Crespo v. Smart Health Diagnostics Co.

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CARLO CRESPO, Plaintiff, v. SMART HEALTH DIAGNASTICS COMPANY, et al., Defendants.

No. 5:23-cv-01421-HNJ

United States District Court, N.D. Alabama, Northeastern Division

May 7, 2024

MEMORANDUM OPINION

HERMANN. JOHNSON, JR. UNITED STATES MAGISTRATE JUDGE

On November 9, 2023, Defendants Smart Health Diagnostics Company (hereinafter “Smart Health”) and Matthew Nunez filed a Motion to Dismiss or, Alternatively, to Transfer Venue. (Doc. 4). Based upon review of the motion and associated filings, the court DISMISSES Count IV, an unjust enrichment claim against Smart Health only, for failure to state a claim. The court will maintain the other challenged claims. As for the venue challenges, the United States District Court for the Northern District of Alabama constitutes a proper venue for all remaining claims and thus, the court declines to transfer the case to the United States District Court for the Central District of California.

BACKGROUND

On September 7, 2023, Plaintiff Carlo Crespo filed his Complaint in the Circuit Court of Madison County, Alabama, concerning “two [allegedly unpaid] loans Crespo made to Defendants-a $150,000 loan to SmartHealth [sic] and a $110,000 loan to SmartHealth personally guaranteed by Mr. Nunez.” (Doc. 11 at 1; doc. 1-1). Specifically, the Complaint alleged (I) breach of contract against Smart Health in relation to a written $150,000 Loan Agreement (attached to the Complaint as Exhibit A), (II) breach of contract against Smart Health in relation to the $110,000 loan, (III) breach of guaranty against Nunez in relation to the $110,000 loan, (IV) unjust enrichment against Smart Health in relation to the $150,000 loan, and (V) unjust enrichment against Smart Health and Nunez in relation to the $110,000 loan. (Doc. 11). On October 20, 2023, Defendants timely removed the case to this court “without conceding ... the propriety of venue.” (Doc. 1 at 1).

Subsequently Defendants filed a Motion to Dismiss or, Alternatively, to Transfer Venue. (Doc. 4; doc. 13). Defendants move to dismiss counts II, III, IV, and V for failure to state a claim for relief. In particular, Defendants argue Crespo does not properly allege breach of contract or breach of guaranty as to the $110,000 loan because the Complaint lacks sufficiently specific allegations to render those claims plausible. (Doc. 4 at 5-6; doc. 13 at 1-3). To this end, Defendants would require Crespo to attach a written contract to his Complaint or cite precise language from the contract. In addition, Defendants claim Crespo's unjust enrichment claim as to the $150,000 loan constitutes an impermissible alternative claim due to the presence of an undisputed and valid Loan Agreement. (Doc. 4 at 7-8; doc. 13 at 4-6). Defendants also contend the court should dismiss all claims pertaining to the $110,000 loan because extrinsic evidence demonstrates Crespo transferred the funds to Catalyst Bioholdings, LLC (hereinafter “Catalyst”), not Smart Health. (Doc. 4 at 5; doc. 13 at 7). Finally, Defendants claim the $110,000 loan agreement, if it reflects an oral contract, violates the statute of frauds. (Doc. 4 at 7; doc. 13 at 3-4).

Crespo contends all claims, when examined on the face of the Complaint, meet the plausibility requirement as detailed in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). (Doc. 11 at 2-9).

In addition, Defendants move to transfer the case to the Central District of California, Southern Division. (Doc. 4 at 9; doc. 13 at 7). In support, Defendants cite the following paragraph-containing a forum selection provision and multiple waiver provisions-in the $150,000 Loan Agreement:

14. Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial. ... Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Superior Court of the State of California sitting in Irvine, California and of the United States District Court of the Central District of California, and any California appellate court from any thereof, in any action or proceeding arising out of this Agreement, or for recognition or enforcement of any judgment relating thereto or arising therefrom, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding shall be exclusively heard and determined in such California State court or, to the extent permitted by applicable law, in such California federal court. . Nothing in this Agreement shall affect any right that Lender may otherwise have to bring any action or proceeding relating to this Agreement against Borrower or its properties in the courts of any jurisdiction. Borrower hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in this Section 14. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of any purported inconvenient forum to the maintenance of such action or proceeding in any such court. ...

