Sheffer v. Healthcare Services Group, Inc. et al, No. 7:2019cv00053 - Document 50 (W.D. Va. 2019)
Court Description: MEMORANDUM OPINION. Signed by Senior Judge Glen E. Conrad on 10/18/2019. (aab)
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CLERK'S OFFICEU.S.DIST.COURF AT R> NOkE, ' VA FII -ED IN THE UNITED STATES DISTIUCT COURT ocT 18 2212 FOR TH E W ESTERN D ISTW CT O F V IRO JN IA JuulA c, nunuc c RK ROAN OKE DIVISION BY: , D E M ATTHEW BM DY SHEFFER, Plaintiff, CivilAction N0.7:19CV00953 M EM OM NDUM OPINION H EA LTH CA RE SERV ICES G ROU P,IN C . By:Hon.Glen E.Com ad SeniorUnited StatesDistrictJudge rd A VA N TE GR OUP,lN C., Defendants. M atthew BradySheffer,aformeremployeeofHealthcareServicesGroup,Inc.(çGHCSG''), filed thisdiversity action againstHCSG andAvanteGroup,, lnc.(1W vahte''),asserting claimsbf fraudulentinducemçnt,frauéulentconcealment,breach ofcontract,andtortiousinterferencewith contract. The case is presently before the courton the defendants'partialmotions to dism iss. Forthereasonssetforth below,them otionswillbegranted. Backzround The following facm al allegations, taken from the plaintiffs nm ended complaint,are accepted astrue forpurposes ofthe pending m otions. See Erickson v.Pardus,55.1U.S.89,94 (2007)(çûgW lhenrulingonadefendant'smotionto dismiss,ajudgemustacceptastnzea1lofthe Sheffer v. Healthcare Services Group, Inc. et al factualallegationscontainedinthecomplaint.'). Doc. 50 Sheffer resides in Botetourt Cotmty,Virginia. In 2014, he began w orking as a sales director for HCSG,a Pennsylvania corporation based in Bensalem ,Pezmsylvania. Sheffer's employmentcontractGlcalledfor(himjtoreceiveatwopercentcommissiönbased on grossprofit margin onany contractthatEhe)brokeredforHCSG.'' Am.Compl.! 11,ECFNo.42. Sheffer Dockets.Justia.com allegesthatECHCSG 1ed (him)tobelieve,atthetimeofcontracting,thathiscommission stnzcture was fixed at 2 percent.'' Id.! 13. Sheffer accepted the position based on the favorable commission structure. Id.!35. On oraboutFebruary 1,2017,Sheffersecured acontractbetween HCSG and Avantethat wasworth approximately $22million.dollars.l Id.! 16. Shortly thereafter,Shefferdiscovered thattlzreebuildingsincludedin thescopeoftheoliginalcontracthadbeen ççwrongly withheldfrom the contract,depdving the contractofcertain profitsand affecting ...Sheffer's comm issions.'' Id.! 18. On oraboutApril20,2017,HCSG'S ChiefRevenue Officer,M ike M cBryan,notised Shefferand othersalesdirectorsthatthecom pany waschangingthe salesdirectors'commission structure. Although HCSG had Gtattempted to change Etheqcommission structure''in previous years,the modifkations çGwere generally not implemented against (the plaintiffj untilthe HCSG-AVM tecontract.'' J-pa.!!38-39. InM ay of2017,Shefferinquiredabouthiscommission on the contractwith Avante. M cBryan and Donnie W arren,HCSG'S Vice Presidentof Sales, advised ShefferthatSçhe would notbereceiving commissionsbased on 2percentgrossprolit,but ratherthe12017commissionstructme'wouldbeapplied.'' JZ !43. M cBryanand W arren also informedShefferthatGçcertaincommissionshadnotbeenenrnedduetoAvantebeinginarreargsl.'' J-T.:23. Overthecourse ofthe following yem-,ShefferElprotested the çnew'com mission structure being'applied against'him ,'' since he had relied on the prom ised tw o percent com m ission in accepting employment with HCSG. Ji ! 44. However,the plaintiY s efforts proved . 1AvanteisaFloridacorporationthqtownsandoperatesntlrsingfacilitiesintheW esternD istrictofVirginia. SeeAm.Compl.!( j4,7. unsuccessful. Shefferultimately leftHCSG on Septem ber21,2018,çsdue to HCSG'Sconduct.'' 