, et al, 736 F.2d 19, 26 (2d Cir.1984) (finding plaintiff’s claim did not meet Abbott test). See also Nat’l Wildlife Federation v. Goldschmidt, 677 F.2d 259, 263 (2d Cir.1982); Nat’l Resources Defense Council v. U.S. Nuclear Regulatory Comm., 539 F.2d 824, 837 (2d Cir.1976); Greene County Planning Board v. Federal Power Comm., 455 F.2d 412, 425 (2d Cir.) cert. denied 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90 (1972).

The instant case appears to fall squarely within the Abbott guidelines. The issue between Peggy Zamore and the defendants is sharply defined. By exercising judicial authority over this case there is no possibility that the court will become enmeshed in “abstract disagreements over administrative policies” that Abbott cautioned against. The statute in question simply leaves no room for discretion on the part of the CCHRO. Furthermore, the question in this case is a purely legal one, calling only for an interpretation and application of Conn.Gen.Stat. § 46a-60(a)(7)(D). The administrative process has “been exhausted at least to the extent that an adequate factual record has been established.” Seafarers, supra, 736 F.2d at 26. Finally, the judicial action requested will not interfere with an ongoing administrative process. If there were any indication whatsoever of agency activity,, this court would hesitate to intervene even though the plaintiff’s complaint has been long delayed. The responsible agency, the CCHRO, however, apparently has taken no action on the plaintiffs complaint in over three years.

Having satisfied the Abbott criteria of fitness for judicial review, it remains for the court to evaluate the harm to the plaintiff of withholding judicial action. Peggy Zamore’s wrongful discharge and her prayer for reinstatement appear again to satisfy the Abbott requirements. The injury is great and continuing. Delay inflicts further harm on the plaintiff. The administrative solution has failed to address Peggy Zamore’s injury. Common sense suggests that this issue should be resolved, and a judicial resolution reached.

Because of the foregoing, the court finds that, in the instant case, the inaction of the CCHRO is tantamount to final dismissal and hence suitable for judicial review as if on appeal.

The Connecticut Supreme Court has defined the scope of judicial review of an agency decision under Conn.Gen.Stat. § 46a-60.

The scope of judicial review in an appeal from an administrative agency such as the defendant commission is limited by § 4-183(g) [the Connecticut Administrative Procedures Act] which provides, in part, that ‘[t]he court may reverse or modify the decision [of the administrative agency] if substantial rights of the appellant have been prejudiced because the ... conclusions, or decisions are ... affected by ... error of law.’

Pik-Kwik Stores, Inc. v. Commission on Human Rights & Opportunities, 170 Conn. at 330, 365 A.2d 1210. According to Pik-Kwik, a court may reverse or modify the decision of the CCHRO if substantial rights of the appellant have been prejudiced and if the ruling were based on a determination of law. rather than of fact. The plaintiff’s discharge despite the clear mandate of Conn.Gen.Stat. § 46a-60(a)(7)(D) and the subsequent inaction of the CCHRO fulfills these requirements.

3. Jurisdiction

Having determined that the state statute was violated, it remains for the court to examine the jurisdictional doctrines that might counsel against this court’s exercise of jurisdiction.

Although the exercise of pendent jurisdiction is ultimately discretionary, there are policy considerations and legal guidelines which the court must weigh before deciding to exercise jurisdiction over this state law claim. The plaintiff must have a cause of action arising under federal law as well as the separate state law claim. Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148 (1933); J.I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964). Both causes of action must derive from a common nucleus of operative fact. United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). The federal claims must be serious and viable. Pennhurst State School v. Halderman, — U.S. —-, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). Finally, judicial economy and an equitable concern for the ability of the plaintiff to maintain separate federal and state actions must outweigh fears of possible federal intervention into uncertain areas of state law.

In the instant case, the plaintiffs federal and state claims arise from the identical incident. Her federal claims, both statutory and constitutional, are viable. Although her federal claim under Title VII allows concurrent jurisdiction in federal and state court, the plaintiff has exercised her right to bring her action in federal court. The Title VII claim is substantial, although it cannot be resolved at this juncture due to factual disputes. The constitutional due process claim, as stated above, has already been decided in favor of the plaintiff. Thus, the plaintiff is in federal court legitimately with significant federal claims. Finally, it is far more efficient to resolve all plaintiff's legal claims arising from her discharge in one court action. And, because the state statute is unambiguous, resolution. of plaintiff’s state law claim in federal court is not overly intrusive.

In Pandis v. Sikorsky Aircraft, 431 F.Supp. 793 (D.Conn.1977), Judge Newman declined to exercise pendent jurisdiction over and dismissed a state law claim when the case was properly in federal court on an ADEA claim. However, Judge Newman had found that (1) ADEA preempted the state age discrimination act and (2) the state claim was still in the administrative process and hence not yet ripe. In this case, unlike Pandis, there is no preemption of the state maternity leave provisions by Title VII. Instead the state has given additional protection to the plaintiff, and the constructive dismissal by the CCHRO has made this case ripe for judicial intervention. Given these differences, this court finds it appropriate in this case to exercise pendent jurisdiction over the state law claim.

Nor does the doctrine of abstention prevent the court from exercising its jurisdiction. The rule of Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), requires a federal court to abstain if a federal constitutional claim is presented along with a state law claim that may be dispositive. In theory, the federal court should then let a state court decide the state law question in an effort to avoid the federal constitutional decision. However, Pullman abstention “will not be ordered if the state law is clear on its face ... or if the constitutional issue would not be avoided or changed no matter how the statute is construed.” C. Wright, The Law of Federal Courts, § 52, at 304 (4th ed. 1983). This court has already concluded that the state statute is clear on its face. Further, the constitutional issue is a due process violation based on the denial of a hearing, while the statutory claim is denial of a job following maternity leave. The two substantive claims are, therefore, distinct. The constitutional issue in this case is in no way affected and would not be avoided by the state law decision. Thus, Pullman abstention is not warranted.

