Fairview Health Services v. Armed Forces Office of the Royal Embassy of Saudi Arabia

             UNITED STATES DISTRICT COURT                            
                DISTRICT OF MINNESOTA                                


Fairview Health Services, doing business as                               
University of Minnesota Medical Center,    File No. 21-cv-2666 (ECT/TNL)  

     Plaintiff and Counter-                                          
     Defendant,                                                      

v.                                       OPINION AND ORDER                

Armed Forces Office of the Royal Embassy                                  
of Saudi Arabia,                                                          

     Defendant, Counter-Plaintiff,                                   
     and Third-Party Plaintiff,                                      

v.                                                                        

Medical Cost Advocate, Inc.; Global Medical                               
Services, LLC; International Medical Center                               
of Minnesota, LLC, formerly doing business                                
as  Minnesota  International  Medicine;                                   
Khemwattie Singh; and Sherif Saad,                                        

     Third-Party Defendants.                                         
________________________________________________________________________  

William Thomas Wheeler, Geoffrey Koslig, David P. Bunde, and Pari McGarraugh, 
Frederickson  &  Byron,  Minneapolis,  MN;  and  Jacob  Patsch  Harris,  Office  of  the 
Minnesota Attorney General, St. Paul, MN, for Plaintiff Fairview Health Services.   
Cormac Connor, George Edward Stewart, III, and Julia Anne Bonestroo Banegas, Husch 
Blackwell LLP, Washington, D.C.; and Aaron B. Chapin, Husch Blackwell LLP, Chicago, 
IL, for Defendant Armed Forces Office of the Royal Embassy of Saudi Arabia.   

Charles E. Jones, Kelly C. Engebretson, Sara Filo, and Megan Renslow, Moss & Barnett, 
Minneapolis, MN, for Third-Party Defendant Medical Cost Advocate, Inc.    

Karl J. Yeager, Meagher & Geer, PLLP, Minneapolis, MN, for Third-Party Defendant 
Sherif Saad.                                                              
________________________________________________________________________  
Fairview Health Services provided treatment to two Saudi citizens in 2018 and 
2019.  The Armed Forces Office of the Royal Embassy of Saudi Arabia, the entity 
responsible for payment of those services, mailed over $1.3 million to Fairview but named 

the wrong payee on the checks.  Fairview forwarded the checks to that payee, who took the 
funds.  Fairview initiated this breach-of-contract suit against the Armed Forces Office in 
2021 to recover payment.                                                  
The case is now in its third round of Rule 12 motions.  The Armed Forces Office 
moved to dismiss Fairview’s Complaint in March 2023, and its motion was denied.  In 

August 2023, the Armed Forces Office asserted counterclaims against Fairview and claims 
against third parties.  Those claims were dismissed without prejudice.  In February 2024, 
the Armed Forces Office amended its answer and reasserted counterclaims and third-party 
claims.  Now, Fairview and two third-party defendants, Medical Cost Advocate, Inc. and 
Sherif Saad, move to dismiss the claims against them.  Fairview also moves to strike one 

of the Armed Forces Office’s affirmative defenses.                        
Fairview’s motions will be granted because the Armed Forces Office does not 
plausibly allege a breach, and its affirmative defense is not cognizable.  Saad’s motion will 
be denied because the Armed Forces Office sufficiently pleads his personal participation 
in the disappearance of the funds intended for Fairview.  And MCA’s motion will be 

granted in part and denied in part; the Armed Forces Office does not assert a plausible 
claim for breach of fiduciary duty, but its breach of contract and contribution claims 
survive.                                                                  
                           I1                                        
The facts underlying this iteration of the case are largely the same as the facts 
described in the December 7, 2023 Opinion and Order.  See Fairview Health Servs. v. 

Armed Forces Off. of Royal Embassy of Saudi Arabia, 

, 905–07 (D. 
Minn. 2023).  Still, an overview of the events leading to these motions is helpful.   
The Armed Forces Office is part of the Kingdom of Saudi Arabia’s embassy and 
diplomatic mission in the United States.  Am. Countercl. [ECF No. 131] ¶ 2.  It arranges 
healthcare for Saudi citizens who are otherwise unable to obtain particular care in Saudi 

Arabia.  Id. ¶ 3.  Fairview is a nonprofit healthcare corporation providing services in 
Minnesota, including to at least two Saudi citizens.  Id. ¶ 4; see id. ¶¶ 28–29.  The Armed 
Forces Office and Fairview did not interact directly, but through intermediaries—first 
through  Minnesota  International  Medicine  (“MIM”),  then  Medical  Cost  Advocate 
(“MCA”).                                                                  

Beginning in 2014, Fairview engaged MIM as an agent to “invoice and collect fees” 
for Fairview’s services.  Id. ¶ 21 (quoting Ex. Y [ECF No. 133-1] § 3(c)).  The Armed 
Forces Office would contact MIM to coordinate healthcare services.  Id. ¶ 22.  MIM would 



1    In reviewing a Rule 12(b)(6) motion, a court must accept as true all the factual 
allegations in the challenged pleading and draw all reasonable inferences in the plaintiffs’ 
favor.  Gorog v. Best Buy Co., 

 (8th Cir. 2014) (citation omitted).  In 
accordance  with  these  rules,  the  background  facts  are  taken  from  the 
Amended Counterclaims and Third-Party Claims [ECF No. 131] filed by the Armed Forces 
Office, and documents necessarily embraced by that pleading.  See Zean v. Fairview Health 
Servs., 

 (8th Cir. 2017).                                
send invoices to the Armed Forces Office, and the Armed Forces Office paid MIM.  

 
¶¶ 22–23.                                                                 
Beginning in March 2018, the Armed Forces Office retained MCA as an agent to 

provide medical bill review services and to assist with prospective and retrospective price 
negotiations.  Id. ¶ 39.  Under their agreement, if MCA negotiated a rate reduction, it would 
present the Armed Forces Office with a “Preferred Rate Agreement” to memorialize the 
negotiated terms.  Id. ¶ 39(e).  The Armed Forces Office and MCA agreed to hold each 
other’s confidential information in “strict confidence.”  Id. ¶ 39(f)–(g).   

The  remaining  third-party  defendants  are  Global  Medical  Services  (“GMS”), 
Khemwattie Singh, and Dr. Sherif Saad.  GMS acquired MIM around June 2018.  Id. ¶ 6; 
Ex. X [ECF No. 132-3] ¶ 1(c).  Singh was the chief executive officer of MIM and GMS.  
Am. Countercl. ¶ 8; Ex. T [ECF No. 132-3].  Saad was the chief business development 
officer of MIM and GMS, and the former chief executive officer of MIM.  Am. Countercl. 

¶ 9; Ex. T.                                                               
Through MIM, the Armed Forces Office arranged healthcare services for two Saudi 
children, R.A. and L.A., in 2017.  Am. Countercl. ¶¶ 28–29.  Fairview provided medical 
care for the children.  Id. ¶ 30.  The treatment ultimately generated $1,301,272.95 in 
negotiated charges.  Id. ¶ 92.  Those charges were presented to the Armed Forces Office in 

fourteen invoices from MIM.  Id. ¶ 24; see Exs. A–P [ECF Nos. 132-1 to -2].   
MCA, on behalf of the Armed Forces Office, began negotiating with Fairview 
regarding these invoices in mid-2019.  Id. ¶ 49.  On June 20, 2019, MCA and the Armed 
Forces Office entered into sixteen Preferred Rate Agreements for the fourteen invoices.  Id. 
¶ 61; Exs. A–P.2  The Preferred Rate Agreements identified Fairview as the party that 
“agrees to accept” payment.  See, e.g., Ex. A.3  Before the Armed Forces Office paid for 
R.A. and L.A.’s care, MCA provided the Armed Forces Office with these instructions: 

     When making payment agreements for Minnesota Medicine           
     please send checks to the following address AND iNCLUDE         
     [sic] Attention Maureen Ring:                                   

          Fairview Health Services                                   
          Attention: Maureen Ring                                    
          400 Stinson Boulevard                                      
          Minneapolis MN 55413                                       
Am. Countercl. ¶ 88.  The Armed Forces Office made the checks payable to MIM, as it 
had done before.  Id. ¶ 87.                                               
An Armed Forces Office representative spoke with an MCA employee by phone on 
September 4, 2019.  Id. ¶ 91.  During the call, the Armed Forces Office told MCA that it 
had made the checks payable to MIM and “asked if this was correct or if the Checks should 
be reissued.”  Id.  The MCA employee “advised the [Armed Forces Office] to proceed and 
to send the Checks to Fairview, without altering the payee information.”  Id.   
That same day, the Armed Forces Office sent sixteen checks—made payable to 
MIM and totaling more than $1.3 million—via overnight mail to Fairview’s Stinson 

2    There are sixteen Preferred Rate Agreements for fourteen invoices because, the 
Armed Forces Office alleges, MCA entered into three agreements for one invoice (invoice 
no. 6023).  Am. Countercl. ¶ 199; see Exs. K–M [ECF No. 132-2].           

3    Each Preferred Rate Agreement states, “Fairview Health Services agrees to accept 
a flat rate of [amount]” save one.  Instead of “Fairview Health Services,” one Agreement 
reads, “Minnesota Medicine - Fairview Hosp agrees to accept a flat rate . . . .”  Ex. E [ECF 
No. 132-1].                                                               
Avenue address.  Id. ¶¶ 92–93; see Exs. A–P (checks); Ex. Q [ECF No. 132-2] (proof of 
delivery).  The mailing did not include “attention Maureen Ring.”  Am. Countercl. ¶ 93.  
Fairview received the checks on September 5.  Id. ¶ 94; Ex. Q.  After receiving the checks, 

Fairview forwarded them to MIM.  Am. Countercl. ¶ 95.                     
On September 16, Fairview contacted MCA claiming it had not received payment 
for the services rendered to R.A. and L.A.  Id. ¶ 99.  The Armed Forces Office and MCA 
investigated and obtained copies of the canceled checks.  Id. ¶¶ 100–03.  The Armed Forces 
Office alleges it paid MCA roughly $7,875.00 for its services in trying to locate the checks.  

Id. ¶ 102.                                                                
Bridgewater  Bank  records  show  that  $1,301,272.854  was  deposited  to  MIM’s 
account on September 10, 2019.  Id. ¶ 115; Ex. Z [ECF No. 132-5].  The next day, $500,000 
was transferred out of the account in two transactions.  Ex. Z.  Within ten days of depositing 
the funds, all $1.3 million was transferred out of the account in large transactions.  Id.  

Three of the transfers—for $200,000 on September 11, for $300,000 the same day, and for 
$500,000 on September 13—were done “per Kim.”  Id.  The parties do not say who “Kim” 
is, but the exhibits show third-party defendant Khemwattie Singh, MIM’s CEO, went by 
“Kim” Singh, see Ex. T, and that Singh was listed on the bank account, see Ex. Z.5   


4    It doesn’t matter for these motions, but there is a ten-cent discrepancy between what 
the Armed Forces Office alleges it paid and what MIM deposited.  The Armed Forces 
Office alleges $1,301,272.95 was mailed.  See, e.g., Am. Compl. ¶¶ 92, 186, 188, 191.  The 
deposit was for $1,301,272.85.  Ex. Z.                                    

5     Singh was indicted on federal wire-fraud charges in 2022.  Am. Countercl. ¶ 113; 
Ex. X.  She pleaded guilty in December 2023 to two counts of wire fraud and willful failure 
to account for and pay over payroll taxes.  See United States v. Singh, No. 22-cr-308(1) 
Along with Singh, MIM and GMS are named on the Bridgewater Bank account.  
Am. Countercl. ¶ 115; Ex. Z.  Saad is not.  See Ex. Z.  The Armed Forces Office alleges 
that the transferred funds went to six other Bridgewater Bank accounts controlled by Singh, 

GMS, or GMS personnel.  Am. Countercl. ¶ 119.  It alleges the funds were “transferred 
again to other domestic or foreign accounts, transferred to third parties, and were used to 
pay for Singh and others to travel overseas.”  Id. ¶ 121.                 
Sherif Saad—chief business development officer of MIM and GMS—emailed the 
Armed Forces Office on the day of the deposit (September 10), inquiring about the status 

of payment.  Id. ¶ 97.  Two days later, Saad emailed the Armed Forces Office to confirm 
“the hospital” received the checks, without specifying what “the hospital” meant.  Id. ¶ 98.  
The Armed Forces Office understood Saad’s message to mean the invoices had been paid.  
Id.                                                                       
Fairview sued the Armed Forces Office in December 2021, claiming it has not been 

paid for the medical services it provided to R.A. and L.A., and asserting claims for breach 
of contract, quantum meruit, and breach of the implied covenant of good faith and fair 
dealing.  Compl. [ECF No. 1] ¶¶ 26–39.  In March 2023,6 the Armed Forces Office moved 
to dismiss Fairview’s claims for lack of subject-matter jurisdiction, failure to state a claim 
upon which relief may be granted, and failure to join MIM and MCA as necessary parties.  



(PJS/JFD) at ECF No. 106.  In July 2024, Singh was sentenced to a 27-month imprisonment 
term.  Id. at ECF No. 145.                                                
6    Due to delays in effecting service, the Armed Forces Office did not enter an 
appearance until February 2023.  ECF Nos. 16–18.                          
ECF Nos. 24–28.  The motion was denied.  See Fairview Health Servs. v. Armed Forces 
Off. of the Royal Embassy of Saudi Arabia, 

, at 825 (D. Minn. 2023).  
The  Armed  Forces  Office  subsequently  filed  a  responsive  pleading  that  included 

counterclaims and third-party claims.  ECF No. 42.  In September 2023, Fairview and 
MCA moved to dismiss the claims against them, ECF Nos. 56, 60, and the motions were 
granted without prejudice to permit the Armed Forces Office the opportunity to seek leave 
to amend, see Fairview Health Servs., 705 F. Supp. 3d at 918.  The Armed Forces Office 
subsequently sought leave to amend, and Magistrate Judge Leung granted the motion.  ECF 

No. 129.                                                                  
The Armed Forces Office has now filed an Amended Answer, ECF No. 130, and 
again asserts counterclaims and third-party claims, ECF No. 131.  The Armed Forces 
Office brings two counterclaims against Fairview: breach of contract and breach of the 
implied covenant of good faith and fair dealing.  Id. ¶¶ 128–51.  It brings one claim against 

MIM and GMS for breach of implied contract.  Id. ¶¶ 152–64.  Two claims are asserted 
against MIM, GMS, Singh, and Saad: unjust enrichment/quantum meruit and conversion.  
Id. ¶¶ 165–92.  Lastly, the Armed Forces Office brings three claims against MCA for 
breach of contract, breach of fiduciary duty, and contribution.  Id. ¶¶ 193–238.  Fairview, 
MCA, and Saad separately move to dismiss each claim against them.  ECF Nos. 146, 148, 

166.  Fairview also moves to strike one of the Armed Forces Office’s affirmative defenses: 
comparative fault.  ECF No. 153.                                          
                           II                                        
In reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6), a 
court must accept as true all of the factual allegations in the complaint and draw all 

reasonable inferences in the plaintiff’s favor.  Gorog v. Best Buy Co., 

 
(8th Cir. 2014) (citation omitted).  Although the factual allegations need not be detailed, 
they must be sufficient to “raise a right to relief above the speculative level.”  Bell Atl. 
Corp. v. Twombly, 

 (2007) (citation omitted).  The complaint must “state 
a claim to relief that is plausible on its face.”  

