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Scripps Health v. Nthrive Revenue Systems, LLC

United States District Court, S.D. California

September 3, 2019

SCRIPPS HEALTH, a California corporation, Plaintiff,
v.
NTHRIVE REVENUE SYSTEMS, LLC, formerly known as Medassets Analytical Systems, LLC, a Delaware limited liability company; NTHRIVE, INC., doing business as nThrive Revenue Systems, LLC, a Delaware corporation; FORMATIV HEALTH, a Delaware limited liability company, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO DISMISS DEFENDANTS' COUNTERCLAIMS WITH LEAVE TO AMEND [DOC. NO. 23.]

          MARILYN L. HUFF, DISTRICT JUDGE

         On July 22, 2019, Plaintiff Scripps Health filed a motion to dismiss Defendants nThrive Revenue Systems, LLC and nThrive, Inc.'s counterclaims. (Doc. No. 23.) On August 20, 2019, the Court took the motion to dismiss under submission. (Doc. No. 29.) On August 26, 2019, nThrive filed its response in opposition to Scripps's motion to dismiss. (Doc. No. 31.) On August 30, 2019, Scripps filed its reply. (Doc. No. 34.) For the reasons below, the Court grants in part and denies in part Scripps's motion to dismiss.

         Background

          The following facts are taken from the allegations in Plaintiff's complaint. Plaintiff Scripps is a nonprofit health care system with four hospitals and twenty-eight outpatient facilities. (Doc. No. 1, Compl. ¶ 5.) Scripps entered in an agreement with Defendant nThrive, effective September 25, 2017, for the management, recovery, and collection of Scripps's legacy accounts receivables. (Id. ¶¶ 19, 31.)

         Scripps alleges that nThrive did not perform the services required under the agreement in accord with contractual or industry standards. (Id. ¶ 39.) Scripps further alleges, among other things, that nThrive “secretly and surreptitiously assigned, subcontract, and/or delegated” some or all of its obligations under the agreement to third-party Formativ Health, despite the inclusion of an anti-assignment clause in the agreement. (Id. ¶¶ 42-44.)

         On April 24, 2019, Scripps filed a complaint against nThrive and Formativ Health, alleging claims for: (1) fraud and deceit; (2) negligent misrepresentation; (3) aiding and abetting fraud; (4) conspiracy to commit fraud; (5) intentional interference with contractual relations; (6) intentional interference with prospective economic advantage; (7) breach of contract; (8) breach of the covenant of good faith and fair dealing; (9) negligence; (10) unjust enrichment; (11) demand for accounting; and (12) unfair business practices in violation of California Business and Professions Code § 17200 et seq. (Doc. No. 1.)

         On June 28, 2019, Formativ Health filed an answer to the complaint. (Doc. No. 8.) On July 1, 2019, nThrive filed an answer to the complaint and counterclaims against Scripps, alleging counterclaims for: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) negligent misrepresentation; and (4) unjust enrichment. (Doc. Nos. 11, 12.) By the present motion, Scripps moves pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss nThrive's counterclaims for breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, and unjust enrichment. (Doc. No. 23.)

         Discussion

         I. Legal Standards

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

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a complaint if the plaintiff has failed to state a claim upon which relief can be granted. See Conservation Force v. Salazar, 646 F.3d 1240, 1241 (9th Cir. 2011). Federal Rule of Civil Procedure 8(a)(2) requires that a pleading stating a claim for relief containing “a short and plain statement of the claim showing that the pleader is entitled to relief.” The function of this pleading requirement is to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         A complaint will survive a Rule 12(b)(6) motion to dismiss if it contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. (quoting Twombly, 550 U.S. at 557). Accordingly, dismissal for failure to state a claim is proper where the claim “lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

         In reviewing a Rule 12(b)(6) motion to dismiss, a district court must accept as true all facts alleged in the complaint, and draw all reasonable inferences in favor of the claimant. See Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). But, a court need not accept “legal conclusions” as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Further, it is improper for a court to assume the claimant “can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

         II. ...


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