United States District Court, N.D. Texas, Fort Worth Division
AMBULATORY SERVICES OF PUERTO RICO, LLC, ON ITS BEHALF AND DERIVATIVELY ON BEHALF OF SNG NARANJITO, LLC, ET AL., Plaintiffs,
SANKAR NEPHROLOGY GROUP, LLC, ET AL., Defendants.
MEMORANDUM OPINION AND ORDER
MCBRYDE, UNITED STATES DISTRICT JUDGE.
the court for consideration and decision is the motion of
plaintiffs, Carlos R. Rivera ("Rivera"), Ambulatory
Services of Puerto Rico, LLC ("ASPR"), and SNG
Naranjito, LLC ("Naranjito") (collectively
"plaintiffs"), to disqualify counsel for defendants
Sankar Nephrology Group, LLC ("SNG"), Renal
Physicians of North Texas LLC ("Renal Physicians"),
and PPG Health P.A. ("PPG") from representing any
of the defendants in this action. The court has concluded
that it should withhold a ruling on plaintiffs' motion,
as well as the pending motions to dismiss, until after the
hearing now scheduled for June 12, 2019, has been conducted.
of Plaintiffs' Claims
the underbrush is cleared away, the heart of plaintiffs'
main complaints are that SNG, at the behest of defendants
Ponniah S. Sankarapandian, a/k/a Ponniah Sankar
("Ponniah Sankar"), and Balamurugan P.
Sankarapandian, a/k/a Bala Sankar ("Bala
Sankar")(collectively, "the Sankars"), (1)
secretly and fraudulently borrowed against Naranjito's
assets $3, 700, 000 for the purchase from Rivera of a sixty
percent interest in Naranjito and (2) caused the mishandling
and misappropriation of $7 million realized from the sale of
Naranjito's assets to Fresenius Medical Care
("Fresenius") in February 2016. At the time of
the sale, Naranjito was jointly owned by ASPR and SNG. The
second of those two complaints received the most attention in
the allegations of the amended complaint.
first of the two, which is the basis of Count I of the
complaint, arises from a transaction in early 2014 when ASPR,
acting through Rivera, and SNG, acting through the Sankars,
entered into an arrangement for joint ownership of Naranjito.
In connection with that transaction ASPR and SNG executed a
Membership Contribution Agreement ("MCA") that
prohibited future financing or the encumbrance of
Naranjito's assets without joint approval of ASPR and
SNG. Plaintiffs alleged that SNG violated the MCA by
encumbering assets of Naranjito to obtain funds to use for
funding of SNG's purchase of an interest in Naranjito, in
a way that did not benefit ASPR but, instead, caused ASPR to
suffer damages. This alleged violation forms the basis of
Count I of the complaint. Doc. 36 at 39, ¶¶ 170
agreement ASPR and SNG entered into when Naranjito was formed
was a Limited Liability Operating Agreement for Naranjito
(the "Operating Agreement"). Count II complains
that the Sankars and SNG breached the Operating Agreement in
a number of respects, including causing an inappropriate
distribution for the benefit of SNG and the Sankars of the
funds realized from defendant Branch Banking and Trust
Company ("BB&T") of the $3, 700, 000 loan they
obtained from BB&T to fund SNG's purchase of an
interest in Naranjito in violation of the Operating Agreement
as well as in violation of the MCA. Id. at 39-41,
into other Counts of the amended complaint are further
complaints about the $3, 700, 000 loan and the disposition of
the $7 million received from the sale of Naranjito's
III is based on a claim of breach by SNG of an agreement SNG
and ASPR executed for the sale of the assets of Naranjito to
Fresenius (the "Member Sale Agreement" or
"MSA"). The MSA set forth the understanding of the
parties relative to disposition of the sale proceeds from the
sale of Naranjito to Fresenius. According to plaintiffs, ASPR
was to receive no less than $2, 800, 000 from that sale and,
in addition, was entitled to forty percent of the $76, 000
received for Naranjito's inventory. SNG allegedly
violated the Member Sale Agreement by preventing payment to
ASPR of its share of the proceeds, causing the purchaser,
instead, to pay the proceeds to BB&T, rendering the
proceeds inaccessible to ASPR. In the process, SNG failed to
pay ASPR its forty percent share of the sale's proceeds.
IV alleged breach of fiduciary duty against the Sankars and
SNG based on the conduct of SNG and the Sankars in obtaining
the $3, 700, 000 loan from BB&T for their personal
benefit--for using Naranjito's assets and profits for
is a breach of contract claim against defendants Renal
Physicians and PPG. The MSA required Renal Physicians and PPG
to provide certain business and administrative management
services to Naranjito. Plaintiffs alleged that SNG breached
the MSA by, among other things, failing to provide the
services Renal Physicians and PPG were responsible for, and
for allowing Renal Physicians and PPG to overbill Naranjito
for their services for the period after ASPR took over the
commercial billing and collections.
