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SA'BUTTAR HEALTH & MEDICAL v. TAP PHARMACEUTICALS

July 1, 2004.

SA'BUTTAR HEALTH & MEDICAL, P.C., a North Carolina Corporation, Plaintiff,
v.
TAP PHARMACEUTICALS, INC., a Delaware corporation, Defendant.



The opinion of the court was delivered by: JOAN H. LEFKOW, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Sa'Buttar Health & Medical, P.C. ("Clinic"), brings this action against TAP Pharmaceuticals, Inc. ("TAP"), pursuant to 28 U.S.C. ยง 1332,*fn1 alleging in Count I that TAP breached its contract with the Clinic when TAP refused to fill an order for the drug Lupron. In Count II, the Clinic alleges that it was fraudulently induced to enter into a contract when TAP falsely represented that it would provide a constant supply of Lupron to the Clinic. In Count III, the Clinic contends repeated assurances by TAP that an order of Lupron was temporarily delayed, when in fact it was never shipped, constitutes fraud and deceit. Before the court is TAP's motion under Federal Rule of Civil Procedure 12(b)(6) to dismiss Count I and under Federal Rules of Civil Procedure 9(b) and 12(b)(6) to dismiss Counts II and III. For the reasons set forth below, the motion is granted. MOTION TO DISMISS STANDARDS

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted. Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). Dismissal is appropriate only if it appears beyond a doubt that the plaintiff can prove no set of facts in support of its claim that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Kennedy v. Nat'l Juvenile Det. Ass'n, 187 F.3d 690, 695 (7th Cir. 1999). In ruling on the motion, the court accepts as true all well pleaded facts alleged in the complaint, and it draws all reasonable inferences from those facts in favor of the plaintiff. Jackson v. E.J. Brach Corp., 176 F.3d 971, 977 (7th Cir. 1999); Zemke v. City of Chicago, 100 F.3d 511, 513 (7th Cir. 1996).

  In addition to the mandates of Rule 12(b)(6), Federal Rule of Civil Procedure 9(b) requires "all averments of fraud" to be "stated with particularity," although "[m]alice, intent, knowledge, and other condition of mind of a person may be averred generally." "The rule requires the plaintiff to state the identity of the person who made the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir. 1994); see also DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990) ("Although states of mind may be pleaded generally [under Rule 9(b)], the `circumstances' must be pleaded in detail. This means the who, what, when, where, and how: the first paragraph of any newspaper story."). ALLEGATIONS OF THE COMPLAINT

  According to the Clinic's First Amended Complaint ("Complaint"), in November 1998, Al Woods, a sales representative of TAP, told Dr. Buttar, President of the Clinic, that TAP would provide the Clinic with a constant supply of Lupron, a drug used in the treatment of cancer. Based on this statement, the Clinic entered into an agreement with TAP whereby TAP would supply the Clinic's requirements for the drug. After a few orders had been placed by the Clinic and filled by TAP, Al Woods informed Dr. Buttar the Clinic soon would be eligible for free samples of Lupron. Al Woods suggested the Clinic use the free samples for Medicare patients but submit claims for reimbursement to Medicare even though the Clinic had not paid for them. He further suggested a selling price for the drug to the Clinic's patients that would be consistent with the prices of other physicians.

  The Clinic rejected these suggestions because Dr. Buttar believed they would work a fraud on Medicare and the Clinic's patients. Then, on May 24, 1999, the Clinic placed an order for Lupron with TAP but the order was not shipped. Several months passed, during which time the Clinic was told on several occasions that the medication was sure to arrive soon, but it never came. As a result, the Clinic lost clientele, reputation, and revenue due to its inability to provide Lupron to its patients.

  DISCUSSION

  In support of its motion to dismiss Count I, for breach of contract, TAP argues, (1) it did not breach the contract because it never accepted the Clinic's May 24, 1999 order, (2) the Clinic fails to allege breach of a written contract and therefore is barred by the Statute of Frauds, and (3) the contract contains a merger clause, making any previous oral agreement between Al Woods and the Clinic void. As for Count II, fraudulent inducement, and Count III, fraud and deceit, TAP argues (4) the Clinic fails to plead facts sufficient to establish a scheme to defraud and (5) the Clinic fails to plead facts with sufficient particularity as required by Federal Rule of Civil Procedure 9(b). Because the court dismisses Count I based on (1) above and Counts II and III based on (4) above, it does not address the other grounds.

  A. Breach of Contract

  Count I alleges that TAP's failure to fill and deliver an order of Lupron placed by the Clinic on May 24, 1999, constitutes a material breach of TAP's contractual duties. Typically, under Rule 12(b)(6) the court is limited to the four corners of the complaint when determining whether a plaintiff has adequately pled a claim upon which relief may be granted. Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002). A narrow exception, however, allows a court to consider a document attached to a motion to dismiss without having to turn the motion into one for summary judgment, so long as that document is central to the plaintiff's complaint. Wright v. Associated Ins. Cos., Inc., 29 F.3d 1244, 1248 (7th Cir. 1994).

  In this case, the contract underlying Count I is central to the Clinic's breach of contract claim, and TAP has attached to its motion to dismiss a copy of a written agreement between it and the Clinic. TAP specifically relies on the standard terms of the contract, which indicate each order received by TAP is subject to its acceptance, either in writing or by performance, arguing that the Clinic fails to allege in its Complaint that the May 24, 1999 order was ever accepted by TAP, as would be required for TAP to have a contractual duty to subsequently fill the order.

  Instead, the Clinic claims the contract attached by TAP to its motion to dismiss is not the contract referred to in its Complaint, but "a different agreement." The Clinic does not provide any alternative contract in support of its position, although the court infers that it refers to the oral agreement between Buttar and Woods.*fn2 Rather, it claims the sole issue under Rule 12(b)(6) is whether the Clinic has adequately alleged a breach of contract action against TAP.

  The court disagrees. The policy of the exception, to allow a court to consider documents outside the four corners of the complaint, is to prevent a plaintiff from evading dismissal under Rule 12(b)(6) simply by failing to attach a contract that proves his claim has no merit. Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002). In this case, that appears to be what the Clinic is trying to accomplish by alleging an oral agreement that preceded the execution of the written document TAP provides.

  Moreover, the court is not bound by the plaintiff's allegations as to the effect of the attached contract but can independently examine the contract and form its own conclusions. Rosenblum, 299 F.3d at 661. Here, the Clinic claims the contract attached by TAP is unauthenticated but does not suggest that the document is inauthentic. See Black v. Rodriguez, No. 01 C 1721, 2002 WL 31045390, at *1 n. 4 (N.D. Ill. Sept. 11, 2002) (citing Waldridge v. American Hoechst Corp., 24 F.3d 918, 921 (7th Cir. 1994) (on summary judgment*fn3 evidence need only be admissible in substance not form). The contract provided by TAP is signed and dated by Dr. Buttar, President of the Clinic, ...


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