.  “A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the reasonable 
inference that the defendant is liable for the misconduct alleged.”  Ashcroft v. Iqbal, 

 (2009).  “[T]he tenet that a court must accept as true all of the allegations 
contained in a complaint is inapplicable to legal conclusions.”  

      
                          III                                        

                           A                                         
The Armed Forces Office’s first claim is against Fairview for breach of contract.  It 
alleges Fairview breached the Preferred Rate Agreements essentially by forwarding the 
checks to MIM, and that it was damaged by losing the $1.3 million payments and by paying 
MCA to search for the checks.  Am. Countercl. ¶ 143.  Fairview argues the Armed Forces 
Office has failed to plausibly allege a breach.  See ECF No. 149 at 9–11.  Fairview is right: 

the Armed Forces Office has not pleaded facts plausibly showing Fairview breached any 
duty under the Preferred Rate Agreements.                                 
Under Minnesota law, a breach-of-contract claim requires: “(1) a valid contract; 
(2) performance by the plaintiff of any conditions precedent; (3) a material breach of the 
contract by the defendant; and (4) damages.”  Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) (citation omitted); see Park Nicollet Clinic v. Hamann, 

 (Minn. 2011) (same).  Fairview disputes the third and fourth elements, 
arguing the Armed Forces Office has not plausibly alleged Fairview breached the contracts 
or that the Armed Forces Office suffered damages caused by any breach.  ECF No. 149 at 
10–17.                                                                    

The Armed Forces Office alleges Fairview breached the Preferred Rate Agreements 
by (a) failing to alert the Armed Forces Office that the checks had been made payable to 
MIM, (b) failing to prevent the checks from being delivered to MIM, and (c) failing to treat 
the debt as having been paid after initially receiving the checks.  Am. Countercl. ¶ 143.  
Fairview argues that none of the alleged breaches stems from any duty defined in the 

Preferred Rate Agreements.  ECF No. 149 at 10–11.  The Armed Forces Office responds 
that each duty Fairview is alleged to have breached is contained in the plain language of 
the Preferred Rate Agreements.  ECF No. 165 at 9–13.                      
A careful review of the Preferred Rate Agreements shows Fairview has the better 
argument.  Each Preferred Rate Agreement is just one page and contains identical language, 

save specific details like the invoice number and payment amount.  See Exs. A–P.  The text 
of each Preferred Rate Agreement is as follows:                           
     This  Preferred  Rate  Agreement  constitutes  the  full        
     understanding  between  Fairview  Health  Services  and         
     Medical Cost Advocate, Inc. (acting as an agent on behalf of    
     Armed Forces Office of the Royal Embassy of Saudi Arabia)       
     regarding  the  above-referenced  patient  and  service  dates.  
     Fairview  Health  Services  agrees  to  accept  a  flat  rate  of 
     $[amount] for services rendered.  The agreed upon amount is     
     the full amount due to the Facility or Healthcare Professional.  
     Provider shall not attempt to collect any additional monies     
     from the patient.  Provider shall not file arbitration or suit with 
     regards to this bill.                                           
     . . .                                                           
     This agreement and any requested forms should be returned by    
     fax  to   (866)  773-0887  or  via  email  to                   
     [email protected],  attention  Annemarie            
     Todd.                                                           
     Please contact Annemarie Todd at (201) 674-0366 with any        
     questions or concerns regarding this agreement.                 
     Accepted and Agreed                                             
Ex. A.  Each also contains a header with a date, account number, and specific details, and 
two signature lines: one for Annemarie Todd on behalf of MCA and one for Fairview.  See, 
e.g., 

                                                                 
(1)  The  Armed  Forces  Office  claims  Fairview  breached  the  Preferred  Rate 
Agreements first “by failing to[] alert the [Armed Forces Office] that the Checks delivered 
to  Fairview  had  been  made  payable  to  MIM  and  that  Fairview  deemed  this  to  be 
inconsistent with the [Preferred Rate Agreements].”  Am. Countercl. ¶ 143; see also ECF 
No. 165 at 9.  According to the Armed Forces Office, this duty to alert arises from the 
sentence, “Please contact Annemarie Todd . . . with any questions or concerns regarding 
this agreement.”  ECF No. 165 at 9–10.  The Armed Forces Office offers no legal support 
for that contention, 

 and none is apparent.  The sentence is informational, set off from 
substantive paragraph of the agreements, and would not ordinarily create any duty on 
Fairview’s part.  As Fairview points out, it never agreed to alert the Armed Forces Office 
of its own mistake.  ECF No. 181 at 4; see Watkins Inc. v. Chilkoot Distrib., Inc., 

 (8th Cir. 2013) (affirming summary judgment on a breach-of-contract claim 

where “Appellants have presented no law from the state of Minnesota, or any other 
authority, that persuades us they possess a cause of action for breach where, as here, the 
agreements are completely silent as to [the issue]”).  And if the “questions or concerns” 
sentence created any duty, that duty was not plausibly breached because Fairview did not 
have any questions or concerns.  ECF No. 181 at 5.  The Armed Forces Office’s first breach 

theory fails.                                                             
(2) The second breach the Armed Forces Office alleges is Fairview’s failure to 
“prevent the Checks from being delivered to MIM, a party that was not the intended 
recipient of the Checks.”  Am. Countercl. ¶ 143; see also ECF No. 165 at 10.  This duty, 
the Armed Forces Office argues, arises from three sources: the “questions or concerns” 

sentence described above, Fairview’s delivery instructions, and the clause that “Fairview 
Health Services agrees to accept a flat rate of $[amount] for services rendered.”  ECF No. 
165 at 10.  Again, the Armed Forces Office cites no legal authority for its arguments.  And 
again, these claims fall short of showing a breach of any duty.  The “questions or concerns” 
sentence does not plausibly allege any duty, as described above.  The delivery instructions 

provided to the Armed Forces Office later (instructing it to send the checks to Fairview, 
“Attention Maureen Ring”) were neither part of the “plain language” of the Preferred Rate 
Agreements, see, e.g., Ex. A, nor complied with by the Armed Forces Office, see Am. 
Countercl. ¶ 93 (“The mailing address was the same as shown in Ex. S but did not include 
the specific ‘attention’ to Maureen Ring.”); see also Russo, 

 (listing 
performance of any conditions precedent as a breach-of-contract claim requirement under 
Minnesota law).  Lastly, the clause stating, “Fairview agrees to accept a flat rate” did not 

create any duty for Fairview to accept checks payable to MIM, or anyone besides itself.  
As Fairview points out, it would not have been able to cash or deposit a check that was not 
made payable to it.  ECF No. 181 at 6–7.  The Armed Forces Office does not plausibly 
allege a breach under its second theory.                                  
(3) Third, the Armed Forces Office claims Fairview breached the Preferred Rate 

Agreements by failing to “treat the [Armed Forces Office’s] debt to Fairview as having 
been paid, once Fairview’s agent accepted payment from the [Armed Forces Office] for a 
debt owed to Fairview.”  Am. Countercl. ¶ 143; see also ECF No. 165 at 11.  The Armed 
Forces Office claims the duty to treat the debt as paid arises from the “Fairview agrees to 
accept a flat rate” sentence in the Preferred Rate Agreements.  ECF No. 165 at 11.  It argues 

that “[o]nce Fairview chose to forward the . . . checks to Fairview’s billing agent, Fairview 
also should have deemed the payment as having been accepted.”  

  But again, Fairview 
could not “accept” checks that listed a payee other than Fairview.  The Armed Forces 
Office’s third theory fails.                                              
The facts the Armed Forces Office presents in its Amended Counterclaims, taken 

as  true,  fail  to  plausibly  show  Fairview  breached  the  Preferred  Rate  Agreements.  
Fairview’s motion to dismiss will be granted as to Claim 1.               
                           B                                         
The Armed Forces Office’s second claim is that Fairview breached the implied 
covenant of good faith and fair dealing by failing to accept payment, failing to alert the 

Armed Forces Office to any concerns about the payee, and failing to acknowledge that it 
had received the checks and forwarded them to MIM.  Am. Countercl. ¶ 149.  Fairview 
primarily argues the Armed Forces Office has not sufficiently alleged it acted in bad faith.  
ECF No. 149 at 17–19.  Again, Fairview has the better argument.  The Armed Forces Office 
has not plausibly alleged facts tending to show Fairview acted in bad faith.   

“Under Minnesota law, every contract includes an implied covenant of good faith 
and  fair  dealing  requiring  that  one  party  not  ‘unjustifiably  hinder’  the  other  party’s 
performance of the contract.”  In re Hennepin Cnty. 1986 Recycling Bond Litig., 

 (Minn. 1995) (quoting Zobel & Dahl Constr. v. Crotty, 

 (Minn. 1984)); see also Restatement (Second) of Contracts § 205 (Am. L. Inst. June 

2024 Update).  The duty “governs the parties’ performance and prohibits a party from 
failing to perform for the purpose of thwarting the other party’s rights under the contract.”  
Team Nursing Servs., Inc. v. Evangelical Lutheran Good Samaritan Soc’y, 

, 
641–42 (8th Cir. 2006).  “[A] plaintiff alleging a claim for breach of the implied covenant 
of good faith and fair dealing ‘need not first establish an express breach of contract claim—

indeed, a claim for breach of an implied covenant of good faith and fair dealing implicitly 
assumes the parties did not expressly articulate the covenant allegedly breached.’”  Cox v. 
Mortg. Elec. Registration Sys., Inc., 

 (8th Cir. 2012) (quoting Hennepin 
Cnty., 

).  “Minnesota courts generally look to the defendant’s motive to 
determine whether the defendant has breached the implied covenant of good faith and fair 
dealing.”  BP Prods. N. Am., Inc. v. Twin Cities Stores, Inc., 

 (D. 
Minn. 2007).                                                              

Whether a party has acted in bad faith is generally a question of fact reserved for 
the fact-finder, see Anderson v. Medtronic, Inc., 

 (Minn. 1986), but 
that does not relieve a plaintiff of the burden to allege facts plausibly showing bad faith, 
see Miles v. Simmons Univ., 

, 1075 (D. Minn. 2021) (“A rule 
excluding fact questions from consideration on a Rule 12(b)(6) motion to dismiss would 

not faithfully reflect federal pleading standards.”).  Examples of the type of conduct that 
may constitute bad faith include:                                         
     wrongfully repudiating a contract, avoid[ing] performance by    
     affirmatively blocking the happening of a condition precedent,  
     refusing to allow a party to perform unless the performing      
     party  waived  other  contractual  rights,  and  using  a  party’s 
     rejection of an offer as a defense to contract liability when the 
     defendant persuaded the party to reject the offer in the first  
     place.                                                          
Cox, 

 (internal quotation marks and citations omitted).    
The Armed Forces Office has not plausibly alleged that Fairview acted in bad faith.  
The Armed Forces Office does not allege any of the types of conduct that Cox contemplates 
may constitute bad faith: it does not claim Fairview avoided performance, repudiated the 
contract, or refused to allow the Armed Forces Office to perform, for example.  Though 
the Armed Forces Office alleges Fairview’s bad faith “denied the [Armed Forces Office] 
the full benefit of its bargain,” Am. Countercl. ¶ 150, it received exactly what it bargained 
for: medical treatment for L.A. and R.A., see 

 ¶¶ 28–29.  Moreover, the Armed Forces 
Office alleges no ulterior, bad-faith motive for Fairview to have forwarded the checks to 
MIM.  Fairview clearly wants to be paid for the services it rendered, and there is no 
plausibly alleged motive for Fairview to maliciously forward checks intended for it to 

another entity, when the checks were made payable to that entity.  Fairview’s motion to 
dismiss Count 2 will be granted.                                          
                           C                                         
In its fourth claim,7 the Armed Forces Office alleges MIM, GMS, Singh, and Saad 
were unjustly enriched when they wrongfully retained the $1.3 million payment intended 

for Fairview.  See Am. Countercl. ¶¶ 178–181.  Only Saad moves to dismiss, arguing the 
Armed Forces Office hasn’t met its pleading burden.  ECF No. 167 at 6.  But here, the 
Armed Forces Office has alleged facts sufficient to state a plausible unjust enrichment 
claim against Saad.                                                       
To state an unjust enrichment claim, the Armed Forces Office must allege Saad “has 

knowingly received or obtained something of value for which [he] in equity and good 
conscience should pay.”  ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 

 (Minn. 1996) (internal quotation marks omitted); see Dahl v. R.J. Reynolds 
Tobacco Co., 

, 195–96 (Minn. Ct. App. 2007).  As an equitable remedy, 
unjust enrichment “does not apply when there is an enforceable contract” governing the 

parties’ relationship.  Caldas v. Affordable Granite & Stone, Inc., 

 
(Minn. 2012); see U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 

, 497 

7    No party has moved to dismiss the Armed Forces Office’s third claim: breach of 
implied contract against MIM and GMS, Am. Countercl. ¶¶ 152–64.           
(Minn. 1981).  Unjust enrichment “rest[s] on notions of justice and fairness rather than on 
any actual agreement between the parties.”  O’Brien & Wolf, LLP v. S. Cent. Minn. Elec. 
Workers’ Fam. Health Plan, 

 (Minn. Ct. App. 2018).     

The Armed Forces Office pleads a plausible unjust enrichment claim against Saad.  
It alleges Saad was “actively involved in and knowledgeable of the transactions” at 
Bridgewater Bank, Am. Countercl. ¶ 112; that Saad was the chief business development 
officer of MIM and GMS, id. ¶ 9; that, before GMS acquired MIM, Saad was the CEO of 
MIM, id.; that “Singh, Saad, GMS, and MIM knew that the checks comprising the Total 

PRA Payment were not intended for them” and nonetheless did not return them, id. ¶ 125; 
and that “MIM, GMS, Singh and/or Saad deliberately and fraudulently retained or spent 
the entire . . . amount,” id. ¶ 173.                                      
Saad’s arguments in support of dismissal are not persuasive.  He argues that the 
allegations are “scant and unavailing,” and that they indicate Singh—not Saad—had 

control of the funds.  ECF No. 167 at 6.  Saad has a point: the claims are more specific with 
respect to Singh.  See Am. Countercl. ¶¶ 113–21 (alleging Singh was named on the 
Bridgewater Bank account, that the funds were used to pay for Singh’s travel, and that 
Singh pleaded guilty to wire fraud in connection with her role at MIM and GMS).  Still, 
the claims against Saad are supported with sufficient facts to survive a Rule 12(b)(6) 

motion.  Along with the facts already referenced, the Armed Forces Office plausibly alleges 
Saad—in his role as CEO of MIM—executed the agreements between Fairview and MIM, 
that he knew of the transactions at issue, and even reached out to Armed Forces Office 
asking about the status of the Armed Forces Office’s payments on the invoices.  Id. ¶¶ 20, 
97, 112.  After MIM received and deposited the checks, Saad was the one who informed 
the Armed Forces Office “that the hospital received the checks,” causing the Armed Forces 
Office to believe the invoices had been properly paid.  Id. ¶ 98.  The Armed Forces Office 

has sufficiently alleged that Saad knowingly received something of value to which he was 
not entitled.                                                             
Saad’s argument against “shareholder liability” is also unavailing.  See ECF No. 
185 at 2–4.  To begin with, the argument was first raised in Saad’s reply brief.  Arguments 
raised for the first time in a reply brief are not usually entertained.  RedKing Foods LLC v. 

