Prescription Supply Inc et al v. Musa et al

Filing 37

ORDER granting in part in part 6 Motion to Dismiss and Granting Plaintiff Leave to Amend Complaint. Signed by District Judge Arthur J. Tarnow. (MLan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
PRESCRIPTION SUPPLY, INC. ET. AL.,
Case No. 16-12070
Plaintiffs,
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW

v.
MOUSSA “MARK” MUSA, ET. AL.,

U.S. MAGISTRATE JUDGE
DAVID G. GRAND

Defendants.
/

ORDER GRANTING IN PART MOTION TO DISMISS [16]; GRANTING PLAINTIFF
LEAVE TO AMEND COMPLAINT
Plaintiffs filed a complaint in the Northern District of Ohio on January 22,
2016 [3]. The case was transferred to the Eastern District of Michigan on June 7,
2016 per Plaintiffs’ request under 28 U.S.C. §1404. On July 8, 2016, Defendant
Care Home RX. Corp. (“Care Home”) filed a Motion to Dismiss [6]. Plaintiffs
responded on August 1, 2016 [14] and Defendant Care Home replied on August
15, 2016 [16]. The Court finds the motion suitable for determination without a
hearing, as provided by Local Rule 7.1(f)(2), with respect to all of Plaintiff’s
claims brought against Defendant Care Home. For the reasons stated below,
Defendant’s Motion to Dismiss is GRANTED in part, and Plaintiffs’ tortious
interference with business relationships, defamation, unjust enrichment, conversion
and conspiracy claims are dismissed and DENIED in part as to Plaintiffs’ claims
of misappropriation of trade secrets and unfair competition claims. Additionally,
Page 1 of 21

Plaintiffs are given leave to amend complaint to reflect the Court’s determination
that Michigan state law applies.
FACTUAL BACKGROUND
Plaintiff Prescription Supply Inc. (“PSI”) was ASAP RX, Inc. (“ASAP”)’s
main supplier of prescriptions for several years prior to July 2015. Defendants
Mark Musa and Mike Musa’s pharmacy, ASAP, entered into a Credit Agreement
with Plaintiffs and further granted to Plaintiffs a security interest in all of ASAP’s
inventory. Defendants Mark Musa and Mike Musa each executed an Unconditional
Personal Guaranty of the Corporate Debt of ASAP in favor of PSI, and
subsequently began falling behind on their payments due to the credit account in
December 2013.
PSI believed the likelihood of collecting the amounts due (over $1 million)
was slim, so PSI and Defendant Mark Musa and Mike Musa entered into an Asset
Purchase Agreement (APA) on July 20, 2015, which had a far less value
($300,000) than the debt owed to Plaintiffs. Pursuant to the APA, Defendants Mark
and Mike Musa agreed to be employed at PSI, through its wholly owned subsidy
Plaintiff LTC Pharmacy LLC (“LTC”), for at least six months, and further agreed
to be subject to terms containing non-competition, non-disclosure and nonsolicitation provisions. Under the APA, so long as certain conditions were met, the
debt owed to PSI would be extinguished.

Page 2 of 21

The complaint alleges that while working for Plaintiffs, Defendants Mark
and Mike Musa engaged in unlawful competitive behavior prohibited by the APA
and Employment Agreements. Defendants Mark and Mike Musa are alleged to
have used the assistance of Defendant Laureen Musa and Care Home to divert
customers and opportunities to Care Home, unlawfully stealing customers and
opportunities. Plaintiffs allege, upon information and belief, that Care Home was
formed in August 2014 for the purpose of continuing the retail pharmacy business
of Defendant Mark and Mike Musa, and that it was in competition with LTC.
Plaintiffs allege that Laureen Musa and other employees of ASAP working at Care
Home diverted Plaintiffs’ customers to the new pharmacy in knowing violation of
the APA and employment agreements. Plaintiffs further allege that Defendant Care
Home is knowingly profiting from its violation of these agreements.
STANDARD OF REVIEW
Defendants move to dismiss Plaintiff’s complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6) and 9(b). On a Rule 12(b)(6) motion to dismiss, the
Court must “assume the veracity of [the plaintiff’s] well-pleaded factual
allegations and determine whether the plaintiff is entitled to legal relief as a matter
of law.” McCormick v. Miami Univ., 693 F.3d 654, 658 (6th Cir. 2012) (citing
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); Mayer v. Mylod, 988 F.2d 635, 638
(6th Cir. 1993)).

