Federal magistrate judge keeps Alton Bank in Cardinal Health 110's MUFTA lawsuit

By Karen Kidd | Jan 14, 2019

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CAPE GIRARDEAU – A bank remains one of the defendants in an Ohio pharmaceutical company's lawsuit to collect on hundreds of thousands of dollars in alleged debt following a federal judge's recent decision in the case.

In her 13-page memorandum and order issued Jan. 4, U.S. Magistrate Judge Abbie Crites-Leoni, on the bench in U.S. District Court for Missouri's Eastern District, Southeastern Division, granted part of Alton Bank's motion for dismissal from plaintiff Cardinal Health 110's lawsuit.

Among the claims Crites-Leoni dismissed in the case turned on whether aiding and abetting can be used to state a claim in the case.

The plaintiff alleged that Alton Bank and other defendants in the case, Jonesboro, Arkansas-based Wilkare Pharmacy and Wilkare Real Estate, abetted the lead defendant, Premiere Healthcare LLC, in fraudulently conveying its assets to Alton Bank. Alton Bank argued that one count in Cardinal Health case should be dismissed because the Missouri Supreme Court "has not yet recognized" aiding and abetting as a cause of action, according to Crites-Leoni's order.


U.S. Magistrate Judge Abbie Crites-Leoni   semo.edu - Kathy Hollenbeck

Cardinal Health countered that while that count in its lawsuit is "unconventional," that it does state a claim. Cardinal Health pointed to the 2017 U.S. 8th Circuit Court of Appeals case, Aguilar v. PNC Bank, which did recognize aiding and abetting as a cause of action.

In her order, Crites-Leoni said she could not find that the Missouri Supreme Court would recognize aiding and abetting as a cause of action and dismissed that count.

Cardinal Health 110's diversity lawsuit claims violations of Missouri's Uniform Fraudulent Transfer Act (MUFTA) and other state laws. The case stems from the nearly $800,000 debt Premiere Healthcare allegedly owed Cardinal Health by the time the latter filed its lawsuit in Ohio's Franklin County Common Pleas Court in 2015, according to the background portion of Crites-Leoni's order.

Cardinal Health 110 is based in Dublin, Ohio

In July 16, 2016, it appeared the lawsuit would be settled when the parties agreed to a settlement agreement, Premier subsequently defaulted on the agreement and Cardinal Health alleged that it was unable to collect on its judgment because of a fraudulent scheme "and other actions of the defendants."

In its motion to dismiss filed in August, Alton Bank argued that Count IV should be dismissed because the lawsuit tries to impose direct liability against a non-debtor, which would contravene MUFTA. Alton Bank also claimed that MUFTA's statute of limitations preclude Cardinal Health bringing some of its claims in relation to some of the transactions at issue.

Crites-Leoni declined to dismiss that portion of the case.

"[Alton Bank] cites no authority for its argument that the MUFTA does not apply to 'those who may have facilitated those transfers on behalf of the debtor,'" Crites-Leoni said in her order. "Because plaintiff alleges that Alton Bank knowingly received fraudulently transferred assets in violation of the MUFTA, Count IV states a claim against Alton Bank."

Alton Bank also argued that Cardinal Health had not established diversity in that no reference to the citizenship of any unnamed or "Doe" defendants initially named in the case. Alton Bank also argued that Cardinal Health failed to state a claim upon which relief may be granted. 

Cardinal Health voluntarily dismissed the unnamed defendants in December.

"There is no dispute that the remaining named defendants are diverse," Crites-Leoni said in her order. "Consequently, defendant’s motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) will be denied as moot."

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