Retina & Vitreous of La. v. Mason

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RETINA & VITREOUS OF LOUISIANA, INC. v. ROBERT W. H. MASON, M.D.

Civil Action No. 23-158-JWD-SDJ

United States District Court, M.D. Louisiana

March 1, 2024

RULING AND ORDER

JOHN W. deGRAVELLES, JUDGE.

This matter comes before the Court on the Motion to Dismiss Certain Counterclaims Pursuant to Federal Rule 12 (“Motion to Dismiss”) (Doc. 19) filed by Counter-Defendant Retina & Vitreous of Louisiana, Inc. (“RVOL”). Counter-Plaintiff Robert W. H. Mason M.D. (“Dr. Mason”) opposes the motion. (Doc. 26.) RVOL has filed a reply. (Doc. 28.) Oral argument is not necessary. The Court has carefully considered the law, the facts in the record, and the arguments and submissions of the parties and is prepared to rule. For the following reasons RVOL's Motion to Dismiss is granted in part and denied in part.

I. Relevant Factual and Procedural Background

A. Factual Background

The following factual allegations are primarily taken from Dr. Mason's Answer and Counterclaim (“Counterclaim”) (Doc. 16). The well-pled allegations are assumed to be true for the purposes of this motion. See In re Great Lakes Dredge & Dock Co., 624 F.3d 201, 210 (5th Cir. 2010) (citation omitted).

Dr. Robert W. H. Mason is a retina specialist who was hired by RVOL, a vitreoretinal surgery and ophthalmology medical practice located in Baton Rouge, Louisiana. (First Amended Complaint & Request for Jury, Doc. 10 at 2-3.) Dr. Mason had begun speaking to RVOL about joining the practice around June 2016, and he was hired in early 2017. (Doc. 16 at 9-10.) In October 2019, Dr. Mason was made a shareholder pursuant to agreements signed by the parties, including an Employment Agreement, Shareholder Agreement, and Stock Issuance Agreement. (Id. at 10.) Dr. Mason claims that during the course of his involvement with RVOL, RVOL and its principal owner Dr. John Couvillion breached the agreements that were made. (Id.) Dr. Mason claims that these agreements were breached in at least twelve different ways. (Id. at 11-23.)

(1) Pre-existing debt: RVOL had a practice of incurring debt for an injectable drug, which was paid for by insurance companies, but was not paid off until the last minute. (Id. at 12.) The COVID-19 restrictions placed on RVOL resulted in a decreased number of procedures, leaving RVOL in debt to the drug vendor. (Id.) RVOL took out a line of credit to pay off this debt, which Dr. Mason claims was incurred prior to him becoming a shareholder. (Id. at 12-13.) Dr. Mason cites to Section 8.1 of RVOL's Bylaws, which says that he would not be responsible for debt that RVOL had incurred before he became a shareholder.^[1] (Id. at 13.) RVOL did make a demand that Dr. Mason pay those loans. (Id.) Dr. Mason says that this issue was not reflected in the financial statements he was given access to before he became a shareholder, so this issue was not known until after he became a shareholder. (Id.)

(2) Salary deferral not paid back: Dr. Mason deferred 50% of his salary between April 23, 2020, and July 3, 2020, pursuant to an oral agreement, in order to pay back the debt to the drug vendors. (Id. at 13-14.) RVOL has not paid those deferred amounts. (Id. at 14.)

(3) Failure to pay cash rebates: Dr. Mason did not receive rebates from the drugs he ordered for the practice, despite a purported agreement with Dr. Couvillion that allowed Dr. Mason to receive rebates in exchange for the risk of spoiled drug units or lack of reimbursement. (Id. at 14-15.)

(4) Unpaid salary: RVOL did not increase Dr. Mason's base pay from $600,000 to $900,000 once he became a Class B Shareholder in November 2021. (Id. at 16.) Dr. Mason claims that this was in breach of the Employment Agreement.^[2] (Id.) The Employment Agreement was attached to RVOL's Opposition as Exhibit B, (Doc. 19-3).

(5) Resignation payout: Due to Dr. Couvillion's behavior, Dr. Mason decided to seek employment elsewhere, eventually choosing to start a practice in Tennessee. (Doc. 16 at 17.) Dr. Mason notified RVOL in February 2022 that he would be leaving. (Id.) Dr. Mason offered to stay anywhere between six months and two years to ease the transition, but Dr. Couvillion said that six months would be enough time to train Dr. Mason's replacement. (Id.) Dr. Couvillion stopped communicating with Dr. Mason on February 25, 2022, which affected the shared patients between the two, prompting Dr. Mason to leave after six months, due to ethical issues. (Id. at 18.) Dr. Mason cites Section 2.8.1(a) of the Shareholder's Agreement, saying that he should be entitled to the payment that he would have gotten if he had stayed the full two years after notice was given.^[3] (Id.)

