Ali v. Humana Inc.

Filing 36

ORDER Denying Defendant Humana Inc.'s 25 Motion to Dismiss First and Second Causes of Action in Plaintiff's Third Amended Complaint, signed by District Judge Anthony W. Ishii on 2/12/13. (Gonzalez, R)

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IN THE UNITED STATES DISTRICT COURT FOR THE

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EASTERN DISTRICT OF CALIFORNIA

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Plaintiff,
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v.
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HUMANA INC.,
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Defendant.
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____________________________________)
KARIMA K. ALI,

CASE NO. 1:12-CV-00509-AWIGSA
ORDER DENYING
DEFENDANT HUMANA
INC.’S MOTION TO DISMISS
FIRST AND SECOND CAUSES
OF ACTION IN PLAINTIFF’S
THIRD AMENDED
COMPLAINT
[DOCUMENT NO. 30]

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I. INTRODUCTION
Defendant, Humana Inc., (hereinafter referred to as “Defendant”) has filed a motion to

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dismiss the first and second causes of action in the third amended complaint of Plaintiff, Karima

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K. Ali (hereinafter referred to as “Plaintiff”) pursuant to Federal Rule of Civil Procedure

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12(b)(6). For the reasons discussed below, the motion to dismiss shall be denied.

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II. FACTS AND PROCEDURAL BACKGROUND

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The court refers the parties to previous orders for a complete chronology of the

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proceedings. On October 22, 2012, Plaintiff filed her third amended complaint (TAC) against

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Defendant alleging (1) breach of written contract, (2) conversion, (3) defamation, and (4)

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negligence. On November 5, 2012, Defendant filed a motion to dismiss the first and second

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causes of action for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).

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III. LEGAL STANDARD

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A complaint must contain “a short and plain statement of the claim showing that the

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pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Where the plaintiff fails to allege “enough

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facts to state a claim to relief that is plausible on its face,” the complaint may be dismissed for

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failure to allege facts sufficient to state a claim upon which relief may be granted. Bell Atlantic

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Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). “A claim

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has facial plausibility,” and thus survives a motion to dismiss, “when the pleaded factual content

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allows the court to draw the reasonable inference that the defendant is liable for the misconduct

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alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

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Determining whether a complaint will survive a motion to dismiss for failure to state a claim is a

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“context-specific task that requires the reviewing court to draw on its judicial experience and

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common sense.” (Id. at 664-665). On a Rule 12(b)(6) motion to dismiss, the court accepts all

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material facts alleged in the complaint as true and construes them in the light most favorable to

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the plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

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IV. DISCUSSION
A. Breach of Written Contract
In California, the elements of a cause of action for breach of contract are (1) the existence

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of a contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s

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breach and (4) resulting damages to the plaintiff. Oasis West Realty, LLC v. Goldman, 51

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Cal.4th 811, 821, 124 Cal.Rptr.3d 256, 250 P.3d 1115 (2011). “If the action is based on alleged

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breach of a written contract, the terms must be set out verbatim in the body of the complaint or a

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copy of the written agreement must be attached and incorporated by reference.” Harris v. Rudin,

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Richman & Appel, 74 Cal.App.4th 299, 307, 87 Cal.Rptr.2d 822 (1999).

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Plaintiff’s TAC alleges that she and Defendant “entered into an agreement that Plaintiff

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will receive $100 for every enrollment her agents submit,” that Plaintiff “performed all

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conditions, Covenants, [sic] and promises required by it on its part to be performed in accordance

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with the terms and condition of the contract,” that Plaintiff’s “Agents [sic] submitted 400

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Enrolment [sic] for 2011 Annual Enrollment Period which started on Nov. 1, 2010 and ended

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Dec. 31, 2010,” that “Plaintiff earned $40,000.00 Commission [sic] according to the verbal and

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written agreement,” and that “Defendant did not pay the amount on 2011 and 2012,” amounting

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to damages of $80,000 for the years 2011 and 2012, and $33,000 in penalties incurred from the

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California Department of Labor Commission. Plaintiff attached the contract as Appendix I, but

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as Defendant points out, the terms of compensation between the parties are set out in a collateral

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contract titled Producer Partnership Plan, which is not attached.

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Defendant argues that Plaintiff has failed to sufficiently allege a cause of action for

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breach of contract because she failed to attach a copy of the Producer Partnership Plan or the

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terms and rules of the Medicare referral fee program. Mot. to Dismiss at 6-7. Defendant further

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claims that Plaintiff’s failure to attach either of these documents or allege their terms renders her

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claim insufficient. However, contrary to Defendant’s argument, federal procedural rules do not

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require that the contract at issue be attached to the complaint. Downtown Plaza LLC v. Nail Trix,

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Inc., 2008 WL 5099656 at *1 (E.D.Cal.2008).

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In this case, Plaintiff has alleged the material terms and conditions of an agreement that

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she entered into with Defendant, in which Defendant was to pay $100 for every enrollment

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Plaintiff’s agents submitted, that Plaintiff’s agents submitted $40,000 worth of enrollments in

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both 2011 and 2012 in accordance with the terms of the agreement, that Defendant breached the

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agreement by not paying, and that Plaintiff has suffered damages as a result of this breach

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amounting to the $80,000 Defendant did not pay and an additional $33,000 in penalties incurred

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from the California Department of Labor Commission because Plaintiff was unable to meet her

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payroll obligations as a result of Defendant’s failure to hold up its end of the agreement. These

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allegations are sufficient to plead a breach of contract.

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B. Conversion

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In California, the elements of conversion are “(1) the plaintiff’s ownership or right to

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possession of personal property, (2) the defendant’s disposition of the property in a manner that

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is inconsistent with the plaintiff’s property rights, and (3) resulting damages.” Fremont

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Indemnity Co. v. Fremont General Corp., 148 Cal.App.4th 97, 119, 55 Cal.Rptr.3d 621 (2007).

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Plaintiff’s conversion claim is premised on her breach of contract claim. Defendant argues that

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Plaintiff’s cause of action for conversion should be dismissed because Plaintiff failed to allege

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that she was entitled to the $80,000 as a result of any Contract with Defendant. Mot. to Dismiss

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at 7.

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However, in light of this court’s conclusion regarding Plaintiff’s breach of contract claim
above (i.e., that Plaintiff has adequately pleaded a cause of action for breach of contract), it

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follows that Plaintiff has also adequately pleaded a cause of action for conversion. First, Plaintiff

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alleges that she has a right to possess the $80,000 because she and Defendant entered into an

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agreement in which Defendant agreed to pay her $100 for every enrollment submitted by

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Plaintiff’s agents. Second, Plaintiff alleges that Defendant did not pay the $80,000 owed to her

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under the agreement, but rather kept this money for itself. Lastly, Plaintiff alleges $80,000 in

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damages from non-payment, as well as $33,000 in California Department of Labor Commission

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penalties as a result of Defendant’s conversion. Thus, Plaintiff’s allegations are sufficient to

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plead a cause of action for conversion.

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V. DISPOSITION

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Based on the foregoing, Defendant’s motion to dismiss the first and second causes of action for

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breach of contract and conversion, respectively, is DENIED.

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IT IS SO ORDERED.

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Dated:
0m8i78

February 12, 2013
SENIOR DISTRICT JUDGE

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