Abira Medical Laboratories, LLC v. CareSource

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION AT DAYTON

ABIRA MEDICAL LABORATORIES, LLC,

Plaintiff, Case No. 3:24-cv-157

vs.

CARESOURCE, et al., District Judge Michael J. Newman

Magistrate Judge Peter B. Silvain, Jr.

Defendants.

____________________________________________________________________________

ORDER: (1) GRANTING IN PART AND DENYING IN PART DEFENDANT’S

MOTION TO DISMISS (Doc. No. 12); (2) DISMISSING COUNTS II AND III OF THE

AMENDED COMPLAINT (Doc. No. 11); (3) PERMITTING THE CASE TO PROCEED

WITH THE FOLLOWING CLAIMS: COUNTS I AND IV (BREACH OF CONTRACT

AND QUANTUM MERUIT/UNJUST ENRICHMENT) AGAINST DEFENDANT

CARESOURCE; AND (4) REFERRING THIS MATTER TO MAGISTRATE JUDGE

SILVAIN SO THAT A MEDIATION CONFERENCE CALL BETWEEN MAGISTRATE

JUDGE GENTRY AND COUNSEL FOR BOTH SIDES CAN PROMPTLY OCCUR

______________________________________________________________________________

This is a civil case, premised on the Court’s diversity jurisdiction,1 in which Abira Medical

Laboratories, LLC (“Abira”), doing business as Genesis Diagnostics, performed laboratory testing

services for Defendant CareSource’s insured members (“members”). Doc. No. 11 at PageID 65.

Abira alleges that “the requisitions of laboratory testing services” submitted on CareSource

members’ behalf included an assignment of benefits that created a contractual agreement requiring

CareSource to pay Abira for services and allowing Abira to sue for non-payment. Id. at PageID

65-66. As a result of the alleged assignment of benefits, Abira asserts that CareSource has failed

to pay (or has underpaid) Abira’s claims submitted to CareSource, totaling $665,518. Id. at PageID

68-69, 82.

1 Accordingly, Ohio law controls. Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).

The Court has already afforded Abria an opportunity to amend its complaint. Id. In Abira’s

Amended Complaint, it alleges seven state-law claims2 against CareSource: (1) breach of contract;

(2) breach of the implied covenant of good faith and fair dealing; (3) fraudulent misrepresentation;

(4) negligent misrepresentation; (5) equitable estoppel; (6) promissory estoppel; and (7) quantum

meruit/unjust enrichment. See generally id. CareSource filed a motion to dismiss pursuant to Fed.

R. Civ. P. 12(b)(6). Doc. No. 12. In response to the motion, Abira filed a memorandum in

opposition (Doc. No. 15), and CareSource replied. Doc. No. 17. Thus, the motion is ripe for

review.

I. Legal Standard

Rule 12(b)(6), like all other Federal Rules of Civil Procedure, “should be construed,

administered, and employed by the court and the parties to secure the just, speedy, and inexpensive

determination of every action and proceeding.” Fed. R. Civ. P. 1. A motion to dismiss filed

pursuant to Rule 12(b)(6) operates to test the sufficiency of the complaint and permits dismissal

for “failure to state a claim upon which relief can be granted.” To survive a Rule 12(b)(6) motion,

a plaintiff must satisfy the basic pleading requirements set forth in Rule 8(a). Under Rule 8(a)(2),

a complaint must contain a “short and plain statement of the claim showing that the pleader is

entitled to relief.” Fed. R. Civ. P. 8(a)(2).

A complaint will not suffice if it offers only “labels and conclusions or a formulaic

recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Instead, “a complaint must

contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A plaintiff must plead “factual

2 Abira incorrectly pled four counts, but Count III is four separate state-law claims.

content that allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. “Where a complaint pleads facts that are ‘merely consistent with’ a

defendant’s liability, it ‘stops short of the line between possibility and plausibility of “entitlement

to relief.”’” Id. (quoting Twombly, 550 U.S. at 557).

II. Analysis

A. Count I: Breach of Contract

In Ohio, a plaintiff must establish four elements for a breach of contract claim: “(a) the

existence of a contract; (b) performance by the plaintiff; (c) breach by the defendant; and (d)

damage or loss to the plaintiff.” Thomas v. Publishers Clearing House, Inc., 29 Fed. App’x 319,

322 (6th Cir. 2002) (citing Doner v. Snapp, 649 N.E.2d 42, 44 (Ohio Ct. App. 1994)). Abira

adequately pleads performance and damages related to the alleged breach because Abira claims it

performed laboratory testing services for CareSource’s members worth $665,518, but Abira never

received payment or did not receive full payment. Doc. No. 11 at PageID 67-69, 77-82.