(6) Loss of income due to reduction in referrals after notice: Due to Dr. Mason's choice to leave RVOL and in breach of the terms that the parties had agreed to, the number of referrals that were given to him drastically decreased, resulting in lost revenue. (Id. at 18-19.)

(7) Reimbursement of unusual expenses: Dr. Mason claims that after he gave notice that he would be leaving RVOL, RVOL began making payments to “consultants” and “experts” who Dr. Mason believes were used to decrease the amounts owed to him. (Id. at 19.)

(8) Unpaid accounts receivable: During negotiations of the agreements that RVOL and Dr. Mason entered into, Dr. Mason requested that a provision-which would require him to forfeit his share of accounts receivable once he was no longer a shareholder-be removed from the contracts. (Id. at 20.) He was successful, and those portions of the agreements were omitted. (Id.) Despite this, RVOL did not pay Dr. Mason his portion of accounts receivable when he left RVOL. (Id.)

(9) Reimbursement of unpaid expenses: Dr. Mason and Dr. Couvillion both had American Express cards that were for business expenses for RVOL. (Id. at 21.) RVOL did not reimburse the charges on Dr. Mason's business card, although the expenses were related to RVOL. (Id.) Dr. Mason argues that he is entitled to reimbursement pursuant to the terms and conditions of his relationship with RVOL. (Id.)

(10) Reimbursement of share of personal expenses of Dr. Couvillion: The parties had agreed that any legal, advertising, or accounting fees that related to RVOL business would be paid through the general cost center, which the parties shared. (Id. at 22.) Dr. Couvillion sent some of his personal expenses, including legal expenses relating to issues with Dr. Mason, to the general cost center, causing Dr. Mason to pay for costs that were personal to Dr. Couvillion. (Id.)

(11) Failure to pay expenses from personal credit card: In addition to his business American Express card, Dr. Mason had a personal American Express card that was linked to the business card. (Id. at 22-23.) Using his personal card, Dr. Mason paid for a family vacation using American Express points, but the vacation was cancelled due to COVID-19. (Id. at 23.) The points were refunded to the business card, causing Dr. Mason's personal funds to be used to pay business expenses. (Id.) RVOL has not paid Dr. Mason for the refunded points that were used. (Id.)

(12) Failure to make equal distributions: Section 4.3.2 of the Shareholders' Agreement allowed a Class B shareholder to receive the same amount of distributions as Dr. Couvillion, but Dr. Mason was not given the equal amount.^[4] (Id. at 23-24.)

(13) Other amounts owed: Finally, Dr. Mason says that a forensic examination of RVOL and Dr. Couvillion's financial records “may reveal additional amounts owed to Dr. Mason” and requests that his right to bring a claim for those amounts be reserved. (Id. at 24.)

In addition to his breach of contract claims, Dr. Mason claims that RVOL fraudulently misrepresented its financial situation during their negotiations. (Id. at 24-25.) Finally, Dr. Mason claims that RVOL violated the Louisiana Unfair Trade Practices Act (“LUTPA”) for the following actions described in the breach of contract claims (1) pre-existing debt, (2) salary deferral not paid back, (3) failure to pay cash rebates, (6) loss of income due to reduction in referrals after notice, (8) unpaid accounts receivable, (9) reimbursement of unpaid expenses, and (12) failure to make equal distributions. (Id. at 25-26.)

B. Procedural Background

RVOL filed its initial petition in the 19th Judicial District Court for the Parish of East Baton Rouge on January 27, 2023. (Doc. 2 at 1.) Dr. Mason filed a Notice of Removal (Doc. 2) on March 3, 2023, alleging diversity jurisdiction. (Id.) Dr. Mason filed a Partial Motion to Dismiss on March 29, 2023. (Doc. 8.) RVOL subsequently amended its petition, filing the First Amended Complaint and Request for Jury. (Doc. 10.) Dr. Mason filed his Answer and Counterclaim on May 8, 2023. (Doc. 16.) His Counterclaim asserts the specific breach of contract claims described above, a fraud claim related to RVOL's representation that it was relatively debt free, and a claim under LUTPA. (Doc. 16 at 11, 24-27.)

II. Relevant Standards

A. Rule 12(b)(6) Standard

While the 12(b)(6) standard is typically used to challenge a complaint, it may also be used for a counterclaim. 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1363 (3d ed. 2023). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Hamilton v. Dall. Cnty., 79 F.4th 494, 499 (5th Cir. 2023) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007))). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting Iqbal, 556 U.S. at 678).

“To be...