Abira Med. Labs. v. CareSource

1

ABIRA MEDICAL LABORATORIES, LLC, Plaintiff, v. CARESOURCE, et al., Defendants.

No. 3:24-cv-157

United States District Court, S.D. Ohio, Western Division

November 18, 2024

Magistrate Judge Peter B. Silvain, Jr.

ORDER: (1) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS (Doc. No. 12); (2) DISMISSING COUNTS II AND III OF THE AMENDED COMPLAINT (Doc No. 11); (3) PERMITTING THE CASE TO PROCEED WITH THE FOLLOWING CLAIMS: COUNTS I AND IV (BREACH OF CONTRACT AND QUANTUM MERUIT/UNJUST ENRICHMENT) AGAINST DEFENDANT CARESOURCE; AND (4) REFERRING THIS MATTER TO MAGISTRATE JUDGE SILVAIN SO THAT A MEDIATION CONFERENCE CALL BETWEEN MAGISTRATE JUDGE GENTRY AND COUNSEL FOR BOTH SIDES CAN PROMPTLY OCCUR

MICHAEL J. NEWMAN, UNITED STATES DISTRICT JUDGE

This is a civil case, premised on the Court's diversity jurisdiction,^[1]in which Abira Medical Laboratories, LLC (“Abira”), doing business as Genesis Diagnostics performed laboratory testing services for Defendant CareSource's insured members (“members”). Doc. No. 11 at PageID 65. Abira alleges that “the requisitions of laboratory testing services” submitted on CareSource members' behalf included an assignment of benefits that created a contractual agreement requiring CareSource to pay Abira for services and allowing Abira to sue for non-payment. Id. at PageID 65-66. As a result of the alleged assignment of benefits, Abira asserts that CareSource has failed to pay (or has underpaid) Abira's claims submitted to CareSource, totaling $665,518. Id. at PageID 68-69, 82.

The Court has already afforded Abria an opportunity to amend its complaint. Id. In Abira's Amended Complaint, it alleges seven state-law claims^[2]against CareSource: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) fraudulent misrepresentation; (4) negligent misrepresentation; (5) equitable estoppel; (6) promissory estoppel; and (7) quantum meruit/unjust enrichment. See generally id. CareSource filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). Doc. No. 12. In response to the motion, Abira filed a memorandum in opposition (Doc. No. 15), and CareSource replied. Doc. No. 17. Thus, the motion is ripe for review.

I. Legal Standard

Rule 12(b)(6), like all other Federal Rules of Civil Procedure, “should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed.R.Civ.P. 1. A motion to dismiss filed pursuant to Rule 12(b)(6) operates to test the sufficiency of the complaint and permits dismissal for “failure to state a claim upon which relief can be granted.” To survive a Rule 12(b)(6) motion, a plaintiff must satisfy the basic pleading requirements set forth in Rule 8(a). Under Rule 8(a)(2), a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

A complaint will not suffice if it offers only “labels and conclusions or a formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Instead, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.”'” Id. (quoting Twombly, 550 U.S. at 557).

II. Analysis

A. Count I: Breach of Contract

In Ohio, a plaintiff must establish four elements for a breach of contract claim: “(a) the existence of a contract; (b) performance by the plaintiff; (c) breach by the defendant; and (d) damage or loss to the plaintiff.” Thomas v. Publishers Clearing House, Inc., 29 Fed. App'x 319, 322 (6th Cir. 2002) (citing Doner v. Snapp, 649 N.E.2d 42, 44 (Ohio Ct. App. 1994)). Abira adequately pleads performance and damages related to the alleged breach because Abira claims it performed laboratory testing services for CareSource's members worth $665,518, but Abira never received payment or did not receive full payment. Doc. No. 11 at PageID 67-69, 77-82.

CareSource argues in favor of dismissing Abira's breach of contract claim because Abira has not properly alleged the existence of a contract (and by implication, CareSource did not breach because there was no contract). See Doc. Nos. 12, 17. CareSource claims that Abira “does not allege any specific contractual clauses authorizing the laboratory testing, specifying the price of such testing, or requiring CareSource to pay for the testing.” Doc. No. 12 at PageID 91.

