Newberry v. Silverman

789 F.3d 636

Peter C. NEWBERRY, Plaintiff–Appellant

v.Marc H. SILVERMAN, D.D.S.; Silverman Dental, LLC, Defendants–Appellees.

No. 14–3882.

United States Court of Appeals, Sixth Circuit.

Argued: April 29, 2015.

Decided and Filed: May 29, 2015.

ARGUED:Peter Canavan Newberry, Berry, Kentucky, for Appellant. Michael M. Mahon, Reminger, CO., L.P.A., Cincinnati, Ohio, for Appellees. ON BRIEF:Peter Canavan Newberry, Berry, Kentucky, for Appellant. Michael M. Mahon, Danny M. Newman Jr., Reminger, CO., L.P.A., Cincinnati, Ohio, for Appellees.

Before: GILMAN, ROGERS, and SUTTON, Circuit Judges.

OPINION

RONALD LEE GILMAN, Circuit Judge.

This case stems from a root canal gone wrong. The parties are an Ohio dentist and a Kentucky patient. Approximately 10 years after Marc H. Silverman, D.D.S. performed a root canal on one of Peter C. Newberry's teeth in the early to mid– 1990s, Newberry returned to Silverman because the tooth was hurting. Silverman examined the tooth, offered a tentative diagnosis unrelated to the root canal, and sent Newberry on his way. Several years later, Newberry and Silverman repeated this exercise, with the same outcome. Finally, in 2012, Newberry sought a second opinion and found out that his original root canal had not been properly completed. Newberry then sued Silverman in a Kentucky state court, Silverman removed the case to a federal district court in Kentucky, that court ordered a change of venue to a federal district court in Ohio, and the district court in Ohio dismissed the complaint for failure to state a claim.

Newberry now appeals that dismissal. For the reasons set forth below, we VACATE the judgment of the district court and REMAND the case for further proceedings with respect to Newberry's fraud claim, but AFFIRM on all other grounds.

I. BACKGROUND

Because Newberry's complaint was dismissed on the pleadings, “the facts as set forth in the complaint are taken as true for the purposes of this appeal.” See Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 720 (6th Cir.2010). The dental history below is therefore based solely on the allegations in Newberry's complaint.

A. Dental history

Newberry, then living in Ohio, began seeing Silverman for dental care in 1986. No later than the mid–1990s, Silverman performed a root canal on one of Newberry's teeth.

Approximately 10 years later, Newberry came back to Silverman complaining that the tooth on which Silverman had performed the root canal was hurting. Silverman X-rayed the tooth, after which he opined that Newberry had bitten down too hard, bruised a nerve, or developed cancer. He recommended that Newberry continue monitoring the situation.

Several years later, Newberry returned to Silverman with the same complaint. Silverman again assured him that the discomfort had nothing to do with the root canal. Silverman conveyed the same information to Newberry by telephone after Newberry had moved to Kentucky in 2005. Finally, in November 2012, Newberry visited an endodontist—a specialist in root canals—who discovered that the root canal that Silverman had performed in the 1990s was incomplete. A portion of the tooth's root remained, which had caused the area to become abscessed. The endodontist resolved the problem, and Newberry has suffered no further discomfort with regard to the tooth in question.

Within days of discovering that Silverman had not performed a complete root canal, Newberry sent an email from Kentucky to Silverman's office in Ohio requesting his dental records. Silverman's office emailed back and informed Newberry that his records were inaccessible farther back than 2003 because the records were stored digitally, and that Silverman's current software was no longer compatible with records before that date. Newberry and Silverman emailed back and forth about Newberry's records several times over the course of the next month, and Silverman was eventually able to find a few more records. Silverman, however, sent only one X-ray of the tooth on which he had performed the root canal, and that was taken during the original procedure. In December 2012, Newberry asked specifically for all of the X-rays of that tooth, but he was told that they had been discarded at some unspecified point in the past. The only explanation that Silverman offered for discarding the records was to reduce the size of Newberry's file.

