NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

ANGEL JET SERVICES, LLC, Hon. Dennis M. Cavanaugh

Plaintiff, OPINION

V. Civil Action No. I O-cv-6459 (DMC)(MF)

BOROUGH OF WOODLAND PARK,

Defendant/Third-Party Plaintiff,

v.

NORTH JERSEY MUNICIPAL

EMPLOYEE BENEFITS FUND and

AETNA INSURANCE COMPANY,

Third-Party Defendants.

DENNIS M. CAVANAUGH, U.S.D.J.

This matter comes before the Court upon the Motion ofThird-Party Defendants North Jersey

Municipal Employee Benefits Fund (“NJMEBF”) and Aetna Insurance Company (“Aetna”)

(collectively “Third-Party Defendants”) to Dismiss the Third-Party Complaint of Third-Party

PlaintiffBorough ofWoodland Park (“Borough”) pursuant to FED. R. Civ. P. 1 2(b)(6). (ECF No.32).

Pursuant to FED. R. Civ. P. 78, no oral argument was heard. After carefully considering the

submissions ofthe parties, and based upon the following, it is the finding ofthis Court that Third

Party Defendants’ Motion to Dismiss is granted.

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I. BACKGROUND

A. Factual History

Original Plaintiff Angel Jet Services, LLC (“AJS”) initiated the underlying complaint

against Borough for multiple causes to recover damages for unpaid services and equipment totaling

$433,525 plus attorney’s fees, costs, and all additional damages the court may deem proper.(ECF

No. 1, Dec. 13, 2012). Borough has, in turn, narnedNJi’vIEBF and Aetna as Third-Party Defendants

for multiple causes to recover the same sum citing unpaid liabilities to their insured, Police Chief

Robert Reda (“ChiefReda”) and for failure to provide adequate information on the appeals process.

(ECF No. 17). In 2008, Chief Reda was diagnosed with Stage IV metastic lung cancer after which

he began to receive cancer treatment. ChiefReda a resident of West Paterson, New Jersey, received

alternative treatment for his cancer at a clinic in Coeur d’Alene, Idaho, and routinely traveled

between Idaho and New Jersey for such treatment. In early February 2009, while traveling aboard

a commercial flight to receive care in Idaho, Chief Reda became severely ill. The flight landed in

Seattle, Washington, where paramedics immediately began treating him at the airport. After this

treatment successfully stabilized ChiefReda, he and his wife traveled by ground to Coeur d’Alene,

Idaho.

On February 22, 2009, while on the same trip, ChiefReda was admitted to Kootenai Medical

Center (“Kootenai’) in Coeur d’Alene, Idaho, after presenting to the emergency room with critical

issues related to his declining health. For a period of two (2) weeks, Chief Redas condition

1 The facts in the Background section have been taken from the parties’ submissions. On

this Motion to Dismiss, the Court will accept the factual allegations in the Third-Party Complaint

as true and construe all facts in Plaintiffs’ favor.

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continued to worsen and he was admitted to the Intensive Care Unit at Kootenai, where medical staff

described him as critically ill. Chief Reda and his treating physician at Kootenai discussed

options for treatment and determined that it was medically necessary for him to receive more

conventional treatment at the most appropriate and closest facility to his home, St. Joseph Wayne

Hospital in New Jersey. Air ambulance transportation was then ordered by Chief Reda’s treating

physician because, according to the physician, Chief Reda was unable to return to New Jersey to

receive treatment at St. Joseph Wayne Hospital via any other means, ChiefRedas treating physician

at Kootenai expressed that, based on his medical knowledge and judgment, air ambulance

transportation was ChiefReda’s only option for a positive outcome to his treatment, as his condition

had deteriorated significantly at that time.

