The Lash Group, LLC v. Daya Medicals, Inc.

1 2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4 THE LASH GROUP, LLC, Case No. 2:24-cv-00843-ART-EJY 5 Plaintiff / Counter-Defendant, ORDER GRANTING MOTION TO 6 DISMISS COUNTERCLAIMS v. 7 (ECF No. 26) DAYA MEDICALS, INC., 8 Defendant / Counterclaimant. 9 10 This case involves a contract dispute between two medical companies. 11 Plaintiff and Counter-Defendant, The Lash Group, LLC (“Lash Group”) sued 12 Defendant and Counterclaimant Daya Medicals, Inc. (“DayaMed”) for breach of 13 contract, alleging that DayaMed failed to pay several invoices. DayaMed 14 counterclaimed for breach of contract, breach of the implied covenant of good 15 faith and fair dealing, and several tort claims. Before the Court is Lash Group’s 16 motion to dismiss DayaMed’s counterclaims (ECF No. 26). Lash Group moves to 17 dismiss all claims except the claim for breach of contract. For the following 18 reasons, the Court grants the motion. 19 I. BACKGROUND 20 In August 2021, DayaMed entered into a service agreement with Lash 21 Group, pursuant to which Lash Group agreed to provide services for DayaMed 22 and DayaMed agreed to pay Lash Group for its services. (ECF No. 1 at ¶¶ 6, 7; 23 ECF No. 23 at ¶ 6.) Neither DayaMed’s complaint nor Lash Group’s 24 countercomplaint identifies exactly what those services are or what the 25 agreement involved, but the contractual dispute concerns nonpayment for those 26 services. (See ECF Nos. 1, 23.) 27 A. Lash Group’s Allegations 28 Lash Group alleges that DayaMed did not pay Lash Group for several 1 invoices that it submitted pursuant to the service agreement in 2022, totaling 2 over $800,000. (ECF No. 1 at ¶ 16, 19.) Lash Group alleges that the service 3 agreement provided that if DayaMed disputed any portion of an invoice, DayaMed 4 would pay the undisputed amount and notify Lash Group of its dispute within 5 fifteen days of the invoice. (Id at ¶ 10.) Lash Group alleges that it provided the 6 services agreed upon from January to May 2022 and timely issued invoices. (Id. 7 ¶¶ 12, 13.) DayaMed did not notify Lash Group of any disputes. (Id at ¶ 14.) In 8 April 2022, Lash Group notified DayaMed that it intended to terminate providing 9 services on May 16, 2022, unless it received payment for the January, February, 10 and March invoices by May 13, 2022. (Id at ¶ 15.) DayaMed did not pay those 11 invoices and Lash Group ceased providing services on May 16, 2022. (Id at ¶ 16.) 12 Lash Group issued invoices for the services provided in April and May of 2022 13 and again did not receive payment. (Id at ¶ 19.) Lash Group asserts four claims 14 against DayaMed: breach of contract, breach of the implied covenant of good faith 15 and fair dealing, breach of account stated, and unjust enrichment. (ECF No. 1 at 16 ¶¶ 3–6.) 17 B. DayaMed’s Allegations 18 In response, DayaMed admits entering into a contract but alleges that Lash 19 Group “did not perform its contractual obligations owed to DayaMed to the 20 contractually required standard.” (ECF No. 23 at ¶ 7.) DayaMed alleges that Lash 21 Group “overcharged and artificially increased the sums owed on its purported 22 invoices while simultaneously underperforming or failing to perform contractual 23 obligations.” (Id. at ¶ 8.) DayaMed asserts that it “outlined some of these 24 deficiencies in a communication dated July 18, 2022.” (Id. at ¶ 9.) For example, 25 Lash Group’s invoices charged “1.65 quantities of a monthly fee in just one month 26 in derogation of the contract.” (Id. at ¶ 10.) There was also a “$55,000 charge for 27 RN Coordinator which would have been sufficient to serve 5,000 patients, not the 28 20-30 patients that existed at the height of Lash Group’s involvement.” (Id. at ¶ 1 11.) DayaMed alleges that over $637,000 of the $816,000 invoiced is in dispute. 