Charleston Area Medical Center, Inc. v. Sakhai
Filing
48
MEMORANDUM OPINION AND ORDER granting plaintiff Charleston Area Medical Center, Inc.'s 10 MOTION to Dismiss counts three and four of defendant's counterclaim; directing that counts three and four of Dr. Sakhai's 7 counterclaim are dismissed. Signed by Judge John T. Copenhaver, Jr. on 11/14/2016. (cc: counsel of record; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
CHARLESTON AREA MEDICAL
CENTER, INC.,
Plaintiff,
v.
Civil Action No. 2:16-0333
LEILA ELLEN SAKHAI, M.D.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is plaintiff Charleston Area Medical Center,
Inc.’s (“CAMC”) motion to dismiss counts three and four of
defendant’s counterclaim, filed May 3, 2016.
I.
Plaintiff CAMC instituted this action by filing a
complaint with this court on January 14, 2016, invoking the
jurisdiction of the court on the basis of diversity
jurisdiction.
In the complaint, CAMC alleges that on June 25,
2012, CAMC Teays Valley Hospital, Inc. (“CAMC Teays Valley”),
which thereafter merged into CAMC on March 1, 2013, entered into
a Recruitment and Commercial Loan and Security Agreement (“the
Recruitment Agreement”) with defendant Leila Ellen Sakhai, M.D.
(“Dr. Sakhai”).
Pl. Compl. at ¶ 7; Exhibit A to Pl Compl.
Under the terms of the Recruitment Agreement, CAMC Teays Valley
(now CAMC) was to provide “recruitment incentives to [Dr.
Sakhai], including without limitation a commercial recruitment
loan, to assist [Dr. Sakhai] in establishing her medical
practice in the geographic area served by CAMC Teays Valley.”
Pl. Compl. at ¶ 8.
On July 10, 2012, Dr. Sakhai executed and delivered to
CAMC Teays Valley a Commercial Loan Promissory Note (“the Note”)
in the amount of $30,000.00, in accordance with the terms of the
Recruitment Agreement.
Id. at ¶ 9; Exhibit B to Pl. Compl.
The
terms of the Note stated that Dr. Sakhai was to repay the
balance of the loan with interest, in thirty-six monthly
payments beginning September 30, 2012.
Pl. Compl. at ¶ 9.
Interest on the principal amount accrued at four and one fourth
percent per annum, amortized over the life of the loan.
Id.
Any amount of the note unpaid when due would bear a twelve
percent interest rate per annum until the default was cured.
Id.
Under the Recruitment Agreement, CAMC Teays Valley agreed
to forgive each monthly payment due under the Note as long as
Dr. Sakhai performed her duties under the Recruitment Agreement,
2
which included continuing her medical practice in the community
of Teays Valley (“the Community”).
Id. at ¶ 10.
On July 18, 2012, CAMC Teays Valley and Dr. Sakhai
entered into an Income Guarantee and Commercial Loan Agreement,
(“the Income Agreement”) under which CAMC Teays Valley agreed to
extend a line of credit to Dr. Sakhai in order to cover expenses
in her medical practice.
Compl.
Id. at ¶¶ 11, 12; Exhibit C to Pl.
Under the terms of the Income Agreement, Dr. Sakhai,
among other things, agreed to continue her medical practice in
the Community.
Pl. Compl. at ¶ 12.
That same day, pursuant to
the Income Agreement, Dr. Sakhai executed and delivered to CAMC
Teays Valley a Revolving Credit Note, with a maximum principal
amount of $372,611.50 (“the Revolving Note”).
Exhibit D to Pl. Compl.
Id. at ¶ 13;
Interest on the note accrued at one
percent per annum until the end of the Credit Period, and
thereafter at the prime lending rate published in The Wall
Street Journal on the day following the end of the Credit
Period, plus one percent per annum, until paid in full.
Compl. at ¶ 13.
Pl.
Dr. Sakhai was to repay the Revolving Note by
monthly installment payments in accordance with the schedule
contained in the Income Agreement.1
1
Id. at ¶ 14; see Exhibit C
Although CAMC cites to the document containing the schedule by
which Dr. Sakhai was to repay CAMC Teays Valley under the terms
3
to Pl. Compl.
These monthly installment payments were to be
forgiven by CAMC Teays Valley as long as Dr. Sakhai performed
her obligations under the Income Agreement, which included
continuing her medical practice in the Community.