Abira's allegations must be construed in the light most favorable to it and treated as true. See Twombly, 550 U.S. at 555-56. Abira alleges that it performed approximately 192 laboratory testing services for CareSource members, and CareSource did not pay (or has underpaid) for the services. Doc. No. 11 at PageID 68-69, 71. Abira attached a spreadsheet to its Amended Complaint alleging the date, amount billed, and accession number (a unique identifier) for each test. Id. at PageID 77-82.

Abira further alleges after it performed each test, it sent a requisition for laboratory testing services to CareSource where each member “executed an assignment of benefits with respect to their original requisitions for services” and that created an assignment of contractual rights. Doc. No. 11 at PageID 65-69. In other words, Abira and CareSource's contractual relationship stems from these documents because they purportedly assign the benefit of payments from CareSource to Abira. As discussed above, Abira alleges it completed the tests in exchange for the promise of the assigned payments.

Under Ohio law, “the assignee of a contract takes that contract with all rights of the assignor and subject to all defenses that the obligor may have had against the assignor,” including the right to any payment under the contract and the right to sue for breach. Citizens Fed. Bank, F.S.B. v. Brickler, 683 N.E.2d 358, 364 (Ohio Ct. App. 1996). Here, Abira alleges that it received requisition documents with assignments from approximately 192 laboratory testing services for CareSource members. Doc. No. 11 at PageID 71, 77-82. At the current stage, Abira has plausibly shown a contractual relationship existed with CareSource.

Therefore, the Court DENIES CareSource's motion to dismiss Abira's breach of contract claim. Accordingly, this claim shall proceed to discovery.

B. Count II: Breach of the Implied Covenant of Good Faith and Fair Dealing

“In addition to a contract's express terms, every contract imposes an implied duty of good faith and fair dealing in its performance and enforcement.” Cincinnati Dev. III, LLC v. Cincinnati Terrace Plaza, LLC, No. 22-3303, 2023 WL 2487348, at *8 (6th Cir. Mar. 14, 2023), reh'g denied, No. 22-3303, 2023 WL 2747886 (6th Cir. Mar. 31, 2023) (quoting Lucarell v. Nationwide Mut. Ins. Co., 97 N.E.3d 458, 469 (Ohio 2018)). Good faith requires a “compact reference to an implied undertaking not to take opportunistic advantage in a way that could have not been contemplated at the time of drafting, and which therefore was not resolved explicitly by the parties.” Id. (citation and quotation omitted).

Ohio does not recognize an independent cause of action for breach of the implied duty of good faith and fair dealing. Id. (citing Lucarell, 97 N.E.3d at 469). In other words, “there is no violation of the implied duty unless there is a breach of a specific obligation imposed by the contract, such as one that permits a party to exercise discretion in performing a contractual duty or in rejecting the other party's performance.” Id. (citing Lucarell, 97 N.E.3d at 469).

Accordingly, this claim merits dismissal. The Court GRANTS CareSource's motion to dismiss Abira's breach of the implied covenant of good faith and fair dealing claim.

C. Count III: Fraudulent and Negligent Misrepresentation; Equitable and Promissory Estoppel

Abira pled Count III as one claim, but it is actually four separate state-law claims. See Hortman v. Miamisburg, 852 N.E.2d 716, 719 (Ohio 2006) (analyzing promissory and equitable estoppel separately); Patel v. Univ. of Toledo, 95 N.E.3d 979, 986-90 (Ohio Ct. App. 2017) (analyzing negligent misrepresentation and fraud separately). Accordingly, the Court will analyze each claim separately.

1. Fraudulent Misrepresentation

Under Ohio law, the elements of common law fraudulent misrepresentation are:

(a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and

(f) a resulting injury proximately caused by the reliance.

Mikulski v. Centerior Energy Corp., 501 F.3d 555, 562 n.4 (6th Cir. 2007) (quoting Burr v. Stark County Bd. of Comm'rs, 491 N.E.2d 1101, 1102 (Ohio 1986)). For the purposes of a fraud claim, a representation of fact must be definite. Ullmo ex rel. Ullmo v. Gilmour Acad., 273 F.3d 671, 678 (6th Cir. 2001) (citing Friesner v. Mid American Nat'l Bank & Trust Co., No. WD 88-67, 1989 WL 111756, at *5 (Ohio Ct. App. Sept. 29, 1989)).

Under Fed.R.Civ.P. 9, when alleging...