Mondero et al v. Lewes Surgical & Medical Associates P.A. et al
MEMORANDUM ORDER Granting 74 MOTION to Amend Pleadings (see Memorandum Order for further details). Signed by Judge Richard G. Andrews on 1/17/2017. (nms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
DR. NANCY MONDERO, JUDY L.
HOWETT NP, MARGARET M. SAWYER,
TANIKKA R. MILLER, and MARIAN L.
Civil Action No. 14-588-RGA
LEWES SURGICAL & MEDICAL
ASSOC IATES P.A., a Delaware Professional
Association, SEMAAN M. ABBOUD M.D.,
BETH E. BITTNER,
Pending before the court is Plaintiff Howett's motion for leave to amend her complaint.
(D.I. 74). On November 3, 2016, I denied Defendants' motion for summary judgment on Plaintiff
Howett's fraud/restitution claim. (D.I. 71 at 9; D.I. 72). I did so "out of basic fairness" and
encouraged Plaintiff Howett "to amend her claim to state an actionable theory." (D.I. 71 at 9-10).
Plaintiffs proposed amended complaint contains the following claims: (1) Title VII of the Civil
Rights Act, Retaliation, (2) Fraud/Restitution of Meaningful Use Funds (as to Howett only), (3)
Breach of Implied Contract (Quasi-Contract) (as to Howett only), (4) Breach of Fiduciary Duty
(as to Howett only), (5) Intentional Interference with Business Relations (as to Howett only), (6)
Common Law Misappropriation/Civil Theft (as to Howett only), (7) Unjust Enrichment (as to
Howett only), (8) Conversion (as to Howett only), and (9) Replevin (as to Howett only). (D.I. 74
at pp. 15-25).
LEGAL STAND ARD
Under the relevant portion of Fed. R. Civ. P. 15(a), Plaintiffs may amend their pleading
with the court's leave. The "grant or denial of an opportunity to amend is within the discretion
of the District Court .... " Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000). A court should
"freely give leave whenjustice so requires." Fed. R. Civ. P. 15(a)(2). "Amendment, however, is
not automatic." Szubielski v. Pierce, 152 F. Supp. 3d 227, 232 (D. Del. 2016). Leave to amend
may be denied upon a showing of "undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of the allowance of the amendment, futility of
amendment, etc." Foman v. Davis, 371 U.S. 178, 182 (1962). "Futility of amendment occurs
when the complaint, as amended, does not state a claim upon which relief can be granted."
Szubielski, 152 F. Supp. 3d at 233.
Defendants argue that Plaintiff's motion should be denied based on futility. Defendants
assert that the proposed complaint fails under collateral estoppel and res judicata. I disagree.
"The doctrine of collateral estoppel is designed to provide repose and put a definite end
to litigation." Columbia Cas. Co. v. Playtex FP, Inc., 584 A.2d 1214, 1216 (Del. 1991). "Under
... [this] doctrine, where a question of fact essential to the judgment is litigated and determined
by a valid and final judgment, the determination is conclusive between the same parties in a
subsequent case on a different cause of action." Id.
Here, the core issue is whether Medicare and Medicaid Electronic Health Records
Incentive Program funds ("incentive funds") possessed by Defendant Lewes Surgical properly
belongs to Plaintiff Howett. Defendant argues that this issue was litigated in the previous
Superior Court action.
The relevant facts are as follows. The complaint in the Superior Court action asserts a
cause of action for "Breach of Employment Contract and Implied Covenant of Good Faith and
Fair Dealing" by Howett against Lewes Surgical. (D.I. 77-1 at 5). Howett alleged, "Defendant
failed to properly calculate [Howett]'s income for purposes of determining bonus payments," (Id.
if 35) and that such a bonus was owed to Howett (Id. iii! 18, 29-38).
In the Amended Pre-Trial
Stipulation and Order, Howett claimed that she "earned $198,294.00 for Lewes Surgical in
2010." (D.I. 59-4 at 5). This was based on a spreadsheet. (Id.). After some exclusions and
some calculations, the bonus owed was alleged to equal $40,142.40. (Id.). Defendant claims
that Howett's bonus calculations relied on data suggesting that incentive funds belonged to
Defendant. (D.I. 77 at 3; D.I. 77-1 at 10, 12-14; D.I. 83 at 2). It appears that Howett did rely on
such data to support her bonus calculations. Presumably, had her data not relied on the implied
fact that the incentive money belonged to Defendant, the bonus figure she sought would have
been lower. It is unclear from the record before this Court what position, if any, the Superior
Court took as to this issue, because the Order of Judgment only stated that, as to "Howett's claim
for recovery of bonus money withheld, the Court finds in favor of Defendant and against
Plaintiff and therefore, the claim is dismissed." (D.I. 77-2 at 7 if V).