2 (Id. at ¶ 13.) DayaMed also alleges that Lash Group failed to perform by 3 “sometimes directly risking patients’ wellbeing,” for example by “[leaving] multiple 4 prescriptions for the same medication active in patients’ files resulting in patients 5 receiving double and sometimes triple the medication.” (Id. at ¶ 14.) DayaMed 6 further alleges that Lash Group was provided “a specially crafted and curated list 7 of 1,701 potential patients/customers that Lash Group agreed to contact and 8 attempt to convert into ongoing users.” (Id. at ¶ 16.) Lash Group’s representative, 9 Bob Landers, represented that he anticipated the “conversion rate into 10 clients/customers” from this list would be over ninety percent, when in fact it 11 was just 1.2 percent. (Id. at ¶ 18.) DayaMed brings counterclaims for breach of 12 contract, breach of the covenant of good faith and fair dealing, negligent 13 misrepresentation, intentional misrepresentation, fraudulent inducement, 14 negligence, and declaratory relief. (ECF No. 23.) 15 Lash Group moves to dismiss all of DayaMed’s counterclaims under Rule 16 12(b)(6) and Rule 9, except the counterclaim for breach of contract. (ECF No. 23 17 at 9.) 18 II. LEGAL STANDARD 19 A court may dismiss a complaint for “failure to state a claim upon which 20 relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must 21 provide “a short and plain statement of the claim showing that the pleader is 22 entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 23 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it 24 demands more than “labels and conclusions” or a “formulaic recitation of the 25 elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing 26 Twombly, 550 U.S. at 555). “Factual allegations must be enough to rise above the 27 speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to 28 dismiss, a complaint must contain sufficient factual matter to “state a claim to 1 relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 2 U.S. at 570). Under this standard, a district court must accept as true all well- 3 pleaded factual allegations in the complaint and determine whether those factual 4 allegations state a plausible claim for relief. Id. at 678–79. 5 Federal Rule of Civil Procedure 9(b) requires a plaintiff to “state with 6 particularity the circumstances constituting fraud.” This particularity standard 7 requires alleging “the who, what, when, where, and how of the misconduct 8 charged, including what is false or misleading about a statement, and why it is 9 false.” United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 10 2016) (cleaned up). Allegations under Rule 9(b) must be “specific enough to give 11 defendants notice of the particular misconduct which is alleged to constitute the 12 fraud charged so that they can defend against the charge and not just deny that 13 they have done anything wrong.” Id. 14 III. JURISDICTION 15 District courts have original jurisdiction over civil actions where the 16 amount in controversy exceeds $75,000 and is between “citizens of a State and 17 citizens or subjects of a foreign state.” 28 U.S.C. § 1332. Lash Group is a 18 Delaware corporation with principal place of business in Pennsylvania and 19 DayaMed is a Canadian corporation with principal place of business in Reno, 20 Nevada. (ECF No. 1 at ¶ 3; ECF No. 23 at ¶ 2.) The amount in controversy exceeds 21 $75,000. (ECF No. 1 at ¶ 3.) Accordingly, subject matter jurisdiction is proper. 22 IV. CHOICE OF LAW 23 Lash Group argues that all claims should be determined under Delaware 24 law, but analyzes the claims under both jurisdictions, arguing that the result is 25 the same. (ECF No. 26 at 5.) DayaMed does not dispute that the contract claims 26 should be analyzed under Delaware law, but “reserves the right to further brief” 27 the issue of whether the tort claims should be determined under Nevada law. 28 (ECF No. 32 at 4.) It, too, argues that the result is the same under both 1 jurisdictions because there are only minimal differences between the two state’s 2 laws. (Id. at 4–5.) 3 A. Contract Claims 4 District courts sitting in diversity apply the forum state’s substantive law. 5 Hanna v. Plumer, 380 U.S. 460, 465 (1965). In Nevada, if the language of a 6 contract is clear and unambiguous, the contract will be enforced as written. Am. 7 First Fed. Credit Union v. Soro, 359 P.3d 105, 106 (Nev. 2015). Although the 8 contract is not attached to the pleadings (see ECF Nos. 1, 23), the Court may go 9 beyond the pleadings to consider “documents whose contents are alleged in a 10 complaint and whose authenticity no party questions, but which are not 11 physically attached to the pleading.” Smallman v. MGM Resorts Int’l, 638 F. Supp. 12 1175, 1186-87 (D. Nev. 2022) (quoting Branch v. Tunnell, 14 F.3d 449, 454 (9th 13 Cir. 1994). 