MED-X GLOBAL, LLC v. AZIMUTH RISK SOLUTIONS, LLC et al

Filing 35

OPINION filed. Signed by Judge Anne E. Thompson on 8/27/2018. (mmh)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MED-X GLOBAL, LLC, individually,
MED-X GLOBAL, LLC, as assignee
and/or attorney-in-fact of MARIO
BECERRIL TREJO, and MARIO
BECERRIL TREJO, individually,

Civ. No. 17-13086
OPINION

Plaintiffs,
v.
AZIMUTH RISK SOLUTIONS, LLC, and
CERTAIN UNDERWRITERS AT
LLOYD’S LONDON SUBSCRIBING TO
POLICY NUMBER 92355005,
Defendants.
THOMPSON, U.S.D.J.
This matter comes before the Court upon the Motion to Dismiss by Defendants Azimuth
Risk Solutions, LLC (“Azimuth”) and Certain Underwriters at Lloyd’s, London Subscribing to
Policy Number 923550051 (“Lloyd’s”) (collectively, “Defendants”). (ECF No. 28.) Plaintiffs
Med-X Global, LLC (“Med-X”) (individually, as assignee of Mario Becerril Trejo, and as
attorney-in-fact of Trejo) and Trejo oppose. (ECF No. 33.) The Court has decided this Motion
based on the written submissions of the parties without oral argument pursuant to Local Civil
Rule 78.1(b). For the reasons stated below, the Motion is granted in part and denied in part.

1

Defendants correct the name of this Defendant from Plaintiff’s papers and describe its name, in
its entirety, to read, “Certain Underwriters at Lloyd’s, London Subscribing to Policy Number
92355005, each for their own, and not for the other, their interests being several and not joint.”
(Defs.’ Mot. Dismiss at 1, ECF No. 28-2.)

BACKGROUND
This case is a contract action arising out of a health insurance policy. On March 21, 2016,
Trejo purchased an insurance policy underwritten by Lloyd’s and serviced by Azimuth, thirdparty administrator of Lloyd’s. (Am. Compl. ¶¶ 2, 10, ECF No. 27.) This policy covered eligible
medical expenses for Trejo and his dependents. (See id. ¶¶ 11–15.) Trejo, a citizen and resident
of Mexico (id. ¶ 3), suffered a gunshot wound and was hospitalized at St. Luke’s Medical Center
(“St. Luke’s”) in Mexico from July 2 to August 22, 2016 (id. ¶¶ 18–20). Trejo authorized St.
Luke’s to bill Lloyd’s through Azimuth. (Id. ¶ 20.) St. Luke’s provided $917,116.32 worth of
services to Trejo, and Lloyd’s denied coverage for all but $62,500. (Id. ¶¶ 21, 23.)
On April 27, 2017, an assignment of benefits for these claims was executed, putatively
assigning the benefits to Med-X. (Id. ¶ 26.) Trejo additionally acknowledged Med-X as his
attorney-in-fact in relation to these claims. (Id.) Med-X contacted Azimuth regarding the claim,
and a representative from Azimuth indicated that Lloyd’s had retained a Mexican medical
provider to assess the reasonableness of the claims and charges and to prepare a claim report. (Id.
¶¶ 27–29.) Receiving no further response, Plaintiff retained the Merlin Law Group, which
requested a full administrative record and claim report, as well as twenty-three other enumerated
items. (Id. ¶ 30.) Plaintiff received none of these documents. (Id. ¶¶ 31–33.)
On December 14, 2017, Med-X, as sole Plaintiff, filed the present law suit, seeking relief
as an assignee of Trejo’s contract rights and pleading two Counts of breach of contract. (See
generally Compl., ECF No. 1.) Upon Defendants’ motion, we dismissed the Complaint on April
10, 2018, finding that the contract’s anti-assignment clause barred assignment of the claims to
Med-X, and that therefore Med-X lacked standing to bring a breach of contract claim. (ECF Nos.
21–22.) We did, however, grant Med-X leave to amend (id.), and later an extension of time (ECF