Page 3 of 21

ANALYSIS
1. CHOICE OF LAW
Having originally filed their complaint in the Northern District of Ohio,
Plaintiff’s complaint contains claims raised under Ohio state law. Defendant argues
that, under Michigan choice of law jurisprudence, Michigan state law should
apply. Defendant asserts that Michigan law applies in this diversity case under the
rule articulated in Olmstead v. Anderson, 428 Mich. 1 (1986) and Sutherland v.
Kennington Truck Serv., 454 Mich. 274 (1997). Plaintiffs argue that under Van
Dusen v. Barrack, 376 U.S. 612, 639 (1964), Ohio state law should apply because
the Court must apply the law that the Ohio District Court would have applied to the
state law claims.
This case was transferred under 28 U.S.C. §1404 from the Northern District
of Ohio at the request of the Plaintiffs, without objection from the Defendants, in
order to avoid a possible destruction of complete diversity. [2]. Per Van Dusen v.
Barrack, the Erie doctrine requires that Courts apply the choice of law rules of the
transferor state if a case is transferred into their jurisdiction under §1404. 376 U.S.
612, 639 (1964). In Ohio, the choice of law rules dictate that “the law of the place
of injury controls unless another jurisdiction has a more significant relationship to
the lawsuit.” Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 946 (6th Cir.
2011), citing Morgan v. Biro Mfg. Co., 15 Ohio St.3d 339, 474 N.E.2d 286, 289

Page 4 of 21

(1984). When deciding which State has the most significant relationship, Ohio
courts consider:
(1) the place of the injury;
(2) the location where the conduct causing the injury took place;
(3) the domicile, residence, ... place of incorporation, and place of
business of the parties;
(4) the place where the relationship between the parties ... is located;
(5) any of the factors listed in Section 6 of the Restatement (Second)
of Conflict of Laws
Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 946 (6th Cir. 2011).
In this case, it is clear that Michigan state law should apply. All parties but
one Plaintiff reside or maintain a principle place of business in Michigan, and
therefore any injuries that may have occurred were also situated in Michigan. The
alleged acts of harm stemming from the violations of contract, i.e. the taking of
clients from Plaintiffs, and misuse of trade secrets, et. al., also occurred in
Michigan, as did the underlying relationship of the various contracts between
Plaintiffs and Defendants as well as the individual Defendants’ relationship with
Defendant Care Home. Finally, as Defendants illustrate in their response brief,
there is little substantive difference between the jurisprudence governing the
claims at issue in Ohio and Michigan. Therefore there is no risk of Plaintiffs being
entitled to greater relief if Michigan law is applicable rather than Ohio state law.
Accordingly, under Ohio choice of law rules, Michigan law should apply in this
case.

Page 5 of 21

Because Plaintiffs’ complaint contemplates claims brought under state law, the
Court grants Plaintiffs leave to amend their complaint to reflect the choice of law
decision in the interests of justice. However, the claims that the Court has
dismissed in this complaint are not affected by this limited amendment of the
complaint, because based on the substance of the complaint and the legal
arguments made by Plaintiffs under Michigan law in the response brief, a valid
claim cannot be stated for the claims that are dismissed under a Michigan law
analysis and any amendment that would affect this dismissed claims would be
futile based on the facts alleged against Care Home in the complaint. Foman v.
Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962).
2. MISAPPROPRIATION OF TRADE SECRETS
Plaintiffs allege that Defendant Care Home has misappropriated Plaintiffs’
trade secrets, including business practices, pricing information, customer contacts,
information regarding existing contracts, wholesale prices, and the specific needs
of each customers. [1 at ¶66-69]. As part of an employment agreement with LTC
signed by Defendants Mike and Mark Musa, this information was to be kept
confidential for the sole benefit of LTC. [1-11; 1-12]. The complaint also alleges
that Defendant Care Home was “fully aware of Mark and Mike Musa’s obligations
contained in the APA and Employment Agreements.” [1 at ¶35]. Defendant
contends the Plaintiffs have not stated a claim for misappropriation of trade secrets