On or about February 24, 2009, Chief Reda’s family contacted AJS to arrange for the

necessary air ambulance transportation. After being fully informed ofthe Base Rate, Mileage Rate

and Additional Services, Chief Reda and his family attempted to obtain insurance coverage

(preauthorization) for the air ambulance transportation through NJMEBF. At the time, ChiefReda

was covered by the health plan offered by Third-Party Defendants as a condition of his employment

with the Borough. NJMEBF denied authorization for the air ambulance transportation. ChiefRedas

family immediately contacted Borough Mayor Pat Lepore (“Mayor Lepore”) for help. On February

25, 2009, Mayor Lepore contacted AJS via email and expressly agreed, on behalf of and as Mayor

of the Borough, to pay all costs for the air ambulance transportation for Chief Reda. Specifically,

Mayor Lepore wrote:

(A)s Mayor of the Borough of Woodland Park, I am overriding any negative benefit

determinations by Aetna in regards to the Air ambulance Transport on 02-25-09 from Kootenai

Medical Center PCU, ID to St. Joseph Wayne Hospital, NJ for pt. Robert Reda Member

3

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#BBLT76DA DOB 03/131 1957. Also, ifyou can, send me a message with the cost ofthe transport.

(ECFNo. 1,Ex.A).

AJS’s Rate Schedule was then quoted to Mayor Lepore over the telephone and, based on

the promise of Mayor Lepore, and the beliefthat he had the authority as Mayor to speak on behalf

of the Borough, AJS transported Chief Reda 2,135 miles from Idaho to New Jersey, and

provided the necessary medical care. (ECF No. 1, Ex, B). After performing the authorized services,

AJS submitted an invoice to Mayor Lepore and the Borough in accordance with the Rate Schedule

for all services rendered to Chief Reda.

During a subsequent telephone call with AJS, Mayor Lepore, on behalf ofthe Borough, provided his

‘personal assurance one way or another that AJS would be compensated for the service. On or

about June 18, 2009, AJS placed a follow-up call to Mayor Lepore inquiring about the status of

payment and to advise that payment was due. During that call, and for the first time, Mayor Lepore

stated to AJS that the Borough would be unable to pay for the services rendered to Chief Reda. As

required byN.J.S.A. 59:1-i, et seq., on August 3,2009, AJS provided the Borough with a written

Notice of Claim relating to the services provided to Chief Reda and the promise made by Mayor

Lepore, on behalf ofthe Borough, to pay. (ECF No.1, Ex. C). The Borough ultimately failed to pay

AJS for any of the services rendered to Chief Reda and Mayor Lepore has not delivered on his

promise to secure payment for same.

B. Procedural History

Third-Party Defendants filed this Motion to Dismiss Borough’s Third-Party Complaint for failure

to state a claim for which relief can be granted on March 19, 2012. (ECF No, 32). Third-Party

Defendants assert that the Borough is not being sued by AJS for the health insurance benefits

4

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provided by Third-Party Defendants, but for the separate contractual agreement made to

compensate AJS directly for its services, an agreement that Third-Party Defendants allege is

apart and separate from any agreement they had with Chief Reda and the Borough. Ifthe

agreement underlying this Third-Party dispute is premised on a separate promise made by the

Mayor on behalf of the Borough, then NJMEBF argues that FED. R. Civ. P. 1 2(b)(6) should apply

as the borough bears full responsibility for promises made beyond the scope of the health

insurance policy provided by NJMEBF, leaving there no claim against NJMEBF for which relief

can be granted. Borough filed Opposition on April 11, 2012. (ECF No. 33). Third-Party

Defendants filed their Reply on April 11, 2011. (ECF No. 34). The matter is now before this

Court.

II. STANDARD OF REVIEW

In deciding a motion under Rule 12(b)(6), the district court is “required to accept as true

all factual allegations in the complaint and draw all inferences in the facts alleged in the light

most favorable to the [Plaintiff].” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir.

2008), “[A] complaint attacked by a Rule I 2(b)(6) motion to dismiss does not need detailed

factual allegations.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the

Plaintiffs “obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than

labels and conclusions, and a formulaic recitation of the elements of a cause of action will not

do.” Id. To survive a motion to dismiss, the complaint must state a plausible claim. Ashcroft v.

