S p e c ia lty H o sp itals o f W a sh ing to n , L L C , is a su b sid ia ry o f S p e c ia lty H o sp itals o f A m e ric a , L L C
. See [D o c . 1/ 1 , ¶ 8]. Speci al t y H ospi t al s of Am er i ca, LLC , an d Sp eci al t y H ospi t al s o f W ash i ng t on, LLC , bot h f i l ed i dent i cal 2/ m o t i o ns to d i sm i ss. -1 - UN I TE D ST AT ES D I STRI CT C OU RT D IS T R IC T O F C O LU M B IA

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- - : DI RECT SUP PL Y, I

NC., :

: CASE NO. 1:11-CV-683 Plaintiff, : : v. : OPI NI ON & ORDER : [ Resolving Doc . Nos. 3 , 4 , & 7 ] S P EC IAL TY H OS P I TAL S OF : AMERI CA, L L C, e t al

. , : : De fe nd ants
. :

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- - J AMES S. GW I

N, UNI TED STATES DI STRI CT J UDGE: I n th is la w s u it f o r p ay me n t f o r d e li v e r e d

p r o d u c ts an d p r o v id e d s e r v ic e s , Pl a inti f

f D ir e ct Sup ply , Inc . (Dir ect

Sup ply ) s ue s D e fe nd ants Spe c ia lty Ho sp ita ls o f Ame ri c a , L L C, Sp e c ia lty Hospitals of Washington, L L C (toge ther, Spec ialty Hospitals), and N o t -For-Profit Hospital

1/ Cor po ratio n (NF P) fo r b re a c h o f c ontr a c t and qu antum me ru it. Spe c ia lty Ho sp it als mo ves to dismiss , arguing that Direc t Supply failed to joi n a nec essar

y party . [Docs. 3 & 4 ]. NFP also moves 2/ t o dismiss , arguing that Direc t Supply has fa iled to state a c laim ag ainst NFP. [Doc. 7 ]. Direct Supply opposes these motions. [Docs. 13 & 14 ]. Addit ionally , Specialty Hospitals opposes NFP’s motion to di smiss. [Doc. 12 ]. F or the fo llo wi ngre a so ns , th e Court DE NI ES Specialty Hospitals’s motions t o dismiss and GR ANTS IN P ART and DENIES IN PAR T NF P’ s mo tio n to dis mis s.

I
. On No ve mbe r 7 , 2 00 7, the Di str ic t of Col umb ia

e nt ered int o a pa rt ne rs hip wi th S pe c ia ltyCase No. 1:11-CV- 683

G w i n , J.

-2 - Ho sp ita ls for th e ac qu isi tio n a nd imp ro ve me nt o f t

he Gr e ate r S outhe a st C omm un ity Ho sp ita l. See [Doc. 3-1 , at 2 3
- 4 0 ]
. T h e D i s tr i c to f C o l umb i a

w a s th e s o l e l i m i t e d

p artn e r an d o w n e d n i n e tynine per cent of

the par tnership’s intere st. Id. at 28, § 1.6. Specialty Hospitals, as the g ener al par tner, owned one perc ent of the pa rtnership’s inter est, id. , and wa s r e sp on sib le fo r t

he mana g e me nt, operation, a

nd control of the partne rshi p ’s b u s i ness, id. at 33, § 5.2. Specialty Hospitals had no authority to “obligate, bind or commit [t he District of Columbia] in any way for a ny obl i gat i on.” Id. at 30, § 4.2(a ). Also, the District of Columbia was not li ab l e to the par tnership for a

ny obligations, ex cept its agree d capital c ontributions. Id. at 33, § 5.1. Con sis te nt w iththe a g re e me nt, Spe c ia lty Ho sp ita ls p ur c ha se d th e old Gr e ate r S outhe a st Communi ty

Hospital and beg an oper ations under the name United Medical Center . [Doc. 1 , ¶ 8 ]. Plaintiff Direc t Supply

and De fenda

nt Specialty

Hospitals entere d into two “Product and Servic es Agree ments” under

which Dire ct Supply , tru e t o i ts name, agree d to supply “ce rtain produc ts and service s to [ United Medica l Center] for the ope ration of the fac ility .” Id. ¶ 9. Althoug h Direc t Sup p ly k e p t u

p it s e n d o f th e a g r e e me n t an d h a s r e p e ate d ly d e ma n d e d f u ll p ay me n t, a b a la

nce of $462,055.17 (not including interest and costs) remains unpaid t o Direc t Supply
. Id. ¶ 10
. On Au gus t 21 , 2 00 9, and

June 9, 20 10 , Sp e c ia lty

Ho sp ita ls’ s Re g ion a l Co ntr oll e r a c kn ow le dg e d Sp e c ia lty Hospitals’s obligation to pay this outst andingbalanc e. Id. ¶ 11. On J uly 9, 2010, the District of Columbi a took c ontrol of United Medic al Center. [Doc. 1 , ¶ 1 2]. F ir st, the Di str ic t tr ans fe rr e d th e Un ite d M e dic a l Ce nte r p ropert y to it self by a Sub sti tut e Trustee ’s Dee d, see [Doc. 7-4 ], and formed NFP, [Doc. 1 , ¶ 12 ]; see[Doc. 7-5 ]. Then, in a mayoral order (No. 10-117) , the mayor of the District of Columbia transfer red the rights and obligations of United Medica l Center to the new ly formed N FP. [Doc. 1 , ¶

12 ]; see[Doc. 7-6 ]. In response to theCase No. 1:11-CV- 683

G w i n , J.