1d.! 10. ProceduralH istorv Sheffer filed the instantaction against HCSG and Avante on Janury 28* ,2019. The defendantsmoved to dismisscertain countsofthecomplainttmderRule 12(b)(6)oftheFederal RulesofCivilProcedurè.'OnJtme 17,2019,thecourtheld ahemingon thedefendants'm otions. Attheèonclusion oftheheming,thecourttook themotionstm deradvisem entand granted in part theplaintiffsreques!forleaveto 5le an nmended complaint. On June 27,2019,Shefferfiled an nm ended com plaintagainstthe defendants,in which he asserts the following claims:fraud in the inducement against HCSG (Count I);fraudulent concealmentagainstHCSG tcotmt11);breac; hofcontractagainstHCSG tcotmt111);ndtortious interfeience with contractagainstAvante(Count1V). HCSG hasmoved to dismissthe fraud claimsassertedinCotmtsIandI1,andAvantehasm ovedto dism issthetortiousinterferenceclaim asserted in CountIV. The motionshavebeen fully briefed and arenow l'ipe forreview . Standard ofR eview Rule 12(b)(6)permitsapartyto move fordismissalofacomplaintforfailureto statea claim upon which reliefcan be granted. W hen deciding am otion to dismisstmderthisnzle,the courtmustaccejtastrueallwell-pleadedallegationsanddraiva1lreasonablefactualinferencesin theplaintiffsfavor. Erickson,551U.S.at94. dlW hileacomplaintattackedbyaRule 12(b)(6) m otion to dismissdoesnotneed detailed factualllegations,aplaintifpsobligation to providethe g' rounds ofhisentitlem entto reliefrequiresm ore than labelsand concl ions,and a formulaic yus ! j ' ' recitation oftheelementsofacauseofaction willnotdo.'' B ellA tl.Cöp .v.Tw om bly,550 U .S. 544,555 (2007) (intem alcitatioriand quotation marks omitted). To survive dismissal,;$a complaintm ustcontain sufficientfactualm atter,accepted astrue,to çstateaclaim forreliefthatis plausibleonitsface,'''menningthatitmustdspleadlqfactualcontentthatallowsthecourtto draw the reasonable inference thatthe defendantis liable forthe misconductalleged.'' Ashcp ftv. lqbal,556U.S.662,678(2009)(quotingTwombly,550U.S.at570). D iscussion ' 1. Fraud Claim s HCSG hasm oved to dism issthe fraud claimsasserted in CountsIand 11oftheam ended ' . ' < . ' . . complaint. Asindicatedabove,Shefferassertsclaimsofaudulentinducçmentao fraudulent concealm entagainstHCSG. M ore specifcally,ShefferassertsthatHCSG fraudulently induced him to acceptemploym entby falsely representingthathewould earn atwo percentcom mission on each contract brokerid on behalf of HCSG. Sheffer also asserts that H CSG fraudulently concealedtheictthathewouldnotbereceivingatwopercentcommissiononthecontractthathe brokered with Avante. The partiesagreethatVirgirlia substantive law appliesto the plaintiffsclaims. çtunder Virginia law,to establish a fraud claim ,aplaintiffm ustprove :by clearand convincing evidence: (1)afalserepresentation,(2)ofamaterialfact,(3)madeintentionally andknowingly,(4)with intenttomislead,(5)reliancebythepartymisled,and(6)resultingdamagetothepartymisled.''' Sharmav.USA Int'l.LLC,851F.3d308,312(4thCir.2017)(quotingEvaluationResearchCop . v.Aleguin,439 S.E.2d 387,390 (Va.1994)). Fraudulentinducementoccurswhen a party inducesanotherparty to enter into a cùntractby m aking a false representation ofm aterialfact. See Abi-NAim v.Concord Condùminium.LEC,699 S.E.2d 483,489 (Va.2û10) (çG(A)false . . . ' . represinttionofamatirialfact,éoristituting aninducelenttothecontract,onwhiéh thegliartfj hadarightto rely,isalwaysgroundforrescissionofthecontractgand)...isalso grotmd foran 4 action fordamages.'')