United States District Court, D. New Jersey
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter comes before the Court on defendant's motion to
dismiss plaintiffs Amended Complaint pursuant to Fed.R.Civ.P.
12(b)(1), lack of subject matter jurisdiction.
Hopewell Risk Strategies, LLC (hereinafter
"Hopewell"), was in the business of providing
medical bill review services, wherein Hopewell's services
assisted clients in negotiating reductions in billed medical
services. (Am. Compl., ECF No. 11, at ¶¶ 1, 3).
Defendant, Specialty Care Management, LLC ("hereinafter
SCM"), provided medical bill verification services for
renal medical services and billing. (Id. at
¶¶ 2, 4). Prior to October 2011, Robert Clemente
and Gerald Young were co-owners of Hopewell and SCM.
(Id. at ¶ 8).
October 2011, Hopewell and SCM entered into the Hopewell Risk
Strategies, LLC and Specialty Care Management, LLC Services
Agreement ("Agreement"), and then Young and
Clemente entered into a Purchase and Sale Agreement
(Id. at ¶¶6-l 1). Under the Purchase and
Sale Agreement, Young became the sole owner of Hopewell, and
it was the expectation under that agreement that Young would
be entitled to a revenue stream. (Id. ¶12).
to the Agreement, SCM was to use Hopewell on "an
exclusive basis" for review of all SCM's renal
medical bills, and in exchange for Hopewell's services,
SCM was to pay Hopewell $50, 000 per month in November and
December 2011, and in January 2012, $50, 000 or 32% of fees
SCM collected from its clients in December 2011, net of
commissions paid to third parties, whichever was greater.
(Id. at ¶¶ 14-16). SCM was required to
make payment in full on all balances due to Hopewell within
thirty business days of receiving payments from SCM's
clients. (Id. at ¶ 17).
January 2012 through May 2013, Hopewell sent SCM monthly
invoices totaling $911, 975.90; however, SCM only paid
Hopewell $597, 369.50. (Id. at ¶¶ 20,
24-25). At this time, Hopewell requested from SCM a full and
complete accounting, because it believed SCM's invoices
did not accurately account for the commission due to Hopewell
under the agreement. (Id. at ¶ 26). SCM did not
provide Hopewell with an accounting. (Id.) Based on
this, Hopewell believed SCM had not, on "an exclusive
basis," used Hopewell for all of SCM's renal medical
reviews, which violated the contractual agreement.
(Id. at ¶ 27). Hopewell also believed that SCM
had misappropriated Hopewell's proprietary and
confidential software and databases for its competing
companies, in violation of the agreements. (Id. at
2013, SCM filed suit for declaration of relief against
Hopewell, and Hopewell filed a counterclaim for breach of
contract. (Id. at ¶ 82). The parties
participated in extensive discovery, and this Court denied
motions for Summary Judgment. (Id. at ¶ 84).
Thereafter, pursuant to a Memorandum of Understanding
("MOU") dated December 7, 2015, the attorneys for
the parties agreed to submit the matter to binding
arbitration. (Id. at ¶ 85, see also
ECF No. 11-5 (MOU)). The following day, on December 8, 2015,
attorneys for the parties signed another letter agreeing to a
high/low settlement agreement wherein the maximum amount
Hopewell could be awarded was $700, 000 and the minimum (low)
amount was $50, 000. (Id. at ¶ 86, see
also ECF No. 11-6).With those agreements in place, the
parties submitted a Stipulation of Dismissal without
Prejudice, and the Court executed same on December 10, 2015.
(ECF No. 11-7). After submitting the matter to binding
arbitration, on April 11, 2016, Judge Wallitsh of ADR Options
rendered a verdict in favor of SCM, and awarded no damages to
Hopewell. (Am. Compl. at ¶ 88).
6, 2016, Hopewell wrote to the Court requesting the matter be
re-listed for trial. (ECF No. 13-5). Hopewell claimed it had
requested payment ($50, 000) from SCM multiple times;
however, SCM refused to render payment due to an alleged
"third party lien that was not part of the settlement
agreement." (Id.) Hopewell claims that the
parties therefore never had a meeting of the minds when they
entered into the high/low settlement agreement, and the
settlement agreement was entered under false pretenses.
response, SCM counters that Hopewell was not paid because it
had not followed ordinary procedures to modify the
Arbitration Award to reflect a $50, 000 award, as agreed to
in the high/low agreement, and to confirm that award as a
judgment. (ECF No. 13-2, at ¶ 10). SCM informed the
Court that a third-party, Steven Turner, has obtained a
judgment against Hopewell in the amount of $456, 609.53, and
Turner seeks payment. (Def. br., ECF No. 13-1, at 4). The
judgment of Turner against Hopewell is not pending before
Court scheduled a conference for June 21, 2016, where the
Court advised Hopewell that, if it wanted to vacate the
Arbitration Award, it should file a motion to do so. (ECF No.
13-2 at ¶ 12-13). Instead, Hopewell brought the present
suit on December 29, 2017. In this new action, Hopewell
brings ten claims: (1) Breach of contract (services
agreement); (2) Breach of covenant of good faith and fair
dealing (services agreement); (3) Promissory estoppel
(services agreement); (4) Quantum meruit (services
agreement); (5) Fraud (services agreement); (6) Breach of the
settlement agreement; (7) Breach of covenant of good faith
and fair dealing (settlement agreement); (8) Promissory
estoppel (settlement agreement); (9) Quantum meruit
(settlement agreement); and (10) Fraud (settlement
filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1),
for lack of subject matter jurisdiction. (ECF No. 13).
Specifically, SCM contends that the court lacks subject
matter jurisdiction because a valid arbitration exists
between the parties. (Def. br. at 6). Should the court
determine it does have subject matter jurisdiction over these
claims, SCM argues that the doctrines of collateral estoppel
and the entire controversy doctrine bars this action.
(Id. at 10). Finally, SCM argues that instead of
bringing the present suit, Hopewell's recourse was to
bring a suit to modify the arbitration award and to enter a
judgment against SCM Id. at 11.
to the Federal Rule of Civil Procedure 12(b)(1), a claim can
be dismissed for lack of jurisdiction over the subject
matter. This motion to dismiss may be asserted at any time in
a case. In re Kaiser Group Int"l, Inc., 399
F.3d 558, 565 (3d Cir. 2005). In a motion to dismiss based on
subject matter jurisdiction, "the standard ... is much
more demanding [than the standard under 12(b)(6)]. When
subject matter jurisdiction is challenged under Rule
12(b)(1), the plaintiff must bear the burden of
persuasion." Hedges v. United States, 404 F.3d
744, 750 (3d Cir. 2005). If the defendant's attack is
facial, the court may take all allegations in the complaint
as true and "may dismiss the complaint only if it
appears to a certainty that the plaintiff will not be able to
assert a colorable claim of subject matter
jurisdiction." Liu v. Gonzales, 2007 U.S. Dist.
LEXIS 74611, at *7 (D.N.J. Oct. 5, 2007). In contrast, a
factual challenge "concerns not an alleged pleading
deficiency, but rather the actual failure of [plaintiffs]
claims to comport with . . . jurisdictional