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Asd Specialty Healthcare Inc., D/B/A Asd v. New Life Home Care Inc. and Gregory

November 29, 2011


The opinion of the court was delivered by: (judge Caputo)


Presently before the Court are Defendant Gregory Malia's Motion to Dismiss the Amended Complaint and Plaintiff ASD Specialty Healthcare Inc.'s Motion to Dismiss Counterclaims Filed by New Life Home Care Inc. Mr. Malia's motion will be denied because ASD may plead inconsistent claims and has sufficiently alleged facts supporting corporate veil-piercing and fiduciary duty theories. But because ASD has not sufficiently served Mr. Malia, it must perfect service within twenty-one days. ASD's motion will be granted in part because New Life did not plead its fraud claims with particularity and the statute of limitations has run on its claims that ASD fraudulently billed it for goods it did not receive. The motion will be denied in part, however, because New Life may plead inconsistent claims and assert a cause of action for accounting.

I. Background

A. ASD's Amended Complaint

The facts as alleged in ASD's Amended Complaint are as follows:

Defendant New Life Home Care is a company that provides pharmaceutical and related services to assist individuals with bleeding disorders such as hemophilia. In August of 2005 and 2006, New Life entered into an open account with Plaintiff ASD Healthcare, a pharmaceutical supplier, for the purchase of antihemophilic drugs. To establish the account, New Life signed business applications with ASD, agreeing to pay all debts, accounts, and invoices.

New Life's controlling shareholder is Defendant Gregory Malia. He controlled New Life's finances and made all significant decisions for the company. Mr. Malia has treated New Life as his alter ego, using New Life funds to help pay for his lavish and opulent lifestyle, even while New Life was insolvent or nearing insolvency. Mr. Malia paid himself approximately $300,000 a year as New Life's president and CEO, in addition to $80,000 for pastoral care he provides to New Life's patients. He charged personal expenses to his corporate credit card, including $8,000 for the monthly rent on his Manhattan apartment and the payments on his luxury cars. Mr. Malia also issued approximately $300,000 worth of checks to his attorney, a personal friend, without any invoices describing services rendered by the attorney. Further, he paid the rent on New Life's operating space to an entity of which he was the sole owner.

In early 2010, ASD requested that New Life make payment for the pharmaceuticals it had purchased. New Life failed to make any payments. In April 2010, New Life signed a promissory note in the amount of $1,119,759.65 with ASD. New Life represented that it would make payments under the note and timely pay for any future pharmaceutical purchases. At that time, New Life also executed a security agreement granting ASD a security interest in New Life's personal property. ASD perfected the security interest on June 7, 2010 by filing a UCC-1 financing statement with the Secretary of State of the Commonwealth of Pennsylvania.

New Life failed to make payments to ASD and is now in default of its obligations under the business applications, note, and security agreement. As of January 7, 2011, the aggregate principal balance due to ASD from New Life equaled $2,558,586.83 plus interest of eighteen percent per annum on each outstanding invoice.

ASD instituted this action against New Life and Mr. Malia on January 10, 2011. After the complaint was dismissed for jurisdictional defects, ASD filed an amended complaint on January 19, 2011. The complaint contains seven counts: (1) breach of the business applications; (2) breach of the note; (3) unjust enrichment; (4) replevin; (5) breach of fiduciary duty; (6) conversion; and (7) piercing the corporate veil. Mr. Malia moved to dismiss the complaint on July 15, 2011. The motion is fully briefed and ripe for disposition.

B. New Life's Counterclaims

The facts as alleged in New Life's answer are as follows: ASD provides pharmaceuticals to New Life. The price of these pharmaceuticals constantly fluctuates based on changing contractual relationships and government standards.

In July of 2009, New Life reviewed the copies of all purchase orders placed with ASD and the corresponding invoices for the year 2009. Based on its review, New Life determined that ASD had been overbilling it. Specifically, the review showed that ASD had billed New Life for goods that it did not receive and that ASD had inflated the prices on goods that it did provide to New Life.

New Life filed its answer on July 15, 2011. The answer asserts four counterclaims: (1) fraudulent concealment; (2) unjust enrichment; (3) fraud, misrepresentation, and deceit; and (4) accounting. New Life seeks damages in the amount of $650,000. ASD moved to dismiss the counterclaims on July 29, 2011. The motion has been fully briefed and is ripe for disposition.

II. Discussion

A. Legal Standard on a Motion to Dismiss

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded "enough facts to state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), meaning enough factual allegations "'to raise a reasonable expectation that discovery will reveal evidence of'" each necessary element, Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). The pleading standard of Federal Rule of Civil Procedure 8 does not require "detailed factual allegations," but "[a] pleading that offers 'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. ...

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