No. 25).
The Amended Complaint was filed on June 11, 2018, this time naming as Plaintiffs (a)
Med-X, individually, (b) Med-X, as assignee and/or attorney-in-fact of Trejo, and (c) Trejo.
(ECF No. 27.) On June 25, 2018, Defendants moved to dismiss. (ECF No. 28.) Plaintiffs, after
requesting an automatic extension under Local Civil Rule 7.1(d)(5) (ECF No. 29), timely
opposed (ECF No. 33). Defendants repled. (ECF No. 34.) This Motion is now before the Court.
LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency
of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). The defendant bears the
burden of showing that no claim has been presented. Hedges v. United States, 404 F.3d 744, 750
(3d Cir. 2005). When considering a Rule 12(b)(6) motion, a district court should conduct a threepart analysis. Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). “First, the court must ‘take
note of the elements a plaintiff must plead to state a claim.’” Id. (quoting Ashcroft v. Iqbal, 556
U.S. 662, 675 (2009)). Second, the court must “review[] the complaint to strike conclusory
allegations.” Id.; see also Iqbal, 556 U.S. at 679. Finally, the court must assume the veracity of
all well-pleaded factual allegations and “determine whether the facts are sufficient to show that
plaintiff has a ‘plausible claim for relief.’” Fowler v. UPMC Shadyside, 578 F.3d 203, 211
(quoting Iqbal, 556 U.S. at 679); see also Malleus, 641 F.3d at 563. If the complaint does not
demonstrate more than a “mere possibility of misconduct,” it must be dismissed. See Gelman v.
State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at
679).
DISCUSSION
Defendants’ Motion wages a tripartite attack on the Amended Complaint. First, it claims

that Med-X lacks standing to sue and should therefore be dismissed as a party. Second, it argues
that, once Med-X is dismissed, the Court lacks subject matter jurisdiction and so the entire case
must be dismissed. Third, it contends that even if the Court has subject matter jurisdiction, venue
is improper. We address each argument in turn.
I.

Med-X’s Standing to Sue for Breach of Contract
Med-X brings breach of contract claims (a) individually (i.e., on its own behalf), (b) as

assignee of Trejo, and (c) as attorney-in-fact of Trejo. According to Defendants, none of these
postures confer standing on Med-X to allow its inclusion as a party.
As a general matter, Article III of the United States Constitution requires that any
plaintiff to a case have standing—that is, that the plaintiff has suffered an injury in fact, caused
by the defendant’s alleged conduct, and redressable by the relief sought. Sprint Commc’ns Co. v.
APCC Servs., Inc., 554 U.S. 269, 273–74 (2008). “[T]he minimum requirement for an injury-infact is that the plaintiff have legal title to, or a proprietary interest in, the claim.” W.R. Huff Asset
Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100, 108 (2d Cir. 2008) (citing Sprint, 544 U.S.
at 289). Thus, a plaintiff in a breach of contract case has standing only where that party holds
some title or interest created by the contract.
Med-X has no rights under the contract at issue. It was not an original party to the
contract. (Am. Compl. ¶ 11.) And as has been previously held in this litigation, Trejo has not
validly assigned its contract rights to Med-X. (See Op. Granting Mot. Dismiss, ECF No. 21.)
Med-X claims to be an attorney-in-fact of Trejo (Am. Compl. ¶ 26), but an attorney-in-fact lacks
standing to sue in her own name. See Am. Orthopedic & Sports Med. v. Independence Blue Cross
Blue Shield, 890 F.3d 445, 455 (3d Cir. 2018) (“A power of attorney . . . ‘does not transfer an
ownership interest in the claim,’ . . . but simply confers on the agent the authority to act ‘on

behalf of the principal[.]’”) (quoting W.R. Huff, 549 F.3d at 108; In re Complaint of Bankers
Trust Co., 752 F.2d 874, 881 (3d Cir. 1984)). 2 Med-X therefore lacks standing to sue in its own
name.
However, an attorney-in-fact may bring a claim in a representative capacity. W.R. Huff,
549 F.3d at 109; Roby v. Ocean Power Techs., Inc., 2015 WL 1334320, at *11 (D.N.J. Mar. 17,
2015). Thus, while Med-X lacks standing to sue individually or as an assignee of Trejo, it may
bring the present suit on behalf of Trejo, as Trejo’s attorney-in-fact. 3
II.