(internalquotation marksand citation omitted). Fraudulentconcealment occurswhen aparty knowingly and intentionally concealsam aterialfactfrom anotherparty who is acting tmderthe agsumption thatthe factdoesnotexist. Allen Realty Corn.v.Holbert,318 S.E.2d592,597(Va.1984);seealsoHitaclliCreditAm.Corp.v.SicnetBa' nk.166F.3d614,629 (' tthCir.1999)(explainingthatGGconcealment,whetherbywordorconduct,maybetheequivalent otafalserepresentationbecauseitalwaysinvolvesdeliberatenondisclosuredesigned toprevent anotherfrom lenrning,thetruth'l. FraudclaimsaresubjecttoaheightenedpleadingstandardundertheFederalRulesofCivil Procedure. Rule9(b)requiresapartyallegingfraudtoS'statewithparticularitythecircumstances constitutihg fraud .!..'' Fçd.R.Civ.P.9(b). Tosatisfythisstandard,theplaintiffEGmust,ata rriiniinum ,describi Sthe tim e,place' ,and contents ofthe false representations,as wellas the identity of the person m aking the misrepresentation and what he obtained thereby.''' United . . ' ' Statesixre1.W ' ils'on v'.Kelldca Bfo 'wn & Root.Inc., 525F. 3d 370,)79(4th Cir.200à)(quoting Hanison vyW estinchouseSavannah ltiverCo.,176F.3d 776,784 (4th Cir.1999$. ççgléack of compliancewith Rule 9(b)'spleading requirementsistreated asafailureto stateaclaim tmder Rule12(b)(6).'' Hanison,176F.3dat783n.5. Rule9(b)alsoprovidesthatSçintent,knowledge,and otherconditionsofaperson'smind may be alleged generally.'' Fed.R.Civ. 'P.9(b). Howeker,çlûgenerally'isa relative term.'' lqbal,556U.S.at686. AlthoughRule9(b)excùsesaparty from pleadingknowledgeandintent tm dera' n elevated pleading standard, ttgiqtdoesnotgivehim liceàsetoevadethelessrigid- though stilloperative--stricturesofRufe 8.'' Id.at686-87. UnderRule 8,aplaintiffcnnnotGtplead the bareelelenisofhiscauseofactiono...and expecthiscomplaintto surviveam otion todism iss.'' Id. at 687. Instead, the l'ule requires the plaintiff to articulate suffk ient facts to state a plausible not m erely possible--claim for relief. 1d.at 678-79;see also Tuchman v.DSC Commc'nsCop.,14 F.3d 1062,1068(5th Cir.1994)(çTopleadscienteradequately,aplaintiff mustsetforthspecificfactsthatsupportan inferenceoffraud.''). Applying theseprinciples,the courtconcludesthattheam ended complaintfailsto statea q ' . plausibleclaim offraud. Turning firstto the claim offraudulentinducem ent,itisnotenough to sim plyassertthatHCSG tsknew''atthetim etheplaintiffsignedtheemploymentagreem enttçthatit had nö intention ofpaying ghimjthe2 percentgrosscommission overthecolzrse ofthe entire contracmalpedod.'' Am.Compl.! 34;see also iés! 37 (&W tthetime Mr.Shefferrelied on HCSG'Srepresentationsofhiscom mission structtzre,upon infonnation and belief,H CSG did not intend to pay Mr.Shefferthis commission during the duration ofhisemployment.''). Such conclusoryallegationsofWrongdoingarepreciselythetypeofallegationsthatTwomblyatldIgbal rejectéd. SeeFrancisv.Giacomelli,588F.3d186,193(4thCir.2009)(emphasizingthatûtinalted assertions'ofwrongdoing necessitate som e çfactualenhancem ent'within the com plaintto cross çthelinebetween possibility and plausibility ofentitlementto relief'')(quoting Twomblv,550 U.S.at317);seealso Cty.ofGyayson v.RA-r l-ech Servs.,No.7:13-cv-00384,2014 U.S.Dist. LEXIS73945,at*6(W .D.Va.M ay29,2014)(Conrad,J.),affd,Cty.ofGraysonv.Spane,609F. Ajp'x 150 (4th Cir.2015)(holding thattheplaintiffs could notstate a claim forfraud in the . ' . inducem entby,simply asserting thatthe defendantsentered into the agreem entsatissuewith no ' ) intentionofperformingin acéordancewiththeagreements). Therem ainingfactualallegations,whichpertain to actionstaken aftertheformation ofthe employmentcontract,failtolidemonstratethedefendant'sintent(attbetimetheproinisesgwereq lade)nevertoabldeb#thbtenhsojtj, jeco.ntract.,, OutofChaos.Ltd.v.AON Corn.,' 15F.App'x 137,142 (4th Cir.2001). SheffeiallegesthatCCHCSG attempted to change (the)commission stl-ucture in 2015, 2016, and 2017 without new consideration,'' but did not enforce the modiscationsagainsthim untilhesecuredthecontractwithAvante. Am.Compl.!!38-39,47. W hile such allegationsm ay supporta claim forbreach ofthe employm entcontract,they do not supporta reasonable inference offraudulentintentatthetime thecontractw asfonued.z Stated differently,the nm ènded complaintfailsto plead sufficientfactsfrom which itcan bereasonably inferred thatHCSG çGnrverintended to abideby theterm softhecontract.'' Flip M ortg.Com .v. M cElhone,841F.2d531,537(4thCir.1988). M oreover,despise being afforded an additionalopportunity to comply with Rule 9(b), Shefferhasnotdone so. The nmended complaintfailsto plead with particulrity the time and place ofthe allegedly falserepresentations,orthe identity ofthe individualts)responsible for rriaking them . Instead,ShefferallegesthatGCHCSG''m ade falserepresentatiönsregarding a two percentcom mission rateçton m any occasionsy''including the tstim eofcontracting.'' Am .Compl. !! 