S p ec i alt y H o sp i t als’ s ch all en ge t o t he l eg ali t y o f t he D i st rict ’ s t ak eo ve r i s C M C R e a lty v . F e n ty , C i v . Act i on 3/ 1 0 -0 0 4 5 7 1 -B , S u p e rio r C o u rt fo r th e D istric t o f C o lum b ia . [D o c . 7 -3 , at 6].

T h e p a rtie s a g re e tha t C o u n t IV o f D ire c t S u p p ly’s co m p la int— tho u g h m istak e n ly l a b e le d a s a b re a c h -o f- 4/ c o n tra c t cla im

— p u rp o rts to s ta te a c la im fo r q u a n tum m e ru it a g a ins t N F P
. See [D o c . 7 -1 , at 5 n.3 ]; [D o c . 26 , at 2]; [ D oc. 12 , at 4]. In a d d iti o n , D ire c t S u p p ly h a s m o v e d fo r su m m a ry j u d g m e n t, s ee [D o c .

5/ 15 ], argui ng t hat no p art y de ni es t he d e b t an d tha t t h e C o u rt’s re so lutio n o f N F P ’s m o tio n w ill se ttl e t h e c la im s a s a m a tter o f l a w . [D o c . 14 , at 2-3]. T he C o urt p rev i o usly st aye d b rief i ng o n D i rec t S up p l y’ s m o t i o n p en d i ng reso l uti o n o f t he D efen d an t s’ m o t i o ns to d i sm i ss. -3 - Di str ic t’ s ta

ke ov e r, Spe c ia lty

Ho sp ita ls pr ov ide d th e Di str ic t of Col umb ia

wi th n oti c e , p ur su ant t o D.C. Code § 12-309 , t h at i t planned to pursue le g al re medies, see[Doc. 3-1 , at 21], and has since filed a la wsuit challeng ing the takeove r, [Doc. 3/ 1 at ¶

12 ]; see also [Doc. 7-3 , at 6]. Af te r t he Di str ic t of Co lum

bia too k o ve r Unit e d M e dic a l Ce nte r, Spe c ia lty Ho sp ita ls continued to ac knowledg e its liability for pa y ment to Direc t Supply

under the Products and Servic es Agree ments and even made a pay ment towards the balanc e on J uly 30, 2010. [Doc. 1 , ¶ 13]
. But in a c ha ng e of tun e , o n D e c e mbe r 2 2, 20 10 , Sp e c ia lty Ho sp ita ls n oti fi ed Di rect Sup ply that it believed N FP—not Specialty Hospitals—was now liable f or the outstandingbalanc e. Id. at ¶ 14. On J anuar y 26, 2011, Direc t Supply sent letters to NFP and to Specialty Hospitals’s attorney ag ain d em an ding pa

y ment. Id. at ¶

¶ 1 5- 16 . Wh e n n e ith e r r e sp on de d, Di re c t Su pp ly br ou g ht t his brea ch-o f- co n t ract and quantum-mer uit action ag ainst Specialty Hospitals and, in the alter native, ag ainst NFP. See[Doc. 1 ]
. 4/ Spe c ia lty Ho sp ita ls m ov e s to dis mis s o n th e the ory that th e Di str ic t of Col umb ia

is a
nece ssary party require d to be joined under Fe dera l Rule of Civil Procedur e 19. [Docs. 3 & 4 ] . NFP als o m ov es t o dis mi ss , on the th eory th at Dir ect S up pl y has no t an d can no t s tat e a cl aim again stNFP beca use Mayoral Or der 10- 117 transfe rre d Specialty Hospitals’s assets t o NFP but did not transfe r any of Specia lty

Hospitals’s liabiliti es to NF P. [ Doc. 7 ]
. 5/Case No. 1:11-CV- 683

G w i n , J.

See [D o c . 17 ]
.

In su p p o rt o f i ts m o tio n , N F P p o ints t o thr e e c a se s in wh ic h the S u p e rio r C o u rt fo r t h e D istric t o f C o lum b ia 6/ hel d t hat breac h- o f

- co nt ract cl ai m s co ul d b e b rought b y unp ai d supp l i ers agai nst Sp eci al t y H o spi t al s’ s subsi d i ari es, but n o t ag a ins t t h e D istric t o f C o lum b ia o r N F P
. See [D o c . 7 -3 ( S o d ex o O p era t i o n s, L L C v. C a

p i t o lM ed

. C t r. , Ci v i l Act i on N o . 2 0 1 0 C A 0 0 2 4 6 7 B (D .C . S u p e r. F e b . 1 1 , 2 0 1 1 )) ]; [D o c . 2 4 -1 ( G r eater S ou t heastCo m m un i t y Em er gency Phys i ci ans , LLC v. Capi t olM edi cal Cent er, LLC , C as e N o. 20 11 C A 000 71 2 C ( D
. C
. Super
. N ov. 15, 201 1)) ] ; [ D oc. 2 5 -1 ( M edAs s et

s NetRev enue Sy s t ems , LLC v

. Capi t olM edi cal Cent er, LLC , C ase N o . 2 0 1 0 C A 00 5 6 7 9 C (D
. C
. Sup er. A p r. 4, 20 1 2 )) ]. -4 - The Court consider s the two motions in turn. II. NFP moves to dismiss for failure to state a claim upon which relief can be gr anted. See Fe d. R. Civ. P . 12(b)( 6) . For Di re ct Supply

