Atl. Specialty Ins. Co. v. MCMC, LLC

• Decision Date: 02 August 2022
• Docket Number: Civil Action 21-cv-11194-ADB
• Parties: ATLANTIC SPECIALTY INSURANCE COMPANY, Plaintiff, v. MCMC, LLC, A DELAWARE LIMITED LIABILITY COMPANY, Defendant.
• Court: U.S. District Court — District of Massachusetts

ATLANTIC SPECIALTY INSURANCE COMPANY, Plaintiff,
v.
MCMC, LLC, A DELAWARE LIMITED LIABILITY COMPANY, Defendant.

Civil Action No. 21-cv-11194-ADB

United States District Court, D. Massachusetts

August 2, 2022

MEMORANDUM AND ORDER

ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE

Plaintiff Atlantic Specialty Insurance Company (“ASIC”) filed this action on July 23, 2021 seeking damages arising from Defendant MCMC, LLC's (“MCMC”) alleged breach of contract and refusal to indemnify ASIC for losses resulting from that breach. See [ECF No. 1 (Compl.)]. On September 7, 2021, MCMC moved to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) or, alternatively, to transfer this action to the District of Arizona pursuant to 28 U.S.C. § 1404(a) or § 1406(a). [ECF No. 16]. ASIC opposed on October 5, 2021. [ECF No. 23]. For the reasons stated below, MCMC's motion to dismiss or transfer, [ECF No. 16], is DENIED.

I. BACKGROUND

The following facts are drawn from the complaint and the evidence the parties have proffered in support of their jurisdictional arguments. See A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016)

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(stating that plaintiffs bear the burden of establishing specific jurisdiction and it is “not enough . . . to ‘rely on unsupported allegations in [its] pleadings'”) (alteration in original) (citation omitted)).

ASIC, an insurance company, is incorporated in New York and has a principal place of business in Minnesota. [Compl. ¶ 12]. MCMC is an “independent organization that provides independent medical peer reviews” for insurance companies. [Id. ¶ 20]. It is incorporated in Delaware and its principal place of business is in Memphis, Tennessee, but prior to February or March 2021, its principal place of business was in Quincy, Massachusetts, including for the entirety of the time period relevant to this action, [Compl. ¶ 13], and it still maintains a Resident Agent in Boston, Massachusetts, [ECF No. 23 at 3-4].

On March 3, 2014, ASIC entered into a contract (the “Service Agreement”) with MCMC. [Compl. ¶ 24]; see [ECF No. 1-3]. The Service Agreement contained a “Governing Law” clause that provides that the “Agreement shall be governed and construed in accordance with the law of the Commonwealth of Massachusetts.” [ECF No. 1-3 at 5]. The Service Agreement stipulated that MCMC would provide ASIC with “Peer Review Services” performed by physicians and health care practitioners. [Id. at 7; Compl. ¶ 24]. ASIC alleges that MCMC breached the Service Agreement by assigning a peer reviewer, in this case, a doctor, who provided a “faulty” medical opinion for the evaluation of an insurance claim, which resulted in a private arbitration against ASIC. [Compl. ¶¶ 1, 2-6]. Now, seeking indemnity from MCMC to recover the costs it incurred during the arbitration and in payment of the arbitration's settlement, ASIC brings claims against MCMC for breach of contract, contractual indemnity, and, in the alternative, common law indemnity, as well as negligent misrepresentation and declaratory judgment. [Id. ¶ 10].

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II. PERSONAL JURISDICTION

A. Standard of Review

ASIC bears the burden of establishing that personal jurisdiction exists over MCMC. Get In Shape Franchise, Inc. v. TFL Fishers, LLC, 167 F.Supp.3d 173, 191 (D. Mass. 2016) (citing Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002)). “When a district court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing . . ., the ‘prima facie' standard governs its determination.” United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). Under the prima facie standard, the plaintiff must proffer “evidence which, if credited, is sufficient to support findings of all facts essential to personal jurisdiction.” A Corp., 812 F.3d at 54 (quoting Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)).

“[P]laintiffs may not rely on unsupported allegations in their pleadings” and are instead “obliged to adduce evidence of specific facts” supporting jurisdiction. Platten v. HG Berm. Exempted Ltd., 437 F.3d 118, 134 (1st Cir. 2006) (alteration in original) (first quoting Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992), then quoting Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145 (1st Cir. 1995)). The Court takes as true whatever properly documented facts a plaintiff proffers, construes those facts in the light most favorable to the plaintiff, and considers facts put forward by the defendant to the extent they are uncontradicted. See Prairie Eye Ctr., 530 F.3d at 26; Platten, 437 F.3d at 134.

