Gould v. Moran Towing Corporation

Filing 50

ORDER granting 42 Motion to Dismiss for Lack of Jurisdiction. For the reasons set forth in the attached document, I grant Select Medical Corporation's motion to dismiss the Third Party Complaint. Ordered by Magistrate Judge James Orenstein on 4/3/2014. (Orenstein, James)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------------------------X
MATTHEW PAUL GOULD,
Plaintiff,
- against MORAN TOWING CORP.,
Defendant.
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MEMORANDUM
AND ORDER
12-CV-5046 (JO)

James Orenstein, Magistrate Judge:
Plaintiff Matthew Paul Gould ("Gould") has asserted a claim under the Jones Act, 36 U.S.C. §
30104, et seq., seeking damages arising from injuries he claims to have sustained while working as a
tankerman on a vessel owned and operated by his employer, defendant Moran Towing Corporation
("Moran"). Docket Entry ("DE") 29 (Complaint). On July 22, 2013, Moran filed a Third Party
Complaint seeking indemnification from Select Medical Corporation ("Select") on the ground that the
latter company, which Moran engaged to provide physical therapy services to Gould, acted negligently
and thereby exacerbated Gould's injuries. DE 37 (Third Party Complaint). Select now moves to
dismiss the Third Party Complaint on the ground that it is not subject to this court's jurisdiction. DE
42 (Motion to Dismiss). For the reasons set forth below, I agree and therefore grant the motion.
I.

Background
A.

Facts

Gould alleges that he sustained the injuries at issue on November 14, 2010, while working on
Moran's barge. Third Party Complaint ¶ 10. He later returned to his home in Florida, where a doctor
diagnosed his injury as a rotator cuff tear, performed surgery to repair it, and prescribed a course of
physical therapy. Id. ¶¶ 11-12. Acting pursuant to its obligations as a maritime employer, Moran
arranged for Gould to receive physical therapy at a facility in Pensacola called Select Physical Therapy

Pine Forest ("Pine Forest"). Id. ¶¶ 7, 13. 1 Pine Forest provided physical therapy to Gould from April
19 through September 9, 2011. Id. ¶ 15. However, Moran alleges that Pine Forest was negligent, and
that as a result Gould re-injured his rotator cuff and required further surgery; Gould now asserts that
in the aftermath of his second injury and surgery, he cannot return to his former employment. Id.
¶¶ 17-18. Moran alleges that an appropriate course of physical therapy would have allowed Gould to
resume his work as a tankerman. Id. ¶ 19.
In seeking to establish personal jurisdiction over Select, Moran makes the following
allegations, all of which I assume to be true for purposes of the instant motion. Select is a Delaware
corporation. Id. ¶ 7. Through its Select Medical Outpatient Division, which operates the Pine Forest
facility in Pensacola, see id., "Select derives substantial revenue from interstate commerce and
advertises its ability to and provides [sic] services to patients in New York through its website." Id. ¶ 9. 2
When Moran set out to arrange Gould's physical therapy, its agent in New York, Universal
Coordinating Care, LLC ("Universal"), entered into a contract for such services with Pine Forest. Id. ¶
13. Pine Forest provided reports about Gould's treatment to Universal, which "administered and
monitored" the therapy services in New York. Id. ¶¶ 14, 15. Moran paid Select for the therapy. Id. ¶ 14.

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Select contends Pine Forest is a "d/b/a designation" of Gulf Breeze Physical Therapy, Inc. ("Gulf
Breeze"). DE 42-3 (Select's memorandum of law) at 6. It adds that Gulf Breeze, a Florida corporation,
is not a direct subsidiary of Select or directly controlled by the latter company, but is instead separated
from Select by three levels of corporate ownership and control; that is, Gulf Breeze is a wholly owned
subsidiary of one corporation, which is a wholly owned subsidiary of another, which in turn is a wholly
owned subsidiary of Select. See id. at 3; DE 42-2 (affidavit of Select official) ¶ 7. Moran does not appear
to dispute that claim. See DE 44-9 (Moran's memorandum of law) ("Opp.") at 2. As explained below,
however, I grant the instant motion for reasons unrelated to the nature of the corporate relationship
between Select and Pine Forest, and would reach the same result even if the parties agreed that Pine
Forest was an alter ego of Select.

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Moran's phrasing creates some ambiguity as to whether Select's website is one that solicits patients at
unspecified locations and is merely accessible from New York, or instead solicits patients who are
themselves in New York. That ambiguity does not affect my analysis.
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B.

Proceedings

Gould filed his Complaint against Moran on October 8, 2012, and later amended it on May 9,
2013. DE 1; DE 29. Moran answered on November 9, 2012. DE 9. On April 1, 2013, Moran moved to
transfer venue of the case to the Northern District of Florida. DE 16. In explaining why such a
transfer would be in the interest of justice, Moran wrote that "Select cannot be sued in this District."
DE 16-5 (memorandum of law in support of motion to transfer) at 3; see also id. at 6-7 (arguing that
Moran's claim that Pine Forest's negligence "exacerbated plaintiff's injury cannot be [tried] in this
Court"); id. at 8 (contending that a joint trial of Gould's personal injury claim and Moran's negligence
claim is "only possible in the Northern District of Florida"). The court heard argument and denied the
motion on April 29, 2013. DE 26. 3
Thereafter, the parties unanimously consented to refer the case to me for all proceedings
including entry of a final judgment, and Moran then sought and received leave to file its Third Party
Complaint against Select (which likewise consented to have a magistrate handle the case). See DE 33;
DE 36; DE 47; 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Moran filed the pleading on July 22, 2013. DE
37. Select then filed the instant motion on September 4, 2013, and the parties completed the briefing
on October 11, 2013. See DE 42; DE 48. No party has requested oral argument.
II.