Minn Assocs. LP, No. 13-cv-0002 (PJS/JSM), 

, at *4 (D. Minn. Feb. 26, 
2014); see also D. Minn. LR 7.1(c)(3)(B) (“A reply memorandum must not raise new 
grounds for relief or present matters that do not relate to the opposing party’s response.”).  
More fundamentally, the Armed Forces Office does not assert Saad is liable in his capacity 
as a shareholder of MIM or GMS.  To the contrary, the Armed Forces Office specifically 

alleges Saad is liable in his personal capacity because he personally had knowledge of the 
funds and caused them to be retained.  See Am. Countercl. ¶¶ 112, 172–79.  Saad’s 
argument appears to spring from the Armed Forces Office’s reliance on C.H. Robinson 
Worldwide, Inc. v. U.S. Sand, LLC, No. 13-cv-1274 (JRT/FLN), 

 (D. Minn. 
Jan. 8, 2014).  See ECF No. 180 at 6–7.  In C.H. Robinson, the plaintiff sued a corporation, 

its CEO, and its owner for unjust enrichment, among other claims.  C.H. Robinson, 

, at *1.  But there, unlike here, the plaintiff alleged the individual defendants 
(the CEO and the owner) “‘used U.S. Sand’s corporate entity as a mere shell to secure 
valuable services from C.H. Robinson and then diverted the proceeds from those services 
to their own personal use,’ and ‘exercised such control over U.S. Sand such that it was their 
alter  ego.’”    Id.  at  *2.    The  Armed  Forces  Office  relies  on  C.H.  Robinson  for  the 
unremarkable  conclusions  that  a  court  may  deny  a  motion  to  dismiss  an  unjust 

enrichment/quantum meruit claim when the claimant alleged sufficient facts to state a 
plausible claim, and that it would be “unjust” or “morally wrong” to allow the defendant 
to retain profits derived from plaintiff’s services without paying for the services.  ECF No. 
180 at 6–7 (quoting C.H. Robinson, 

, at *6).  Notably, the Armed Forces 
Office does not claim Saad used MIM or GMS as a shell or alter ego in its pleadings or 

briefing.  In other words, Saad is not being sued because he is or was a shareholder of MIM 
and GMS; he is being sued because he is alleged to have personally exploited the funds.  
There  is  no  veil-piecing  problem  here.8    It  is  difficult  to  understand  why  an  unjust 
enrichment  claim  could  not  be  asserted  against  an  individual  when  the  complainant 
plausibly alleges the individual’s personal involvement.  Saad’s motion to dismiss will be 

denied as to Claim 4.                                                     



8    If the Armed Forces Office intended to allege shareholder liability, the claim would 
still survive.  In C.H. Robinson, the court found that the complaint’s allegations, “[]though 
sparse,” were enough to survive a motion to dismiss.  C.H. Robinson, 

, at 
*9.  The same is true here.  The Amended Counterclaims allege Saad failed to observe 
corporate formalities to enrich himself, Am. Countercl. ¶ 123, which is one of the Victoria 
Elevator  factors  used  to  determine  when  a  shareholder  can  be  liable  for  corporate 
obligations.  

 at *8 (citing Victoria Elevator Co. of Minneapolis v. Meriden Grain Co., 

 (Minn. 1979)).  “At the pleading stage, courts in this district have 
permitted claims against individual corporate defendants to proceed when plaintiffs make 
basic allegations as to one or more of these factors.”  

               
                           D                                         
In its fifth cause of action, the Armed Forces Office asserts a conversion claim 
against MIM, GMS, Singh, and Saad.  Am. Countercl. ¶¶ 182–92.  Again, Saad is the only 

third-party defendant moving to dismiss.  ECF No. 167.  Saad argues the claim is not 
plausibly  alleged  and  that  a  check  cannot  support  a  conversion  claim  because  it  is 
intangible.  Id. at 7; ECF No. 185 at 4–6.  These arguments are not persuasive.    
“The elements of common law conversion are (1) the plaintiff has a property interest 
and (2) the defendant deprives the plaintiff of that interest.”  Noble Sys. Corp. v. Alorica 

Cent., LLC, 

 (8th Cir. 2008) (quoting Olson v. Moorhead Country Club, 

 (Minn. Ct. App. 1997)); see DLH, Inc. v. Russ, 

 
(Minn. 1997) (defining conversion “as an act of willful interference with personal property, 
‘done without lawful justification by which any person entitled thereto is deprived of use 
and possession’” (quoting Larson v. Archer-Daniels-Midland Co., 

 

(Minn. 1948))).                                                           
Saad’s primary argument is short and simple: the Armed Forces Office failed to 
allege Saad received any funds and failed to plead any facts to show that Saad deprived the 
Armed Forces Office of any funds.  ECF No. 167 at 7.  Not so.  The Armed Forces Office 
alleged Saad’s personal involvement in receiving the funds with some particularity.  See 

Am. Countercl. ¶¶ 97, 98, 112 (pleading Saad knew about the transactions, reached out to 
the Armed Forces Office regarding the status of payments, and sent an email stating the 
checks had been received).                                                
In Saad’s reply brief, he argues (for the first time) that the conversion claim cannot 
withstand a 12(b)(6) motion because checks are intangible property.  See ECF No. 185 at 
4–6.  The Minnesota Court of Appeals has said that “a conversion claim is viable with 

respect to money only if the money is in a tangible form (such as a particular roll of coins 
or a particular stack of bills) and is kept separate from other money.”  TCI Bus. Cap., Inc. 
v. Five Star Am. Die Casting, LLC, 

 (Minn. Ct. App. 2017); see 
Streambend Props. II, LLC v. Ivy Tower Minneapolis LLC, No. A18-1488, 

, at *8 (Minn. Ct. App. June 3, 2019).  The TCI Business Capital court reached 

this conclusion for three reasons: (1) the Minnesota Supreme Court has typically defined 
property as goods and all of its prior opinions regarding conversion concerned tangible 
personal property, i.e., “items that can be seen and touched”; (2) the conclusion was 
consistent with the Minnesota Court of Appeals’ only precedential opinion to address the 
issue expressly; and (3) the conclusion also was “consistent with the traditional common-

law rule that an electronic financial transaction cannot be the basis of a conversion claim.”  
TCI Bus. Cap., Inc., 890 N.W. 2d at 428–29.  This jibes with the Eighth Circuit’s long-held 
understanding that Minnesota conversion law follows “the general rule . . . that the cause 
of action only applies to tangible property, or intangible property customarily merged in, 
or identified with, some document.”  H.J., Inc. v. Int’l Tel. & Tel. Corp., 

, 

1547 (8th Cir. 1989) (citations omitted); see Advanced Control Tech., Inc. v. Iversen, No. 
19-cv-1608 (DSD/TNL), 

, at *5 (D. Minn. Apr. 8, 2021) (same).   
Saad’s intangibility argument fails.  First, the argument was raised for the first time 
in reply.  RedKing Foods LLC, 

, at *4; D. Minn. LR 7.1(c)(3)(B).  Second, 
even if the argument is entertained, a stack of sixteen checks is not the type of “intangible” 
property Minnesota law contemplates as not qualifying for a conversion claim.  Unlike, for 
example, electronic funds, checks are “items that can be seen and touched.”  TCI Bus. Cap., 

Inc., 

.  And a check is considered intangible property “merged in, or 
identified with, some document,” such that it may be considered tangible.  H.J., Inc., 867 
F.2d at 1547;  see CyberOptics Corp. v. Yamaha Motor Co., No. 3-95-1174, 

, at *25 (D. Minn. July 29, 1996) (“Under the traditional rule, conversion may apply 
to . . . documents in which intangible rights are merged, such as promissory notes, bank 

checks, bonds, and bills of lading . . . .” (emphasis added)).  A few examples of intangible 
property—not subject to a conversion claim—are instructive.  Trade secrets, proprietary 
information, intellectual property, and digital copies of photographs have been found 
intangible by courts applying Minnesota law.  See Advanced Control Tech., Inc., 

, at *5 (trade secrets and proprietary information); Beaulieu v. Stockwell, 

 (8th Cir. 2022) (intellectual property and digital copies of photos).  A physical 
check—or  sixteen  of  them—designating  specific  amounts  to  be  paid  is  qualitatively 
different from the sorts of property usually considered intangible.       
As part of his intangibility argument, Saad asserts that the Armed Forces Office’s 
conversion claim fails because it did not hold a property interest in the checks under 

Minnesota conversion law.  ECF No. 185 at 6.  The Armed Forces Office has sufficiently 
pleaded it had a property interest in the checks.  See Am. Countercl. ¶ 189 (“The [Armed 
Forces Office] is being unlawfully deprived of its property as a result of MIM’s, GMS’, 
Singh’s, and Saad’s misconduct . . . .”); see also FCA Constr. Co. v. Singles Roofing Co., 
No. 09-cv-3700 (ADM/AJB), 

, at *2 (D. Minn. Nov. 3, 2011) (denying 
a motion to dismiss a conversion claim when the plaintiff “has alleged that it held a property 
interest in the money at issue and was wrongfully deprived of its property interest in that 

money by [defendant’s] misappropriation of it”).  Saad’s motion to dismiss will be denied 
as to Claim 5.                                                            
                           E                                         
The Armed Forces Office and MCA entered into an agreement in which MCA 
would negotiate invoices with Fairview on the Armed Forces Office’s behalf.  See Ex. R 

[ECF No. 132-2].  The Armed Forces Office alleges MCA breached the agreement by 
negotiating a higher invoice payment for one of the fourteen invoices.  The Armed Forces 
Office alleges that invoice 6023 (Exs. K–M) was originally for $216,971.50, and after 
MCA negotiated on its behalf, the Armed Forces Office paid $258,154.76—roughly 
$41,000 more than Fairview charged.  Am. Countercl. ¶¶ 78–81.  MCA argues that release 

and indemnity clauses within the contract bar the claim.  See ECF No. 147 at 11.  But it is 
plausible these clauses may be unenforceable, and the Armed Forces Office plausibly 
alleges a breach.                                                         
Under Minnesota law,9 a breach-of-contract claim requires: “(1) a valid contract; 
(2) performance by the plaintiff of any conditions precedent; (3) a material breach of the 


9    In the last round of Rule 12 motions, there was some dispute about which state’s 
law applied to the Armed Forces Office’s third-party claims against MCA.  See Fairview 
Health Servs., 705 F. Supp. 3d at 913 n.4.  Now, all parties seem to agree that Minnesota 
law governs each of the Armed Forces Office’s claims.  See ECF Nos. 147, 149, 165, 167, 
171, 180 (each relying exclusively on Minnesota law).                     
contract by the defendant; and (4) damages.”  Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) (citation omitted).  MCA does not argue that the Armed Forces 
Office failed to plausibly allege any element of a breach-of-contract claim.  See ECF No. 

147.  It argues the claim is barred by the very contract at issue.  

 at 12–20.  This claim, 
then, will turn on whether the exculpatory clause in the contract is enforceable and covers 
the conduct at issue.                                                     
The agreement between MCA and the Armed Forces Office includes four provisions 
that MCA thinks are relevant to the Armed Forces Office’s three claims against it: (1) a 

term providing that the Armed Forces Office “understands and agrees that it will be its 
obligation to pay the Patient’s health care provider”; (2) a term specifying both parties 
agree the Armed Forces Office is solely responsible for bill payment; (3) an exculpatory 
clause, entitled “Release,” providing the Armed Forces Office agrees to release MCA 
“from any and all claims . . . arising out of the performance of the MCA of the services 

contemplated” by the agreement; and (4) and indemnity clause providing the Armed Forces 
Office will indemnify and hold MCA harmless against the same.  ECF No. 147 at 13–14 
(quoting Ex. R §§ 2.3, 2.4, 6.1, 6.2).  The clauses that MCA argues would preclude the 
breach-of-contract claim here are the exculpatory clause and the indemnity clause.   
Under  Minnesota  law,  both  exculpatory  clauses  and  indemnity  clauses  are 

disfavored.  “[E]xculpatory clauses are disfavored and will not be enforced if the clause 
‘purports to release the benefitted party from liability for intentional, willful or wanton 
acts.’”  Gage v. HSM Elec. Prot. Servs., Inc., 

 (8th Cir. 2011) (quoting 
Schlobohm v. Spa Petite, Inc., 

 (Minn. 1982)); see also Just. v. 
Marvel, LLC, 

, 901 (Minn. 2022) (“We have previously recognized that 
both types of provisions are disfavored in the law.”).  The Minnesota Supreme Court has 
said that “exculpatory clauses do not violate public policy when applied to claims of 

ordinary negligence, but do violate public policy, and are therefore unenforceable, against 
claims of ‘willful and wanton negligence.’”  Gage, 

 (quoting Morgan Co. 
v. Minn. Mining & Mfg., 

 (Minn. 1976)).  “But whether an exculpatory 
clause is enforceable is a fact-based question that usually cannot be resolved on a Rule 12 
motion.”  Untiedt’s Vegetable Farm, Inc. v. S. Impact, LLC, 

, 766 (D. 

