Edalati, et al v. Sabharwal, et al

Filing 39

MEMORANDUM AND ORDER granting 25 Motion to Dismiss Counts II, VII, and VIII of Defendants' Counterclaims. Signed by District Judge Carlos Murguia on 9/27/2019. (heo)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

UNITED STATES ex rel. MONA SABET
EDALATI and DAVID EDALATI; and
MONA SABET EDALATI and DAVID
EDALATI, individually,

)
)
)
)
)
Plaintiffs/Relators,
)
)
v.
)
)
PARAMJEET SABHARWAL,
)
WANDA KANIEWSKI, KANSAS
)
INSTITUTE OF MEDICINE LLC,
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KASAS INSTITUTE OF MEDICINE, INC., )
and MINIMALLY INVASIVE SURGERY )
HOSPITAL, INC.,
)
)
Defendants.
)
)

Case No. 17-02395-CM-GEB

MEMORANDUM AND ORDER
This matter is before the court on Plaintiff/Relator Dr. David Edalati’s Motion to Dismiss
Counts III, VII, and VIII of Defendants’ Counterclaims. (Doc. 25.)
I.

FACTUAL BACKGROUND

Plaintiffs are former employees of defendants Minimally Invasive Surgical Hospital and
Kansas Institute of Medicine. Defendants are two doctors licensed in the State of Kansas, one forprofit hospital, and two corporate entities that operate a medical clinic. Plaintiffs filed this qui tam
action against defendants on behalf of the United States, alleging multiple violations of the False
Claims Act, including retaliation after plaintiffs took action to oppose defendants’ allegedly unlawful
conduct.
On May 8, 2019, defendants answered and alleged eight counterclaims against plaintiffs,
including two counterclaims for conversion (Counts III and VII) and one counterclaim for defamation

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(Count VIII). Defendants’ counterclaims for conversion are based on the former employment of
plaintiff Dr. Edalati and his duties under various employment agreements, while defendants’
counterclaim for defamation is based on plaintiff’s alleged communications to patients. Plaintiff Dr.
Edalati disputes the validity of the employment agreements and moves to dismiss these three
counterclaims as either unavailable under Kansas law or inadequately pleaded.
II.

LEGAL STANDARDS

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court assumes true
all well-pleaded facts in the complaint, disregards all legal conclusions worded as factual allegations,
and grants the non-moving party all reasonable inferences from the pleadings. Colony Ins. Co. v.
Burke, 698 F.3d 1222, 1228 (10th Cir. 2012). To survive a motion to dismiss, the complaint “must
contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face,”
not merely possible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Co. v. Twombly, 550
U.S. 544, 570 (2007)) (quotation marks omitted); see Ridge at Red Hawk, L.L.C. v. Schneider, 493
F.3d 1174, 1177 (10th Cir. 2007).
III.

DISCUSSION

Plaintiff argues that defendants cannot bring their counterclaims for conversion because those
claims are based on the parties’ disputed employment agreements, and that defendants’ counterclaim
for defamation is inadequately pleaded. Defendants argue that Federal Rule of Civil Procedure 8
permits their conversion counterclaims as a pleading of inconsistent grounds, and that the court should
allow defendants to proceed to discovery so that they may cure the deficiencies in their counterclaim
for defamation. The court will address defendants’ counterclaims for conversion before turning to
defendants’ counterclaim for defamation.

