Evanston Ins. Co. v. Neuromonitoring Techs.
| Decision Date | 29 March 2022 |
| Docket Number | CIVIL 1:18-cv-11497 (CPO) |
| Parties | EVANSTON INSURANCE COMPANY, Plaintiff/Counterclaim Defendant, v. NEUROMONITORING TECHS., INC., et al. Defendant/Counterclaim Plaintiff NEUROMONITORING TECHS., INC., Third-Party Plaintiff, v. MARKEL SERVICE INCORPORATED, Third-Party Defendant |
| Court | U.S. District Court — District of New Jersey |
Matthew D. Vodzak
Fowler Hirtzel McNulty & Spaulding, LLP
On behalf of Counterclaim and Third-Party Plaintiff.
Joseph Schramm, III, Esq.
FisherBroyles, LLP
Sean M. Hanifin, Esq. (pro hac vice)
Jason C. Reichlyn, Esq. (pro hac vice)
DYKEMA GOSSETT PLLC
On behalf of Counterclaim and Third-Party Defendants.
Pending before the Court is Evanston Insurance Company and Markel Service, Inc.'s (“MSI”) Consolidated Motion to Dismiss Neuromonitoring Technologies, Inc.'s (“NMT”) Counterclaim (ECF. No. 73) and Third-Party Complaint (ECF. No. 74) under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 85).
NMT's Counterclaim against Evanston asserts claims for declaratory judgment (Counts I-III), breach of contract (Count IV) breach of the duty of good faith and fair dealing (Count V) [1]bad faith and breach of fiduciary duty (Count VI), fraud (Count VII), negligent representation (Count VIII), fraudulent inducement/misrepresentation (Count IX), and negligence (Count X). (ECF No. 73).
NMT's Third-Party Complaint against MSI asserts claims for fraud (Count I), negligent representation (Count II), fraudulent inducement/misrepresentation (Count III), negligence (Count IV), and contribution and indemnity (Count V). (ECF No. 74).
Evanston seeks to dismiss Counts IV, V, VI, VII, and IX under F.R.C.P. 12(b)(6).[2] (ECF No. 85). MSI seeks to dismiss all Counts of the Third-Party Complaint under F.R.C.P. 12(b)(6). (ECF No. 85).
For the following reasons, Evanston and MSI's consolidated Motion is GRANTED IN PART and DENIED IN PART.
This is the fourth Motion to Dismiss to come before the Court in this matter.[3] (ECF Nos. 17, 52, 66). The Court's Opinions in relation to the first three Motions lay out the detailed factual background of this case. (ECF Nos. 30, 61, 69). The Court incorporates the factual discussion included in those prior three Opinions here and will only briefly address the facts that are relevant to the present motion.
This case stems from the death of Margaret Mary Niedzwiadek (the “Patient”) after an October 2013 surgical procedure. (ECF No. 69 at 2). During that procedure, Robert Perro, an employee of NMT, failed to communicate vital information to the surgeons operating on the Patient. (ECF No. 69 at 2). This allegedly led to the death of the Patient in December 2013. (ECF No. 69 at 2). Evanston, as the insurer of NMT, provided a defense of the medical malpractice state court lawsuit[4] (the “Underlying Lawsuit”). (ECF No. 69 at 2). While the Underlying Lawsuit was pending and it was providing a defense to NMT, Evanston instituted suit in this Court seeking declaratory relief against NMT “to determine the parties' rights and obligations under” the insurance policy due to NMT's alleged misrepresentations and omissions on the policy application.[5] (ECF No. 1, ¶ 1). Evanston ultimately obtained NMT's consent to settle the Underlying Lawsuit and paid a $1.1 million settlement on behalf of NMT. (ECF No. 73, ¶ 94). Subsequently, Evanston amended its Complaint in this action to seek reimbursement of the full settlement amount from NMT. (ECF Nos. 51, 63).
