Schering Corp. v. Griffo

• Decision Date: 17 January 2012
• Docket Number: No. CIV 11–0357 JB/KBM.,CIV 11–0357 JB/KBM.
• Court: U.S. District Court — District of New Mexico
• Parties: SCHERING CORPORATION, now known as Merck & Co. and Old Republic Insurance Company, Plaintiffs, v. Donald J. GRIFFO, Thomas Gonzales, Gina Delfino, individually and as Personal Representative of the Estate of Manuel Delfino, and as Parent and Next Friend of Domonic Sena and Gabriel Delfino, minors, Defendants.

872 F.Supp.2d 1220

SCHERING CORPORATION, now known as Merck & Co. and Old Republic Insurance Company, Plaintiffs,

v.Donald J. GRIFFO, Thomas Gonzales, Gina Delfino, individually and as Personal Representative of the Estate of Manuel Delfino, and as Parent and Next Friend of Domonic Sena and Gabriel Delfino, minors, Defendants.

No. CIV 11–0357 JB/KBM.

United States District Court,

D. New Mexico.

Jan. 17, 2012.

Thomas P. Gulley, Rebecca L. Avitia, Bannerman & Johnson, P.A., Albuquerque, NM, for Plaintiffs.

Mark D. Jarmie, Jarmie & Associates, Albuquerque, NM and Mark D. Standridge, Jarmie & Associates, Las Cruces, NM, for Defendants Donald J. Griffo and Thomas Gonzales.

Brian S. Colon, Robles Rael & Anaya, P.C., and Esteban A. Aguilar, Sr., Albuquerque, NM, for Defendant Gina Delfino.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on Plaintiff Gina Delfino's Motion to Dismiss and, Alternatively, Motion to Stay, filed June 17, 2011 (Doc. 11) (“MTD”). The Court held a hearing on November 16, 2011. The primary issue is whether the Court should stay or dismiss the federal declaratory judgment action, because there is a parallel state proceeding. The Court will grant the Motion to Stay and deny the Motion to Dismiss. The Court concludes that the State Farm Fire & Casualty Company v. Mhoon, 31 F.3d 979 (10th Cir.1994), factors weigh in favor of declining jurisdiction over the declaratory judgment action at this time.

FACTUAL BACKGROUND

Plaintiff Schering Corporation, now known as Merck & Co., Inc. (“Schering Corp.”) is a New Jersey pharmaceutical company with its principal place of business in Kenilworth, New Jersey. Complaint for Declaratory Relief ¶ 1, at 1, filed April 28, 2011 (Doc. 1)(“Compl.”). Plaintiff Old Republic Insurance Company (“Old Republic”) is a Pennsylvania corporation with its principal place of business in Illinois. Compl. ¶ 2, at 1.

On April 29, 2005, Alicia Gonzales was driving on Interstate 25 in Albuquerque, New Mexico, when her vehicle collided with another vehicle. Compl. ¶ 4, at 2. The collision fatally injured Manuel Delfino, an occupant of the other vehicle and an eight-year old boy, and injured Defendant Gina Delfino, Manuel's mother. Compl. ¶ 4, at 2. On April 25, 2008, Gina Delfino, individually, as personal representative of Manuel Delfino's estate, and as parent and next friend of Dominic Sena and Gabriel Delfino, Manuel Delfino's minor siblings, filed a lawsuit in the Second Judicial District, Bernalillo County, State of New Mexico, Case No. D–202–CV–2006–03125 (“state lawsuit”) against Defendants Donald J. Griffo and Thomas Gonzales, Schering Corp.'s employees, as well as Schering Corp. and others. Compl. ¶ 5, at 2. The state lawsuit alleges that A. Gonzales was intoxicated at the time of the collision. See Compl. ¶ 6, at 2. The state lawsuit also alleges that, before the collision, A. Gonzales had been drinking alcoholic beverages which Griffo and T. Gonzales purchased for her. See Compl. ¶ 7, at 2. Additionally, the state lawsuit alleges that Griffo and Gonzales were negligent in serving alcohol to A. Gonzales when she was already intoxicated, and in allowing her to drive her vehicle while intoxicated. See Compl. ¶ 8, at 2. In the state lawsuit, Gina Delfino alleges that Griffo and T. Gonzales are liable to her individually, and in her representative capacity, for: (i) her personal injuries; (ii) the death of M. Delfino; (iii) loss of consortium that she, Sena, and Gabriel Delfino suffered; and (iv) punitive damages. See Compl. ¶ 9, at 2.

Schering Corp. employed Griffo and T. Gonzales on April 29, 2005, and the state lawsuit alleges that Griffo and T. Gonzales negligently contributed to A. Gonzales' intoxication and allowed her to drive while intoxicated. See Compl. ¶¶ 10, 17, at 2–3. Furthermore, the state lawsuit asserts that Griffo and T. Gonzales were with A. Gonzales for a business purpose, because she was an employee of Dr. David Leech, an Albuquerque physician. See Compl. ¶ 11, at 3. It alleges that Griffo and T. Gonzales were acting within the course and scope of their employment with Schering Corp. See Compl. ¶ 12, at 3. The state lawsuit asserts that Schering Corp. is vicariously liable for Griffo and T. Gonzales' actions, because Schering Corp. was their employer. See Compl. ¶ 13, at 3. The state lawsuit further asserts that Schering Corp. was negligent in hiring, training, and supervising Griffo and T. Gonzales, because it allowed and encouraged them to serve alcohol to physicians or a physician's staff to the point of obvious intoxication while in the course and scope of their employment without educating its' employees about the perils of alcohol. See Compl. ¶ 14, at 3.