to defe at this moti on, its complaint musthave “ fac ial plausibilit y ,” re quiringthat the pleading possess “fa ctual content that allows the court to draw the
rea sonable infe renc e that the de fenda nt is liable for the misconduc t alleg ed.” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) . When evalua t ing a Rule 12(b)(6) motion, the Court mus t construe the complain t “i n favor

of the plaintiff, who must be g rante d the bene fit of all infer ence s that can be d e r iv e d f r o m th e f a cts alleg ed.” Schuler v . United States , 617 F.2d 605, 608 ( D.C. Cir. 1979)
. Al tho ugh f

a c tua l a lle g atio ns are a ssume d to be tr ue , tho se a lle g atio ns mus t sti ll b e su ff ic ie nt t o “ ra ise
a rig ht to relief

above the speculative level.” Be ll Atl. Cor p. v . Two mb ly , 550 U.S. 544, 555 (2007)
. Additionally , the Court need not “ acc ept l ega l conclusions cast in [the complaint] as fa ctual alleg ations.” Kowal v. MCI Commc’ns Corp. , 16 F.3d 1271, 1276 ( D.C. Cir. 1994)
. NF P argue s that, a s a

matte r o f l aw, Di re c t Su

pp ly ’s br e a c h- of

-c ontr a c t and

qu antum- me ru it
c la ims a g a ins t it

sh ou ld b e dis mis se d b e c a

us e Mayor a l O rd e r 1 0- 11 7 d id n ot t ra ns fe r any of

Spe c ia lty H o s p i t a l s ’ s l i a

b i l i t i e s t o N F P ; th e o r d e r

tr an s f e r r e d o n l y S p e c i a l ty H o s p i t a l s ’ s a s s e t s . A c c o r d i n g l y, 6/ NFP say s it cannot be he ld liable for money owed on a

ny of the produc ts or services t hat Dire ctCase No. 1:11-CV- 683

G w i n , J.

D i r ect Suppl y do es not al l ege or ar gu e t hat t he D i s t r i ct of Co l umbi a wa s a par t y t o t he P r od uct s an d Serv i ces 7/ A gr eement s or t hat t he D i s t r i ct became c o n tra c tu a lly lia b le t o D ire c t S u p p ly o n tho se c o n tra c ts b y vir tue o f i ts p a rtic ip a tio n in the li m ited p a rtn e rs h ip . A p p a re n tly, D ire c t S u p p ly ag re e s tha t “S p e c ia lty H o sp itals h a d no a u tho rity to “o b liga te , b ind o r c o m m it [th e D istric t o f C o lum b ia ] in a n y w a y fo r a n y o b liga tio n ,” [D o c . 3 -1 , at 30, § 4. 2(a) ] , an d t hat the D istric t o f C o lum b ia w a s n o t l ia b le to the p a rtn e rs h ip fo r a n y o b liga tio n s e x c e p t i ts a g re e d c a p ital c o n trib u tio n s, i d. a t 33, § 5. 1. T h e Cour t Ref or m Act of

1970 s et up t h e D i s t r i ct of C ol u mbi a’ s cou r t s y s t em t o be c ompar abl e t o t h os e of 8/ the sta te s. P e rn e ll v . S o u th a ll R e a lty , 416 U
. S. 363, 367 ( 1974)
. H isto ric a lly, D .C . co u rts h a v e p ro v id e d the a p p lica b le la w in d ive rs ity c a se s, L e e Fl i n t k ot e Co. , 593 F. 2d 1275, 1278 n
. 14 ( D
. C. Ci r . 1979) , co ncerni ng bo t h s t at ut o ry and c o m m o n law , P e rn e ll , 416 U
. S. a t 368
. T he D i st ri ct of C o l um b i a C o urt of A p p eal s i s t o be t reat ed as t he hi ghest co urt o f t h e sta te
. I

d. A ltho u g h this C o u rt is no t b o u n d b y E rie t o def er t o t he D
. C
. Super i or Court ’ s i nt er pret at i on of l aw, u n d e r so m e c irc u m sta n c e s “d e fer rin g to a w e ll- re a so n e d , c a re fully re se a rc h e d o p inio n o n lo c a l l a w is b o th a p p ro p ria te and i n k eepi ng w i t h t he C ongr es s i onal pur po s e r eorg ani zi ng t he j udi ci ar y of t he D i s t r i ct of

Co l umbi a. ” No rw o o d v . M arr occo , 780 F. 2d 110, 113 ( D
. C. Ci r . 1986)
.

D i r e c t S u pp l y a r g u e s t h a t S pe c i a l t y Hos pi t a l s ’ s c on t r a c t u a l du t y t o pa y w a s a s s i g n e d t o N FP. D e s pi t e s om e 9/ a p p a re n t c o n fus io n in ter m s, co mp a re Res t at eme n t ( Se con d) of Cont r ac t s § 317( 1) ( 1981) , and R est at em ent (Seco nd ) of Cont r ac t s § 317 c mt
. a ( 1981) w ith Res t at eme n t (S ec on d) of Cont r ac t s § 318( 1) ( 1981) , t he C our t un ders t ands D i r ect S u p p ly’s ar g u m e n t t o b e tha t N F P , at so m e p o int, a ssu m e d S p e c ia lty H o sp itals’s c o n tra c tua l o b liga tio n to p a y. -5 - Supply provided.

