United States District Court, N.D. Mississippi, Oxford Division
HENRY ROOP and FIRST CHOICE DIABETIC SUPPLIES, INC. PLAINTIFFS,
LARRY MELTON; JAMES HURST; ASHLAND DRUGS, INC.; and JOHN DOES 1-5 DEFENDANTS
MEMORANDUM OPINION GRANTING PLAINTIFF HENRY ROOP'S CONSOLIDATED MOTION TO DISMISS COUNTERCLAIMS
GLEN H. DAVIDSON, Senior Judge.
Presently before the Court is a motion to dismiss  pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure filed by Plaintiff/Counterdefendant Henry Roop. Defendants/Counterplaintiffs Larry Melton and Ashland Drugs have filed a response, and Plaintiff/Counterdefendant Henry Roop has filed a reply. Accordingly, the matter is ripe for review. For the reasons set forth below, the Court finds that the motion is well taken and should be granted.
A. Factual and Procedural Background
This action arises from a dispute among business associates. Plaintiff Henry Roop ("Roop") and Plaintiff First Choice Diabetic Supplies, Inc. ("First Choice") (collectively, "Plaintiffs") bring suit against Defendants Larry Melton ("Melton"); James Hurst ("Hurst"); and Ashland Drugs, Inc. ("Ashland Drugs") (collectively, "Defendants"). Plaintiffs' complaint presents the following sixteen counts under state law: (1) breach of fiduciary duties, (2) breach of duty of care, (3) breach of duty of loyalty, (4) breach of covenant of good faith and fair dealing, (5) constructive trust, (6) accounting, (7) unjust enrichment, (8) intentional and negligent misrepresentation, (9) common law fraud and misrepresentation, (10) conversion, (11) negligence and gross negligence, (12) interference with contracts/business relationships, (13) embezzlement/misappropriation, (14) intentional and negligent infliction of emotional distress, (15) tortious interference with contract, and (16) misappropriation of business opportunity. Plaintiffs' complaint presents one count under federal law for retaliatory discharge under 31 U.S.C. § 3730 of the False Claims Act (the "FCA"). It is undisputed that the parties are all citizens of Mississippi and that the sole stated basis for the Court's jurisdiction is federal question jurisdiction over the FCA claim and pendent jurisdiction over the supplemental state law claims.
Plaintiffs' complaint alleges the following facts: In July of 2009, Roop, Melton, and Hurst agreed to become equal partners and the only members in First Choice, a closely held corporation, Pls.' Compl.  ¶¶ 9-10; Hurst and Melton agreed to put up 100% of the initial capital and operating funds to begin First Choice, and Roop agreed to invest his "time, skills, and significant experience in pharmaceutical sales and marketing and a successful thirty-two (32) year history in the industry, " id. ¶ 11; the three members agreed to divide any profits equally, id. ; Roop's title was "Diabetic Sales Director, " a sales position wherein Roop was not involved with the finances of First Choice, id. ¶¶ 15, 19; Hurst's title was "Diabetic Shoe Specialist" and "Assistant Operations Manager, id. ¶ 16; Melton's title was "Director of Operations, " and his "primary duties were to handle relations with Medicare and Medicaid, conduct patient billing and collection, process claims, inventory control, pay bills, and handle First Choice's finances, " id. ¶ 17; "[n]o other member of First Choice had any experience in dealing with Medicaid and Medicare besides Melton, " who "represented that he had years of successful experience in the task and would be responsible for it, " id. ¶ 18; "[b]ased on his representation, Melton was to ensure that First Choice was properly accredited by Medicaid and Medicare and to handle such government billing appropriately, " id. Apparently, business relations soured among the three, and Plaintiffs are suing to recover alleged converted assets and damages.
Defendants have filed separate answers to Plaintiffs' complaint, and Melton and Ashland Drugs have each filed identically worded counterclaims against Roop. Roop now moves to dismiss these counterclaims pursuant to Rule 12(b)(6), contending that Melton and Ashland Drugs have failed to state a counterclaim upon which relief can be granted.
B. Rule 12(b)(6) Standard
Motions to dismiss pursuant to Rule 12(b)(6) "are viewed with disfavor and are rarely granted." Kocurek v. Cuna Mut. Ins. Soc'y, 459 F.Appx. 371, 373 (5th Cir. 2012) (citing Gregson v. Zurich Am. Ins. Co., 322 F.3d 883, 885 (5th Cir. 2003)). When deciding a Rule 12(b)(6) motion to dismiss, the Court is limited to the allegations set forth in the complaint and any documents attached to the complaint. Walker v. Webco Indus., Inc., ___ F.Appx. ___, 2014 WL 1388923, at *1 (5th Cir. 2014) (per curiam) (citing Kennedy v. Chase Manhattan Bank USA, NA, 369 F.3d 833, 839 (5th Cir. 2004)); Roebuck v. Dothan Sec., Inc., 515 F.Appx. 275, 280 (5th Cir. 2013) (per curiam).
