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.
for consideration (1) the motion of defendants Sankar
Nephrology Group, LLC ("SNG"), Renal Physicians of
North Texas, LC ("Renal Physicians"), and PPG
Health, P.A. ("PPG")(collectively, the "SNG
defendants") to dismiss,  (2) the motion of defendants
Ponniah Sankarapandian a/k/a Ponniah Sankar
("Ponniah") and Balamurgugan P. Sankarapandian
a/k/a Bala Sankar ("Bala") (together, the
``Sankars") to dismiss, and (3) the motion of defendant
Branch Banking and Trust Company ("BB&T") to
dismiss, each motion being directed to plaintiffs' second
amended complaint. The court, having considered the motions,
the responses of plaintiffs, Ambulatory Services of Puerto
Rico, LLC ("ASPR"), on its own behalf and
derivatively on behalf of SNG Naranjito, LLC (``Naranj
ito"), and Carlos R. Rivera ("Rivera"), the
replies, the record, and applicable authorities, finds that
the motions of the SNG defendants and the Sankars should be
granted in part, and that the BB&T motion should be
November 12, 2018, plaintiffs filed their original complaint
in this action. Doc. 1. On February 1, 2019, they filed their
amended complaint. Doc. 36. In response, defendants filed
motions to dismiss. Docs. 38, 40, 45. And, on June 27, 2019,
pursuant to the court's order of June 13, 2019, Doc. 79,
plaintiffs filed their second amended complaint, Doc. 80,
which is the operative pleading. Plaintiffs allege:
originally founded a hemodialysis clinic in Puerto Rico,
Centro de Dialisis San Miguel Arcangel ("San
Miguel"), and wanting to start another one, he sought an
investor. Doc. 80 at 7, ¶¶ 22, 24. His search led
him to SNG, which owned and operated other dialysis clinics,
and Ponniah, SNG's controlling member. Id. at
¶ 24 & 10, ¶ 38. Based on representations made
by Ponniah regarding his prior experience successfully
operating SNG dialysis clinics, the future profitability of
Naranjito, and his ability to complete the transaction
without outside funding, Rivera agreed to sell 60% of San
Miguel. Id. at 8, ¶¶ 26, 28.
parties entered into a number of agreements regarding
Naranjito. Id. at 8, ¶ 30. Pursuant to an Asset
Purchase Agreement, SNG agreed to buy 60% of San Miguel's
assets, with San Miguel transferring the remaining 40% to
Rivera's company, ASPR. Doc. 81 at Appx. 0007-0034. Then,
SNG and ASPR contributed their interests in San Miguel (the
"contributed assets") to the new dialysis clinic,
Naranjito, through a Membership Contribution Agreement
("MCA"). Id. Appx. 0036-0040. Thus, SNG
became a 60% member and ASPR a 40% member of Naranjito.
Id. at Appx. 0085. SNG and ASPR also entered into a
Limited Liability Company Operating Agreement for Naranjito
(the "Operating Agreement"). Id. Appx.
0042-0089. Pursuant to the Operating Agreement, a
supermajority of owners was required to approve the borrowing
of money or obtaining credit except for short-term unsecured
obligations in the ordinary course of business. Doc. 80 at
10, ¶¶ 35-36; Doc. 81 at Appx. 0065. And, Renal
Physicians entered into a Management Services Agreement
("MSA") pursuant to which it agreed to provide
management services to Naranjito. Doc. 81 at Appx. 0091-0103.
SNG's acquisition of 60% of San Miguel's assets, SNG
and the Sankars got a secured loan from BB&T in the
principal amount of $3, 700, 000 (the ``BB&T loan"),
leveraged all of Naranjito's assets, including ASPR's
contributed assets, and granted a lien in favor of BB&T,
and added Naranjito as a co-obligor on the BB&T loan.
Doc. 80 at 12, ¶ 45. Neither Ponniah, SNG, or Renal
Physicians ever informed Rivera of these obligations.
Id. ¶ 46. BB&T knew that the BB&T loan
must be kept secret from Rivera and acted to hide the
fraudulent nature of the transaction. Id. at 14-15,
¶¶ 55, 59.
Physicians caused hundreds of thousands of dollars to be
transferred from Naranjito's bank account to an account
or accounts controlled by SNG, which then used a portion of
those funds to make electronic payments toward the BB&T
loan. Doc. 8 0 at 35-36, ¶ 143. The Sankars and SNG then
concealed those payments by emailing Rivera financial
statements that omitted them. Id. at 40, ¶ 159.
and SNG eventually decided to sell Naranjito's assets.
Rivera secured a $7 million offer from Bio-Medical
Applications of Puerto Rico, Inc. ("Bio-Medical"),
which belongs to an international conglomerate operating
under the name Fresenius Medical Care. Doc. 80 at 27, ¶
106. On February 9, 2016, SNG and ASPR executed an Agreement
to Sell Assets of SNG Naranjito, LLC to Fresenius Medical
Care (the "Member Sale Agreement"). Id. at
28, ¶ 107; Doc. 81 at Appx. 0112. The pertinent part of
that agreement states that "the allocation of the
proceeds of the sale of ownership interest shall be as
follows" and indicates that SNG will be allocated $4,
200, 000, consistent with its 60% ownership interest in
Naranjito, and ASPR will be allocated $2, 800, 000,
consistent with its 4 0% ownership interest. Id. On
January 3, 2017, Bio-Medical, at the direction of the Sankars
and SNG, processed two wire transfers totaling $7 million:
one transfer of $2, 719, 638.20 to an account in the name of
SNG and Waranjito to satisfy the BB&T loan, and another
in the amount of $4, 280, 361, 80 to a separate account in
Naranjito's name. Doc. 80 at 32, ¶ 132.
the sale to Fresenius, plaintiffs investigated and determined
that defendants had defrauded them and others through a
scheme of investing in and operating dialysis clinics
including Naranjito. Doc. 80 at 33-42, ¶¶ 134-62.
