Biotronik, Inc. v. Lamorak Insurance Co., 060315 NMDC, 15-00252 WJ/WPL

Docket NºCivil 15-00252 WJ/WPL
Opinion JudgeWILLIAM P. JOHNSON, District Judge.
Case DateJune 03, 2015
CourtUnited States District Courts, 10th Circuit, District of New Mexico

BIOTRONIK, INC., Plaintiff,



Civil No. 15-00252 WJ/WPL

United States District Court, D. New Mexico.

June 3, 2015


WILLIAM P. JOHNSON, District Judge.

THIS MATTER comes before the Court upon a Motion to Transfer Venue filed by Lamorak Insurance Company, f/k/a OneBeacon America Insurance Company ("OneBeacon" or "Defendant") on April 2, 2015 (Doc. 6). Having reviewed the parties' briefs and applicable law, the Court finds that Defendants motion is well-taken; accordingly, it is GRANTED.


Defendant seeks an Order from this Court pursuant to 28 U.S.C. § 1404(a) transferring this case to the United States District Court for the District of Oregon. This case is before this Court as a result of Defendants removal of the case on March 27, 2015 on the basis of diversity jurisdiction. The state court complaint was initially filed by Biotronik, Inc. ("Biotronik" or "Plaintiff") on March 13, 2015 in the First Judicial District Court, County of Santa Fe, State of New Mexico. Defendant removed the case to federal court on March 27, 2015 on the basis of diversity jurisdiction. Plaintiff seeks relief for Defendants alleged breach of contract, and a declaratory judgment as to coverage under three insurance policies for two underlying tort claims lawsuits.

On March 26, 2015, OneBeacon and Atlantic Specialty Insurance Co. ("Atlantic Specialty") filed suit seeking declaratory relief in the United States District Court for the District of Oregon-the same day Defendant sent Plaintiff a letter denying coverage. See Atlantic Specialty Insurance Co., et al., v. Biotronik, Inc., No. 3:15-cv-00501-PK. Since the venue issue before the Court involves more than one federal lawsuit (the instant lawsuit removed from New Mexico state court and the one filed in Oregon) as well as underlying tort claims lawsuits, a chronological overview of the relevant facts would be helpful to clarify the parties' positions on the issues that the Court will address.1

A. The Parties

Biotronik is a distributor of devices for cardiac rhythm management, including implantable cardioverter defibrillators and pacemakers, and was listed as a named insured under the three insurance policies (the "Policies") that are relevant to this lawsuit. Biotronik is a corporation presently organized under the laws of the State of Delaware and is qualified to do business in the State of New Mexico. Biotronik was originally organized and incorporated under the laws of the State of Oregon in 1988. Ex. C, Art. of Incorp.; Doc. 1, ¶ 5. However, on December 31, 2014, after the entry of a $28 million verdict against it, Biotronik changed its place of incorporation to Delaware.

OneBeacon is a corporation organized and existing under the laws of the State of Pennsylvania, with its principal place of business in Pennsylvania. At the time the Policies were issues, OneBeacon was a liability insurer incorporated in Pennsylvania and headquartered in Minnetonka, Minnesota. At the time the Policies were issued to Biotronik, OneBeacon was licensed to do business in New Mexico.

Atlantic Specialty is a liability insurer incorporated in New York, headquartered in Minnetonka, Minnesota and is licensed to do business in New Mexico. Atlantic Specialty is the insurer for one of the Policies at issue but was not initially named as a defendant in this case.

B. The Policies

From August 15, 2005 through August 15, 2008 (the "Policy Periods"), Plaintiff was a named insured under the "Policies issued by Defendant and Atlantic Specialty. The first policy was issued by Atlantic Specialty and covered the time period from August 15, 2005 through August 15, 2006. See Ex. E, ¶ 9 (Oregon Compl.). The second and third policies were issued by Defendant and covered the time periods of August 15, 2006 through August 15, 2007, and August 15, 2007 through August 15, 2008. Ex. E, ¶¶ 11-13. The Policies were solicited and negotiated by Plaintiffs broker in Oregon (i.e., "Aon Oregon"), and all three Policies were delivered to Aon Oregon in Portland, Oregon.

C. Underlying Tort Claims Lawsuits ("the Pacemaker Actions")

Biotronik was named as a defendant in two lawsuits for which it is now seeking coverage under the Policies described above: (1) Sowards, et al. v. Las Cruces Medical Center, LLC, d/b/a Mountain View Regional Medical Center, et al., Case No. CV-2009-2563 (N.M. 3rd Judicial Dist. Ct.) (the "Sowards Action"); and (2) Fraga, et al. v. BIOTRONIK, Inc., et al., Case No. D-lol-CV-20112-03539 (N.M. 1st Judicial Dist. Ct.) (the "Fraga Action") (together, both lawsuits referred to as the "Pacemaker Actions").

