Singh, RX, PLLC v. Selective Ins. Co. of S.C.

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SINGH RX, PLLC D/B/A SRX SPECIALTY CARE PHARMACY, A MICHIGAN PROFESSIONAL LIMITED LIABILITY COMPANY, AND AMAN DEEP SINGH, AN INDIVIDUAL, Plaintiffs, v. SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, A NEW JERSEY PROPERTY AND CASUALTY INSURANCE COMPANY, AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, A PENNSYLVANIA PROPERTY AND CASUALTY INSURANCE COMPANY, JANSSEN SCIENCES IRELAND UNLMITED COMPANY, AN INTERESTED PARTY, JANSSEN PRODUCTS, LP, AN INTERESTED PARTY, AND JOHNSON & JOHNSON, AN INTERESTED PARTY., Defendants.

No. 22-cv-12732

United States District Court, E.D. Michigan, Southern Division

July 10, 2024

OPINION AND ORDER

(1) DENYING PLAINTIFFS' MOTION FOR JUDGMENT ON THE PLEADINGS OR ALTERNATIVELY, FOR SUMMARY JUDGMENT AGAINST DEFENDANT SELECTIVE [ECF No. 57]; (2) GRANTING SELECTIVE'S MOTION FOR SUMMARY JUDGMENT [ECF No. 60]; (3) DENYING PLAINTIFFS' MOTION FOR JUDGMENT ON THE PLEADINGS, OR ALTERNATIVELY, FOR SUMMARY JUDGMENT AGAISNT DEFENDANT AMERICAN CASUALTY [ECF No. 61]; AND (4) GRANTING DEFENDANT AMERICAN CASUALTY'S MOTION FOR SUMMARY JUDGMENT [ECF No 58]; AND (5) CANCELLING BENCH TRIAL AND MOOTING SELECTIVE'S MOTION TO ADJOURN TRIAL [ECF No 75].

GERSHWIN A. DRAIN, United States District Judge.

I. Introduction

This is an insurance coverage dispute. Plaintiffs Singh RX, PLLC d/b/a SRX Specialty Care Pharmacy (“SRX”) and Aman Deep Singh (“Singh”) (collectively “Plaintiffs”) filed a Complaint for Breach of Contract and Declaratory Relief (the “Complaint”).^[1] See ECF No. 1. The Complaint names two Defendants: Selective Insurance Company of South Carolina, a New Jersey property and casualty insurance company (“Selective”), and American Casualty Company of Reading Pennsylvania, a property and casualty insurance company (“American Casualty”) (collectively “Defendants”). The dispute arises out of Plaintiffs' demand that Defendants defend and indemnify them in an underlying lawsuit brought in the United States District Court for the Eastern District of New York by Janssen Sciences Ireland Unlimited Company, Janssen Products, LP, and Johnson & Johnson (the “Janssen Lawsuit”), discussed in greater detail infra.

Now before the Court are several motions. First, Plaintiffs filed a Motion for Judgment on the Pleadings or Alternatively Summary Judgment Against Defendant Selective Insurance Company of South Carolina on January 15, 2024. See ECF No. 57. Selective responded on February 13, 2024, and Plaintiffs replied on March 5, 2024. See ECF Nos. 65 and 72.

Second, Defendant American Casualty filed a Motion for Summary Judgment on January 16, 2024. See ECF No. 58. Plaintiffs responded on February 13, 2024, and American Casualty Company replied on March 5, 2024. See ECF Nos. 68 and 70.

Third, Selective filed a Motion for Summary Judgment on January 16, 2024. See ECF No. 60. Plaintiffs responded on February 13, 2024, and Selective replied on March 5, 2024. See ECF Nos. 67 and 69.

Lastly, Plaintiffs filed a Motion for Judgment on the Pleadings or Alternatively Summary Judgment Against American Casualty on January 16, 2024. See ECF No. 61. American Casualty responded on February 13, 2024, and Plaintiffs replied on March 5, 2024. See ECF Nos. 66 and 71.

The Court held oral argument on June 25, 2024. For the reasons set forth below:

1) ECF No. 57: Plaintiffs' Motion for Judgment on the Pleadings or Alternatively Summary Judgment Against Defendant Selective Insurance Company of South Carolina is DENIED;

2) ECF No. 60: Selective's Motion for Summary Judgment is GRANTED;

3) ECF No. 61: Plaintiffs' Motion for Judgment on the Pleadings or Alternatively Summary Judgment Against American Casualty is DENIED;

4) ECF No. 58: Defendant American Casualty's Motion for Summary Judgment is GRANTED.

5) ECF No. 75: Selective's motion to adjourn trial is MOOT and the bench trial scheduled for July 15, 2024, is cancelled.

II. Factual Background

SRX is a pharmacy that operates in Royal Oak, Michigan. Singh is a pharmacist and the principal of SRX. The subject matter of this dispute pertains to two separate insurance policies issued by Selective and American Casualty. Selective issued a Businessowners and Commercial Umbrella Policy to SRX for a period beginning on October 19, 2021, and ending October 19, 2022 (the “Business Owners Policy” and the “Commercial Umbrella Policy”). See ECF No. 18-1. American Casualty issued a Professional Liability Policy to SRX with an effective period of March 26, 2021 to March 26, 2022. See ECF No. 1-3, PageID.247.