Subject Matter Jurisdiction
The Court’s subject matter jurisdiction under diversity is limited to suits between:
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state . . . ;
(3) citizens of different States and in which citizens or subjects of a foreign state
are additional parties; and
(4) a foreign state . . . as plaintiff and citizens of a State or of different States.

28 U.S.C. § 1332(a). Plaintiff Med-X is incorporated in, and has its principal place of business
in, New Jersey (Am. Compl. ¶ 4), and is therefore a citizen of New Jersey. Plaintiff Trejo is a
citizen of Mexico. (Id. ¶ 3.) Defendant Azimuth appears to be a citizen of Indiana. (Id. ¶ 6.) 4

2

Although American Orthopedic is a case arising under ERISA, its proposition that a grant of
power-of-attorney does not confer standing derives, not from ERISA, but from principles of
agency and contract. See Am. Orthopedic, 890 F.3d at 455. Note also that American
Orthopedic’s findings as to power-of-attorney are dicta, as Appellant in that case had waived its
arguments concerning power-of-attorney. See id. But we see no reason to doubt the solidity of
the proposition stated.
3 Defendants argue that power-of-attorney “is not plausibly pled under Twombly.” (Defs.’ Reply
Br. at 4 n.1, ECF No. 34.) But sufficient pleading requires only “a short and plain statement of
the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Since Trejo, not
Med-X, seeks recovery, from Defendants, Trejo is the real party in interest under Federal Rule
17(a), see Choi v. Kim, 50 F.3d 244, 247 (3d Cir. 1995), and the Complaint sufficiently pleads
that Trejo is entitled to relief.
4 The Complaint states that “Azimuth was a third-party insurance administrator based in Indiana
and engaged in the business of, among other things, administering health insurance claims and
making indemnification decisions in relation to same throughout the world.” (¶ 6.) The Court
interprets this assertion as an assertion that Azimuth is domiciled in Indiana.

Defendant Lloyd’s appears to be a citizen of the United Kingdom. (Id. ¶ 5.) 5
Defendants argue that once Med-X is dismissed as a party, this case is one between a
Plaintiff from Mexico and Defendants from Indiana and the United Kingdom. (Mot. Dismiss at
10–11.) This configuration does not match any of the provisions of § 1332(a). Dresser Indus.,
Inc. v. Underwriters at Lloyd’s of London, 106 F.3d 494, 497–98 (3d Cir. 1997) (citing Allendale
Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 428 (7th Cir. 1993) (stating that jurisdiction
exists under § 1332(a)(3) when United States citizens exist on both sides of the dispute); see also
13E Charles Alan Wright et al., Federal Practice and Procedure § 3604 (3d ed., 2018 update).
Therefore, claim Defendants, the Court lacks subject matter jurisdiction
Defendants, in other words, are asking the Court to assess subject matter jurisdiction
based on the identity of the parties at the present moment. To do so would contradict the usual
practice of assessing jurisdiction based on the identity of the parties at the time the complaint
was filed. See Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 575 (2004) (upholding
the time-of-filing rule as “longstanding precedent”); Lang v. Windsor Mount Joy Mut. Ins. Co.,
487 F. Supp. 1303 (1980) (collecting cases). Although this “time of filing” rule is typically
applied where the citizenship status of a party changes mid-suit, see, e.g., Grupo Dataflux, 541
U.S. at 575, the Third Circuit has also looked to the time of filing where the parties themselves
change during the case, New Rock Asset Partners, L.P. v. Preferred Entity Advancements, Inc.,
101 F.3d 1492, 1506 (3d Cir. 1996) (allowing supplemental jurisdiction where the original
jurisdiction-creating party was replaced); Brough v. Strathmann Supply Co., 358 F.2d 374, 376

5

It is not clear whether Lloyd’s is also a citizen of New York. The Complaint alleges that
Lloyd’s has “offices in New York, New York.” (¶ 5). Defendants argue that the proposition that
“New York is considered [Lloyd’s] principal place of business” is “alleged nowhere, and is
palpably untrue.” (Mot. Dismiss at 11.) The Court has subject matter jurisdiction either way, so
we need not resolve this issue.