Page 6 of 21

because they have failed to establish that the information at issue qualifies as a
“trade secret” as a matter of law, and because they do not allege in the complaint
that Defendant Care Home “misappropriated” the information in any way.
In Michigan, a claim of misappropriation of trade secrets has three elements,
“(1) the existence of a trade secret, (2) the defendant's acquisition of the trade
secret in confidence; and (3) the defendant's unauthorized use of it.” Polytorx,
L.L.C. v. Univ. of Michigan Regents, No. 318151, 2015 WL 2144800, at *7 (Mich.
Ct. App. May 7, 2015), citing Stromback v. New Line Cinema, 384 F3d 283, 302
(CA 6, 2004). Trade secrets are defined as:
(d)… information, including a formula, pattern, compilation, program,
device, method, technique, or process, that is both of the following:
(i)

Derives independent economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use.

(ii)

Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

Mich. Comp. Laws Ann. § 445.1902.
Defendant argues that Plaintiffs cannot state a claim for misappropriation of
trade secrets because the alleged secrets, including consumer lists, do not constitute
trade secrets under Michigan law. Michigan Courts have held that customer lists
can be protected under the Michigan Uniform Trade Secrets Act (MUSTA) if they

Page 7 of 21

are detailed information that cannot be readily available through another source,
and thus in some circumstances this can be protected as trade secrets in a
confidentiality agreement. Laethem Equip. Co. v. Deere & Co., No. 05-10113,
2007 WL 2433980, at *18 (E.D. Mich. Aug. 14, 2007).
In the complaint, Plaintiffs allege that Defendant Mike and Mark Musa
signed a confidentiality agreement, as part of their employment contract with LTC
that included a provision that describes the information that is considered trade
secrets under the MUSTA claim:
Employee acknowledges that during his employment with LTC he
will come into possession of trade secrets or other confidential and
proprietary information of LTC (all of which will be referred to in this
Agreement as “proprietary information”), specifically including,
among other things, the identity of clients and prospective clients of
LTC; client files and detailed information concerning client needs and
requirements; proposals designed to meet client needs or
requirements; product designs, drawings, and specifications, or their
drafts; formulas; pricing, cost, and margin information; and other
financial information and records of LTC. Employee acknowledges
that the foregoing types of proprietary information are highly
confidential to LTC, are valuable, give a competitive advantage to
LTC, and could not, without great expense and difficulty, be obtained
or duplicated by others who have not been able to acquire such
information by virtue of employment with LTC.
[1 at ¶27]. This agreement language appears to cover exactly the type of
information that Michigan Courts have considered to be trade secrets. See e.g.
Hayes–Albion v. Kuberski, 421 Mich. 170, 182, 364 N.W.2d 609, 615 (1984)
(customer lists developed by a former employee and information relating to a

Page 8 of 21

customer’s needs may be considered trade secrets if the employee is bound by a
confidentiality agreement); Laethem Equip. Co. v. Deere & Co., No. 05-10113,
2007 WL 2433980, at *18 (E.D. Mich. Aug. 14, 2007) (holding same). Since these
types of customer lists can constitute trade secrets, it is a question of fact whether
the lists and various information were readily identifiable and thus not trade
secrets, or if they indeed are the type of detailed information that is considered to
be protected under MUSTA.
Defendant Care Home also alleges that the claim fails to state that Plaintiffs’
took any measures to protect the alleged trade secrets, a requirement under
Michigan law to qualify as a trade secret. MCL §445.1902(d)(ii). However, as
detailed in the confidentiality agreement signed by Defendants Mike and Mark
Musa at the time of their employment, Plaintiffs clearly took reasonable efforts to
protect the disputed trade secret information, in fact invoking language from
Michigan MUSTA case law to describe the information at hand.
Under the MUSTA, misappropriation means either:
(i)

Acquisition of a trade secret of another by a person who knows
or has reason to know that the trade secret was acquired by
improper means.