Pl. Compl. at
¶ 14.
Under both the Recruitment Agreement and the Income
Agreement, Dr. Sakhai’s failure to maintain a practice in the
Community was an event of default.
Id. at ¶ 15.
Upon default,
the balances under the Note and Revolving Note were to be
immediately due and payable.
Id.
CAMC alleges that on or around June 1, 2015, Dr.
Sakhai notified CAMC through her counsel that she was
terminating her medical practice in the Community, effective May
31, 2015.
Id. at ¶ 16.
On or about July 1, 2015, Dr. Sakhai
established a practice with the Naples Women’s Center in Naples,
Florida.
Id. at ¶ 17.
Because Dr. Sakhai terminated her
medical practice in the Community, she was in default under the
terms of the Recruitment Agreement and the Income Agreement.
Id. at ¶ 15.
Despite her default, Dr. Sakhai has not paid the
balances that became immediately due and payable under the Note
and the Revolving Note.
Id. at ¶ 18.
CAMC alleges that as of
of the Income Agreement, it is not included in the exhibits to
CAMC’s complaint.
4
December 31, 2015, Dr. Sakhai owes it $2,854.26 from the Note,
which includes $188.32 in accrued and unpaid interest that
continues to accrue at the default rate of twelve percent per
annum.
Id. at ¶ 19.
In addition, CAMC contends that as of
December 31, 2015, Dr. Sakhai owes it $164,437.37 from the
Revolving Note, which includes $3,997.54 in accrued and unpaid
interest that continues to accrue at the rate of four and one
fourth percent per annum.
Id. at ¶ 20.
CAMC makes two claims against Dr. Sakhai in its
complaint.
Count one alleges breach of contract of the
Recruitment Agreement and the Income Agreement in Dr. Sakhai’s
failure to pay the outstanding balances of the Note and the
Revolving Note.
Id. at ¶¶ 21-26.
Count two alleges a claim of
unjust enrichment in that Dr. Sakhai used and benefited from the
Recruitment Agreement and the Income Agreement and the
corresponding notes from CAMC, and she will be unjustly enriched
unless she is required to pay CAMC the amounts due under the
Note and the Revolving Note.
Id. at ¶¶ 27-32.
As damages, CAMC
asks for: $2,854.26 due under the Note as of December 31, 2015,
and pre-judgment interest in the amount of twelve percent per
annum; $164,437.37 due under the Revolving Note as of December
31, 2015, and pre-judgment interest in the amount of four and
one fourth percent per annum; post judgment interest on both the
5
Note and Revolving Note in the maximum rate allowed by law; and
any other relief the court deems appropriate.
Id. at p. 7.
On April 12, 2016, Dr. Sakhai answered the complaint
and asserted four counterclaims against CAMC.
In count one of
her counterclaim, Dr. Sakhai alleges that CAMC breached the
Recruitment Agreement by failing to perform certain duties,
including: assisting Dr. Sakhai in developing her practice,
making required payments on Dr. Sakhai’s behalf, providing her
with insurance assistance, and by breaching its duty of good
faith and fair dealing.
Def. Answer and Counterclaim at ¶¶ 3-8.
In her count two, Dr. Sakhai alleges that CAMC’s failures in
performing its duties under the Recruitment Agreement caused
CAMC to be unjustly enriched and that Dr. Sakhai is entitled to
damages for the unjust enrichment “in an amount equal to the
benefit to [CAMC] of the value of her services under the
Recruitment Agreement.”
Id. at ¶¶ 9-13.
In count three, Dr. Sakhai alleges that CAMC
tortiously interfered with one of Dr. Sakhai’s contracts,
presumably the Recruitment Agreement or the Income Agreement.
According to Dr. Sakhai, CAMC and West Virginia University
(“WVU”) engaged in a joint business venture relationship to
teach and supervise medical students and new doctors.
15.
Id. at ¶
She appears to allege that Dr. Byron Calhoun, who was an
6
employee of WVU, acted as an agent of the joint venture and
refused to treat some of her patients on a discriminatory basis.
Id. at ¶¶ 14-21.
This “intentional interference” by Dr.
Calhoun, she contends, resulted in a loss of business and
financial harm to her.
Id. at ¶¶ 22-23.