The Pacemaker Actions arise from the alleged conspiracy on the part of Biotronik and certain physicians to implant Biotronik medical devices into patients who did not need them, resulting in damages and the patients' loss of an opportunity for a better outcome from their treatments. The Pacemaker Actions contain allegations that Biotronik provided certain doctors performing the implantations with financial, personal service and other inducements in order to increase the number of implantations of Biotronik devices in patients. The Sowards Action ended in an adverse jury verdict against Biotronik in the initial amount of 67 million dollars, which Biotronik successfully reduced to a verdict of $28 million. See Doc. 20, Gartman Decl., ¶ 5.2 The Fraga Action, " includes twenty-eight individual plaintiffs and is still pending in New Mexico state court. See Ex. 7 at 24. The plaintiffs in both the Sowards Action and the Fraga Action assert that the alleged conspiracy and negligent conduct by Biotronik resulted in seventeen unnecessary or non-indicated implantations during the time periods covered by the Policies.

D. Biotroniks Tender of Claims and OneBeacons Response

On December 22, 2014, Biotronik tendered a claim for coverage in the Sowards Action to OneBeacon. Ex. 1 ( Sowards Tender Letter); Ex. E ¶ 27 (Oregon Compl.). On January 23, 2015, Biotronik tendered claims for coverage in the Fraga Action to Dana Lenahan at OneBeacon. Ex. E, ¶ 31 (Oregon Compl.). Biotronik notified Ms. Lenahan of the claims by means of three separate letters, one for each of the Policies. Exs. 2-4 ( Fraga Tender Letters). Biotronik reiterated its request for coverage under the Policies in subsequent email correspondence and telephone calls. Biotronik claims that it emphasized that it needed a prompt coverage determination so that it could effectively negotiate toward a settlement with the plaintiffs in the Pacemaker Actions.

OneBeacon states that Biotroniks notices of both of the Pacemaker Actions were late. The plaintiffs in the Sowards Action served Biotronik with their initial complaint in November was served with the Fraga Action in March 2012, but did not give notice to OneBeacon until January 2015. OneBeacon claims that, prior to receiving notice of the Pacemaker Actions, Biotronik had on multiple occasions expressly denied to the plaintiffs and the court in the Sowards Action that it had any insurance available to it that would provide coverage for the claims in that lawsuit. Ex. D, Dendinger Decl., ¶ 5.3

OneBeacon completed its preliminary investigation of the Pacemaker Actions and issued its coverage letter to Biotronik on March 26, 2015 advising that the Policies in question do not afford coverage for the claims asserted in the Pacemaker Actions. Ex. D, Dendinger Decl., ¶ 16. Counsel for OneBeacon responded to Biotroniks tender letters by means of two letters. Exs. 5 & 6 (letters dated Feb.13, 2015). Biotronik notes that although the actual issuer of the 2005-06 Policy was Atlantic Specialty, OneBeacons letter regarding the Fraga Action listed all three insurance policies and stated that "OneBeacon America Insurance Company" was the "Insurer." Id. This oversight (which Biotronik characterized as a "misrepresentation") was not corrected until March 26, 2015 when OneBeacon denied coverage. Ex. 7 at 5.

E. Lawsuits Filed in New Mexico State Court and in U.S. District Court, District of Oregon

On March 13, 2015, Biotronik filed the complaint supporting the instant action in the New Mexico state court, when it claims it became clear that OneBeacon did not intend to promptly provide a coverage determination with respect to the Pacemaker Actions. The complaint, now before this Court, alleges that OneBeacon breached the Policies by failing to provide a coverage determination prior to March 13, 2015. OneBeacon contends that Biotronik had not previously made any demands or made any assertions that OneBeacon would be in breach if it failed to complete its investigation prior to that date. OneBeacon also contends that, in light of the more than four-year delay in notice provided by Biotronik to OneBeacon concerning the Pacemaker Actions, there should be no surprise that OneBeacon could not complete its investigation and coverage evaluation in essentially a one-month period between the time it was given access to documents and the March 9, 2015 mediation. The New Mexico Action was removed to federal court on March 27, 2015. Biotronik filed an Amended Complaint on April 20, 2015, adding Atlantic Specialty as a party and amending certain allegations. Doc. 17.

On March 26, 2015, one day before the New Mexico Action was removed to this Court, OneBeacon and Atlantic Specialty filed suit seeking declaratory relief in Oregon Federal District Court-the same day OneBeacon sent Biotronik a letter denying coverage. See Atlantic Specialty Insurance Co., et al., v. Biotronik, Inc., No. 3:15-cv-00501-PK ("Oregon Action").


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