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Ambulatory Services of Puerto Rico, LLC v. Sankar Nephrology Group LLC

United States District Court, N.D. Texas, Fort Worth Division

September 3, 2019




         Came on 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, [1] (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 granted.


         Plaintiffs' Claims

         On November 12, 2018, plaintiffs filed their original complaint in this action. Doc.[2] 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:

         Rivera 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.[3] Id. at 8, ¶¶ 26, 28.

         The 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.

         To fund 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.

         Renal 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.

         ASPR 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.

         Following 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.

         The 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.

         Counts 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.[4] Doc. 80 at 65.


         Grounds of the Motions

         In 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.

         III. Applicable Pleading Standards

         Rule 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 allegations.").

         Moreover, 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 sense." Id.

         As the 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).

         In 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).

         Rule 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 ...

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