14 The contract’s choice of law provision states: “this agreement shall be 15 construed in accordance with the laws of the State of Delaware (without reference 16 to its conflicts of law principles).” (ECF No. 26 at 5.) Because this provision is 17 unambiguous, the Court applies Delaware law to the contract claims. See, e.g., 18 Kidneigh v. Tournament One Corp., 2:12-cv-02209-APG-CWH, 2013 WL 2245920, 19 at *1 (D. Nev. May 21, 2013) (applying an unambiguous choice of law provision). 20 B. Tort Claims 21 Courts in Nevada apply a three-step framework to determine whether tort- 22 law claims fall within the scope of a choice-of-law clause, considering: (1) 23 “whether the parties intended for tort claims to be governed by a choice-of-law 24 clause in a related contract between them”; (2) “whether the tort claims relate ‘to 25 the interpretation of the contract;’” and (3) “whether the tort claims involve the 26 same operative facts as a parallel breach-of-contract claim.” Nail v. Lens.com, 27 2:24-cv-01149-JAD-EJY, 2024 WL 4477012, at *2 (D. Nev. Oct. 11, 2024) (citing 28 Tuxedo Int’l Inc. v. Rosenberg, 251 P.3d 690, 699-70 (Nev. 2011)). The court only 1 proceeds beyond the first step if the intent of the parties is ambiguous. Id. 2 The choice of law provision here states that the agreement shall be 3 “construed” in accordance with Delaware law. (ECF No. 26 at 5.) By its plain 4 terms, the provision does not include related tortious conduct. See, e.g., Morgan 5 v. Bash, No. 219CV00546JADBNW, 2021 WL 601871, at *2 (D. Nev. Feb. 16, 6 2021) (choice-of-law provision concerning contract’s “validity, construction, 7 performance, and effect” does not include tortious conduct). Because neither 8 party has fully briefed this issue, the Court assumes without deciding that 9 Nevada law applies to the tort claims. 10 V. DISCUSSION 11 Lash Group moves to dismiss DayaMed’s counterclaims for breach of the 12 covenant of good faith and fair dealing (Count 2), negligent misrepresentation 13 (Count 4)1, intentional misrepresentation (Count 5), fraudulent inducement 14 (Count 6), negligence (Count 7), and declaratory relief (Count 8). The Court 15 addresses each in turn. 16 A. Breach of the Covenant of Good Faith and Fair Dealing (Count 2) 17 “Under Delaware law, an implied duty of good faith and fair dealing is 18 interwoven into every contract.” Anderson v. Wachovia Mortg. Corp., 497 F. Supp. 19 2d 572, 581 (D. Del. 2007) (citing Chamison v. HealthTrust, Inc., 735 A.2d 912, 20 920 (Del. Ch. 1999)). “In order to plead successfully a breach of an implied 21 covenant of good faith and fair dealing, the plaintiff must allege a specific implied 22 contractual obligation, a breach of that obligation by the defendant, and resulting 23 damage to the plaintiff.” Id. at 581–82 (citing Fitzgerald v. Cantor, No. C.A. 16297- 24 NC, 1998 WL 842316, at *1 (Del. Ch. Nov. 10, 1998)). “[O]ne generally cannot 25 base a claim for breach of the implied covenant on conduct authorized by the 26 terms of the agreement.” Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 441 27 28 1 DayaMed’s countercomplaint does not include a third count. 1 (Del. 2005). 2 DayaMed alleges that Lash Group breached the implied covenant of good 3 faith and fair dealing by “among other things, performing in a manner that was 4 unfaithful to the purpose of the Contract” and by “deliberately contraven[ing] the 5 requirements, intention, and spirit of the contract.” (ECF No. 23 at ¶¶ 41, 42.) 6 Lash Group argues that this counterclaim should be dismissed because it 7 contains only conclusory statements. The Court agrees. DayaMed does not allege 8 a specific implied contractual obligation that Lash Group breached. The Court is 9 unable to discern from the countercomplaint which factual allegations relate to 10 the breach of contract, and which relate to the breach of the implied covenant. 11 Accordingly, the Court grants Lash Group’s motion to dismiss DayaMed’s 12 counterclaim for breach of the implied covenant. The counterclaim is dismissed 13 without prejudice. 