D. CONCLUSION

Accordingly, plaintiff’s motion for summary judgment against all defendants on her Title VII claim is denied because of material factual disputes. Summary judgment is granted in favor of plaintiff on her due process claim, Count Four, against defendants Dyer, in his official capacity and the City of Danbury, but not against defendant Draper as. there are factual disputes regarding his involvement in the decision to abolish plaintiff’s position and to terminate her. No' remedy need be fashioned for this violation, however, because summary judgment is granted for plaintiff on that portion of Count One alleging a state statutory cause of action, again against Dyer and the City of Danbury, and such a violation carries with it the right to reinstatement and back pay.

• The City of Danbury is ordered to reinstate Peggy Ravich Zamore to her former or an equivalent position. She is awarded $55,877 in back pay for the time she was unemployed, excluding six months when she had her second child, and reasonable attorney’s fees under 42 U.S.C. § 1988, for which her counsel should file an accounting of hours spent and an hourly rate, within 30 days of the date of this decision. Judgment is entered and effective as of the date of this decision, with the attorney’s fee issue to be treated separately as a collateral matter.

SO ORDERED.

      . The-defendants have suggested that they complied with the' statutory requirement to offer plaintiff an equivalent position when her original job was discontinued. Defendant Draper’s affidavit concerning this alleged compliance reveals no bona fide job offer was ever made to Mrs. Zamore. He stated "I contacted Mrs. Zamore by telephone on or about June 22, 1983, and invited her to apply for the position [of nutritionist]. A copy of the job description and qualifications for the Nutritionist position were subsequently forwarded to Mrs. Zamore.” There can be no factual dispute that an invitation to apply for a possible job is not the same as the statutorily mandated placement in an equivalent position, especially since the job description was forwarded to the plaintiff more than three weeks after her abrupt discharge. Furthermore, the court notes that, based on the job description, in any event, the positions do not appear to be equivalent in their salary or levels of responsibility.

      . 29 C.F.R. § 1604.10(c)

      . Plaintiff also claims a property right in her job arising out of her status as a civil service employee entitled to protection under Chapter 113, Part 1, of Connecticut General Statutes Title 7 and Danbury Civil Service Commission Regulations (Complaint ¶ 42) which defendants have denied.

      . One federal district court in California has found that Title VII preempted a state statute mandating reinstatement from maternity leave. California Savings and Loan Assoc. v. Guerra, et al, No. 83-4927R (C.D.Cal. Mar. 19, 1984). This court finds that Title VII does not preempt state law. Indeed, the statute itself so states. 42 U.S.C. § 2000e-7. This is in direct contrast to the Age Discrimination in Employment Act (ADEA) which explicitly states that "upon commencement of action under this chapter such action shall supersede any state action.” 29 U.S.C. § 633(a). Therefore, any age discrimination decisions regarding preemption are inapposite.

      . The potential for improper- judicial interference in an ongoing administrative .proceeding persuaded District Judge Jose Cabranes and subsequently the Second Circuit Court of Appeals that the Abbott test precluded judicial action in National Wildlife Federation v. Goldschmidt, 504 F.Supp. 314 (D.Conn.1980), 519 F.Supp. 523 (D.Conn.1981), aff’d. 677 F.2d 259 (2d Cir.1982). In National Wildlife, the plaintiffs sought relief from actions of the Federal Department of Transportation and from the Connecticut Department of Transportation in connection with the environmental impact of construction of an interstate highway connector. Judge Cabranes ruled that the Abbott test was not satisfied because the agenciés in question were still considering the issue.
      Furthermore, this court might also choose not to intervene if it had the power instead to issue a mandamus to the CCHRO to decide plaintiff's case. Because the CCHRO is a state agency, however, orders to comply with state procedures may not be issued by a federal court. Pennhurst State School v. Halderman, — U.S. -, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). As mandamus is not possible and the agency apparently is no longer considering plaintiff’s complaint, this element of Abbott is satisfied in the instant case.


source: Caselaw Access Project

author: SOLOMON, Judge:

license: Public Domain

text:
    ARMSTRONG BUICK, INC., an Oregon corporation; Braley & Graham Company, an Oregon corporation; Wallace Buick Company, dba Wallace Buick-AMC, an Oregon corporation, Plaintiffs, v. GENERAL MOTORS CORPORATION, a Delaware corporation, Defendant.
    Civ. No. 84-324-SO.
    United States District Court, D. Oregon.
    Oct. 1, 1984.
    Douglas G. Houser, Douglass M. Hamilton, Bullivant, Houser, Bailey, Pendergrass, Hoffman, O’Connell & Goyak, Portland, Or., for plaintiffs.
    Wayne Hilliard, Bruce C. Hamlin, Spears, Lubersky, Campbell, Bledsoe, Anderson & Young, Portland, Or., for defendant.
   OPINION

SOLOMON, Judge:

Plaintiffs, Armstrong Buick, Inc., Braley & Graham Company, and Wallace Buick Company (Dealers) filed this action to enjoin defendant, General Motors, from adding a new Buick dealership in the Portland Multiple Dealer Area. The Dealers contend that Oregon Revised Statute 650.150 protects franchised dealers against adding a new dealership when existing dealers can show the likelihood of a serious adverse economic impact on them.

Oregon Revised Statute 650.150 provides, in part:

(1) A dealer may enjoin a manufacturer, distributor or importer from franchising an additional motor vehicle dealership of the same line-make within the dealer's relevant market area for good cause, provided that the existing dealer files a complaint with a court of competent jurisdiction within the time period specified in subsection (4) of this section. For purposes of this section, an indication of the relevant market area shall be the area of sales and service responsibility designated in the existing dealer’s franchise, but other factors such as actual sales and service area shall be considered.
$ * * * * * *
(3) In determining if good cause exists pursuant to subsections (1) and (2) of this section, the court shall consider such factors as:
(a) Whether threats or other coercive action, oral or written, were made to or-taken against the dealer by the manufacturer, distributor or importer.
(b) Whether the dealer is asked to terminate one franchise in order to keep another franchise.
(c) Whether the existing franchise is providing adequate and convenient consumer care for the motor vehicles of the line-make in the market area.

These pertinent sections of the statute have never been judicially interpreted ei-' ther by this court or by a state court of Oregon.

