Ohio Sec. Ins. Co. v. Premium Food Grp.

• Decision Date: 30 June 2022
• Docket Number: Civil Action 21-15690 (FLW)
• Parties: OHIO SECURITY INSURANCE COMPANY, Plaintiff, v. PREMIUM FOOD GROUP, INC. and NUT CRAVINGS, INC., Defendants.
• Court: U.S. District Court — District of New Jersey

OHIO SECURITY INSURANCE COMPANY, Plaintiff,
v.
PREMIUM FOOD GROUP, INC. and NUT CRAVINGS, INC., Defendants.

Civil Action No. 21-15690 (FLW)

United States District Court, D. New Jersey

June 30, 2022

*NOT FOR PUBLICATON*

OPINION

HON. FREDA L. WOLFSON U.S. CHIEF DISTRICT JUDGE

This declaratory judgment action arises out of a dispute over insurance policies. Plaintiff, Ohio Security Insurance Company (“Plaintiff” or “Ohio Security”), seeks a declaration with respect to its coverage obligations to defendants Premium Food Group, Inc. (“Premium Food”) and Nut Cravings, Inc. (“Nut Cravings”) (collectively, “Defendants”), in connection with an underlying state court action against Nut Cravings. Before this Court is Defendants' Motion to Dismiss Plaintiff's Complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). (ECF No. 12.) Plaintiff opposes the Motion (ECF No. 13.), and Defendants filed a Reply. (ECF No. 14.) Plaintiff filed a sur-reply. (ECF No. 17.) For the following reasons, the case is transferred to the United States District Court for the Southern District of New York.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. The Lancia Action

On April 5, 2021, Rebecca and Paul Lancia filed a civil action (the “Lancia Action”) in the state of New Jersey against multiple defendants, including defendant Nut Cravings. In that action,

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the Lancias claimed that Mrs. Lancia suffered multiple strokes after consuming unwashed poppy seeds. Ms. Lancia allegedly consumed poppy seed tea to treat her rheumatoid arthritis and had purchased the unwashed poppy seeds for her tea from among others, Nut Cravings. (Lancia Compl. ¶¶ 1, 4, 7.) The Lancias alleged that the various defendants, including Nut Cravings, knew or should have known that the unwashed poppy seeds sold to Ms. Lancia contained dangerous levels of the opiate alkaloids and would be used to make a poppy seed tea that qualifies as a Schedule II narcotic. (Id. ¶¶ 161-62, 171-79.) The underlying complaint in the Lancia Action set forth 11 counts against Nut Cravings, including claims for products liability; breach of warranty; negligence, and negligence per se; misrepresentation and failure to disclose; defective design under the Products Liability Act; strict liability; consumer fraud under the Consumer Fraud Act; punitive damages; loss of consortium; and negligent infliction of emotional and mental distress. (Id.)

B. The Insurance Policies and Present Litigation

Premium Food, which sold poppy seeds to Nut Cravings, purchased several insurance policies in New York from Plaintiff through its insurance broker, Skyscraper Insurance Services, Inc. (See Insurance Policy Numbers BKS (19) 59 30 57 38, BKS (20) 59 30 57 38, and BKS (21) 59 30 57 38, ECF Nos. 1-3, 1-4, and 1-5.) The insurance policies were effective from November 13, 2018 through November 13, 2021, and they cover “bodily injury” under certain circumstances. Id. On March 19, 2021, prior to the filing of the Lancia complaint, Skyscraper Insurance Services, Inc., requested that Ohio Security Policy Number BKS (21) 59 30 57 38 be amended to include Nut Cravings as an additional named insured. (Compl. ¶ 31.) Nut Cravings was added as an additional insured effective as of March 19, 2021. (Id. ¶ 32.) On April 16, 2021, Nut Cravings was served with the Lancia complaint. (Id. ¶ 33.) Thereafter, on May 28, 2021, Plaintiff denied coverage to Nut Cravings on the ground that Nut Cravings was not insured under the policies

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during the time of the alleged injury in the Lancia Action. (Id. ¶ 35.) Nut Cravings subsequently provided Plaintiff with a “Hold Harmless and Indemnification Agreement” dated January 16, 2018, in which Premium Food allegedly agreed to defend and indemnify Nut Cravings with respect to products liability in connection with products purchased from Premium Food. (Id. ¶ 36.) On July 19, 2021, Plaintiff allegedly revised its coverage decision and agreed to defend Nut Cravings in the Lancia Action subject to a complete reservation of rights, including its right of reimbursement for any defense or indemnity costs incurred. (Id. ¶ 38.) On August 19, 2021, Plaintiff filed the instant declaratory judgment action, seeking a declaration of its rights and obligations under the insurance policies. (Id. ¶ 40.) In the instant matter, Defendants moved to dismiss Plaintiff's action for lack of personal jurisdiction under Rule 12(b)(2). (Defendants' Motion to Dismiss (“Defs. Mot. to Dismiss”), ECF No. 12.)

II. PERSONAL JURISDICTION

In a motion to dismiss for lack of personal jurisdiction, it is the plaintiff s burden to present evidence establishing a prima facie case of personal jurisdiction over the defendant. Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009). Although a court initially takes the allegations of the complaint as true, once a defendant raises a jurisdictional defense, a plaintiff bears the burden of proving that jurisdiction is proper by affidavits or other competent evidence. MaxLite, Inc. v. ATG Elecs., Inc., 193 F.Supp.3d 371, 382 (D.N.J. 2016) (citing Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996)). If the court does not hold an evidentiary hearing on the motion to dismiss, however, “the plaintiff need only establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004).

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“A federal court sitting in New Jersey has jurisdiction over parties to the extent provided under New Jersey state law.” Miller Yacht Sales, Inc., 384 F.3d at 96 (citing Fed.R.Civ.P. 4(e)); see also Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 144-45 (3d Cir. 1992). “[T]he New Jersey long-arm statute permits the exercise of personal jurisdiction to the fullest limits of due process.” IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998) (citations omitted). Thus, courts examine whether, under the Due Process Clause, the defendant possesses “certain minimum contacts with [New Jersey] such that the maintenance of the suit does not offend notions of fair play and substantial justice.” Int'lShoe Co. v. Washington, 326 U.S. 310, 316 (1945).

The two forms of personal jurisdiction are general jurisdiction and specific jurisdiction. Metcalfe, 566 F.3d at 334. Minimum contacts are analyzed in the context of both types of personal jurisdiction. Id. General jurisdiction extends beyond an entity's state of incorporation and principal place of business only where its contacts with another forum are so significant as to...