13,46, Thecourtagreeswith HCSG thatsuchconclusory allegationsareinsufficienttomeet theheightenedpleadilk starldard o?Rule9(b). Accordingly,HCSG'Smotionwillbegranted è with respectto the claim offraudulentinducem ent.3 Forsim ilarreasons,thecourtconcludeslhattheplaintiffsclaim offraudulentconcealm eht iss'ubjectto dismissalunderRule 11(b)(6). Althoughitisnotentirely clearfrom theamended com plaint,thisclaim appearstljbe based on the assertion thatHCSG fraudulently concealed the factthatSàefferwouldnotreceive'atwopkrcentcommissiononthecontractthathebrokeredwith 2 ThecourtnotesthatHCSG hasnotmovedto dismissthebreach ofcontractclaim asserted in Count111, whichispremisedon thesameallegationsastheclaim offraudulentinduçement. 3 ln,hi shriefinopppsitiontothçmotiontodismiss,Sheffersummarillrequestsleavetoamendasecondtime intheiventthaithecouftconcludesthattheamendedcomplaintfailsto satlsfyRulb9(b). Sucharequéstisnot properandwillnotbeconsideredbythecourt. SeeACA Fin.Guar.Corn.v.CityofBuenaVista,917F.3d206,218 (4thCir.2019)(exprisslydecliningtofindthatrequeststomnendmadeinoppositionbriefsconstituteapropermotion toamend);Cozzarelliv.InspirePharms.Inc.,549F.3d618,630-31(4thCir.2008)(affirmingthedenialofleaveto amendwheretheplaintiffs'requestforleavewasinafootnotetotheirresponsetodefendants'motionto dismissand, thus,didn 'otqualifyasamotionforleavetoamend). ' Avante. Hokever,ShefferdoesnotpointtoanySûwordgs)orconduct''byaparticularpersonthat wereintendedtotçprevent(himjfrom lenrningthetruth.'' VanDeusenv.Snead,441S.E.2d207, 209(Va.1994)(citationomitted). Instead,ShefferallegesthatMikeM cBryanadvisedhim and other sales directors about a change in the comm ission structure in April of 2017,and that M cBryan and Dormie W arren both informed him thatthe new com mission structure would be applied in calculating hiscommission on theAvantecontract. SeeAm.Compl.!! 20,57,61. M cBryan and W arren also advised Shefferthathiscom mission on the Avantecontractwould be affectedby Avante'sfailuretopayin accordancewiththecontractualterms. Seeiés!23. The amended complaintissimply devoid ofsufficientfactualallegationsto state aclaim offraudulent concealm entrelatedtotheplaintiffscomm ission on theAvantecontfact. Accordingly,HCSG'S motlon willbegrantedw ith respectto thisclaim . II. Tortious Interference C laim ln CountIV ofthe nmendedcom plaint,Shefferassertsaclaim oftortiousinterferencewith contractagainstAvante.'M ore specifically,Shefferm aintainsthatAvante tortiously interfered q4th hiscontracmalrighttoreceiveatwopercentcom mission on thegrossprostfrom theAvante contract. To supportthisclaim,ShefferallegesthatGtgclommissionpracticesarecommonwithin the industry''and thatttAvanteknew thatghe)would bereceiving a commission based on the brokelinjoftheHCSG-AV=tecohtract'' IZ ! 