Minn. 2020) (citing Schlobohm v. Spa Petite, Inc., 

, 923–26 (Minn. 1982)).   
MCA primarily argues exculpatory and indemnity clauses are enforceable where, 
as here, they do not attempt to eliminate liability for willful and wanton negligence.  ECF 
No. 147 at 14–15; see Ex. R §§ 6.1, 6.2 (excepting gross negligence and intentional 
misconduct  from  each  clause).    But  although  Minnesota  courts  “may  uphold  the 

enforceability of a contractual indemnity clause, [they] disfavor agreements ‘seeking to 
indemnify the indemnitee for losses occasioned by its own negligence.’”  Dewitt v. London 
Rd. Rental Ctr., Inc., 

 (Minn. 2018) (quoting Nat’l Hydro Sys. v. M.A. 
Mortenson Co., 

 (Minn. 1995).  “Accordingly, we strictly construe 
such indemnity clauses” against the indemnitee (MCA).  Id.; see also Just., 979 N.W.2d at 

900 (“[B]oth indemnity clauses and exculpatory clauses are subject to the same standard 
of strict construction.”).  MCA claims that because the clauses specifically except “grossly 
negligent behavior or intentional misconduct,” it is understood that ordinary negligence is 
covered.  ECF No. 147 at 15 (“Any ambiguity that might be claimed to exist is addressed 
by the fact that the Agreement excepts ‘gross negligence’ and ‘intentional misconduct’ – 
thus, any reader would be informed that under the exculpatory clause MCA is being 
released, in advance, for any conduct by MCA that constitutes ordinary negligence.”).  But 

that sort of coverage-by-implication is squarely rejected in Minnesota law.  “For an 
indemnity  clause  to  pass  strict  construction,  the  contract  must  include  an  ‘express 
provision’  that  ‘indemnif[ies]  the  indemnitee  for  liability  occasioned  by  its  own 
negligence; such an obligation will not be found by implication.’”  Dewitt, 910 N.W. at 
417 (quoting Farmington Plumbing & Heating Co. v. Fischer Sand & Aggregate, Inc., 

 (Minn. 1979).  Considering that such clauses are “disfavor[ed]” and their 
enforceability “usually cannot be resolved on a Rule 12 motion,” the better answer is to 
reject MCA’s argument that the claims are barred by the contract terms.  Id. at 416; 
Untiedt’s Vegetable Farm, Inc., 493 F. Supp. 3d at 766.                   
  Besides unenforceability, the Armed Forces Office’s primary argument is that the 

specific clauses at issue do not apply to MCA’s actions.  The exculpatory clause applies to 
claims “arising out of the performance of MCA of the services contemplated by the 
Agreement.”    Ex.  R  § 6.1.10     The  Armed  Forces  Office  argues  that  because  MCA 
negotiated a higher price on one instance (when it was supposed to negotiate lower prices), 
it was not “performing” under the contract.  ECF No. 171 at 5–8, 10–13.  A review of the 

applicable contract clauses confirms the contract is filled with references to lowering the 


10   Similarly, the indemnity clause applies to “claims made or causes of action . . . 
arising out of or relating to the MCA services or other matters authorized by [the Armed 
Forces Office] pursuant to this Agreement.”  Ex. R § 6.2.                 
cost of treatment, and the Armed Forces Office’s reading is plausible.  The first recital 
clause confirms that the Armed Forces Office “would like to realize a lower price” for 
treatments.  Ex. R at 1 (under “WHEREAS”).  The “Patient Authorization” clause provides 

that the Armed Forces Office “authorizes MCA to act as the Patient’s authorized personal 
representative for the purpose of obtaining a reduction in the cost” of treatment.  Id. § 1.5 
(emphasis  added).    Another  section—“Retrospective  Negotiation”—refers  to  the 
“Adjusted Price” that MCA procures as “the reduced price the provider is willing to accept 
for the procedure after MCA negotiation.”  Id. § 2.1 (emphasis added).  Plainly, the Armed 

Forces Office contracted with MCA for price reductions.  It has plausibly alleged that MCA 
acted outside the scope of performance when it obtained a higher rate for invoice 6023.  
MCA’s motion to dismiss Claim 6 will be denied.                           
                           F                                         
In its seventh claim, the Armed Forces Office alleges MCA breached a fiduciary 

duty to it when MCA negotiated the Preferred Rate Agreements in its own self-interest, by 
disrupting a “simple” negotiation and payment process, by giving the Armed Forces Office 
ambiguous payment instructions, and by disclosing confidential information to Fairview.  
Am. Countercl. ¶¶ 214–22.  MCA moves to dismiss the claim in its entirety.  ECF No. 147.  
MCA again argues the claim is barred by the agreement’s terms.  ECF No. 147 at 11, 16.   

In  Minnesota,  a  breach-of-fiduciary-duty  claim  has  four  elements:  “[1]  duty, 
[2] breach, [3] causation, and [4] damages.”  Hansen v. U.S. Bank Nat’l Ass’n, 

, 327 (Minn. 2019).  “A fiduciary relationship is characterized by a ‘fiduciary’ who 
enjoys a superior position in terms of knowledge and authority and in whom the other party 
places a high level of trust and confidence.”  Carlson v. SALA Architects, Inc., 

, 330–31 (Minn. Ct. App. 2007) (citing Toombs v. Daniels, 

 
(Minn. 1985)).  As explained in the December 2023 order, the Armed Forces Office has 

plausibly alleged a de facto fiduciary relationship existed between it and MCA.  See 
Fairview Health Servs., 705 F. Supp. 3d at 916.  Further, “in Minnesota, an agent owes 
fiduciary duties to its principal,” U.S. Bank Nat’l Ass’n v. San Antonio Cash Network, 

 (D. Minn. 2017), and the Armed Forces Office has sufficiently alleged 
it engaged MCA as its agent, see Fairview Health Servs., 705 F. Supp. 3d at 916; see also 

Am. Countercl. ¶¶ 39(a), 195, 209, 232; see also Ex. R § 1.4 (“MCA will be an agent for 
Client . . . .”).                                                         
MCA  primarily  argues  the  breach-of-fiduciary-duty  claim  must  be  dismissed 
because the exculpatory and indemnity clauses discussed above bar these claims.  The 
enforceability  of  the  exculpatory  and  indemnity  clauses  was  discussed—and  MCA’s 

argument was rejected—above.  For the same reasons, MCA’s release/indemnity argument 
is rejected here.                                                         
Secondarily, MCA argues, albeit briefly, that the Armed Forces Office’s alleged 
harm is theoretical or implausible.  ECF No. 147 at 11, 12 n.3.  MCA has a point.  For 
example, the Armed Forces Office alleges MCA breached its fiduciary duty “by forwarding 

approximately  20  confidential  emails  to  Fairview  without  the  AFO’s  knowledge, 
permission, or consent.”  Am. Countercl. ¶ 221.  Recall that the Armed Forces Office and 
MCA  agreed  to  hold  each  other’s  confidential  information  in  “strict  confidence.”  
Id. ¶ 39(f)–(g); see also Ex. R § 4.2.  The Armed Forces Office plausibly alleges MCA 
breached its duty to hold its confidential information in confidence by sharing with 
Fairview several confidential emails and other communications.  Am. Countercl. ¶¶ 109–
10.  The Armed Forces Office asserts generally that it lost $1.3 million due to MCA’s 

breach and was forced to pay MCA $7,875 in searching for the checks, but the $1.3-million 
loss had already occurred by the time the confidential emails were shared, and it is unclear 
how sharing those emails could have resulted in MCA investigation fees.  See id. ¶ 225(a), 
(c).                                                                      
Other of the Armed Forces Office’s breach-of-fiduciary-duty claims get closer to 

plausibly supporting a damages theory.  For example, the Armed Forces Office alleges 
MCA  breached  its  fiduciary  duty  “giving  the  [Armed  Forces  Office]  confusing  and 
ambiguous instructions and communications regarding payee information for the Checks.”  
Am. Countercl. ¶ 220.  Recall that MCA is the entity that asked the Armed Forces Office 
to send payment “for Minnesota Medicine” to Fairview and include “Attention Maureen 

Ring.”  Id. ¶ 88.  It is plausible, then, that the Armed Forces Office relied on its agent for 
payment instructions when making the checks payable to Minnesota Medicine.  But, again, 
the  Armed  Forces  Office  did  not  follow  those  instructions.    It  neglected  to  include 
“Attention Maureen Ring” on the package or the checks, and Fairview forward them to 
MIM.  It would strain plausibility to say MCA breached its fiduciary duty to the Armed 

Forces Office when the Armed Forces Office did not follow MCA’s instructions.  It is 
plausible that the exculpatory and indemnity clauses are unenforceable, but the Armed 
Forces Office still does not plausibly allege damages stemming from a breach of fiduciary 
duty.  MCA’s motion to dismiss Claim 7 will be granted.                   
                           G                                         
The Armed Forces Office asserts that, to the extent it is found liable to Fairview, it 
is entitled to contribution from MCA.  Am. Countercl. ¶ 237.  MCA argues that the 

agreement the Armed Forces Office and MCA entered precludes contribution because the 
Armed Forces Office agreed it would assume sole responsibility for payments and would 
indemnify MCA.  ECF No. 147 at 11–12.                                     
“Contribution is an equitable doctrine that requires that persons under a common 
burden share that burden equitably.”  Far E. Aluminium Works Co. v. Viracon, Inc., 

, 1115 (D. Minn. 2021) (quoting Nuessmeier Elec., Inc. v. Weiss Mfg. Co., 

 (Minn. Ct. App. 2001)).  “Contribution requires proof of ‘(1) 
common liability of two or more actors to the injured party; and (2) the payment by one of 
the actors of more than its fair share of that common liability.’”  

 (quoting Nuessmeier 
Elec., 

).  “Common liability ‘arises when both parties are liable to the 

injured party for part or all of the same damages.’”  

 (quoting Nuessmeier Elec., 

).                                                           
In the previous round of Rule 12 motions, the Armed Forces Office’s contribution 
claim against MCA was dismissed because all of its other claims against MCA were 
dismissed.  See Fairview Health Servs., 705 F. Supp. 3d at 918 (“The Armed Forces Office 

does not—and could not—plausibly allege that it and MCA share common liability to 
Fairview.  MCA’s motion will be granted as to [contribution].”)  Now, however, because 
the Armed Forces Office’s breach-of-contract claim against MCA (Claim 6) survives, the 
contribution claim should survive as well.                                
                          IV                                         
Fairview moves to strike one of the Armed Forces Office’s affirmative defenses 
pursuant to Rule 12(f).  In the Armed Forces Office’s Amended Answer, it asserts eighteen 

affirmative defenses, and “reserves the right to assert additional affirmative defenses that 
may be identified in discovery.”  Am. Answer [ECF No. 130] at 10–12, ¶¶ A–S.  One of 
the affirmative defenses, labeled “G,” states in full, “Fairview’s claims are barred in whole 
or in part by Fairview’s own comparative fault.”  Id. at 11, ¶ G.  Fairview moves to strike 
the affirmative defense as insufficient as a matter of law.               

A  party  may  move  to  strike  “from  a  pleading  an  insufficient  defense  or  any 
redundant, immaterial, impertinent, or scandalous matter.”  Fed. R. Civ. P. 12(f)(2).  “The 
court may grant a motion to strike an affirmative defense only if no questions of law or fact 
exist  and  the  defense  sought  to  be  stricken  could  not  succeed  under  any  set  of 
circumstances.”  First Bank Sys., Inc. v. Martin, 

 (D. Minn. 1991).  

Motions to strike are “viewed with disfavor and are infrequently granted.”  Lunsford v. 
United States, 

 (8th Cir. 1977).  “A motion to strike a defense will be 
denied if the defense is sufficient as a matter of law or if it fairly presents a question of law 
or fact which the court ought to hear.”  

 (quoting 2A Moore’s Federal Practice P 12.21 
at 2437 (2d ed. 1975)).                                                   
Fairview sued the Armed Forces Office for breach of contract, quantum meruit, and 

breach of the implied covenant of good faith and fair dealing.  Compl. ¶¶ 26–39.  It argues 
that because its claims are based in breach of contract, a comparative fault defense fails as 
a matter of law.  ECF No. 154 at 9–11.  It is true that the Minnesota Supreme Court has 
said the comparative-fault statute, 

, subdiv. 1 (2023), does not apply 
to contract claims.  Leamington Co. v. Nonprofits’ Ins. Ass’n, 

, 677–78 
(Minn. Ct. App. 2003) (citing Lesmeister v. Dilly, 

, 101–02 (Minn. 1983).  

Minnesota courts have consistently held the same.  See Sander & Co. v. N. Cap. Ins., No. 
A06-971, 

, at *3 (Minn. Ct. App. July 3, 2007) (“[T]he district court 
applied  a  negligence-based  remedy  rather  than  a  contract-based  remedy  . . . .    The 
comparative-fault  statute,  however,  does  not  apply  to  contract  claims.”);  Residential 
Funding Co., LLC v. First Mortg. Corp., No. 13-cv-3490 (SRN/HB), 

, 

at *12 (D. Minn. Dec. 21, 2018) (“Defendant appears to invoke the concept of comparative 
negligence or comparative fault from tort law, which has no bearing in this contractual 
indemnification action.”); Sievert v. LaMarca, 

 (Minn. Ct. App. 1985) 
(“We are mindful of the fact that ordinarily the comparative fault statute does not apply to 
contract cases.”).                                                        

The Armed Forces Office’s contrary argument is not persuasive.  It cites Mike’s 
Fixtures, Inc. v. Bombard’s Access Floor Sys., Inc., 

 (Minn. Ct. App. 
1984).  ECF No. 163 at 4–5.   In Mike’s Fixture’s, the court explained that Minnesota’s 
comparative fault statute was not intended to apply to contract cases because (1) “contract 
law has never spoken in terms of fault,” and (2) “the statute derives from the Uniform 

Comparative Fault Act,” which says “[t]here is no intent to include in the coverage of the 
Act actions that are fully contractual in their gravamen and in which the plaintiff is suing 
solely because he did not recover what he contracted to receive.”  Mike’s Fixture’s, 354 
N.W.2d at 839–40 (quoting Lesmeister, 330 N.W.2d at 101–02).  But, it concluded, “as to 
items of consequential damage, the unreasonable failure to mitigate damages is ‘fault’ 
which can be apportioned under the comparative fault statute.”  

.  The Armed 
Forces Office already asserted Fairview’s failure to mitigate as an affirmative defense.  

Am. Answer at 11, ¶ F.  And its damages claims ($1.3 million in lost funds and $7,875 in 
payment to MCA to search for the lost checks) cannot reasonably be understood as 
consequential damages.  Consequential damages “are, for lack of a better word, ‘the 
consequence of special circumstances known to or reasonably supposed to have been 
contemplated by the parties when the contract was made.’”  Far E. Aluminium Works Co. 

v. Viracon, Inc., 

 (8th Cir. 2022) (quoting Kleven v. Geigy Agric. 
Chems., 

 (Minn. 1975)).  “The prototypical example is a loss of profits 
from missing a delivery date.”  