A. Count I I I

—Direc t Supply

Sues NFP for

Br eac h of Contrac t Di re c t Sup ply a sse rt e d its br e a c h- of -c ontr a c t c la im a g a ins t NF P a s an a lte rn ativ e to its br e a c h- of -c ontr a c t c la im a g a ins t Sp e c ia lty Ho sp ita ls t o th e e xt e nt

“ t h a t a ny [o f S pe c ia lty

Ho sp ita ls’ s] obligations a

rising under the Products and Service s Ag ree ments were transfe rre d to NFP pursuant to M ayo r a l O r d e r

1 0
- 1 1 7
. ” [D oc. 1 , ¶ 31]. Under D.C. law, Specialty

Hospitals’s contra ctual 7/ 8/ liabiliti es could have transfe rre d to NFP in one of two way s. Fi rst , if the mayoral order assig ned 9/ Specialty Hospitals’s contra cts to NFP, then, as t he assignee of t hose contracts, NFP “stands in the shoes of [Specialty

Hospitals] and acquir es the same rig hts and liabiliti es as if [NFP] had bee n an orig inal party

to the contra ct.” M

a n ga n a r o Co r

p . v . J e ff e r s o n a t Pe n n Q u a r te r

, L.P. , No
. Civ. A. 04-2133 GK, 2005 WL 3273979, at *3 (D.D.C. Aug. 9, 2005)
. Second, even if the mayoral orde r did not assig n Specialty Hospitals’s contra cts to N FP, the mayor’s tra nsfer of Specia lty

Hospitals’s assets to NF P may

have also—by operation of D.C. common law—tra nsfer red Spec ialty

Hospitals’sCase No. 1:11-CV- 683

G w i n , J.

W h en de ci di n g a Rul e 12( b) ( 6) mot i on , c o urt s m ay co ns i der “ docu men t s a t t ac h ed t o or i n cor por at ed by

10/ r ef er enc e i n t he com pl ai nt an d m at t er s s ubj ect t o ju di ci al not i ce. ” Ru f f i n v . G r ay , 4 4 3 F . A p p ’x 5 6 2 , 5 6 3 (D .C . C ir. 2011) (per curi am ) ( q uo t i ng Fe d. R. Ci v . P. 12( b) ( 6) ); s ee al s o R e d d in g v . D istrict o f C o lu m b ia , 8 2 8 F . S u p p . 2 d 2 7 2 , 278 ( D
. D
. C. 2011) . M a yo ra l O rd e r 1 0 -1 1 7 is inc o rp o ra te d b y r e fer e n c e in the c o m p la int. See , e . g. , [D o c . 1 , ¶ 3 1 ]. I n a d d iti o n , m a yo ra l o rd e rs a re p u b lic re c o rd s se tti n g o u t a p u b lic o ff ic e ’s ac tivities. See Fe d
. R
. E vi d
. 803( 8) . P u b lic re c o rd s a re m a tter s su b je c t t o ju d ic ia l no tice a n d m a y c o n sid e re d w h e n d e c id ing m o tio n s to d ism iss. U

. S. v . Phi l i p M orr i s I nc. , 116 F. Su pp. 2d 131, 154 ( D
. D
. C. 2000)
. -6 - liabiliti es. Neve rtheless, Direc t Supply has not a lleg ed fac ts suf ficient to “ raise a ri gh tt o relief [under either c ontrac t theory] above the spec ulative level.” Twom bly , 550 U.S. at 555
. First, Mayoral Or der 10- 117 never assig ned S pecia lty

Hospitals’s contra cts with Direc t Supply to NFP. It transfe rre d only “[t] he Hospital Proper

ty and all other

exis t ing rights a

nd obligations,” which had been conveyed to the District of Columbia by the Substitute Trustee ’s Dee d. [Doc. 7-6 , at 1]. The S ubstitut e Trustee’s Deed, in turn, had conveyed only the hospital’s “land 10/ and premises, toge ther with the improvements, ease ments, and appurte nance s . . . and all fur niture, furnishing s, fix tures, g oods, equipment, inventory or personal proper

ty .” Id. Neither

the mayoral
or de r n or the de e d me nti on

any a ssi g nme nt o f S pe c ia lty

Ho sp ita ls’ s c ontr a c ts. No r h a s D ir e c t Su pp ly plea d e d any o th e r f a c t g iv in gr is e to anin f

e r e n c e th at N F P e v e r

a s s ume d Sp e c ia lt y H ospitals’s ob lig atio ns to NF P. Ac c or din g ly , Dir e c t Supp ly ha s f a ile d to state a

br e a c h- of

-c ontr a c t c la im a g a ins t NFP under

this theory
. Se c on d, Spe c ia lty Ho sp ita ls’ s li a bil iti e s d id n ot—

by op e ra tio n o f D .C. c omm on

law— pa ss to NFP when Ma

yoral Or der 10- 117 conve y edSpecialty Hospitals’s assets. D.C. common law provides, as a gene ral rule , that when a business entity

acquir es the a ssets of another business, the
succe ssor is not liable for the prede cessor ’s debts or liabiliti es. Bingham v. Goldbe rg, Marche sano, Kohlman, Inc. , 637 A.2d 81, 89 (D.C. 1994) . To be sure , this is notan absolute r ule; four e stablished
e x c e p t i o n s p l a c e l i a

b i l i ty f o r a p r e d e c e s s o r ’ s d e b t s u

p o nth e e n t i ty a c qu i r i n gth e a s s e t s . S p e c i f i c a l l y,Case No. 1:11-CV- 683

G w i n , J.