(ii)

Disclosure or use of a trade secret of another without express or
implied consent by a person who did 1 or more of the
following:
(A) Used improper means to acquire knowledge of the
trade secret.
Page 9 of 21

(B) At the time of disclosure or use, knew or had reason
to know that his or her knowledge of the trade secret
was derived from or through a person who had
utilized improper means to acquire it, acquired under
circumstances giving rise to a duty to maintain its
secrecy or limit its use, or derived from or through a
person who owed a duty to the person to maintain its
secrecy or limit its use.
(C) Before a material change of his or her position, knew
or had reason to know that it was a trade secret and
that knowledge of it had been acquired by accident or
mistake.
Mich. Comp. Laws Ann. § 445.1902(b).
In the complaint, Plaintiffs clearly alleges that Defendant Care Home is
“fully aware of Mark and Mike Musa’s obligations contained in the APA and
Employment Agreements” which encompasses the confidentiality agreement. [1 at
¶35]. The complaint also alleges that Defendant Laureen Musa, wife of Defendant
Mark Musa, owns/operates Defendant Care Home and that Defendants Mike and
Mark Musa have been frequently observed at Defendant Care Home, and further
states that they work there. Given all of this information, the complaint
successfully alleges that Defendant Care Home acquired trade secrets of Plaintiffs
and had reason to know that the secrets were in fact improperly acquired.
While Defendant Care Home argues that Plaintiffs do not allege any specific
facts that Care Home knew the information was acquired by improper means, the
complaint as a whole lays out the claim for misappropriation of trade secrets, and
Page 10 of 21

clearly states that Care Home knew about the confidentiality agreements that the
Mark and Mike Musa had signed, and wrongfully used that information for their
own benefit to secure new clients. Therefore, Defendant Care Home’s Motion to
Dismiss is denied as to the misappropriation of trade secrets claim.
3. TORTIOUS INTERFERENCE WITH BUSINESS RELATIONSHIPS CLAIMS
Defendant argues that Plaintiffs’ claims of unfair competition and tortious
interference with business relationships should be dismissed because they are
preempted by MUTSA. Defendant Care Home also argues that Plaintiffs’ tortious
interference claim must be dismissed for failing to plead facts alleging that Care
Home interfered with their business relationships.
MUTSA contains a preemption provision, which states that the “act
displaces conflicting tort, restitutionary, and other law of this state providing civil
remedies for misappropriation of a trade secret.” Midfield Concession Enterprises,
Inc. v. Areas USA, Inc., No. 2:14-CV-12174, 2014 WL 4211013, at *3 (E.D. Mich.
Aug. 26, 2014), citing Mich. Comp. Laws § 445.1908(2)(a). However, MUTSA
does not preempt “other civil remedies that are not based on misappropriation of a
trade secret.” Id, citing MCL §445.1908(2).
In their tortious interference with business claim, Plaintiffs allege that
Defendants Mark and Mike Musa “made false representations” to Plaintiffs’
customers on behalf of Care Home and “attempted to obtain Plaintiffs’ contracts in

Page 11 of 21

order to benefit themselves and Care Home by using Plaintiffs’ confidential
information that they had access to as a result of being employed by Plaintiffs”
causing Plaintiffs to lose business relationships and expectancies between Plaintiffs
and their customers. [1 at ¶57]. Plaintiffs allege that all Defendants knew of these
contracts and business relationships and that they intended to use these acts of
tortious interference to improperly interfere with Plaintiffs’ contracts and business
relationships. [1 at ¶62-63].
The elements of tortious interference with a business relationship include (1)
“the existence of a valid business relation or expectancy,” (2) “knowledge of the
relationship or expectancy on the part of the interferer,” (3) “an intentional
interference inducing or causing a breach or termination of the relationship or
expectancy,” and (4) “resultant damage to the party whose relationship has been
disrupted.” Lakeshore Cmty. Hosp., Inc. v. Perry, 212 Mich. App. 396, 401, 538
N.W.2d 24, 27 (1995).
Additionally, tortious interference claims “must allege the intentional doing
of a per se wrongful act or the doing of a lawful act with malice and unjustified in
the law for the purpose of invading the contractual rights or business relationship
of another.” Bhan v. Battle Creek Health Sys., 579 F. App'x 438, 443 (6th Cir.
2014), citing CMI Int'l, Inc. v. Intermet Int'l Corp., 251 Mich.App. 125, 131, 649