  The checks being lost, stolen, or made payable to the 
wrong party, and the ensuing fees paid to search for the checks, do not appear to have been 
contemplated by the parties when the contracts were made, and the Armed Forces Office 

presents no credible argument that they were.  See ECF No. 165 at 13–16.  The situations 
to which the comparative fault statute might apply to contract claims are not present here.  
Affirmative Defense G is insufficient as a matter of law and does not fairly present a 
question which the court ought to hear.  See Lunsford, 

.  The defense will 
be stricken.                                                              

Based on the foregoing, and on all the files, records, and proceedings herein, IT IS 
ORDERED THAT:                                                             

1.   Fairview Health Services’ Motion to Dismiss the Armed Forces Office’s 
Amended Counterclaim [ECF No. 148] is GRANTED.  Claims 1 and 2 are DISMISSED 
with prejudice.                                                           
2.   Sherif Saad’s Motion to Dismiss [ECF No. 166] is DENIED.        
3.   Medical Cost Advocate, Inc.’s Motion to Dismiss Armed Forces Office of 

Royal Embassy of Saudi Arabia’s Amended Third-Party Complaint [ECF No. 146] is 
GRANTED in part.  Claim 7 is DISMISSED with prejudice.  The motion is in all other 
respects DENIED.                                                          
4.   Fairview’s  Motion  to  Strike  the  Armed  Forces  Office’s  Affirmative 
Defense G [ECF No. 153] is GRANTED.                                       


Dated:  October 10, 2024           s/ Eric C. Tostrud                     
                              Eric C. Tostrud                        
                              United States District Court           

             UNITED STATES DISTRICT COURT                            
                DISTRICT OF MINNESOTA                                


Fairview Health Services, doing business as                               
University of Minnesota Medical Center,    File No. 21-cv-2666 (ECT/TNL)  

     Plaintiff and Counter-                                          
     Defendant,                                                      

v.                                       OPINION AND ORDER                

Armed Forces Office of the Royal Embassy                                  
of Saudi Arabia,                                                          

     Defendant, Counter-Plaintiff,                                   
     and Third-Party Plaintiff,                                      

v.                                                                        

Medical Cost Advocate, Inc.; Global Medical                               
Services, LLC; International Medical Center                               
of Minnesota, LLC, formerly doing business                                
as  Minnesota  International  Medicine;                                   
Khemwattie Singh; and Sherif Saad,                                        

     Third-Party Defendants.                                         
________________________________________________________________________  

William Thomas Wheeler, Geoffrey Koslig, David P. Bunde, and Pari McGarraugh, 
Frederickson  &  Byron,  Minneapolis,  MN;  and  Jacob  Patsch  Harris,  Office  of  the 
Minnesota Attorney General, St. Paul, MN, for Plaintiff Fairview Health Services.   
Cormac Connor, George Edward Stewart, III, and Julia Anne Bonestroo Banegas, Husch 
Blackwell LLP, Washington, D.C.; and Aaron B. Chapin, Husch Blackwell LLP, Chicago, 
IL, for Defendant Armed Forces Office of the Royal Embassy of Saudi Arabia.   

Charles E. Jones, Kelly C. Engebretson, Sara Filo, and Megan Renslow, Moss & Barnett, 
Minneapolis, MN, for Third-Party Defendant Medical Cost Advocate, Inc.    

Karl J. Yeager, Meagher & Geer, PLLP, Minneapolis, MN, for Third-Party Defendant 
Sherif Saad.                                                              
________________________________________________________________________  
Fairview Health Services provided treatment to two Saudi citizens in 2018 and 
2019.  The Armed Forces Office of the Royal Embassy of Saudi Arabia, the entity 
responsible for payment of those services, mailed over $1.3 million to Fairview but named 

the wrong payee on the checks.  Fairview forwarded the checks to that payee, who took the 
funds.  Fairview initiated this breach-of-contract suit against the Armed Forces Office in 
2021 to recover payment.                                                  
The case is now in its third round of Rule 12 motions.  The Armed Forces Office 
moved to dismiss Fairview’s Complaint in March 2023, and its motion was denied.  In 

August 2023, the Armed Forces Office asserted counterclaims against Fairview and claims 
against third parties.  Those claims were dismissed without prejudice.  In February 2024, 
the Armed Forces Office amended its answer and reasserted counterclaims and third-party 
claims.  Now, Fairview and two third-party defendants, Medical Cost Advocate, Inc. and 
Sherif Saad, move to dismiss the claims against them.  Fairview also moves to strike one 

of the Armed Forces Office’s affirmative defenses.                        
Fairview’s motions will be granted because the Armed Forces Office does not 
plausibly allege a breach, and its affirmative defense is not cognizable.  Saad’s motion will 
be denied because the Armed Forces Office sufficiently pleads his personal participation 
in the disappearance of the funds intended for Fairview.  And MCA’s motion will be 

granted in part and denied in part; the Armed Forces Office does not assert a plausible 
claim for breach of fiduciary duty, but its breach of contract and contribution claims 
survive.                                                                  
                           I1                                        
The facts underlying this iteration of the case are largely the same as the facts 
described in the December 7, 2023 Opinion and Order.  See Fairview Health Servs. v. 

Armed Forces Off. of Royal Embassy of Saudi Arabia, 

, 905–07 (D. 
Minn. 2023).  Still, an overview of the events leading to these motions is helpful.   
The Armed Forces Office is part of the Kingdom of Saudi Arabia’s embassy and 
diplomatic mission in the United States.  Am. Countercl. [ECF No. 131] ¶ 2.  It arranges 
healthcare for Saudi citizens who are otherwise unable to obtain particular care in Saudi 

Arabia.  Id. ¶ 3.  Fairview is a nonprofit healthcare corporation providing services in 
Minnesota, including to at least two Saudi citizens.  Id. ¶ 4; see id. ¶¶ 28–29.  The Armed 
Forces Office and Fairview did not interact directly, but through intermediaries—first 
through  Minnesota  International  Medicine  (“MIM”),  then  Medical  Cost  Advocate 
(“MCA”).                                                                  

Beginning in 2014, Fairview engaged MIM as an agent to “invoice and collect fees” 
for Fairview’s services.  Id. ¶ 21 (quoting Ex. Y [ECF No. 133-1] § 3(c)).  The Armed 
Forces Office would contact MIM to coordinate healthcare services.  Id. ¶ 22.  MIM would 



1    In reviewing a Rule 12(b)(6) motion, a court must accept as true all the factual 
allegations in the challenged pleading and draw all reasonable inferences in the plaintiffs’ 
favor.  Gorog v. Best Buy Co., 

 (8th Cir. 2014) (citation omitted).  In 
accordance  with  these  rules,  the  background  facts  are  taken  from  the 
Amended Counterclaims and Third-Party Claims [ECF No. 131] filed by the Armed Forces 
Office, and documents necessarily embraced by that pleading.  See Zean v. Fairview Health 
Servs., 

 (8th Cir. 2017).                                
send invoices to the Armed Forces Office, and the Armed Forces Office paid MIM.  

 
¶¶ 22–23.                                                                 
Beginning in March 2018, the Armed Forces Office retained MCA as an agent to 

provide medical bill review services and to assist with prospective and retrospective price 
negotiations.  Id. ¶ 39.  Under their agreement, if MCA negotiated a rate reduction, it would 
present the Armed Forces Office with a “Preferred Rate Agreement” to memorialize the 
negotiated terms.  Id. ¶ 39(e).  The Armed Forces Office and MCA agreed to hold each 
other’s confidential information in “strict confidence.”  Id. ¶ 39(f)–(g).   

The  remaining  third-party  defendants  are  Global  Medical  Services  (“GMS”), 
Khemwattie Singh, and Dr. Sherif Saad.  GMS acquired MIM around June 2018.  Id. ¶ 6; 
Ex. X [ECF No. 132-3] ¶ 1(c).  Singh was the chief executive officer of MIM and GMS.  
Am. Countercl. ¶ 8; Ex. T [ECF No. 132-3].  Saad was the chief business development 
officer of MIM and GMS, and the former chief executive officer of MIM.  Am. Countercl. 

¶ 9; Ex. T.                                                               
Through MIM, the Armed Forces Office arranged healthcare services for two Saudi 
children, R.A. and L.A., in 2017.  Am. Countercl. ¶¶ 28–29.  Fairview provided medical 
care for the children.  Id. ¶ 30.  The treatment ultimately generated $1,301,272.95 in 
negotiated charges.  Id. ¶ 92.  Those charges were presented to the Armed Forces Office in 

fourteen invoices from MIM.  Id. ¶ 24; see Exs. A–P [ECF Nos. 132-1 to -2].   
MCA, on behalf of the Armed Forces Office, began negotiating with Fairview 
regarding these invoices in mid-2019.  Id. ¶ 49.  On June 20, 2019, MCA and the Armed 
Forces Office entered into sixteen Preferred Rate Agreements for the fourteen invoices.  Id. 
¶ 61; Exs. A–P.2  The Preferred Rate Agreements identified Fairview as the party that 
“agrees to accept” payment.  See, e.g., Ex. A.3  Before the Armed Forces Office paid for 
R.A. and L.A.’s care, MCA provided the Armed Forces Office with these instructions: 

     When making payment agreements for Minnesota Medicine           
     please send checks to the following address AND iNCLUDE         
     [sic] Attention Maureen Ring:                                   

          Fairview Health Services                                   
          Attention: Maureen Ring                                    
          400 Stinson Boulevard                                      
          Minneapolis MN 55413                                       
Am. Countercl. ¶ 88.  The Armed Forces Office made the checks payable to MIM, as it 
had done before.  Id. ¶ 87.                                               
An Armed Forces Office representative spoke with an MCA employee by phone on 
September 4, 2019.  Id. ¶ 91.  During the call, the Armed Forces Office told MCA that it 
had made the checks payable to MIM and “asked if this was correct or if the Checks should 
be reissued.”  Id.  The MCA employee “advised the [Armed Forces Office] to proceed and 
to send the Checks to Fairview, without altering the payee information.”  Id.   
That same day, the Armed Forces Office sent sixteen checks—made payable to 
MIM and totaling more than $1.3 million—via overnight mail to Fairview’s Stinson 

2    There are sixteen Preferred Rate Agreements for fourteen invoices because, the 
Armed Forces Office alleges, MCA entered into three agreements for one invoice (invoice 
no. 6023).  Am. Countercl. ¶ 199; see Exs. K–M [ECF No. 132-2].           

3    Each Preferred Rate Agreement states, “Fairview Health Services agrees to accept 
a flat rate of [amount]” save one.  Instead of “Fairview Health Services,” one Agreement 
reads, “Minnesota Medicine - Fairview Hosp agrees to accept a flat rate . . . .”  Ex. E [ECF 
No. 132-1].                                                               
Avenue address.  Id. ¶¶ 92–93; see Exs. A–P (checks); Ex. Q [ECF No. 132-2] (proof of 
delivery).  The mailing did not include “attention Maureen Ring.”  Am. Countercl. ¶ 93.  
Fairview received the checks on September 5.  Id. ¶ 94; Ex. Q.  After receiving the checks, 

Fairview forwarded them to MIM.  Am. Countercl. ¶ 95.                     
On September 16, Fairview contacted MCA claiming it had not received payment 
for the services rendered to R.A. and L.A.  Id. ¶ 99.  The Armed Forces Office and MCA 
investigated and obtained copies of the canceled checks.  Id. ¶¶ 100–03.  The Armed Forces 
Office alleges it paid MCA roughly $7,875.00 for its services in trying to locate the checks.  

Id. ¶ 102.                                                                
Bridgewater  Bank  records  show  that  $1,301,272.854  was  deposited  to  MIM’s 
account on September 10, 2019.  Id. ¶ 115; Ex. Z [ECF No. 132-5].  The next day, $500,000 
was transferred out of the account in two transactions.  Ex. Z.  Within ten days of depositing 
the funds, all $1.3 million was transferred out of the account in large transactions.  Id.  

Three of the transfers—for $200,000 on September 11, for $300,000 the same day, and for 
$500,000 on September 13—were done “per Kim.”  Id.  The parties do not say who “Kim” 
is, but the exhibits show third-party defendant Khemwattie Singh, MIM’s CEO, went by 
“Kim” Singh, see Ex. T, and that Singh was listed on the bank account, see Ex. Z.5   


4    It doesn’t matter for these motions, but there is a ten-cent discrepancy between what 
the Armed Forces Office alleges it paid and what MIM deposited.  The Armed Forces 
Office alleges $1,301,272.95 was mailed.  See, e.g., Am. Compl. ¶¶ 92, 186, 188, 191.  The 
deposit was for $1,301,272.85.  Ex. Z.                                    

5     Singh was indicted on federal wire-fraud charges in 2022.  Am. Countercl. ¶ 113; 
Ex. X.  She pleaded guilty in December 2023 to two counts of wire fraud and willful failure 
to account for and pay over payroll taxes.  See United States v. Singh, No. 22-cr-308(1) 
Along with Singh, MIM and GMS are named on the Bridgewater Bank account.  
Am. Countercl. ¶ 115; Ex. Z.  Saad is not.  See Ex. Z.  The Armed Forces Office alleges 
that the transferred funds went to six other Bridgewater Bank accounts controlled by Singh, 

GMS, or GMS personnel.  Am. Countercl. ¶ 119.  It alleges the funds were “transferred 
again to other domestic or foreign accounts, transferred to third parties, and were used to 
pay for Singh and others to travel overseas.”  Id. ¶ 121.                 
Sherif Saad—chief business development officer of MIM and GMS—emailed the 
Armed Forces Office on the day of the deposit (September 10), inquiring about the status 

of payment.  Id. ¶ 97.  Two days later, Saad emailed the Armed Forces Office to confirm 
“the hospital” received the checks, without specifying what “the hospital” meant.  Id. ¶ 98.  
The Armed Forces Office understood Saad’s message to mean the invoices had been paid.  
Id.                                                                       
Fairview sued the Armed Forces Office in December 2021, claiming it has not been 

paid for the medical services it provided to R.A. and L.A., and asserting claims for breach 
of contract, quantum meruit, and breach of the implied covenant of good faith and fair 
dealing.  Compl. [ECF No. 1] ¶¶ 26–39.  In March 2023,6 the Armed Forces Office moved 
to dismiss Fairview’s claims for lack of subject-matter jurisdiction, failure to state a claim 
upon which relief may be granted, and failure to join MIM and MCA as necessary parties.  



(PJS/JFD) at ECF No. 106.  In July 2024, Singh was sentenced to a 27-month imprisonment 
term.  Id. at ECF No. 145.                                                
6    Due to delays in effecting service, the Armed Forces Office did not enter an 
appearance until February 2023.  ECF Nos. 16–18.                          
ECF Nos. 24–28.  The motion was denied.  See Fairview Health Servs. v. Armed Forces 
Off. of the Royal Embassy of Saudi Arabia, 

, at 825 (D. Minn. 2023).  
The  Armed  Forces  Office  subsequently  filed  a  responsive  pleading  that  included 

counterclaims and third-party claims.  ECF No. 42.  In September 2023, Fairview and 
MCA moved to dismiss the claims against them, ECF Nos. 56, 60, and the motions were 
granted without prejudice to permit the Armed Forces Office the opportunity to seek leave 
to amend, see Fairview Health Servs., 705 F. Supp. 3d at 918.  The Armed Forces Office 
subsequently sought leave to amend, and Magistrate Judge Leung granted the motion.  ECF 

No. 129.                                                                  
The Armed Forces Office has now filed an Amended Answer, ECF No. 130, and 
again asserts counterclaims and third-party claims, ECF No. 131.  The Armed Forces 
Office brings two counterclaims against Fairview: breach of contract and breach of the 
implied covenant of good faith and fair dealing.  Id. ¶¶ 128–51.  It brings one claim against 

MIM and GMS for breach of implied contract.  Id. ¶¶ 152–64.  Two claims are asserted 
against MIM, GMS, Singh, and Saad: unjust enrichment/quantum meruit and conversion.  
Id. ¶¶ 165–92.  Lastly, the Armed Forces Office brings three claims against MCA for 
breach of contract, breach of fiduciary duty, and contribution.  Id. ¶¶ 193–238.  Fairview, 
MCA, and Saad separately move to dismiss each claim against them.  ECF Nos. 146, 148, 

166.  Fairview also moves to strike one of the Armed Forces Office’s affirmative defenses: 
comparative fault.  ECF No. 153.                                          
                           II                                        
In reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6), a 
court must accept as true all of the factual allegations in the complaint and draw all 

reasonable inferences in the plaintiff’s favor.  Gorog v. Best Buy Co., 

 
(8th Cir. 2014) (citation omitted).  Although the factual allegations need not be detailed, 
they must be sufficient to “raise a right to relief above the speculative level.”  Bell Atl. 
Corp. v. Twombly, 

 (2007) (citation omitted).  The complaint must “state 
a claim to relief that is plausible on its face.”  