Under the statute, a court may enjoin the' establishment of a new dealership. The statute lists three factors that a court can consider in determining whether good cause exists. It is conceded that no threats or coercive action were made or taken against the dealers by General Motors and that none of the dealers were asked to terminate one franchise in order to keep another. The parties, however, disagree on whether the dealers are now providing adequate and convenient consumer service to Buick owners in the Gresham area. Although these factors are not exclusive, they reflect a desire to protect consumers and also to protect dealers from certain abuses of manufacturers.

The ordinary economic impact of an additional dealer does not fall into any of the listed categories. In fact, the act as passed does not contain the following provision under the section which requires the court to consider “Economic impact of the additional or relocated franchise on existing- franchises” in determining whether good cause exists as required in an earlier draft of the statute. In my view, the statute was not designed to, nor does it cover, the factual situation involved in this case.

I find that the proposed dealership would probably improve the service to present Buick owners in the Gresham area and will probably increase the sale of Buick automobiles in that area.

Even if I were to find that the dealers’ statutory argument was controlling, there is insufficient evidence to enjoin General Motors from establishing a dealership in the Gresham area. An injunction is an extraordinary remedy and requires clear and convincing proof. The dealers have not met that burden. They have not established that any of the three dealers will suffer a substantial adverse economic impact.

Jim Weston Pontiac-GMC is located in Gresham, Oregon and is more than ten miles from the nearest Buick dealer. The Buick automobile has a much lower percentage of sales in the Gresham area than in any other area situated in the Portland Multiple Dealer Area.

I find that there is merit to General Motors’ argument that proximity favorably affects dealer sales, and in view of the continued population growth in the Gresham area, it is likely that existing Buick dealers will not be able to adequately service the Gresham area. I further find that a dual Pontiac and Buick dealership in the Gresham area is not inconsistent with the policies of General Motors and will not present an unjustifiable adverse economic impact on the other dealers in the Portland area.

I, therefore, hold that General Motors’ proposed granting of a Buick franchise to the Gresham dealer, Jim Weston Pontiac-GMC, is justifiable and.should not be enjoined.

Counsel for General Motors shall submit proposed findings of fact and conclusions of law consistent with this opinion. No costs or attorney’s fees.

      . The Portland Multiple Dealer Area is the geographic area assigned in the Dealer Sales and Service Agreement. The three plaintiff Dealers and a fourth dealer in Vancouver, Washington (who is not a plaintiff in this action) share the primary responsibility for sales and service for this area.


author: JUNE L. GREEN, District Judge.

text:
    KEENE CORPORATION, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, et al., Defendants.
    Civ. A. No. 78-1011.
    United States District Court, District of Columbia.
    Oct. 4, 1984.

      Harold D. Murry, Jr., Clifford & Warnke, Eugene Anderson, Jerold Oshinsky, Arthur S. Olick, Anderson, Baker, Kill & Olick, Washington, D.C., for plaintiff.
    Dennis M. Flannery, Wilmer, Cutler & Pickering, Washington, D.C., Michael R. Gallagher, Thomas E. Betz, Gallagher, Shrap, Fulton, Norman & Mollison, Cleveland, Ohio, Frank W. Gaines, Jr., Robert L. Hoegle, Olwine, Connelly, Chase, O’Donnell & Weyher, Washington, D.C., Gerald Y. Weigle, Jr., Dinsmore, Shohl, Coates & Depree, Cincinnati, Ohio, John F. Mahoney, Jr., James E. Rocap, Stephen L. Nightingale, John P. Arness, William J. Bowman, Hogan & Hartson, Washington, D.C., for defendants.
   MEMORANDUM OPINION

JUNE L. GREEN, District Judge.

This action is before the Court on three independent motions for partial summary judgment regarding punitive damages brought by defendant Insurance Company of North America (“INA”), defendant Liberty Mutual Insurance Company (“Liberty”), and defendant Aetna Casualty and Surety Company (“Aetna”); defendant Aetna’s motion for partial summary judgment regarding plaintiff’s claim of misrepresentation; . plaintiff Keene Corporation’s (“Keene”) opposition thereto; defendants’ replies; plaintiff’s supplemental responses; and the entire, record herein. The Court heard oral argument on these motions on June 4, 1984.

In its Third Amended Complaint (“Complaint”), Keene seeks punitive damages in potential excess of $150 million from-INA, Liberty, and Aetna. Complaint at ¶¶ 66, 112; Memorandum of INA in Support of its Motion For Summary Judgment as to Keene’s Claims for Punitive Damages (“Motion of INA”) at 1. Keene bases its claim for punitive damages on defendants’ alleged “malicious breach of contract” and “tortious acts arising from defendants’ breaches of their contracts and of their express and implied obligations and duties, with respect to the asbestos damage claim lawsuits brought against Keene.” Complaint at 1. Defendants contend that under the laws of the applicable jurisdiction punitive damages may not be imposed against them.

The issue of whether punitive damages may lie in this case is governed by two threshold questions. First, which jurisdiction controls the punitive damages issue? Second, does the controlling jurisdiction’s rule of law permit courts to impose punitive damages against insurance companies for “bad faith” dealing?

Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure when no genuine issues of material fact exist and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Weiss v. Kay Jewelry Stores, Inc., 470 F.2d 1259, 1262 (D.C.Cir.1972), quoting Traylor v. Black, Sivalls & Bryson, Inc., 189 F.2d 213, 216 (8th Cir.1951).

