Andrews Sports Medicine & Orthopaedic Center LLC v. Cory

Filing 28

MEMORANDUM OPINION AND ORDER ADOPTING the Magistrate Judge's 25 REPORT AND RECOMMENDATIONS, GRANTING IN PART and DENYING IN PART 18 MOTION to Dismiss as set out herein. This case is REFERRED BACK to the Magistrate Judge for further proceedings in accordance with this Court's General Order of Reference. Signed by Judge Virginia Emerson Hopkins on 10/2/2014. (JLC)

FILED
2014 Oct-02 PM 03:32
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
ANDREWS SPORTS MEDICINE
)
&ORTHOPAEDIC CENTER, LLC, )
)
Plaintiff/Counterclaim
)
Defendant,
)
)
v.
)
)
JOHN WARD CORY, M.D.,
)
)
Defendant/Counterclaim
) Case No.: 2:11-CV-4088-JHE
Plaintiff/Third-Party Plaintiff, )
)
v.
)
)
JAMES ANDREWS, M.D., E. LYLE )
CAIN, M.D., JEFFREY R. DUGAS, )
M.D., STEVEN R. NICHOLS, M.D., )
)
Third-Party Defendants.
)

MEMORANDUM OPINION AND ORDER
I.

INTRODUCTION1
Plaintiff Andrews Sports Medicine & Orthopaedic Center, LLC (“ASMOC”)

initiated this action against Defendant John Ward Cory, M.D. (“Dr. Cory”) alleging

1

This section of the court’s opinion is copied verbatim from the magistrate
judge’s Report and Recommendation, doc. 25.

state law claims for breach of an employment agreement, breach of a credit agreement,
and unjust enrichment. (Doc. 1). Dr. Cory asserts counterclaims against ASMOC and
third-party claims against James R. Andrews, M.D. (“Dr. Andrews”), E. Lyle Cain,
M.D. (“Dr. Cain”), Jeffry R. Dugas, M.D. (“Dr. Dugas”), and Steven R. Nichols, M.D.
(“Dr. Nichols”) (collectively referred to as the “ASMOC Doctors”) seeking a
declaratory judgment and alleging state law claims for fraudulent inducement,
promissory fraud, breach of contract, breach of implied contract, intentional
interference with contractual and/or business relationships, promissory estoppel,
equitable estoppel, and conspiracy. (Doc. 17). ASMOC and the ASMOC Doctors
(collectively,“Movants”) move to dismiss the counterclaims and third-party claims
asserted against them. (Doc. 18). Dr. Cory has submitted a response in opposition to
the motion. (Doc. 19).
II.

PROCEDURAL POSTURE
On September 16, 2014, the magistrate judge entered a Report and

Recommendation (“R&R”) recommending that the motion to dismiss be DENIED as
to Counts I-V and VII-IX and GRANTED as to Count VI. (Doc. 25). In that
document, the parties were specifically of their right to object within fourteen days
from the date of the R&R. (Id. at 22.)d No objections were filed and the time to do so
has passed. Therefore, the R&R (doc. 25) and motion to dismiss (doc. 18) are before
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the undersigned.2
III.

APPLICABLE STANDARDS
A.

District Court Review of Report and Recommendation

After conducting a “careful and complete” review of the findings and
recommendations, a district judge may accept, reject, or modify the magistrate judge’s
report and recommendation. See 28 U.S.C. § 636(b)(1) (“A judge of the court may
accept, reject, or modify, in whole or in part, the findings or recommendations made
by the magistrate judge.”); Williams v. Wainwright, 681 F.2d 732 (11th Cir. 1982)
(quoting Nettles v. Wainwright, 677 F.2d 404, 408 (5th Cir. 1982), overruled on other
grounds by Douglass v. United Services Auto. Ass’n, 79 F.3d 1415 (5th Cir. 1996)).3
The district judge may also receive further evidence or recommit the matter to the
magistrate judge with instructions. 28 U.S.C. § 636(b)(1).
A district judge “shall make a de novo determination of those portions of the
report or specified proposed findings or recommendations to which objection is made.”

