Interim Healthcare Inc. v. Health Care@Home, LLC et al
Filing
59
ORDER denying 36 Motion to Dismiss.; Health Care@Home, LLC Answer to the Complaint due 2/20/2018. Signed by Judge Beth Bloom on 2/12/2018. (vmz)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 17-cv-61378-BLOOM/Valle
INTERIM HEALTHCARE INC.,
Plaintiff,
v.
HEALTH CARE@HOME, LLC and
STEVEN COHN,
Defendants.
__________________________________/
ORDER DENYING MOTION TO DISMISS
THIS CAUSE is before the Court upon Defendant, Health Care@Home, LLC’s Verified
Motion to Dismiss Complaint and Memorandum of Law in Support Thereof, ECF No. [36], filed
on October 2, 2017. ECF No. [36] (“Motion”). The Court has carefully reviewed the Motion, all
opposing and supporting materials, the record in this case and the applicable law, and is
otherwise fully advised. For the reasons set forth below, the Motion is denied.
I.
Factual Background1
Plaintiff Interim Healthcare Inc. (“Interim” or “Plaintiff”) operates a health care staffing
franchise which provides nursing, therapy, and non-medical home care, hospice, and healthcare
staffing through over 300 franchisees throughout the United States. ECF No. [1] ¶ 5. Defendant
Healthcare@Home (“HCH” or “Defendant”2) is one such franchisee. Id. ¶¶ 1, 9. On August 30,
2013, Interim and HCH entered into a Franchise Agreement which granted HCH an Interim
1
The Court accepts the well-pleaded factual allegations found in the complaint, ECF No. [5-1]
(“Complaint”) as true. Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010).
2
HCH’s principle, Steven Cohn, was initially also a named defendant in this action, but the
parties have since settled the claims against him. See CITE.
Case No. 17-cv-61378-BLOOM/Valle
franchise in a portion of Arizona (“Franchise Agreement” or “Agreement”). Id. ¶ 9; see also
ECF No. [1-1] at 5. Under the Franchise Agreement, HCH agreed to pay certain weekly service
charges based on a percentage of sales, and, in the event that the service charge was not timely
paid, certain late fees. Id. ¶¶ 12–13; see also ECF No. [1-1] at 17–21. The Franchise Agreement
further allows for termination by Interim in the event of HCH’s default by “fail[ing] to fully and
faithfully perform and abide by all of the terms, covenants, and conditions of th[e Franchise]
Agreement.” ECF No. [1-1] at 23. The Franchise Agreement also contains an eleven-month
non-compete clause and a clause which allows the prevailing party in any litigation to recover
reasonable attorneys’ fees, costs and expenses. Id. at 14–15; see also ECF No. [1-1] at 15.3
Accordingly to the Complaint, the parties operated without event under the Franchise
Agreement until June 1, 2015, when Interim served HCH with a notice of default, claiming HCH
owed Interim $72,774.37 under the Agreement. Id ¶ 16. On March 13, 2017, Interim terminated
the Franchise Agreement because HCH had failed to cure the defaults noticed in the June 2015
default notice. Id. ¶ 17. On June 6, 2017, Interim further notified HCH that it was in violation of
the eleven-month non-compete clause contained in the Franchise Agreement. Id. ¶ 20.
According to the Complaint, as of May 31, 2017, HCH owed $399,803.63 in past due
royalties under the Franchise Agreement. Id.¶¶ 19, 24–25. Interim also alleges that it is due
$1,436,400 in “future royalties,” which it has calculated by multiplying the number of weeks
(336) remaining on the ten year Franchise Agreement by the “average weekly service charge due
from HCH” ($4,275). Id. ¶¶42–44. Finally, Plaintiff also seeks attorneys’ fees, costs, and
expenses payable to the prevailing party in pursuant to Franchise Agreement. Id. ¶¶ 26, 45.
II.
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Procedural Background
Plaintiff has attached the Franchise Agreement to the Complaint. Because the Franchise
Agreement is integral to the Complaint and no party has challenged its authenticity, the Court
may consider it without turning this motion into a motion for summary judgment.