Through forensic analysis, plaintiffs discovered self-dealing
by the Sankars and SNG and improprieties by other defendants.
Id. at 42-43, ¶¶ 163-68.
second amended complaint sets forth fifteen causes of action,
which are as described in the court's memorandum opinion
and order signed May 28, 2019, Doc. 76 at 2-8, except that
what was described in that opinion as Count XVI is now Count
Fifteen and Counts XV and XVII of the amended complaint are
no longer being asserted.
Four and Eleven reflect that they are brought by Rivera and
ASPR, but as discussed, infra, Rivera is really not
asserting any claims. The remaining counts are asserted only
by ASPR, with the exception of Count Fifteen, wherein ASPR
and Naranjito request judgment in their favor. Doc. 80 at 65.
of the Motions
their respective motions to dismiss the second amended
complaint, defendants assert that the claims against it or
him should be dismissed for want of sufficient pleading.
Applicable Pleading Standards
8(a)(2) of the Federal Rules of Civil Procedure provides, in
a general way, the applicable standard of pleading. It
requires that a complaint contain "a short and plain
statement of the claim showing that the pleader is entitled
to relief," Fed.R.Civ.P. 8(a)(2), "in order 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) (internal quotation
marks and ellipsis omitted). Although a complaint need not
contain detailed factual allegations, the "showing"
contemplated by Rule 8 requires the plaintiff to do more than
simply allege legal conclusions or recite the elements of a
cause of action. Twombly, 550 U.S. at 555 & n.3.
Thus, while a court must accept all of the factual
allegations in the complaint as true, it need not credit bare
legal conclusions that are unsupported by any factual
underpinnings. See Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009) ("While legal conclusions can provide the
framework of a complaint, they must be supported by factual
to survive a motion to dismiss for failure to state a claim,
the facts pleaded must allow the court to infer that the
plaintiff's right to relief is plausible. Iqbal,
556 U.S. at 678. To allege a plausible right to relief, the
facts pleaded must suggest liability; allegations that are
merely consistent with unlawful conduct are insufficient.
Id. In other words, where the facts pleaded do no
more than permit the court to infer the possibility of
misconduct, the complaint has not shown that the pleader is
entitled to relief. Id. at 679. "Determining
whether a complaint states a plausible claim for relief . . .
[is] a context-specific task that requires the reviewing
court to draw on its judicial experience and common
Fifth Circuit has explained: "Where the complaint is
devoid of facts that would put the defendant on notice as to
what conduct supports the claims, the complaint fails to
satisfy the requirement of notice pleading."
Anderson v. U.S. Dep't of Housing & Urban
Dev., 554 F.3d 525, 528 (5th Cir. 2008). In sum, ``a
complaint must do more than name laws that may have been
violated by the defendant; it must also allege facts
regarding what conduct violated those laws. In other words, a
complaint must put the defendant on notice as to what conduct
is being called for defense in a court of law."
Id. at 528-29. Further, the complaint must specify
the acts of the defendants individually, not collectively, to
meet the pleading standards of Rule 8(a). See Griggs v.
State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999);
see also Searcy v. Knight (In re Am. Int'l
Refinery), 402 B.R. 728, 738 (Bankr. W.D. La. 2008).
considering a motion to dismiss for failure to state a claim,
the court may consider documents attached to the motion if
they are referred to in the plaintiff's complaint and are
central to the plaintiff's claims. Scanlan v. Tex.
A&M Univ., 343 F.3d 533, 536 (5th Cir. 2003) . The
court may also refer to matters of public record. Papasan
v. Allain, 478 U.S. 265, 268 n.l (1986); Davis v.
Bayless, 70 F.3d 367, 372 n.3 (5th Cir. 1995); Cinel
v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994). This
includes taking notice of pending judicial proceedings.
Patterson v. Mobil Oil Corp., 335 F.3d 476, 481 n.1
(5th Cir. 2003). And, it includes taking notice of
governmental websites. Kitty Hawk Aircargo, Inc. v.
Chao, 418 F.3d 453, 457 (5th Cir. 2005); Coleman v.
Dretke, 409 F.3d 665, 667 (5th Cir. 2005).
9(b) sets forth the heightened pleading standard imposed for
fraud claims: ``In alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud
or mistake." The Fifth Circuit requires a party
asserting fraud to "specify the statements contended to
be fraudulent, identify the speaker, state when and where the
statements were made, and explain why the statements were
fraudulent." Hermann Holdings, Ltd. v. Lucent
Techs., Inc., 302 F.3d 552, 564-65 (5th Cir. 2002)
(internal quotations and citations omitted). Succinctly
stated, Rule 9(b) requires a party to identify in its
pleading "the who, what, when, where, and how" of
the events constituting the purported fraud. Dorsey v.
Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir.
2008). Rule 9(b) applies to all cases where the gravamen of
the claim is fraud even though the theory supporting the
claim is not technically termed fraud. Frith v. Guardian
Life Ins. Co. of Am., 9 F.Supp.2d 734, 742 (S.D. Tex.
1998}. Statutory claims based on allegations of fraud, such
as violations of the Texas Insurance Code, the TDCA, and the
Texas DTPA, as well as those for fraud, fraudulent