2

The motion was randomly assigned to the undersigned on October 1, 2014.

3

The Eleventh Circuit has adopted as binding precedent all Fifth Circuit
decisions issued before October 1, 1981, as well as all decisions issued after that
date by a Unit B panel of the former Fifth Circuit. Stein v. Reynolds Sec., Inc., 667
F.2d 33, 34 (11th Cir. 1982); see also United States v. Schultz, 565 F.3d 1353,
1361 n.4 (11th Cir. 2009) (discussing the continuing validity of Nettles).
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28 U.S.C. § 636(b)(1). This requires that the district judge “give fresh consideration
to those issues to which specific objection has been made by a party.” Jeffrey S. v.
State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (citing H.R. Rep. No. 94-1609,
94th Cong., 2nd Sess., reprinted in 1976 U.S. Code Cong. & Admin. News 6162,
6163). In contrast, those portions of the R&R to which no objection is made need only
be reviewed for clear error. Macort v. Prem, Inc., 208 Fed. App’x. 781, 784 (11th Cir.
2006).4
“Neither the Constitution nor the statute requires a district judge to review, de
novo, findings and recommendations that the parties themselves accept as correct.”
United States v. Woodard, 387 F.3d 1329, 1334 (11th Cir. 2004) (internal quotation
marks omitted) (quoting United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.
2003)). It is incumbent upon the parties to timely raise any objections that they may
have regarding a magistrate judge’s findings contained in a report and recommendation,
4

Macort dealt only with the standard of review to be applied to a magistrate's
factual findings, but the Supreme Court has held that there is no reason for the
district court to apply a different standard to a magistrate's legal conclusions.
Thomas v. Arn, 474 U.S. 140, 150, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985). Thus,
district courts in this circuit have routinely applied a clear-error standard to both.
See Tauber v. Barnhart, 438 F. Supp. 2d 1366, 1373–74 (N.D. Ga. 2006)
(collecting cases). This is to be contrasted with the standard of review on appeal,
which distinguishes between the two. See Monroe v. Thigpen, 932 F.2d 1437, 1440
(11th Cir. 1991) (when a magistrate's findings of fact are adopted by the district
court without objection, they are reviewed on appeal under a plain-error standard,
but questions of law remain subject to de novo review).
4

as the failure to do so subsequently waives or abandons the issue, even if such matter
was presented at the magistrate judge level. See, e.g., United States v. Pilati, 627 F.3d
1360 at 1365 (11th Cir. 2010) (“While Pilati raised the issue of not being convicted of
a qualifying offense before the magistrate judge, he did not raise this issue in his appeal
to the district court. Thus, this argument has been waived or abandoned by his failure
to raise it on appeal to the district court.”).
B.

Sufficiency of the Pleadings5

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a short
and plain statement of the claim showing the pleader is entitled to relief.” “[T]he
pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but
it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic v. Twombly, 550 U.S.
544, 555 (2007)). Mere “labels and conclusions” or “a formulaic recitation of the
elements of a cause of action” are insufficient. Iqbal, 556 U.S. at 678 (citations and
internal quotation marks omitted). “Nor does a complaint suffice if it tenders ‘naked
assertion[s]’ devoid of ‘further factual enhancement.’” Id. (citing Bell Atl. Corp., 550
U.S. at 557).