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Based on the foregoing, Plaintiff filed its Complaint, ECF No. [1] on July 11, 2017
alleging three causes of action: Count I – Breach of Contract – Past Due Royalties; Count II –
Breach of Contract – Non-Compete; and Count III – Breach of Contract – Future Royalties. On
December 4, 2017, the Court entered an Order pursuant to the parties’ stipulations, ECF Nos.
[56] & [57], dismissing all claims against Defendant Cohen and Count II in its entirety. ECF No.
[58]. Accordingly, the only claims remaining before the Court are Counts I and III against HCH,
both of which HCH seeks to dismiss.
In its Motion, HCH argues that Count I fails to state a claim because Interim fails to
allege that it complied with all its obligations under the contract. ECF No. [36] at 17. HCH
further argues that Count III fails to state claim because the alleged future royalties are
speculative and that it was Interim’s conduct in terminating the agreement—rather than
HCH’s—that caused any alleged future royalty damages. ECF No. [36] at 15–16. In Opposition
to both these arguments, Interim argues that both claims have been sufficiently plead. First, it
argues that Count III states a claim because HCH’s argument regarding damages is irrelevant on
a motion to dismiss a claim for breach of contract under 12(b)(6). Id. at 8. Second, it argues that
Count I is sufficiently plead by reiterating the allegations plead in the Complaint and stating that
“Interim has pled all the elements of a breach of contract claim and therefore, pled enough facts
to state a claim of breach of contract that is plausible on its face.” Id. at 8–9.4
III.
Legal Standard
A pleading in a civil action must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although a complaint “does
not need detailed factual allegations,” it must provide “more than labels and conclusions, and a
4
The Court notes that both parties’ request attorneys’ fees, costs, and expenses in the
Motion. These requests, to the extent cognizable, are premature and dismissed without
prejudice. See ECF Nos. [36] at 17–18; [45] at 9–10; [47] at 5.
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formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that Rule
8(a)(2)’s pleading standard “demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation”). Nor can a complaint rest on “‘naked assertion[s]’ devoid of ‘further
factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (alteration in
original)). ”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.’” Id. (quoting Twombly,
550 U.S. at 570).
When reviewing a motion to dismiss, a court, as a general rule, must accept the plaintiff’s
allegations as true and evaluate all plausible inferences derived from those facts in favor of the
plaintiff. See Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012); Miccosukee
Tribe of Indians of Fla. v. S. Everglades Restoration Alliance, 304 F.3d 1076, 1084 (11th Cir.
2002). Although the Court is required to accept all of the allegations contained in the complaint
and exhibits attached to the pleadings as true, this tenet is inapplicable to legal conclusions.
Iqbal, 556 U.S. at 678; Thaeter v. Palm Beach Cnty. Sheriff’s Office, 449 F.3d 1342, 1352 (11th
Cir. 2006) (“When considering a motion to dismiss . . . the court limits its consideration to the
pleadings and all exhibits attached thereto.”) (internal quotation marks omitted). In the Rule
12(b)(6) context, a plaintiff’s pleadings should be read as a whole. See Speaker v. U.S. Dep’t of
Health & Human Servs. Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1383 (11th Cir.
2010) (interpreting specific language in complaint within the context of the entire complaint);
Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242, 1252 n.11 (11th Cir. 2005) (stating
that, in a Rule 12(b)(6) context, “[w]e read the complaint as a whole”). But pleadings that “are no
more than conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.” Iqbal, 556
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U.S. at 679; see also Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009)
(“‘[U]nwarranted deductions of fact’ in a complaint are not admitted as true for the purpose of testing
the sufficiency of plaintiff’s allegations.”). Through this lens, the Court addresses the instant
Motion.
IV.
Analysis
The parties recognize that Florida law governs the construction of the Franchise
Agreement. See ECF No. [1-1] ¶19. “[U]nder Florida law, franchise agreements are considered
personal service contracts.” Burger King Corp. v. Agad,911 F. Supp. 1499, 1506 (S.D. Fla. 1995)
(citing Burger Chef Sys., Inc. v. Burger Chef of Fla., Inc., 317 So. 2d 795, 797 (Fla. 4th DCA
1975)). To state a claim for breach of a franchise contract, a plaintiff must allege: (1) a valid
contract; (2) a material breach of that contract; and (3) damages resulting from the breach. Vega
v. T-Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009) (citing Friedman v. N.Y. Life Ins.