VI is a civil RICO count against Ponniah Sankar and SNG based
on their conduct in obtaining the lending arrangement with
BB&T to fraudulently acquire an equity interest in
Naranjito, as previously mentioned, and other SNG dialysis
clinics, and to fund the operation of the clinics in a manner
that diverted profits away from Naranjito and other clinics
for the benefit of the Sankars, SNG, and other
Sankar-affiliated businesses, to the damage of ASPR.
VII again is described as a civil RICO count against Ponniah
Sankar and SNG, this one based on their conduct and
activities in acquiring and maintaining a controlling
interest in what was known as "SNG Dialysis
Clinics," including Naranjito. This allegation appears
again to be related to the acquisition by Ponniah Sankar and
SNG of the $3, 700, 000 loan from BB&T previously
VIII is another civil RICO claim against Ponniah Sankar and
SNG, this time based on the relationship between those
defendants and SNG Dialysis, again growing out of the
transaction that resulted in the $3, 700, 000 BB&T loan
as well as other allegedly unlawful loans, and related
transactions, that were made or conducted despite having
never obtained ASPR's approval for the loans, the
proceeds of none of which were used to benefit ASPR or
Naranjito, but were for the sole benefit and personal use of
Ponniah Sankar and SNG.
IX alleged against all defendants a conspiracy to violate
civil RICO. This count alleged that defendants Bala Sankar,
Renal Physicians, and PPG joined with Ponniah Sankar and SNG
in a conspiracy to commit acts in violation of 18 U.S.C.
§ 1962(a)-(c). The respects in which that happened
appear to be the same conduct previously alleged against the
parties in the earlier civil RICO counts.
is an unjust enrichment count against BB&T and SNG
related to the funds received from the sale of Naranjito.
This count essentially restates in different words the same
complaints made by plaintiffs relative to alleged
inappropriate disbursement of the $7 million received from
Fresenius when it purchased Naranjito's assets.
XI is a fraud count against Ponniah Sankar and SNG related to
the obtaining from BB&T of the previously discussed $3,
700, 000 loan that was used by SNG to purchase an interest in
the assets of Naranjito.
XII is a civil conspiracy claim against all defendants. At
the outset of allegations under this count, the allegation is
made that "[t]his is an action for damages arising from
a civil conspiracy by the Defendants to defraud ASPR through
Defendants' acts of promoting and perpetuating Ponniah
Sankar's and SNG's self-dealing and disloyalty."
Doc. 36 at 57, ¶ 270.
XIII is a conversion count against BB&T and SNG.
Plaintiffs describe this count as "an action for damages
arising from SNG's and BB&T's conversion of
property rightfully owned by ASPR as minority owner of
Naranjito." Id. at 58, ¶ 2 76. The
complaint in this count relates to the handling by BB&T
and SNG of the proceeds from the $7 million sale of the
assets of Naranjito to Fresenius.
XIV is an equitable accounting claim against SNG by which
ASPR seeks an accounting of the financing of Naranjito due to
SNG's fraudulent activities and corporate misconduct
orchestrated by its controlling member, Ponniah Sankar, as
described in the amended complaint. Id. at 59,
XV asserted a breach of duty of good faith and fair dealing
claim against BB&T. It is based on allegations that
BB&T owed Naranjito a duty of good faith and fair dealing
in connection with the financial services provided to
Naranjito, and that BB&T violated that duty as to various
transactions that are described in the amended complaint.
Id., at 60, ¶¶ 287-288.
XVI asserts an aiding and abetting breach of fiduciary duty
claim against BB&T. This count is based on an allegation
that BB&T aided and abetted the Sankars and SNG in their
violations of fiduciary duties owed to ASPR and Naranjito.
Id. at 61, ¶¶ 291-292. Those alleged
breaches of fiduciary duty apparently pertain to various
transactions that were earlier described in the amended
XVII alleged violation of the Texas Deceptive Trade Practices
Act against BB&T. Plaintiffs alleged that ASPR and
Naranjito were consumers within the meaning of the Texas
Deceptive Trade Practices-Consumer Protection Act and that
the bank engaged in false, misleading, and deceptive acts,
practices, and/or omissions with respect to the provision of
financial services to Naranjito and ASPR, again referring to
the various transactions in which BB&T were involved that
previously had been described in the amended complaint.
Id., at 61-62, ¶¶ 295-296.
in the Amended Complaint of Cantey Hanger and Its
was no mention of Cantey Hanger or any of the Cantey Hanger
attorneys in the original complaint by which this action was
initiated in November 2 018. Doc. 1. As what might be viewed
to be a prelude to the late decision of the plaintiffs to
seek disqualification of Cantey Hanger and its attorneys from
representing any defendant in this action, plaintiffs
mentioned in the amended complaint fourteen times the
involvement of Cantey Hanger and its attorneys in various
transactions about which plaintiff complains.
mentions include the following allegations:
Naranjito hired Cantey Hanger to assist in the sale of
Naranjito to Fresenius, and throughout the transaction
lawyers from Cantey Hanger were in contact with Rivera
regarding various aspects of the transaction and its impacts