CareSource argues in favor of dismissing Abira’s breach of contract claim because Abira

has not properly alleged the existence of a contract (and by implication, CareSource did not breach

because there was no contract). See Doc. Nos. 12, 17. CareSource claims that Abira “does not

allege any specific contractual clauses authorizing the laboratory testing, specifying the price of

such testing, or requiring CareSource to pay for the testing.” Doc. No. 12 at PageID 91.

Abira’s allegations must be construed in the light most favorable to it and treated as true.

See Twombly, 550 U.S. at 555-56. Abira alleges that it performed approximately 192 laboratory

testing services for CareSource members, and CareSource did not pay (or has underpaid) for the

services. Doc. No. 11 at PageID 68-69, 71. Abira attached a spreadsheet to its Amended

Complaint alleging the date, amount billed, and accession number (a unique identifier) for each

test. Id. at PageID 77-82.

Abira further alleges after it performed each test, it sent a requisition for laboratory testing

services to CareSource where each member “executed an assignment of benefits with respect to

their original requisitions for services” and that created an assignment of contractual rights. Doc.

No. 11 at PageID 65-69. In other words, Abira and CareSource’s contractual relationship stems

from these documents because they purportedly assign the benefit of payments from CareSource

to Abira. As discussed above, Abira alleges it completed the tests in exchange for the promise of

the assigned payments.

Under Ohio law, “the assignee of a contract takes that contract with all rights of the assignor

and subject to all defenses that the obligor may have had against the assignor,” including the right

to any payment under the contract and the right to sue for breach. Citizens Fed. Bank, F.S.B. v.

Brickler, 683 N.E.2d 358, 364 (Ohio Ct. App. 1996). Here, Abira alleges that it received

requisition documents with assignments from approximately 192 laboratory testing services for

CareSource members. Doc. No. 11 at PageID 71, 77-82. At the current stage, Abira has plausibly

shown a contractual relationship existed with CareSource.

Therefore, the Court DENIES CareSource’s motion to dismiss Abira’s breach of contract

claim. Accordingly, this claim shall proceed to discovery.

B. Count II: Breach of the Implied Covenant of Good Faith and Fair Dealing

“In addition to a contract’s express terms, every contract imposes an implied duty of good

faith and fair dealing in its performance and enforcement.” Cincinnati Dev. III, LLC v. Cincinnati

Terrace Plaza, LLC, No. 22-3303, 2023 WL 2487348, at *8 (6th Cir. Mar. 14, 2023), reh’g denied,

No. 22-3303, 2023 WL 2747886 (6th Cir. Mar. 31, 2023) (quoting Lucarell v. Nationwide Mut.

Ins. Co., 97 N.E.3d 458, 469 (Ohio 2018)). Good faith requires a “compact reference to an implied

undertaking not to take opportunistic advantage in a way that could have not been contemplated

at the time of drafting, and which therefore was not resolved explicitly by the parties.” Id. (citation

and quotation omitted).

Ohio does not recognize an independent cause of action for breach of the implied duty of

good faith and fair dealing. Id. (citing Lucarell, 97 N.E.3d at 469). In other words, “there is no

violation of the implied duty unless there is a breach of a specific obligation imposed by the

contract, such as one that permits a party to exercise discretion in performing a contractual duty or

in rejecting the other party’s performance.” Id. (citing Lucarell, 97 N.E.3d at 469).

Accordingly, this claim merits dismissal. The Court GRANTS CareSource’s motion to

dismiss Abira’s breach of the implied covenant of good faith and fair dealing claim.

C. Count III: Fraudulent and Negligent Misrepresentation; Equitable and

Promissory Estoppel

Abira pled Count III as one claim, but it is actually four separate state-law claims. See

Hortman v. Miamisburg, 852 N.E.2d 716, 719 (Ohio 2006) (analyzing promissory and equitable

estoppel separately); Patel v. Univ. of Toledo, 95 N.E.3d 979, 986-90 (Ohio Ct. App. 2017)

(analyzing negligent misrepresentation and fraud separately). Accordingly, the Court will analyze

each claim separately.

1. Fraudulent Misrepresentation

Under Ohio law, the elements of common law fraudulent misrepresentation are:

(a) a representation or, where there is a duty to disclose, concealment of a fact, (b)

which is material to the transaction at hand, (c) made falsely, with knowledge of its

falsity, or with such utter disregard and recklessness as to whether it is true or false

that knowledge may be inferred, (d) with the intent of misleading another into

relying upon it, (e) justifiable reliance upon the representation or concealment, and

(f) a resulting injury proximately caused by the reliance.