Keene argues exhaustively on the merits of awarding punitive damages against defendants for their “bad faith” conduct in “blatantly switching] to a manifestation interpretation of [their] comprehensive general liability ... insurance policies on a national scale” to “enable [them] to escape [their] recognized enormous potential financial liability for the asbestos lawsuits.” Keene’s Statement of Points and Authorities in Opposition to Motion of INA for Partial Summary Judgment as to Keene’s Claims for Punitive Damages (“Keene Opposition to INA Motion”) at 6-7; see Keene’s Statement of Points and Authorities in Opposition to Motion of Liberty for Summary Judgment as to Counts III, IV and VI of Keene’s Third Amended Complaint (“Keene Opposition to Liberty Motion”) at 3-14; Keene’s Statement of Points and Authorities in Opposition to Motion of Aetna for Summary Judgment as to Count IV and as to Keene’s Claims for Punitive Damages in Counts III, IV and VI of Keene’s Third Amended Complaint (“Keene Opposition to Aetna Motion”) at 7-23. But the issue here is not the propriety of awarding punitive damages for defendants’ alleged misconduct. Rather, the issues are choice of law and interpretation of the applicable law regarding Keene’s punitive damages claim. The material facts that bear on these issues are not in dispute. Therefore, the punitive damages question is ripe for adjudication and may properly be considered for summary judgment.

The Court finds that Keene is not entitled to punitive damages against defendant INA as a matter of law. Thus, defendant INA’s motion for partial summary judgment is granted. The Court defers final judgment on the motions of defendant Liberty and defendant Aetna as to punitive damages until further briefing is received from the parties.

In Count IV of the Complaint, Keene states a cause of action for fraudulent misrepresentation to support in part its claim for punitive damages against defendants. The cause of action is based on defendants’ representations as to the extent of coverage of Keene’s insurance policies. Keene seeks compensatory and punitive damages. Complaint at ¶¶ 113-15. Defendant Aetna seeks dismissal of the fraud claim.

The appropriateness of the misrepresentation claim raises the same threshold questions as that of the punitive damages claim concerning choice of law and interpretation of the controlling jurisdiction’s rule of law. As these questions raise no genuine issues of material fact, the Court properly may rule on the appropriateness of the misrepresentation claim on a motion for summary judgment. Fed.R.Civ.P. 56.

The Court finds that Keene’s claim of fraudulent misrepresentation against Aetna must be dismissed and, therefore, grants defendant Aetna’s motion for partial summary judgment as to Count IV of Keene’s Third Amended Complaint.

I. Punitive Damages

A. Choice of Law

To determine the applicable law in a diversity case, a Federal court first must determine whether Federal or State law applies. Procedural issues are determined under Federal law, while substantive issues must be decided under State law. Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Since choice of law is a substantive issue under the Erie doctrine, a Federal court sitting in diversity must apply the choice-of-law rules of the forum in which it sits. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); Steorts v. American Airlines, Inc., 647 F.2d 194, 196-97 (D.C.Cir.1981). This Court, therefore, must apply the choice-of-law rules of the District of Columbia to determine which State’s law governs the punitive damages issue.

District of Columbia courts employ an “interest analysis” approach which was originally applied to tort actions in Tramontana v. S.A. Empressa De Viacao Aerea Rio Grandense, 350 F.2d 468, 471-73 (D.C.Cir.1965), and to contract actions in Fox-Greenwald Sheet Metal Co. v. Markowitz Bros. Inc., 452 F.2d 1346, 1353-54 (D.C.Cir.1971). See Mazza v. Mazza, 475 F.2d 385, 388 (D.C.Cir.1973); see also Semler v. Psychiatric Institute, 575 F.2d 922, 924 (D.C.Cir.1978). In Mazza v. Mazza, the United States Court of Appeals stated that “[t]he relevant inquiry focuses on the relationship of the ... jurisdictions to the controversy, the interests involved, and whether application of foreign law' would offend a strong and clearly defined local policy.” Mazza v. Mazza, 475 F.2d at 391 (D.C.Cir.1973).

The process involves two steps. First, the Court must determine which States have an interest in the controversy at hand. Second, the Court must decide, from those found to have a conflicting interest, which State’s policy would be advanced by application of its law. See Gaither v. Myers, 404 F.2d 216, 222 (D.C.Cir.1968). “[T]he state with the ‘most significant relationship’ should also be that whose policy would be advanced by application of the law, i.e., the state with the greatest interest in applying its law to the issue.” In Re Air Crash Disaster at Washington, D.C., 559 F.Supp. 333, 342 (D.D.C.1983); see also Semler v. Psychiatric Institute, 575 F.2d at 924.

Keene’s allegations of “bad faith” dealings by defendants arise from the insurance contracts between the parties. Keene, however, seeks punitive damages for defendants’ tortious misrepresentations and misconduct. Complaint at ¶¶ 104-08.

In applying the “interest analysis” approach to tort claims, District of Columbia courts have considered the factors set forth in section 145 of the Restatement (Second) of Conflict of Laws. See Hitchcock v. United States, 665 F.2d 354, 360 (D.C.Cir.1981). These factors are:

(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(e) the domicile, residence, place of incorporation and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.

Restatement (Second) of Conflict of Laws § 145(2) (1971). The Restatement emphasizes that these contacts are not to be applied mechanically, but “are to be evaluated according to their relative importance with respect to the particular issue.” Id. Therefore, the Court will examine not the general interests of various states, but the precise interests in the specific issue involved. In Re Air Crash Disaster Near Chicago, Illinois, 644 F.2d 594, 611 (7th Cir.1981); In Re Air Crash Disaster at Washington, D.C., 559 F.Supp. at 341.

In the instant case, the issue is punitive damages. States’ interests in compensatory damages differ from those involved in punitive damages. E.g., James v. Powell, 19 N.Y.2d 249, 279 N.Y.S.2d 10, 16-17, 225 N.E.2d 741, 746-47 (1967) (Puerto Rico law applies to compensatory damages; the law of New York governs punitive damages.). When the primary purpose of a rule of law is to deter or punish conduct, the States with the most significant interests are those in which the conduct occurred and in which the principal place of business and place of incorporation of defendant are located. See Restatement (Second) of Conflict of Laws § 145 comments c-e; In Re Air Crash Disaster Near Chicago, Illinois, 644 F.2d at 613. The State of domicile of plaintiff has no interest in imposing punitive damages. “The legitimate interests of [plaintiffs’ domiciliary] states, after all, are limited to assuring that the plaintiffs are adequately compensated for their injuries____ Once the plaintiffs are made whole by recovery of the full measure of compensatory damages to which they are entitled under the law of their domiciles, the interests of those States are satisfied.” In Re Air Crash Disaster Near Chicago, Illinois, 644 F.2d at 613. The place where the injury occurred and where the parties’ relationship is centered do not claim as great an interest in the punitive damages issue as in other tort-related issues.

