United States District Court, D. Nevada
PAUL B. CANALE, M.D., Plaintiff,
SAHARA OUTPATIENT SURGERY CENTER, LTD., a Nevada limited partnership, et al., Defendants.
M. Navarro, Chief Judge.
before the Court is the Motion to Dismiss the Complaint, (ECF
No. 6), filed by Defendants Sahara Outpatient Surgery Center,
Ltd. (“Sahara”) and Surgicare of Las Vegas, Inc.
(“Surgicare”) (collectively “Surgery Center
Parties”). Paul B. Canale, M.D.
(“Plaintiff”) filed a Response, (ECF No. 12), and
Surgery Center Parties filed a Reply, (ECF No. 18).
pending before the Court is Defendant Lance Hickman's
(“Hickman's”) Motion to Dismiss the
Complaint, (ECF No. 26). Plaintiff filed a Response, (ECF No.
28), and Hickman filed a Reply, (ECF No 31).
reasons discussed below, the Court GRANTS in
part and DENIES in part,
without prejudice, Defendants' Motions
is a medical doctor specializing in orthopedic surgery.
(Comp. ¶ 11, ECF No. 1-2). In 1992, while serving as a
medical practitioner in Las Vegas, Nevada, Plaintiff received
a Confidential Private Offering Memorandum, which offered an
investment opportunity in a Las Vegas, Nevada hospital under
the business title of Las Vegas Surgery Hospital, Ltd.
(Id. ¶¶ 11- 12). That Memorandum offered
Plaintiff, and other potential investors, a chance to
purchase up to forty limited partnership “Units”
in Las Vegas Surgery Hospital, Ltd. (Id.).
subsequently purchased one Unit for the sum of $12, 000.00,
and signed a Subscription Agreement to memorialize his
purchased interest. (Id. ¶ 13). Surgicare, as
the General Partner of Las Vegas Surgery Hospital, Ltd.,
accepted Plaintiff's Subscription Agreement and purchase
price on February 11, 1993. (Id. ¶¶ 4,
13). Roughly eight months later, Las Vegas Surgery Hospital,
Ltd. changed its name to Sahara Outpatient Surgery Center,
Ltd. (“Sahara”), and began operating a hospital
in Las Vegas, Nevada. (Id. ¶¶ 14-15).
operated under a “Limited Partnership Agreement,
” dated December 28, 1992 (“LPA 1992”).
(Id. ¶ 14). The LPA 1992 governed business
operations, including who qualified as a “Limited
Partner” and standards for changes to the LPA 1992.
(Id. ¶¶ 16-21).
1992 underwent several amendments while Plaintiff was an
investor in Sahara, the first of which occurred in 1996 and
involved a “split” in Units from 100 to 1000.
(Id. ¶ 22). That split meant each
“currently outstanding Unit” would be divided
into 10 Units. (Id.). A second amendment in 2005
again “split” each outstanding Unit into two, and
also changed the standard for a “Majority in
Interest” under the LPA 1992. (Id. ¶ 23).
September 5, 2014, Sahara sent all investors a proposed
amendment to the LPA 1992. (Id. ¶ 26). Relevant
to this case, that proposed amendment changed the
requirements for an investor to be a Limited Partner; and it
also changed the Partnership and General Partner's
ability to repurchase a Limited Partner's Units at a
certain, agreed-upon price. (Id.). For example, the
amendment included a “Physician Eligibility
Requirement” and a “Physician Investor”
requirement so that an investor “must perform at least
one-third of his or her procedures that are on the
Medicare-approved ASC procedure list at the Center.”
(Id. ¶ 31). Plaintiff alleges that he did not
consent or agree to the proposed change; but the amendment
nonetheless passed on November 20, 2014 (“LPA
2014”). (Id. ¶¶ 27-29).
one year later, Hickman, acting as Surgicare's agent,
sent a letter to Plaintiff explaining that, “pursuant
to the terms of the [LPA 2014], ” Surgicare exercised
its option to repurchase Plaintiff's Units because
Plaintiff did not meet the “Physician Eligibility
Requirements” as defined in the LPA 2014. (Id.
¶¶ 5, 33-34). Plaintiff accordingly received $16,
880.00 for his repurchased Units. (Id. ¶ 35).
April 17, 2018, Plaintiff filed his Complaint against Sahara,
Surgicare, and Hickman (collectively
“Defendants”) in the District Court of Clark
County, Nevada (“Nevada State Court”).
(Id. at 1). Plaintiff's Complaint alleges nine
causes of action associated with the repurchase of his Units:
(1) breach of contract; (2) breach of the implied covenant of
good faith and fair dealing; (3) declaratory relief; (4)
accounting; (5) conversion; (6) breach of fiduciary duties;
(7) securities fraud; and (8) punitive damages. (Id.
¶¶ 38-92). Defendants then removed this matter from
Nevada State Court to this Court on June 5, 2018. (Pet.
Removal, ECF No. 1).
two weeks after removing Plaintiff's Complaint to this
Court, Sahara and Surgicare filed their Motion to Dismiss
Plaintiff's Complaint, (ECF No. 6). Hickman filed a
separate Motion to Dismiss Plaintiff's Complaint, (ECF
No. 26), about three months later.
Rule of Civil Procedure 12(b)(6) mandates that a court
dismiss a cause of action that fails to state a claim upon
which relief can be granted. See N. Star Int'l v.
Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir.
1983). When considering a motion to dismiss under Rule
12(b)(6) for failure to state a claim, dismissal is
appropriate only when the complaint does not give the
defendant fair notice of a legally cognizable claim and the
grounds on which it rests. See Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). In considering
whether the complaint is sufficient to state a claim, the
Court will take all material allegations as true and construe
them in the light most favorable to the plaintiff. See NL
Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.
Court, however, is not required to accept as true allegations
that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences. See Sprewell v. GoldenState Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A
formulaic recitation of a cause of action with conclusory
allegations is not sufficient; a plaintiff must plead facts
showing that a violation is plausible, ...