Carrero v. Molina Healthcare of Puerto Rico, Inc.

Filing 15

MEMORANDUM AND ORDER: For the reasons set forth in this Memorandum and Order, Defendant's Motion to Dismiss at Docket No. 9 is DENIED. Signed by Judge Raul M. Arias-Marxuach on 5/6/2022. (mrr)

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 1 of 10

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
CARLOS A. CARRERO,
Plaintiff
v.
MOLINA HEALTHCARE OF PUERTO
RICO, INC.,

CIVIL NO. 21-1605 (RAM)

Defendant
MEMORANDUM AND ORDER
RAÚL M. ARIAS-MARXUACH, United States District Judge
Pending before the Court is defendant Molina Healthcare of
Puerto Rico, Inc.’s (“Molina Healthcare” or “Defendant”) Motion to
Dismiss (the “Motion”). (Docket No. 9). Plaintiff Carlos Antonio
Carrero (“Plaintiff”) filed an Opposition to the Motion (the
“Opposition”), and Defendant filed a Reply (the “Reply”). (Docket
Nos. 11; 14). For the reasons detailed below, the Motion is DENIED.
I.

FACTUAL BACKGROUND 1

Molina Healthcare is a health insurance company. (Docket No.
1 ¶ 3.1). In 2014, Molina Healthcare contracted with the Puerto
Rico Administration of Health Insurance Services (“ASES” by its
Spanish acronym) and became a major provider for Vital, Puerto

The Court’s factual recitation is taken from Plaintiff’s allegations in the
Complaint, the content of which must be accepted as true at this stage of the
proceedings. See Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55
(1st Cir. 2012).
1

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 2 of 10
Civil No. 21-1605 (RAM)

2

Rico’s publicly funded health insurance plan. Id. ¶ 3.2.
On March 17, 2017, Defendant hired Plaintiff, a forty-year
veteran of the health services industry, as its Chief Executive
Officer (“CEO”). Id. ¶ 3.6.
In summer 2020, Molina Healthcare advised ASES that, by August
2021, it would stop providing services to the Vital program. Id.
¶ 3.9. Because the ASES contract was Defendant’s only business
activity in Puerto Rico, this meant it would be exiting the Puerto
Rican market by August 2021 as well. Id. ¶¶ 3.3, 3.9.
Following
negotiations

this

news,

regarding

Plaintiff

Plaintiff’s

and

Defendant

severance

engaged

agreement.

in
Id.

¶ 3.10. Plaintiff alleges that, during this process, he was led to
believe

that

Molina

Healthcare

would

be

terminating

the

CEO

position entirely months before it was scheduled to cease its
activities in Puerto Rico. Id. ¶ 3.11. Thus, Plaintiff believed he
would lose his position before August 2021 and would not be
replaced. Id. Plaintiff contends this belief was supported by the
tasks he was asked to carry out during the negotiation process,
such as negotiating the termination of lease agreements, closing
out vendor/supplier accounts, and handling pending claims. Id.
¶ 3.12.
Plaintiff asserts that by late May 2020, the parties had
reached an understanding that Plaintiff would work until February
2021. Id. ¶ 3.13. Plaintiff avers this termination date was crucial

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 3 of 10
Civil No. 21-1605 (RAM)

3

to the severance negotiations because, had he stayed in the CEO
position until March 1, 2021, he would have been entitled to
collect on his 2021 Employee Stock Purchase Plan. Id. ¶ 3.14. Also
around late May 2020, Plaintiff received a draft Waiver and Release
Agreement

(the

“Agreement”),

which

included

incentives

for

Plaintiff to resign but did not include a precise termination date.
Id. ¶ 3.13. However, because Plaintiff believed the February 2021
date “was set in stone,” he signed the Agreement in June 2020,
believing

it

was

the

best

deal

he

would

get

under

the

circumstances. Id. ¶¶ 3.15, 3.16.
On January 2, 2021, Defendant allegedly prepared a letter
addressed

to

Plaintiff

advising

him

of

his

March

1,

2021

termination date. Id. ¶ 3.17. The Complaint does not state whether
that letter was ever sent to Plaintiff.
On February 14 and 15, 2021, the parties signed an amendment
to the Agreement. Id. ¶ 3.18. This amendment awarded Plaintiff an
additional $15,000 in compensation and specified a February 28,
2021 termination date. Id. Pursuant to the amended agreement,
Plaintiff stepped down from his role as CEO on February 28, 2021.
Id. ¶ 3.19.
Thereafter, on March 29, 2021, Molina Healthcare announced
the appointment of Zivany García (“García”) to Plaintiff’s former
CEO position. Id. ¶ 3.20. Plaintiff alleges Defendant purposefully
misled him into thinking his CEO position would be eliminated

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 4 of 10
Civil No. 21-1605 (RAM)

4

beginning in March 2021 to induce him to sign the Agreement, and
thus forego his stock options which would have been due if he
stayed an additional day, i.e., until March 1, 2021. Id. ¶ 3.22.
Plaintiff contends this scheme became obvious once García was
appointed. Id. ¶ 3.25.
Given this alleged deceit meant to induce Plaintiff into
signing the Agreement, Plaintiff requests this Court declare the
Agreement null and void pursuant to Puerto Rico law. Id. ¶ 3.23.
II.