In count four, Dr. Sakhai alleges a claim of
impossibility of performance.
According to her, “[a]s a direct
and proximate result of the intentional interference of Dr.
Calhoun with [Dr. Sakhai’s] practice, among other problems
presented by Dr. Calhoun, performance under the Recruitment
Agreement and the Income Agreement was impossible for [her].”
Id. at ¶¶ 24-25.
Dr. Sakhai seeks damages for breach of contract and
unjust enrichment, pre- and post-judgment interest, dismissal of
CAMC’s complaint with prejudice, attorney fees and costs, and
such other relief as the court deems just and equitable.2
Id. at
p. 9-10.
CAMC has filed a motion to dismiss counts three and
four of Dr. Sakhai’s counterclaim for failure to state a claim
2
Although she does not so state in her counterclaim, presumably
Dr. Sakhai also seeks damages for CAMC’s alleged tortious
interference and for impossibility of performance.
7
upon which relief can be granted under Rule 12(b)(6).
Pl. Mot.
to Dismiss Counts Three and Four of Counterclaim at 1.
CAMC
states that neither claim makes allegations against it, but
instead refers to a third party, Dr. Calhoun.
Id. at 2-3.
In
addition, even if either claim included allegations against
CAMC, CAMC argues that the claims fail as a matter of law.
Id.
Dr. Sakhai has responded, arguing that each of the
counterclaims state a claim upon which relief can be granted, to
which CAMC has filed its reply.3
II.
a. Governing Standard
Federal Rule of Civil Procedure 8(a)(2) requires that
a pleader provide “a short and plain statement of the claim
showing . . . entitle[ment] to relief.”
Fed. R. Civ. P.
8(a)(2); Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007).
Rule
12(b)(6) correspondingly permits a defendant to challenge a
complaint when it “fail[s] to state a claim upon which relief
can be granted . . . .”
Fed. R. Civ. P. 12(b)(6).
3
As CAMC notes in its reply brief, Dr. Sakhai’s response brief
was untimely filed. See Pl. Reply in Supp. of Mot. to Dismiss
Counts Three and Four of Counterclaim at 1, n.1. CAMC filed and
served its motion to dismiss on May 3, 2016. Dr. Sakhai did not
file its response brief until May 27, 2016, seven days after it
was due. The court finds the delay harmless.
8
The required “short and plain statement” must provide
“‘fair notice of what the . . . claim is and the grounds upon
which it rests.’”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957),
overruled on other grounds, Twombly, 550 U.S. at 563); see also
Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007).
In order 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.’”
Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S.
at 570); see also Monroe v. City of Charlottesville, 579 F.3d
380, 386 (4th Cir. 2009).
Application of the Rule 12(b)(6) standard requires
that the court “‘accept as true all of the factual allegations
contained in the complaint . . . .’”
Erickson, 127 S. Ct. at
2200 (quoting Twombly, 127 S. Ct. at 1965); see also South
Carolina Dept. Of Health And Environmental Control v. Commerce
and Industry Ins. Co., 372 F.3d 245, 255 (4th Cir. 2004)
(quoting Franks v. Ross, 313 F.3d 184, 192 (4th Cir. 2002)).
The court must also “draw[] all reasonable . . . inferences from
th[e] facts in the plaintiff's favor . . . .”
Edwards v. City
of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
9
b. Applicable Law
Because the contracts at issue in this case were made
in West Virginia and to be performed there, West Virginia law
applies.
See General Elec. Co. v. Keyser, 166 W. Va. 456, 275
S.E.2d 289, Syl. Pt. 2 (1981) (“The law of the state in which a
contract is made and to be performed governs the construction of
a contract when it is involved in litigation in the courts of
this state.”) (internal citations and quotations omitted); see
also Exhibits A-D to Pl. Compl.
Furthermore, the Recruitment
Agreement states that “[a]ll questions pertaining to the
validity, construction or performance hereof shall be determined
in accordance with the laws of the State of West Virginia.”
Exhibit A to Pl. Compl. at p. 7-8.
See
The Note and the Income
Agreement contain similar provisions providing that West
Virginia law is to be applied in disputes arising out of the
agreements.
See Exhibit B to Pl. Compl. at p. 3; Exhibit C to
Pl. Compl. at p. 10.
Although the Revolving Note does not
contain a similar provision, it states that it is subject to the
terms and condition of the Income Agreement.