In June 2021, Janssen, a pharmaceutical company, allegedly notified SRX that a prescription for “Symutza,” an antiviral medication used to treat HIV type 1, was filled from SRX. Though the bottle had “Symutza” on the label, it contained Prezcobix, a different prescription medicine used to treat HIV type 1.^[2] ECF No. 602, PageID.1909. Symutza is a Janssen product. Singh allegedly discussed the issue with “Harris,” a drug representative for a wholesaler (Safe Chain) from whom Plaintiffs had purchased pharmaceuticals, but SRX allegedly failed to stop purchasing from Safe Chain. Id. at PageID.1913-1917.

From July 2021 through July 2022, six letters addressed to Singh RX were sent by counsel for Janssen, inter alia, advising Plaintiffs of issues concerning the purchase and disbursement of counterfeit HIV medications. They also requested that Plaintiffs quarantine specified medication and comply with subpoenas related to two separate legal matters. See ECF Nos. 60-2, PageID.1920-30; ECF Nos. 605, 60-7, 60-8, 60-9, and 60-10. However, Singh testified that he did not recall receiving the letters. See ECF No. 60-2, PageID.1921.

The Janssen Lawsuit was filed on April 7, 2022, in the United States District Court for the Eastern District of New York by Johnson & Johnson and two subsidiaries: Janssen Sciences Ireland Unlimited Company and Janssen Products, LP (the “Janssen plaintiffs”). The complaint was amended on December 20, 2022.

It alleged that “SRX bought hundreds of counterfeit bottles from Safe Chain and Brooklyn-based Scripts long after a counterfeit,” purchased by SRX from Safe Chain and dispensed to a customer, “was detected and brought to SRX's attention.” ECF No. 17-3, PageID.1149. The complaint also alleged that “[s]ince the Wholesaler Defendants stopped selling HIV medication, SRX has been obtaining Janssen-branded HIV medication of unknown origin from unidentified unauthorized distributors.” Id.

The Janssen plaintiffs asserted the following claims against SRX and Singh: (1) Count I, federal trademark infringement in violation of 15 U.S.C. § 1114(1)(a) (use of trademarks without consent in the sale of “counterfeit” products (ECF No. 1-5, PageID.475); (2) Count II, federal trademark infringement in violation of 15 U.S.C. § 1114(1)(b) (use of trademarked labels on counterfeit bottles) (ECF No. 15, PageID.476); (3) Count III, “false description and designation of origin in commerce” in violation of 15 U.S.C. § 1125(a)(1)(A) (ECF No. 1-5, PageID.477); (4) Count IV, federal false advertising in violation of 15 U.S.C. § 1125(a)(1)(B) (ECF No. 1-5, PageID.478); (5) Count V, federal dilution of mark in violation of 15 U.S.C. § 1125(c) (ECF No. 1-5, PageID.480); (6) New York dilution of mark and injury to business reputation in violation of New York General Business Law § 360-1 (ECF No. 1-5, PageID.481); (7) Count VII, New York Deceptive Business Practices in violation of New York General Business Law § 349 (ECF No. 1-5, PageID.482); (8) Count VIII, common law unfair competition (ECF No. 1-5, PageID.482); (9) Count IX, common law unjust enrichment (ECF No. 1-5, PageID.483).

SRX and Singh submitted respective insurance claims to both Selective and American Casualty. On August 23, 2022, Selective, the insurer of the Business Owner's and Commercial Umbrella Policy, denied coverage for defense and indemnification. Selective does not believe that it has a duty to defend Plaintiffs in the Janssen lawsuit. See ECF No. 27, PageID.1498.

American Casualty denied defense and indemnification coverage under the professional liability policy for a variety of reasons discussed infra. ECF No. 36, PageID.1600.

Below, the Court will discuss all four of the pending motions. For clarity, however, the Court begins with the cross motions for summary judgment filed by Plaintiffs and Selective. The Court will subsequently address the cross motions for summary judgment filed by Plaintiffs and American Casualty Company.

III. Legal Standard

In their respective motions against Selective and American Casualty, Plaintiffs move for judgment on the pleadings under Fed.R.Civ.P. 12 (c) (“Rule 12(c)”), or in the alternative, for summary judgment under Fed.R.Civ.P. 56 (“Rule 56”). The respective motions filed by Selective and American Casualty Company urge the Court to grant summary judgment.

In considering motions filed pursuant to Rule 12(c), the Sixth Circuit has determined that, “[w]hen the plaintiff, as opposed to the defendant, moves for judgment on the pleadings. . . [the court] ask[s] whether the plaintiff's petition, stripped of those allegations which are denied by the defendant's answer, would leave the petition stating a cause of action against the defendant.” United Food & Com. Workers, Loc. 1995 v. Kroger Co., 51 F.4th 197, 202 (6th Cir. 2022), reh'g denied, No. 22-5085, 2022 WL 18431457 (6th Cir. Dec. 19, 2022), and cert. denied sub nom. Kroger Ltd. P'ship I v. United Food & Com. Workers, Loc. 1995, 143 S.Ct. 2496, 216 L.Ed.2d 455 (2023) (internal citations omitted).

However if “matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). The parties conducted discovery. P...