14 B. Negligent Misrepresentation (Count 4) 15 To state a claim for negligent misrepresentation in Nevada, a plaintiff must 16 allege that the defendant (1) “in the course of [its] business, profession or 17 employment, or in any other action in which [it] has a pecuniary interest, [(2)] 18 supplie[d] false information [(3)] for the guidance of others in their business 19 transactions” and (4) caused pecuniary loss (5) by the plaintiff's “justifiable 20 reliance upon the information,” (6) if defendant “fail[ed] to exercise reasonable 21 care or competence in obtaining or communicating the information.” Barmettler 22 v. Reno Air, Inc., 956 P.2d 1382, 1387 (Nev. 1998). Courts in the Ninth Circuit 23 have held that claims for negligent misrepresentation must meet Rule 9(b)’s 24 particularity requirements. Nevada Rest. Servs., Inc. v. Factory Mut. Ins. Co., No. 25 222CV01104RFBVCF, 2023 WL 2572301, at *3 (D. Nev. Mar. 20, 2023) (collecting 26 cases). 27 DayaMed alleges that Lash Group “misrepresented its competence, 28 experience, and ability to perform the services contemplated in the Contract 1 including its ability to convert a curated list of potential customers into customers 2 of DayaMed,” that DayaMed relied upon those representations, that those 3 representations were false, and that DayaMed suffered damages. (ECF No. 23 at 4 ¶¶ 45–51.) DayaMed alleges that Lash Group’s representative, Bob Landers, 5 “expressly represented that he anticipated the conversion rate into 6 clients/customers of Lash group from this curated list would be in excess of 7 ninety percent” but that the conversion rate was just 1.2 percent. (ECF No. 23 at 8 ¶ 17.) 9 Lash Group argues that this claim fails because it is “premised on Lash 10 Group’s alleged promise of future performance,” citing Cundiff v. Dollar Loan Ctr. 11 LLC, 726 F. Supp. 2d 1232, 1238 (D. Nev. 2010). (ECF No. 26 at 7.) In Cundiff, 12 the court acknowledged that “Nevada has not addressed whether a 13 misrepresentation as to future performance can be negligent” and concluded that 14 “Nevada would hold that a misrepresentation as to future performance cannot be 15 negligent because such a statement is either fraudulent, i.e., the person never 16 held that intention at the time he made the statement, or it was not a 17 misrepresentation at all, the person simply later failed to perform as promised.” 18 726 F. Supp. 2d at 1238. Several courts in this district have since followed that 19 prediction of how the Nevada Supreme Court would rule on this issue. See Edry 20 v. Hometown Equity Mortg., LLC, No. 2:22-CV-00804-MMD-VCF, 2023 WL 21 3250830, at *5 (D. Nev. Jan. 31, 2023) (collecting cases). The Court is persuaded 22 by those cases and finds that DayaMed’s claim fails because it based on a promise 23 of future performance. 24 Accordingly, the Court grants Lash Group’s motion to dismiss DayaMed’s 25 counterclaim for negligent misrepresentation. Count 4 is dismissed without 26 prejudice. 27 28 1 (Count 6) 2 Lash Group argues that DayaMed’s fraud claims should be dismissed for 3 failure to plead with the particularity required under Rule 9(b). “Intentional 4 misrepresentation is established by three factors: (1) a false representation that 5 is made with either knowledge or belief that it is false or without a sufficient 6 foundation, (2) an intent to induce another’s reliance, and (3) damages that result 7 from this reliance.” Nelson v. Heer, 163 P.3d 420, 426 (Nev. 2007). To establish 8 fraudulent inducement, a plaintiff must show: “(1) a false representation made 9 by [the defendant], (2) [the defendant’s] knowledge or belief that the 10 representation was false (or knowledge that it had an insufficient basis for making 11 the representation), (3) [the defendant’s] intention to therewith induce [the 12 plaintiff] to consent to the contract’s formation, (4) [the plaintiff’s] justifiable 13 reliance upon the misrepresentation, and (5) damage to [the plaintiff] resulting 14 from such reliance.” J.A. Jones Const. Co. v. Lehrer McGovern Bovis, Inc., 89 P.3d 15 1009, 1018 (Nev. 2004). 16 DayaMed alleges that Lash Group “made misrepresentations to DayaMed 17 concerning its competence, experience, and ability to perform the services 18 contemplated in the Contract including its ability to convert a curated list of 19 potential customers into customers of DayaMed.” (ECF No. 23 at ¶ 53.) This claim 20 appears to be based on the allegation that Bob Landers represented that the client 21 conversion rate would be much higher than it turned out to be. (Id. at ¶ 17.) 