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Stella Maris Insurance Company, Limited v. Catholic Health East

September 8, 2010

STELLA MARIS INSURANCE COMPANY, LIMITED
v.
CATHOLIC HEALTH EAST, ET AL.



The opinion of the court was delivered by: Surrick, J.

MEMORANDUM

Presently before the Court are Defendants Mary Serio and Nicholas Serio's Motion to Dismiss for Lack of Jurisdiction and/or for Lack of Jurisdiction Due to Lack of Diversity Between Plaintiff and Defendant Catholic Health East (ECF No. 17), and Defendant Jeffrey Constantine, M.D.'s Motion to Dismiss for Lack of Jurisdiction (ECF No. 19). For the following reasons, Defendants' Motions will be granted.

I. BACKGROUND

This is a declaratory judgmentaction in which Plaintiff Stella Maris Insurance Company, Ltd., seeks a declaration that it has no duty to defend or indemnify Defendant Jeffrey Constantine, M.D., in connection with the medical malpractice lawsuit brought against him in New York state court. The New York state lawsuit involves DefendantsMary and Nicholas Serio suing on behalf of their daughter, Nicole Serio, who it is alleged suffered injuries as a result of Dr. Constantine's negligence.*fn1 Stella Maris is a single-parent captive insurance company that is wholly owned by Defendant Catholic Health East ("CHE"). (Compl. ¶ 1, Apr. 30, 2010, ECF No. 1.) Stella Maris is domiciled in the Cayman Islands. (Id.) It insures and reinsures certain professional and general liability risks of CHE, its regional health corporations, and other entities, including Defendant Catholic Health System of Buffalo, NY, d/b/a Sisters of Charity Hospital. (Id.)

Defendant CHE is a Pennsylvania not-for-profit corporation with its principal place of business in Pennsylvania. (Compl. ¶ 2.) CHE is party to a joint operating agreement with Defendant Catholic Health System of Buffalo, NY, d/b/a Sisters of Charity Hospital (the "Hospital"), which is a not-for-profit corporation with its principal place of business in Buffalo, New York. (Id. ¶¶ 2-3.) From July 1, 2001 through July 1, 2002, CHE was the first named insured under a general liability insurance policy issued by Stella Maris (the "Policy"). (Id. ¶ 8.)

Dr. Constantine is a medical doctor who resides in the state of New York. (Id. ¶ 4.) He is licensed to practice medicine in New York. He is not licensed to practice in Pennsylvania. (Id. ¶ 4; Constantine Mot. to Dismiss Ex. D ¶ 5, July 2, 2010, ECF No. 19.) Dr. Constantine does not have any bank accounts, real estate, mailing address, or offices in Pennsylvania. (Constantine Mot. Ex. 4 ¶¶ 3-4, 6.) Dr. Constantine, an obstetrician-gynecologist, was a full-time employee of the Hospital from July 1996 to June 30, 2001. (Compl. ¶ 23(a).) On July 7, 2001, when the incident that gave rise to the medical malpractice lawsuit occurred, Dr. Constantine was employed by a private group called 431 OB-GYN. (Id. ¶ 23(b).) After becoming employed by 431 OB-GYN, Dr. Constantine had an independent contractor relationship with the Hospital in which he would take call and act as an attending physician who supervised resident physicians. (Id. ¶ 23(c).)

Defendants Mary and Nicholas Serio (the "Serios") are the parents and natural guardians of Nicole Serio. The Serios' primary residence is in New York. (Compl. ¶ 5.) The Serios do not have any bank accounts, real estate, or phone listings in Pennsylvania. (Serio Mot. to Dismiss Ex. A ¶¶ 3-4, Ex. B ¶¶ 3-4, June 23, 2010, ECF No. 17.)

On or about July 27, 2005, the Serios filed suit against Dr. Constantine; the Buffalo Medical Group, P.C.; and the Hospital in the New York Supreme Court (the "New York Action"). (Constantine Mot. Ex. 1 ¶¶ 2-4.) The Serios allege that between July 5 and July 7, 2001, Dr. Constantine provided negligent medical care during the birth of Nicole Serio, causing her serious, permanent injuries. (Id. ¶¶ 14-15.) The litigation between the Serios and Dr. Constantine is ongoing.

Dr. Constantine's primary medical malpractice liability insurance is provided by Medical Liability Mutual Insurance Company ("Medical Liability Mutual"). (Pl.'s Resp. to Serios 2, July 6, 2010, ECF No. 20.) Medical Liability Mutual is covering the costs of Dr. Constantine's defense in the New York Action. (Id.) During discovery in the New York Action, the Serios' attorneys began seeking information regarding the obligation that Stella Maris might have to provide additional insurance coverage to Dr. Constantine beyond the limits of the policy issued to Dr. Constantine by Medical Liability Mutual. (See, e.g., Constantine Mot. Ex. H, Schlert Dep. 53:21-54:4.) As a result, Stella Maris filed the instant lawsuit against CHE, the Hospital, the Serios, and Dr. Constantine in this Court on April 30, 2010. Stella Maris is seeking a declaration that it has no obligation to defend or indemnify Dr. Constantine in connection with the New York Action because Dr. Constantine was not a covered person under the Policy Stella Maris issued to CHE. (Compl. ¶¶ 29-33.) Dr. Constantine and the Serios have both moved to dismiss the complaint for lack of personal jurisdiction and lack of subject-matter jurisdiction. Alternatively, the Moving Defendants ask us to abstain from hearing this declaratory judgment action under Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942), and its progeny. (See Constantine Mot. 1; Serio Mot. 1.)

II. DISCUSSION

When defendants challenge both personal jurisdiction and subject-matter jurisdiction, district courts customarily resolve the challenge to subject-matter jurisdiction before addressing personal jurisdiction. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578 (1999). "[T]here is no unyielding jurisdictional hierarchy," however, and in appropriate circumstances a district court may properly address personal jurisdiction before subject-matter jurisdiction. Id., see also In re Hechinger Inv. Co. of Delaware, 335 F.3d 243, 250-51 (3d Cir. 2003) ("[In Ruhrgas], the Court held that federal courts are not generally obligated to address 'jurisdictional issues' in any particular order."). Therefore, when "a district court has before it a straightforward personal jurisdiction issue presenting no complex question of state law, and the alleged defect in subject-matter jurisdiction raises a difficult and novel question, the court does not abuse its discretion by turning directly to personal jurisdiction." Ruhrgas, 526 U.S. at 588.

The personal-jurisdiction inquiry in this case is straightforward, while determining subject-matter jurisdiction requires us to address the novel question of whether Stella Maris is the alter ego of CHE for purposes of determining whether the parties are diverse. We will address personal jurisdiction first. See Machulsky v. Hall, 210 F. Supp. 2d 531, 537 (D.N.J. 2002) (addressing personal jurisdiction first because "deciding the issue of subject matter jurisdiction . . . requires an analysis of the application of federal RICO laws against multiple, geographically diverse defendants").

A. Personal Jurisdiction

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff bears the burden of establishing jurisdiction over the defendants. Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004) (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002)). Plaintiff need only establish a prima facie case of jurisdiction, and we accept all of Plaintiff's ...


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