Pl. Compl. at p. 1-2.
See Exhibit D to
Accordingly, the court will determine
whether Dr. Sakhai has stated claims entitling her to relief
under West Virginia law.
10
III.
a. Count Three: Tortious Interference
CAMC alleges that count three of Dr. Sakhai’s
counterclaim must be dismissed for two reasons.
First, it
states that count three alleges no facts that it interfered with
any contract because all allegations are directed towards a
third party, Dr. Calhoun.
Pl. Memo. in Supp. of Mot. to Dismiss
Counts Three and Four of Counterclaim at 4.
Second, CAMC
contends that even if Dr. Sakhai had included allegations in her
counterclaim that supported a claim against CAMC, the claim must
still be dismissed because a cause of action for tortious
interference of a contract may not be made against a party to
that contract.
Id.
The allegations in Dr. Sakhai’s third count are not
entirely clear, but, making all reasonable inferences, it
appears that in count three, she claims that CAMC and WVU
engaged in a joint venture whereby CAMC was to teach and
supervise medical students and new doctors.
Counterclaim at ¶ 15.
Def. Answer and
Dr. Calhoun, who was employed by WVU, and
who allegedly acted as an agent of the joint venture of CAMC and
WVU, “disparag[ed], demean[ed] and insult[ed]” Dr. Sakhai and
intentionally refused to treat some of her patients on a
discriminatory basis.
Id. at ¶¶ 14-23.
11
These actions allegedly
caused losses to Dr. Sakhai’s business and caused her to suffer
financial harm.
Id.
Through Dr. Calhoun, acting as an agent of
CAMC and WVU’s purported joint venture, CAMC is alleged to have
tortiously interfered with the Recruitment Agreement and the
Income Agreement, or potentially a third agreement between CAMC
and Dr. Sakhai whereby CAMC was to provide “specialists to aid
in the development of [Dr. Sakhai’s] practice.”
Pl. Resp. in
Opp. to Def. Mot. to Dismiss Counts Three and Four of
Counterclaim at 3-4.
Taking all of these allegations as true, Dr. Sakhai
fails to state a claim upon which relief can be granted.
As
CAMC notes, in order to establish a prima facie case of tortious
interference, a party must show:
(1)
(2)
(3)
(4)
existence of a contractual or business relationship or
expectancy;
an intentional act of interference by a party outside
that relationship or expectancy;
proof that the interference caused the harm sustained;
and
damages.
Torbett v. Wheeling Dollar Sav. & Trust Co., 173 W. Va. 210, 314
S.E.2d 166, Syl. Pt. 2 (1983) (emphasis added).
Thus, under
this framework, a party may not tortiously interfere with a
contract to which it is a party.
See Hatfield v. Health Mgmt.
Assocs. Of West Virginia, 223 W. Va. 259, 672 S.E.2d 395, Syl.
Pt. 6 (2008) (“It is impossible for one party to a contract to
12
maintain against the other party to the contract a claim for
tortious interference with the parties’ own contract.”)
(internal citations omitted).
Moreover, no cause of action for
tortious interference of a contract may stand where an agent
allegedly interferes with a contract of its principal.
See
Cotton v. Otis Elevator Co., 627 F. Supp. 519, 522 (S.D. W. Va.
1986) (“A corporation cannot tortiously interfere with an
agreement to which it is a party and accordingly, where an agent
breaches a contract to which his principal is a party on behalf
of his principal, no cause of action for tortious interference
with regard to such contract can be had.”).
Although Dr. Sakhai does not state in her counterclaim
which contract that Dr. Calhoun, acting as an agent of the
purported CAMC and WVU joint venture, tortiously interfered
with, Dr. Sakhai has failed to mention in her counterclaim any
contract to which she, but not CAMC, is a party.
See Pl. Reply
in Supp. of Mot. to Dismiss Counts Three and Four of
Counterclaim at 2-3.
CAMC and Dr. Sakhai are both parties to
the Recruitment Agreement and the Income Agreement, meaning that
Dr. Sakhai may not state a cause of action for CAMC’s
interference with them.
See Hatfield, 223 W. Va. 259, 672
S.E.2d 395, Syl. Pt. 6.
Dr. Sakhai’s response in opposition to
the motion to dismiss counts three and four of the counterclaim
13
refers to an agreement, as earlier noted, between CAMC and Dr.