Discussion
As Moran's claim against Select rests on diversity jurisdiction, New York law determines the

issue of personal jurisdiction. Cargill, Inc. v. Sabine Trading & Shipping Co., Inc., 756 F.2d 224, 228 (2d Cir.
1985). Moran, as the party asserting the claim, bears the burden of establishing that Select is subject to

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The court did not rule on the question of personal jurisdiction in denying the motion to transfer. At
oral argument on the motion, the court did appear to assume that it would lack such jurisdiction, a
proposition with which Gould's counsel agreed and Moran's counsel voiced no disagreement. See DE
49 (transcript) at 9. Neither the parties' arguments on the transfer motion nor the court's resolution of
it is dispositive of the instant motion.
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this court's personal jurisdiction. Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.
1996). In opposing Select's pre-discovery motion to dismiss, Moran may rely on "legally sufficient
allegations of jurisdiction[,]" id. (citations omitted), and is entitled to have the court resolve any
pertinent factual disputes in its favor. Alterseekers, Inc. v. BrandForce SF, LLC, 2013 WL 5236533, at *4
(E.D.N.Y. Sept. 16, 2013).
Moran relies on a provision of New York's long-arm statute that extends personal jurisdiction
over a non-domiciliary that "commits a tortious act without the state causing injury to person or
property within the state … if he … expects or should reasonably expect the act to have consequences
in the state and derives substantial revenue from interstate or international commerce …." N.Y.
C.P.L.R. 302(a)(3)(ii) (cited in Opp. at 6). To prevail on that jurisdictional theory, Moran must establish
that:
(1) the defendant [i.e., Select] committed a tortious act outside New York; (2) the cause
of action arose from that act; (3) the tortious act caused an injury to a person or
property in New York; (4) the defendant expected or should reasonably have expected
the act to have consequences in New York; and (5) the defendant derived substantial
revenue from interstate or international commerce ….
Penguin Grp. (USA) Inc. v Am. Buddha, 16 N.Y.3d 295, 302 (2011).
To fit its claim against Select into that framework, Moran characterizes the injuries for which it
seeks redress as an increase in its liability to Gould as well as the loss of Gould's services as an
employee, each of which "flow[s] from the negligent medical care" at issue and each of which "will
occur in New York." Opp. at 8. That view of the claim does not accord with controlling law, however,
because for purposes of the provision of New York's long-arm statute upon which Moran relies, "[t]he
situs of the injury is the location of the original event which caused the injury, not the location where
the resultant damages are subsequently felt …." Hermann v. Sharon Hosp., Inc., 522 N.Y.S.2d 581, 583
(App. Div. 1987). The "original event which caused the injury" Moran describes may well produce

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"resultant damages" that will be "subsequently felt" in New York, but the event itself – the allegedly
negligent physical therapy that Pine Forest provided to Gould, resulting in the exacerbation of his torn
rotator cuff – occurred in Florida. See id. (holding that the same provision of the long-arm statute at
issue here is inapplicable where, as here, the plaintiff was physically injured as a result of negligent
medical care provided outside of New York, leading to subsequent effects within New York).
Moran also purports to rely on Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d
120 (2d Cir. 2002) (cited in Opp. at 8-9). That case, however, involved torts of a commercial nature,
and the court had, in an earlier opinion in the same case addressing the pertinent long-arm statute
provision, explicitly limited its holding to instances of "fraud or breach of fiduciary duty committed in
another state." Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 791-92 (2d Cir. 1999)
(discussing the holding in Hermann before turning to cases with facts "far more analogous" to those
presented). The court drew that distinction for a good reason that applies with equal force here:
Whereas a commercial tort involving fraud or misrepresentation may not cause injury immediately or
in the state in which it was committed, the first effect of a tort involving physical injury is immediately
visited upon the body of the injured person. See id. at 792 (holding that for commercial torts involving
fraud or breach of fiduciary duty, "the critical question is thus where the first effect of the tort was
located that ultimately produced the final economic injury"). Accordingly, the holding in Bank Brussels
Lambert does not alter the jurisdictional analysis here.
The decision in DiStefano v. Carozzi N. Am. Corp., 286 F.3d 81 (2d Cir. 2001) (cited in Opp. at 9),
also provides no support for Moran's position. DiStefano complained of a decision made in New
Jersey to terminate his employment – but as the court noted, he had performed his work in New York,
and therefore experienced the immediate effect of the termination decision in New York, thus

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satisfying the latter state's long-arm statute. Id. at 85. Explaining its decision, the court reasoned as
follows:
"Th[e] 'original event' is … generally distinguished not only from the initial tort but
from the final economic injury and the felt consequences of the tort." … We have
previously held in applying N.Y. C.P.L.R. § 302(a)(3) that the "original event" occurs
"where the first effect of the tort … that ultimately produced the final economic
injury" is located.
Id. at 85-86 (quoting Bank Brussels Lambert, 171 F.3d at 791, 792 (quoting Hermann)). Indeed, because
the DiStefano opinion relies explicitly on the earlier decision in Bank Brussels Lambert, and in turn on
Hermann, it manifestly does no more than the latter decisions to support Moran's jurisdictional theory
– and as explained above, those cases do not support that theory at all. I therefore conclude that
Moran has failed to plead an injury to a person or property in New York, and as a result cannot
establish personal jurisdiction over Select.
III.

Conclusion
For the reasons set forth above, I grant Select Medical Corporation's motion to dismiss the

Third Party Complaint.
SO ORDERED.
Dated: Brooklyn, New York
April 3, 2014

/s/
JAMES ORENSTEIN
U.S. Magistrate Judge

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