Podiatry Ins. Co. Of Am. v. Falcone, CIVIL ACTION NO. 3:10-1106
| Decision Date | 25 February 2011 |
| Docket Number | CIVIL ACTION NO. 3:10-1106 |
| Parties | PODIATRY INSURANCE COMPANY OF AMERICA, Plaintiff, v. TINA M. FALCONE, mother and natural guardian of Leslie Sue Burd, a minor, et al., Defendants. |
| Court | U.S. District Court — Southern District of West Virginia |
Pending before the Court are Defendant Huntington Foot & Ankle Clinic Inc.'s Motion to Dismiss Tina M. Falcone's Cross-Claim (Doc. 24), Plaintiff's Motion for Leave to Amend Complaint (Doc. 26), Motion by Cabell Huntington Hospital, Inc. for Leave to File Rule 12(b) Motion (Doc. 27), and Motion by Cabell Huntington Hospital, Inc. to Dismiss Third Party Complaint (Doc. 31). For the following reasons, Huntington Foot & Ankle Clinic Inc.'s motion to dismiss the cross-claim is GRANTED, Plaintiff's motion to amend the complaint is DENIED as moot, and Cabell Huntington Hospital, Inc.'s motion for leave and motion to dismiss Third Party Complaint are GRANTED.
Plaintiff Podiatry Insurance Company of America ("PICA") filed this action pursuant to the Declaratory Judgments Act, 28 U.S.C. § 2201, and Rule 57 of the Federal Rules of Civil Procedure. PICA is seeking a declaratory judgment that it does not have to provide a defense for or indemnify a number of parties involved in an underlying suit filed in the Circuit Court of Cabell County, Civil Action No. 10-C-446 ("Underlying Suit"). See Compl., Doc. 1. Among these parties is the plaintiff of the Underlying Suit, Tina M. Falcone, who is acting both individually and in a representative capacity as the mother and natural guardian of L.S.B., a minor. See Compl., Req. for Relief ¶ 1, Doc. 1. Ms. Falcone filed cross-claims in this action, which allege her negligence claims from the Underlying Action, and a Third Party Complaint, which brings in Cabell Huntington Hospital as a Third Party Defendant. As the current case originates in the Underlying Action, a brief overview of that action can help illuminate the issues presented in the currently pending motions.
The Underlying Action stems from alleged medical malpractice by Dr. Seth Stinehour. Ms. Falcone alleges that L.S.B. suffered permanent injuries and damages as a result of his negligent treatment. Compl. ¶¶ 10-13, Underlying Action, Doc. 1-1. Ms. Falcone filed this suit on her daughter's behalf, and also alleges individual damages. Id. ¶¶ 14-15. The Complaint in the Underlying Action contains three counts. Two relate to the alleged negligent treatment, and the third alleges that Dr. Stinehour has refused to produce the medical records and bills related to the treatment. Id. ¶¶ 22-24.
Ms. Falcone also alleges that during all relevant times, Dr. Stinehour was the "actual or ostensible agent and/or servant and/or employee" of Huntington Foot & Ankle Clinic, Inc. ("Huntington Foot") and Great Teays Podiatry, PLLC ("Great Teays"). Id. ¶¶ 10-15. Accordingly, these entities are also defendants in the Underlying Action. Podiatry Insurance Company of America ("PICA") is not a party to the Underlying Action. It is, however, the insurer of David Chris Wood, DPM, and Huntington Foot. Compl. ¶¶ 13-14, Doc. 1. It is from this relationship and thealleged agency-principal relationship between Huntington Foot and Dr. Stinehour that the current action originates. Id.
PICA, an Illinois corporation, filed the current action on September 10, 2010. Compl., Doc. 1. Plaintiff named as defendants all the named parties in the Underlying Action, all of whom are represented to be citizens of West Virginia. Id. As the professional liability policy at issue has a limit greater than this Court's jurisdictional amount and there is diverse citizenship, this Court has jurisdiction pursuant to 28 U.S.C. § 1332. Id. ¶¶ 1-7.
PICA issued the policy to David Chris Wood, DPM and Huntington Foot for the period of August 1, 2009 through August 1, 2010, with a retroactive date of August 1, 1998. Id. ¶ 14. PICA asserts that the policy does not cover any liability stemming from an agency-principal relationship and, as Dr. Stinehour is not a named insured under the policy, any liability he has incurred does not trigger a duty on the part of PICA to defend or indemnify Huntington Foot. Id. ¶¶ 26-33. PICA seeks a declaratory judgment regarding this duty and any potential duty with regard to the other parties to the Underlying Action. Id. ¶¶ 1-2.