(Doc. 1-1 at 22). Defendants claim Paragraph 14's forum selection provision binds both parties and explicitly lodges venue for Counts I and IV in California. (Doc. 4 at 9-12; doc. 13 at 7-10). In response, Crespo claims the Loan Agreement's quoted language binds only the Borrower, not the Lender, to a California venue. (Doc. 11 at 9-11). Moreover, Defendants deem venue improper in the Northern District of Alabama as to Counts II, III, and V because no substantial part of the events regarding those claims occurred in Alabama. (Doc. 4 at 12-14; doc. 13 at 10-11). Crespo argues the Loan Agreement permits him to bring claims relating to the Agreement in any venue, and he further contends a substantial part of the events concerning the applicable claims took place in Alabama. (Doc. 11 at 11-13).

Finally, Defendants move to transfer the case to California based on the doctrine of forum non conveniens because splitting claims between two separate courts would result in needless piecemeal litigation. (Doc. 4 at 14-15; doc. 13 at 11). Crespo responds that the court should extend deference to the plaintiff's chosen venue. (Doc. 11 at 13-15).

ANALYSIS

I. FAILURE TO STATE A CLAIM CONTENTIONS

Federal Rule of Civil Procedure 8, governing pleading, calls for a short and plain statement of a claim, which, if established, entitles the pleader to relief. See Dees v. Lamar, No. 2:20-cv-1326-LSC-GMB, 2020 WL 13750276, at *2 (N.D. Ala. Nov. 30, 2020) (noting Rule 8(a)(1) requires a plaintiff to “give the defendant fair notice of what the . . .claim is and the grounds upon which it rests”). Relatedly, Federal Rule of Civil Procedure Rule 12(b)(6) permits a court to dismiss a complaint if it fails to state a claim for which relief may be granted.

In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Court revisited the applicable standard governing Rule 12(b)(6) motions to dismiss. First, courts must take note of the elements a plaintiff must plead to state the applicable claims at issue. Id. at 675.

After establishing the elements of the claim at issue, the court identifies all well-pleaded, non-conclusory factual allegations in the complaint and assumes their veracity. Id. at 679. Well-pleaded factual allegations do not encompass mere “labels and conclusions,” legal conclusions, conclusory statements, or formulaic recitations and threadbare recitals of the elements of a cause of action. Id. at 678 (citations omitted). In evaluating the sufficiency of a plaintiff's pleadings, the court may draw reasonable inferences in the plaintiff's favor. Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242, 1248 (11^th Cir. 2005).

Third, a court assesses the complaint's well-pleaded allegations to determine if they state a plausible cause of action based upon the identified claim's elements. Iqbal, 556 U.S. at 678. Plausibility ensues “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,” and the analysis involves a context-specific task requiring a court “to draw on its judicial experience and common sense.” Id. at 678, 679 (citations omitted). The plausibility standard does not equate to a “probability requirement,” yet it requires more than a “mere possibility of misconduct” or factual statements that are “merely consistent with a defendant's liability.” Id. at 678, 679 (citations omitted).

Pursuant to Iqbal's approach, the undersigned will examine the challenged causes of action to determine whether Crespo has pleaded sufficient facts to state plausible claims.

A. Count II of Crespo's Complaint States a Plausible Claim for Breach of Contract.

Defendants argue Crespo's Complaint does not adequately specify terms sufficient to sustain a breach-of-contract claim as to the $110,000 loan. See doc. 13 at 2 (“Count II formulaically recites that ‘SmartHealth [sic] did not perform its obligations under the agreement.' It alleges no facts whatsoever as to what SmartHealth's supposed obligations were or how it failed to perform. The Complaint does not state any terms of the loan or when it was supposed to be paid back.”). In this vein, Defendants claim Crespo must attach a written contract to the Complaint or, at a minimum, cite to specific language in the contract. Id. at 2-3. Next, Defendants assert any claim for breach of oral contract necessarily violates the statute of frauds. Finally, Defendants cite external documents to suggest Crespo contracted with Catalyst, a...