88. Shefferfurtheralleges,uponinformation and belief,thatAvanteçtéonspired gwith HCSGqtoremove,tmderimproperand illegalmeans, tllree (3)buildingsfrom the contract''thathe brokered on behalfof HCSG,and thatAvante ççknewgyqand/orcouldreadilydiscover,thatthischangeinthetermsoffheHcsG-Avantecpntract c . would grèatly rèducé'ghisj comm'ission.'' Id.!! 89,93. Sheffer also alleges thatAvante's 8 actionsGiinduced (himlto teM inatehisemploymentcontractwith HCSG dueto the enormous costssufferedtlzroughlostcommissions.'' Id.IJ97. To statea claim fortortiousinterferencewith contracttmderVirginialaw,aplaintiffm ust allegefactssufscienttoestablish:(1)theexistenceofabusinessrelationshiporexpectancywitha probability of futblm economic benest;(2)the defendant's knowledge ofthe relationship or expectancy;(3)areagonable certainty that,absentthe defendant'sintentionalmisconduct,the plaintiffwouldhavecontinuedin therelationship orrealizedtheexpectancy;(4)thedefendant's intentional interference including the loss of the relationship or expectancy; (5) that the defendant'sinterferencewasdonebfimpropermethods;and (6)resultingdnmage. Duacin v. Adnms,360S.E.2d832,835-36(Va.1987). ImpropermethodsincludeSsillegalorindependently tortibus(actsj,such sviolationso/stamtes,regulations,orrecognized common-law rules.'' 1d. at836. Uponreview oftheam ended complaint,the courtconcludesthatitfailsto stateaclaim of tortiousinterference againstAvante. Even assumingthatAvantewasawarethatShefferwould reieive a com'm ission on any coniaétbrokered on behalfofHCSG,Shefferdoes notplausibly allejetiatAvanteintentionallyinterferedwithhis'expectedcommissionorthatsuchinterference was comm itted tluough im ' properorillegalm eans. Sheffer'sassertion thatAvante ççconspired'' withFICSG toremovetllreèbuildingkfronithecontractbrokeredbyShefferiswhollyconclusdry, asishisassertion thatAvanteused Slimproperand illegalmeans''to do so. Am.Compl.! 89. M oreover,the am endid complaint does not include any facts that Would allow the courtto reakénably inferthatAkante intentionally and improperly m odified the'tenns of its comm ercial èofitràctwithHCSG inordertoreduceSheffer'scommission. SeeSD3.LLC v.Black& Decker ' ' . . . . . - ' u: (u.s.)Ino.,8o1F.3d412,422(4thèir.201s)(emphasizingthatcourtsarenotrequifedio accept 9 tmw arranted inferences,unreasonable conclusiong,or argum ents''when ruling on a m otion to dismissandçGcan furtherputasideanynaked assertionsdevoid offurtherfactualenhancemenf') (internal .quotationmarksomitted). The snme is tnze for Sheffer's assertion thatAvante çtinduced (himj to terminate his employmentcontractwith HCSO.'' Am.Compl.! 97. Cout' tshavefotmd itçdaxiomaticthata plaintiffcnnnotsustain aclaim oftortiousinference with businessexpectancy when he willingly surrendered hi4righttothoseexpectancies.'' Stradtm an v.Republic Servs..Inc.,121F.Supp:3d 578,583 (E.D.Va.2015)(quoting Taylorv.CNA Corn.,7, 82 F.Supp.2d 182,204 (E.D.Va. 2010:. Even assumingthatan employeecan maintain atortiousinterferenceclaim based on a constructive discharge theory,Sheffer does not allege,muçh less plausibly dem onstrate,that Avahteactedwith the expresspurpdse ofinducinghim toterminatehisemploymentwith HCSG. SeeEppçrsonv.Va.Dep'tofCorr.,77Va.Cir.325,330 (Va.Cir.Ct.2008)(explainingthata plaintiffalleging constructive dischargemustproveûideliberateness''on thepartofthedefendant, which Etçexistsonlyiftheactionscomplained ofwereintendçdbythegdefendantqasah effortto forcetheemployeetoquit''')(quotingBristow v.DailyPress.Inc.,770F.2d 1251,1255(4thCir. 1985)). Forthesereasons,thecdurt' concludesthàtthè'nmend8d'complaintfail' stù state aclaim of tortious interference with contractagaiùstAvante. Acùordingly,the com' twillgrantAvante's partialm otion to dismiss. C onclusion Forthereasonsstated,the courtwillgrantthedefendants'm otionsforpartialdim issalof te 1i nmehded complain't,and dism')sstheplaintiffsclaimsoffraudulentinducement,audulent concealm ent,and tortious interference with contract. The case willproceed on the remaining claim forbreach ofcontractagainstHCSG. The Clerk isdirected to send copiesofthismem orandtlm opinion and the accom panying ordeito allcotmselofrezord. DATED)This 1%# dayofOctober,2019. SeniorUzlited StatesDistrictJudge
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