Industrial Injury Prevention and Management, LLC v. Fit for Work, LLC
Filing
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ORDER granting in part and denying in part 9 Motion to Dismiss Signed by Chief District Judge Louis Guirola, Jr on 11/30/2016 (Guirola, Louis)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
INDUSTRIAL INJURY PREVENTION
AND MANAGEMENT, LLC
v.
PLAINTIFF
CAUSE NO. 1:16CV270-LG-RHW
FIT FOR WORK, LLC
DEFENDANT
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
BEFORE THE COURT is the Motion to Dismiss [9] filed by Fit for Work, in
which it seeks dismissal of Industrial Injury Prevention and Management, LLC’s
tortious interference with contract and accounting and damages claims. The
Motion has been fully briefed by the parties. After reviewing the Motion, the record
in this matter, and the applicable law, the Court finds that the Motion to Dismiss
should be granted as to Industrial Injury’s tortious interference with contract claim
and denied as to Industrial Injury’s claim for an accounting and damages.
BACKGROUND
In May 2012, F.A. Richards Associates, a third-party administrator for the
shipbuilding company Huntington Ingalls, Inc., approach Douglas Roll with a
proposal for opening an on-site physical therapy clinic at Huntington Ingalls. Roll
then contacted Fit for Work, a company that specializes in providing workplace
injury prevention services, because he was considering providing these services at
the on-site clinic. However, in August 2012, representatives of F.A. Richards and
Huntington Ingalls informed Roll that the focus of the clinic would initially be
prescribed physical therapy for specific injuries but may eventually be expanded to
include injury prevention services. Roll formed a limited liability company named
Industrial Injury Prevention and Management, LLC (hereafter referred to as
“Industrial Injury”) to provide services at the on-site clinic.
On October 1, 2012, Fit for Work and Industrial Injury entered into a License
Agreement, which provides that Fit for Work developed a proprietary program to
assist businesses “in creating a safer work environment for their employees” by
providing “consulting services and advice . . . regarding proper ergonomics, body
mechanics, physical education, [and] assistance with occupational and health
standards . . . .” (Compl., Ex. 1 at 1, ECF No. 1-2). The license agreement provided
Industrial Injury the exclusive right to use Fit for Work’s program in the territory
designated by the license agreement and that it would pay a fifteen percent
commission to Fit for Work. (Compl., Ex. 1 at vi, 1, 3-4, ECF No. 1-2).
On December 6, 2012, a F.A. Richards representative informed Roll that F.A.
Richards and Huntington Ingalls did not want any injury prevention services to be
provided at the on-site clinic. Nevertheless, Roll underwent training conducted by
Fit for Work in 2013.
On October 8, 2013, Industrial Injury entered into a Consulting Contract
with F.A. Richards. Although F.A. Richards and Huntington Ingalls had rejected
the Fit for Work proposal for injury prevention and Industrial Injury was solely
providing prescribed physical therapy at the on-site clinic, Industrial Injury
“voluntarily remitted the 15% commissions” to Fit for Work. (Compl. at 8, ¶32, ECF
No. 1-2). Industrial Injury claims that the Fit for Work injury prevention program
has only been used on a de minimis basis at the clinic. Industrial Injury explains:
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From the term of the execution of the License Agreement, in
anticipation of [Fit for Work’s] promises, representations and
presentations, it was anticipated that workplace ergonomics and
preventive care would encompass the vast majority of the work
performed by [Industrial Injury]. As a result, and although not
required under the terms of the License Agreement, [Industrial Injury]
gratuitously remitted fifteen percent of its prescriptive care, insurance,
worker’s compensation billed, insurance claim based fees to [Fit for
Work].
(Compl. at 10, ¶34, ECF No. 1-2).
Industrial Injury eventually stopped paying Fit for Work the fifteen percent
commission. Industrial Injury claims that Fit for Work then “began to take the
position that, in the event that [Industrial Injury] terminated the License
Agreement [with Fit for Work], it would have to cease doing business with [F.A.
