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Finger v. Jacobson

United States District Court, E.D. Louisiana

November 2, 2017

SIMON FINGER, M.D.
v.
HARRY JACOBSON ET AL.

         SECTION: “H” (1)

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE

         Before the Court are a Motion to Dismiss, or Alternatively Compel Dispute Resolution by Defendants Harry Jacobson and MedCare Investment Corporation (Doc. 11), and a Motion to Dismiss, or Alternatively Compel Dispute Resolution by Defendants Cardiovascular Care Group, Inc., Steve Johnson, and Douglas Koppang (Doc. 12). For the following reasons, the Motions are DENIED.

         BACKGROUND

         Plaintiff Simon Finger is an orthopedic surgeon who alleges that he was fraudulently mislead by Defendants to sell his private practice and join the Louisiana Heart Hospital (the “Hospital”) as an employee. Plaintiff's Complaint alleges that Defendant MedCare Investment Corporation (“MedCare”) is a private equity firm that held an investment interest in Defendant Cardiovascular Care Group, Inc. (“CCG”). CCG is a healthcare company that indirectly owns the Hospital. Defendant Harry Jacobson is the chairman of MedCare, and Defendants Steve Johnson and Douglas Koppang are executives at CCG. Plaintiff alleges that Jacobson, Johnson, and Koppang made intentional and fraudulent misrepresentations regarding MedCare and CCG's financial situations and commitment to the Hospital in order to induce him to join the Hospital. In reliance on their statements, Plaintiff signed a seven-year contract with an annual salary of $1.3 million plus production bonuses. Plaintiff thereafter “shut down his private practice, divested his interest in [an unrelated] surgical hospital and [] physical therapy clinic, and sold his medical equipment and supplies to the Hospital. On May 1, 2016, he reported to work at the Hospital as an employee.”[1]

         In late August 2016, Koppang informed Plaintiff that CCG had decided to stop supporting the Hospital and that it would be shut down if it could not find a buyer. Plaintiff's Complaint states that thereafter Jacobson told Plaintiff that MedCare would guarantee his income stream for the life of his contract, however, the documentation promised was never provided. Plaintiff alleges that he sustained damages for his justifiable reliance on the intentional and fraudulent misrepresentations of Jacobson, Johnson, and Koppang.[2] He alleges that MedCare and CCG are vicariously liable for the fraudulent misrepresentations of their agents.

         Defendants have moved for dismissal of these claims on several grounds. First, Jacobson and MedCare allege that Plaintiff has failed to state a claim against them. Second, all Defendants allege that Plaintiff's claims should be dismissed because he failed to join an indispensable party. Finally, all Defendants argue in the alternative that the parties should be compelled to arbitration pursuant to an arbitration provision in Plaintiff's employment agreement with the Hospital. This Court will consider each argument in turn.

         LEGAL STANDARD

         A. Rule 12(b)(6)

         To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough facts “to state a claim for relief that is plausible on its face.”[1] A claim is “plausible on its face” when the pleaded facts allow the court to “draw reasonable inference that the defendant is liable for the misconduct alleged.”[2]A court must accept the complaint's factual allegations as true and must “draw all reasonable inferences in the plaintiff's favor.”[3] The court need not, however, accept as true legal conclusions couched as factual allegations.[4] To be legally sufficient, a complaint must establish more than a “sheer possibility” that the plaintiff's claims are true.[5] If it is apparent from the face of the complaint that an insurmountable bar to relief exists and the plaintiff is not entitled to relief, the court must dismiss the claim.[6] The court's review is limited to the complaint and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.[3]

         B. Rule 12(b)(7)

         Federal Rule of Civil Procedure 12(b)(7) permits dismissal for failure to join an indispensable party under Federal Rule of Civil Procedure 19.[4] It “allows for both the joinder of parties who should be present in order to have a ‘fair and complete resolution of the dispute, ' and for the dismissal of lawsuits ‘that should not proceed in the absence of parties that cannot be joined.'”[5] Rule 19 sets out a two-step inquiry: whether a party should be added under the requirements of Rule 19(a) and whether litigation can properly proceed without the absent party under the requirements of Rule 19(b).[6] A “Rule 12(b)(7) motion will not be granted because of a vague possibility that persons who are not parties may have an interest in the action. In general, dismissal is warranted only when the defect is serious and cannot be cured.”[7] The decision whether to dismiss a case for failure to join an indispensable party first requires the court, in a highly practical, “fact-based endeavor, ” to determine whether the party meets the requirements of Federal Rule of Civil Procedure 19(a).[8]

Under Rule 19(a)(1), the party must be joined if it is subject to process, its joinder does not deprive the Court of subject matter jurisdiction, and if: “(A) in the person's absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.”[9]

         The party seeking the joinder bears the initial burden of demonstrating that the person is necessary.[10]

         C. Motion to Compel Arbitration

         The question of arbitrability is governed by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., which broadly applies to any written provision in “a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction.”[11] A two-step analysis governs whether parties should be compelled to arbitrate a dispute.[12] The Court must first determine whether the parties agreed to arbitrate the dispute.[13] This determination involves two separate inquiries: (1) whether there is a valid agreement to arbitrate between the parties, and, if so, (2) whether the dispute in question falls within the scope of that agreement.[14] Both inquiries are generally guided by ordinary principles of state contract law.[15] The strong federal policy favoring arbitration applies “when addressing ambiguities regarding whether a question falls within an arbitration agreement's scope, ” but it does not apply “when determining whether a valid agreement exists.”[16] If the Court finds the parties agreed to arbitrate, it must then proceed to the second step of the analysis and consider whether any federal statute or policy renders the claims non-arbitratable.[17]

         LAW AND ANALYSIS

         A. 12(b)(6) Motion to Dismiss

         First, Defendants Jacobson and MedCare allege that Plaintiff Finger has failed to state a claim against them in his Complaint. The ...


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