Mikulski v. Centerior Energy Corp., 501 F.3d 555, 562 n.4 (6th Cir. 2007) (quoting Burr v. Stark

County Bd. of Comm’rs, 491 N.E.2d 1101, 1102 (Ohio 1986)). For the purposes of a fraud claim,

a representation of fact must be definite. Ullmo ex rel. Ullmo v. Gilmour Acad., 273 F.3d 671, 678

(6th Cir. 2001) (citing Friesner v. Mid American Nat’l Bank & Trust Co., No. WD 88–67, 1989

WL 111756, at *5 (Ohio Ct. App. Sept. 29, 1989)).

Under Fed. R. Civ. P. 9, when alleging fraudulent misrepresentation, the party “must state

with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). To allege

fraud with particularity, Abira, at a minimum, must “‘allege the time, place, and content of the

alleged misrepresentation on which [they] relied . . . .’” Heinrich v. Waiting Angels Adoption

Servs., Inc., 668 F.3d 393, 403 (6th Cir. 2012) (quoting United States ex rel. Bledsoe v. Cmty.

Health Sys., Inc., 342 F.3d 634, 643 (6th Cir. 2003)).

In Abira’s response to the motion to dismiss, Abira points to an alleged omission by

Defendant. Abira states, “Abira also relied on the omission of Defendant to make definitive

statements that it would not pay an invoice even after being presented with one.” Doc. No. 15 at

PageID 118. An omission is not a definite statement. See Ullmo, 273 F.3d at 678. Accordingly,

Abira has not alleged the requirements necessary for fraudulent misrepresentation under Ohio law.

Further, Abira only vaguely refers to the content of the misrepresentation, saying an

unidentified CareSource “representative . . . represented to Plaintiff . . . that Defendant would pay

for services to be rendered by the Plaintiff to Defendant’s insureds.” Doc. No. 11 at PageID 71.

Abira’s allegation does not include the required time nor place of the alleged representation. See

Heinrich, 668 F.3d at 403. Thus, it is far from pleading the “what” of any representation with the

“particularity” required by Fed. R. Civ. P. 9(b). Cf. Gozion v. Cleveland Sch. of the Arts Bd. of

Trustees, --- N.E.3d ----, 2024 WL 2698171, at *4-5 (Ohio Ct. App. May 23, 2024), appeal not

allowed, 241 N.E.3d 221 (Table) (Ohio 2024).

Therefore, the Court GRANTS CareSource’s motion to dismiss Abira’s fraudulent

misrepresentation claim.

2. Negligent Misrepresentation

The elements of negligent misrepresentation require that a defendant “must (1) supply false

information; (2) for the guidance of others in their business transactions; (3) causing pecuniary

loss to the plaintiff; (4) while the plaintiff justifiably relied upon the information; (5) and while the

defendant failed to exercise reasonable care or competence in obtaining or communicating the

information.” Palmer-Donavin Mfg. Co. v. Rheem Sales Co., No. 2:14-CV-91, 2014 WL 2767665,

at *8 (S.D. Ohio June 18, 2014) (citing Delman v. City of Cleveland Heights, 534 N.E.2d 835, 838

(Ohio 1989)). A negligent misrepresentation claim requires a plaintiff to allege that the defendant

“made some ‘affirmative false statement’ to [plaintiff].” Pierre Invs., Inc. v. Fifth Third Bancorp,

No. 23-3269, 2023 WL 8373001, at *1 (6th Cir. Dec. 4, 2023) (citing Textron Fin. Corp. v.

Nationwide Mut. Ins. Co., 684 N.E.2d 1261, 1269 (Ohio Ct. App. 1996)). In other words, an

omission does not satisfy the elements for negligent misrepresentation. See id.

Ohio law further provides:

A core requirement in a claim for negligent misrepresentation is a special

relationship under which the defendant supplied information to the plaintiff for the

latter’s guidance in its business transaction. This relationship occurs only in

‘special’ circumstances. Usually the defendant is a professional (e.g., an

account[ant]) who is in the business of rendering opinions to others for their use in

guiding their business, and the plaintiff is a member of a limited class. This ‘special’

relationship does not exist in ordinary business transactions. Those who are in the

business of supplying information for the guidance of others typically include

attorneys, surveyors, abstractors of title and banks dealing with non-depositors’

checks.

