Wells Pharmacy Network, LLC v. Regulatory Compliance Assocs. Inc., Case No: 5:16-cv-319-Oc-37PRL

WELLS PHARMACY NETWORK, LLC, Plaintiff, v. REGULATORY COMPLIANCE ASSOCIATES INC. Defendant.

Case No: 5:16-cv-319-Oc-37PRL

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA OCALA DIVISION

September 28, 2016

REPORT AND RECOMMENDATION¹

In this contract dispute, the Defendant, Regulatory Compliance Associates Inc., agreed to provide consulting services to Plaintiff, Wells Pharmacy Network, LLC. Plaintiff complains, however, that Defendant breached the contract, and an implied duty of good faith and fair dealing, by improperly billing it. Plaintiff seeks damages for these claims and a declaration that the contract is either unenforceable or expressly limits the amount Defendant can charge. Defendant moves to dismiss these claims. (Doc. 21).

As set forth below, I recommend that the motion be denied in its entirety, as Plaintiff sufficiently states its claims for relief.

I. BACKGROUND²

This dispute, then, is about billing issues between two businesses. Plaintiff is a Florida compounding pharmacy (Doc. 17, ¶¶ 1, 5), while Defendant is a Wisconsin consulting firm that provides consulting services to life-science firms, such as Plaintiff. (Doc. 17, ¶¶ 2, 6). These two firms entered into various agreements, which I will collectively call the Contract.³ (Doc. 17, ¶ 7). Under the Contract, Defendant provided consulting services at Plaintiff's Ocala, FL site. (Doc. 17, ¶¶ 3, 7; 17-1, pp. 2, 6).

According to Plaintiff, the parties agreed to a fee and cost estimate of $133,350. (Doc. 17, ¶ 7). This fee and cost estimate, as Plaintiff alleges, limits the amount Defendant can charge Plaintiff to no more than $133,350. Indeed, this cost and fee estimate can only be exceeded with Plaintiff's prior approval.

Also, Defendant agreed to bill Plaintiff bi-weekly. (Doc. 17, ¶ 17). Despite Defendant's duty to bill Plaintiff bi-weekly, it did not. Defendant instead delayed billing for months and then clumped together four or five months' worth of bills into two invoices. (Doc. 17, ¶¶ 14, 17-20). Though the total amount requested in these two invoices exceeded $133,350, Plaintiff insists that it never authorized any amount above the limit. (Doc. 17, ¶¶ 15, 17, 45).

Plaintiff has paid Defendant, to date, $68,219.60. (Doc. 17, ¶ 15). This amount is in controversy too: Plaintiff asserts that Defendant has fraudulently over-billed, bills which Plaintiff has in part paid. For instance, Plaintiff contends that Defendant billed for a consultant that Plaintiff specifically asked Defendant not to provide; Defendant billed for unrelated costs; andDefendant billed for 321 hours of work to create a standard operating procedure template that only required 56 hours of work.⁴ (Doc. 17, ¶¶ 23-25). In short, Plaintiff insists that it has already overpaid Defendant. (Doc. 17, ¶¶ 31, 36-37).

When Plaintiff contacted Defendant about these billing problems, Defendant initially indicated that it would work with Plaintiff to resolve them. (Doc. 17, ¶ 26). Instead, Defendant sent Plaintiff a demand letter requesting an amount above the agreed to $133,350 estimate. In fact, Defendant demanded $237,926.81 in total from Plaintiff. (Doc. 17, ¶ 15). At some point, Plaintiff offered Defendant $133,350 to resolve their dispute, but Defendant rejected the offer. (Doc. 17, ¶ 27).

Based on these alleged acts, Plaintiff filed suit and asserts three Counts: (1) breach of contract; (2) breach of the implied duty of good faith and fair dealing; and (3) under 28 U.S.C. § 2201, the Federal Declaratory Judgment Act, Plaintiff requests a declaration that the Contract is illusory and unenforceable insofar as it allows Defendant to bill for services not rendered, or, in the alternative, Plaintiff requests a declaration that the Contract limits the amount that Plaintiff could owe Defendant to $133,350.

II. LEGAL STANDARD

The bare minimum a plaintiff must set forth in his complaint is found in Fed. R. Civ. P. 8. Under Rule 8, "[a] pleading that states a claim for relief 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). The United States Supreme Court has explained, in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), that while particularity is not required under Fed. R. Civ. P. 8,as it is under Fed. R. Civ. P. 9, "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Instead, "[t]o 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.'" Id. (quoting Twombly, 550 U.S. at 570).