T he def

endan t i n t hi s ca s e wa s Cap i t ol M edi cal Cent er , a s ubs i di ar y of Speci al t y H ospi t al s t hat ha d op er at ed 11/ U nit ed M ed i ca l C en t er. Fo r rea d ab i l i t y, all sub si d i aries o f S p ec i alt y H o sp i t als are referre d t o as S p ec i alt y H o sp i t als. -7 - when: (1) the buyer e x pressly or impliedly

agree s to assume such debts; or (2) the transa ction amounts to a de fa cto merg er of the buyer a

nd seller; or (3) the buyin g co rp o ration is a “me re c ontinuation” of the sellingcorpor ation; or (4) the transa ction is entere d into fra udulently in order to e scape liability for suc h de bts
. Id. at 89 -9 0. B ut D ir e c t Su pp ly do e s n ot e ve n a

rgue that any

of the se e xce pti on s a

pp ly , mu c h le ss set forth fa cts in its complaint that, if true, might establish NFP’s c ontrac tual liability under a ny of these e x ceptions to the g ener al rule. F ir st, the mayor a l or de r d id n ot t ra ns fe r S pe c ia lty

Ho sp ita ls’ s c ontr a c tua l de bt t o N F P. Ex pressly , the orde r transf err ed only the “oblig ations transfe rre d to the District of Columbia under the [J uly 9, 2010,] S ubstitut e Truste e’s De ed.” [Doc. 7-6 , at 1]. The Substi tut e T ru s t ee ’s Dee d descr ibes the transf

err ed prope rty

and does not in cl u d e an y of Specia lty

Hospitals’s contra ctual debts. See[Doc. 7-4 , at 2]; see also [ Doc. 7-6 , at 1]; [ Doc. 24-1 , at 13-14 ( Gre ate r S ou the as t Com m u n i t y E m e r ge n c y P h y sic ian s, LLC v . Ca

pitol M e dic al C e nte r, LLC , Case No. 2011 CA 000712 C, ( D.C. Super. Nov. 15, 2011))] (“[N]either the District [of Columbia] nor NFP expressly assumed all of [Specialty

Hospitals’s] l iabilities.”). 11/ No r d oe s th e c om pl ain t su g g e st that N F P imp lie dly a c c e pte d Sp e c ia lty

Ho sp ita ls’ s d e bts when it receive d the assets transfe rre d by Mayoral Or der 10- 117. See Portfolio Fi n. Servic ing Co. ex rel. Jacom Computer Servs., I nc. v. Share max.c om, Inc

. , 334 F. Supp. 2d 620, 625 (D.N.J. 2004) (Thre e fa ctors deter

mine whether a corpor ation has implicitl y assumed the de bts of its predec essor: “(1) whether

the succ essor’s c onduct indicated its intention t o as s u m e the de bt; (2) whethe r theCase No. 1:11-CV- 683

G w i n , J.

-8 - cre ditor relied on the c onduct an d t h e ef fec t of any

relianc e; and ( 3) whe ther the suc cessor ’s repres entatives a dmitted liabili ty .”). A s Direc t Supply acknow ledg es, NF P has never admitted liability for Spec ialty Hospitals’s debts. [Doc. 1 , ¶ 16]. Instead, Spec ialty Hospitals admitted that it was liable for

those debts. [Doc. 1 , ¶ 13 ]. And , D ir e c t Su

pp ly a dmi ts t hat it was Spe c ia lty Hospitals’s admission of liabilit y —not any repr esentation by

NFP—that Dire ct Supply had re lied on when it decided aga inst attempting to collect pay ment from the District of Columbi a. Id. Direc t Supply ’s complaint does not sugg est that NF P impl iedly assumed Specia lty

Hospitals’s contra ctual debts. Acc ord [Doc. 7-3 , at 5 ( So de x o Op e ra tio ns, LLC v . Ca pitol M e d. Ctr

. , Civil Action No. 2010 CA 002467 B ( Fe b. 11, 2011))] (no evidenc e indicate s “any conduct that would signify the District’s intent to assume [S pecia lty Hospitals’s] debt, any relianc e by [t he plaintiff] on such conduc t, [ or] any admission of liabilit y”). Se c on d, Di re c t Supp ly ha s not al le g e d a de fa c to me rg e r of the Spe c ia lty Ho sp ita ls a

nd NF P. They rema in separate entities, and the de-f acto-merg er e x ception g ener ally require s that the two entities—the prede cessor entity and the acquiringentity —be esse ntially

the same. See, e .g. , [Doc. 24-1 , at 14 ( Gre ate r S

ou the as t Co mm un ity

Em e rge nc

y Ph y sic ian s, LLC v . Ca

pitol M e dic al C e nte r, LLC , Case No. 2011 CA 000712 C, (D.C. Super. N ov. 15, 2011))] (The me rg er e x ception does not apply when Specialty Hospitals, the prede cessor entity , “continues to retain its separ ate e x istence.” ); Rivas v. Dist. Int’l Trucks , Civ. A. No. 85–3411 BDP/PJ A, 1989 WL117871 (D.D.C. Oc t. 5, 1989) (F or the de -fa cto-mer g er ex ception to apply “ther e must have be en continuity of owne rship; i.e., the
succe ssion of the selling c orporation’s s t o ck h olders to stockholder status in the purchasing corpor ation.”). Spec ial t y Hospitals continues to exi st separate and a part fr om NFP. And the
c ompl a int make s n o a lle g atio ns su g g e sti ngany a ff ili atio n b e tw e e n Sp e c ia lty Ho sp ita ls a

nd NF P.Case No. 1:11-CV- 683

G w i n , J.

