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Apogee Medical Management Inc. v. St. Francis Hospital Inc.

United States District Court, D. Arizona

October 23, 2018

Apogee Medical Management Incorporated, Plaintiff,
St. Francis Hospital Incorporated, Defendant.



         Before the Court is Defendant St. Francis Hospital Incorporated's (“St. Francis”) motion to dismiss for lack of personal jurisdiction or, alternatively, to transfer venue. (Doc. 11.) The motion is fully briefed, and the Court heard oral argument on October 16, 2018. (Docs. 17-18.) For the following reasons, St. Francis' motion is denied.

         I. Background

         Plaintiff Apogee Medical Management Incorporated (“Apogee”) is an inpatient physician (“Hospitalist”) provider with its principal place of business in Arizona. (Doc. 1 ¶¶ 1, 6.) Apogee contracts with hospitals around the country to arrange and manage Hospitalist care. (¶ 5.) In South Carolina, Apogee's Hospitalists provide medical services through Apogee's affiliated physician group. (¶ 7.) In 2014, Apogee began discussions with St. Francis about managing the Hospitalist program at St. Francis' facilities in South Carolina. (Doc. 17-3 ¶¶ 5-10.) Apogee and St. Francis formally entered into a Hospitalist Services Agreement (“HSA”) in July 2015. (Doc. 1 ¶ 17.)

         In early 2017, Apogee became concerned about high patient volumes at St. Francis' facilities. (¶ 21.) Apogee and St. Francis agreed to add permanent staffing and to the use of Locum Tenens physicians (“Locums”) for interim coverage. (¶¶ 12, 22.) With St. Francis' approval, Apogee submitted monthly invoices for reimbursement of the Locums' cost, which St. Francis paid. (¶¶ 26, 28.)

         At some point thereafter, St. Francis requested additional Hospitalists. (¶ 29.) On April 19, 2017, Apogee and St. Francis met to discuss increasing the number of Hospitalists. (¶ 30.) Apogee and St. Francis agreed upstaffing required continued use of Locums. (¶ 31.) Following the meeting, Apogee and St. Francis exchanged emails to memorialize their discussion, thereby amending the HSA (“April 2017 Amendment”). (¶¶ 33-35.)

         Following the April 2017 Amendment, St. Francis continued to pay Apogee's monthly invoices for the Locums. (¶ 46.) In December 2017, however, St. Francis refused to pay the outstanding balance of Locums invoices and asked Apogee to refund all amounts invoiced and paid by St. Francis in 2017, and for certain amounts invoiced and paid in 2016. (¶¶ 48-49.) When St. Francis refused to pay the agreed-upon amounts, Apogee filed this lawsuit. (¶ 50.)

         As relevant here, Apogee alleges St. Francis breached the HSA and its implied covenant of good faith and fair dealing when St. Francis refused to pay for the Locums services. (¶¶ 52-55, 57-60.) Alternatively, Apogee argues St. Francis' refusal to pay for the Locums services constitutes unjust enrichment, Apogee is entitled to recover the reasonable value of its services provided under the HSA, and that Apogee detrimentally relied on St. Francis' promises to pay for the Locums services. (¶¶ 62-69, 73-74, 76-79.) St. Francis has moved to dismiss the claims against it for lack of personal jurisdiction or, alternatively, to transfer the case to the District of South Carolina. (Doc. 11.)

         II. Motion to Dismiss for Lack of Personal Jurisdiction

         A. Legal Standard

         “When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). “Where, as here, the defendant's motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). Moreover, “uncontroverted allegations in [the plaintiff's] complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.” Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996) (internal quotation and citation omitted). The court, however, “may not assume the truth of allegations in a pleading which are contradicted by affidavit.” Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir. 1977).

         B. Analysis

         “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.” Walden v. Fiore, 571 U.S. 277, 283 (2014). Arizona authorizes courts to exercise jurisdiction to the maximum extent permitted by the Due Process Clause of the United States Constitution. Ariz. R. Civ. P. 4.2(a). Thus, courts in this District may exercise personal jurisdiction over a defendant who is not physically present in Arizona if the defendant has sufficient minimum contacts with the state, such that the suit can be maintained without offending traditional notions of fair play and substantial justice. See Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

         Personal jurisdiction may be general or specific. General personal jurisdiction over a nonresident defendant requires “continuous corporate operations within a state so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” Id. at 318. Specific personal jurisdiction exists when a lawsuit arises out of, or is related to, the defendant's contacts with the forum. Helicopteros Nacionales de Colo., S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). Here, Apogee contends only that St. Francis is subject to specific jurisdiction. (Doc. 17 at 6-12.)

         In determining whether specific jurisdiction over an out-of-state defendant exists, the Court applies a three-prong test:

(1) The non-resident defendant must purposefully direct [its] activities or consummate some transaction with the forum or resident thereof; or perform some act by which [it] purposefully avails [itself] of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (internal quotation and citation omitted). Apogee bears the burden of satisfying the first two prongs. Id. at 802. If Apogee succeeds, the burden shifts to St. Francis to “present a compelling case” ...

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