A claim is plausible on its face where "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Plausibility means "more than a sheer possibility that a defendant has acted unlawfully." 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) (internal quotation marks omitted). In short, to survive a motion to dismiss a plaintiff must allege something more "than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (citing Twombly, 550 U.S. at 555).

The Eleventh Circuit utilizes a two-pronged approach in its application of the holdings in Iqbal and Twombly. First, the court will "eliminate any allegations in the complaint that are merely legal conclusions." Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010). Then, "where there are well-pleaded factual allegations," the court will "'assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.'" Id. (quoting Iqbal, 556 U.S. at 679).

In applying this two-step approach to determine the complaint's sufficiency under Rule 8 (and in turn the plausibility of the claims), the Eleventh Circuit limits its "consideration to the well-pleaded factual allegations, documents central to or referenced in the complaint, and matters judicially noticed." La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).Further, the Court can infer "'obvious alternative explanations,' which suggest lawful conduct rather than the unlawful conduct the plaintiff would ask the court to infer." Am. Dental Ass'n, 605 F.3d at 1290 (quoting Iqbal, 556 U.S. at 682) (brackets omitted).

III. DISCUSSION

As an initial matter, in this removed diversity suit, "the choice-of-law rules of the forum state determine which state's substantive law applies." RSUI Indem. Co. v. Desai, No. 8:13-CV-2629-T-30TGW, 2014 WL 4347821, at *2 (M.D. Fla. Sept. 2, 2014). And in Florida, "when contracting parties indicate in the contract their intention as to the governing law, any dispute under the contract will be governed by such law as long as it is not against Florida's public policy." Videojet Techs. Inc. v. Garcia, No. 8:07-CV-1407T30MAP, 2008 WL 2415042, at *3 (M.D. Fla. June 12, 2008)) (footnote omitted). The Contract here states (and the parties do not dispute) that Wisconsin law governs.⁵ (Doc. 17-1, pp. 4-5). Thus, absent argument to the contrary, Wisconsin law applies to Plaintiff's first two Counts.

As to Plaintiff's request for declaratory judgment under 28 U.S.C. § 2201, "this Court applies federal law for its determination of the sufficiency of the complaint" as "declaratory judgment acts are procedural mechanisms and confer no substantive rights." Maryland Cas. Co. v. Smartcop, Inc., No. 4:11-CV-10100-KMM, 2012 WL 2675476, at *2 (S.D. Fla. July 6, 2012); Thomas v. Blue Cross & Blue Shield Ass'n, 594 F.3d 823, 830 (11th Cir. 2010) ("The Federal Rules of Civil Procedure 'govern the procedure for obtaining a declaratory judgment under 28 U.S.C. § 2201.' As a result, 'the requirements of pleading and practice in actions for declaratory relief are exactly the same as in other civil actions . . . ."') (quoting Fed. R. Civ. P. 57. and 10BCHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, Federal Practice and Procedure § 2768 (3d ed. 1998)). Still, "[f]ederal jurisdiction for this declaratory judgment action is based on diversity jurisdiction, and therefore state law applies to any issue not governed by the Constitution or treaties of the United States or Acts of Congress." Feldkamp v. Long Bay Partners, LLC, No. 2:09-CV-253-FTM29SPC, 2010 WL 3610452, at *4 (M.D. Fla. Sept. 14, 2010) (citing Mid-Continent Cas. Co. v. American Pride Bldg. Co., LLC, 601 F.3d 1143, 1148 (11th Cir.2010)).

I will now address each of Plaintiff's counts in turn.

A. Count I—Breach of Contract

To state a claim for breach of contract under Wisconsin law, a "plaintiff must show a valid contract that the defendant breached and damages flowing from that breach." Matthews v. Wisconsin Energy Corp. Inc., 534 F.3d 547, 553 (7th Cir. 2008) (citing Northwestern Motor Car, Inc. v. Pope, 51 Wis. 2d 292, 296 (Wis. 1971)). The only contested element here is whether Plaintiff has sufficiently plead damages. (Doc. 21, pp. 5-6).

Plaintiff alleges that Defendant's breach—e.g., tardily providing invoices; billing in excess of $133,350 without Plaintiff's approval; and billing for services not requested, services not rendered, and costs not necessary to perform Defendant's contractual duties—has caused Plaintiff to pay Defendant $68,219.60, an amount purportedly greater than the value of the services Defendant performed. (Doc. 17, ¶¶ 15, 30-31). In sum, Plaintiff states that it sustained an injury by overpaying for Defendant's services. See (Doc. 17, ¶ 31).

Defendant contends that this claim fails as Plaintiff admits to owing Defendant more than $68,219.60 (Doc. 21, pp. 4-5), and that Plaintiff is not entitled to recoup...