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Patientpoint Royalty Holdings, Inc. v. Healthgrid Coordinated Care Solutions, Inc.

United States District Court, M.D. Florida

November 3, 2017




          This matter comes before the Court without a hearing on the Motion to Dismiss or, in the Alternative, to Compel Arbitration (Doc. 25) filed by the Defendants, the response in opposition (Doc. 30) filed by the Plaintiff, PatientPoint Royalty Holdings, Inc. (henceforth, “PPRH”), and the reply (Doc. 35) filed by the Defendants.

         I. Background

         According to the allegations of the Amended Complaint (Doc. 22), PPRH is the successor in interest[1] to PatientPoint, LLC (“PatientPoint”), which in June 2015 sold all of the stock of PatientPoint Coordinated Care Solutions, Inc. (“PPCCS”) to Defendant HealthGrid Coordinated Care Solutions, Inc. (“HealthGrid”) for 20, 000 shares of HealthGrid stock. (Doc. 22 at 2). The deal also included a royalty agreement (the “Agreement”) under which PatientPoint was to receive a share of HealthGrid's future “Revenue” - a term defined in the Agreement. (Doc. 22 at 14). PatientPoint assigned its rights under the Agreement to another entity, which immediately transferred those rights to PPRH. (Doc. 22 at 2-3).

         A dispute has arisen between these parties regarding the definition of Revenue and, by extension, the amount of royalties to which PPRH is entitled. By way of the instant suit, PPRH seeks a declaration that its interpretation of that definition is correct. The Defendants contend that PPRH's request for declaratory relief does not present an actual case or controversy, and therefore this Court lacks subject matter jurisdiction. In the alternative, the Defendants argue that this matter must be referred to arbitration.

         II. Legal Standard

         A. Subject Matter Jurisdiction and Declaratory Judgments

          The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides that, “[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” The Declaratory Judgment Act does not confer subject matter jurisdiction on the court; any request for such a judgment must still satisfy Article III of the Constitution, which limits the judicial power to “cases” and “controversies.” To do so, the underlying dispute must be “definite and concrete, touching the legal relations of parties having adverse legal interests.” Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-241, (1937). It must also be “real and substantial” and “admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” Id. at 241.

The difference between an abstract question and a ‘controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941).

Attacks on subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) come in two forms. “Facial attacks” on the complaint “require[ ] the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.” Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.), cert. denied, 449 U.S. 953, 101 S.Ct. 358, 66 L.Ed.2d 217 (1980) (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977)). “Factual attacks, ” on the other hand, challenge “the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered.” Id.

Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990).

         B. Arbitration

         The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-14, provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA was designed to overrule “the judiciary's long-standing refusal to enforce agreements to arbitrate.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 219-20 (1985). It reflects “an emphatic federal policy in favor of arbitral dispute resolution.” KPMG LLC v. Cocchi, 565 U.S 111, 111 (2011) (per curiam).

         The FAA does not require parties to arbitrate when they have not agreed to do so or prevent parties who do agree to arbitrate from excluding certain claims for the scope of their arbitration agreement; it simply requires courts to enforce privately negotiated agreements to arbitrate, in accordance with their terms. Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 1255, 103 L.Ed.2d 488 (1989). To determine whether an agreement to arbitrate governs a particular dispute, the court interprets the agreement as it would any other contract. Multi-Financial Securities Corp. v. King, 386 F.3d 1364, 1367 (11th Cir. 2004). But, unlike other contracts, any ...

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