Lavender Health Care, LLC v. Redstone LLC
| Decision Date | 14 September 2021 |
| Docket Number | 8:20-cv-2289-CEH-TGW |
| Parties | LAVENDER HEALTH CARE, LLC, Plaintiff, v. REDSTONE LLC, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
This matter comes before the Court upon Defendant's Motion to Dismiss Amended Complaint, Join Indispensable Party or Dismiss Counts III and VI, Strike Punitive Damages Claim and Incorporated Memorandum of Law in Support [Doc. 19] and Plaintiff's Opposition [Doc. 25]. In the motion Defendant argues that the claims are deficient and subject to dismissal, that Plaintiff improperly seeks punitive damages and that a necessary and indispensable party has not been joined with regard to Counts III and VI for civil conspiracy and a Sherman Act violation. The Court, having considered the motion and being fully advised in the premises, will GRANT-IN-PART and DENY-IN-PART Defendant's Motion to Dismiss Amended Complaint, Join Indispensable Party or Dismiss Counts III and VI, Strike Punitive Damages Claim and Incorporated Memorandum of Law in Support.
Plaintiff, Lavender Health Care, LLC is a limited liability company organized under the laws of Florida. [Doc. 12 ¶ 1]. On September 12, 2009, one of Plaintiff's two members, Richard Kimsey, entered into a Master Developer Agreement (MDA) with Doctors Express Franchising, purchasing the exclusive rights to open and manage Doctors Express urgent care centers in Tampa Bay, St. Petersburg, Sarasota, and Fort Myers, Florida-the specified territory-as the Master Developer. Id. ¶¶ 9-11, 13. Plaintiff paid a fee of $194, 400 to become the Master in the designated territory. Id. ¶ 12. The MDA was assigned by Kimsey to Plaintiff on October 12, 2009. Id. ¶ 16.
Under the terms of the MDA, if Plaintiff referred any prospect to Doctors Express and that prospect signed a franchise agreement to operate a business in the designated territory, Plaintiff would receive from Doctors Express fifty percent (50%) of the Initial Franchise Fee paid by the prospect. Id. ¶ 14. The MDA also provided that Plaintiff would receive from Doctors Express 2.5% of the gross sales from each of the franchises in his exclusive territory in exchange for Plaintiff's efforts, investment of time and resources in developing, managing and supporting the franchisees in his purchased territory. Id. ¶ 15.
Subsequently, Doctors Express sold its assets and liabilities to DRX Urgent Care, LLC, and in April 2013, American Family Care LLC (AFC) acquired these assets and obligations. Id. ¶¶ 17, 18. This included the MDA between Doctors Express and Plaintiff. Id. ¶ 19. In or about January 2017, Defendant, Redstone was introduced by AFC to Plaintiff and other Master Developers, as a resource to assist the Master Developers in developing their master territories. Id. ¶ 21. Redstone was fully aware of Plaintiff's MDA and Plaintiff's rights in the master territory set forth in the MDA. Id. ¶ 23. Plaintiff cooperated and worked with Redstone as a resource to locate prospective franchisees in its master territory. Id. ¶ 22.
On or about August 27, 2018, Redstone, (then d/b/a American Development Partners) entered into an Area Development Agreement (“ADA”) with American Franchising LLC and/or its affiliate. Id. ¶ 24. Pursuant to the ADA, Redstone purportedly purchased the exclusive rights to develop urgent care centers in a specified territory consisting of the three largest counties located within the master territory previously granted to Plaintiff. Id. ¶ 25. Redstone had the right to purchase 17 franchise licenses for locations within Plaintiff's master territory. Id. ¶ 26. Redstone entered into the ADA, despite knowing of Plaintiff's rights under the MDA. Id. ¶¶ 23, 24.
Plaintiff was subsequently informed by AFC that all future prospects Plaintiff brought to AFC in the three largest counties within the master territory previously granted to Plaintiff must be brought in only through Redstone. Id. ¶ 27. This severely damaged Plaintiff's ability to develop franchises in its purchased master territory. Id. ¶ 28. The actions of Redstone replaced Plaintiff's role as a Master Developer in its purchased territory and caused AFC to terminate Plaintiff's MDA, without notice and without cause. Id. ¶¶ 29, 30. Plaintiff was severely damaged as a result. Id. ¶ 31.
