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Inge v. McClelland

United States District Court, D. New Mexico

June 26, 2017

ELIZABETH INGE, individually, and JOHNNY INGE, individually, Plaintiffs,
ROBERT BOB McCLELLAND, III, individually, and doing business as, BOB'S BUDGET PHARMACY, Defendant.


         In DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' COMPLAINT (Doc. No. 26) (Motion), Defendant Robert McClelland (Defendant) asks the Court to dismiss all claims asserted in the FIRST AMENDED CIVIL COMPLAINT FOR VIOLATION OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS (RICO) ACT; NEGLIGENCE; BREACH OF FIDUCIARY DUTIES, UNFAIR PRACTICES; AND PUNITIVE DAMAGES (Doc. No. 2) (Amended Complaint). Plaintiffs oppose the Motion. See PLAINTIFFS' RESPONSE TO “DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' COMPLAINT” [DOC. 26] (Doc. No. 30) (Response). Defendant submitted a reply brief. See DEFENDANT'S REPLY IN SUPPORT OF HIS MOTION TO DISMISS PLAINTIFF'S COMPLAINT (Doc. No. 33) (Reply). Because Plaintiffs' claims are barred under the wrongful conduct rule and its corollary, the in pari delicto doctrine, the Court will grant the Motion and will dismiss with prejudice all claims in the Amended Complaint.


         Normally a motion to dismiss for failure to state a claim should be made prior to filing the answer or in the answer itself. Fed.R.Civ.P. 12(b)(6). If the defendant moves to dismiss after filing the answer, the motion should generally be treated as a motion for judgment on the pleadings. Fed.R.Civ.P. 12(c), (h)(2); Lowe v. Town of Fairland, Okla., 143 F.3d 1378, 1381 n. 5 (10th Cir. 1998); Republic Steel Corp. v. Pennsylvania Eng'g Corp., 785 F.2d 174, 182 (7th Cir. 1986). In evaluating a Rule 12(c) motion, however, the court applies the same standard used in deciding Rule 12(b)(6) motions to dismiss. See Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000) (“A motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6).”).

         Under Rule 12(b)(6), the court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion “tests the sufficiency of the allegations within the four corners of the complaint.” Romero v. United States, 159 F.Supp.3d 1275, 1279 (D.N.M. 2015) (citation omitted). When considering a Rule 12(b)(6) motion, the court must accept as true all well-pleaded factual allegations in the complaint, view those allegations in the light most favorable to the non-moving party, and draw all reasonable inferences in the plaintiff's favor. Smith v. United States, 561 F.3d 1090, 1097 (10th Cir.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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted). “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.

         In ruling on a motion to dismiss, the court typically considers only the facts alleged in the complaint. Martin v. Central States Emblems, Inc., 150 F. App'x 852, 857 (10th Cir. Oct. 11, 2005) (unpublished) (citing County of Santa Fe v. Pub. Serv. Co. of N.M., 311 F.3d 1031, 1035 (10th Cir. 2002)). However, the court may review documents referred to in a complaint, without converting a motion to dismiss into a motion for summary judgment, if the documents are central to the plaintiff's claim and the parties do not dispute their authenticity. Martin, 311 F.3d at 1035 (citing County of Santa Fe). The court may also consider documents of which the court may take judicial notice. S.E.C. v. Goldstone, 952 F.Supp.2d 1060, 1190 (D.N.M. 2013).


         Plaintiffs allege that between approximately July 26, 2013 and January 29, 2015, Defendant, a licensed pharmacist, [1] filled prescriptions for Plaintiff Johnny Inge for improper and dangerous amounts of opioids and other controlled substances “knowing that there was absolutely no medical necessity or benefit to prescribing these medications[.]” (Am. Compl. ¶ 9 v-vi.) For example, during that time period Defendant dispensed to Mr. Inge 5, 160 oxycodone pills, a Schedule II narcotic, in dosage amounts intended for end-stage cancer patients. (Id. ¶ 9 vi.) Defendant also dispensed to Mr. Inge 1, 560 tramadol pills, a Schedule IV narcotic. Between November 25, 2013 and January 29, 2015, Defendant filled numerous prescriptions for Plaintiff Elizabeth Inge. For example, Defendant dispensed to Mrs. Inge 1, 650 tramadol pills and 6, 540 oxycodone pills at potency levels given to end-stage cancer patients. (Id. ¶ 9 vii.) (See also Am. Compl. Exs. 1-2 (printout of prescriptions filled for Plaintiffs at Bob's Budget Pharmacy)). Defendant also allowed Plaintiffs to pay cash for some prescriptions in violation of Medicaid rules and regulations. (Id. ¶ 9 viii.)[2]

