United States District Court, W.D. Kentucky, Louisville Division
ADVANCED LIFELINE SERVICES, INC. Plaintiff
CENTRAL HOSPITAL SERVICES, INC., d/b/a CHAMPS HEALTHCARE MANAGEMENT PROGRAMS Defendant
MEMORANDUM OPINION AND ORDER
REBECCA GRADY JENNINGS, DISTRICT JUDGE UNITED STATES DISTRICT
Advanced Lifeline Services, Inc. (“ALS”) brings
this action against Defendant Central Hospital Services,
Inc., d/b/a Champs Healthcare Management Programs
(“Champs”), alleging fraudulent inducement (Count
I), intentional or negligent misrepresentation (Count II),
and breach of the implied duties of good faith and fair
dealing (Count III). [DE 1-2, Compl. at ¶ 1]. Champs now
moves to dismiss Counts I and II under Federal Rule of Civil
Procedure 9(b) and all Counts under Rule 12(b)(6). [DE 4,
Mot. Dismiss]. The matter is fully briefed and ripe for
judgment. [See DE 8, ALS Resp.; DE 9, Champs Reply]. Having
considered the parties' filings and the applicable law,
the Court GRANTS Champs's Motion to Dismiss.
following facts are set out in the Complaint and accepted as
true for purposes of Champs's Motion. See Davis v.
Prison Health Servs., 679 F.3d 433, 440 (6th Cir. 2012).
provides ventilator and respiratory care services to skilled
nursing facilities in the United States. [DE 1-2 at
¶¶ 5, 7]. Part of its business is to furnish and
administer the application of medical gases to patients in
those facilities. Id. Champs, through Premier Group
Purchasing (“Premier”), facilitates a group
purchasing plan for medical supplies that offers its members
the opportunity to buy products from participating vendors at
discounted prices. Id. at ¶ 8-9.
2009, Champs accepted ALS's application to join the group
purchasing plan. Id. at ¶ 10. As part of the
process, ALS executed Champs's “Continuation of
Care Membership Application” (the “Membership
Application”). In October 2010, ALS contracted with
Airgas NorPac, Inc. (“Airgas”) for Airgas to
supply medical gases to ALS for seven years. [DE 1-2 at
¶ 12]. The contract resulted from ALS's membership
in Premier, with Champs acting as ALS's purported agent.
Id. When ALS entered into the Airgas contract, a
Champs employee represented to ALS that ALS was obtaining the
best price offered for the Airgas medical gases. Id.
at ¶ 13. Other Champs employees reiterated this claim in
response to ALS's later inquiries. Id.
did not inform ALS that Airgas offered eight pricing tiers.
If ALS were designated as an acute-care provider, it would be
entitled to the more cost-effective Tier 5 pricing.
Id. at ¶ 15. Champs employee Timothy Andrejcak
represented to Airgas that ALS provided non-acute care
services and was thus entitled only to Tier 2 pricing.
Id. at ¶ 22. Champs also purported to sign on
ALS's behalf in designating ALS as a non-acute care
provider. Id. ALS never authorized Champs to make
that representation or to sign on its behalf in making the
designation. Id. ALS had no knowledge that Champs
made these representations to and designations with Airgas
until September 2016-approximately six years after ALS first
contracted with Airgas. Id. at ¶ 23.
December 4, 2017, ALS filed suit against Champs in Jefferson
County Circuit Court. [DE 1-2]. In its Complaint, ALS alleges
that Champs, among other things, made intentional or
negligent misrepresentations, fraudulently induced ALS to
enter into a contract with a non-party for the purchase of
oxygen for seven years and overpay for that oxygen, and
breached the implied duties of good faith and fair dealing.
Id. at ¶¶ 1, 7-23. On January 16, 2018,
Champs filed a timely notice to remove the action to this
Court pursuant to 28 U.S.C. § 1441. Id. Champs
now moves to dismiss Counts I and II under Rule 9(b) and all
Counts under Rule 12(b)(6). [DE 4].
Fraudulent Inducement (Count I) and Misrepresentation (Count
Applicable Law and Legal Standard
argues that ALS's claims for fraudulent inducement (Count
I) and misrepresentation (Count II) are not pled with
particularity under Federal Rule of Civil Procedure 9. [DE
4-1 at 35-38]. This action is in federal court based on
diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Federal procedural law governs this action and establishes
the appropriate pleading standard for inducement and
misrepresentation. Minger v. Green, 239 F.3d 793,
799 (6th Cir. 2001); Tucker v. Heaton, No.
5:14-CV-00183-TBR, 2015 WL 1884384, at *3 (W.D. Ky. Apr. 24,
2015); Fed.R.Civ.P. 81(c)(1). If ALS satisfies federal
pleading requirements for fraudulent inducement and
misrepresentation, Kentucky's substantive law will apply
to those claims. Rawe v. Liberty Mut. Fire Ins. Co.,
462 F.3d 521, 526 (6th Cir. 2006).
9(b) requires plaintiffs to plead fraudulent inducement and
misrepresentation allegations with particularity.
Republic Bank & Tr. Co. v. Bear Stearns &
Co., 683 F.3d 239, 247 (6th Cir. 2012). At a minimum,
plaintiffs must allege: (1) the time, place, and content of
any allegedly false representations; (2) the fraudulent
scheme; (3) the defendant's fraudulent intent; and (4)
the resulting injury. U.S. ex rel. Bledsoe v. Cmty.
Health Sys., Inc., 342 F.3d 634, 643 (6th Cir. 2003)
(internal citations and quotation marks omitted); see also
Frank v. Dana Corp.,547 F.3d 564, 570 (6th Cir.
2008) (internal citations and quotations omitted). General
allegations of fraud are insufficient. VanDenBroeck v.
CommonPoint Mortgage Co., 210 F.3d 696, 701 (6th Cir.
2000). For allegations against a corporation, the plaintiff
must also identify the representatives who made the
statements from which the plaintiff's claims arise.
William Beaumont Hosp. Sys. v. Morgan Stanley & Co.,
LLC, 677 Fed.Appx. 979, 984 (6th Cir. 2017). Thus, a
plaintiff must identify the speaker of the alleged statements
instead of “referring vaguely only to
‘defendants.'” Cataldo v. U.S. Steel
Corp.,676 F.3d 542, 551 (6th Cir. 2012). Such