"Under Rule 8(a), the plaintiff must allege enough facts to state a claim to relief that is plausible on its face.'" United States ex rel. Spicer v. Westbrook, ___ F.3d ___, 2014 WL 1778030, at *7 (5th Cir. May 5, 2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "While we accept all well-pleaded factual allegations as true and interpret the complaint in the light most favorable to the plaintiff, [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ' do not establish facial plausibility." Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). 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." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). "[P]laintiffs must allege facts that support the elements of the cause of action in order to make out a valid claim." Webb v. Morella, N522 F.Appx. 238, 241 (5th Cir. 2013) (per curiam) (quoting City of Clinton v. Pilgrim's Pride Corp., 632 F.3d 148, 152-53 (5th Cir. 2010) (internal quotation marks omitted)). "[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss." Id. (quoting Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993) (internal quotation marks omitted)). "Dismissal is appropriate when the plaintiff has not alleged enough facts to state a claim to relief that is plausible on its face' and has failed to raise a right to relief above the speculative level.'" Emesowum v. Hous. Police Dep't, ___ F.3d ___, 2014 WL 1347029, at *1 (5th Cir. Apr. 7, 2014) (quoting Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955).
C. Discussion and Analysis
As stated above, Melton and Ashland Drugs bring two identically worded counterclaims against Roop for defamation and a violation of the Mississippi Litigation Accountability Act of 1988. Roop argues that the Court should dismiss the counterclaims on Rule 12(b)(6) grounds, specifically arguing that (1) the defamation counterclaim should be dismissed, because a defamation claim cannot be based upon language in a plaintiff's complaint; and (2) the Mississippi Litigation Accountability Act claim should be dismissed, because Plaintiffs have substantial factual proof to support their allegations in their complaint. For the reasons stated below, the Court finds that both the defamation counterclaim and the Mississippi Litigation Accountability Act counterclaim must be dismissed.
1. Defamation Counterclaim
Melton and Ashland Drugs first assert a defamation counterclaim, alleging that Roop "has made untrue and false statements, disseminated untrue and false information, and spread untrue and false rumors concerning" both of them, and that these alleged statements include certain statements set forth in Plaintiffs' complaint  specifically: (1) that Melton engaged in "improper" billing practices involving claims filed or made with Medicare and Medicaid, see Pls.' Compl.  ¶ 20; (2) that Melton violated an alleged "fiduciary duty" owed to Roop, " see id. ¶¶ 37, 38, 54; (3) that Melton improperly converted assets of First Choice, see id. ¶ 37; (4) that Melton looted the assets of First Choice, see id. ; (5) that Melton engaged in "wrongful conduct, " which caused damage to Roop, see id. ¶ 38; (6) that Melton was dishonest in his business dealings, see id. ¶ 49; (7) that Melton acted "improperly and illegally" and made "improper payments, " see id. ¶ 57; (8) that Melton made "intentional" misrepresentations of facts to the detriment of Roop, see id. ¶¶ 59, 60, 65; (9) that Melton tortuously converted assets belonging to Roop, see id. ¶ 69; (10) that Melton "used improper means" to interfere with business relationships, see id. ¶¶ 74, 75; (11) that Melton violated violated a "fiduciary relationship" and "embezzled" from Roop, see id. ¶¶ 77, 78; (12) that Melton violated the law, see id. ¶ 80; (13) that Melton engaged in "intentional, wilful, and wanton" misconduct, which damaged Roop, see id. ¶ 84; (14) that Melton "misappropriated business opportunities" which damaged Roop, see id. ¶ 88; and that Melton violated federal law, specifically 31 U.S.C. § 3730 and submitted "false claims" for Medicare and Medicaid, see id. ¶ 37. See Melton's Counterclaim  at 24-25 ¶ 5; Ashland Drugs' Counterclaim  at 23-24 ¶ 5. Melton and Ashland Drugs further allege that Roop has made "other defamatory statements which may be shown at the trial of this civil action" which are "not privileged and have been published to a third party and... are actionable pursuant to Mississippi law...." See Melton's Counterclaim  at 25-26 ¶ 6; Ashland Drugs' Counterclaim  at 24-25 ¶ 6. Roop argues that these allegations fail to make out a defamation counterclaim, because a defamation claim cannot be based upon unspecified statements and because the Plaintiffs' complaint is entitled to immunity.
For Melton or Ashland Drugs to establish a defamation claim under Mississippi law, the following ...