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Evanston Insurance Co. v. Neuromonitoring Technologies, Inc.

United States District Court, D. New Jersey, Camden Vicinage

April 30, 2019

EVANSTON INSURANCE COMPANY, Plaintiff,
v.
NEUROMONITORING TECHNOLOGIES, INC., ROBERT PERRO, and DAVID J. NIEDZWIADEK, as Administrator of the Estate of Margaret Mary Niedzwiadek, Defendants.

          FISHERBROYLES, LLP By: Joseph Schramm, Esq. Counsel for Plaintiff Evanston Insurance Company

          LOSS, JUDGE & WARD, LLP By: Sean M. Hanifin, Esq.; Jason C. Reichlyn, Esq. Hamilton Square Counsel for Plaintiff Evanston Insurance Company

          FOWLER HIRTZEL MCNULTY & SPAULDING LLP By: Dennis Chow, Esq. Counsel for Defendant Neuromonitoring Technologies, Inc.

          OPINION [DKT. NO. 17]

          RENÉE MARIE BUMB, UNITED STATES DISTRICT JUDGE

         In this action, Plaintiff Evanston Insurance Company (“Evanston”) seeks a judicial declaration that Evanston has no duty to defend or indemnify Defendant Neuromonitoring Technologies, Inc. (“NMT”) in the underlying medical malpractice lawsuit filed in the Superior Court of New Jersey, Atlantic County, on October 20, 2015, captioned Niedzwiadek v. Droney, et al., No. L-000094-16 (the “Underlying Lawsuit”). Now, this matter comes before the Court upon a Motion to Dismiss [Dkt. No. 17], filed by NMT pursuant to Fed.R.Civ.P. 12(b)(1), asking the Court to decline to exercise its discretionary jurisdiction over this case under the Declaratory Judgment Act (the “DJA”), 28 U.S.C. § 2201, et seq. For the reasons set forth herein, the Court shall exercise its discretionary jurisdiction over this matter. Accordingly, NMT's Motion to Dismiss will be DENIED, without prejudice.

         I. FACTUAL BACKGROUND

         This matter arises out of a dispute over malpractice indemnity and defense coverage in relation to the Underlying Lawsuit. As alleged in the Underlying Lawsuit, Margaret Mary Niedzwiadek (the “Patient”) underwent a surgical procedure on October 22, 2013. During that procedure, Robert Perro, an employee of NMT, monitored the Patient's Somatosensory Evoked Potentials (“SEPs”), but allegedly failed to communicate the suboptimal quality of SEP signals to the spinal surgeon or to the orthopedic surgeon. In the Underlying Lawsuit, it is alleged that as a result of Mr. Perro's actions, the Patient never awoke from surgery and, ultimately, died on December 5, 2013. On October 20, 2015, Defendant David J. Niedzwiadek, as Administrator of the Patient's Estate, commenced the Underlying Lawsuit against Mr. Perro, NMT, and others. Although Evanston was not named as a defendant in the Underlying Lawsuit, Evanston has been providing a defense to Mr. Perro and NMT in that case, pursuant to a Medical Professional Liability Insurance Policy (the “Policy”).

         For reasons unclear to the Court, Evanston did not file this action until July 20, 2018, almost three years after the Underlying Lawsuit was commenced. Evanston's Complaint asks the Court to grant a declaratory judgment pursuant to the DJA, relieving Evanston of its duty to defend or indemnify NMT under the Policy, based on NMT's alleged misrepresentations to Evanston at the time NMT applied for the Policy. Specifically, Evanston notes that, in both 2014 and 2015, NMT's President, Richard Mathabel, answered “no” to the question, “[a]re you aware of any circumstances which may result in a malpractice claim or suit being made or brought against you or any of your employees?” However, Evanston alleges that, during the pendency of the Underlying Lawsuit, it received documentation establishing that NMT terminated Mr. Perro's employment, less than 24 hours after the Patient's surgery, for “gross negligence” and “willful misconduct” in relation to his actions during the Patient's procedure. Evanston argues that NMT's answers on the Policy applications were misrepresentations because, given the circumstances of the Patient's procedure and Mr. Perro's swift termination, “any reasonable person in NMT's ... position would have concluded that an ensuing claim was highly likely.” Compl., at ¶ 55.

         II. LEGAL STANDARD

         A defendant may move to dismiss a claim for lack of subject matter jurisdiction under Rule 12(b)(1) at any time during the course of litigation. Fed.R.Civ.P. 12(b)(1); Iwanowa v. Ford Motor Co., 67 F.Supp.2d 424, 437-38 (D.N.J. 1999). “Challenges to subject matter jurisdiction under Rule 12(b)(1) may be facial or factual.” Common Cause of Pa. v. Pa., 558 F.3d 249, 257 (3d Cir. 2009) (internal citation and quotation omitted). “A facial attack, as the adjective indicates, is an argument that considers a claim on its face and asserts that it is insufficient to invoke the subject matter jurisdiction of the court because ... it does not present a question of federal law, or because ... some other jurisdictional defect is present.” Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014).

         When reviewing a facial attack, as it appears that NMT asserts in this Motion to Dismiss, a “court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff.” Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). A court, upon reviewing a facial attack, may dismiss the complaint “only if it appears to a certainty that the plaintiff will not be able to assert a colorable claim of subject matter jurisdiction.” Iwanowa, 67 F.Supp.2d at 438.

         Factual attacks, in contrast, argue that subject matter jurisdiction is improper “because the facts of the case ... do not support the asserted jurisdiction.” Aichele, 757 F.3d at 358. The presumption of truth does not extend to factual attacks, “and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). Courts are permitted, however, to weigh and consider evidence “outside the pleadings” to decide whether subject matter jurisdiction is proper. Aichele, 757 F.3d at 358 (internal citation and quotation omitted). A court, upon reviewing the merits of the jurisdiction claims, may consider, for example, affidavits, depositions, and testimony to evaluate “factual issues bearing on jurisdiction.” Iwanowa, 67 F.Supp.2d at 438. Based upon its review of that evidence, a court may make factual findings, beyond the pleadings, to determine whether jurisdiction is proper. See, e.g., CNA v. United States, 535 F.3d 132, 145 (3d Cir. 2008).

         III. ANALYSIS

         In the Motion to Dismiss, NMT argues that this Court should decline to exercise its discretionary jurisdiction under the DJA and dismiss this action for lack of ...


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