Richards] and for employees of [Huntington Ingalls].” (Compl. at 11, ¶37).
Industrial Injury viewed this as a threat to interfere with Industrial Injury’s
Consulting Contract with F.A. Richards. As a result, it filed the present lawsuit
against Fit for Work attempting to assert a tortious interference with contract claim
and seeking a declaration that Industrial Injury’s Consulting Contract with F. A.
Richards is not contingent on the continuance of the License Agreement between
Industrial Injury and Fit for Work. It also seeks an accounting and return of funds
it paid to Fit for Work. Fit for Work filed the present Motion seeking dismissal of
Industrial Injury’s tortious interference with contract claim and its claim for an
accounting and damages.
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DISCUSSION
I. STANDARD OF REVIEW
When considering a motion to dismiss filed pursuant to Fed. R. Civ. P.
12(b)(6), the court must accept all well-pleaded facts as true and must view all facts
in the light most favorable to the plaintiff. New Orleans City v. Ambac Assurance
Corp., 815 F.3d 196, 199-200 (5th Cir. 2016). The complaint should be dismissed
unless it pleads “enough facts to state a claim to relief that is plausible on its face.”
Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “[T]he complaint must allege more than labels
and conclusions, a formulaic recitation of the elements of a cause of action will not
do, and factual allegations must be enough to raise a right to relief above the
speculative level.” Jabaco, Inc. v. Harrah’s Operating Co., Inc., 587 F.3d 314, 319
(5th Cir. 2009).
II. TORTIOUS INTERFERENCE WITH CONTRACT
The parties agreed that Texas law should be applied to interpret the
License Agreement. (Compl., Ex. 1 at 14, ECF No. 1-2). However, as the parties
have correctly noted, the tortious interference with contract claim is a tort claim
that is not governed by the choice of law provision in the License Agreement.
In cases for which diversity jurisdiction exists, courts apply the choice of law
rules of the forum state to determine which state’s substantive law should be
applied. Ellis v. Trustmark Builders, Inc., 625 F.3d 222, 226 (5th Cir. 2010). Thus,
Mississippi’s choice of law rules must be applied in the present case. Under
Mississippi law, courts should only conduct a choice-of-law analysis if there is a true
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conflict between the laws of the states that have an interest in the litigation.
Williams v. Liberty Mut. Ins. Co., 741 F.3d 617, 620 (5th Cir. 2014).
According to the parties, the two states that have an interest in this litigation
are Mississippi and Texas. Under Mississippi law, recovery for tortious
interference with contract is permissible where a plaintiff proves:
(1) the acts were intentional and willful; (2) they were calculated to
cause damage to the plaintiff in his lawful business; (3) they were done
for the unlawful purpose of causing damage and loss, without right or
justifiable cause on the part of the defendant, which acts constitute
malice; and (4) actual damage or loss resulted.
Reeves v. Midcontinent Exp. Pipeline, LLC, 119 So. 3d 1097, 1102 (¶13) (Miss. Ct.
App. 2013). “In this context, ‘malicious’ is defined as the intentional doing of a
harmful act without legal or sound justification or excuse, in other words, the
willful violation of a known right.” Collins v. Collins, 625 So. 2d 786, 790 (Miss.
1993). Therefore, “[a]n action for interference with contract ordinarily lies when a
party maliciously interferes with a valid and enforceable contract[,] causing one
party not to perform and resulting in injury to the other contracting party.” Nichols
v. Tri-State Brick & Tile Co., Inc., 608 So. 2d 324, 328 (Miss. 1992).
Under Texas law, the elements of a tortious interference with contract claim
are “(1) an existing contract subject to interference, (2) a willful and intentional act
of interference with the contract, (3) that proximately caused the plaintiff’s injury,
and (4) caused actual damages or loss.” Prudential Ins. Co.of Am. v. Fin. Review
Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). The “plaintiff is not limited to showing
the contract was actually breached . . . . Any interference that makes performance
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more burdensome or difficult or of less or no value to the one entitled to
performance is actionable.” Khan v. GBAK Props., Inc., 371 S.W.3d 347, 359-60
(Tex. Ct. App. 2012).
