Am. Cas. Co. of Reading v. Allen, CASE NO. 2:12-CV-2414-SLB

AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA Plaintiffs, v. DAVID L. ALLEN; et al., Defendants.

CASE NO. 2:12-CV-2414-SLB

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

September 29, 2015

MEMORANDUM OPINION

This case is presently pending before the court on plaintiff's Objections, (doc. 109),¹ to the Magistrate Judge's Report and Recommendation, (doc. 108). Plaintiff, American Casualty Company of Reading, Pennsylvania, filed a Complaint for Declaratory Judgment naming as defendants its insured, David L. Allen, and the individuals who have filed suit against Allen and his employer, Meds I.V. in Alabama state courts [state-court plaintiffs].² (See generally doc. 1.) Thestate-court lawsuits arise out of injuries allegedly caused by Allen, in whole or in part, while he was acting as a pharmacist; at that time Allen was covered by a professional liability policy issued by American Casualty. In its Complaint for Declaratory Judgment -

American Casualty seeks a judgment declaring that the Underlying Actions constitute "related claims" as that term is defined under the Policy. Because the Underlying Actions arise from the same alleged act, error or omission, or[,] at a minimum, "related acts, errors or omissions," the Underlying Actions must be considered a single claim, subject to the $1 million indemnity limit of liability for "each claim" under the Policy's professional liability coverage part.

(Id. ¶ 1 at 3.)

On American Casualty's Motion for Summary Judgment, the Magistrate Judge issued a Report and Recommendation, which recommended dismissal of this case as "premature and unripe." (Doc. 108 at 10.) Then American Casualty filed its Objections to the Report and Recommendation. (Doc. 109.) Based upon the court's consideration of all the materials in the record, including the Objections and the Report and Recommendation, as well as the relevant caselaw, the court is of the opinion that plaintiff's Objections are due to be overruled and the Magistrate Judge's Recommendation is due to be accepted as modified.

I. STANDARD OF REVIEW

The district court reviews de novo those parts of the Report and Recommendation to which a party has objected. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3)("The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to."). Other parts of the Report and Recommendation to which a party has not objected may be reviewed for plain error or manifest injustice. United States v. Slay, 714 F.2d 1093, 1095 (11th Cir. 1983)(citing Nettles v. Wainwright, 677 F.2d 404, 410 (11th Cir. 1982)). Upon review, "[t]he district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Fed. R. Civ. P. 72(b)(3).

II. STATEMENT OF FACTS

In 2011, numerous individuals were exposed to the bacteria, Serratia marcescens. Of the 19 cases of S. marcescens blood stream infections [BSI], 17 cases were identified between March 1, 2011 and March 15, 2011; the remaining two cases occurred in January and February 2011. (Doc. 100-1 at 20.) Nine patients died and "the median time between the initial S. marcescens culture and death was 1 day." (Id.) The S. marcescens BSIs occurred in six Alabama hospitals; all these hospitals had given the infected patients total parenteral nutrition [TPN] compounded by Meds I.V. (Id. at 19.) TPN was prescribed daily and delivered to the hospitals each night. (Id.)

The following state-court cases were filed on behalf of 25 patients:

Bonnie Allinder, Ida Gipson, Anna Calkins, and Willie Jean Armstrong v. Meds I.V. LLC, et al., No. CV-2011-900247 (Ala. Cir. Ct. [Jeff. Cnty - Bessemer Div.] May 2, 2011)(see doc. 80-4 at 185-97);

Dillie Ray Culberson, as Executrix of the Estate of Eleanor Ray Harrison v. Meds I.V. LLC, et al., No. CV-2011-902407 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] July 5, 2011)(see doc. 80-4 at 132-137);

David Bernard Evans, as Administrator of the Estate of Columbus Evans v. Meds I.V., LLC, et al., No. CV-2011-901213 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 8, 2011)(see doc. 80-3 at 319, 324-35);

Lillie Ann and Joe Fancher, as Parents and Co-Administrators of the Estate of Darryl Joe Fancher v. Meds I.V., LLC, et al., No. CV-2011-902641 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] July 25, 2011)(see doc. 80-3 at 352-64);

Wanda Fowler as Personal Representative of the Estate of Robert Ernest Fowler v. Meds I.V. LLC, et al., No. CV-2011-900218 (Ala. Cir. Ct. [Jeff. Cnty - Bessemer Div.] April 19, 2011)(see doc. 80-3 at 388-97);

Jewel Ann Harris, as administratrix of the Estate of Lelon Harris v. Meds I.V., et al.,, No. CV-2011-901136 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 4, 2011)(see doc. 80-4 at 159-64);

Shirley Haynesworth, as Power of Attorney for and on behalf of Todd Hammond, and Todd Hammond v. Meds I.V. LLC, et al., Case No. 2011-901139 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 4, 2011)(see doc. 80-3 at 284-97);

