Quest Diagnostics, LLC v. Pinnacle Consortium of Higher Education

QUEST DIAGNOSTICS, LLC v. PINNACLE CONSORTIUM OF HIGHER EDUCATION, a Vermont Reciprocal Risk Retention Group, and GENESIS INSURANCE COMPANY

C.A. No. PC-2011-6410

Superior Court of Rhode Island

March 14, 2013

For Plaintiff: Mark P. Dolan, Esq.

For Defendant: Todd D. White, Esq., Mark O. Denehy, Esq., Matthew T. Oliverio, Esq., Lewis K. Loss, Esq., Harry Tashjian, IV Esq.

DECISION

Gibney, P.J., JUSTICE/MAGISTRATE

Before this Court for decision is an insurance dispute between Plaintiff Quest Diagnostics, LLC ("Quest") and Defendants Pinnacle Consortium of Higher Education ("Pinnacle") and Genesis Insurance Company ("Genesis"). Quest brought the instant declaratory judgment action to determine its rights to defense and indemnification under insurance policies issued by Pinnacle and Quest to Brown University ("Brown"). Quest and Brown are co-defendants in an underlying tort suit in which Brown filed a cross-complaint against Quest. Quest moved for summary judgment on its request for declaratory relief, and Pinnacle and Genesis filed objections and cross-motions for summary judgment. Jurisdiction is pursuant to G.L. 1956 § 9-30-1, the Uniform Declaratory Judgment Act. For the reasons set forth below, this Court declares that Quest is not entitled to defense and indemnification pursuant to the relevant policies and provisions.

I Facts and Travel

Brown and Quest entered into a professional services agreement pursuant to which Brown retained Quest as "a licensed independent contractor to perform certain clinical laboratory testing for students and employees" at Brown University Health Services ("Health Center"). The agreement set forth, inter alia, policies and procedures for testing to be performed by Quest on behalf of Brown. The agreement also contained an insurance procurement obligation which, in part, required Brown and Quest separately to obtain general liability insurance and professional liability insurance policies. Each party was to name the other as an additional insured on its general liability policy. Brown secured such insurance through Pinnacle, as well as excess insurance through Genesis. The instant dispute among Quest and Pinnacle and Genesis arose out of a tort suit in which Brown and Quest are co-defendants.

On May 10, 2006, Pauline Hall, who then was a Brown graduate student, presented to the Health Center with complaints of a sore throat, ear pain, and nausea. Ms. Hall was seen by Rita Shiff, a physician's assistant employed by Brown at the Health Center, who ordered a Rapid Strep Test to be performed by Quest. The parties dispute what happened next. Brown and its insurers claim that in violation of the professional services agreement, Quest failed to send the sample to the proper facility and consequently failed to perform the test. Quest argues that the error actually was caused by a Brown employee who covered the Quest desk during lunch. In any event, it is undisputed that the test was not performed. Ms Hall returned to the Health Center on May 12, 2006, at which point she was diagnosed with toxic shock syndrome. This resulted in a prolonged illness from which she suffered permanent injury. On June 26, 2006, Brown's Director of the Office of Insurance and Risk notified the insurers in writing of a potential claim. In March 2008, Ms. Hall filed suit ("Underlying Complaint" or "Underlying Action") against Ms. Shiff, Brown, and Quest. Ms. Hall alleged negligent treatment and diagnosis by Ms. Shiff and Brown, as well as negligent laboratory testing by Quest.

On December 10, 2010, Brown filed a cross-complaint ("Cross-Complaint") against co-defendant Quest in which Brown alleged that Quest caused Ms. Hall's injuries and that Quest negligently failed to properly process the Rapid Strep Test, failed to obtain the results of the test and failed to communicate the test results to the Health Center. Brown specifically alleged that, in violation of the professional services agreement, Quest was negligent in its failure to perform the test at a local facility instead of sending it to Cambridge; failure to perform the test on May 10, 2006; failure to notify the Health Center that the test was pending as of 5:00 P.M.; failure to report the test results to the Health Center by 5:30 P.M.; and failure to fax the results of the test to the Health Center. Brown also claimed that Quest breached the professional services agreement and that the agreement entitled Brown to indemnification and contribution from Quest in relation to Ms. Hall's claims.