-9 - Ac c or d [Doc
. 7-3 , at 5 ( So de

x o O pe ra tio ns, LLC

v . Ca pitol M e d. Ctr

. , Ci vil Ac tio n N o. 20 10 CA 00 2 4 6 7 B ( D
. C
. S u

p e r . F e b
. 1 1 , 2 0 1 1 ) ) ] ( f i n d i n gn o e v i d e n c e th atth e D i s tr i c tm e r g e d w i th Specialty ’s Hospitals). Nor ha s Direc t Supply

alleg ed that NF P is a “mere continuation” of Specialty Hospitals. An acquir i n g en t i t y

is a mere continuation of its prede cessor when “ there is a continuation of the
c or po rate e nti ty of the se lle r”—it ’s no t e no ugh th at “ the re is a c ontin uatio n o f t

he se lle r’ s b us ine ss operation.” Bingham , 637 A.2d at 92 (qu o t i n g Bud Antle, Inc . v. Eastern Foods, Inc

. , 758 F.2d 1451, 1458 (11th Cir. 1985) ). Specia lty Hospitals did not sell United M edica l Center to NF P; the District
o f Co lumb ia to o k th e h o s p it a l f r o m Sp e c ia lt

y H o s p it a ls an d g av e it to N F P. [Doc. 1 , ¶ 1 2 ]. Specialty Hospitals’s corpor ate identity has not continued a s NFP; it was a c omplete c h an ge of
owne rs hi p, and S pecialt

y Ho sp ita ls h a s challenged the takeove r. [Doc. 1 , ¶ 1 2 ]
. A d d i t i o n a l l y, Specialty Hospitals is a privately

owned c orporation, [ Doc. 1 , ¶ ¶ 2 & 3], whil e NF P is a

g ov e rnme ntcre ated, non- profit cor

poration, [Doc. 1 , ¶¶ 4 & 12]. NF P and Specialty Hospitals remain sepa

rate ; NF P i s n o ta c o rp o ra t e c o n t i nu at i o no f S p ec i al t y H o s p i t al s , an d Di re ctS u

p p l y d o es n o tal l ege otherwise. Acc ord [Doc. 24-1 , at 15 ( Gre ate r So uth e as t Co mm un ity Em e rge nc

yPh y sic ian s, LLC
v . Ca pitol M e dic al C e nte r, LLC , Case No. 2011 CA 000712 C, (D.C. Super
. Nov. 15, 2011))] (findingthat NFP is not a mere continuation of Specialty Hospitals be cause there was no c onsented sale of Spec ialty

Hospitals’s assets and the re w as a c omplete cha ng e of ownership). F ina lly , D ir e c t Su

pp ly do e s not a lle g e that Sp e c ia lty Ho sp ita ls w a s tr

yingto e sc a

pe its de bts by vir tue of a fr a ud ule nt t ra ns fe r. As Di re c t Su

pp ly ’s c omp la int

a c kn ow le dg e s, “ Spe c ia lty Ho sp ita ls challeng ed the District of C olumbia’s takeove r of [Unit ed Medical Center] and NF P’s assumption of control ove r the fa cility .” [Doc. 1 , ¶ 12 ]. Ins te a d, the take ov e r w a s th e Di stri ct’ s re sp on se toCase No. 1:11-CV- 683

G w i n , J.

A quan t um- meru i t cl ai m can be broug ht wh en a part y has not been com pens at ed f or s er vi ces r ender ed un der 12/ e ithe r a qua si

- co nt ract ual (i m p l i ed

- i n- l aw) ob liga tio n o r a n im p lied -in-fac t co n tra c tua l o b liga tio n . Ne w E c o n o m y C a p ita l, LLC v

. New M ar ke ts Capi t alG r oup , 881 A. 2d 1087, 1095 ( D
. C. 2005)
. A n i mp l i ed- i n- f act co nt r act i s a t r ue cont r act tha t m e e ts th e e le m e n ts o f a b ind ing a g re e m e n t. I d. A q u a si c o n tra c t i s n o t an a c tua l co n tra c t; it is d u ty t h a t o n e p a rty h a s to c o m p e n sa te a n o the r p a rty to a v o id his o w n un ju st e n ric h m e n t. I

d. -1 0- Specialty Hospitals’s brea ch of its a g ree ment with the District. [Doc. 7-4 , at 1, ¶ D ]; accord [Doc. 25-1 , at 4 (

Me dA sse ts N

e t R e v e nu eSy

ste ms, LLC

v . Ca pitol M e dic al C e nte r, LLC , Case No. 2010 CA 005679 C ( D.C. Super. Apr. 4, 2012))] (conc luding that the District of Columbia could not be
atte mpt ingto e sc a

pe lia bil ity fo r S pe c ia lty

Ho sp ita ls’ s c ontr a c ts b e c a us e the Di str ic t ha d n o li a

bil ity for these contra cts under the limit ed par tnership agree ment). Ac c or din g ly , D ir e c t Sup ply “ c an pr ov e no se t of fa c ts in su pp or t of the ir [br e a c h- of

-c ontr a c t] claim [ag ainst NFP] which would entitle them to relief,” Kowal , 1 6 F. 3d at 1276 , and the Court dis mis se s Co unt I I Iof

the c omp la int
. B . Co unt IV—Di re c t Su

pp ly Sue s N F P f

or Qu antum Me ru it 12/ No ne the le ss, the Court c ann ot dis mis s D ir e c t Su pp ly ’s qu antum- me ru it c la im a g a ins t N F P. Th at c la im i s p re mis e d o n NF P’ s poss e ssi on and c ontin ue d en joy me nt of Di re c t Su

pp ly ’s pr od

uc ts and alr eady-provided se rvice s, and it is independe n t of whethe r Specia lty Hospitals’s contra ctual debt passed to NF P. [ Doc. 26 , at 2 ]. NF P argue s th at Co unt IV fa ils a s a matt e r of law be c a us e the pla int if

f h a s n ot s uf

fi c ie ntl y pleade d the eleme nts o f a qu an tum-meruit claim. To succ eed on a claim of qua

ntum meruit, a plaintiff must establish: (1 ) va lua

ble se rv ic e s b e ingre nd e re d; (2 ) fo r t he pe rs on so ught t o b e c ha

rg e d; (3) which ser

vices we re a ccepted by

the pers o n s o u gh t t o b e charg ed, used and enjoyed by

him or her; and (4) under s u ch ci rc u m s t an ce s as re asonably notified the per son sought to beCase No. 1:11-CV- 683

G w i n , J.