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A. Conversion
In Kansas, a party may bring a tort claim parallel to a breach of contract claim when the tort is
independent of the bargained-for duties of the contract. Swimwear Sol., Inc. v. Orlando Bathing Suit,
LLC, 309 F. Supp. 3d 1022, 1032 (D. Kan. 2018); see Rezac Livestock Comm. Co. v. Pinnacle Bank,
255 F. Supp. 3d 1150, 1171–72 (D. Kan. 2017) (“Plaintiff’s conversion claim rests not on the terms of
any contract . . . .”). If the duties allegedly breached by the tort claim are specifically outlined in the
contract, then the tort claim is part of the contractual relationship and may not be separately brought.
See M.F. v. ADT, Inc., 357 F. Supp. 3d 1116, 1136–37 (D. Kan. 2018) (stating the difference as
“whether the contract calls for a specific result”).
Defendants rely on the parties’ disputed employment agreements as the basis for defendants’
conversion counterclaims. Defendants allege that plaintiff Dr. Edalati received fees for medical work,
that those fees are the property of defendants, and that plaintiff has improperly exercised ownership
over those fees by not remitting them to defendants. Defendants’ various claims for breach of contract
(Counts I and V) and an accounting (Counts II and VI) show that this duty to remit fees is based on
specific language of the parties’ disputed employment agreements. (See Doc. 21, at 12–13, 16–17.)
The disputed employment agreements call for a specific result, and defendants’ counterclaims for
conversion are based on specific remittance obligations owed under those agreements. See M.F., 357
F. Supp. 3d at 1136–37. These claims are therefore part of the alleged breach of a contractual
relationship and, under Kansas law, may not be separately brought in tort. While defendants may
attempt to recover these allegedly misappropriated funds, they may not do so through the tort of
conversion.
While the court recognizes defendants’ position that they should be permitted to allege
inconsistent grounds under Federal Rule of Civil Procedure 8, the Rule does not cure claims that are

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unavailable by law. Defendants’ counterclaims for conversion are subject to dismissal not because
they are inconsistent with defendants’ contract-based claims, but because they rely on a contract-based
duty. See Bittel v. Farm Credit Servs. of Cent. Kan., 962 P.2d 491, 498 (Kan. 1998) (requiring
independent tort for a plaintiff to pursue both remedies). Kansas law limits defendants’ counterclaims
to relief in contract.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), because defendants’ counterclaims for
conversion are unavailable under Kansas law, the court dismisses defendants’ counterclaims.
B. Defamation
“To state a claim for defamation under Kansas law, plaintiff must allege (1) false and
defamatory words; (2) communicated to a third person; (3) which resulted in harm to his reputation.”
Fisher v. Lynch, 531 F. Supp. 2d 1253, 1271 (D. Kan. 2008) (citing Hall v. Kan. Farm Bureau, 50 P.3d
495, 504 (Kan. 2002)). “To sufficiently plead a defamation claim, the complaint must allege the
defamatory words, the communicator of those words, the persons to whom those words were published
and the time and place of publication.” Id. at 1271–72.
Defendants’ counterclaim for defamation alleges: “[p]laintiff Dr. David Edalati has
communicated false and defamatory statements to patients and other physicians, including telling
patients that Kansas Institute of Medicine has closed its clinic and telling patients that Dr. Sabharwal
and Kansas Institute of Medicine will not honor their promises.” (Doc. 21, at 20.) Defendants further
conclude that “[t]hese statements were materially false and constitute defamation,” that plaintiff’s
statements “have damaged [d]efendants,” and that plaintiff “acted in a willful, wanton, fraudulent,
and/or malicious manner toward [defendants], thereby warranting an award of punitive damages.” (Id.
at 20–21.)

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Defendants’ counterclaim, on its face, does not allege reputational harm and does not identify
the specific words used, “the persons to whom those words were published,” or “the time and place of
publication.” See Fisher, at 1271–72; Bushnell Corp. v. ITT Corp., 973 F. Supp. 1276, 1287 (D. Kan.
1997) (rejecting claim as insufficient to enable a defense where alleged communications were made to
“customers and the industry in general”). While the court has allowed amendment of claims when a
plaintiff’s defamation claims lacked sufficient information to enable a defense, defendants here do not
ask to merely amend their claim language to cure their allegations, and the court’s prior allowance
predates the Iqbal/Twombly plausibility framework. See Bushnell, 973 F. Supp. at 1287 (denying
dismissal and permitting amendment only so plaintiff may allege clarifying facts). Defendants may
not look to discovery in the hopes of meeting their burden at the pleading stage. See Iqbal, 556 U.S. at
678–79 (“Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with nothing more
than conclusions.”).
Pursuant to Federal Rule of Civil Procedure 12(b)(6), because defendants have not sufficiently
alleged a counterclaim for defamation, the court dismisses defendants’ counterclaim.

IT IS THEREFORE ORDERED that Plaintiff/Relator Dr. David Edalati’s Motion to Dismiss
Counts III, VII, and VIII of Defendants’ Counterclaims (Doc. 25) is granted.
Dated this 27th day of September, 2019, at Kansas City, Kansas.

s/ Carlos Murguia
CARLOS MURGUIA
United States District Judge

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