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J.M. Smith Corporation v. Ciolino Pharmacy Wholesale Distributors, LLC

United States District Court, E.D. Louisiana

May 19, 2015



JAY C. ZAINEY, District Judge.

Before the Court is a Motion to Dismiss for Failure to State a Claim upon which Relief May be Granted (Rec. Doc. 16) filed by defendants Ciolino Pharmacy Wholesale Distributors, LLC, Ciolino Pharmacy, Inc., C's Discount Pharmacy, Inc., Fast Access Specialty Therapeutics, LLC, JJK Wholesale Distributors, LLC, Steven F. Ciolino, and Gregory M. Johns. Plaintiff JM Smith Corporation d/b/a Smith Drug Company opposes the motion. The motion, set for submission on January 28, 2015, is before the Court on the briefs without oral argument.[1]


Plaintiff J.M. Smith Corporation ("Smith") filed this Complaint on November 12, 2014 seeking to recover amounts awarded in a judgment obtained in a prior related action. That prior action, J.M. Smith Corp. v. Ciolino Pharmacy Wholesale Distributors, LLC, et al., No. 10-1483 c/w no. 10-1786, commenced in 2010 as an open account claim by Smith against Ciolino Pharmacy Wholesale Distributors, LLC (referred to, along with its other related business entities, collectively as "Ciolino") based on transactions in November and December of 2009. In response to the initiation of that action, Ciolino filed breach of contract and other counterclaims against Smith. That matter was tried to a jury over a four day period beginning on November 11, 2013. The jury returned a verdict on November 15, 2013 awarding Smith $654, 336.51 against CPWD on its open account claim and denying all of Ciolino's counterclaims. The Court subsequently entered a judgment on December 5, 2013. After additional briefing, on August 22, 2014, the Court ordered that Smith be awarded $260, 000.00 in attorneys' fees and $71, 600.00 in costs related to the prosecution of its open account claim.

In the present lawsuit, involving the same parties with the one new addition of Gregory M. Johns as a defendant, Smith seeks to recover the entirety of the amount owed from the previous related litigation. Smith alleges that, beginning in November 2009, Ciolino Pharmacy Wholesale Distributors, LLC ("CPWD"), via Steven F. Ciolino, started to divert its funds to other entities and individuals, including into the personal accounts of Steven F. Ciolino and other named defendants, for no "meaningful consideration, " thus causing or resulting in the increased insolvency of CPWD. (Rec. Doc. 1, Comp. at §§ 20, 23-26). Smith also claims that CPWD "transferred [the] pharmaceuticals [obtained in November and December of 2009] "to JJK Wholesale Distributors, LLC and possibly the Ciolino [e]ntities." Id. at §21. Smith contends that these actions were undertaken by CPWD "to shield itself from judgment and to prevent Plaintiff from recovering amounts owed since November 2009." Id. at §26. Furthermore, Smith argues that Steven F. Ciolino (who allegedly has at least an ownership interest in all defendant entities) and Gregory M. Johns (who allegedly has a fifty percent ownership interest in JJK Wholesale Distributors, LLC) have operated these entities as their alter-egos. Id. at §§ 28-34. Based on these allegations, Smith seeks to annul any transactions increasing CPWD's insolvency via a revocatory action, pierce the corporate veil to hold Steven F. Ciolino and Gregory M. Johns personally liable on the amounts awarded, recover damages via a theory of unjust enrichment, and have the subject transactions declared as absolute or relative simulations. Id. at §§ 35-60.

Ciolino filed the present motion seeking to dismiss Smith's Complaint in its entirety. First, Ciolino argues that the doctrine of res judicata applies here to bar all of Smith's claims. Second, Ciolino argues that prescription or peremption bars all of Smith's claims other than unjust enrichment. Third, Ciolino argues that Smith has failed to fulfill the pleading requirements of F.R.C.P. 8 under the standard as set out in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).


In the context of a motion to dismiss the Court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Lovick v. Ritemoney, Ltd., 378 F.3d 433, 437 (5th Cir. 2004)). However, the foregoing tenet is inapplicable to legal conclusions. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Thread-bare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. (citing Bell Atlantic Corp. v. Twombly, 550, U.S. 544, 555 (2007)).

The central issue in a Rule 12(b)(6) motion to dismiss is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief. Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010) (quoting Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir. 2008)). To avoid dismissal, a plaintiff must plead sufficient facts to "state a claim for relief that is plausible on its face." Id. (quoting Iqbal, 129 S.Ct. at 1949). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The Court does not accept as true "conclusory allegations, unwarranted factual inferences, or legal conclusions." Id. (quoting Plotkin v. IP Axess, Inc., 407 F.3d 690, 696 (5th Cir. 2005)). Legal conclusions must be supported by factual allegations. Id. (quoting Iqbal, 129 S.Ct. at 1950).

a. Procedural Argument

In opposing the present motion, Smith responds to the substantive grounds raised by Ciolino but first argues that the Court should deny the motion "as it improperly relies upon matters outside the pleadings to support its substantive legal arguments." (Rec. Doc. 19, Opposition at 7).

Based on its rulings, infra, the Court finds no need to address this argument.

b. Res Judicata and Prescription

Ciolino argues that this matter should be dismissed on grounds of res judicata. Ciolino ...

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