MedChoice Financial, LLC v. ADS Alliance Data Systems, Inc.

857 F. Supp. 2d 665, 2012 U.S. Dist. LEXIS 30662, 2012 WL 748622
CourtDistrict Court, S.D. Ohio
DecidedMarch 8, 2012
DocketCase No. 2:11-cv-212
StatusPublished
Cited by10 cases

This text of 857 F. Supp. 2d 665 (MedChoice Financial, LLC v. ADS Alliance Data Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
MedChoice Financial, LLC v. ADS Alliance Data Systems, Inc., 857 F. Supp. 2d 665, 2012 U.S. Dist. LEXIS 30662, 2012 WL 748622 (S.D. Ohio 2012).

Opinion

OPINION AND ORDER

GREGORY L. FROST, District Judge.

This matter is before the Court for consideration of Counterclaim Defendant Philip Hall’s Motion to Dismiss for Lack of Jurisdiction and for Failure to State a Claim upon which Relief Can Be Granted (ECF No. 25), Counterclaim Defendant MedChoice Financial, LLC’s Motion to Dismiss (ECF No. 27), World Financial Network Bank’s Response in Opposition to MedChoice Financial LLC’s Motion to Dismiss (ECF No. 36), World Financial Network Bank’s Response in Opposition to Philip Hall’s Motion to Dismiss (ECF No. 37), Counterclaim Defendant Philip Hall’s Reply in Support of his Motion to Dismiss for Lack of Personal Jurisdiction and for Failure to State a Claim upon which Relief Can Be Granted (ECF No. 39), and Counterclaim Defendant MedChoice Financial LLC’s Reply in Support of its Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted (ECF No. 40). For the reasons that follow, the Court DENIES the motions to dismiss. (ECF Nos. 25, 27.)

I. Background

The parties’ complaints conflict as to some of the basic facts underlying this action. Plaintiff MedChoice Financial, LLC (“MedChoice”) defines itself as a financial services company that provides financing to patients of healthcare providers in a specified network. (ECF No. 7 ¶ 8.) Defendant World Financial Network Bank (the “Bank”) defines itself as an issuer of private label and co-brand credit card accounts. (ECF No. 15, at 2 ¶ 9.) In September 2005, MedChoice and the Bank [669]*669entered into a Private Label Credit Card Program Agreement (“the Contract”) under which MedChoice or the Bank (the parties dispute this fact) issued credit cards to patients in MedChoice’s provider network. Under the Contract, MedChoice acted as the “middle man” between the Bank, the individual patients/cardholders, and the network healthcare providers in order to finance certain medical procedures and products. (See ECF Nos. 7 ¶ 1; 15, at 20 ¶ 11.) The Contract remained in effect until the Bank terminated it in September 2010. (ECF Nos. 7 ¶ 59; 15, at 8 ¶ 54).

In March 2011, MedChoice filed suit against the Bank for the Bank’s conduct surrounding and leading up to the termination of the Contract. (ECF No. 2.) MedChoice amended its complaint in September 2011 to add the Bank’s alleged parent company, ADS Alliance Data Systems, Inc. (“ADS”), as a defendant (together with the Bank, “Defendants”).1 (ECF No. 7.) MedChoice asserts that the Bank expressly breached certain terms of the Contract, exercised its discretion under the Contract in bad faith, and wrongfully terminated the Contract. MedChoice also asserts various causes of action against Defendants including tortious interference with contract, unjust enrichment, breach of fiduciary duty, and violation of the Ohio Trade Secrets Act, among others.

Defendants answered MedChoice’s complaint on October 18, 2011. (ECF No. 11.) On November 8, 2011, Defendants filed an Amended Answer in which they assert several counterclaims against Med-Choice and its owners, Philip Hall (“Hall”) and Michelo Naturile (“Naturile”) (collectively, “Counterclaim Defendants”). (ECF No. 15.) According to Defendants, the Contract required MedChoice to submit credit transactions for approved goods and services to the Bank. The Bank would then place a charge on the patient/cardholder’s account and transfer the funds to MedChoice, which would then transfer the funds to the healthcare provider. The Bank had discretion as to how it handled the MedChoice accounts and could, for example, “charge back” accounts to MedChoice that it disputed. Defendants assert that Counterclaim Defendants fraudulently submitted charges for unauthorized goods and services that caused the Bank to extend credit it would not otherwise have extended. Defendants also assert that, after the Bank transferred funds to MedChoice for the charged transactions, Counterclaim Defendants did not transfer the funds to the healthcare providers as the Contract required. Finally, when the Bank sought to “charge back” disputed accounts to Med-Choice, Defendants assert that Med-Choice owed substantially more to providers than it had in its bank account. The Counterclaim sets forth several causes of action against Counterclaim Defendants including breach of contract, fraud, violations of Ohio’s Deceptive Trade Practices Act, and defamation, among others. (ECF No. 15 at 18-38, ¶¶ 48-118.)

Hall, MedChoice and Naturile have each moved to dismiss certain counterclaims. Hall filed a motion on December 15, 2011 to dismiss the claims against him pursuant to Rules 12(b)(2) and 12(b)(6). (ECF No. 25.) MedChoice concedes that this Court has jurisdiction over it but moved on December 15, 2011 to dismiss Counts III (Fraud), V (Violation of Ohio’s Deceptive Trade Practices Act), and VI (Defamation) pursuant to Rule 12(b)(6). (ECF No. 27.) [670]*670Naturile filed a motion on January 30, 2012 to dismiss the claims against him pursuant to Rules 12(b)(2) and 12(b)(6). (ECF No. 35.) This Opinion and Order addresses MedChoice’s and Hall’s motions to dismiss.

II. Discussion

A. MedChoice’s Motion to Dismiss Pursuant to Rule 12(b)(6)

MedChoice moves to dismiss Counts III (Fraud), V (Violation of Ohio’s Deceptive Trade Practices Act), and VI (Defamation) of Defendants’ Counterclaim pursuant to Rule 12(b)(6). Specifically, MedChoice argues that the economic loss rule bars Defendants’ fraud and Deceptive Trade Practices Act claims and that Defendants failed to allege sufficient facts to support a defamation claim under Ohio law. Med-Choice’s arguments are not well taken.

Dismissal under Rule 12(b)(6) is appropriate if the complaint fails to state a claim upon which the Court can grant relief. Fed.R.Civ.P. 12(b)(6). In ruling on a Rule 12(b)(6) motion, the Court must construe the complaint in the light most favorable to the plaintiff, treat all well-pled allegations contained therein as true, and determine whether the factual allegations present plausible claims for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court must view the complaint as a whole and view each individual allegation in the context of the entire complaint. In re Polyurethane Foam Antitrust Litig., 799 F.Supp.2d 777, 782 (N.D.Ohio 2011).

Rule 8(a)(2) requires that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8 does not require “detailed factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). Instead, it requires “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. “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 alleged misconduct.” Id.

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857 F. Supp. 2d 665, 2012 U.S. Dist. LEXIS 30662, 2012 WL 748622, Counsel Stack Legal Research, https://law.counselstack.com/opinion/medchoice-financial-llc-v-ads-alliance-data-systems-inc-ohsd-2012.