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Beyond Batten Disease Foundation v. Children's Mercy Hospital

United States District Court, W.D. Missouri, Western Division

July 28, 2016

BEYOND BATTEN DISEASE FOUNDATION, Plaintiff,
v.
THE CHILDREN’S MERCY HOSPITAL; STEPHEN F. KINGSMORE; DARRELL L. DINWIDDIE; and NEIL A. MILLER, Defendants.

          ORDER

          Fernando J. Gaitan, Jr. United States District Judge

         Pending before the Court is defendants’ motion to dismiss (Doc. No. 7).

         I. Background

         Plaintiff Beyond Batten Disease Foundation (hereinafter “BBDF”) brought suit against defendant Children’s Mercy Hospital (hereinafter “CMH”), Stephen F. Kingsmore, Darrell L. Dinwiddie, and Neil A. Miller (employees of CMH) asserting three causes of action: Claim one for unjust enrichment; Claim two for tortious interference; and Claim three for conversion of intellectual property. BBDF is pursuing all of these claims under Missouri law.

         BBDF is a 501(c)(3) non-profit charitable foundation located in Texas and formed under the laws of Texas. BBDF’s mission is to eradicate Batten disease (a rare genetic, neurodegenerative condition). BBDF wanted to commercialize a rare disease genetic test. In order to do so, it decided to partner with National Center for Genome Resources (hereinafter “NCGR”) based in New Mexico. BBDF funded the research for NCGR to develop the test. Defendants Stephen F. Kingsmore (hereinafter “Kingsmore”), Darrell L. Dinwiddie (hereinafter “Dinwiddie”), and Neil A. Miller (hereinafter “Miller”) were on the research team at NCGR. BBDF had an agreement with NCGR that BBDF retained the intellectual property that resulted from the project.

         BBDF needed a partner to help them commercialize the genetic test. With Kingsmore’s assistance, BBDF started negotiating with CMH about a joint venture to use the genetic test. CMH planned to open a pediatric genome center. In January 2011, CMH decided to hire Kingsmore, Dinwiddie, and Miller away from NCGR to work on the pediatric genome center CMH was developing. CMH and BBDF continued negotiations regarding collaborating on commercializing the diagnostic genetic test. CMH opened their pediatric genome center in October of 2011. In November 2012, CMH sent BBDF a Contribution Agreement to essentially buy BBDF out of any future commercialization of the genetic testing device.

         During the same time that BBDF was negotiating with CMH to commercialize the test, it was also negotiating with LabCorp and Sonic Healthcare (other diagnostic companies). Both LabCorp and Sonic Healthcare terminated negotiations with BBDF. LabCorp ceased the negotiations in 2012. Sonic Healthcare ceased its negotiations in August 2014. CMH is currently operating their pediatric genome center and allegedly using intellectual property owned by BBDF to conduct testing.

         II. Standard

         When deciding a motion to dismiss under Rule 12(b)(6), the Court must accept the plaintiff’s factual allegations as true, construing them in the light most favorable to the plaintiff. Patterson Oil Co. v. VeriFone, Inc., No. 2:15-cv-4089, 2015 U.S. Dist. LEXIS 141635, at *9 (W.D. Mo. Oct. 19, 2015) (citing Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008)). Fed.R.Civ.P. 8(a)(2) states that a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” “The pleading standard Rule 8 announces does not require ‘detailed factual allegations, ’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 677-678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, (2007)). In order for a claim 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, 677-678 (2009).

         Missouri’s borrowing statute, Mo. Rev. Stat. § 516.190, provides that “[w]henever a cause of action has been fully barred by the laws of the state, territory or country in which it originated, said bar shall be a complete defense to any action thereon, brought in any of the courts of this state.” Usually, “the possible existence of a statute of limitations defense is not ordinarily grounds for Rule 12(b)(6) dismissal unless the complaint itself establishes the defense.” Nelson v. Bitters, No. C15-4077-CJW, 2016 U.S. Dist. LEXIS 35020, *17 (N.D. Iowa Mar. 18, 2016) (quoting Joyce v. Armstrong Teasdale, LLP, 635 F.3d 364, 367 (8th Cir. 2011) (quoting Jessie v. Potter, 516 F.3d 709, 713 n.2 (8th Cir. 2008))). However, “when it ‘appears from the face of the complaint itself that the limitations period has run, ’ a [statute of] limitations defense may properly be asserted through a Rule 12(b)(6) motion to dismiss.” Nelson v. Bitters, No. C15-4077-CJW, 2016 U.S. Dist. LEXIS 35020, *17 (N.D. Iowa Mar. 18, 2016) (quoting Wycoff v. Menke, 773 F.2d 983, 984-85 (8th Cir. 1985)). The purpose of the borrowing statute is “primarily to prevent a plaintiff from forum shopping for a statute of limitations. The statute prevents a plaintiff from gaining more time to bring an action merely by suing in a forum other than where the cause of action accrued.” Natalini v. Little, 185 S.W.3d 239, 241 (Mo.Ct.App. 2006).

         III. Discussion

         Defendants move to dismiss BBDF’s claims with prejudice, alleging that BBDF’s claims are barred under Missouri’s borrowing statute since the claims each have a two year statute of limitation in Texas. Although Missouri has a five year statute of limitations for the types of claims presented by plaintiff, defendants assert that Missouri’s statute of limitations does not apply because BBDF’s claims originated in Texas and BBDF is claiming purely economic harm.

         Plaintiff BBDF argues that BBDF was not exclusively injured in Texas and the case has a strong enough connection to Missouri for the Missouri statute of limitations to apply. BBDF also asserts that CMH’s continued use of the genetic test is a continuing tort, and therefore the statute of limitations has not run. BBDF further claims that without discovery, there are too many unknown facts to determine whether the statute of limitation has run. BBDF also asks that it be granted leave to amend its complaint if the Court finds in favor of CMH, instead of dismissing the action with prejudice.[1]

         In looking at the facts in the light most favorable to the plaintiff, the Court must determine how to apply Missouri’s borrowing statute. “[T]he ‘critical issue’ in applying the borrowing statute ‘is determining where a cause of action originated.’” Morley v. Square, Inc., No. 4:14cv172, 2014 U.S. Dist. LEXIS 147476, *7 (E.D. Mo. Oct. 16, 2014) (quoting Great Plains Trust Co. v. Union Pac. R. Co., 492 F.3d 986, 992 (8th Cir. 2007). To determine where the cause of action originated, the Court looks at (1) where the plaintiff sustained damage and (2) where the damage was “capable of ascertainment.” Hildene Opportunities Master Fund Ltd v.Arvest Bank, No. 14-1110-cv-W-ODS, 2016 U.S. Dist. LEXIS 8117 (W.D. Mo. Jan. 25, 2016). “[D]amages are ‘sustained and capable of ascertainment’ when the fact of damage can be discovered or made known.” Morley v. Square, Inc., No. 4:14-cv-172, 2014 U.S. Dist. LEXIS 147476, *7 (E.D. Mo. Oct. 16, 2014) (quoting Jordan v. Willens,937 S.W.2d 291, 294 (Mo. App. W.D. 1996)). “[F]or cases involving a purely economic injury, as opposed to a physical accident with economic consequences, a cause of action originates where the plaintiff is financially damaged.” Morley v. Square, Inc., No. 4:14cv172, 2014 U.S. Dist. LEXIS 147476, *7 (E.D. Mo. Oct. 16, 2014) (quoting Great ...


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