.  “A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the reasonable 
inference that the defendant is liable for the misconduct alleged.”  Ashcroft v. Iqbal, 

 (2009).  “[T]he tenet that a court must accept as true all of the allegations 
contained in a complaint is inapplicable to legal conclusions.”  

      
                          III                                        

                           A                                         
The Armed Forces Office’s first claim is against Fairview for breach of contract.  It 
alleges Fairview breached the Preferred Rate Agreements essentially by forwarding the 
checks to MIM, and that it was damaged by losing the $1.3 million payments and by paying 
MCA to search for the checks.  Am. Countercl. ¶ 143.  Fairview argues the Armed Forces 
Office has failed to plausibly allege a breach.  See ECF No. 149 at 9–11.  Fairview is right: 

the Armed Forces Office has not pleaded facts plausibly showing Fairview breached any 
duty under the Preferred Rate Agreements.                                 
Under Minnesota law, a breach-of-contract claim requires: “(1) a valid contract; 
(2) performance by the plaintiff of any conditions precedent; (3) a material breach of the 
contract by the defendant; and (4) damages.”  Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) (citation omitted); see Park Nicollet Clinic v. Hamann, 

 (Minn. 2011) (same).  Fairview disputes the third and fourth elements, 
arguing the Armed Forces Office has not plausibly alleged Fairview breached the contracts 
or that the Armed Forces Office suffered damages caused by any breach.  ECF No. 149 at 
10–17.                                                                    

The Armed Forces Office alleges Fairview breached the Preferred Rate Agreements 
by (a) failing to alert the Armed Forces Office that the checks had been made payable to 
MIM, (b) failing to prevent the checks from being delivered to MIM, and (c) failing to treat 
the debt as having been paid after initially receiving the checks.  Am. Countercl. ¶ 143.  
Fairview argues that none of the alleged breaches stems from any duty defined in the 

Preferred Rate Agreements.  ECF No. 149 at 10–11.  The Armed Forces Office responds 
that each duty Fairview is alleged to have breached is contained in the plain language of 
the Preferred Rate Agreements.  ECF No. 165 at 9–13.                      
A careful review of the Preferred Rate Agreements shows Fairview has the better 
argument.  Each Preferred Rate Agreement is just one page and contains identical language, 

save specific details like the invoice number and payment amount.  See Exs. A–P.  The text 
of each Preferred Rate Agreement is as follows:                           
     This  Preferred  Rate  Agreement  constitutes  the  full        
     understanding  between  Fairview  Health  Services  and         
     Medical Cost Advocate, Inc. (acting as an agent on behalf of    
     Armed Forces Office of the Royal Embassy of Saudi Arabia)       
     regarding  the  above-referenced  patient  and  service  dates.  
     Fairview  Health  Services  agrees  to  accept  a  flat  rate  of 
     $[amount] for services rendered.  The agreed upon amount is     
     the full amount due to the Facility or Healthcare Professional.  
     Provider shall not attempt to collect any additional monies     
     from the patient.  Provider shall not file arbitration or suit with 
     regards to this bill.                                           
     . . .                                                           
     This agreement and any requested forms should be returned by    
     fax  to   (866)  773-0887  or  via  email  to                   
     [email protected],  attention  Annemarie            
     Todd.                                                           
     Please contact Annemarie Todd at (201) 674-0366 with any        
     questions or concerns regarding this agreement.                 
     Accepted and Agreed                                             
Ex. A.  Each also contains a header with a date, account number, and specific details, and 
two signature lines: one for Annemarie Todd on behalf of MCA and one for Fairview.  See, 
e.g., 

                                                                 
(1)  The  Armed  Forces  Office  claims  Fairview  breached  the  Preferred  Rate 
Agreements first “by failing to[] alert the [Armed Forces Office] that the Checks delivered 
to  Fairview  had  been  made  payable  to  MIM  and  that  Fairview  deemed  this  to  be 
inconsistent with the [Preferred Rate Agreements].”  Am. Countercl. ¶ 143; see also ECF 
No. 165 at 9.  According to the Armed Forces Office, this duty to alert arises from the 
sentence, “Please contact Annemarie Todd . . . with any questions or concerns regarding 
this agreement.”  ECF No. 165 at 9–10.  The Armed Forces Office offers no legal support 
for that contention, 

 and none is apparent.  The sentence is informational, set off from 
substantive paragraph of the agreements, and would not ordinarily create any duty on 
Fairview’s part.  As Fairview points out, it never agreed to alert the Armed Forces Office 
of its own mistake.  ECF No. 181 at 4; see Watkins Inc. v. Chilkoot Distrib., Inc., 

 (8th Cir. 2013) (affirming summary judgment on a breach-of-contract claim 

where “Appellants have presented no law from the state of Minnesota, or any other 
authority, that persuades us they possess a cause of action for breach where, as here, the 
agreements are completely silent as to [the issue]”).  And if the “questions or concerns” 
sentence created any duty, that duty was not plausibly breached because Fairview did not 
have any questions or concerns.  ECF No. 181 at 5.  The Armed Forces Office’s first breach 

theory fails.                                                             
(2) The second breach the Armed Forces Office alleges is Fairview’s failure to 
“prevent the Checks from being delivered to MIM, a party that was not the intended 
recipient of the Checks.”  Am. Countercl. ¶ 143; see also ECF No. 165 at 10.  This duty, 
the Armed Forces Office argues, arises from three sources: the “questions or concerns” 

sentence described above, Fairview’s delivery instructions, and the clause that “Fairview 
Health Services agrees to accept a flat rate of $[amount] for services rendered.”  ECF No. 
165 at 10.  Again, the Armed Forces Office cites no legal authority for its arguments.  And 
again, these claims fall short of showing a breach of any duty.  The “questions or concerns” 
sentence does not plausibly allege any duty, as described above.  The delivery instructions 

provided to the Armed Forces Office later (instructing it to send the checks to Fairview, 
“Attention Maureen Ring”) were neither part of the “plain language” of the Preferred Rate 
Agreements, see, e.g., Ex. A, nor complied with by the Armed Forces Office, see Am. 
Countercl. ¶ 93 (“The mailing address was the same as shown in Ex. S but did not include 
the specific ‘attention’ to Maureen Ring.”); see also Russo, 

 (listing 
performance of any conditions precedent as a breach-of-contract claim requirement under 
Minnesota law).  Lastly, the clause stating, “Fairview agrees to accept a flat rate” did not 

create any duty for Fairview to accept checks payable to MIM, or anyone besides itself.  
As Fairview points out, it would not have been able to cash or deposit a check that was not 
made payable to it.  ECF No. 181 at 6–7.  The Armed Forces Office does not plausibly 
allege a breach under its second theory.                                  
(3) Third, the Armed Forces Office claims Fairview breached the Preferred Rate 

Agreements by failing to “treat the [Armed Forces Office’s] debt to Fairview as having 
been paid, once Fairview’s agent accepted payment from the [Armed Forces Office] for a 
debt owed to Fairview.”  Am. Countercl. ¶ 143; see also ECF No. 165 at 11.  The Armed 
Forces Office claims the duty to treat the debt as paid arises from the “Fairview agrees to 
accept a flat rate” sentence in the Preferred Rate Agreements.  ECF No. 165 at 11.  It argues 

that “[o]nce Fairview chose to forward the . . . checks to Fairview’s billing agent, Fairview 
also should have deemed the payment as having been accepted.”  

  But again, Fairview 
could not “accept” checks that listed a payee other than Fairview.  The Armed Forces 
Office’s third theory fails.                                              
The facts the Armed Forces Office presents in its Amended Counterclaims, taken 

as  true,  fail  to  plausibly  show  Fairview  breached  the  Preferred  Rate  Agreements.  
Fairview’s motion to dismiss will be granted as to Claim 1.               
                           B                                         
The Armed Forces Office’s second claim is that Fairview breached the implied 
covenant of good faith and fair dealing by failing to accept payment, failing to alert the 

Armed Forces Office to any concerns about the payee, and failing to acknowledge that it 
had received the checks and forwarded them to MIM.  Am. Countercl. ¶ 149.  Fairview 
primarily argues the Armed Forces Office has not sufficiently alleged it acted in bad faith.  
ECF No. 149 at 17–19.  Again, Fairview has the better argument.  The Armed Forces Office 
has not plausibly alleged facts tending to show Fairview acted in bad faith.   

“Under Minnesota law, every contract includes an implied covenant of good faith 
and  fair  dealing  requiring  that  one  party  not  ‘unjustifiably  hinder’  the  other  party’s 
performance of the contract.”  In re Hennepin Cnty. 1986 Recycling Bond Litig., 

 (Minn. 1995) (quoting Zobel & Dahl Constr. v. Crotty, 

 (Minn. 1984)); see also Restatement (Second) of Contracts § 205 (Am. L. Inst. June 

2024 Update).  The duty “governs the parties’ performance and prohibits a party from 
failing to perform for the purpose of thwarting the other party’s rights under the contract.”  
Team Nursing Servs., Inc. v. Evangelical Lutheran Good Samaritan Soc’y, 

, 
641–42 (8th Cir. 2006).  “[A] plaintiff alleging a claim for breach of the implied covenant 
of good faith and fair dealing ‘need not first establish an express breach of contract claim—

indeed, a claim for breach of an implied covenant of good faith and fair dealing implicitly 
assumes the parties did not expressly articulate the covenant allegedly breached.’”  Cox v. 
Mortg. Elec. Registration Sys., Inc., 

 (8th Cir. 2012) (quoting Hennepin 
Cnty., 

).  “Minnesota courts generally look to the defendant’s motive to 
determine whether the defendant has breached the implied covenant of good faith and fair 
dealing.”  BP Prods. N. Am., Inc. v. Twin Cities Stores, Inc., 

 (D. 
Minn. 2007).                                                              

Whether a party has acted in bad faith is generally a question of fact reserved for 
the fact-finder, see Anderson v. Medtronic, Inc., 

 (Minn. 1986), but 
that does not relieve a plaintiff of the burden to allege facts plausibly showing bad faith, 
see Miles v. Simmons Univ., 

, 1075 (D. Minn. 2021) (“A rule 
excluding fact questions from consideration on a Rule 12(b)(6) motion to dismiss would 

not faithfully reflect federal pleading standards.”).  Examples of the type of conduct that 
may constitute bad faith include:                                         
     wrongfully repudiating a contract, avoid[ing] performance by    
     affirmatively blocking the happening of a condition precedent,  
     refusing to allow a party to perform unless the performing      
     party  waived  other  contractual  rights,  and  using  a  party’s 
     rejection of an offer as a defense to contract liability when the 
     defendant persuaded the party to reject the offer in the first  
     place.                                                          
Cox, 

 (internal quotation marks and citations omitted).    
The Armed Forces Office has not plausibly alleged that Fairview acted in bad faith.  
The Armed Forces Office does not allege any of the types of conduct that Cox contemplates 
may constitute bad faith: it does not claim Fairview avoided performance, repudiated the 
contract, or refused to allow the Armed Forces Office to perform, for example.  Though 
the Armed Forces Office alleges Fairview’s bad faith “denied the [Armed Forces Office] 
the full benefit of its bargain,” Am. Countercl. ¶ 150, it received exactly what it bargained 
for: medical treatment for L.A. and R.A., see 

 ¶¶ 28–29.  Moreover, the Armed Forces 
Office alleges no ulterior, bad-faith motive for Fairview to have forwarded the checks to 
MIM.  Fairview clearly wants to be paid for the services it rendered, and there is no 
plausibly alleged motive for Fairview to maliciously forward checks intended for it to 

another entity, when the checks were made payable to that entity.  Fairview’s motion to 
dismiss Count 2 will be granted.                                          
                           C                                         
In its fourth claim,7 the Armed Forces Office alleges MIM, GMS, Singh, and Saad 
were unjustly enriched when they wrongfully retained the $1.3 million payment intended 

for Fairview.  See Am. Countercl. ¶¶ 178–181.  Only Saad moves to dismiss, arguing the 
Armed Forces Office hasn’t met its pleading burden.  ECF No. 167 at 6.  But here, the 
Armed Forces Office has alleged facts sufficient to state a plausible unjust enrichment 
claim against Saad.                                                       
To state an unjust enrichment claim, the Armed Forces Office must allege Saad “has 

knowingly received or obtained something of value for which [he] in equity and good 
conscience should pay.”  ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 

 (Minn. 1996) (internal quotation marks omitted); see Dahl v. R.J. Reynolds 
Tobacco Co., 

, 195–96 (Minn. Ct. App. 2007).  As an equitable remedy, 
unjust enrichment “does not apply when there is an enforceable contract” governing the 

parties’ relationship.  Caldas v. Affordable Granite & Stone, Inc., 

 
(Minn. 2012); see U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 

, 497 

7    No party has moved to dismiss the Armed Forces Office’s third claim: breach of 
implied contract against MIM and GMS, Am. Countercl. ¶¶ 152–64.           
(Minn. 1981).  Unjust enrichment “rest[s] on notions of justice and fairness rather than on 
any actual agreement between the parties.”  O’Brien & Wolf, LLP v. S. Cent. Minn. Elec. 
Workers’ Fam. Health Plan, 

 (Minn. Ct. App. 2018).     

