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Neurology and Pain Management Associates P.C. v. Bunin

United States District Court, N.D. Indiana, South Bend Division

August 13, 2018




         This is a case for breach of contract and related torts arising from a failed independent contractor relationship. Plaintiff Neurology and Pain Management Associates, P.C. (“Vanguard”), filed its complaint in Delaware County (Indiana) Circuit Court on September 26, 2016. Defendant Bio-Behavioral Care Solutions, LLC (“BCS”), removed the matter to the Southern District of Indiana[1] and the case then transferred therefrom to this District on January 12, 2017. [DE 38] The pleadings have closed and Defendants BCS and Anthony Bunin have moved for judgment on the pleadings. [DE 50] For the reasons stated herein, the Court will deny the motion.


         Vanguard, an Indiana corporation, provides psychiatric care services to seniors in outpatient offices, acute care hospitals, and long-term care facilities. On or about November 1, 2012, Vanguard hired Bunin as an independent contractor, and the two parties agreed to the terms set forth in a memorandum of understanding (“MOU”). At that time, however, Bunin still worked for one of Vanguard's direct competitors, BCS, as an executive officer. According to Vanguard, it had no idea that Bunin still served as BCS's employee because Bunin falsely informed Vanguard that he had ended his relationship with BCS.

         Bunin's contract with Vanguard required him to perform various marketing and recruitment functions. Vanguard alleges, however, that from November 2012 until July 2015, Bunin failed to perform any services for Vanguard and instead worked surreptitiously for BCS the entire time. In particular, Bunin solicited Vanguard's customers and prospective customers on behalf of BCS as part of a scheme to divert their business away from Vanguard. Bunin kept Vanguard in the dark by continuously providing Vanguard's president with false reports detailing his “progress” in carrying out his responsibilities under the agreement. But in July 2015, Vanguard caught Bunin in his lies and terminated his contract. This lawsuit followed.


         A motion for judgment on the pleadings under Rule 12(c) is subject to the same standard of review as a motion to dismiss under Rule 12(b)(6). Gill v. City of Milwaukee, 850 F.3d 335, 339 (7th Cir. 2017). Therefore, the Court construes the complaint in the light most favorable to the plaintiff, accepts the factual allegations as true, and draws all reasonable inferences in the plaintiff's favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A complaint must contain only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). That statement must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). However, a plaintiff's claim need only be plausible, not probable. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). Evaluating whether a plaintiff's claim is sufficiently plausible to survive a motion to dismiss is “‘a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Iqbal, 556 U.S. at 678).

         Additionally, when pleading fraud, the federal rules set a higher bar. Ello v. Brinton, No. 2:14-CV-299, 2015 WL 7016462, at *2 (N.D. Ind. Nov. 10, 2015). Fed.R.Civ.P. 9(b) states that in fraud cases, “a party must state with particularity the circumstances constituting fraud.” The Seventh Circuit has stated that Rule 9(b) “effectively carves out an exception to the otherwise generally liberal pleading requirements under the Federal Rules.” Graue Mill Dev. Corp. v. Colonial Bank & Trust Co. of Chi., 927 F.2d 988, 992 (7th Cir. 1991). To satisfy the requirement of Rule 9(b), a plaintiff pleading fraud must state “the identity of the person who made the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff.” Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir. 1994) (internal quotation marks omitted) (quoting Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir. 1992)). Stated differently, a plaintiff pleading fraud must state “the who, what, when, where, and how: the first paragraph of any newspaper story.” DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990); see also Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011) (“Heightened pleading in the fraud context is required in part because of the potential stigmatic injury that comes with alleging fraud and the concomitant desire to ensure that such fraught allegations are not lightly leveled.”).


         Vanguard's complaint alleges the following causes of action against both Defendants: constructive fraud (Count II); tortious interference with business relationships (Count V); and unfair competition (Count VI). As for Bunin individually, Vanguard alleges breach of contract (Count I), breach of fiduciary duty (Count III), and fraud (Count IV). The complaint lastly contains an unnumbered cause of action against BCS for tortious interference with contractual relationships.

         Defendants seek dismissal of these claims on four basic grounds: (1) the breach of contract claim should be dismissed because Vanguard has not shown the existence of a valid contract; (2) the fraud and constructive fraud claims should be dismissed as insufficiently plead under Rule 9(b); (3) the unfair competition claim should be dismissed as insufficiently plead; and (4) several of the tort claims should be dismissed as improperly duplicative of the breach of contract claim. The Court addresses these arguments in turn.

         A. Breach of Contract

         Vanguard maintains that Bunin violated the agreed-to terms of his employment agreement with Vanguard, thereby committing breach of contract. In Indiana, it is well settled that “[t]o recover for a breach of contract, a plaintiff must prove that: (1) a contract existed, (2) the defendant breached the contract, and (3) the plaintiff suffered damage as a result of the defendant's breach.” Collins v. McKinney, 871 N.E.2d 363, 370 (Ind.Ct.App. 2007). Specifically, Vanguard alleges that it entered into an agreement with Bunin whereby it hired Bunin as an independent contractor. [DE 39 ¶ 8] The terms of this agreement are contained in the MOU, which Vanguard attached to its complaint. Id. Generally speaking, the MOU required Bunin to market and promote Vanguard's nursing facilities in his assigned territory, new markets outside of his territory, provide specialized clinical support programs, and recruit clinical staff. Id. ¶¶ 10-11. The MOU also included a clause that prohibited Bunin from soliciting or diverting (or attempting to solicit or divert) clients, customers, etc., who were already under contract with Vanguard, and from interfering with Vanguard's business relationships. Id. ¶ 13. Vanguard alleges that Bunin breached this agreement by failing to provide any services required of him under the MOU, “surreptitiously working for BCS while he was supposed to be working for Vanguard, ” and “soliciting Vanguard's customers and potential customers on behalf of BCS.” Id. ¶ 23. As a result of this breach, Vanguard alleges it suffered actual damages, special and/or consequential damages, and lost profits. Id. ¶¶ 27-28. Vanguard has therefore sufficiently alleged breach of contract.

         Defendants argue that Vanguard cannot possibly “prove the existence of a contract” because the MOU attached to Vanguard's complaint lacks signatures and contains blank spaces regarding Bunin's compensation and scope of work. [DE 51 at 5-6] Defendants believe that this indicates a lack of acceptance or “meeting of the minds” necessary to prove that a valid contract existed. Id. at 5 (citing Indiana Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 733, 737 (Ind.Ct.App. 2005). But at this stage in the litigation, Vanguard does not need to prove the existence of a valid contract - it only needs to state sufficient facts to support a claim for breach of contract that is plausible on its face, and indeed Vanguard specifically alleges that the parties “accepted and acted pursuant to” the MOU's terms. [DE 39 ¶ 8] The fact that Vanguard attached an unexecuted copy of the MOU to its complaint in order to highlight its terms does not negate the possibility that the parties entered into a valid agreement at some point. For example, the MOU may have been signed at a later date, and there may be other documents or memorializations indicating as much. There may also be evidence that Bunin accepted the agreement through his conduct. Either way, these facts may be ascertained through discovery and Defendants' argument is better suited for summary judgment. See Eastek Int'l Corp. v. Ingersoll-Rand Co., No. 10-C-3305, 2010 WL 4790912, at *2 (N.D.Ill. Nov. 16, 2010) (denying motion to dismiss breach of contract claim where plaintiff attached an unsigned agreement to its ...

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