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Sysinformation Healthcare Services LLC v. Pauls Valley Hospital Authority

United States District Court, W.D. Oklahoma

July 12, 2019




         Before the Court are the following motions: (1) Plaintiff's Motion to Dismiss First Amended Counterclaim and Brief in Support [Doc. No. 41]; (2) Defendant's Motion for Partial Summary Judgment [Doc. No. 42]; and (3) Defendant's Alternative Motion to Dismiss for Failure to Join an Indispensable Party [Doc. No. 44]. The motions are fully briefed and ready for determination.

         I. Introduction

         Plaintiff alleges in this action that Defendant has breached the terms of a promissory note (Note) and a termination agreement (Termination Agreement). Defendant has filed a counterclaim for negligence and breach of contract alleging Plaintiff has breached the terms of a Master Services Agreement (MSA) and failed to adequately perform its obligations under the MSA. Defendant further seeks a “determination of security interest” and alleges by the filing of an amended complaint in this action, Plaintiff has waived any security interest in defendant's property.

         On or about November 18, 2013, the parties entered into the MSA. Plaintiff alleges Defendant breached the MSA by failing to timely make payments due thereunder and by prematurely engaging a new vendor contrary to the provisions of the MSA designating Plaintiff as the exclusive billing and collections servicer. Thereafter, on April 11, 2017, the parties entered into a Termination Agreement which terminated the MSA effective November 18, 2016. Under the terms of the Termination Agreement, Defendant admitted that it owed $336, 145.91 to Plaintiff under the MSA and agreed to pay that amount. The parties also executed a Promissory Note in the principal amount of $336, 145.91. Plaintiff has sued Defendant for breach of the Termination Agreement and the Promissory Note. Defendant has filed a First Amended Counterclaim [Doc. No. 39] against Plaintiff. Defendant brings counterclaims for: (1) breach of contract; (2) negligence; and (3) determination of security interest.

         Plaintiff moves to dismiss Defendant's counterclaims. Conversely, Defendant moves for partial summary judgment in its favor on its counterclaim for determination of security interest. In the alternative, Defendant moves for dismissal of the First Amended Complaint for failure to join certain creditors of Defendant as indispensable parties.

         II. Discussion

         To avoid a dismissal for failure to state a claim, a complaint must set out factual allegations that “raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The court accepts the well-pleaded allegations in the complaint as true and construes them in the light most favorable to the plaintiff. Id. “[W]hen the allegations in a complaint, however, true, could not raise a [plausible] claim of entitlement to relief, ” the matter should be dismissed. Id. at 558. A court need not accept “[t]hreadbare recitals of the elements of a cause of action supported by mere conclusory statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “[T]o state a claim in federal court, a complaint must explain what each defendant did to him or her; when the defendant did it; how the defendant's actions harmed him or her; and what specific legal right the plaintiff believes the defendant violated.” Nasious v. Two Unknown B.I.C.E. Agents, 492 F.3d 1158, 1163 (10th Cir. 2007). The ultimate duty of the court is to “determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).

         A. Dismissal of Defendant's First Amended Counterclaim

         1. Breach of Contract

         Defendant alleges Plaintiff breached the MSA by: (1) allowing time limits for filing claims to pass without having properly filed claims with third parties; (2) improper posting of payments; (3) failure to adjust accounts as required by applicable regulations and/or contract with third-party payors; (4) failure to identify, process and refile claims which were rejected for insufficient information and other problems that could have been cured; (5) failure to identify and attempt to collect remaining account balances after all funds due from third-party payors have been collected. See id., at 1-2. Defendant seeks damages in an unspecified amount, but in excess of $75, 000.

         Plaintiff argues Defendant's allegations are deficient and fail to provide Plaintiff with fair notice of the claim brought against it. As Plaintiff points out, “[t]here are no allegations of when, how, or under what circumstances the alleged breaches occurred.” Pl.'s Mot. at 7. The Court agrees. Defendant's allegations are overly vague and fail to put Plaintiff on notice of the scope of the breach of contract claim brought against it or the resulting damages. Dismissal of the claims is proper on this basis.

         The Court further finds any amendment would be futile.[1] As Plaintiff further argues, the Termination Agreement includes a release which bars any breach of contract claims Defendant purports to bring under the MSA. The release includes broad language and each party agrees to release the other from “all claims” that “relat[e] to arise[e] from, or in any way concern[]” the MSA. See Termination Agreement, [Doc. No. 1-1], ¶ 4. The release further provides, however, that it does not prevent “any counterclaim [Defendant] may assert in response to any claim or cause of action initiated by [Plaintiff] . . . .” Id. The Termination Agreement further provides that the parties agrees to “refrain from directly or indirectly asserting any claim or demand . . . based upon or arising out of any released claim” but that the parties are not precluded from “enforc[ing] performance under th[e] [Termination] Agreement. . . .” Id., ¶ 5.

         The Court finds the release bars Defendant's counterclaim for breach of contract. The counterclaim specifically alleges breach of the MSA and Defendant released such claims under the Termination Agreement. Defendant excerpts portions of the release to contend it reserved its rights to bring the breach of contract claim, but when the Termination Agreement is read in its entirety, ...

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