Page 12 of 21

N.W.2d 808, 812 (Mich.App.2002). To establish that a Defendant's conduct lacked
justification and exhibited malice, “the plaintiff must demonstrate, with specificity,
affirmative acts by the defendant that corroborate the improper motive of the
interference.” Dalley v. Dykema Gossett, 287 Mich. App. 296, 324, 788 N.W.2d
679, 696 (2010).
Defendant contends that Plaintiffs have not alleged that Care Home
committed any act, and that the claim relies on the acts of Defendants Mike and
Matt Musa, and therefore the claim must be dismissed against Defendant Care
Home. Additionally, Defendant also states that even if the complaint alleged that
Care Home committed an affirmative act, there is nothing unlawful about Care
Home taking customers from Plaintiffs since both companies are engaged in the
retail pharmacy business in Michigan and possess the same customer base.
In the complaint, Plaintiffs do not plead any specific affirmative act that
Defendant Care Home undertook. While they allege that Care Home had
knowledge of the actions of Defendants Mike and Mark Musa, they do not allege
that these acts were supported or instigated by Defendant Care Home, or that it
performed any affirmative acts that underlies the tortious interference claim.
Rather, Plaintiffs only state that Defendant Care Home “knew of [Plaintiffs’]

Page 13 of 21

contracts and business relationships, and expectancies between Plaintiffs and its
customers.” [1 at ¶61].
While Plaintiffs allege that they have satisfied the standard by alleging that
Defendant Care Home acted by and through Defendants Mike and Mark Musa,
they fail to cite any case which supports the proposition that the requirements
under Michigan law for a tortious interference claim can be satisfied by mere
knowledge of the wrongful acts of others that interfere with business relationships
of a Plaintiff. Plaintiffs here have failed to plead any affirmative acts on the part of
Defendant Care Home which relate to the tortious interference with business
relationship claim. Accordingly, this claim is dismissed as against Defendant Care
Home.
Plaintiffs also bring an unfair competition claim against Defendants. In the
complaint, they allege that “Defendants have engaged in an unlawful conspiracy
which has involved the misappropriation of trade secrets, the violation of business
agreements, all designed to unfairly and unlawfully compete against Plaintiffs in
the marketplace.” [1 at ¶72]. Plaintiffs further allege that Defendants have enticed
customers “to transfer to Defendant Care Home with the promise that they will not
have to collect or pay co-pays,” thus committing a prohibited trade practice to
unfairly compete with Plaintiffs. [1 at ¶48].

Page 14 of 21

The allegations of engaging in the prohibited trade practice of promising
that customers would not have to fund co-pays with respect to the unfair
competition claim are allegations describing “conduct that could be deemed
unethical or unfair irrespective of whether trade secrets are involved” and therefore
this claim is not preempted under MUSTA and should not be dismissed. Dana Ltd.
v. Am. Axle & Mfg. Holdgins, Inc., No. 1:10-CV-450, 2012 WL 2524008, at *13
(W.D. Mich. June 29, 2012).
4. BUSINESS DEFAMATION
Plaintiffs also bring a claim of business defamation against Defendant Care
Home, alleging in the complaint that “Defendants told Plaintiffs’ customers that,
among other things, Plaintiffs were not providing proper services and were
charging them too much.” [1 at ¶80]. Under Michigan law, the four elements of
defamation are:
(1) a false and defamatory statement concerning the plaintiff,
(2) an unprivileged communication to a third party,
(3) fault amounting at least to negligence on the part of the publisher,
and
(4) either actionability of the statement irrespective of special harm
(defamation per se) or the existence of special harm caused by
publication
Ghanam v. Does, 303 Mich. App. 522, 544, 845 N.W.2d 128, 142 (2014).
Michigan Courts have also held that defamation claims have a specificity
requirement, and that the complaint must include recitation that “[w]ho made the
Page 15 of 21

