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NCMIC Insurance Co. v. Brown

United States District Court, D. New Mexico

March 26, 2018



         This case concerns a dispute over insurance coverage. Plaintiff NCMIC Insurance Company (Plaintiff or NCMIC) asks the Court to declare that the per claim limit of an insurance policy issued by Plaintiff to Defendants Michael Brown (Mr. Brown) and Bones, Inc. (Bones) applies to the claims asserted against Mr. Brown and Bones by Defendants Charles Daily (Mr. Daily) and Rose Elean Alvarez Martinez (Ms. Martinez).[1] Mr. Daily moves to dismiss the Complaint for untimely service or, alternatively, asks the Court to dismiss or stay this action under the Colorado River doctrine.[2] Mr. Brown and Bones echo Mr. Daily's arguments and move to join his Motion, which is fully briefed.[3] The Court will deny the Motion in the interest of judicial economy because no parallel state proceeding is pending.

         I. BACKGROUND

         Mr. Brown is a chiropractor who resides in New Mexico, where his practice is incorporated under the name Bones, Inc. In October of 2015 Plaintiff, an Iowa insurance company, issued Professional Liability-Chiropractic Malpractice Policy number MP00086887 to Mr. Brown and Bones (the Policy). The Policy was effective from October 3, 2015, to October 3, 2016.

         Mr. Daily, a former patient of Mr. Brown and Bones, alleges that he was injured as a result of his treatment by Mr. Brown, which took place from October 2015 through at least March of 2016. Based on these alleged injuries, Mr. Daily and his wife, Ms. Martinez, filed a lawsuit on March 10, 2017 in New Mexico state court against Mr. Brown and Bones. See Daily v. Brown et al., No. D-307-CV-2017-00672 (Third Judicial District Court, Dona Ana County) (state court lawsuit). Mr. Daily and Ms. Martinez are both residents of New Mexico.

         After filing the state court lawsuit, Mr. Daily and Ms. Martinez learned of the existence of the Policy. On September 21, 2017, they moved to amend their state court complaint to add NCMIC as a defendant and to request a declaratory judgment as to the coverage available under the Policy should Mr. Daily and Ms. Martinez prevail on their claims. Mr. Daily and Ms. Martinez argue that the New Mexico Medical Malpractice Act requires policy limits of $600, 000 plus past and future medical expenses, while NCMIC maintains that the Policy limits are $200, 000 per occurrence. Mr. Daily and Ms. Martinez attached their proposed amended complaint as an exhibit to their motion. Mr. Brown and Bones did not oppose the motion, but they did not consent to the amendment of the state court complaint until October 6, 2017.

         On October 4, 2017, while the motion to amend was still pending in the Third Judicial District Court, Plaintiff filed this federal declaratory judgment action. The state court then granted the unopposed motion to amend on October 10, 2017, and Mr. Daily and Ms. Martinez filed their amended state court complaint on October 12, 2017. Summons issued in this federal case on the same day. NCMIC was served with the state court amended complaint on October 30, 2017. On November 21, 2017, it filed a motion in the Third Judicial District Court to dismiss the state declaratory judgment action. However, NCMIC did not serve Defendants with the Complaint in this case until January 26, 2018.[4] Defendants ask the Court to dismiss this federal action based on the delay in service or to abstain from deciding this federal court case while the state court proceeding is ongoing. However, on March 21, 2018, the state court granted NCMIC's motion to dismiss Defendants' state court declaratory judgment claim.[5] Consequently, Plaintiff is no longer a party to Defendants' state court case, and there is no longer a pending claim that parallels this federal proceeding.


         The Court has jurisdiction over this matter under 28 U.S.C. § 1332(a) due to diversity of citizenship between the parties and an amount in controversy greater than $75, 000. In 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 referenced in the Complaint and central to Plaintiff's claim, those necessary to resolve jurisdictional facts, and court documents of which the Court may take judicial notice. 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); St. Louis Baptist Temple, Inc. v. FDIC, 605 F.2d 1169, 1172 (10th Cir.1979) (“[F]ederal courts, in appropriate circumstances, may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.”). Mr. Daily has attached numerous exhibits to his Motion. Some of these are court documents of which the Court may take judicial notice. The Court will not consider others, such as copies of emails and medical records, in deciding the Motion.


         Defendants first assert that Plaintiff's Complaint should be dismissed because of insufficient service of process.[6] Since Plaintiff belatedly filed proof that all Defendants were served on January 26, 2018, the Court will consider only the claim of delay rather than failure of service. Rule 4 of the Federal Rules of Civil Procedure provides a time limit for service.

If a defendant is not served within 90 days after the complaint is filed, the court--on motion or on its own after notice to the plaintiff--must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.

         Fed. R. Civ. P. 4(m). Defendants were served 114 days after the Complaint was filed, and service was therefore untimely. The Court is not required to grant an extension because Plaintiff has not made any attempt to demonstrate good cause for its failure to effectuate service within the 90 days allowed.

         Instead, Plaintiff asks the Court to exercise its discretion to grant a permissive extension. “If the plaintiff fails to show good cause, the district court must still consider whether a permissive extension of time may be warranted. At that point the district court may in its discretion either dismiss the case without prejudice or extend the time for service. Espinoza v. United States, 52 F.3d 838, 841 (10th Cir. 1995); accord Sanders v. Sw. Bell Tel., L.P., 544 F.3d 1101, 1111 (10th Cir. 2008). Plaintiff argues that the delay of 24 days beyond the 90-day period provided by Rule 4 is a “relatively short time period” that does not warrant dismissal. Plaintiff contends that Defendants have not demonstrated any prejudice from the untimely service, and that under these circumstances policy considerations favor deciding the case on its merits rather than dismissing the case on a technicality. Plaintiff asserts that dismissal would not be in the interests of judicial economy because Plaintiff would simply refile its Complaint.

         Factors that the Court should consider in determining whether to grant a permissive extension of time for service include (1) whether the applicable statute of limitations would bar the action if it had to be refiled, (2) whether the plaintiff has tried, but failed, to effect service upon the United States, especially if proceeding pro se, and (3) whether the failure of a pro se plaintiff to effect timely service was a consequence of confusion or delay attending the resolution of an in forma pauperis petition. Espinoza, 52 F.3d at 842. “More time may be needed . . . when a request to waive service fails, a defendant is difficult to serve, or a marshal is to make service in an in forma pauperis action.” Fed.R.Civ.P. 4(m) Advisory Committee's note (2015). Additional factors include whether the defendant had notice of the lawsuit or would be prejudiced by an extension. Wilson v. Montano, Civ. No. 11-658 KG/SCY, Civ. No. 11-951 KG/SCY, Civ. No. 11-1021 KG/SCY (D.N.M. February 28, 2017) ...

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