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Computer Programs & Systems, Inc. v. Texas General Hospital

United States District Court, S.D. Alabama, Southern Division

September 12, 2019

COMPUTER PROGRAMS & SYSTEMS, INC., et al., Plaintiffs,
TEXAS GENERAL HOSPITAL, et al., Defendants.



         Pending before the Court is the Motion to Dismiss Texas General Hospital and Texas General Hospital-VZRMC's Counterclaims and Incorporated Memorandum of Law. Doc. 49, filed January 19, 2019. Pursuant to Fed.R.Civ.P. 12(b)(6), Plaintiffs move the Court dismiss Defendants' counterclaims against them because the counterclaims are either not plausibly pled, not actionable in the present context, or both. Id. at 2-3. Having considered the motion and relevant law, the Court finds the motion to dismiss is due to be GRANTED IN PART and DENIED IN PART.

         I. PARTIES

         In this Memorandum Opinion and Order, Plaintiff/Counterclaim Defendant Computer Programs & Systems, Inc., will be referred to as “CPSI”; Plaintiff/Counterclaim Defendant Trubridge, L.L.C., will be referred to as “Trubridge”; and CPSI and Trubridge will be collectively referred to as “Plaintiffs.” The Court will refer to Defendant/Counterclaim Plaintiff Texas General Hospital as “Texas General” and Defendant/Counterclaim Plaintiff Texas General Hospital-VZRMC's as “Van Zandt.” The Court will collectively refer to Texas General and Van Zandt as “Defendants.”


         The district court has subject matter jurisdiction over the claims in this action pursuant to 28 U.S.C. § 1332 (diversity).

         The district court has personal jurisdiction over the claims in this action because CPSI and Trubridge both have their principal place of business in Mobile County, Alabama, which is within the Court's district. See BNSF Ry. Co. v. Tyrrell, ___ U.S. ___, 137 S.Ct. 1549, 1558, 198 L.Ed.2d 36 (2017) (internal citations and quotation marks omitted) (“Goodyear and Daimler clarified that a court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so continuous and systematic as to render them essentially at home in the forum State. The paradigm forums in which a corporate defendant is at home, explained, are the corporation's place of incorporation and its principal place of business.”); see also Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291-92 (11th Cir. 2000) (citations omitted) (“Specific jurisdiction arises out of a party's activities in the forum that are related to the cause of action alleged in the complaint. . . . General personal jurisdiction, on the other hand, arises from a defendant's contacts with the forum that are unrelated to the cause of action being litigated. The due process requirements for general personal jurisdiction are more stringent than for specific personal jurisdiction, and require a showing of continuous and systematic general business contacts between the defendant and the forum state.”).

         Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(1) because CPSI and Trubridge have their principal places of business in this judicial district.


         On February 7, 2018, Plaintiffs originally filed their complaint in the Circuit Court of Mobile County. Doc. 1 ¶ 1. In Plaintiffs' complaint, they bring against Defendants two (2) Alabama state law claims for breach of contract. Doc. 1-1 at 6-7.

         On March 12, 2018, Defendants filed their notice of removal to this Court based on diversity of citizenship, which the Court orderd Defendants to amend to correct their jurisdictional pleadings. See Docs. 1, 5. Defendants filed their answer to the complaint on March 19, 2018, and their amended notice of removal on March 22, 2018. Docs. 7, 15. The Court denied Defendants' motion to transfer venue to the Northern District of Texas on August 7, 2018. See Docs. 16, 38.

         On November 2, 2018, Defendants filed their Motion for Leave to Amend Pleadings to add defenses and counterclaims and amend their answer to the complaint, which the Court granted. Docs. 40, 46. On December 5, 2018, Defendants filed their amended answer, in which they brought against Plaintiffs Alabama state law counterclaims of breach of contract, negligence, wantonness, breach of warranty for services, breach of duty of good faith and fair dealing, breach of fiduciary duty, fraud or negligent misrepresentation, fraudulent concealment, fraudulent inducement, and estoppel. Doc. 47.

         Plaintiffs filed the instant motion to dismiss counterclaims on December 19, 2018. Doc. 49. Defendants timely responded in opposition, to which Plaintiffs filed their reply. Docs. 51, 52. The Court finds oral argument unnecessary for resolution. Therefore, the motion is fully briefed and ripe for adjudication.


