United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
Sierra Vista Hospital (Plaintiff) filed a Complaint in the
Seventh Judicial District Court, Sierra County, New Mexico,
seeking a declaration as to its rights and liabilities with
respect to a locum tenens agreement Plaintiff entered into
with Defendant Barton & Associates, Inc. (Defendant).
See COMPLAINT FOR DECLARATORY JUDGMENT (Doc. No.
1-2). Defendant removed the case from state court based on
diversity of citizenship between the parties and an amount in
controversy greater than $75, 000, see 28 U.S.C.
§ 1332(a); NOTICE OF REMOVAL (Doc. No. 1), and now asks
the Court to dismiss Plaintiff's Complaint for lack of
subject matter jurisdiction and for failure to state a claim,
see BARTON & ASSOCOATES, INC.'S MOTION TO
DISMISS (Doc. No. 7) (Motion). The Motion is fully briefed.
See PLAINTIFF'S RESPONSE TO DEFENDANT'S
MOTION TO DISMISS PLAINTIFF'S COMPLAINT FOR DECLARATORY
JUDGMENT (Doc. No. 14) (Response); DEFENDANT'S REPLY TO
PLAINTIFF'S RESPONSE TO BARTON & ASSOCIATES,
INC.'S MOTION TO DISMISS (Doc. No. 15) (Reply). Because
the Court has jurisdiction and Plaintiff's requested
relief is an appropriate subject for declaratory relief, the
Court will deny the Motion.
is a hospital located in Truth or Consequences, Sierra
County, New Mexico. Compl. ¶ 1. Plaintiff is a New
Mexico state governmental entity and is protected by
governmental sovereign immunity. Compl. ¶ 2. Defendant
is a Massachusetts corporation in the business of
coordinating the placement of temporary locum tenens
healthcare providers. Compl. ¶¶ 3, 6-7. On March
30, 2016, Plaintiff entered into an agreement with Defendant,
under which Defendant would coordinate the placement of locum
tenens providers at Plaintiff's facility through binding
placement orders. Compl. ¶¶ 12-14. The agreement
contained choice of law and venue provisions in case any
dispute should arise between the parties. Compl. ¶ 23.
18, 2016, Plaintiff and Defendant agreed to a placement order
whereby Dr. Owen DeWitt was to provide locum tenens medical
services at Plaintiff's facility from June 6, 2016,
through September 9, 2016. Compl. ¶¶ 15-16. On
January 24, 2017, Defendant notified Plaintiff that it
believed Plaintiff had breached the agreement by
independently and indirectly contracting with Dr. DeWitt
without Defendant's contractual involvement. Compl.
¶ 18. Defendant informed Plaintiff that it would view
any continued engagement between Plaintiff and Dr. DeWitt as
tortious interference with Defendant's contractual
relationship with Dr. DeWitt. Compl. ¶ 19. Although
Defendant noted that it would prefer to resolve the issue
without litigation, it threatened to bring suit against
Plaintiff in Massachusetts should those negotiations be
unsuccessful. Compl. ¶ 20; Reply at 1-2. Defendant
asserts that through the choice of law and venue provisions
in the contract Plaintiff agreed to submit legal disputes
related to the agreement to a court of competent jurisdiction
in the Commonwealth of Massachusetts to be determined under
Massachusetts law. Compl. ¶ 23. Plaintiff denies that it
is subject to suit in Massachusetts or that Massachusetts law
governs this dispute. Compl. ¶¶ 24-29.
Additionally, Plaintiff claims that as a governmental entity
it is immune from suit for tortious interference in any
venue. Resp. at 2. Plaintiff filed a declaratory judgment
action rather than waiting for Defendant to sue, requesting
the Court to declare that 1) Plaintiff has not breached its
agreement with Defendant; 2) Plaintiff has not tortuously
interfered with Defendant's relationship with Dr. DeWitt;
3) Plaintiff is immune from suit for tortious interference;
and 4) Plaintiff is not subject to suit in the Massachusetts
courts and the parties' disputes are not governed by
Massachusetts law. Compl. ¶ A. Defendant contends that
Plaintiff's Complaint must be dismissed because no actual
controversy exists and because the merits of Plaintiff's
alleged breach and tortious interference are not proper
subjects for declaratory relief. Mot. at 2, 11-12.
resolving the Motion, the Court will take the well-pleaded
allegations of the Complaint as true, and it will not
consider materials outside of the pleadings other than those
necessary to resolve jurisdictional facts or those referenced
in the Complaint and central to Plaintiff's claim.
See Pace v. Swerdlow, 519 F.3d 1067, 1072-73 (10th
Cir. 2008) (in resolving a motion to dismiss, district courts
may properly consider documents referred to in the complaint
and central to the plaintiff's claim, and may take
judicial notice of adjudicative facts); Holt v. United
States, 46 F.3d 1000, 1003 (10th Cir. 1995) (when
jurisdictional facts are challenged, the district court may
consider materials outside the pleadings without converting
the motion to one for summary judgment).
Court applies federal procedural law and state substantive
law when exercising its diversity jurisdiction. See James
River Ins. Co. v. Rapid Funding, LLC, 658 F.3d 1207,
1217 (10th Cir. 2011). Because a declaratory judgment statute
provides only a procedural remedy and does not create any
substantive right, the federal Declaratory Judgment Act
(DJA), 28 U.S.C. § 2201, controls this action. See
Farmers Alliance Mutual Insurance Co. v. Jones, 570 F.2d
1384, 1386 (10th Cir. 1978). Under § 2201(a) the Court
may, “[i]n a case of actual controversy within its
jurisdiction, . . . declare the rights and other legal
relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.”