-1 1-

char g ed that the plaintiff, in perf orming such service s, expected to be paid by him or her. In re Ric h , 337 A.2d 764, 766 (D.C. 1975)
. Di re c t Sup ply ha s a lle g e d fa c ts su ff ic ie nt to state a

qu antum- me ru it c la im a g a ins t N F P. F ir st, Di re c t Su pp ly a lle g e s th at it

pr ov ide d v a lua

blepr od uc ts t o Unit e d M e dic a l Ce nte r u nd e r t he Pr od uc ts and Servic es Agree ments that have not be en paid f or. [Doc. 1 , ¶ 10]. Second, Direc t Supply alleg es that NFP has a ssumed control of the f acility and so is be nefitting from those unpaid produc ts. [ Doc. 1 , ¶ 12 ]. I n othe r wo rd s, NF P ha s ben e fi tte d fr om the pr od uc ts an d some se rv ic e s th at D ir e c t Su pp ly provided. In re Ric h , 337 A.2d at 766 . Third, pursuant to Mayoral Or der 10- 117, NFP ac cepte d
c ontr ol o f t

he e qu ipm e nt p ro vid e d b y Di re c t Sup ply and ha s “ us e d and e njo y e d” that e qu ipm e nt i n operating the f

acility
. Id. F ourt h, the c omp la int

su ff ic ie ntl y a lle g e s a numbe r o f c ir c ums tanc e s th at, if tr ue , r e a so na

bly put N F P on no tic e that Di re c t Sup ply wo uld e xpe c t pa y me nt. Mo st t e lli ng ly , D ir e c t Su pp ly se nt a letter to NF P on J anuar

y 26, 2011, which tol d NFP that Specialty Hospitals had taken the position that NFP wa s liable for the rema ining ba lance . [Doc. 1 , ¶ 16]. Initiating discussions reg arding pay ment for se rvice s rende red e stablishes an “e x pectation of pay ment ” fo r a b enef

it confer red. Perles v . Kagy , 362 F. Supp. 2d 195, 199 (D.D .C. 2005) , vacate d and remande d on other grounds , 473 F.3d 1244 ( D.C. Cir. 2007)
. Additionally , Direc t Supply alleg es t hat Unit ed Medical Center’ s proper ty was tra nsfer red to NFP under Mayoral Order 10-117. [Doc. 1 , ¶ 12]. An entity acquir ing rig hts to proper ty may be
on rea sonable notice th at United Medic al Center ha d not paid for much of its inventory

and equipment, par

ticularly when the Substitute Trustee’ s Dee d noted that the convey ance was be ingCase No. 1:11-CV- 683

G w i n , J.

-1 2- “ ma de su bje c t to su c h lie ns , le a se s, e nc umb ra nc e s, re se rv atio ns , c ov e na nts , c on dit ion s, e a se me nts and re striction, if any , lawfully aff ecting the
. . . proper

ty .” Direc t Supply rea sonably alleg es that the District of C olumbia and NFP wer e aware that the United Medic al Center a cquisition would include
cer tain liabiliti es. See[Doc. 7-4 , at 2 ]. Di re c t Su pp ly ’s c omp la int

c onta ins su ff

ic ie nt fa c tua l a lle g atio ns to state a qu antum- me ru it claim ag ainst NFP. Ac cording ly , the Court denies NF P ’s m o t ion to dism iss CountIV of the
c omp la int
. III
. The Court turns now to Specialty Hospitals’s motion to dismi ss for fa ilure to join a nec essar y pa rt y . In Sp e c ia lty

Ho sp ita ls’ s vie w, Di re c t Sup ply wa s re qu ir e d to joi n the Di str ic t of Col umb ia in this a ction beca

use the District is an indispensable pa rty under F eder al Rule of Civil P roce dure 19. F e de ra l Ru le of

Civ il Pr oc e dure 12 (b )( 7) pr ov ide s th at a c omp la int

may be dis mis se d f

or “ fa ilure to join a party under Rule 19.” Fe d. R. Civ. P . 12(b)( 7)
. Neve rtheless, c ourts are g ener ally reluc tant to g rant Rul e 12(b)(7) motions; “dismissal is war rante d only

when the de fec t is serious and ca nnot be cur ed.” 5C C ha

rl e s A lan Wr ight, Ar

thu r R. Mille r, Mary

Ka y Ka ne & Ric ha

rd L . M arc us , F e de ra l Practice & Proc edure § 1359 (3d ed. 2004) . As with other Rule 12 motions, the court must acc ept the complaint’s alleg ations as true f or the purposes of a Rule 12(b)( 7) motion to dismiss
. 16th & K Hotel, LP v. Commonwealth Land Ti tle Ins. Co. , 276 F.R.D. 8, 12 (D .D.C. 2011)
. Also, courts may

consider matters outside the plea dings when dete rmining whether Rule 19
r e qu ir e s th at a p arty b e jo in e d. An de rso n v . H all , 755 F. Supp. 2, 5 (D.D .C. 1991) . Whether an absent party is indispensa ble “ca n only be deter

mined in the context of parti cu l arl itigation.” Provident Tradesmens Bank &Trust Co. , 390 U.S. 102, 118 (1968)
.Case No. 1:11-CV- 683

G w i n , J.