Iqbal, 129 5. Ct. 1937, 1950 (2009). Thus, assuming that the factual allegations in the complaint

are true, those “[fjactual allegations must be enough to raise a right to relief above a speculative

5

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leveL” Twombly, 550 U.S. at 555.

III. DISCUSSION

Borough asserts four claims under common law principles of contract law for two types

of relief: (1) declaratory relief for violation of terms of the healthcare contract: and (2) a

declaration by the Court stating that Aetna violated express and implies terms of the healthcare

plan. All four claims (Counts I, II, III, and IV) are dismissed as to Third- Party Defendants for

failure to state a claim for which relief can be granted.

1. COUNTS lAND 112

In Counts I and II, Borough seeks declaratory relief for violation of terms of the

healthcare contract. To support their claim for breach of contract, Borough states the conclusion.

without providing proper factual basis, that Chief Reda was entitled” to AJS services.

Borough’s facts in support of this conclusion do not show that Chief Reda was entitled to

receive this specific form oftransportation as part of his insurance coverage. Borough states in

the Third-Party Complaint that Chief Reda had an insurance policy that was in full effect with the

Third Party Defendants, (Third-Party Compl. J 6). Borough asserts that Chief Reda’s treating

2Conspicuously absent from Borough’s Third-Party Complaint and Opposition Brief is

any explanation as to who ultimately authorized Chief Reda’s flight. Borough acknowledges that

Aetna denied authorization for the flight. Borough also states that Chief Reda was flown back to

New Jersey on one of AJS’s ambulatory jets on February 25, 2009. However. Borough’s

submissions to the Court do not speak to whether or not Mayor Lepore actually authorized this

transportation for Chief Reda, after Chief Reda’ s initial request for pre-authorization was denied

by Aetna. Nor does Borough acknowledge that the nature of the underlying complaint between

AJS and Borough in this case, is for breach of a contract that AJS claims to have formed with

Mayor Lepore in writing, and then again verbally via telephone. (Mot. Dis. Br. 6, 7). In fact,

“Angel Jet is not making a claim for benefits under the health insurance plan, they are seeking

the enforcement ofa separate contract with the brought (emphasis added).” (Reply Br. 6).

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physician in Idaho was of the opinion that “air ambulance transportation was Chief Reda’ s only

option for returning to New Jersey,” and “that Chief Reda’s attempt to obtain preauthorization

was denied by Third Party Defendants.” (Id. ¶J 12, 15) (emphasis added). Borough goes further,

arguing that Third Party Defendants had an obligation to cover the costs associated with the

transport of Chief Reda from Idaho to New Jersey for necessary and required medical treatment.

(id. ¶ 20) (emphasis added). However, Borough fails to cite any factual support as to why this

service was necessary or more importantly, why Third-Party Defendants were obligated to pay

for AJS service. Without providing any other factual support for these conclusions, such as

specific language from the Chief Reda’ s health insurance policy, indicating that Third-Party

Defendant’s were obligated to pay for these services, Borough’s Third-Party Complaint fails to

present facts that allow the Court to “infer more than the mere possibility of misconduct” or to

conclude that Borough “is entitled to relief.” Iqbal, 556 U.S. at 679.

Accordingly, Counts I and II of Third-Party Plaintiffs Complaint are dismissed.

2. COUNTS III AND IV

In Counts III and IV, Borough does not allege that Third-Party Defendants violated any

express terms of the Health Insurance Agreement. Rather, Borough argues that Aetna’s denial of

Chief Reda’s claim for AJS services violated Aetna’s duty of good faith and fair dealing under

New Jersey common law. It is well established under New Jersey law that “[e]very party to a

contract ... is bound by a duty of good faith and fair dealing in both the performance and

enforcement of the contract.” Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr.