The Armed Forces Office pleads a plausible unjust enrichment claim against Saad.  
It alleges Saad was “actively involved in and knowledgeable of the transactions” at 
Bridgewater Bank, Am. Countercl. ¶ 112; that Saad was the chief business development 
officer of MIM and GMS, id. ¶ 9; that, before GMS acquired MIM, Saad was the CEO of 
MIM, id.; that “Singh, Saad, GMS, and MIM knew that the checks comprising the Total 

PRA Payment were not intended for them” and nonetheless did not return them, id. ¶ 125; 
and that “MIM, GMS, Singh and/or Saad deliberately and fraudulently retained or spent 
the entire . . . amount,” id. ¶ 173.                                      
Saad’s arguments in support of dismissal are not persuasive.  He argues that the 
allegations are “scant and unavailing,” and that they indicate Singh—not Saad—had 

control of the funds.  ECF No. 167 at 6.  Saad has a point: the claims are more specific with 
respect to Singh.  See Am. Countercl. ¶¶ 113–21 (alleging Singh was named on the 
Bridgewater Bank account, that the funds were used to pay for Singh’s travel, and that 
Singh pleaded guilty to wire fraud in connection with her role at MIM and GMS).  Still, 
the claims against Saad are supported with sufficient facts to survive a Rule 12(b)(6) 

motion.  Along with the facts already referenced, the Armed Forces Office plausibly alleges 
Saad—in his role as CEO of MIM—executed the agreements between Fairview and MIM, 
that he knew of the transactions at issue, and even reached out to Armed Forces Office 
asking about the status of the Armed Forces Office’s payments on the invoices.  Id. ¶¶ 20, 
97, 112.  After MIM received and deposited the checks, Saad was the one who informed 
the Armed Forces Office “that the hospital received the checks,” causing the Armed Forces 
Office to believe the invoices had been properly paid.  Id. ¶ 98.  The Armed Forces Office 

has sufficiently alleged that Saad knowingly received something of value to which he was 
not entitled.                                                             
Saad’s argument against “shareholder liability” is also unavailing.  See ECF No. 
185 at 2–4.  To begin with, the argument was first raised in Saad’s reply brief.  Arguments 
raised for the first time in a reply brief are not usually entertained.  RedKing Foods LLC v. 

Minn Assocs. LP, No. 13-cv-0002 (PJS/JSM), 

, at *4 (D. Minn. Feb. 26, 
2014); see also D. Minn. LR 7.1(c)(3)(B) (“A reply memorandum must not raise new 
grounds for relief or present matters that do not relate to the opposing party’s response.”).  
More fundamentally, the Armed Forces Office does not assert Saad is liable in his capacity 
as a shareholder of MIM or GMS.  To the contrary, the Armed Forces Office specifically 

alleges Saad is liable in his personal capacity because he personally had knowledge of the 
funds and caused them to be retained.  See Am. Countercl. ¶¶ 112, 172–79.  Saad’s 
argument appears to spring from the Armed Forces Office’s reliance on C.H. Robinson 
Worldwide, Inc. v. U.S. Sand, LLC, No. 13-cv-1274 (JRT/FLN), 

 (D. Minn. 
Jan. 8, 2014).  See ECF No. 180 at 6–7.  In C.H. Robinson, the plaintiff sued a corporation, 

its CEO, and its owner for unjust enrichment, among other claims.  C.H. Robinson, 

, at *1.  But there, unlike here, the plaintiff alleged the individual defendants 
(the CEO and the owner) “‘used U.S. Sand’s corporate entity as a mere shell to secure 
valuable services from C.H. Robinson and then diverted the proceeds from those services 
to their own personal use,’ and ‘exercised such control over U.S. Sand such that it was their 
alter  ego.’”    Id.  at  *2.    The  Armed  Forces  Office  relies  on  C.H.  Robinson  for  the 
unremarkable  conclusions  that  a  court  may  deny  a  motion  to  dismiss  an  unjust 

enrichment/quantum meruit claim when the claimant alleged sufficient facts to state a 
plausible claim, and that it would be “unjust” or “morally wrong” to allow the defendant 
to retain profits derived from plaintiff’s services without paying for the services.  ECF No. 
180 at 6–7 (quoting C.H. Robinson, 

, at *6).  Notably, the Armed Forces 
Office does not claim Saad used MIM or GMS as a shell or alter ego in its pleadings or 

briefing.  In other words, Saad is not being sued because he is or was a shareholder of MIM 
and GMS; he is being sued because he is alleged to have personally exploited the funds.  
There  is  no  veil-piecing  problem  here.8    It  is  difficult  to  understand  why  an  unjust 
enrichment  claim  could  not  be  asserted  against  an  individual  when  the  complainant 
plausibly alleges the individual’s personal involvement.  Saad’s motion to dismiss will be 

denied as to Claim 4.                                                     



8    If the Armed Forces Office intended to allege shareholder liability, the claim would 
still survive.  In C.H. Robinson, the court found that the complaint’s allegations, “[]though 
sparse,” were enough to survive a motion to dismiss.  C.H. Robinson, 

, at 
*9.  The same is true here.  The Amended Counterclaims allege Saad failed to observe 
corporate formalities to enrich himself, Am. Countercl. ¶ 123, which is one of the Victoria 
Elevator  factors  used  to  determine  when  a  shareholder  can  be  liable  for  corporate 
obligations.  

 at *8 (citing Victoria Elevator Co. of Minneapolis v. Meriden Grain Co., 

 (Minn. 1979)).  “At the pleading stage, courts in this district have 
permitted claims against individual corporate defendants to proceed when plaintiffs make 
basic allegations as to one or more of these factors.”  

               
                           D                                         
In its fifth cause of action, the Armed Forces Office asserts a conversion claim 
against MIM, GMS, Singh, and Saad.  Am. Countercl. ¶¶ 182–92.  Again, Saad is the only 

third-party defendant moving to dismiss.  ECF No. 167.  Saad argues the claim is not 
plausibly  alleged  and  that  a  check  cannot  support  a  conversion  claim  because  it  is 
intangible.  Id. at 7; ECF No. 185 at 4–6.  These arguments are not persuasive.    
“The elements of common law conversion are (1) the plaintiff has a property interest 
and (2) the defendant deprives the plaintiff of that interest.”  Noble Sys. Corp. v. Alorica 

Cent., LLC, 

 (8th Cir. 2008) (quoting Olson v. Moorhead Country Club, 

 (Minn. Ct. App. 1997)); see DLH, Inc. v. Russ, 

 
(Minn. 1997) (defining conversion “as an act of willful interference with personal property, 
‘done without lawful justification by which any person entitled thereto is deprived of use 
and possession’” (quoting Larson v. Archer-Daniels-Midland Co., 

 

(Minn. 1948))).                                                           
Saad’s primary argument is short and simple: the Armed Forces Office failed to 
allege Saad received any funds and failed to plead any facts to show that Saad deprived the 
Armed Forces Office of any funds.  ECF No. 167 at 7.  Not so.  The Armed Forces Office 
alleged Saad’s personal involvement in receiving the funds with some particularity.  See 

Am. Countercl. ¶¶ 97, 98, 112 (pleading Saad knew about the transactions, reached out to 
the Armed Forces Office regarding the status of payments, and sent an email stating the 
checks had been received).                                                
In Saad’s reply brief, he argues (for the first time) that the conversion claim cannot 
withstand a 12(b)(6) motion because checks are intangible property.  See ECF No. 185 at 
4–6.  The Minnesota Court of Appeals has said that “a conversion claim is viable with 

respect to money only if the money is in a tangible form (such as a particular roll of coins 
or a particular stack of bills) and is kept separate from other money.”  TCI Bus. Cap., Inc. 
v. Five Star Am. Die Casting, LLC, 

 (Minn. Ct. App. 2017); see 
Streambend Props. II, LLC v. Ivy Tower Minneapolis LLC, No. A18-1488, 

, at *8 (Minn. Ct. App. June 3, 2019).  The TCI Business Capital court reached 

this conclusion for three reasons: (1) the Minnesota Supreme Court has typically defined 
property as goods and all of its prior opinions regarding conversion concerned tangible 
personal property, i.e., “items that can be seen and touched”; (2) the conclusion was 
consistent with the Minnesota Court of Appeals’ only precedential opinion to address the 
issue expressly; and (3) the conclusion also was “consistent with the traditional common-

law rule that an electronic financial transaction cannot be the basis of a conversion claim.”  
TCI Bus. Cap., Inc., 890 N.W. 2d at 428–29.  This jibes with the Eighth Circuit’s long-held 
understanding that Minnesota conversion law follows “the general rule . . . that the cause 
of action only applies to tangible property, or intangible property customarily merged in, 
or identified with, some document.”  H.J., Inc. v. Int’l Tel. & Tel. Corp., 

, 

1547 (8th Cir. 1989) (citations omitted); see Advanced Control Tech., Inc. v. Iversen, No. 
19-cv-1608 (DSD/TNL), 

, at *5 (D. Minn. Apr. 8, 2021) (same).   
Saad’s intangibility argument fails.  First, the argument was raised for the first time 
in reply.  RedKing Foods LLC, 

, at *4; D. Minn. LR 7.1(c)(3)(B).  Second, 
even if the argument is entertained, a stack of sixteen checks is not the type of “intangible” 
property Minnesota law contemplates as not qualifying for a conversion claim.  Unlike, for 
example, electronic funds, checks are “items that can be seen and touched.”  TCI Bus. Cap., 

Inc., 

.  And a check is considered intangible property “merged in, or 
identified with, some document,” such that it may be considered tangible.  H.J., Inc., 867 
F.2d at 1547;  see CyberOptics Corp. v. Yamaha Motor Co., No. 3-95-1174, 

, at *25 (D. Minn. July 29, 1996) (“Under the traditional rule, conversion may apply 
to . . . documents in which intangible rights are merged, such as promissory notes, bank 

checks, bonds, and bills of lading . . . .” (emphasis added)).  A few examples of intangible 
property—not subject to a conversion claim—are instructive.  Trade secrets, proprietary 
information, intellectual property, and digital copies of photographs have been found 
intangible by courts applying Minnesota law.  See Advanced Control Tech., Inc., 

, at *5 (trade secrets and proprietary information); Beaulieu v. Stockwell, 

 (8th Cir. 2022) (intellectual property and digital copies of photos).  A physical 
check—or  sixteen  of  them—designating  specific  amounts  to  be  paid  is  qualitatively 
different from the sorts of property usually considered intangible.       
As part of his intangibility argument, Saad asserts that the Armed Forces Office’s 
conversion claim fails because it did not hold a property interest in the checks under 

Minnesota conversion law.  ECF No. 185 at 6.  The Armed Forces Office has sufficiently 
pleaded it had a property interest in the checks.  See Am. Countercl. ¶ 189 (“The [Armed 
Forces Office] is being unlawfully deprived of its property as a result of MIM’s, GMS’, 
Singh’s, and Saad’s misconduct . . . .”); see also FCA Constr. Co. v. Singles Roofing Co., 
No. 09-cv-3700 (ADM/AJB), 

, at *2 (D. Minn. Nov. 3, 2011) (denying 
a motion to dismiss a conversion claim when the plaintiff “has alleged that it held a property 
interest in the money at issue and was wrongfully deprived of its property interest in that 

money by [defendant’s] misappropriation of it”).  Saad’s motion to dismiss will be denied 
as to Claim 5.                                                            
                           E                                         
The Armed Forces Office and MCA entered into an agreement in which MCA 
would negotiate invoices with Fairview on the Armed Forces Office’s behalf.  See Ex. R 

[ECF No. 132-2].  The Armed Forces Office alleges MCA breached the agreement by 
negotiating a higher invoice payment for one of the fourteen invoices.  The Armed Forces 
Office alleges that invoice 6023 (Exs. K–M) was originally for $216,971.50, and after 
MCA negotiated on its behalf, the Armed Forces Office paid $258,154.76—roughly 
$41,000 more than Fairview charged.  Am. Countercl. ¶¶ 78–81.  MCA argues that release 

and indemnity clauses within the contract bar the claim.  See ECF No. 147 at 11.  But it is 
plausible these clauses may be unenforceable, and the Armed Forces Office plausibly 
alleges a breach.                                                         
Under Minnesota law,9 a breach-of-contract claim requires: “(1) a valid contract; 
(2) performance by the plaintiff of any conditions precedent; (3) a material breach of the 


9    In the last round of Rule 12 motions, there was some dispute about which state’s 
law applied to the Armed Forces Office’s third-party claims against MCA.  See Fairview 
Health Servs., 705 F. Supp. 3d at 913 n.4.  Now, all parties seem to agree that Minnesota 
law governs each of the Armed Forces Office’s claims.  See ECF Nos. 147, 149, 165, 167, 
171, 180 (each relying exclusively on Minnesota law).                     
contract by the defendant; and (4) damages.”  Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) (citation omitted).  MCA does not argue that the Armed Forces 
Office failed to plausibly allege any element of a breach-of-contract claim.  See ECF No. 

147.  It argues the claim is barred by the very contract at issue.  

 at 12–20.  This claim, 
then, will turn on whether the exculpatory clause in the contract is enforceable and covers 
the conduct at issue.                                                     
The agreement between MCA and the Armed Forces Office includes four provisions 
that MCA thinks are relevant to the Armed Forces Office’s three claims against it: (1) a 

term providing that the Armed Forces Office “understands and agrees that it will be its 
obligation to pay the Patient’s health care provider”; (2) a term specifying both parties 
agree the Armed Forces Office is solely responsible for bill payment; (3) an exculpatory 
clause, entitled “Release,” providing the Armed Forces Office agrees to release MCA 
“from any and all claims . . . arising out of the performance of the MCA of the services 

contemplated” by the agreement; and (4) and indemnity clause providing the Armed Forces 
Office will indemnify and hold MCA harmless against the same.  ECF No. 147 at 13–14 
(quoting Ex. R §§ 2.3, 2.4, 6.1, 6.2).  The clauses that MCA argues would preclude the 
breach-of-contract claim here are the exculpatory clause and the indemnity clause.   
Under  Minnesota  law,  both  exculpatory  clauses  and  indemnity  clauses  are 

disfavored.  “[E]xculpatory clauses are disfavored and will not be enforced if the clause 
‘purports to release the benefitted party from liability for intentional, willful or wanton 
acts.’”  Gage v. HSM Elec. Prot. Servs., Inc., 

 (8th Cir. 2011) (quoting 
Schlobohm v. Spa Petite, Inc., 

 (Minn. 1982)); see also Just. v. 
Marvel, LLC, 

, 901 (Minn. 2022) (“We have previously recognized that 
both types of provisions are disfavored in the law.”).  The Minnesota Supreme Court has 
said that “exculpatory clauses do not violate public policy when applied to claims of 

ordinary negligence, but do violate public policy, and are therefore unenforceable, against 
claims of ‘willful and wanton negligence.’”  Gage, 

 (quoting Morgan Co. 
v. Minn. Mining & Mfg., 

 (Minn. 1976)).  “But whether an exculpatory 
clause is enforceable is a fact-based question that usually cannot be resolved on a Rule 12 
motion.”  Untiedt’s Vegetable Farm, Inc. v. S. Impact, LLC, 

, 766 (D. 