Subject Matter Jurisdiction
first argues for dismissal of Plaintiff's Complaint in
its entirety under Federal Rule of Civil Procedure 12(b)(1),
contending that there is no justiciable controversy between
the parties that will establish this Court's subject
matter jurisdiction. See Mot. at 2. “[T]he
facts alleged, under all the circumstances, [must] show that
there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment.”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
138 (2007) (quoting Maryland Casualty Co. v. Pacific Coal
& Oil Co., 312 U.S. 270, 273 (1941)). The Court
cannot issue advisory opinions as to “‘what the
law would be upon a hypothetical state of facts.'”
Id. (quoting Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 241 (1937)).
asserts that the dispute between the parties is not ripe for
review because Defendant has not filed suit against Plaintiff
and has stated its preference to resolve the disagreement
without litigation, making any possibility of legal action
against Plaintiff hypothetical and speculative rather than
imminent. Mot. at 3-5. In evaluating ripeness, the Court
examines “both the fitness of the issue for judicial
resolution and the hardship to the parties of withholding
judicial consideration.” New Mexicans for Bill
Richardson v. Gonzales, 64 F.3d 1495, 1499 (10th Cir.
1995) (internal quotation marks omitted). Defendant contends
that Plaintiff's claim rests on a series of contingencies
too uncertain to be fit for review because it is unknown
whether Defendant will file suit against Plaintiff, and if
so, in which forum and on what legal theory. Mot. at 5. It
further argues that Plaintiff faces no hardship from the
denial of judicial review because Plaintiff is not currently
facing any lawsuit. Mot. at 6.
response, Plaintiff relies on MedImmune, 549 U.S.
118, and maintains that it is not required to wait for
Defendant's threat of suit to be actualized. Resp. at 7.
The Court agrees. An actual controversy does not require an
actual lawsuit. “[T]he phrase ‘case of actual
controversy' in the Act refers to the type of
‘Cases' and ‘Controversies' that are
justiciable under Article III.” MedImmune, 549
U.S. at 127. “[T]he existence of an Article III case or
controversy has never been decided by a judicial wager on the
chances the parties will (imminently or otherwise) sue one
another; rather, it has always focused on the underlying
facts, assessing whether they suggest an extant controversy
between the parties or whether instead they merely call on us
to supply an advisory opinion about a hypothetical
dispute.” Surefoot LC v. Sure Foot Corp., 531
F.3d 1236, 1242 (10th Cir. 2008).
lawsuit between the parties here may be hypothetical, the
dispute is not, and neither are the facts upon which the
dispute is based. Defendant has informed Plaintiff that it
believes Plaintiff has breached the contract between the
parties and has tortiously interfered with the contractual
relations of Defendant and Dr. DeWitt, and Defendant has
noted that if the parties are unable to negotiate a solution
amicably it will be forced to sue Plaintiff in Massachusetts.
Plaintiff, on the other hand, maintains that it has not
breached its agreement with Defendant and has not tortiously
interfered with Defendant's contractual relationship with
Dr. DeWitt, and argues further that it is not subject to suit
in Massachusetts and is immune from suit for tortious
interference. These are not abstract issues of law. The
parties clearly have adverse legal interests in an actual
dispute arising out of specific facts, and the resolution of
the controversy will have practical consequences as to the
parties' negotiations and business relations even if
Defendant does not file suit. See Columbian Fin. Corp. v.
BancInsure, Inc., 650 F.3d 1372, 1376 (10th Cir. 2011).
judgment actions are intended to settle disputes whether or
not a suit other than the declaratory judgment action has
been filed. See Surefoot LC, 531 F.3d at 1242. In
Aetna, there was jurisdiction to declare the status
of insurance policies even though the insured had not sued
for coverage and there was no suit pending other than the
declaratory judgment action. 300 U.S. at 239, 243-44. The
insured had filed claims with the insurer for total
disability, asserting that he was entitled to coverage under
the policies and was no longer required to pay premiums.
Id. at 242-43. The insurer contested the fact of the
alleged disability and rejected the claims, then argued that
the policies had lapsed when the insured ceased paying the
premiums. Id. The Supreme Court concluded that there
was an actual controversy, even though the insured had not
filed suit challenging the rejection of his claims, because
“the parties had taken adverse positions with respect
to their existing obligations” based upon the contested
but definite fact of the insured's disability.
Id. at 242-44. Resolution of the controversy would
settle the rights and obligations of the parties under the
policies, while continued uncertainty would compel the
insurer to maintain financial reserves in case of liability.
Id. at 239, 242. The Court considered the clear
ability of the insured to sue for the disability payments he
claimed were presently due and concluded that the justiciable
nature of the legal issue was no different simply because the
suit was brought by the party seeking to avoid liability.
Id. at 243-44.
here, Defendant has the present ability to file suit for
breach of contract and tortious interference, as demonstrated
by its threat to do just that. The facts upon which the
controversy is based may be disputed, but they have already
occurred and can be determined by the Court. Resolution of
the parties' rights and obligations under the agreement
through declaratory ...