Assocs., 182 N.J. 210, 224 (2005). While “a partys performance under a contract may breach

[the] covenant [of good faith and fair dealing] even though that performance does not violate a

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pertinent express term,” Wilson v. Amerada Hess Corp., 168 N.J. 236, 245 (2001), “the duty of

good faith and fair dealing cannot alter the clear terms of an agreement and may not be invoked

to preclude a party from exercising its express rights under such an agreement.” DiCarlo v. St.

Mary Hosp., 530 F.3d 255, 267 (3d Cir. 2008).

In the context of contracts that “vest[] unilateral discretion ... in one party,” whether to fix

a price, to order a quantity of goods, or to control “other conditional aspects of a contract,” the

New Jersey Supreme Court has explained, “the fact that a discretion-exercising party causes the

dependent party to lose some or all of its anticipated benefit from the contract ... is insufficient to

establish a breach of contract by failing to perform in good faith...” Wilson, 1 68 N.J. at 245-46.

“A party exercising its right to use discretion in setting price under a contract breaches the duty

of good faith and fair dealing if that party exercises its discretionary authority arbitrarily,

unreasonably, or capriciously, with the objective of preventing the other party from receiving its

reasonably expected fruits under the contract.” j at 251. A plaintiff may be entitled to relief in

an action under the covenant ifthe defendant acts with ill motives and without any legitimate

purpose to destroy the plaintiffs reasonable expectations. However, bad motive or intention is

essential, and an allegation of bad faith or unfair dealing should not be permitted to he advanced

in the abstract and absent improper motive. Elliot & Frantz. Inc. v. Ingersoll-Rand Co.. 457 F.3d

312, 329 (3d Cir. 2006) (internal quotations and citations omitted). As these cases make clear, a

party does not breach the implied covenant of good faith and fair dealing merely because its

decisions disadvantaged another party,” thus a plaintiff cannot satisfy the “improper motive”

element of a claim for breach of the covenant of good faith and fair dealing by alleging, without

more, that the defendant’s discretionary decisions benefitted the defendant and disadvantaged the

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plaintiff. j.; see also, e.g., Wilson, 168 N.J. at 246, 251 (exercise of discretion for “ordinary

business purposes” does not constitute improper motive, and “[wjithout bad motive or intention,

discretionary decisions that happen to result in economic disadvantage to the other party are of no

legal significance”).

Here, Borough argues that Aetna violated its implied duties of good faith and fair dealing

without claiming any improper motive or intent. However, it does not satisfy the improper

motive element of a good faith performance claim for a plaintiff to allege merely that its

contractual partner exercised the discretion expressly afforded to it under the agreement, and that

this decision worked to the disadvantage of the complaining party. Stony Brook Constr. Co., Inc.

v. College ofNew Jersey, 260-01, 2008 WL 2404174, 7 (App. Div. May 24, 2004). Elliot &

Frantz, 457 F.3d at 329; cf Black Horse Lane Assoc., L.P. v. Dow Chemical Corp., 228 F.3d

275, 288 (3d Cir. 2000) (citing a party’s collusion with third parties against its contractual partner

as an example of improper motive); Boardwalk, 2009 WL 540675, at 8 (intent to injure

contractual partner is an example of improper motive). Therefore, even the most favorable

reading of Borough’s allegations fails to suggest that Aetna exercised its discretion under the

Healthcare Contract for an improper motive, and because “an allegation of bad faith or unfair

dealing should not be permitted to be advanced in the abstract and absent improper motive,”

Elliot & Frantz, 457 F.3d at 329. Accordingly, the Court will grant Third-Party Defendants’

Motion to Dismiss Counts III and IV of the Complaint.

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IV. CONCLUSION

For the foregoing reasons, Defendants’ Motion to Dismiss the Complaint is granted

without prejudice. An appropriate Order accompanies this Opinion.

Date:

Orig.:

cc:

October2 2012

Clerk

Hon. Mark Falk, U.S.M.J.

All Counsel of Record

File

Dennis M. Cavanaugh, U.

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