Am. Med. Facilities Mgmt. v. Aaron & Gianna, PLC

• Docket Number: Civil Action 2:21-cv-00400
• Decision Date: 24 January 2022
• Parties: AMERICAN MEDICAL FACILITIES MANAGEMENT, LLC, d/b/a AMFM, Plaintiff, v. AARON & GIANNA, PLC; DEWAYNE L. WILLIAMS; VETCOMM, LLC; TERRY READO; DERON BROWN; and OSTEOBIOLOGIC SOLUTIONS, INC., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

AMERICAN MEDICAL FACILITIES MANAGEMENT, LLC, d/b/a AMFM, Plaintiff, v. AARON & GIANNA, PLC; DEWAYNE L. WILLIAMS; VETCOMM, LLC; TERRY READO; DERON BROWN; and OSTEOBIOLOGIC SOLUTIONS, INC., Defendants.

Civil Action No. 2:21-cv-00400

United States District Court, S.D. West Virginia, Charleston

January 24, 2022

MEMORANDUM OPINION AND ORDER

John T, Copenhaver, Jr., Senior United States District Judge.

Pending are defendants Aaron & Gianna, PLC's (“A&G”), and DeWayne Williams' (“Williams”) motions to dismiss, both filed December 14, 2021, based on lack of personal jurisdiction and improper venue.

I. Background

Plaintiff American Medical Facilities Management, LLC, d/b/a AMFM (“American”) is a West Virginia limited liability company that “owns and operates medical facilities in the state of West Virginia, ” where it provides nursing, rehabilitation, and long-term care services. Verified Amended Complaint (“V. Am. Compl.”) ¶ 1, ECF No 12.^[1] A&G is a Louisiana professional law corporation with its principal place of business in Louisiana. Id. ¶ 2. Williams is an attorney licensed and residing in Louisiana and is “an agent, employee, partner, member shareholder, treasurer, and member of the board of directors of Aaron & Gianna.” Id. ¶¶ 3-4.

In the early onset of the coronavirus disease 2019 (“covid”) pandemic “in March of 2020, ” supplies of personal protective equipment (“PPE”) such as masks, gowns, and gloves were scarce. Id. ¶ 16. American was “in a desperate state to acquire . . . PPE” to protect its patients and workers. Id. ¶¶ 18, 20. “[A]t some point prior to April 14, 2020, ” defendant Osteobiologic Solutions, Inc. (“Osteobiologic”), contacted American to solicit and market PPE supplies “at market prices significantly above pre-pandemic levels.” Id. ¶ 19. American agreed to buy “20, 000 N95 Masks, 20, 000 surgical masks, 25, 000 gowns, 5, 000 coveralls and 40, 000 nitrile exam gloves” for a total price of $364, 600. Id. ¶ 20-22; see also Order Form, V. Am. Compl. Ex. A, ECF No. 12-1. The order form stated that 100% of payment was due upon order. V. Am. Compl. ¶ 23; Order Form, V. Am. Compl. Ex. A. In addition, the order form identified defendant Vetcomm, LLC (“Vetcomm”), as the vendor. Order Form, V. Am. Compl. Ex. A; see also V. Am. Compl. ¶¶ 21, 23. Osteobiologic is a Texas corporation with its principal place of business in Texas, V. Am. Compl. ¶ 8. Vetcomm is a limited liability company with members in Texas and Louisiana, id. ¶¶ 5-7.

Because of the order's size and “the atypical supply chain being used, American was hesitant to purchase the[] supplies from” Vetcomm and Osteobiologic. Id. ¶ 28. Thus, Vetcomm and Osteobiologic represented to American that Williams and A&G, neither of whom were otherwise known to American, were their escrow agents “for purposes of holding money, in trust, to secure the transaction.” Id. ¶¶ 29, 31. Williams had directed Vetcomm and Osteobiologic to direct potential buyers to him and A&G for escrow services related to PPE purchases. See id. ¶¶ 30, 32.

On April 15, 2020, American's president spoke with Williams by telephone concerning the proposed purchase of PPE. Id. ¶ 33; see also April 15 Email, V. Am. Compl. Ex. B, ECF No. 12-2. During that conversation, Williams “proposed serving as an ‘escrow agent' for the proposed transaction and promised to hold sums transferred to him in trust, in his firm's client trust account, until the fulfillment of the proposed PPE order by” Vetcomm and Osteobiologic. V. Am. Compl. ¶ 34. On April 15, 2020, Williams emailed American's president as follows:

It was a pleasure speaking with you this morning. As we discussed, Aaron & Gianna, PLC is the Escrow Agent for Vetcomm, LLC in connection with PPE orders. Thank you for supplying the order form. We will advise Vetcomm of our discussion, and advise when the $364, 600 have been wired into [our] account. Rest assured that we will hold the funds in escrow until Vetcomm instructs fulfillment and will so advise you of same for comment if necessary.

April 15 Email, V. Am. Compl. Ex. B. “In reliance of representations made by” Williams, A&G, Vetcomm, Osteobiologic, and agents of Vetcomm and Osteobiologic, American transferred the escrow funds of $364, 600 “on April 15, 2020, to an account owned or controlled by Aaron & Gianna.” V. Am. Compl. ¶ 41.