Ms. Falcone, along with her Answer, filed cross-claims and a Third Party Complaint in this action. The cross-claims incorporate the three counts she alleged in her complaint in the Underlying Action, and also adds an additional count. Cross-Cl. of Def. Falcone, Doc. 17. Count Four seeks, inter alia, additional damages against the cross-claimants, Great Teays, Huntington Foot, Dr. Stinehour, and various unknown individuals and entities, for the failure to provide relevant medical records to Ms. Falcone and damages arising from Dr. Stinehour's failure to maintain an individual policy of medical negligence liability insurance. Id. ¶¶ 26-27. The Third Party Complaint against Cabell Huntington Hospital, Inc. ("CHH"), a West Virginia corporation, alleges that CHH "negligently and carelessly failed to verify" that Dr. Stinehour had a medical negligence professional liability policy. Third Party Compl. ¶ 5, Doc. 18. On the basis of this oversight, the Third Party Plaintiff asserts that CHH is directly and vicariously liable to them for the injuries and damages suffered by L.S.B. Id. ¶ 6.
Defendant Huntington Foot has moved to have the cross-claims dismissed. Mem. of Law in Supp. of Mot. to Dismiss Cross-Cl., Doc. 25. Third Party Defendant CHH likewise seeks to have the Third Party Complaint dismissed. Mem. of Law in Supp. of Third-Party Def.'s Mot. to Dismiss, Doc. 32. Lastly, Plaintiff PICA seeks to amend its Complaint in light of the cross-claims and the Third Party Complaint filed by Defendant Falcone. Pl.'s Mot.for Leave to Amend Compl., Doc. 26. The Court will address the merits of each of these motions in turn.
Defendant Huntington Foot moves to dismiss Defendant Falcone's cross-claim on jurisdictional and abstention grounds. First, Huntington Foot argues that this Court does not have subject matter jurisdiction over the cross-claims. It contends that under Rules 13(g) and 12(b)(1) of the Federal Rules of Civil Procedure, the cross-claims must be dismissed. Second, in the alternative, Huntington Foot argues that this Court should abstain from exercising its jurisdiction, citing this Court's recent decision in Galloway & Associates, PLLC v. Fredeking & Fredeking Law Offices, L.C., 2010 WL 3955790 (S.D. W. Va. 2010). As the Court finds it lacks subject matter jurisdiction over the cross-claims, it declines to reach the abstention argument.
For a cross-claim to be properly asserted, it must comply with the requirements under Rule 13(g). That rule states, in pertinent part:
A pleading may state as a crossclaim any claim by one party against a coparty if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action....
Fed. R. Civ. P. 13(g). In Wheeling Downs Race Track & Gambling Center v. Kovach, Judge Stamp of the Northern District of West Virginia conducted an analysis to determine whether a cross-claim arose out of the same transaction or occurrence. For guidance, he looked to a Fourth Circuit case regarding whether a counterclaim is compulsory under Rule 13(a). Wheeling Downs, 226 F.R.D. 259, 261-62 (N.D. W. Va. 2004). As in an inquiry under 13(g), a court analyzing whether a counterclaim is compulsory must determine if it arises out of the transaction or occurrence as the original claim. Fed. R. Civ. P. 13(a). The Fourth Circuit's suggested inquiries are:
(1) "Are the issues of fact and law raised in the claim and cross-claim largely the same?" (2) "Will substantially the same evidence support or refute the claim as well as the cross-claim?" and (3) "Is there any logical relationship between the complaint and the cross-claim?"
Wheeling Downs, 226 F.R.D. at 261-62 (quoting Painter v. Harvey, 863 F.2d 329, 331 (4th Cir. 1988)).
Under the first inquiry, the Court finds there is little overlap of issues of fact and law between PICA's claims and Ms. Falcone's cross-claims. PICA is seeking a declaratory judgment on the issue of whether the policy it issued to David Chris Wood, DPM, and Huntington Foot subject it to a possible duty of defense or indemnification in the Underlying Action. Compl. ¶ 14, Doc. 1. When this request for relief is ripe for adjudication, to ascertain whether it can be granted the Court will examine the language of PICA's policy and whether the alleged negligence and agencyrelationship fall under the coverage provided by the policy. A determination of whether or not the alleged negligent behavior occurred and resulted in the injuries to L.S.B. is not required in order to decide the claim for declaratory relief filed by PICA. In contrast, the cross-claims filed by Ms. Falcone are based on the alleged negligence of Dr. Stinehour and any liability Huntington Foot may have as a result of its business relationship with Dr. Stinehour. Accordingly, to decide the cross-claims filed by Ms. Falcone would require the Court to consider additional factual and legal issues than those presented by PICA's claim for declaratory relief.
The second inquiry likewise supports a finding that the complaint and cross-claim do not arise out of the same transaction or occurrence. To reiterate, for this Court to determine the request for declaratory relief does not require that the underlying negligence action filed by Ms. Falcone be resolved as well. Whether or not L.S.B.'s injuries stemmed...
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