         In PLAINTIFFS' SUPPLEMENTAL JOINT STATUS REPORT AND PROVISIONAL DISCOVERY PLAN CONTENTIONS (Doc. No. 18) (Plaintiffs' Supplemental Joint Status Report), Plaintiffs explain that in June 2013, Mr. Inge received a telephone call from David Jones, a Nurse Practioner. (Id. at 1.) Although Mr. Inge had not heard from Mr. Jones the previous two years, Mr. Jones knew that Mr. Inge was “recovering from prescription pill use and approached him because of his known vulnerability.” (Id. at 1-2.) Mr. Jones proposed to write prescriptions for powerful narcotic pain pills for Mr. Inge; and after Mr. Inge filled those prescriptions, Mr. Inge would share half of the pills with Mr. Jones. (Id. at 2.) Mr. Inge agreed and picked up the written prescriptions from various drop locations. (Id.) Mr. Inge attempted to fill the initial prescription at Wellburn Pharmacy in Tucumcari, New Mexico; however, the pharmacist refused to fill “such a large prescription for Mr. Jones.” (Id.) Mr. Inge then took the prescription to Defendant, who filled the prescription “knowing that the prescription was bogus; that it was improper and illegal for [Jones] to be prescribing such strong narcotics for a healthy individual[.]” (Id.) Over the ensuing months, Defendant filled numerous fraudulent prescriptions for both Mr. and Mrs. Inge. (Am. Compl. Exs. 1-2.)

         As a result of obtaining and using these powerful drugs, Plaintiffs became addicted to the drugs, lost custody of their child, and lost employment. Mr. Inge was arrested for driving while intoxicated, and Mrs. Inge suffered an overdose. Plaintiffs also experienced painful withdrawal symptoms after losing access to the drugs. (Id. ¶ 11 i-iii.) In Count I, Plaintiffs assert a claim for civil damages under the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962, 1964 (RICO). In Count II, Plaintiffs allege that Defendant was negligent in the provision of pharmacy services and acted in “wanton disregard of the rights of Plaintiffs, ” entitling Plaintiffs to actual and punitive damages. (Id. ¶¶ 15-17.) In Count III, Plaintiffs assert a claim against Defendant for “unfair, deceptive and unconscionable trade practices in the conduct of his business during the times Plaintiffs were patients.” (Id. ¶ 19.) In Count IV, Plaintiffs aver that Defendant “entered into a fiduciary relation of trust and was bound to act in good faith with due regard for the interest of the Plaintiffs as an agent and health care provider” and that Defendant breached the fiduciary duty by filling prescriptions for dangerous drugs in excessive numbers and dosage amounts. (Id. ¶¶ 27-30.)

         Defendant argues that Plaintiffs are barred from any recovery under the New Mexico “wrongful conduct rule.” Defendant asks the Court to dismiss the Amended Complaint in its entirety. As explained below, Plaintiffs are barred from asserting their claims because they are based on Plaintiffs' own illegal conduct, acquiring narcotics through fraudulent prescriptions. Accordingly, the Court will grant the Motion.