Sakhai where “CAMC contracted with Dr. Sakhai to provide
specialists to aid in the development of her practice.”
Def.
Resp. in Opp. to Mot. to Dismiss Counts Three and Four of
Counterclaim at 3-4.
Dr. Sakhai provides no details of this
purported agreement.
In CAMC’s reply, it makes the unchallenged
statement that such a provision was not part of the Recruitment
Agreement or the Income Agreement, and, upon examination of the
agreements, the court does not find such a condition.
See Pl.
Reply in Supp. of Mot. to Dismiss Counts Three and Four of
Counterclaim at 3; see also Exhibits A and C to Pl. Compl.
If
Dr. Sakhai is alleging CAMC interfered with a third agreement
that she describes as an agreement for CAMC to provide
specialists to aid in her practice, although she provides no
evidence of its existence, CAMC would presumably be a party to
that very agreement.
Accordingly, because CAMC is a party to
the contracts Dr. Sakhai alleges it interfered with, a cause of
action against CAMC for tortious interference may not be
maintained.
b. Count Four: Impossibility of Performance
CAMC also alleges that count four does not assert a
cause of action against it and does not reference any conduct by
CAMC that would entitle Dr. Sakhai to relief.
14
Pl. Memo. in
Supp. of Mot. to Dismiss Counts Three and Four of Counterclaim
at 5.
Even if count four asserted conduct committed by CAMC, it
contends that, under West Virginia law, impossibility of
performance is a legal excuse or defense to the failure to
perform a contract, but is not a cognizable cause of action.
Id.
Indeed, Dr. Sakhai has pled impossibility of performance as
a defense to CAMC’s claim of breach of contract.
Def. Answer
and Counterclaim at ¶ 36.
Dr. Sakhai argues that count four pleads facts
sufficient to state a claim for impossibility because “(1) the
interference of Dr. Calhoun with her practice made performance
of her duties under the Agreements impossible[;] and (2) that
she assumed specialist doctors would be provided to her by CAMC
as a basic assumption upon which the contract was made.”
Def.
Memo. in Opp. to Pl. Mot. to Dismiss Counts Three and Four of
Counterclaim at 4.
In count four Dr. Sakhai alleges that due to Dr.
Calhoun’s interferences with Dr. Sakhai’s practice, presumably
through his refusal to treat some of Dr. Sakhai’s patients for
discriminatory reasons, and “other problems presented by Dr.
Calhoun” that Dr. Sakhai does not explain, her performance of
the Recruitment Agreement and the Income Agreement was
impossible.
Def. Answer and Counterclaim at ¶ 24-25.
15
Under West Virginia law, impossibility of performance
is not a cause of action, but is instead a defense or excuse for
a party’s failure to perform its obligations under a contract.
See Waddy v. Riggleman, 216 W. Va. 250, 260, 606 S.E.2d 222, 232
(2004) (referring to the doctrines of impossibility and
impracticability as defenses); O’Dell v. Criss & Shaver, 123 W.
Va. 290, 14 S.E.2d 767 (1941) (calling impossibility “an excuse
for the nonperformance of a contract”); Corpus Juris Secundum,
17B C.J.S. Contracts § 688 (“Impossibility of performance is a
well-recognized defense to nonperformance of an executory
contract.”).
Inasmuch as the defense of impossibility or
impracticability is not appropriately raised as a cause of
action under West Virginia law, Dr. Sakhai has failed to state a
claim in count four of her counterclaim upon which relief can be
granted.
See Ashcroft, 129 S. Ct. at 1949.
IV.
For the foregoing reasons, it is ORDERED that CAMC’s
motion to dismiss counts three and four of Dr. Skahai’s
counterclaim be, and it hereby is granted.
It is further
ordered that counts three and four of Dr. Sakhai’s counterclaim
be, and they hereby are, dismissed.
16
directed to appear.
02/29/2016
Entry of scheduling order.
03/08/2016
Last day to serve F.R. Civ. P 26(a)(1) disclosures.
The Clerk Clerk is requested to transmit this Order and
The is directed to transmit copies of this order
Notice to all counsel of record and to any unrepresented
to counsel of record and any unrepresented parties.
parties.
DATED: January 5, 2016
ENTER: November 14, 2016
John T. Copenhaver, Jr.
United States District Judge
17
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?