On September 29, 2020, Plaintiff filed this action against Redstone. [Doc. 1]. The Amended Complaint alleges six counts. [Doc. 12]. In Count I, Plaintiff alleges that Redstone tortiously interfered with its business relationship with AFC and prospective franchisees and its prospective advantage of significant future benefits. Id. ¶¶ 32-45. Plaintiff further alleges that Redstone induced AFC to breach and terminate the MDA contract with Plaintiff. Id. ¶ 37. Count II asserts a claim for tortious interference with contractual obligations. Id. ¶¶ 46-51. There, Plaintiff alleges that Defendant persuaded AFC that it could do a better job of locating and developing prospective franchisees in Plaintiff's territory and that based upon these representations AFC granted Redstone the ADA and improperly terminated its MDA contract with Plaintiff. Id. ¶¶ 48-49. In Count III, Plaintiff asserts a claim for civil conspiracy, and alleges that Redstone and AFC conspired to unlawfully usurp Plaintiff's territory, and franchisee prospects, and knowingly agreed to engage and did engage in one or more overt acts in pursuit of the conspiracy. Id. ¶¶ 52-55. Count IV alleges that Redstone's actions in entering into the ADA and in pursuing franchisees in Plaintiff's territory constitute unfair methods of competition, unconscionable acts or practices and/or unfair or deceptive practices in violation of the Florida Deceptive and Unfair Trade Practices Act, (FDUTPA), Fla. Stat. § 501.201, et seq. Id. ¶¶ 56-61. Count V is a claim for fraud and alleges that Defendant represented to Plaintiff that it was acting in Plaintiff's best interests in locating and referring franchisees in Plaintiff's territory, did not intend to and failed to perform in accordance with those representations, and that Plaintiff reasonably relied on those representations and has been severely damaged as a result. Id. ¶¶ 62-66. In Count VI, Plaintiff asserts a claim for violation of the Sherman Act. Id. ¶¶ 67-74. There, Plaintiff alleges that the actions of Redstone in entering the ADA and pursuing franchisees in Plaintiff's territory and the termination of Plaintiff's MDA was a combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce, and that Redstone is attempting to establish a monopoly. Id. ¶¶ 69-70.
Defendant has moved to dismiss the Amended Complaint in its entirety, strike all requests for punitive damages, and direct joinder of an indispensable party or dismissal of the civil conspiracy and Sherman Act claims if joinder cannot be maintained. [Doc. 19 at p. 1]. More specifically, Defendant argues that Counts I and II are both subject to dismissal because they fail to allege that Redstone unjustifiably interfered with any business and contractual relationships between Plaintiff and AFC because the MDA did not provide for exclusive rights. Id. at p. 9. Next, Defendant argues that Count III fails because a civil conspiracy must be pleaded with particularity under Rule 9(b) and the conclusory allegations of the complaint are not adequate. Id. at pp. 10-12. The FDUPTA claim purportedly fails because it does not allege harm or injury to any consumer. Id. at pp. 12-14. Defendant argues that the claim for fraud is not pleaded with specificity and Plaintiff fails to allege that Redstone knowingly made any false statement(s) of fact for the purpose of inducing Plaintiff to act in reliance, or that Plaintiff acted in reliance on any such alleged false statement(s). Id. at pp. 14-15.
The Sherman Act claim is purportedly deficient because it fails to allege that Redstone engaged in any predatory or anticompetitive conduct, had a specific intent to monopolize, or had a dangerous probability of achieving monopoly power. Id. at p. 16. Additionally, Defendant argues that Plaintiff has not pleaded the required allegations that the alleged conspiracy unreasonably restrains trade, or that the alleged restraint on trade tends or is reasonably calculated to prejudice the public interest. Id. at p. 17.
Redstone also argues that AFC is directly identified and implicated by, and would likely have joint and several liability under, the civil conspiracy and Sherman Act claims in Counts III and VI, and must be joined as a necessary and indispensable party under Rule 19, Federal Rules of Civil Procedure, as AFC's absence would prevent the Court from affording complete relief. Id. at pp. 17-18. It argues that for liability to be imposed under these two claims, the Court must determine that Redstone and AFC were both members of a conspiracy, and proceeding with the claims would expose AFC to substantial prejudice and an inability to combat any such finding. Id. at p. 18. It requests the Court join AFC or dismiss Counts III and IV. Id. at p. 19.
Lastly, Redstone argues that Plaintiff has improperly alleged an entitlement to punitive damages without obtaining leave of Court and without providing any evidentiary showing or proffer to support such claims for punitive damages and that the improper references must be stricken. Id.
In response, Plaintiff withdraws, without prejudice, its claims for punitive damages. [Doc. 25 at p. 17]. Otherwise, it contends that the motion should be denied as all the claims are sufficiently pleaded and Defendant has not adequately demonstrated that a necessary and indispensable party has not been joined. Id. at p. 1. In explaining the sufficiency of its...
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