B. Procedural history

In November 2013, Newberry filed a lawsuit against Silverman and his incorporated dental practice (hereinafter collectively referred to as Silverman) in a Kentucky state court. Silverman removed the case to the United States District Court for the Eastern District of Kentucky based on the parties' diversity of citizenship. He then moved to dismiss the complaint for lack of personal jurisdiction. After hearing oral arguments on the motion, the district court transferred the case to the United States District Court for the Southern District of Ohio. Once the case arrived in Ohio, Silverman filed a motion to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. The district court in Ohio granted Silverman's motion. Newberry has timely appealed.

II. ANALYSIS

A. Standard of review

We review de novo the grant of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Higgason v. Stephens, 288 F.3d 868, 874 (6th Cir.2002). 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). If a plaintiff fails to plead “enough facts to state a claim to relief that is plausible on its face,” the complaint may be dismissed for failure to state a claim upon which relief may be granted. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the pleaded factual content “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). But “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Moreover, the court need not accept as true allegations that are conclusory or require unwarranted inferences based on the alleged facts. Terry v. Tyson Farms, Inc., 604 F.3d 272, 276 (6th Cir.2010).

B. Ohio law governs Newberry's complaint

The first question before us is whether Kentucky or Ohio law should govern this case. Newberry argues that Kentucky law is applicable for a number of reasons. First, he contends that Kentucky law should control because he originally filed the lawsuit in Kentucky. But when a case that is in federal court because of diversity jurisdiction is transferred from one forum to another, “the choice of law is dependent on the nature of the transfer.” Martin v. Stokes, 623 F.2d 469, 473 (6th Cir.1980). If a case is transferred for the convenience of the parties pursuant to 28 U.S.C. § 1404(a), then the state law of the transferor court applies. Id. On the other hand, if a case is transferred under 28 U.S.C. § 1406(a) because it was originally filed in the wrong venue, then the state law of the transferee district court applies.Id. The same goes for a case transferred under 28 U.S.C. § 1631 for want of jurisdiction. 28 U.S.C. § 1631 (“[T]he action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred ...”) We review de novo the district court's choice-of-law determination. Mill's Pride, Inc. v. Cont'l Ins. Co., 300 F.3d 701, 704 (6th Cir.2002).

The district court in Ohio determined that Newberry's case was transferred pursuant to § 1406(a). It based this conclusion on the original court's “grave doubt that [the] defendants [were] subject to personal jurisdiction” in Kentucky. Newberry does not challenge the propriety of the transfer. He points out, however, that the order transferring the case to Ohio held that transfer was appropriate under “several theories,” and he argues that “there is no reason why the transfer could not be based at least in part upon the convenience of the parties.” He contends that because the “convenience of the parties is as likely a reason for transfer as any other,” Ohio's choice-of-law rules should not be applied.

The applicable law, however, is not that flexible. Because “the nature of that transfer is often difficult to ascertain,” this court has adopted a “broad construction” of § 1406(a), such that “the application of [§ ] 1404(a) [is limited] to the transfer of actions commenced in a district court where both personal jurisdiction and venue are proper.” Martin, 623 F.2d at 473–74. If, therefore, the Eastern District of Kentucky did not have personal jurisdiction over Silverman, then the case must have been transferred pursuant to some other statute, even if the transfer also resulted in greater overall convenience for the parties.

1. Silverman was not subject to personal jurisdiction in Kentucky

Newberry next argues that the district court erred in concluding that Silverman was not subject to personal jurisdiction in Kentucky. We review de novo the district court's personal-jurisdiction determination. Tobin v. Astra Pharm. Prod., Inc., 993 F.2d 528, 542 (6th Cir.1993). If Newberry is correct, and the district court in Kentucky could have exercised personal jurisdiction over Silverman, then the transfer to Ohio would have had to be based solely on § 1404(a), in which case Kentucky law would govern.

When a federal court sits in diversity, it may exercise personal jurisdiction over an out-of-state defendant only if a court of the forum state could do so. Kerry Steel Inc. v. Paragon Indus., Inc., 106 F.3d 147, 148 (6th Cir.1997). “[T]his rule requires the court to determine whether both the state's long-arm statute and the Due Process Clause of the United States Constitution permit the exercise of jurisdiction.” Aristech Chem. Int'l Ltd. v. Acrylic...