The Court will apply this analysis to each of defendants’ motions.

1. Motion of Defendant INA

Defendant INA is a Pennsylvania corporation with its principal place of business in Pennsylvania. Second Amended Complaint at ¶ 2; Answer of INA to Second Amended Complaint at ¶ 2. INA, sold the insurance policies at issue to two Keene predecessors: Baldwin-Hill (“B-H”) and Baldwin-EhretHill (“B-E-H”). Keene Opposition to INA Motion at 3-4.

B-H, at the time of sale of the policies, was a New Jersey corporation, with its principal place of business in New Jersey. Less than three years later, in 1959, the company merged with Ehret Magnesia "Manufacturing Company to form B-E-H, a predecessor subsidiary of Keene. Keene Opposition to INA Motion at 5; Reply Memorandum in Support of INA’s Motion for Summary Judgment as to Keene’s Claims for Punitive Damages (“Reply of INA”) at 8. B-E-H was incorporated under the laws of Pennsylvania. The new company’s articles of incorporation stated that B-E-H “shall be governed by the laws of the Commonwealth of Pennsylvania.” Exhibit ID to Keene Opposition to INA Motion. Nevertheless, B-E-H continued its principal place of business in New Jersey, Keene Opposition to INA Motion at 5, and INA dealt with B-E-H at its New Jersey office between 1959 and 1968. Exhibits 3-4 to Keene Opposition to INA Motion; Reply of INA at 8.

INA, however, executed the policies at issue in Pennsylvania, and sold them to B-E-H through a Pennsylvania broker. Additionally, the policies stated that B-EH’s “principal state” of operations for computing general liability and product liability premiums was Pennsylvania. Reply of INA at 6-10. Keene previously recited these facts in response to an earlier motion of INA for partial summary judgment regarding other damage issues. Keene’s Statement Pursuant to Rule 1-9(h) in Response to INA’s Motion for Summary Judgment and Accompanying Rule 1-9(h) Statement (February 24, 1983) ¶ 34. Keene does not now dispute these facts, although plaintiff asserts that discovery of the policies issued to B-H in New Jersey affects the Court’s choice-of-law analysis. Opposition of Keene at 27-28.

Keene acquired substantially all outstanding stock of B-E-H in 1968, and B-E-H became a subsidiary of Keene. Exhibit 1 to Keene Opposition to INA Motion. Plaintiff Keene now has its principal place of business in New York. Keene Opposition to INA Motion at 27.

INA and Keene have contested at length the issue of which jurisdiction’s punitive damages rule should apply in this case. INA asserts that under the facts, Pennsylvania is the only appropriate jurisdiction because of the State’s significant connection with both parties and the underlying insurance policies. Reply of INA at 14.

Keene, however, contends that the choice-of-law issue is not as simple as INA suggests. Keene provides three alternative jurisdictions: the District of Columbia, New Jersey, and New York. The Court will address each proposed jurisdiction.

Keene alleges that the company suffered financial injury in defending itself in more than 15,000 asbestos-related lawsuits around the country. Complaint at ¶ 66; see Keene Opposition to INA Motion. The cause of this injury, as contended by Keene, was INA’s misrepresentation and misconduct in switching coverage positions from exposure to manifestation. Com-plaint at ¶ 82; Keene Opposition to INA Motion at 6-14. The decision to follow the manifestation theory of coverage presumably occurred in Pennsylvania at defendant INA’s headquarters. Therefore, the place of conduct, as well as defendant INA’s principal place of business and State of incorporation are Pennsylvania. These relationships to the controversy give Pennsylvania a definite interest in the punitive damages issue. The State’s interest in punishing defendant INA’s conduct by allowing punitive damages or in protecting a resident corporation by disallowing such damages should prevail unless another State has a stronger interest in having its law applied.

Keene challenges the application of Pennsylvania law,, but offers no State with more significant interests in this particular controversy. Keene contends that New Jersey law should apply because INA sold two policies to B-H, a New Jersey corporation, and sold several other policies to B-EH, which had its principal place of business in New Jersey. Keene Opposition to INA Motion at 15-16, 27-28.

The domicile State of plaintiff, or plaintiff’s predecessors, however, has no interest in the punitive damages issue. In Re Air Crash Disaster Near Chicago, Illinois, 644 F.2d at 612-13. Further, B-H no longer existed in 1977 when INA’s alleged misconduct occurred. Nor did B-E-H in particular suffer any alleged injuries.

New York has even less interest in this controversy. Keene’s principal place of business is New York, but that fact alone, as demonstrated above, creates no interest. To bolster its argument, Keene stretches New York’s interest in the instant controversy to include that of the place of injury. Keene urges the Court to consider its principal place of business as the place of injury since the company’s financial burdens occurred in every State where a lawsuit was filed against Keene. Keene argues:

The Restatement (Second) of Conflict of Laws devised a pragmatic solution to the complicated choice-of-law issue involved in multistate torts, in which the plaintiff is injured in two or more states. In such cases, the state of the plaintiff’s domicile is presumed to have the most significant relationship with the claim. With regard to corporations, ... courts sometimes look to the state of the corporation’s principal place of business____

Keene Opposition to INA Motion at 25.

The Court disagrees with Keene’s analysis. Comment e to section 145 of the Restatement (Second) states that the place of conduct should be given “particular weight” in a multistate tort, especially when the States where the injury occurred have little relationship to the controversy. Restatement (Second) of Conflict of Laws, § 145(2) comment e (1971). The Court need not even consider the place of injury in the instant controversy. “[T]he place of injury will not play an important role ... when, such as in the case of fraud and misrepresentation ..., there may be little reason in logic or persuasiveness to say that one state rather than another is the place of injury____” Id. “[When the] primary purpose ... is to deter or punish ..., not to compensate, ... the state where the conduct took place rather than the state where the injuries ‘occur’ is the ‘state of dominant interest and thus that of most significant relationship.’ ” Houston North Hospital Properties v. Telco Leasing, 688 F.2d 408, 409 (5th Cir.1982).