Co., 985 So. 2d 56, 58 (Fla. 4th DCA 2008)).
The non-breaching party may “choose between being placed in the position it would have
been in had the contract been fully performed by seeking an award of lost profits or the position
it would have been in prior to the breach, which would be accomplished through an award of
reasonably foreseeable damages.” Burger King Corp. v. Hinton, Inc., 203 F. Supp. 2d 1357,
1366 (S.D. Fla. 2002) (citations omitted). Thus, a non-breaching party may be entitled to
expectation damages for breach of a franchise agreement. Hinton, 203 F. Supp. 2d at 1366
(citing Born v. Goldstein, 450 So.2d 262, 264 (Fla. 5th DCA 1984); Adams v. Dreyfus Interstate
Dev. Corp., 352 So. 2d 76 (Fla. 4th DCA 1977). Specifically, to recover expectation damages,
such as lost profits, a claimant must prove: (1) a breach of contract; (2) loss as a proximate result
of the breach; (3) the loss was, or should have been within the reasonable contemplation of the
parties; and (4) the loss is not remote, contingent, or conjectural and the damages are reasonably
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certain. Lipscher v. LRP Publications, Inc., 266 F.3d 1305, 1317 (11th Cir. 2001) (citations
omitted) (applying Florida law).
Importantly, “not only must the measure of damages be
calculable to a reasonable certainty, but the cause of the loss must not be speculative.” R.A.
Jones & Sons, Inc. v. Holman, 470 So.2d 60, 71 (Fla. 3d DCA 1985).
Applying this standard to the Complaint before the Court, both Counts I and III survive
dismissal. First, as to Count I, Plaintiff has alleged the valid franchise agreement, Defendant’s
material breach by failing to make the required payments pursuant to that Agreement, and
damages resulting from the breach amounting to $399,803.63. ECF No. [1] at 22–26. This is
sufficient to allege a breach of contract past due royalties. While HCH argues in its Motion to
Dismiss that Plaintiff has not alleged that it performed its obligations under the Agreement, to
the contrary Plaintiff states: “Interim Healthcare has performed all of its obligations under the
Franchise Agreement.” ECF No. [1] ¶ 23. Taking Plaintiff’s allegations as true as the Court
must at this stage, this claim survives dismissal.
As to Count III, breach of contract for future royalties, Defendant’s Motion to Dismiss
must also be denied. While Plaintiff appears to acknowledge that Florida courts are hesitant to
award lost future royalties and Defendant cites to Beefy Trail, Inc. v. Beefy King International,
Inc., 267 So. 2d 853 (Fla. 4th DCA 1972), in support of its argument that future royalties are not
recoverable in Florida, as a matter of law, future royalties are available in this state for a breach
of franchise agreement. Lipscher, 266 F.3d 1317. Here, Plaintiff has alleged a breach of the
Franchise Agreement, lost profits as a proximate cause of that breach, that these losses were
reasonably contemplated by the parties based on the ten year term of the Franchise Agreement,
and that the losses alleged are not too speculative as they are based on the average weekly fees
and the remaining weeks on the agreement.
ECF No. [1] at 39–44. Moreover, Defendant’s
citation to Ad-Vantage Te. Directory Consultants, Inc. v. GTE Directories Corp, 943 F. 2d 1511
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(11th Cir. 1991), further highlights that dismissal at this stage is not warranted. The Eleventh
Circuit Court of Appeals, in reviewing the sufficiency of evidence introduced at trial, noted that
“[t]o recover anticipated lost profits in Florida, a plaintiff must demonstrate such a loss with
reasonable certainty by competent proof. The expenses incurred to produce the net profits must
be established in specific dollar amounts” Id. at 1513. Here, the Plaintiff will be held to that
standard at trial. However, at the pleading stage, Plaintiff’s breach of contract claim survives
dismissal.
V.
Conclusion
Accordingly, for the foregoing reasons, it is ORDERED AND ADJUDGED as follows:
1.
Defendant’s Motion, ECF No. [11], is DENIED.
2.
The Defendant shall file its Answer to the Complaint no later than February 20,
2018.
DONE AND ORDERED in Chambers at Miami, Florida, this 12th day of February,
2018.
_________________________________
BETH BLOOM
UNITED STATES DISTRICT JUDGE
Copies to:
Counsel of Record
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