Relevant to the pending motion, NMT raised several Counterclaims against Evanston in its Answer to the Amended Complaint, (ECF No. 73), and filed a Third-Party Complaint against MSI, Evanston's insurance claims administrator. (ECF No. 74). Central to NMT's Counterclaim and Third-Party Complaint is an allegation that Evanston and MSI exercised a “bait and switch” by obtaining NMT's consent to settle the Underlying Lawsuit only to turn around and seek reimbursement of the same settlement in this Court. (ECF No. 73, ¶ 146; ECF No. 74, ¶ 79). NMT further alleges that Evanston breached its policy agreement by failing to meet its “duty to defend” NMT and Perro in the Underlying Lawsuit. (ECF. No. 73, ¶ 133).
As addressed in its previous Opinions, the Court exercises subject matter jurisdiction over this matter pursuant to 28 U.S.C. §§ 1332 and 2001(a). (ECF No. 30).
A. Motion to Dismiss
When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do . . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (citations omitted) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957); Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994); Papasan v. Allain, 478 U.S. 265, 286 (1986)).
To determine the sufficiency of a complaint, a court must take three steps: (1) the court must take note of the elements a plaintiff must plead to state a claim; (2) the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth; and (3) when there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.
Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 664, 675, 679 (2009) ().
A district court, in weighing a motion to dismiss, asks “not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim.” Twombly, 550 U.S. at 563 n.8 (quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also Iqbal, 556 U.S. at 684 (); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (“Iqbal . . . provides the final nail in the coffin for the ‘no set of facts' standard that applied to federal complaints before Twombly.”). “A motion to dismiss should be granted if the plaintiff is unable to plead ‘enough facts to state a claim to relief that is plausible on its face.'” Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at 570).
A court in reviewing a Rule 12(b)(6) motion must only consider the facts alleged in the pleadings, the documents attached thereto as exhibits, and matters of judicial notice. S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd., 181 F.3d 410, 426 (3d Cir. 1999). A court may consider, however, “an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). If any other matters outside the pleadings are presented to the court, and the court does not exclude those matters, a Rule 12(b)(6) motion will be treated as a summary judgment motion pursuant to Rule 56. Fed.R.Civ.P. 12(d).
A. Choice of Law
This Court previously determined that Maryland law applies to this case because NMT, a Maryland company, contracted and bought the Evanston insurance policy in Maryland. (ECF Nos. 61, 69). NMT now argues that the Court should apply New Jersey law to the Counterclaims and Third-Party Complaint. (ECF No. 89-1 at 7). The Court finds NMT's position unavailing.
When a choice-of law question exists in a diversity of citizenship action, “a district court must apply the choice-of-law rules of the state in which it sits in order to determine which state's law applies.” Chin v. Chrysler LLC, 538 F.3d 272, 279 (3d Cir. 2008) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). The Supreme Court of New Jersey has held that “because the law of the place of contract ‘generally comport[s] with the reasonable expectations of the parties concerning the principal situs of the insured risk,' that forum's law should be applied ‘unless the dominant and significant relationship of another state to the parties and the underlying issue dictates that this basic rule should yield.'” Gilbert Spruance Co. v. Pa. Mfrs. Ass'n Ins. Co., 629 A.2d 885, 888 (N.J. 1993).
Further, “[b]efore a choice of law question arises . . . there must actually be a conflict between the potentially applicable bodies of law.” Lucker Mfg. v. Home Ins. Co., 23 F.3d 808, 813 (3d Cir. 1994). Neither NMT (ECF No. 89-1) nor this Court can identify a conflict between New Jersey and Maryland law on the claims which are the subject of this Motion.[6] Accordingly, this Court finds that no actual conflict exists between Maryland and New Jersey law as relevant to the present motions and will continue to apply Maryland law as originally decided.[7] B. NMT's Counterclaim Counts IV, VI, VII, and IX
For the following reasons, the Court grants in part and denies in part Evanston's Motion...
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