Similarly, the Court finds that the District of Columbia has no interest in the punitive damages issue. Keene lists three reasons that the law of the District should apply: INA’s concealment of evidence and advocacy of a false position; injury to Keene in part occurring in the District by the filing of lawsuits here; and both parties doing business in the District. Keene Opposition to INA Motion at 20-21.

The location of the instant litigation is fortuitous. Keene could have brought this case before numerous other Federal Courts. The District, with no significant relationship to the insurance contracts in question, is a disinterested rather than an interested forum. See National Union Fire Insurance Co. v. RLC Corp., 449 A.2d 257, 262 (Del.Super.1982).

Both parties doing business in the District also has no bearing on the punitive damages issue. Nothing surrounding the instant controversy occurred in or particularly affected the District of Columbia.

Keene’s argument that its injuries in part occurred in the District similarly is rejected: As discussed at length previously, the place of injury is of minor importance to the punitive damages claim.

The Court, therefore, finds that Pennsylvania law regarding punitive damages shall control the motion of defendant INA.

2. Motion of Defendant Liberty

The same “interest analysis” applies to the motion of defendant Liberty.

Defendant Liberty’s State of incorporation and principal place of business is Massachusetts. Second Amended Complaint at ¶ 5; Liberty’s Answer to Second Amended Complaint and Counterclaim at ¶ 1. The policies in question were countersigned by Keene and delivered in New York. Reply Memorandum of Liberty in Support of its Motion for Summary Judgment as to Counts III, IV and VI of Keene’s Third Amended Complaint at 3.

Liberty contends that New York law should apply to the punitive damages issue because of Keene’s previous assertion that New York law governed interpretation of the insurance policies between Keene and Liberty. Keene’s assertion was made with respect to its claim for prejudgment interest. Id.; Keene Opposition to Liberty Motion at 37.

Courts have long recognized that they are not bound to decide all issues under the local law of a single State. Each issue must receive separate consideration because of the varying interests involved. Restatement (Second) of Conflict of Laws § 145(1) comment d (1971). For example, the State of execution of a contract would have a strong interest in having its law apply to an issue of contract construction. The question of the validity of a contract, on the other hand, would more significantly involve the interests of the place of performance.

Liberty’s contention that New York law must apply to all issues lacks merit. “The search ... is not for the state whose law will be applied to govern all issues in a case; rather it is for the rule of law that can most approximately be applied to govern the particular issue____” Reese, Depecage: A Common Phenomenon In Choice of Law, 73 Colum.L.Rev. 58, 59-60 (1973). The Court must examine the specific interests involved in the punitive damages issue.

New York has several contacts with the instant controversy. The State is Keene’s principal place of business and the insurance policies in question were countersigned and delivered in New York. But the States.with the most significant interests in a punitive damages issue are the State of incorporation and principal place of business of defendant, and the State where the alleged misconduct occurred. The State of execution and delivery is important to the question of contract interpretation, but not to the question of punitive damages. Similarly, plaintiff’s principal place of business is irrelevant to this issue.

In this ease, Massachusetts claims the most significant interests as Liberty’s incorporating State and principal place of business. In addition, Liberty’s alleged misconduct in switching its theory of coverage and, thereafter, refusing to defend Keene presumably occurred at the insurance company’s corporate headquarters. Regardless of the place of actual decision, Massachusetts has the greatest connection to the conduct as, the “place where ultimate responsibility for the conduct lies.” In Re Air Crash Disaster at Washington, D.C., 559 F.Supp. at 358.

Keene’s repeated contention that District of Columbia law should apply is rejected for the reasons stated above. Keene Opposition to Liberty Motion at 21. The Court finds that Massachusetts law shall apply to Keene’s claim of punitive damages from Liberty.

3. Motion of Defendant Aetna

Defendant Aetna’s contractual relationship with Keene is similar to that of Liberty. The insurance policy in qúestion was issued to Keene at its principal place of business in New York. The transaction occurred through Aetna’s New York, office and a New York insurance broker. Memorandum in Support of Motion of Aetna for Summary Judgment as to Count IV and as to Keene’s Claims for Punitive Damages in Counts III, IV and VI of its Third Amended Complaint (“Motion of Aetna”) at 4. The Court agrees with Aetna’s conclusion that the parties’ contractual relationship is centered in New York, id., but rejects Aetna’s contention that New York law must therefore apply.

Aetna fails to articulate the particular interests involved in the punitive damages issue. The Court previously has analyzed those interests and concluded that the place of incorporation, the principal place of business, and the place of conduct hold the most significant interests.

Aetna is a Connecticut corporation, with its principal place of business in Connecticut. Second Amended Complaint at ft 3. Defendant’s corporate headquarters in Connecticut would be responsible ultimately for the company’s alleged misconduct, even if the decision to employ the manifestation theory of coverage was made in New York. Thus, the conduct creating the tort claims arose in Connecticut. New York’s interests are limited to issues regarding the interpretation of the contract, as the place of issuance, and the awarding of compensatory damages for breach of contract, as plaintiff’s principal place of business.

Keene, dissatisfied with defendant Aetna’s proposed application of New York law, again attempts -to apply the law of the District of Columbia. Keene Opposition to Aetna Motion at 27-28. The Court again rejects Keene’s contention and finds that Connecticut law shall apply to Keene’s claim for punitive damages against Aetna.

B. Application of the Law

1. Pennsylvania Law

The Court’s next inquiry regarding INA’s motion is whether Pennsylvania law permits recovery of punitive damages for “bad faith” conduct by insurance companies. The Court finds that Keene may not recover punitive damages from INA.

The Pennsylvania Supreme Court directly addressed this issue in two 1981 decisions, D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 494 Pa. 501, 431 A.2d 966 (1981) and Smith v. Harleysville Insurance Co., 494 Pa. 515, 431 A.2d 974 (1981).