Carter-Jones Lumber Co. v. Oro RB SPE Owner, LLC, No. 2:20-CV-04894, 2021 WL 2592531,

at *13 (S.D. Ohio June 24, 2021) (quotation omitted). As noted above, special relationships

include “attorneys, surveyors, abstractors of title, banks dealing with nondepositors’ checks, and

investment advisors.” Id. at *14.

CareSource—an insurance company—does not fall within the traditional groups who

create special relationships. See id. Nor has Abira has alleged any facts that the parties had a

special relationship like that of an accountant or an attorney. See generally Doc. No. 11. Abira

has not alleged any facts indicating that its relationship with CareSource was anything other than

an ordinary business transaction.

As discussed above, Abira alleges the misrepresentation was based on an omission of a

definitive statement. Doc. No. 15 at PageID 118. An omission is insufficient to plead a negligent

misrepresentation claim. See Pierre Invs., Inc., 2023 WL 8373001, at *1.

Accordingly, the Court GRANTS CareSource’s motion to dismiss Abira’s negligent

misrepresentation claim.

3. Equitable Estoppel

Under Ohio law, equitable estoppel “is a defense to a legal or equitable claim, not a cause

of action.” Peter D. Brown Tr. v. Shriver, No. 1:17-CV-280, 2018 WL 776365, at *2 (S.D. Ohio

Feb. 8, 2018) (citing Ohio State Bd. of Pharm. v. Franz, 555 N.E.2d 630, 663 (Ohio 1990)).

CareSource correctly points out equitable estoppel only applies as a defense and not as an

affirmative claim. Doc. No. 12 at PageID 95-96; Doc. No. 17 at PageID 136, n.4. Abira concedes

this point in its Response and states it “reserves the right to assert [equitable estoppel] in the

future.” Doc. No. 15 at PageID 119. Thus, the Court GRANTS CareSource’s motion to dismiss

Abira’s equitable estoppel claim.

4. Promissory Estoppel

Ohio law establishes the promissory estoppel doctrine as “a promise that the promisor

‘should reasonably expect to induce action or forbearance on the part of the promisee or a third

person and . . . [that] does induce such action or forbearance is binding’ if one can avoid injustice

only by enforcing the promise.” Andersons, Inc. v. Consol, Inc., 348 F.3d 496, 503 (6th Cir. 2003)

(quoting McCrosky v. Ohio, 456 N.E.2d 1204, 1205 (Ohio 1983)). The elements of promissory

estoppel are: “‘[1] a promise, clear and unambiguous in its terms; [2] reliance [on the promise] by

the party to whom the promise is made; [3] that the reliance was reasonable and foreseeable; and

[4] that the party claiming estoppel was injured by the reliance.’” Id. (quoting Rigby v. Fallsway

Equip. Co., Inc., 779 N.E.2d 1056, 1061 (Ohio Ct. App. 2002)).

A promise is a “a manifestation of intention to act or refrain from acting in a specified way,

so made as to justify a promisee in understanding that a commitment has been made.” Dailey v.

Craigmyle & Son Farms, L.L.C., 894 N.E.2d 1301, 1307 (Ohio Ct. App. 2008) (internal quotation

omitted). Promissory estoppel’s first element—a clear and unambiguous promise—“is not

satisfied by vague or ambiguous references.” Com. Benefits Grp., Inc. v. McKesson Corp., 326

Fed. App’x 369, 375 (6th Cir. 2009) (quoting Casillas v. Stinchcomb, No. E–04–041, 2005 WL

1845318, at *3 (Ohio Ct. App. July 8, 2005)).3

CareSource argues Abira has not met the clear and unambiguous promise element that

would support reasonable reliance and damages because Abira has not alleged any specific

instances where a CareSource employee promised to pay Abira for any specific service. Doc. No.

3 The Court also notes, under Ohio law, the presence of an enforceable contract between the parties

generally precludes a promissory estoppel claim regarding the contract. See O’Neill v. Kemper Ins. Cos.,

497 F.3d 578, 583 (6th Cir. 2007) (“In Ohio, [w]here the parties have an enforceable contract and merely

dispute its terms, scope, or effect, one party cannot recover for promissory estoppel . . . .” (alteration in

original) (internal quotation marks and citation omitted)). As discussed above, Plaintiff pleads a plausible

breach of contract claim.

12 at PageID 95-96. Abira argues that its promissory estoppel claim has merit because CareSource

engaged in a “course of conduct” paying some but not all claims over several years, and the “course

of conduct constituted a representation[.]” Doc. No. 11 at PageID 71; Doc. No. 15 at PageID 119.

