United States District Court, E.D. Virginia, Richmond Division
In re HEALTH DIAGNOSTIC LABORATORY, INC., Debtors.
RICHARD ARROWSMITH, AS LIQUIDATING TRUSTEE OF THE HDL LIQUIDATING TRUST, Appellee. LEMBERG LAW, LLC, et al., Appellants,
MEMORANDUM OPINION (DENYING MOTION FOR LEAVE TO
APPEAL INTERLOCUTORY ORDER)
E. Hudson United States District Judge.
MATTER is before the Court on Appellants' Motion for
Leave to Appeal an Interlocutory Order entered by the United
States Bankruptcy Court for the Eastern District of Virginia
(the "Bankruptcy Court"). (Mot. Leave Appeal, ECF
No. 1-1.) Appellants are seeking leave to appeal the
Bankruptcy Court's decision to deny their motion to
dismiss a Verified Complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6).
parties have filed memoranda supporting their respective
positions. (ECF Nos. 1-1, 2, 5.) The Court will dispense with
oral argument because the facts and legal contentions are
adequately presented in the materials before it, and oral
argument would not aid in the decisional process. E.D. Va.
Local Civ. R. 7(J).
reasons stated herein, the Court will deny Appellants'
Diagnostic Laboratory ("HDL") filed for chapter 11
bankruptcy in the Eastern District of Virginia on June 7,
2015. On September 17, 2015, the Bankruptcy Court entered an
order approving the sale of substantially all of HDL's
assets to True Health Diagnostics, LLC. However, HDL retained
ownership of accounts receivable aged 180 days or more as of
September 29, 2015 (the "Excluded Receivables").
to declaring bankruptcy, HDL operated an accredited,
full-service clinical laboratory that provided testing of
biomarkers for the indication of risk for cardiovascular
disease, diabetes, and other illnesses. The Excluded
Receivables include amounts owed to HDL by patients for
processing lab tests that it received from physicians across
28, 2015, Richard Arrowsmith, the Liquidating Trustee of the
HDL Liquidating Trust ("Appellee"), entered into
agreements with a number of collection agents (the
"Collectors") to pursue collection of certain
Excluded Receivables owned by HDL. The Collectors
subsequently transmitted notices to certain patients for whom
HDL had performed laboratory testing.
experiencing difficulty collecting the Excluded Receivables,
Appellee filed a seven-count Complaint (the "Verified
Complaint") on August 3, 2016, against multiple
defendants, including twenty-one of HDL's former
consumers and their lawyers, Lemberg Law, LLC
(collectively "Appellants"). The Verified Complaint
included seven causes of action, all related to
Appellants' alleged attempts to interfere with the
collection of the Excluded Receivables.
September 21, 2016, Appellants filed a Motion to Dismiss
pursuant to Federal Rule of Bankruptcy Procedure 7012, which
incorporates Federal Rule of Civil Procedure 12(b)(6),
asserting that the Verified Complaint failed to allege facts
sufficient to state a plausible claim under the standards
announced by the Supreme Court in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007), and Ashcroft v.
Iqbal, 556 U.S. 662 (2009).
hearing followed on October 20, 2016. And on March 30, 2017,
the Bankruptcy Court entered a Memorandum Opinion and Order
denying the motion. See In re Health Diagnostics
Laboratory, Inc., Case No. 15-32919-KRH, 2017 WL 1194647
(Bankr. E.D. Va. Mar. 30, 2017).
timely filed their Motion for Interlocutory Appeal of the
Bankruptcy Court's decision to this Court on April 13,
2017. (See Mot. Leave Appeal; see also Fed.
R. Bankr. P. 8002, 8004.)
ISSUES ON APPEAL
have presented the following issues for interlocutory review:
1. Whether the Bankruptcy Court properly applied the
controlling authority of Bell Atlantic Corp. v.
Twombly,550 U.S. 544 (2007), and Ashcroft v.
Iqbal,556 U.S. 662 (2009) to hold that the Complaint
states plausible claims for ...