Rebecca Johnson as Personal Representative of the Estate of Ora Mae Metcalfe v. Meds I.V., LLC, et al., No. CV-2011-901416 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 22, 2011)(see doc. 80-4 at 219-25);

Jeremiah Jones as Personal Representative of the Estate of Flossie Mae Scott v. Meds I.V., LLC, et al., No. CV-2011-901597 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] May 6, 2011)(see doc. 80-4 at 211-17);V. Michele Leonard o/b/o Edith Carter v. Meds IV, LLC, et al., No. CV-2011-903345 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] Sept. 20, 2011)(see doc. 80-3 at 375-81);

Patricia Ann Mainor, as Administratrix for the Estate of Frances Bray Jones v. Meds I.V. LLC, et al., No. CV-2011-901313 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 15, 2011)(see doc. 80-4 at 145-50);

Donald J. Mottern, as Administrator of the Estate of Lavonne S. Mottern v. Meds I.V., LLC, et al., No. CV-2011-901140 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 4, 2011)(see doc. 80-3 at 264-77);

Alice F. Nixon v. Meds I.V. L.L.C., et al., No. CV-2011-00652 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 8, 2011)(see doc. 80-4 at 44-50);

Chester Robinson v. Meds I.V. LLC, et al., No. CV-2011-901196 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 7, 2011)(see doc. 80-4 at 80-90);

Lyndal Robinson as Personal Representative of the Estate of Jewell Robinson v. Meds I.V. LLC, et al., No. CV-2011-900047 (originally filed in Ala. Cir. Ct [Chilton Cnty] on April 14, 2011)(doc. 80-4 at 2-9);

Lisa L. Huebner, as Administrator of the Estate of Joseph Scarborough v. Meds I.V. LLC, et al., No. CV-2011-901137 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 4, 2011)(see doc. 80-4 at 22-27; see also doc. 51);

Cora P. Sheppard, as Personal Representative of the Estate of Lunna Powell v. Meds I.V. LLC, et al., No. CV-2011-901122 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 1, 2011)(see doc. 80-4 at 61-66);

Steven C. Smith, as Personal Representative of the Estate of Dale McAfee Tidwell v. Meds IV, L.L.C., et al., No. CV-2011-901408 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 22, 2011)(see doc. 80-4 at 52-59);

Lori Ellyn Steber v. Meds I.V. LLC, et al., No. CV-2011-903859 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] October 28, 2011)(see doc. 80-3 at 409-21);Gina Yeager v. Meds I.V. LLC, et al., No. CV-2011-901248 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 12, 2011)(see doc. 80-4 at 97-109);

Barbara Young as Personal Representative of the Estate of Mary Ellen Kise v. Meds I.V. LLC, et al., No. CV-2011-900094 (Ala. Cir. Ct. [Autauga Cnty] March 31, 2011)(see doc. 80-4 at 227-33);

Harvey R. Young, as administrator of the Estate of Carol Ann Young v. Meds IV, L.L.C., et al., No. CV-2012-901287 (Ala. Cir. Ct. [Jeff. Cnty - Birmingham Div.] April 24, 2012)(see doc. 80-4 at 235-41).

American Casualty issued Healthcare Providers Professional Liability Insurance Policy No. 0411989207 to Allen for the policy period April 9, 2010, to April 9, 2011. (Doc. 1-1 at 3.) The policy provides that American Casualty "will pay all amounts, up to the [policy limit], that [Allen] become[s] legally obligated to pay as a result of a professional liability claim arising out of a medical incident by [Allen] or by someone for whose professional services [Allen is] legally responsible." (Id. at 15.) Allen was employed as the supervising pharmacist for Meds I.V. (Doc. 80-3 at 140-41 [David Allen Depo. at 103-04].)

Under the terms of the policy:

A. Each Claim

The limits of liability stated on the certificate of insurance as applicable to "each claim" means that our liability for such claim shall not exceed such stated amount.

B. Aggregate

Subject to provision A, above, limits of liability stated on the certificate of insurance as applicable to "all claims in the aggregate" means that our liability shall not exceed such stated amount.. . .

E. Related Claims

If related claims are made against [the insured], all such claims shall be considered a single claim, and the limits of liability applicable to the policy period in force when the act, error or omission, or earliest of related acts, errors or omissions, occurred.

(Doc. 1-1 at 22.) Under the terms of the policy, "related claims" are "all claims arising out of a single act, error or omission or arising out of related acts, errors or omissions in the rendering of professional services or placement services," and "'Related acts, errors or omissions' mean[s] all acts, errors or omissions in the rendering of professional services or placement services that are logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision." (Id. at 18-19.)

III. DISCUSSION

Based on its review of the record, the court agrees with the Magistrate Judge that this matter should be dismissed pending resolution of the underlying state court actions. The court finds that the issue of whether the underlying...