statement and to whom publication was made are included in these requirements”
of the elements of a defamation claim. Hantz Grp., Inc. v. Haney, No. 292954,
2010 WL 4864812, at *5 (Mich. Ct. App. Nov. 30, 2010), citing Ledl v. Quik Pik
Food Stores, Inc., 133 Mich. App. 583, 589, 349 N.W.2d 529, 532 (1984). In the
complaint at issue, Plaintiffs do not identify who made the statement or to whom
the statement was made. Therefore, Defendant Care Home’s motion to dismiss
Plaintiff’s defamation claim is granted.
5. UNJUST ENRICHMENT
Under Michigan law, “[t]he elements of a claim for unjust enrichment are:
(1) receipt of a benefit by the defendant from the plaintiff and (2) an inequity
resulting to plaintiff because of the retention of the benefit by defendant.” Barber
v. SMH (US), Inc., 202 Mich. App. 366, 375 (1993), citing Dumas v. Auto Club
Ins. Ass'n, 437 Mich. 521, 546, 473 N.W.2d 652 (1991). Defendant argues that
Plaintiffs have not stated a claim because the complaint does not allege any facts to
suggest that Care Home obtained any benefit from the goods that were allegedly
ordered and received by Defendants and therefore this claim should be dismissed
as to Defendant Care Home.
In the complaint, Plaintiffs allege that Defendants were unjustly enriched
“by failing and refusing to pay Plaintiffs for goods ordered and received by
Defendants and, upon information and belief, resold by Defendants.” [1 at ¶91].

Page 16 of 21

Plaintiffs argues that this expressly establishes a claim for unjust enrichment
because the allegations include all Defendants in the claim and further assert that
all Defendants, including Care Home, ordered and received these goods and resold
them without paying Plaintiffs.
The Court agrees with Defendant Care Home that this claim should be
dismissed as to Care Home. The complaint claims that Defendants were unjustly
enriched in the amount of $1,303,977.38 for “failing and refusing to pay Plaintiffs
for goods ordered and received by Defendants and, upon information and belief,
resold by the Defendants.” [1 at ¶91]. The complaint also identifies that these
goods were purchased by ASAP and Mark and Mike Musa from PSI. However, the
complaint fails to adequately allege that Defendant Care Home was a party to those
agreements, or indeed received any profit from the purchases by the individual
Defendants or ASAP. The mere use of the term “Defendants” does not
automatically include Care Home, and when the complaint identifies Defendants
Mark and Mike Musa as the purchasers and debt holders of the $1,303,977.38,
there is no indication contained in the complaint that the separate entity of Care
Home was implicated in any of these allegations. Therefore, this claim must be
dismissed as to Defendant Care Home.

Page 17 of 21

6. CONVERSION
In Michigan, common law conversion is defined as, “any distinct act of
domain wrongfully exerted over another's personal property in denial of or
inconsistent with the rights therein.” (Pollard v. J.P. Morgan Chase Bank, NA, 50
F. Supp. 3d 829, 834-35 (E.D. Mich. 2014), quoting Foremost Ins. Co. v. Allstate
Ins. Co., 439 Mich. 378, 391, 486 N.W.2d 600 (1992). A conversion claim must
plead “an interest in specific, identifiable personalty.” Lettinga v. Agristor Credit
Corp., 686 F.2d 442, 448 (6th Cir. 1982), citing Hance v. Tittabawassee Boom Co.,
70 Mich. 277 (1888). “To support an action for conversion of money, the
defendant must have an obligation to return the specific money entrusted to his
care.” Head v. Phillips Camper Sales & Rental, Inc., 234 Mich.App. 94, 111
(1999). “[T]he defendant must have obtained the money without the owner's
consent to the creation of a debtor and creditor relationship.” Id at 112.
In the complaint, Plaintiffs do not plead any facts to establish that Defendant
Care Home had any obligation to return any of the alleged “funds, assets and
opportunities” that Plaintiffs lost from its loss of business from customers and
clients that allegedly moved to Defendant Care Home. There are no allegations in
the complaint that Defendant Care Home ever interacted with Plaintiffs, had any
type of relationship with Plaintiffs or would have had any obligation to return any

