MedChoice Financial, LLC v. ADS Alliance Data Systems, Inc.
857 F. Supp. 2d 665
S.D. Ohio2012Background
- MedChoice and the Bank entered a Private Label Credit Card Program Agreement in Sept 2005 under which MedChoice acted as intermediary to finance procedures for patients in its provider network; contract terminated Sept 2010.
- In March 2011 MedChoice sued the Bank for conduct surrounding termination; MedChoice amended in Sept 2011 to add ADS Alliance Data Systems as a defendant.
- Counterclaims allege fraud, deceptive trade practices, breach of contract, unjust enrichment, and defamation among others arising from alleged unauthorized charges and mismanagement of funds under the Contract.
- Hall, MedChoice, and Naturile moved to dismiss various counterclaims; the court addresses MedChoice’s and Hall’s motions to dismiss.
- The court DENIES the motions to dismiss, finding sufficient facts alleged to support the counterclaims and jurisdiction over Hall in his individual capacity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the economic loss rule bars fraud claim | MedChoice argues the economic loss rule bars fraud. | Counterclaimants contend fraud is beyond mere contract damages. | Fraud claim not barred; claim plausibly alleged. |
| Whether the economic loss rule bars Deceptive Trade Practices Act claim | MedChoice argues DTPA claim is barred by the economic loss rule. | Counterclaimants contend statutory tort claims are independent of contract. | DTPA claim denied to be barred; not precluded by economics loss rule. |
| Whether defamation claim is adequately pled under Rule 8 | MedChoice contends pleading lacks specificity. | Counterclaimants argue enough facts identify statements and speakers; heightened specificity not required under Rule 8. | Defamation claim adequately pled; no heightened pleading required. |
| Whether Hall has personal jurisdiction over counterclaims | Hall argues no personal jurisdiction in his individual capacity. | Counterclaimants contend alter ego and fiduciary-shield doctrine exceptions render Hall subject to jurisdiction. | Personal jurisdiction over Hall in Ohio proper; alter ego analysis supports attribution to Hall. |
| Whether Hall’s 12(b)(6) arguments bar fraud and related claims | Hall contends economic loss rule bars fraud and aiding/abetting fraud claims; also challenges alter-ego theory. | Counterclaimants maintain fraud claims survive and alter-ego theory supports jurisdiction and liability. | Hall's 12(b)(6) arguments rejected; claims survive or remain timely to proceed. |
Key Cases Cited
- Gator Dev. Corp. v. VHH, Ltd., 2009-Ohio-1802 (1st Dist. 2009) (economic loss rule limits for pure economic loss; fraud context discussed)
- Belvedere Condominium Owners’ Ass’n v. R.E. Roark Cos., Inc., 67 Ohio St.3d 274 (Ohio 1993) (alter ego/fiduciary shield doctrine and piercing standards)
- S & R Recycling, Inc., 2011-Ohio-3371 (7th Dist. 2011) (fiduciary-shield doctrine and alter ego analysis in personal jurisdiction)
- Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506 (Ohio 2008) (alter ego piercing and jurisdiction analysis standards)