-1 3- Rule 19 “pre scribes a

three -step proc edure for de terminingwhether litigation may

proce ed in the a b s e n c e o f a p arti c u la

r p arty” : ( 1 ) w h e th e r th e a b s e n t p arty is r e qu ir e d to b e jo in e d ; ( 2) “whe ther [the absent pa

rty] can be joined” ; and (3) if the absent party cannot be joined, “whe ther the action may still proce ed in e quity and g ood conscie nce.” OA O He alt hc are So lut ion s, In c . v . Na t’ l Alliance of Postal &Fed. Employ ees , 394 F. Supp. 2d 16, 19 (D.D .C. 2005)
. At thefi rs t st e p, the Court

mus t de te rm ine wh e the r t he Di stric t of

Col umb ia

is r e qu ir e d to be joined. A pa

rty is require d to be joined if: (A) “in that per son’s absenc e, the c ourt ca nnot acc ord
c o mp l e t e r e l i e f am o n g e x i s t i n g p art i e s ” ; o r ( B ) “ d i s p o s i n g o f th e a c t i o n i n th e [ p arty’ s ] a b s e n c e m ay”
e ith e r “ imp e de the [miss ingpa rt y ’s ] ab ili ty

to p ro te c t [its ] int e re st” or an e xistin gpa rt y is at “ ri sk of incurri n g double, multiple, or otherwise inc onsistent obligations.” Fe d. R. Civ. P . 19(a) . The burden is on the movingparty to d em o n s t ra t e that an absent par ty is require d under Rule 19. Ilan-Gat Enginee rs, Ltd. v. Antigua International Bank, 659 F.2d 234, 242 (D.C. C ir. 1981)
. I f the Court determines that a

n absent pa

rty is not re qu i re dunder Rule 19( a), it nee d not proce ed to the second or third steps of the test. See 16th &K Hotel , 276 F.R.D. at 14
. Specialty Hospitals argues that t he Dist rict of Columbi a is a required party under Rule 19( a) beca use, “[g ]i ven the Di s t ri ct o f Columbi a’s r ole in the oper ation of the fa cility prior to the fo re c los ure, i t po sse sse s a le g a lly pr ote c te d inte re st whic h w ill g o unp ro te c te d s ho uld the c a se proce ed in its absence .” [Doc. 3 , at 7]. To support this argument, Specialty Hospitals points t o the fac t that the District once had control of United Medica l Center. [Doc. 21 , at 2]. Spe c ia lty Ho sp ita ls does not, howeve r, eve n hint at why the Dis trict’s previous control of United Medic al Center g ives it a leg ally

protec ted intere st in thi

s c a s e ; th e ar gum e n ti s a l t o g e th e r c o n c l u s o r

y. Sim il arl y unpe rs ua siv e is Sp e c ia lty Ho sp ita ls’ s in sis te nc e that jo ind e r o f t he Di str ic t isCase No. 1:11-CV- 683

G w i n , J.

-1 4- require d beca

use “N FP is an ‘instrumentality ’ of the D istrict of Columbia.” [Doc. 3 , at 7 ] . There is n o g e ne ra l rul e that a par ty is re qu ir e d to be join e d und e r Rule 19 ba se d me re ly up on a ff ili atio ns . See Obadele v . Kelley , Civ. A. No. 80–1844–OG, 1988 WL40282, at *3 (D.D .C. Apr. 26, 1988) (When eva luating whether a par ty is r equire d, the deter

mination should be made de pendingupon the pa rt y ’s “ int e re st i n th e c ontr ov e rs y” and the c ourt sh ou ld make thi s “ de te rm inatio n[] purs ua nt to R ule 19 (a ). ” ). Ab se nt a

pr ote c te d inte re st, the Di str ic t of Col umb ia ’s a ff

ili atio n w ithNF P is inc on se qu e nti a l. And , to the e xtent th at th e Di str ic t ha s a se c on da ry int e re st i n a

laws uit a g a ins t it s ins tr ume nta lity , N F P—the ins tr ume nta lity

and a de fe nd ant i n th is c a se—c an p ro te c t th at inte re st. Th e Court

c on c lud e s th at th e Di str ic t of Col umb ia

is no t re qu ir e d fo r the a dju dic atio n o f t his
case beca use the District is no t “r eq uired for the Court to gr ant complete r elief a mong” Direc t Supply , Specialty Hospitals, and NF P. 16 &K Hotel , 276 F.R.D. at 14 th . Acc ording ly , this li tigation may proce ed without the District of Columbi a, and Specialty Hospitals’s motion to dismiss i s denied. IV. F or the se re a so ns , th e Court DE NI ES Specialty Hospitals’s motions to dismiss Counts Iand I Iof the c omp la int . In a dd iti on , th e Cou rt GR ANTS IN P ART and D EN I ES I N P ART NF P ’s
mo ti on to dis mis s Co unts I I Iand IV o f t he c omp la int . Co unt I I Iis DI SM ISSED , b ut C o u n tIV
rema ins. I T I S SO ORDERED.

Date d: Jul y

18 , 2 01 2 s/ Jame s S. Gwin J A M E S S
. G W IN UNI TED STATES DI STRI CT J UDGE