CareSource is correct. Abira makes vague and ambiguous references and does not allege

that CareSource made any specific promises regarding reimbursement to satisfy the clear and

unambiguous promise element of promissory estoppel. See Dailey, 894 N.E.2d at 1308-9 (holding

no “clear and unambiguous promise” where party did not make a specific promise or statement

about paying for a repair); see also Farmers’ Ethanol LLC v. Bounty Mins., LLC, 666 Fed. App’x

421, 426-27 (6th Cir. 2016) (holding under Ohio law that plaintiff failed to plead promissory

estoppel where defendant’s conduct, including its silence, did not raise to the level of a clear and

unambiguous promise). The Court GRANTS CareSource’s motion to dismiss Abira’s promissory

estoppel claim.

D. Count IV: Quantum Meruit/Unjust Enrichment

Under Ohio law, unjust enrichment and quantum meruit claims, although separate and

distinct causes of action, share the same essential elements: “(1) the plaintiff conferred a benefit

on the defendant, (2) the defendant knew of the benefit, and (3) it would be unjust to permit the

defendant to retain the benefit without payment.” Grassi v. Grassi, No. 20-3358, 2021 WL

3355475, at *5 (6th Cir. Aug. 3, 2021) (citing Meyer v. Chieffo, 950 N.E.2d 1027, 1039-40 (Ohio

Ct. App. 2011); Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298, 1302 (Ohio 1984)). Unjust

enrichment and quantum meruit claims differ regarding the damages calculation. See id.

(“Damages for an unjust enrichment claim are the amount of the defendant’s benefit, while

damages for a quantum meruit claim are the measure of the value of the plaintiff’s services, less

any damages incurred by the defendant”).

A plaintiff may not recover under a theory of unjust enrichment when an express contract

covers the same subject. Wuliger v. Mfrs. Life Ins. Co., 567 F.3d 787, 799 (6th Cir. 2009) (applying

Ohio law). However, when the parties dispute the existence or enforceability of a contract, a

plaintiff may argue these two claims in the alternative. Fed. R. Civ. P. 8(a)(3) (“A pleading that

states a claim for relief must contain . . . a demand for the relief sought, which may include relief

in the alternative or different types of relief”); Fed. R. Civ. P. 8(d)(3) (“A party may state as many

separate claims or defenses as it has, regardless of consistency”); see Miranda v. Xavier Univ., 594

F. Supp. 3d 961, 974 (S.D. Ohio 2022); Highman v. Gulfport Energy Corp., No. 2:20-cv-1056,

2020 WL 6204344, at *2-3 (S.D. Ohio Oct. 22, 2020) (applying Ohio law).

CareSource argues Abira’s unjust enrichment/quantum meruit claim should be dismissed

because a contract covers the parties’ relationship, but CareSource denies Abira has plausibly

plead the existence of a contract. Doc. No. 12 at PageID 97; Doc. No. 17 at PageID 136-37. Abira

argues that it claims unjust enrichment/quantum meruit in the alternative to its breach of contract

claim. Doc. No. 15 at PageID 120. At the motion to dismiss stage, a plaintiff may plead in the

alternative when there is a dispute about a contract’s existence and the scope of the contract can

be developed in discovery. See Miranda, 594 F. Supp. 3d at 974; Highman, 2020 WL 6204344,

at *2-3.

Abira alleges that it conferred a benefit upon CareSource when it performed laboratory

testing services, CareSource was aware of the benefits, and it was unjust for CareSource to “fail[]

and refus[e] to compensate Plaintiff” for its services. Doc. No. 11 at PageID 73-74. Accordingly,

Abira has plead all the required elements for unjust enrichment/quantum meruit. At this early

stage of the litigation, the Court DENIES CareSource’s motion to dismiss the unjust

enrichment/quantum meruit claim.

III. Conclusion

Based upon the foregoing, CareSource’s motion is GRANTED IN PART AND DENIED

IN PART. Doc. No. 12. Counts II and III of the Amended Complaint (Doc. No. 11) are

DISMISSED WITH PREJUDICE. Abira may pursue only its breach of contract and quantum

meruit/unjust enrichment claims against CareSource. The Court shall issue an order requiring the

parties to meet and confer, pursuant to Fed. R. Civ. P. 16, by separate entry. Discovery shall

proceed forthwith. This matter is REFERRED to Magistrate Judge Silvain, in his role as Dayton

mediation coordinator, to schedule a mediation conference call between Magistrate Judge Caroline

Gentry and counsel for both sides.

IT IS SO ORDERED.

November 18, 2024 s/Michael J. Newman

Hon. Michael J. Newman

United States District Judge