(3d Cir. 1966) (holding that substitution of a party does not destroy diversity jurisdiction); see
also Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 276 (3d Cir. 2001) (citing New Rock for
the proposition that “where the jurisdiction-conferring party drops out and the federal court
retains jurisdiction over what becomes a state law claim between non-diverse parties, the bounds
of Article III have not been crossed.”). Here, because the Court had subject matter jurisdiction
under § 1332(a)(3) based on the parties in the initial Complaint, we continue to have subject
matter jurisdiction throughout the suit.
Given the rather unusual means by which the Court maintains jurisdiction, it is proper to
examine 28 U.S.C. § 1359, which states that, “A district court shall not have jurisdiction of a
civil action in which any party, by assignment or otherwise, has been improperly or collusively
made or joined to invoke the jurisdiction of such court.” Collusion under § 1359 exists where a
clearly inapt party has been joined to create jurisdiction, see, e.g., McSparran v. Weist, 402 F.2d
867, 876 (3d Cir. 1968) (“[T]he straw guardian [was] appointed solely to create diversity
jurisdiction . . . .”); Butler v. Colfelt, 313 F. Supp. 527, 531 (E.D. Pa. 1970), aff’d, 439 F.2d 882
(3d Cir. 1971) (finding collusion where the appointed guardian had never been appointed
guardian before, was unfamiliar with the role, and had no relevant experience), and where the
suit is “wholly local in nature,” Groh v. Brooks, 421 F.2d 589, 595 (3d Cir. 1970); see also
McSparran, 402 F.2d at 876 (finding the controversy “essentially local” where the injured party
and all defendants resided in the state where the accident occurred); Butler, 313 F. Supp. at 531
(“The minor and his parents all resided in Pennsylvania at the time of the accident and
Pennsylvania is the residence of the defendant.”).
Here, by contrast, Plaintiffs brought this action originally by asserting assignment, an
assertion we rejected but which we admitted was a question “[w]ithout a clear answer.” (Op.

Granting Mot. Dismiss at 7.) There were understandable, non-collusive reasons for enlisting a
medical billing agent like Med-X to resolve an international claim dispute in the admittedly
complicated field of health insurance. And in contrast to the “wholly local” cases cited above,
this case involves an Indiana-based insurance company and medical treatment delivered in
Mexico. The jurisdiction of this Court was therefore not invoked collusively under § 1359.
Subject matter jurisdiction is therefore properly exercised in this case.
III.

Venue
Defendants also object to venue under Federal Rule of Civil Procedure 12(b)(3).

However, a party waives the defense of improper venue where the party has previously made a
Rule 12 motion and the defense “was available to the party but omitted from its earlier motion.”
Fed. R. Civ. P. 12(h)(1)(A), (g)(2).
Because venue in federal court depends upon the identity and residence of defendants and
the events giving rise to the claim, 28 U.S.C. § 1391(b), and because those facts are the same as
they were at the time of Defendants’ previous Motion to Dismiss (ECF No. 12), this objection
was available to Defendants at that time. See Sunn Classic Pictures, Inc. v. Budco, Inc., 481 F.
Supp. 382, 388 n.2 (E.D. Pa. 1979). Thus, Defendants waived their objection to venue by failing
to raise it in their previous Motion.
CONCLUSION
For the foregoing reasons, Defendants’ Motion is granted in part and denied in part. An
appropriate Order will follow.

Date: __8/27/2018________

__/s/ Anne E. Thompson__________
ANNE E. THOMPSON, U.S.D.J.