From April 21 through May 6, 2020, Williams and A&G “made a series of illicit transfers” of the escrow funds to various entities for purported fulfillment of PPE orders. Id. ¶ 42; see also id. ¶¶ 43-50 (describing the specific transfers); Fund Transfers List, V. Am. Compl. Ex. C, ECF No. 12-3. Ostensibly, those various entities were vendors selected by Vetcomm or Osteobiologic to fulfill the PPE orders. See V. Am. Compl. ¶¶ 42-50; Funds Transfers List, V. Am. Compl. Ex. C. Williams and A&G “did not consult or seek approval from” American for those transfers, did not determine whether the orders had been filled, and did not inquire of American whether the orders had been filled. See V. Am. Compl. ¶¶ 43-50. Ultimately, Williams and A&G transferred $229, 664 of the escrow funds to a number of different entities, leaving a remaining balance of $134, 936. Id. ¶¶ 50-51; see also Funds Transfers List, V. Am. Compl. Ex. C. American alleges that it “has only received 20, 000 surgical masks at a cost of $25, 000.00.” V. Am. Compl. ¶ 51.

On May 28, 2020, American's president contacted Williams to cancel the undelivered portion of the purchase order and seek the immediate return of the corresponding escrow funds, totaling $339, 600. Id. ¶ 57. Williams responded that the remaining escrow funds would be returned the next day, but the funds were not returned. Id. On June 9, 2020, American again contacted Williams about return of the remaining escrow funds. Id. ¶ 58. In response, “Williams notified [American] for the first time that the balance . . . had been depleted to $134, 936.” Id. American “questioned why he made unauthorized transfers . . . without the consent of [American].” Id. ¶ 59.

Williams responded by email as follows:

Thank you for your email. Our firm operated as Escrow Agent for Vetcomm and performed all transactions at the specific instruction of Vetcomm. We had no Escrow Agreement or privity of contract with [American] requiring notice of expenditures or approval by [American], although that was an aspiration if necessary. Conversely, we had an agreement with Vetcomm to perform transactions as specifically directed and when specifically directed. We followed those directions as given and have provided you with a Reconciliation of those transactions. We were always told that the expenditures were to secure the products you ordered, and still have no reason to believe otherwise. We were never told, nor provided documentation, that [American's] approval of expenditures was required or necessary before we could release funds. If you have documentation to the contrary, please provide same at your earliest convenience.

We advised Vetcomm that we were returning the remaining funds in our account ($134, 936.00) to you based on your request. Vetcomm acknowledged same and indicated that it would be requesting a refund on your behalf from the vendors paid. Our firm has never received any payment at all in this matter, and has in fact likely incurred wiring fees for the various transactions without reimbursement. Thus, no expenditures were made to Aaron & Gianna, PLC at all requiring a refund.

As stated in my previous email, I am copying Vetcomm on this transmission for follow-up. You may reach out to Vetcomm directly to resolve this issue. Should any refunds on this matter be deposited into Aaron & Gianna, PLC's account, we will wire those funds back to you and waive all wiring fees. However, it is Aaron & Gianna's position that it has not violated any agreement regarding the release of any funds in this matter. All expenditures were made at the specific direction of Vetcomm, and A&G was never provided any documentation indicating that [American's] approval was required or necessary to release any funds. Again, if you have documentation to the contrary please provide same.

June 9, 2020, Email, V. Am. Compl. Ex. D, ECF No. 12-4.

“On or about June 11, 2020, ” Williams and A&G transferred to American the remaining funds of $134, 936. V. Am. Compl. ¶ 62. This suit followed with the filing of the initial complaint on July 14, 2021. ECF No. 1. After Williams and A&G each moved to dismiss the complaint, ECF Nos. 5, 7, American filed the verified amended complaint on November 12, 2021, ECF No. 12.

American alleges that Williams and A&G, together with Vetcomm and Osteobiologic, induced American to transfer the escrow funds “knowing that they would neither hold the funds in trust and/or knowing that the funds would not be used to purchase PPE pursuant to the proposed PPE order.” V. Am. Compl. ¶ 40; see also id. ¶ 60. American claims that the defendants “jointly[] had a plan or scheme to obtain payment for items of PPE with no intention to fulfill such orders, but instead convert [American's] funds in furtherance of their joint venture.” Id. ¶ 55. Furthermore, American alleges that Williams and A&G should have “question[ed] the transfers purportedly directed by Vetcomm, ” id. ¶ 61, and not transferred the escrow funds, see id. ¶¶ 52-54.

American advances seven counts against Williams and A&G^[2]: (1) joint venture, id. ¶¶ 66-70; (2) breach of contract id. ¶¶ 71-89; (3) professional negligence, id. ¶¶ 90-98; (4) breach of fiduciary duty, id. ¶¶ 99-107; (5) unjust enrichment, id. ¶¶ 108-13; (6) civil conspiracy, id. ¶¶ 114-19; and (7) fraud, id. ¶¶ 120-26. American seeks, inter alia, $206, 664 in unreturned escrow funds; foreseeable financial damages related...