I do not think that Defendant has adequately shown, at this stage, that the core issue in
the proposed amended complaint was essential to the prior action. It is unclear from the Superior
Court's Order of Judgment what role incentive funds played in the ultimate outcome. In other
words, it does not necessarily follow from the Order of Judgment that the incentive funds did not
properly belong to Howett. The Superior Court did not make any findings as to whether it
accepted the fact that the incentive funds were in fact Defendant Lewes Surgical's. Rather, the
Order of Judgment suggests that the opposite conclusion might be true. (See D.I. 77-2 at 7 if VII
("As to [Lewes Surgical's] Claim against Nancy Mondero for recovery of Electronic Medical
Records incentive money, the claim is dismissed.")). Thus, Defendant has failed to show, at this
stage, that Plaintiffs motion to amend is futile on collateral estoppel grounds.
"Res judicata operates to bar a claim where the following five-part test is satisfied: ( 1) the
original court had jurisdiction over the subject matter and the parties; (2) the parties to the
original action were the same as those parties, or in privity, in the case at bar; (3) the original
cause of action or the issues decided was the same as the case at bar; (4) the issues in the prior
action must have been decided adversely to the appellants in the case at bar; and (5) the decree in
the prior action was a final decree." LaPoint v. AmerisourceBergen Corp., 970 A.2d 185, 192
(Del. 2009). "Delaware, like the federal courts, follows a transactional approach to res judicata."
Id. at 193. "Determining whether two claims arise from the same transaction requires pragmatic
consideration, with the fact finder 'giving weight to such considerations as whether the facts are
related in time, space, origin, or motivation, whether they form a convenient trial unit, and
whether their treatment as a unit conforms to the parties' expectations or business understanding
or usage."' Id. "Two claims 'derive[ d] from a common nucleus of operative fact[ s]' arise from
the same transaction." Id.
Federal courts consider the following four factors to determine whether the original cause
of action is the same as that in the case at bar: "(l) whether the acts complained of and the
demand for relief are the same (that is, whether the wrong for which redress is sought is the same
in both actions); (2) whether the theory ofrecovery is the same; (3) whether the witnesses and
documents necessary at trial are the same (that is, whether the same evidence necessary to
maintain the second action would have been sufficient to support the first); and (4) whether the
material facts alleged are the same." United States v. Athlone Indus., Inc., 746 F.2d 977, 984 (3d
Cir. 1984) (citations omitted). "These factors are the components of' an essential similarity of
the underlying events,' and provide sufficient guidance for assessing when there is not a single
cause of action." Id. The Athlone factors provide a useful framework for considering the factors
for determining whether two claims arise from the same transaction in LaPoint.
I do not think that Defendant has adequately shown that, at this stage, the present suit is
based on the same cause of action as the prior suit. Under the first Athlone factor, the prior suit
complained that Defendant failed to provide Howett with her bonus money. Here, Howett is
complaining that Defendants failed to give her incentive funds that she alleges are rightfully
hers. The prior suit demanded her bonus money as the form of relief. Here, she is demanding
her incentive funds, which is for a different wrong. This factor weighs in favor of Howett.
As to the second factor, the theory of recovery in the prior suit for the recovery of the
bonus money, is based on breach of contract. Here, at least with respect to replevin, Howett has
to show that the incentive funds were her property. That is a different theory ofrecovery. This
factor weighs in favor of Howett.
As to the third factor, Defendant has extensively shown that the witnesses and documents
necessary at trial here are the same as those used in the prior action. (See generally D.I. 77; D.I.
83). This factor heavily weighs in favor of Defendant.
As to the last factor, a comparison of the complaint of the prior action and the proposed
amended complaint in the present action shows that the material facts alleged are different. The
complaint in the prior action does not address the issue of who owns the incentive money as
between Howett and Lewes Surgical. (Compare D.I. 77-1 at 2-8, with D.I. 74). This factor
weighs in favor of Howett.
As an additional consideration, Defendant urges that I consider that Plaintiff could have
amended her complaint in the prior action to include what she is asserting before me now. (D.I.
83 at pp. 2-3). This argument has neutral weight, because while this may be true, it appears that
Plaintiff has colorable reasons for why doing so may not have been feasible or practical. (See
D.I. 80 at 11-13).
This is a very close call. Overall, I find that Defendant has failed to show, at this stage,
that Plaintiffs motion to amend is futile on res judicata grounds.
NOW, THEREFORE, at Wilmington this lZ_ day of January, 2017, it is HEREBY
ORDERED that Plaintiffs' motion for leave to amend (D.I. 74) is GRANTED. Some of the
counts replace counts I previously resolved against Howett. She should not interpret this Order
to mean that I am going to reconsider my previous decisions.
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