Insureds in both Pennsylvania cases sought punitive damages for alleged “bad faith” conduct by the insurers, as does Keene in the instant case. In D’Ambrosio, the court recognized the “seriousness of ‘bad faith’ conduct by insurance carriers,” but held that the State’s Unfair Insurance Practices Act was the proper means of deterrence. D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 431 A.2d at 969. The Act provides, in pertinent part, that “[n]o person shall engage in this State in any trade practice which is defined or determined to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance pursuant to this act.” Unfair Insurance Practices Act, 40 P.S. § 1171.4 (Supp.1980). The Act further defines “unfair methods of competition” and “unfair or deceptive acts or practices” to include, among several others, “[mjisrepresenting pertinent facts or policy or contract provisions relating to coverages at issue.” Id. at § 1171.5.

The court in D’Ambrosio refused to supplement the Act by awarding punitive damages. “An award of punitive damages unquestionably is a deterrent device, ... one which is unnecessary in view of the present legislative-created regulatory scheme.” D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 431 A.2d at 970. The court left to the legislature the decision to impose any additional sanctions. Id.

The Pennsylvania Supreme Court in Smith v. Harleysville reiterated its refusal to create a judicial cause of action against insurers for bad faith conduct and affirmed the dismissal of the counts in which the insured sought punitive damages. Smith v. Harleysville Insurance Co., 431 A.2d at 975.

Plaintiff Keene cites only one ease to support its proposition that Pennsylvania law would impose punitive damages under proper circumstances. In that case, a Pennsylvania trial judge suggested that D’Ambrosio be limited to its facts. Bronner v. Metropolitan Insurance Co., 20 Pa.D. & C.3d 509, 510 (Pa.Ct.C.P., Philadelphia Cty.1981).

Although the court found in D’Ambrosio and Smith that neither insured factually stated a cause of action for “bad faith” conduct, the Pennsylvania Supreme Court in no way intimated that its holdings in those cases were limited to the facts. D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 431 A.2d at 970-71; Smith v. Harleysville Insurance Co., 431 A.2d at 975. Further, appellate courts of Pennsylvania and Federal courts interpreting Pennsylvania law have unhesitantly followed the State Supreme Court’s decisions. E.g., Myers v. USAA Casualty Insurance Co., 298 Pa.Super. 366, 444 A.2d 1217, 1219-10 (1982); Nazer v. Safeguard Mutual Assurance Co., 293 Pa.Super. 385, 439 A.2d 165, 166 (1981); Evans v. Government Employees Insurance Co., 291 Pa.Super. 342, 435 A.2d 1258, 1259 (1981); Commercial Union Assurance Co. v. Pucci, 523 F.Supp. 1310, 1321 (W.D.Pa.1981).

This Court is unable to carve out desirable exceptions to Pennsylvania law. “A federal court in a diversity case is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State____” Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167, 168, 46 L.Ed.2d 3 (1975). The Court must respect Pennsylvania’s policy of not imposing punitive damages against insurance companies, which reflects the State’s judgment to protect the financial security of resident corporations rather than impose punitive damages to regulate conduct. See Jackson v. Koninklijke Luchtvaart Maatschappij N.V., 459 F.Supp. 953, 956 (S.D.N.Y.1978).

The Court therefore concludes that Pennsylvania law precludes recovery of punitive damages from INA in the instant case and limits Keene’s remedy to the Unfair Insurance Practices Act.

2. Massachusetts and Connecticut Law

The parties have not argued or briefed Massachusetts and Connecticut law applicable to the punitive damages issue. The Court defers judgment on the motions of defendant Liberty and defendant Aetna so that the parties may address themselves to such law. The Court expects the parties to complete briefing on this issue by November 7, 1984.

II. Count IV: Misrepresentation

Defendant Aetna further seeks dismissal of Keene’s claim for fraudulent misrepresentation. Motion of Aetna at 8. In Count IV of its complaint, Keene alleges that Aetna (and the other three defendants) misrepresented the extent of coverage of the policies issued to Keene. The alleged misrepresentation occurred not at the time of issuance of the liability policies, but several years later after claims for asbestos-related injuries were filed with the insurance companies. See Complaint at ¶¶ 82-94.

A. Choice of Law

Whether this Court may uphold a claim for misrepresentation raises a choice-of-law issue that must be resolved under the “interest analysis” of the District of Columbia. Aetna contends, as it did for the punitive damages issue, that New York law must apply because of the' State’s relationship to the parties and the controversy. Motion of Aetna at 4. Conversely, Keene claims that the District of Columbia has a stronger interest in the instant dispute for the reasons stated in the Court’s discussion on punitive damages, i.e., the location of the instant litigation, the location of the filing of several asbestos-related suits against Keene, and the place where both parties are doing business. Keene Opposition to Aetna Motion at 27-28.

To determine whether a claim of misrepresentation may lie, the Court must look to the interests important to the particular issue to be decided. Section 148 of the Restatement (Second) of Conflict of Laws sets forth the contacts relevant to claims of fraudulent misrepresentation:

(a) the place, or places, where the plaintiff acted in reliance upon the defendant’s representations,
(b) the place where the plaintiff received the misrepresentations,
(c) the place where the defendant made the representations,
(d) the domicile, residence, nationality, place of incorporation and place of business of the parties,
(e) the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and
(f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.

Restatement (Second) of Conflict of Laws § 148(2) (1971). The Restatement takes the general approach that if any two of the contacts listed above are located wholly in a single State, the applicable law of that State should govern. Id. at § 148(2) comment j.

In the instant case, at least three of the relevant contacts are located in New York. First, plaintiff Keene’s principal place of business is in New York. Keene Opposition to INA Motion at 27. This contact is “of substantial significance” to the misrepresentation issue, especially “when the loss is pecuniary ... because a financial loss will usually be of greatest concern to the state with which the person suffering the loss has the closest relationship.” Restatement (Second) of Conflict of Laws § 148(2) comment i. The principal place of business of plaintiff is more important than that of defendant because of the general compensatory, rather than punitive, nature of the misrepresentation claim. Id.; Federated Capital Corp. v. Florida Capital Corp., 280 F.Supp. 301, 302-03 (S.D.N.Y.1968). Defendant’s principal place of business is “irrelevant to the consideration of the consequences of its alleged misconduct.” Federated Capital Corp., 280 F.Supp. at 303.

