United States District Court, D. Arizona
G. CAMPBELL UNITED STATES DISTRICT JUDGE.
Rosemary Denogean filed a complaint against her former
employer, Defendant San Tan Behavioral Health Services LLC,
alleging violations of the Arizona Employment Protection Act
(“AEPA”), A.R.S. § 23-1501, and the False
Claims Act (“FCA”), 31 U.S.C. § 3730. Doc.
1. Plaintiff has moved to dismiss Defendant's
counterclaim (Doc. 48) and Defendant has moved for summary
judgment (Doc. 49). The motions are fully briefed, and no
party has requested oral argument. For the reasons that
follow, the Court will grant Plaintiff's motion to
dismiss and deny Defendant's motion for summary judgment.
following facts are undisputed. Plaintiff worked as a billing
specialist for Defendant for 4.5 years. Doc. 54 at 5 ¶
1. On August 25, 2016, Plaintiff discovered an abnormality in
the billing system and reported it to her supervisor, Maritza
Romero. Id. at 6 ¶¶ 9-10; Doc. 54-3 at
26-27. In late August, co-worker Amy Napoleon reported the
same abnormality to Defendant's co-owner, Melissa Nelson.
Doc. 50 ¶ 12; Doc. 50-1 at 37. During the ensuing
investigation of the abnormality, Defendant received a report
that Plaintiff might have trained employees to falsify
signatures on billing records. Doc. 50-1 at 41-42. Defendant
placed Plaintiff on administrative leave on August 29 to
investigate the allegation. Doc. 54-3 at 42.
that day, Defendant determined that Plaintiff was not at
fault for the billing issues. Doc. 50 ¶ 21; Doc. 54 at 8
¶ 25. Plaintiff returned to work on August 30, but was
out sick on August 31. Doc. 54 at 8 ¶¶ 27, 29. On
the evening of August 31, Romero informed Plaintiff over the
phone that the billing fraud investigation had uncovered
emails in which Plaintiff sent personal health information
(“PHI”) to her personal email address in
violation of the Health Insurance Portability and
Accountability Act (“HIPAA”). Doc. 54 at 9 ¶
9:00 a.m. on September 1, Plaintiff went to work where she
met with Nelson and Romero. Doc. 50-1 at 42 (Nelson testifies
that Plaintiff was in the office before 8:10 a.m.); Doc. 54
at 9 ¶¶ 35-36. After a verbal argument, Romero
asked Plaintiff to leave the premises until further notice.
Doc. 50 ¶ 28; Doc. 54 at 9 ¶ 36. Defendant then
sent Plaintiff a letter at 9:02 a.m. placing her on
administrative leave while Defendant investigated possible
HIPAA violations. Doc. 50 ¶ 26; Doc. 54 at 9 ¶ 37.
The letter did not mention insubordination. Doc. 50-1 at 55.
the afternoon of September 1, Defendant's president
called Plaintiff to terminate her employment. Doc. 50 ¶
30; Doc. 54 at 10 ¶ 38. Defendant also sent Plaintiff a
letter stating the reasons for her termination:
Failure to abide by [San Tan] protocals [sic] and procedures
which resulted in the unauthorized use of client confidential
information sent to a personal email which is a HIPAA
Insubordination- not following specific instructions during
the course of an internal confidential investigation[.]
Doc. 50-1 at 61.
Plaintiff's Motion to Dismiss.
successful motion to dismiss under Rule 12(b)(6) must show
either that the complaint lacks a cognizable legal theory or
fails to allege facts sufficient to support its theory.
Balistreri v. Pacifica Police Dep't, 901 F.2d
696, 699 (9th Cir. 1988). A complaint that sets forth a
cognizable legal theory will survive a motion to dismiss as
long as it contains “sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Iqbal, 556 U.S.
at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)).
abuse of process counterclaim alleges as follows:
“Through the filing of the Complaint in this
action, [Plaintiff] has willfully misled this court
based upon the knowingly false allegation that her
termination was retaliatory based upon her reporting of
billing fraud.” Doc. 8 at 7 ¶ 19 (emphasis added).
Plaintiff argues that filing a complaint does not constitute
abuse of process as a matter of law. Doc. 48 at 4. Defendant
counters that Plaintiff abused the judicial process by filing
a complaint containing false allegations. Doc. 51 at 3-4.
elements of an abuse of process claim are “(1) a
willful act in the use of judicial process, (2) for an
ulterior purpose not proper in the regular conduct of the
proceedings.” Cruz v. City of Tucson, 401 P.3d
1018, 1021 (Ariz.Ct.App. 2017) (internal quotation marks
omitted). Unlike the tort of malicious prosecution, which
covers the initiation of civil proceedings with malice and
without probable cause, abuse of process addresses misuse of
process after proceedings have been initiated. See Joseph
v. Markowitz, 551 P.2d 571, 573-74 (Ariz.Ct.App. 1976).
motive for filing the complaint, even if improper, cannot
support an abuse of process claim because “abuse of
process requires some act beyond the initiation of a
lawsuit[.]” Id. at 575. Abuse of process
“is not commencing an action or causing process to
issue without justification, but misusing, or misapplying
process justified in itself for an end other than that which
it was designed to accomplish.” Id. at 574
(internal quotation marks and citation omitted). Courts have
“explicitly rejected the contention that the initiation
of a lawsuit can constitute the necessary act” for
abuse of process. Blue Goose Growers, Inc. v. Yuma
Groves, Inc., 641 F.2d 695, 697 (9th Cir. 1981)
(citation omitted). Courts also have held that an abuse of
process claim will not lie where a lawsuit initiated in bad
faith is “continued without justification.”
Morn v. City of Phx., 730 P.2d 873, 876
(Ariz.Ct.App. 1986). Plaintiff's “mere persistence
in [this] litigation, even if based on an improper motive,
does not sustain the tort.” Crackel v. Allstate
Ins. Co., 92 P.3d 882, 888 (Ariz.Ct.App. 2004).
Defendant's counterclaim, which is based entirely on
Plaintiff's initiation and prosecution of this lawsuit,
fails to state a claim for abuse of process.
reply memorandum asks the Court to award her attorneys'
fees for defeating the counterclaim. Doc. 52 at 2. The Court
will not grant relief requested for the first time in a reply
memorandum, and will address ...