STANDARD OF REVIEW

When ruling on a Rule 12(b)(6) motion, “[t]he sole inquiry
. . .

is

whether,

construing

the

well-pleaded

facts

of

the

complaint in the light most favorable to the plaintiffs, the
complaint states a claim for which relief can be granted.” OcasioHernandez v. Fortuno-Burset, 640 F.3d 1, 7 (1st Cir. 2011). The
Court must first “isolate and ignore statements in the complaint
that simply offer legal labels and conclusions or merely rehash
cause-of-action

elements.”

Schatz,

669

F.3d

at

55

(citations

omitted). Then, the Court takes “the complaint’s well-pled (i.e.,
non-conclusory,

non-speculative)

facts

as

true,

drawing

all

reasonable inferences in the pleader’s favor,” to determine “if
they

plausibly

narrate

a

claim

for

relief.”

Id.

(citations

omitted). “If that factual content, so taken, allows the court to
draw the reasonable inference that the defendant is liable for the
misconduct alleged, the claim has facial plausibility” and thus

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 5 of 10
Civil No. 21-1605 (RAM)

5

survives a motion to dismiss. Ocasio-Hernandez, 640 F.3d at 12.
III.

APPLICABLE LAW

Under Puerto Rico contract law, deceit, or “dolo,” may exist
“either in the formation of a contract where a party obtains the
consent of another through deceptive means, or in the performance
of

a

contractual

obligation

where

a

party

knowingly

and

intentionally, through deceitful means, avoids complying with its
contractual obligations.” Feliciano-Muñoz v. Rebarber-Ocasio, 970
F.3d 53, 62 (1st Cir. 2020) (internal quotation marks and citation
omitted). Dolo is considered “grave” when it determines the consent
of a party and “incidental” when it merely influences the party’s
consent. Id. Dolo grave nullifies the contract while incidental
dolo merely gives rise to a claim for damages. Id.
While dolo and fraud are similar concepts, they are not one
and the same. As this District has explained, “a fact pattern
involving contract fraud will always involve ‘dolo,’ but a fact
pattern

involving

‘dolo’

will

not

always

involve

fraud.”

Generadora De Electricidad Del Caribe, Inc. v. Foster Wheeler
Corp., 92 F. Supp. 2d 8, 19 (D.P.R. 2000). Because of this subtle
but important distinction, courts do not apply the heightened
pleading requirements of Federal Rule of Civil Procedure 9(b)
(“Rule 9(b)”) to strictly dolo claims. Id.
Further, “dolo, like fraud, is not presumed, and the party
alleging dolo bears the burden of proof.” Burk v. Paulen, 100 F.

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 6 of 10
Civil No. 21-1605 (RAM)
Supp.

3d

126,

135

6

(D.P.R.

2015).

Thus,

a

plaintiff

must

sufficiently plead that the defendant “acted with intentional
fault or bad faith to deceive him when discussing the formation of
an agreement between the parties[.]” Id. Finally, “[a] person’s
education, his social and economic status, his relations, and the
type of business in which he is engaged are significant when trying
to determine the existence of ‘dolus’ that would void his consent.”
Citibank v. Dependable Ins. Co., 121 D.P.R. 503, 512 (1988).
IV.

ANALYSIS

In this case, Plaintiff alleges dolo grave in the formation
of a contract. Specifically, he alleges: (1) he would not have
signed the Agreement or its amendment and foregone his stock
options had he known Defendant would hire a new CEO, (2) Defendant
purposefully misled him into thinking the CEO position would be
eliminated after February 28, 2021, and (3) thus, the Agreement
should be deemed null and void. (Docket No. 1 ¶¶ 3.22, 3.23).
Plaintiff affirmatively rejected any reading of the Complaint that
advanced a fraud claim, thus relying solely on a dolo theory of
liability. (Docket No. 11 at 10-11). Therefore, the Court need not
subject the Complaint to heightened scrutiny pursuant to Rule 9(b).
See Generadora De Electricidad Del Caribe, Inc., 92 F. Supp. 2d at
19.
A. Plaintiff states a plausible theory of deception
Defendant primarily challenges the Complaint’s sufficiency by

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 7 of 10
Civil No. 21-1605 (RAM)

7

arguing that Plaintiff could not have been a “victim of dolo grave”
because he “knew that [Defendant] had contractual obligations that
would require its presence through at least August of 2021” and
thus Plaintiff must have known that Defendant “needed someone to
lead its operations until its formal exit from Puerto Rico.”
(Docket No. 14 at 4-5). 2 The Court is not persuaded by this
argument.
Plaintiff’s Complaint freely admits that he knew Defendant
was scheduled to end its business in Puerto Rico by August 2021.
(Docket No. 1 at ¶ 3.9). What Plaintiff alleges he was deceived
by, however, is when the CEO position was being eliminated, if at
all. Id. ¶ 3.11. These are wholly separate issues that Defendant
attempts

to

conflate.