“To establish personal jurisdiction in a diversity case, a plaintiff must satisfy both the forum state's long-arm statute and the Due Process Clause of the Fourteenth Amendment.” C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir. 2014) (citing Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir. 1994)). The Due Process Clause of

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the Fourteenth Amendment allows a state court to exercise personal jurisdiction over a nonresident only where the exercise of jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations omitted).

The Massachusetts long-arm statute also limits when courts may exercise personal jurisdiction over nonresidents. Because “the long-arm statute imposes specific constraints on the exercise of personal jurisdiction that are not coextensive with the parameters of due process . . . a determination under the long-arm statute is to precede consideration of the constitutional question.” SCVNGR, Inc. v. Punchh, Inc., 85 N.E.3d 50, 52 (Mass. 2017); see also Cossart v. United Excel Corp., 804 F.3d 13, 18 (1st Cir. 2015) (“The requirements of the Massachusetts long-arm statute are similar to-although not necessarily the same as-those imposed by the Due Process Clause.”).

B. The Massachusetts Long-Arm Statute

ASIC argues that the Court has personal jurisdiction over MCMC under Mass. Gen. Laws ch. 223A, § 3(a), which provides that “[a] court may exercise personal jurisdiction over a person . . . as to a cause of action in law or equity arising from the person's . . . transacting any business in the commonwealth.” See [ECF No. 23 at 4-7].

ASIC asserts that the Court's exercise of personal jurisdiction is proper under § 3(a) because:

(1) the Service Agreement between ASIC and MCMC contained an express choice of law provision requiring Agreement be governed and construed in accordance with the law of the Commonwealth of Massachusetts . . . (2) the Service Agreement included a provision that all notices be delivered to MCMC at “300 Crown Colony Driver [sic], Suite 203, Quincy, MA 02169” . . . and (3) At all relevant times, including the time the parties entered into the Service Agreement in March 2014, the time Dr. McCrary provided medical opinions relevant to this matter in March 2017 and November 2019, and the time of MCMC's breach of contract in refusing

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to comply with its contractual indemnity through 2019, MCMC maintained its principal place of business in Massachusetts and transacted business in Massachusetts. MCMC continues to operate in Massachusetts today.

[ECF No. 23 at 6-7].

“For jurisdiction to exist under [§ 3(a)], ‘the facts must satisfy two requirements-the defendant must have transacted business in Massachusetts, and the plaintiff's claim must have arisen from the transaction of business by the defendant.'” Aldabe v. Env't Servs., Inc., No. 16-cv-11067, 2017 WL 7035658, at *2 (D. Mass. Sept. 20, 2017) (quoting Tatro v. Manor Care, Inc., 416 Mass. 763, 769-71 (1994)). Both requirements are construed broadly in favor of asserting personal jurisdiction. See Geis v. Nestle Waters N. Am., Inc., 321 F.Supp.3d 230, 238 (D. Mass. 2018) (“[t]he definition of ‘transacting any business' is construed broadly”); Saturn Mgmt. LLC v. GEM-Atreus Advisors, LLC, 754 F.Supp.2d 272, 278 (D. Mass. 2010) (“the ‘arising from' requirement is generously construed”). In other words, “[t]he inquiry ultimately boils down to a ‘but for' causation test which asks ‘[d]id the defendant's contacts with the Commonwealth constitute ‘the first step in a train of events that result[ed] in the personal injury.'” Access Now, Inc. v. Otter Prods., LLC, 280 F.Supp.3d 287, 291 (D. Mass. 2017) (quoting Lyle Richards Int'l, Ltd. v. Ashworth, Inc., 132 F.3d 111, 114 (1st Cir. 1997)).

MCMC contends that the Court cannot exercise personal jurisdiction over it because the events giving rise to this suit, which, according to MCMC, solely concern peer review services provided by a doctor in Arizona, did not take place in Massachusetts. [ECF No. 16 at 5]. Section 3(a)'s “arising from” requirement, however, is not so limited. “The business transacted ‘need not have taken place within the physical bounds of the commonwealth.'” C&W Fabricators, Inc. v. Metal Trades, Inc., No. 01-cv-40061, 2002 WL 32759591, at *4 (D. Mass. Mar. 27, 2002).

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Where, as here, the cause of action is an alleged breach of contract and the business transacted in Massachusetts was instrumental in the formation of the contract, the “arising from” requirement is satisfied. Hahn v. Vermont Law School, 698 F.2d 48, 51 (1st Cir. 1983); see also Saturn Mgmt., 754 F.Supp.2d at 278; M-R Logistics, LLC v. Riverside Rail, LLC, 537 F.Supp.2d 269, 276 (D. Mass. 2008); Shipley Co. v. Clark, 728 F.Supp. 818, 822 (D. Mass. 1990). Because ASIC alleges that MCMC breached its Service Agreement with ASIC, and the Service Agreement was formed in connection with ASIC's substantial transaction of business in Massachusetts, these facts are sufficient to satisfy the state's long-arm statute.

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