Second, New York presumably is the place where Keene relied on defendant Aetna’s representation that liability coverage was triggered only by manifestation of asbestosis, and not exposure. As Keene’s principal place of business, New York would be the location of any corporate decision to expend funds to defend itself in the thousands of lawsuits filed against Keene. The places of actual litigation are not important since Keene acted to its detriment by authorizing the litigation and expenditure of funds.

Third, New York presumably is the place where Keene received Aetna’s representation.

These three contacts are sufficient to establish a significant relationship between New York and the instant controversy. The District of Columbia, on the other hand, has no interest in the dispute. Its contacts to the instant litigation are irrelevant to the is^ue of misrepresentation. The only other State with any possible interest would be Connecticut, which is defendant’s principal place of business and the possible place where Aetna made the representations regarding the scope of coverage. As stated previously, defendant’s principal place of business alone is not significant to the misrepresentation issue. Further, Aetna’s coverage statements may have been made to Keene through its New York office.

Regardless of where the representations were made, the Court finds that New York has the most significant interest in having its law applied to the misrepresentation issue.

B. Application of the Law

Under New York law, a claim for misrepresentation clearly may not be brought solely in connection with a breach of contract. “A fraudulent breach of contract is not the basis for a cause of action in fraud. Where the only claim of fraud that is charged concerns a breach of contract and not inducement to enter the contract, an action for fraud is not properly alleged.” England Strohl/Denigris, Inc. v. Weiner, 538 F.Supp. 612, 615 (S.D.N.Y.1982); see also, 37 Am.Jur.2d Fraud and Deceit § 21 (1968) (“[Fraudulent breach of contract does not give rise to an action for fraud____”, citing Drydock Knitting Mills, Inc. v. Queens Machine Corp., 254 A.D. 568, 2 N.Y.S.2d 717 (1938)).

The seminal case is Brick v. Cohn-Hall-Marx Co., 276 N.Y. 259, 11 N.E.2d 902 (1937). In Brick, the parties entered into.a contract for royalties for defendant’s use of a package to manufacture bolts of cloth. Plaintiff thereafter filed a suit for unpaid royalties, alleging that defendant failed to pay the agreed amount and falsified his sales books to conceal the number of sales. Plaintiff filed a cause of action for fraud, rather than breach of contract, to circumvent the statute of limitations. Id. at 903.

The Court of Appeals of New York, in affirming the dismissal of the fraud claim, held that by pleading fraud a plaintiff could not change the nature of the action.

The basis of the action is the contract. The claim of the plaintiffs is based upon the contract; in other words, if the defendant owes the plaintiffs any money, it is because of the agreement which it made to pay royalties upon sales which were made____ If there were fraud extraneous to the contract ... a different situation might arise.

Id. at 904.

The instant case is similar to the situation in Brick. Plaintiff Keene has filed this action against Aetna for funds owed under the parties’ policy provision relating to Aetna’s duty to defend. Keene alleges that Aetna fraudulently misrepresented that its duty to defend arose only upon manifestation of asbestos-related injuries. Aetna’s representation does not constitute a “fraud extraneous to the contract”, but is dependent upon Aetna’s duty to defend under the insurance policy. If the statute of limitations ran on the contract, Keene could not sue Aetna for failure to defend. Nor could Keene file an independent action for fraud. The parties’ are legally bound only by their contractual relationship.

Keene contends that its claim for misrepresentation may be enforced regardless of the enforceability of the underlying agreement. Keene relies principally on two cases, North Shore Bottling Co. v. C. Schmidt and Sons, Inc., 22 N.Y.2d 171, 292 N.Y.S.2d 86, 239 N.E.2d 189 (1968) and Channel Master Corp. v. Aluminum Limited Sales, Inc., 4 N.Y.2d 403, 176 N.Y.S.2d 259, 151 N.E.2d 833 (1958).

In North Shore, the court held that “a contracting party may be charged with a separate tort liability arising from a breach of duty distinct from, or in addition to, the breach of contract.” North Shore Bottling Co. v. C. Schmidt and Sons, Inc., 239 N.E.2d at 193. The separate tort, however, involved fraudulent action independent of any breach of contract. Defendant in North Shore was charged with conspiring to cheat and defraud plaintiff. Id.

Similarly, in Channel Master the court upheld a fraud claim against a contracting party for “fraudulently misrepresenting] himself as intending to perform an agreement.” Channel Master Corp. v. Aluminum Limited Sales, Inc., 151 N.E.2d at 836.

Neither of these cases is applicable to the instant situation. New York courts clearly allow an independent tort action against one who makes a contractual promise with no intent to perform and one who fraudulently induces another to enter into a contract. “However, where the complaint merely alleges, in essence, the non-performance of a contractual obligation, an action in fraud will not lie; ‘actionable fraud depends on more than a showing of non-performance,’ ... or a ‘mere breach of a contract.’ ” Sherkate Sahami Khass Rapol v. Henry R. Jahn & Son, 531 F.Supp. 1048, 1061 (S.D.N.Y.1982).

Keene does not allege that defendant Aetna fraudulently induced Keene to enter into the contract, nor that Aetna promised to defend Keene with no intention of performing. The Court, therefore, dismisses plaintiff’s claim for misrepresentation against Aetna.

In accordance with the above, the Court grants partial summary judgment for defendant ÍNA and defers judgment on the motions of defendant Liberty and defendant Aetna on the issue of punitive damages. The Court further grants partial summary judgment for defendant Aetna as to Count IV of plaintiff's Third Amended Complaint.

      . Keene also seeks punitive damages against a fourth defendant, Hartford Accident & Indemnity Company ("Hartford”). Complaint at ¶ 112. Hartford, however, did not file a motion for partial summary judgment on this issue.

      . Not until September 1983 did Keene discover evidence of the B-H policies. INA earlier had notified Keene that no additional policies could be located. Exhibits 1 at ¶ 7, 2B to Keene Opposition to INA motion.