         As a preliminary matter, Plaintiffs argue that since Defendant failed to specifically plead the wrongful conduct rule as an affirmative defense in his Answer, Defendant has waived the defense and may not assert it in the Motion. Rule 8(c) states, “[i]n responding to a pleading, a party must affirmatively state any avoidance or affirmative defense[.]” Fed.R.Civ.P. 8(c). The wrongful conduct rule is an affirmative defense to Plaintiffs' claims. See Stringfellow v. Oakwood Hosp. and Med. Center, 409 F.Supp.2d 866, 872 (E.D. Mich. 2005) (acknowledging that wrongful conduct rule is an affirmative defense). However, Rule 8(c)'s core purpose is to “act as a safeguard against surprise and unfair prejudice, and strict adherence to the pleading requirement is inappropriate when the purpose of the requirement has otherwise been fulfilled.” Sanchez v. BNSF Railway Co., 976 F.Supp.2d 1265, 1267 (D.N.M. 2013) (Hansen, J.). Hence, in ruling on the Motion, the Court will decide whether the wrongful conduct rule bars Plaintiffs' claims despite Defendant's failure to specifically plead it as an affirmative defense in his Answer. See Ahmad v. Furlong, 435 F.3d 1196, 1201 (10th Cir. 2006) (ruling that failure to plead qualified immunity in answer was not fatal to party who raised the defense in a motion for summary judgment).


         Plaintiffs maintain that they were not violating the law when they presented prescriptions to be filled; however, Plaintiffs admitted their scheme to fill fraudulent prescriptions for narcotics in Plaintiffs' Supplemental Joint Status Report, a document that this Court may consider in ruling on the Motion. Plaintiffs' acquisition of narcotics through fraudulent prescriptions is a violation of federal and state law. See 21 U.S.C. § 843(a)(3) (providing, “[i]t shall be unlawful for any person knowingly or intentionally- . . . (3) to acquire or obtain possession of a controlled substance by misrepresentation, fraud, forgery, deception, or subterfuge[.]”); NMSA 1978 § 30-31-23 (“It is unlawful for a person intentionally to possess a controlled substance unless the substance was obtained pursuant to a valid prescription or order of a practitioner while acting in the course of professional practice.”); NMSA 1978 § 30-31-25 (“It is unlawful for any person: . . . (3) to intentionally acquire or obtain, or attempt to acquire or obtain possession of a controlled substance by misrepresentation, fraud, forgery, deception or subterfuge.”). Because Plaintiffs admit they agreed to share the narcotics with Jones, Plaintiffs also violated state and federal drug trafficking statutes. See NMSA 1978 § 30-31-20 (prohibiting possession of narcotic with intent to distribute) and 21 U.S.C. § 841(a)(1) (same).

         Recently, the United States District Court for the District of New Mexico described the wrongful conduct rule and outlined its parameters:

It is a well settled rule of law that a person cannot maintain an action if, in order to establish his cause of action, he must rely, in whole or in part, on an illegal or immoral act or transaction to which he is a party, or where he must base his cause of action, in whole or in part, on a violation by himself of the criminal or penal laws.
Desmet v. Sublett, 54 N.M. 355, 225 P.2d 141, 142 (1950). “The principle of this public policy is this: No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act.” Id. Notably, the wrongful conduct rule forecloses recovery by the plaintiff even where “the defendant has participated equally in the illegal activity.” Orzel v. Scott Drug Co., 449 Mich. 550, 537 N.W.2d 208, 212-13 (1995). The contours of the wrongful conduct rule require that “the plaintiff's conduct must be prohibited or almost entirely prohibited under a penal or criminal statute, ” and that “a sufficient causal nexus must exist between the plaintiff's illegal conduct and the plaintiff's asserted damage.” Id. at 214-17. Further, “the defendant's culpability [must not be] greater than the plaintiff's culpability for the injuries[.]” ... Id. at 217 (citation omitted).

Romero v. United States, 159 F.Supp.3d 1275, 1280-81 (D.N.M. 2015) aff'd 658 Fed. App'x 376 (10th Cir. 2016). In Orzel, a case on which the Romero court heavily relied, the Michigan Supreme Court held the plaintiff's negligence claim against a pharmaceutical company for honoring her husband's fraudulent prescriptions, which led to his death, was barred by the wrongful conduct rule because his injuries resulted from his wrongful conduct. Id. at 558-59. The Michigan Supreme Court equated the wrongful conduct rule with the common law maxim, known as the “doctrine of in pari delicto.” Id.

[A]s between parties in pari delicto, that is equally in the wrong, the law will not lend itself to afford relief to one as against the other, ...

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