5

This section of this opinion was copied verbatim from the magistrate judge’s

R&R.
5

Fraud claims must be pled more specifically pursuant to Federal Rule of Civil
Procedure 9(b): “In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” However, “[m]alice, intent, knowledge,
and other conditions of a person’s mind may be alleged generally.” FED. R. CIV. P.
9(b). As the Eleventh Circuit has explained,
Rule 9(b) is satisfied if the complaint sets forth “(1) precisely what
statements were made in what documents or oral representations or what
omissions were made, and (2) the time and place of each such statement
and the person responsible for making (or, in the case of omissions, not
making) same, and (3) the content of such statements and the manner in
which they misled the plaintiff, and (4) what the defendants obtained as
a consequence of the fraud.”
Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (quoting Brooks
v. Blue Cross and Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997). “[I]t
is sufficient to plead the who, what, when, where, and how of the allegedly false
statements and then allege generally that those statements were made with the requisite
intent.” Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1237 (11th Cir. 2008).
Federal Rule of Civil Procedure 12(b)(6) permits dismissal when a complaint
fails to state a claim upon which relief can be granted. “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.” Iqbal, 556 U.S. at 678 (citations and internal
quotation marks omitted). A complaint states a facially plausible claim for relief “when
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the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citation omitted).
The complaint must establish “more than a sheer possibility that a defendant has acted
unlawfully.” Id.; see also Bell Atl. Corp., 550 U.S. at 555 (“Factual allegations must
be enough to raise a right to relief above the speculative level.”). Ultimately, this
inquiry is a “context-specific task that requires the reviewing court to draw on its
judicial experience and common sense.” Iqbal, 556 U.S. at 679.
IV.

ANALYSIS
The undersigned assumes the reader’s familiarity with the R&R. The court finds

that none of the magistrate judge’s recommendations are clearly erroneous.
For the reasons set out in the R&R, Dr. Cory’s Amended Counterclaim and
Third-Party Complaint sufficiently alleged fraud and reasonable reliance, such that Dr.
Cory’s fraud-based claims (those for declaratory judgment, fraudulent inducement,
promissory fraud, promissory estoppel, and equitable estoppel) are not due to be
dismissed at this stage of the proceedings. Furthermore, the merger clause in the
Employment Agreement does not bar such claims.
Also for the reasons set out in the R&R, the undersigned agrees that Dr. Cory
has adequately pled a facially plausible breach of contract claim allowing the court to
draw the reasonable inference that ASMOC is liable for the breach. The motion to
7

dismiss is therefore due to be denied with respect to the breach of contract claim
against ASMOC.
Again for the reasons set out in the R&R, the undersigned agrees that Dr. Cory
has plausibly alleged breach by the ASMOC Doctors of an implied contract, and the
motion to dismiss that claim is therefore due to be denied.
The undersigned also agrees, for the reasons set out in the R&R, that Dr. Cory’s
claim against the ASMOC Doctors for intentional interference with existing and
potential business and contractual relationships is due to be granted as a matter of law
because the allegations fail to show that the ASMOC Doctors are strangers to the
contractual and/or business relationships between Dr. Cory and his existing or potential
ASMOC patients, which is an essential element of this claim. Accordingly, the motion
to dismiss is due to be granted with respect to this claim.
Finally, based on the Movants’ arguments before the magistrate judge and his
recommendations, with which the undersigned agrees, as to Dr. Cory’s claims other
than his conspiracy claim, the magistrate judge did not clearly err in recommending that
the motion to dismiss be denied as to Dr. Cory’s conspiracy claim.
V.

CONCLUSIONS AND ORDERS
For the reasons stated above, the court ADOPTS the recommendations of the

magistrate judge and ORDERS as follows:
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1.

The Motion To Dismiss (doc. 18) is GRANTED as to Count VI of the
Amended Counterclaims and Third-Party Claims and otherwise is
DENIED.

2.

Count VI of the Amended Counterclaims and Third-Party Claims is
hereby DISMISSED WITH PREJUDICE.

3.

This case is REFERRED BACK to the magistrate judge for further
proceedings in accordance with this court’s General Order of Reference.

DONE and ORDERED this the 2nd day of October, 2014.

VIRGINIA EMERSON HOPKINS
United States District Judge

9