Page 18 of 21

unspecified “funds, assets and opportunities” that they gained by retaining excustomers from Plaintiffs.
With respect to the alleged conversion of “opportunities,” Michigan law
states that to plead a valid claim for conversion of intangible property, the
intangible rights must be “merged in, or identified with, some document or other
tangible property.” Jason J. Armstrong, D.D.S., P.C. v. O'Hare, No. 308635, 2014
WL 1614474, at *5 (Mich. Ct. App. Apr. 22, 2014). In the complaint at bar, the
undefined and vague “opportunities” enumerated in the conversion claim clearly
have no “solid, identifiable, intellectual base…capable of being exclusively owned
and possessed.” Id at *6. Moreover, the conversion claim surrounding “assets”
does not concern any specific, identifiable property. Lettinga, 686 F.2d at 448.
Therefore, Defendant Care Home’s Motion to Dismiss as to the conversion claim
is granted.
7. CONSPIRACY
Under Michigan law, “[a] civil conspiracy is a combination of two or more
persons, by some concerted action, to accomplish a criminal or unlawful purpose,
or to accomplish a lawful purpose by criminal or unlawful means.” Advocacy Org.
for Patients & Providers v. Auto Club Ins. Ass'n, 257 Mich. App. 365, 384, 670
N.W.2d 569, 580 (2003), aff'd, 472 Mich. 91, 693 N.W.2d 358 (2005). In their
complaint, Plaintiffs allege that “Defendants entered into an agreement to conspire

Page 19 of 21

to unlawfully divert and misappropriate the assets and business opportunities of
Plaintiffs.” [1 at ¶113].
Defendant Care Home argues that Plaintiffs have not adequately alleged that
it worked in concerted action with the individual Defendants to conspire against
Plaintiffs. Plaintiffs assert that they have adequately alleged a conspiracy claim,
based on their allegations in the complaint. However, Plaintiffs merely point to
bare boned allegations that amount to no more than a recital of the elements of the
claim, including “Defendants entered into an agreement to conspire…” and
“Defendants acted in furtherance of their agreement to conspire…” [1 at ¶113-14].
There are no facts alleged in any part of the complaint to support a claim of
conspiracy against Care Home. These allegations are no more than restatement of a
legal conclusion and do not establish any supporting specific facts to uphold the
allegations that Defendant Care Home acted to conspire. Therefore they do not
support a claim of conspiracy. See Cyborowski v. Ennest, No. 08-13736-BC, 2009
WL 1658181, at *7 (E.D. Mich. June 11, 2009).
CONCLUSION
Defendant Care Home filed a Motion to Dismiss the complaint in its entirety
as against Care Home. The Court grants in part and denies in part this motion. The
Court grants this motion as to the claims of tortious interference with business
relationships, defamation, unjust enrichment, conversion and conspiracy and

Page 20 of 21

denies to as to the claims of misappropriation of trade secrets and unfair
competition. Additionally, the Court finds that Michigan law applies to this case
and Plaintiffs are given leave to amend their complaint to reflect that
determination. However, given the facts alleged in the complaint, it would be futile
to grant Plaintiffs leave to amend any of the claims dismissed in this order as to
Care Home, and therefore those claims remain dismissed as against Defendant
Care Home.
IT IS ORDERED that Defendant Care Home’s Motion to Dismiss [16] is
GRANTED in part, dismissing Plaintiffs’ claims of tortious interference with
business relationships, defamation, unjust enrichment, conversion and conspiracy
against Defendant Care Home, and DENIED in part as to Plaintiffs’ claims of
misappropriation of trade secrets and unfair competition against Defendant Care
Home.
IT IS FURTHER ORDERED that Plaintiffs are granted leave to amend the
complaint to reflect the Court’s determination that Michigan state law applies in
this case.
SO ORDERED

Dated: February 27, 2017

s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge

Page 21 of 21