In the present case, it is undisputed that Fit for Work has not interfered with
the F.A. Richards contract; Industrial Injury merely alleges that Fit for Work has
threatened to interfere with the contract. Industrial Injury also does not seek
damages for interference or claim that any damages have resulted from the alleged
threatened interference; it merely seeks injunctive relief preventing any future
interference on the part of Fit for Work.
Since Industrial Injury has not alleged any malicious or intentional acts to
interfere with the F.A. Richards contract and has not alleged any resulting
damages, it has not asserted a plausible claim for interference with contract under
either Mississippi or Texas law. The fact that Industrial Injury is only seeking
injunctive relief does not affect this determination, because Industrial Injury would
be required to demonstrate a substantial likelihood of success on the merits as to its
tortious interference with contract claim before it could obtain a preliminary
injunction. See Speaks v. Kruse, 445 F.3d 396, 399-400 (5th Cir. 2006) (explaining
that a preliminary injunction can only be obtained by demonstrating, inter alia, a
substantial likelihood of success on the merits); see also Sepulvado v. Jindal, 729
F.3d 413, 418 (5th Cir. 2013) (“To assess the likelihood of success on the merits, we
look to standards provided by the substantive law.”) Since Industrial Injury has not
alleged at least two elements of its tortious interference with contract claim, it
cannot demonstrate a substantial likelihood of success on the merits. As a result,
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Industrial Injury’s tortious interference with contract claim must be dismissed
without prejudice pursuant to Fed. R. Civ. P. 12(b)(6).
III. ACCOUNTING AND DAMAGES
Fit for Work argues that Industrial Injury’s claim for an accounting and
damages should be dismissed pursuant to the voluntary payment rule. Since the
accounting and damages claim would require interpretation of the License
Agreement, Texas law must be applied.
“Under the voluntary payment rule, money voluntarily paid on a claim of
right, with full knowledge of all the facts, in the absence of fraud, deception, duress,
or compulsion, cannot be recovered back merely because the party at the time of
payment was ignorant of or mistook the law as to his liability.” Berryman’s S. Fork,
Inc. v. J. Baxter Brinkmann Int’l Corp., 418 S.W.3d 172, 189 (Tex. Ct. App. 2013).
The purpose of the voluntary payment rule is “to preclude a party from paying out
his money, leading the other party to act as though the matter were closed, and
then to be in the position to change his mind and invoke the aid of the courts to get
it back.” Miga v. Jensen, 299 S.W.3d 98, 101 (Tex. 2009). The rule constitutes a
defense to claims for restitution or unjust enrichment. Berryman’s, 418 S.W.3d at
189.
Although Industrial Injury admits in its Complaint that it voluntarily and
gratuitously made the payments at issue to Fit for Work, it would be premature to
grant dismissal based solely on that admission. The question of whether Industrial
Injury acted with full knowledge of all the facts and in the absence of deception,
duress, or compulsion is not addressed by this admission. Under these
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circumstances, Fit for Work’s request for dismissal of the claim for an accounting
and damages must be denied at this time.
CONCLUSION
For the foregoing reasons, Industrial Injury’s tortious interference with
contract claim is dismissed without prejudice for failure to state a claim for relief
that can be granted. Fit for Work’s request for dismissal of Industrial Injury’s claim
for an accounting and damages is denied.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion to
Dismiss [9] filed by the defendant Fit for Work is GRANTED as to Industrial
Injury’s tortious interference with contract claim and DENIED as to Industrial
Injury’s claim for an accounting and damages.
IT IS, FURTHER, ORDERED AND ADJUDGED that Industrial Injury’s
tortious interference with contract claim is DISMISSED WITHOUT
PREJUDICE.
SO ORDERED AND ADJUDGED this the 30th day of November, 2016.
s/
Louis Guirola, Jr.
LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE
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