22 DayaMed alleges that Bob represented that the “conversion rate into 23 clients/customers” would be over ninety percent, and that “after contacting 759 24 potential patients, Lash Group enrolled only nine . . . patients,” representing a 25 drastically lower “conversion rate” of 1.2 percent. (Id.) DayaMed makes the same 26 allegations in support of its claim for fraudulent inducement. (Id. at ¶¶ 61–68.) 27 These allegations do not sufficiently set out the “who, what, when, where, 28 1 and how” required to satisfy the heightened pleading requirement of Rule 9(b). 2 DayaMed does not specify when, where, or how Landers made these 3 representations. The Court therefore grants Lash Group’s motion to dismiss 4 DayaMed’s counterclaim for intentional misrepresentation. Counts 5 and 6 are 5 dismissed without prejudice. 6 D. Negligence (Count 7) 7 Lash Group argues that DayaMed’s negligence claim should be dismissed 8 for failure to allege duty. To state a claim for negligence, a plaintiff must allege: 9 (1) the existence of a duty of care, (2) breach of that duty, (3) legal causation, and 10 (4) damages. Sanchez ex rel. Sanchez v. Wal-Mart Stores, Inc., 221 P.3d 1276, 11 1280 (Nev. 2009). While the tort of negligence can be committed by parties to a 12 contract, the alleged breach must be of a duty imposed by law independent of 13 any contractual duty. Contreras v. Am. Fam. Mut. Ins. Co., 135 F. Supp. 3d 1208, 14 1220 (D. Nev. 2015). 15 Here, DayaMed does not allege an independent duty besides the duty to 16 fulfill the terms of the contract. DayaMed alleges a “duty to accurately invoice for 17 health care services provided as established by applicable regulatory 18 requirements,” but does not cite to any specific statutes or regulations in its 19 pleading or briefing. (ECF No. 23 at ¶ 70.) DayaMed alleges a duty “to use 20 reasonable care and competence when contacting clients on a curated list of 21 potential DayaMed customers.” (Id.) But this list appears also to be a part of the 22 contract. DayaMed does not point to any specific regulatory requirements, and 23 these conclusory allegations are insufficient to establish duty. 24 Accordingly, the Court grants Lash Group’s motion to dismiss DayaMed’s 25 counterclaim for negligence. Count 7 is dismissed without prejudice. 26 E. Declaratory Relief (Count 8) 27 Lash Group argues that DayaMed’s final claim for declaratory relief should 28 be dismissed because it is redundant and is based solely on past conduct. (ECF 1 || No. 26 at 11.) In response, DayaMed argues that a judicial determination is 2 || necessary, but does not cite any authority in support of its argument. (ECF No. 3 || 32 at 17.) DayaMed seeks declaratory relief because it “desires a judicial 4 || determination of the parties’ rights and obligations.” (ECF No. 23 at 76.) The 5 || Court cannot ascertain from DayaMed’s countercomplaint or from its response 6 || to the motion to dismiss what it is seeking under this claim or what allegations 7 || the claim is based upon. The Court therefore dismisses this claim as conclusory. 8 || See, e.g., McGraw v. Kim, No. 2:22-CV-01414-APG-NJK, 2023 WL 3170059, at *2 9 || (D. Nev. Apr. 28, 2023) (dismissing claim for declaratory relief as conclusory 10 || where it did not set forth any relevant factual allegations). 11 The Court therefore grants Lash Group’s motion to dismiss DayaMed’s 12 || counterclaim for declaratory relief. Count 8 is dismissed without prejudice. 13 VI. CONCLUSION 14 Accordingly, the Court grants Lash Group’s motion to dismiss (ECF No. 15 || 26). DayaMed’s counterclaims for breach of the covenant of good faith and fair 16 || dealing (Count 2), negligent misrepresentation (Count 4), intentional 17 || misrepresentation (Count 5), fraudulent inducement (Count 6), negligence (Count 18 || 7), and declaratory relief (Count 8) are dismissed without prejudice and with leave 19 || to amend. 20 The Court grants DayaMed 30 days from the date of this order to file an 21 || amended countercomplaint. 22 23 DATED: August 13, 2025 24 25 Aras plod jen 26 ANNE R. TRAUM 27 UNITED STATES DISTRICT JUDGE 28