         Pursuant to Fed.R.Civ.P. 12(b)(6), a defendant may move to dismiss a complaint on the basis that the plaintiff has failed to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a plaintiff must plead “only enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' [Twombly, 550 U.S.] at 570, 127 S.Ct. [at] 1955. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556, 127 S.Ct. [at] 1955.”). Since a Fed.R.Civ.P. 12(b)(6) motion questions the legal sufficiency of a complaint, in assessing the merits of the motion, the court must assume that all the factual allegations set forth in the complaint are true. See, e.g., United States v. Gaubert, 499 U.S. 315, 327, 111 S.Ct. 1267, 1276, 113 L.Ed.2d 335 (1991); Powell v. Lennon, 914 F.2d 1459, 1463 (11th Cir. 1990); but see also Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 555, 127 S.Ct. at 1955) (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Moreover, all factual allegations shall be construed in the light most favorable to the plaintiff. See, e.g., Brower v. County of Inyo, 489 U.S. 593, 598, 109 S.Ct. 1378, 1382, 103 L.Ed.2d 628 (1989). Obviously, therefore, a district court may not resolve factual disputes when adjudicating a motion to dismiss. Page v. Postmaster Gen. and Chief Exec. Officer of the U.S. Postal Serv., 493 Fed.Appx. 994, 995 (11th Cir. 2012) (citing, among other cases, Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990), for the proposition that, under Fed.R.Civ.P. 12(b)(6), the existence of disputed material facts precludes a district court from granting a motion to dismiss). “‘When considering a motion to dismiss . . . the court limits its consideration to the pleadings and all exhibits attached thereto.'” Thaeter v. Palm Beach Cty. Sheriff's Office, 449 F.3d 1342, 1352 (11th Cir. 2006) (quoting Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000) (per curiam)); see also Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215-16 (11th Cir. 2012) (“Because the Ellis law firm's dunning letter and enclosed documents were attached to the Reeses' complaint as an exhibit, we treat them as part of the complaint for [Fed. R. Civ. P.] 12(b)(6) purposes.”).


         The Court will address Plaintiffs' arguments for the corresponding counterclaim in order.

         a. Counterclaim 1 (Breach of Contract)

         In Defendants' first counterclaim, they allege Trubridge breached Section A(1) of Exhibit A to the Master Services Agreement because Trubridge failed to provide medical coding of all patient encounters, charge for observation and emergency department services, jointly establish a policy for updating a problem list, and provide hospital management with quarterly quality assurance reporting. Doc. 47 ¶ 84. Defendants allege CPSI breached the License and Equipment Agreement because CPSI withheld Defendants' access to software that Defendants need to operate their business, despite their payment for the software, and failed to provide service under certain agreements. Id. ¶ 85.

         Plaintiffs argue Defendants admit in their allegations they failed to perform under the agreements at issue, and because they admitted such, they cannot demonstrate they performed under the agreements and their breach of contract claim fails. Doc. 49 at 4. In response, Defendants argue they were excused from their contractual obligations because Plaintiffs failed to perform their part of the agreements before Defendants' alleged breach. See Doc. 51 at 7.

         Under Alabama law, “[i]n the ordinary breach of contract action, the claimant must prove: (1) the existence of a valid contract binding the parties in the action, (2) his own performance under the contract, (3) the defendant's nonperformance, and (4) damages.” S. Med. Health Sys., Inc. v. Vaughn, 669 So.2d 98, 99 (Ala. 1995). “‘Where [a party] has agreed under the contract to do a particular thing, there is a breach and the right of action is complete upon [the party's] failure to do the particular thing he agreed to do.'” Cunningham v. Langston, Frazer, Sweet & Freese, P.A., 727 So.2d 800, 805 (Ala. 1999) (quoting Seybold v. Magnolia Land Co., 376 So.2d 1083, 1085 (Ala. 1979)). “‘In order to establish that a defendant is liable for a breach of a bilateral contract, a plaintiff must establish that he has performed, or that he is ready, willing, and able to perform under the contract.'” Beauchamp v. Coastal Boat Storage, 4 So.3d 443, 450 (Ala. 2008) (quoting Winkleblack v. Murphy, 811 So.2d 521, 529 (Ala. 2001)).

         Here, Defendants allege Plaintiffs breached the agreements at issue from at least March 2017 because Plaintiffs failed to adequately perform their contractual duties, while Defendants admit they ceased payments under the agreements in fall 2017. See Doc. 47 ¶¶ 16, 62-63; see also Id. ¶¶ 64-79 (describing Plaintiffs' failures to perform contractual duties). Defendants also allege they “performed, tendered performance, or were excused from performing their contractual obligations” because of Plaintiffs' breach. Id. ¶ 81. Therefore, Defendants have properly alleged a breach of contract claim because, at the time of Plaintiffs' alleged breach, Defendants allege they performed under the agreements.

         Plaintiffs' motion to dismiss Defendants' first counterclaim is denied.

         b. Counterclaims 2 (Negligence) and 3 (Wantonness)

         In Defendants' second and third counterclaims, they allege Plaintiffs were negligent when they breached their contractual duty to timely submit claims to payors for reimbursement of healthcare services that were provided by Defendants. Doc. 47 ¶¶ 87-90. Defendants further allege Plaintiffs breached their contractual duty with a reckless or conscious disregard of Defendants' rights. Id. ¶¶ 91-93.

         Plaintiffs argue, under Alabama law, a tort has not been committed when a party fails to perform a contractual obligation. Doc. 49 at 4-5. In response, Defendants argue Alabama law does provide, when a party performs a contractual obligation, the performance of the obligation may be negligent and give rise to a tort and, in any case, these counterclaims need factual development for the Court to ...

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