Drawing

all

reasonable

inferences

in

Plaintiff’s favor, as the Court must do at this stage, Plaintiff
has

stated

a

plausible

dolo

claim

based

on

this

theory

of

deception. His knowledge of Molina Healthcare’s end date in Puerto
Rico is not the same as knowledge of the continuation of his CEO
position.

Defendant relies on portions of an agreement Plaintiff allegedly signed with
ASES in support of its contention that “Plaintiff knew that the Run-Out Period
for [Defendant] to leave the Puerto Rico market would carry over until, at
least, August 31, 2020[.]” (Docket Nos. 9 at 3, 9-10; 14 at 4). However,
Defendant did not cite a single case where a court took judicial notice of a
similar document at the motion to dismiss stage. Instead, it relies on the
general standard for judicial notice and one case that decided the issue in a
different procedural posture. See id. Thus, the Court will not consider the
ASES agreement at this time.
2

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 8 of 10
Civil No. 21-1605 (RAM)

8

B. Plaintiff sufficiently alleges Defendant acted with
intentional fault or bad faith
Defendant also challenges the Complaint’s sufficiency on the
grounds that Plaintiff failed to allege Defendant acted with
intentional fault or bad faith, as he must to sufficiently plead
a dolo claim. (Docket Nos. 9 at 7; 14 at 5); see Burk, 100 F. Supp.
3d at 135. The Court disagrees. Plaintiff plainly alleges Defendant
“purposefully misled” him “into thinking that his position would
be eliminated from [] March 2021 onward, never to be refilled[.]”
(Docket No. 1 ¶ 3.22). He further alleges this “was done for the
improper purpose of denying plaintiff from collecting the stock
options that he was due as per his compensation agreement.” Id.
These specific allegations of bad faith, coupled with the numerous
allegations concerning the financial ramifications and possible
motivations behind Defendant’s alleged deceit, allow the Court to
draw the reasonable inference that Defendant acted in bad faith in
inducing Plaintiff to sign the Agreement and subsequent amendment
and resign from his position before March 1, 2021. Cf. Punta Lima,
LLC v. Punta Lima Dev. Co., LLC, 425 F. Supp. 3d 87, 106 (D.P.R.
2019) (dismissing a dolo claim where the complaint contained only
conclusory allegations of bad faith that did not allow the court
to make a similar inference). Thus, the Motion cannot be granted
on this ground.

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 9 of 10
Civil No. 21-1605 (RAM)

9

C. Plaintiff’s sophistication is insufficient to justify
dismissal of the Complaint
Finally,

Defendant

sophistication

points

in

the

arguing

to

Plaintiff’s

Complaint

should

be

level

of

dismissed.

(Docket Nos. 9 at 11; 14 at 4-5). Defendant contends that, “[a]s
a seasoned executive, Plaintiff should be held to a very high
standard, and any ‘misrepresentations’ through which he could have
been ‘duped’ should have been almost offensive[.]” (Docket No. 9
at 11). The Court agrees with Defendant’s general argument and
notes that the First Circuit has emphasized the importance of
similar considerations in the past. See, e.g., Citibank Glob.
Markets, Inc. v. Rodriguez Santana, 573 F.3d 17, 29 (1st Cir. 2009)
(noting that “the party seeking to invalidate the contract was a
wealthy and accomplished attorney experienced enough to have a
portfolio

that

generated

in

excess

of

a

million

dollars

in

brokerage commissions”). However, in the case at bar, Plaintiff
specifically

states

why

it

was

reasonable

to

have

relied

on

Defendant’s alleged deceit despite his years of experience in the
industry. (Docket No. 1 ¶ 3.12). To wit, the Complaint explains
that Plaintiff was charged with performing tasks consistent with
terminating his position, including negotiating the termination of
lease agreements and closing out vendor/supplier accounts. Id.
Thus, Plaintiff’s sophistication does not warrant dismissing the
Complaint at this stage.

Case 3:21-cv-01605-RAM Document 15 Filed 05/06/22 Page 10 of 10
Civil No. 21-1605 (RAM)

10
V.

CONCLUSION

For the foregoing reasons, Defendant’s Motion at Docket No.
9 is DENIED.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 6th day of May 2022.
S/ RAÚL M. ARIAS-MARXUACH____
United States District Judge