On May 4, 2011, Ms. Hall settled with Brown and Ms. Shiff; Pinnacle and Genesis participated in the settlement, although Quest did not, and Brown's Cross-Complaint against Quest was not resolved. On July 15, 2011 and July 27, 2011, Quest's counsel faxed and mailed to Brown's counsel a demand for complete defense and indemnification from Pinnacle regarding the pending litigation. The letters requested contact information for the pertinent Pinnacle claims representative so that Quest could make its request directly. Both letters also requested information for applicable excess insurance policies, though neither mentioned Genesis.

On November 11, 2011, Quest, having received no reply from Pinnacle and Genesis, filed the instant complaint ("Quest Complaint" or "Instant Complaint") for declaratory judgment against the insurers. Quest requests two declarations: "(1) Quest is entitled to a defense and indemnification in this action^[1] from Pinnacle, at Pinnacle's expense from the date of original tender; (2) Quest is entitled to indemnification in this action pursuant to the aforementioned Pinnacle and Genesis Policies of Insurance[.]" In its motion for summary judgment, Quest argues that 1) it is covered by Pinnacle professional and commercial general liability provisions from the 2005/06 policy year; 2) it is covered by Pinnacle professional liability provisions from the 2010/11 policy year; 3) it is covered by the 2010/11 Genesis Excess Policy; and 4) the insurers breached their duty to defend and waived their right to deny coverage because they failed to timely respond to Quest's demand.

Pinnacle and Genesis filed oppositions and cross-motions for summary judgment in which they argue that Quest is covered only by commercial general liability policies that are inapplicable to the Underlying Action and Brown Cross-Complaint. Specifically, the insurers argue that the Underlying Action was settled as a medical malpractice case under Brown's professional liability policy provisions, and Brown and Quest never in any professional services agreement agreed to extend coverage to one another in their respective professional liability polices. The insurers further contend that Quest failed to provide proper notice to trigger defense and indemnification under the policies.

II Standards of Review

Under the Uniform Declaratory Judgment Act (UDJA), the Superior Court possesses "the power to declare rights, status and other legal relations whether or not further relief is or could be claimed." Section 9-30-1; see also P.J.C. Realty v. Barry, 811 A.2d 1202, 1207 (R.I. 2002) (quoting § 9-30-1). Thus, "the Superior Court has jurisdiction to construe the rights and responsibilities of any party arising from a statute pursuant to the powers conferred upon [it] by G.L. chapter 30 of title 9, the Uniform Declaratory Judgments Act." Canario v. Culhane, 752 A.2d 476, 478-79 (R.I. 2000). Specifically, § 9-30-2 of the Act provides as follows:

"Any person interested under a deed, will, written contract, or other writings constituting a contract, or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or legal relations thereunder." Section 9-30-2 (emphasis added).

A trial court's "decision to grant or to deny declaratory relief under the [UDJA] is purely discretionary." Sullivan v. Chafee, 703 A.2d 748, 751 (R.I. 1997). Further, the purpose of the UDJA is "to allow the trial justice to 'facilitate the termination of controversies.'" Bradford Assocs. v. R.I. Div. of Purchases, 772 A.2d 485, 489 (R.I. 2001) (citations omitted). It is axiomatic that "[a] declaratory-judgment action may not be used for the determination of abstract questions or the rendering of advisory opinions, nor does it license litigants to fish in judicial ponds for legal advice." Sullivan, 703 A.2d at 751 (internal citations and quotations omitted). However, "the mere fact that a court is being asked to render an advisory opinion does not automatically preclude a declaratory judgment in all situations." Id. at 752. Questions of insurance coverage, including an insurer's duty to defend, may be addressed in a declaratory judgment action. Emhart Indus., Inc. v. Century Indem. Co., 559 F.3d 57, 74 (1st Cir. 2009) (citing Conanicut Marine Servs., Inc. v. Ins. Co. of N. Am., 511 A.2d 967, 971 n.10 (R.I. 1986)); Couch on Insurance, § 202:3.

Summary judgment is proper when "no genuine issue of material fact is evident from the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, and the motion justice finds that the moving party is entitled to prevail as a matter of law." Smiler v. Napolitano, 911 A.2d 1035, 1038 (R.I. 2006) (quoting Rule 56(c)). When considering a motion for summary judgment, "the court may not pass on the weight or credibility of the evidence but must consider the affidavits and other pleadings in a light most favorable to the party opposing the motion." Lennon v MacGregor, 423 A.2d 820, 822 (R.I. 1980). The...