Old Republic's general liability insurance Policy No. MWZY 56095 in favor of Schering Corp. was in effect on April 29, 2005 and has a single occurrence limit of $5 million. See Compl. ¶ 18, at 4. The policy covers both Schering Corp. and its employees for negligence claims when an employee acts within the course and scope of his or her employment. See Compl. ¶ 19, at 4. Schering Corp. alleges that Griffo and T. Gonzales were not acting within the course and scope of their employment. See Compl. ¶ 20, at 4. Schering Corp. and Old Republic assert that, because Griffo and T. Gonzales were not acting within the course and scope of their employment on April 29, 2005, Schering Corp. has no duty to defend or indemnify them on the claims brought against them in the state lawsuit. See Compl. ¶¶ 22–23, at 4.

On April 25, 2008, Gina Delfino filed her Third Amended Complaint for Negligence Per Se, Negligence, Negligent Hiring, Retention and Training, Negligent Hiring Retention and Supervision, Prima Facie Tort, Intentional and Negligent Infliction of Emotional Distress, Loss of Consortium, Public Nuisance, and Injunctive Relief (dated April 25, 2008), filed June 17, 2011 (Doc. 11–1)(“State Third Amended Complaint”), in the Second Judicial District, Bernalillo County, State of New Mexico. See Doc. 11–1. Included as Defendants in the state lawsuit were: (i) Cue Inc., a New Mexico Corporation; (ii) 3TM Investments Inc., a New Mexico Corporation doing business as Doc & Eddy's; (iii) Brinker International Inc., a foreign corporation, doing business as Chili's Restaurant & Bar, Brinker Restaurant Corporation, a foreign corporation; (iv) Schering Corp.; (v) Griffo; (vi) T. Gonzales; (vii) Mike Donahue; (viii) James Paz; (ix) Merck & Co., Inc., a New Jersey Corporation; (x) Abbott Laboratories, Inc., a Delaware Corporation; (xi) Kraffty, LLC, a New Mexico Limited Liability Corporation doing business as Uptown Sports Bar & Grill, Uptown Square Venture, a New Mexico General Partnership; (xii) John Whisenant; (xiii) Ronald Nelson; (xiv) John Doe I; (xv) John Doe Company X; and (xvi) John Doe Company Y. See State Third Amended Complaint at 1. On May 19, 2008, Schering Corp. filed Schering Corp.'s Answer to Third Amended Complaint for Negligence Per Se, Negligence, Negligent Hiring, Retention and Training, Negligent Hiring Retention and Supervision, Prima Facie Tort, Intentional and Negligent Infliction of Emotional Distress, Loss of Consortium, Public Nuisance, and Injunctive Relief (dated May 19, 2008), filed June 17, 2011 (Doc. 11–2)(“Schering Corp.'s State Answer”). On May 28, 2008, Defendants in the state lawsuit, Merck & Co. and Paz, filed Merck & Co., Inc. and James Paz's Original Answer to Plaintiffs' Third Amended Complaint (dated May 28, 2008), filed June 17, 2011 (Doc. 11–3)(“Merck's State Answer”). In Schering Corp.'s State Answer, Schering Corp. denied paragraphs 41 through 44 of the State Third Amended Complaint, which included allegations that: (i) on April 29, 2005 A. Gonzales attended an out-of-office luncheon hosted by T. Gonzales, Griffo, Donahue, and Paz, as pharmaceutical representatives working for Schering Corp., Abbott Laboratories, Inc., and Merck & Co., Inc.; (ii) Schering Corp. employed Griffo and T. Gonzales, and they were working within the course and scope of their employment; (iii) T. Gonzales, an employee of Schering Corp., hosted a luncheon and purchased alcoholic beverages for A. Gonzales and other members of Dr. Leech's office at one or more establishments on April 29, 2005; and (iv) Griffo, an employee of Schering Corp., hosted and purchased alcoholic beverages for A. Gonzales and other members of Dr. Leech's office at one or more establishments. See MTD at 3–4; Schering Corp.'s State Answer ¶¶ 41–44, at 7; State Third Amended Complaint ¶¶ 41–44, at 2–3. In Merck's State Answer, Merck & Co. denied allegations that: (i) on April 29, 2005, A. Gonzales attended an out-of-office luncheon that T. Gonzales, Griffo, Donahue, and Paz, as pharmaceutical representatives working for Schering Corp., Abbott Laboratories, and Merck & Co., hosted; and (ii) Merck & Co. employed Paz, and he was working within the course and scope of his employment. See MTD at 4–5; Merck's State Answer ¶¶ 9, 11, at 2; State Third Amended Complaint ¶¶ 41, 47, at 2, 4.

On August 25, 2008,¹ the Honorable Nan Nash, District Court Judge for the Second Judicial District Court, Bernalillo County, State of New Mexico, held that the Schering Corp., Merck & Co., and Abbott Laboratories were not social hosts under N.M.S.A.1978, § 41–11–1E, the Liquor Liability Act, and that they did not owe common-law duties. See MTD at 6. Accordingly, Judge Nash dismissed those claims. See MTD at 6. Gina Delfino appealed that decision to the Court of Appeals of New Mexico, and on April 28, 2010, the Court of Appeals of New Mexico certified the appellate issues to the Supreme Court of New Mexico. See MTD at 6. The Supreme Court of New Mexico accepted certification and, on April 28, 2011, reversed Judge Nash's decision. See MTD at 6. The Supreme Court of New Mexico held that Schering Corp., Merck & Co., and Abbott Laboratories could be social hosts under the N.M.S.A.1978, § 41–11–1E...