Minn. 2020) (citing Schlobohm v. Spa Petite, Inc., 

, 923–26 (Minn. 1982)).   
MCA primarily argues exculpatory and indemnity clauses are enforceable where, 
as here, they do not attempt to eliminate liability for willful and wanton negligence.  ECF 
No. 147 at 14–15; see Ex. R §§ 6.1, 6.2 (excepting gross negligence and intentional 
misconduct  from  each  clause).    But  although  Minnesota  courts  “may  uphold  the 

enforceability of a contractual indemnity clause, [they] disfavor agreements ‘seeking to 
indemnify the indemnitee for losses occasioned by its own negligence.’”  Dewitt v. London 
Rd. Rental Ctr., Inc., 

 (Minn. 2018) (quoting Nat’l Hydro Sys. v. M.A. 
Mortenson Co., 

 (Minn. 1995).  “Accordingly, we strictly construe 
such indemnity clauses” against the indemnitee (MCA).  Id.; see also Just., 979 N.W.2d at 

900 (“[B]oth indemnity clauses and exculpatory clauses are subject to the same standard 
of strict construction.”).  MCA claims that because the clauses specifically except “grossly 
negligent behavior or intentional misconduct,” it is understood that ordinary negligence is 
covered.  ECF No. 147 at 15 (“Any ambiguity that might be claimed to exist is addressed 
by the fact that the Agreement excepts ‘gross negligence’ and ‘intentional misconduct’ – 
thus, any reader would be informed that under the exculpatory clause MCA is being 
released, in advance, for any conduct by MCA that constitutes ordinary negligence.”).  But 

that sort of coverage-by-implication is squarely rejected in Minnesota law.  “For an 
indemnity  clause  to  pass  strict  construction,  the  contract  must  include  an  ‘express 
provision’  that  ‘indemnif[ies]  the  indemnitee  for  liability  occasioned  by  its  own 
negligence; such an obligation will not be found by implication.’”  Dewitt, 910 N.W. at 
417 (quoting Farmington Plumbing & Heating Co. v. Fischer Sand & Aggregate, Inc., 

 (Minn. 1979).  Considering that such clauses are “disfavor[ed]” and their 
enforceability “usually cannot be resolved on a Rule 12 motion,” the better answer is to 
reject MCA’s argument that the claims are barred by the contract terms.  Id. at 416; 
Untiedt’s Vegetable Farm, Inc., 493 F. Supp. 3d at 766.                   
  Besides unenforceability, the Armed Forces Office’s primary argument is that the 

specific clauses at issue do not apply to MCA’s actions.  The exculpatory clause applies to 
claims “arising out of the performance of MCA of the services contemplated by the 
Agreement.”    Ex.  R  § 6.1.10     The  Armed  Forces  Office  argues  that  because  MCA 
negotiated a higher price on one instance (when it was supposed to negotiate lower prices), 
it was not “performing” under the contract.  ECF No. 171 at 5–8, 10–13.  A review of the 

applicable contract clauses confirms the contract is filled with references to lowering the 


10   Similarly, the indemnity clause applies to “claims made or causes of action . . . 
arising out of or relating to the MCA services or other matters authorized by [the Armed 
Forces Office] pursuant to this Agreement.”  Ex. R § 6.2.                 
cost of treatment, and the Armed Forces Office’s reading is plausible.  The first recital 
clause confirms that the Armed Forces Office “would like to realize a lower price” for 
treatments.  Ex. R at 1 (under “WHEREAS”).  The “Patient Authorization” clause provides 

that the Armed Forces Office “authorizes MCA to act as the Patient’s authorized personal 
representative for the purpose of obtaining a reduction in the cost” of treatment.  Id. § 1.5 
(emphasis  added).    Another  section—“Retrospective  Negotiation”—refers  to  the 
“Adjusted Price” that MCA procures as “the reduced price the provider is willing to accept 
for the procedure after MCA negotiation.”  Id. § 2.1 (emphasis added).  Plainly, the Armed 

Forces Office contracted with MCA for price reductions.  It has plausibly alleged that MCA 
acted outside the scope of performance when it obtained a higher rate for invoice 6023.  
MCA’s motion to dismiss Claim 6 will be denied.                           
                           F                                         
In its seventh claim, the Armed Forces Office alleges MCA breached a fiduciary 

duty to it when MCA negotiated the Preferred Rate Agreements in its own self-interest, by 
disrupting a “simple” negotiation and payment process, by giving the Armed Forces Office 
ambiguous payment instructions, and by disclosing confidential information to Fairview.  
Am. Countercl. ¶¶ 214–22.  MCA moves to dismiss the claim in its entirety.  ECF No. 147.  
MCA again argues the claim is barred by the agreement’s terms.  ECF No. 147 at 11, 16.   

In  Minnesota,  a  breach-of-fiduciary-duty  claim  has  four  elements:  “[1]  duty, 
[2] breach, [3] causation, and [4] damages.”  Hansen v. U.S. Bank Nat’l Ass’n, 

, 327 (Minn. 2019).  “A fiduciary relationship is characterized by a ‘fiduciary’ who 
enjoys a superior position in terms of knowledge and authority and in whom the other party 
places a high level of trust and confidence.”  Carlson v. SALA Architects, Inc., 

, 330–31 (Minn. Ct. App. 2007) (citing Toombs v. Daniels, 

 
(Minn. 1985)).  As explained in the December 2023 order, the Armed Forces Office has 

plausibly alleged a de facto fiduciary relationship existed between it and MCA.  See 
Fairview Health Servs., 705 F. Supp. 3d at 916.  Further, “in Minnesota, an agent owes 
fiduciary duties to its principal,” U.S. Bank Nat’l Ass’n v. San Antonio Cash Network, 

 (D. Minn. 2017), and the Armed Forces Office has sufficiently alleged 
it engaged MCA as its agent, see Fairview Health Servs., 705 F. Supp. 3d at 916; see also 

Am. Countercl. ¶¶ 39(a), 195, 209, 232; see also Ex. R § 1.4 (“MCA will be an agent for 
Client . . . .”).                                                         
MCA  primarily  argues  the  breach-of-fiduciary-duty  claim  must  be  dismissed 
because the exculpatory and indemnity clauses discussed above bar these claims.  The 
enforceability  of  the  exculpatory  and  indemnity  clauses  was  discussed—and  MCA’s 

argument was rejected—above.  For the same reasons, MCA’s release/indemnity argument 
is rejected here.                                                         
Secondarily, MCA argues, albeit briefly, that the Armed Forces Office’s alleged 
harm is theoretical or implausible.  ECF No. 147 at 11, 12 n.3.  MCA has a point.  For 
example, the Armed Forces Office alleges MCA breached its fiduciary duty “by forwarding 

approximately  20  confidential  emails  to  Fairview  without  the  AFO’s  knowledge, 
permission, or consent.”  Am. Countercl. ¶ 221.  Recall that the Armed Forces Office and 
MCA  agreed  to  hold  each  other’s  confidential  information  in  “strict  confidence.”  
Id. ¶ 39(f)–(g); see also Ex. R § 4.2.  The Armed Forces Office plausibly alleges MCA 
breached its duty to hold its confidential information in confidence by sharing with 
Fairview several confidential emails and other communications.  Am. Countercl. ¶¶ 109–
10.  The Armed Forces Office asserts generally that it lost $1.3 million due to MCA’s 

breach and was forced to pay MCA $7,875 in searching for the checks, but the $1.3-million 
loss had already occurred by the time the confidential emails were shared, and it is unclear 
how sharing those emails could have resulted in MCA investigation fees.  See id. ¶ 225(a), 
(c).                                                                      
Other of the Armed Forces Office’s breach-of-fiduciary-duty claims get closer to 

plausibly supporting a damages theory.  For example, the Armed Forces Office alleges 
MCA  breached  its  fiduciary  duty  “giving  the  [Armed  Forces  Office]  confusing  and 
ambiguous instructions and communications regarding payee information for the Checks.”  
Am. Countercl. ¶ 220.  Recall that MCA is the entity that asked the Armed Forces Office 
to send payment “for Minnesota Medicine” to Fairview and include “Attention Maureen 

Ring.”  Id. ¶ 88.  It is plausible, then, that the Armed Forces Office relied on its agent for 
payment instructions when making the checks payable to Minnesota Medicine.  But, again, 
the  Armed  Forces  Office  did  not  follow  those  instructions.    It  neglected  to  include 
“Attention Maureen Ring” on the package or the checks, and Fairview forward them to 
MIM.  It would strain plausibility to say MCA breached its fiduciary duty to the Armed 

Forces Office when the Armed Forces Office did not follow MCA’s instructions.  It is 
plausible that the exculpatory and indemnity clauses are unenforceable, but the Armed 
Forces Office still does not plausibly allege damages stemming from a breach of fiduciary 
duty.  MCA’s motion to dismiss Claim 7 will be granted.                   
                           G                                         
The Armed Forces Office asserts that, to the extent it is found liable to Fairview, it 
is entitled to contribution from MCA.  Am. Countercl. ¶ 237.  MCA argues that the 

agreement the Armed Forces Office and MCA entered precludes contribution because the 
Armed Forces Office agreed it would assume sole responsibility for payments and would 
indemnify MCA.  ECF No. 147 at 11–12.                                     
“Contribution is an equitable doctrine that requires that persons under a common 
burden share that burden equitably.”  Far E. Aluminium Works Co. v. Viracon, Inc., 

, 1115 (D. Minn. 2021) (quoting Nuessmeier Elec., Inc. v. Weiss Mfg. Co., 

 (Minn. Ct. App. 2001)).  “Contribution requires proof of ‘(1) 
common liability of two or more actors to the injured party; and (2) the payment by one of 
the actors of more than its fair share of that common liability.’”  

 (quoting Nuessmeier 
Elec., 

).  “Common liability ‘arises when both parties are liable to the 

injured party for part or all of the same damages.’”  

 (quoting Nuessmeier Elec., 

).                                                           
In the previous round of Rule 12 motions, the Armed Forces Office’s contribution 
claim against MCA was dismissed because all of its other claims against MCA were 
dismissed.  See Fairview Health Servs., 705 F. Supp. 3d at 918 (“The Armed Forces Office 

does not—and could not—plausibly allege that it and MCA share common liability to 
Fairview.  MCA’s motion will be granted as to [contribution].”)  Now, however, because 
the Armed Forces Office’s breach-of-contract claim against MCA (Claim 6) survives, the 
contribution claim should survive as well.                                
                          IV                                         
Fairview moves to strike one of the Armed Forces Office’s affirmative defenses 
pursuant to Rule 12(f).  In the Armed Forces Office’s Amended Answer, it asserts eighteen 

affirmative defenses, and “reserves the right to assert additional affirmative defenses that 
may be identified in discovery.”  Am. Answer [ECF No. 130] at 10–12, ¶¶ A–S.  One of 
the affirmative defenses, labeled “G,” states in full, “Fairview’s claims are barred in whole 
or in part by Fairview’s own comparative fault.”  Id. at 11, ¶ G.  Fairview moves to strike 
the affirmative defense as insufficient as a matter of law.               

A  party  may  move  to  strike  “from  a  pleading  an  insufficient  defense  or  any 
redundant, immaterial, impertinent, or scandalous matter.”  Fed. R. Civ. P. 12(f)(2).  “The 
court may grant a motion to strike an affirmative defense only if no questions of law or fact 
exist  and  the  defense  sought  to  be  stricken  could  not  succeed  under  any  set  of 
circumstances.”  First Bank Sys., Inc. v. Martin, 

 (D. Minn. 1991).  

Motions to strike are “viewed with disfavor and are infrequently granted.”  Lunsford v. 
United States, 

 (8th Cir. 1977).  “A motion to strike a defense will be 
denied if the defense is sufficient as a matter of law or if it fairly presents a question of law 
or fact which the court ought to hear.”  

 (quoting 2A Moore’s Federal Practice P 12.21 
at 2437 (2d ed. 1975)).                                                   
Fairview sued the Armed Forces Office for breach of contract, quantum meruit, and 

breach of the implied covenant of good faith and fair dealing.  Compl. ¶¶ 26–39.  It argues 
that because its claims are based in breach of contract, a comparative fault defense fails as 
a matter of law.  ECF No. 154 at 9–11.  It is true that the Minnesota Supreme Court has 
said the comparative-fault statute, 

, subdiv. 1 (2023), does not apply 
to contract claims.  Leamington Co. v. Nonprofits’ Ins. Ass’n, 

, 677–78 
(Minn. Ct. App. 2003) (citing Lesmeister v. Dilly, 

, 101–02 (Minn. 1983).  

Minnesota courts have consistently held the same.  See Sander & Co. v. N. Cap. Ins., No. 
A06-971, 

, at *3 (Minn. Ct. App. July 3, 2007) (“[T]he district court 
applied  a  negligence-based  remedy  rather  than  a  contract-based  remedy  . . . .    The 
comparative-fault  statute,  however,  does  not  apply  to  contract  claims.”);  Residential 
Funding Co., LLC v. First Mortg. Corp., No. 13-cv-3490 (SRN/HB), 

, 

at *12 (D. Minn. Dec. 21, 2018) (“Defendant appears to invoke the concept of comparative 
negligence or comparative fault from tort law, which has no bearing in this contractual 
indemnification action.”); Sievert v. LaMarca, 

 (Minn. Ct. App. 1985) 
(“We are mindful of the fact that ordinarily the comparative fault statute does not apply to 
contract cases.”).                                                        

The Armed Forces Office’s contrary argument is not persuasive.  It cites Mike’s 
Fixtures, Inc. v. Bombard’s Access Floor Sys., Inc., 

 (Minn. Ct. App. 
1984).  ECF No. 163 at 4–5.   In Mike’s Fixture’s, the court explained that Minnesota’s 
comparative fault statute was not intended to apply to contract cases because (1) “contract 
law has never spoken in terms of fault,” and (2) “the statute derives from the Uniform 

Comparative Fault Act,” which says “[t]here is no intent to include in the coverage of the 
Act actions that are fully contractual in their gravamen and in which the plaintiff is suing 
solely because he did not recover what he contracted to receive.”  Mike’s Fixture’s, 354 
N.W.2d at 839–40 (quoting Lesmeister, 330 N.W.2d at 101–02).  But, it concluded, “as to 
items of consequential damage, the unreasonable failure to mitigate damages is ‘fault’ 
which can be apportioned under the comparative fault statute.”  

.  The Armed 
Forces Office already asserted Fairview’s failure to mitigate as an affirmative defense.  

Am. Answer at 11, ¶ F.  And its damages claims ($1.3 million in lost funds and $7,875 in 
payment to MCA to search for the lost checks) cannot reasonably be understood as 
consequential damages.  Consequential damages “are, for lack of a better word, ‘the 
consequence of special circumstances known to or reasonably supposed to have been 
contemplated by the parties when the contract was made.’”  Far E. Aluminium Works Co. 

v. Viracon, Inc., 

 (8th Cir. 2022) (quoting Kleven v. Geigy Agric. 
Chems., 

 (Minn. 1975)).  “The prototypical example is a loss of profits 
from missing a delivery date.”  

  The checks being lost, stolen, or made payable to the 
wrong party, and the ensuing fees paid to search for the checks, do not appear to have been 
contemplated by the parties when the contracts were made, and the Armed Forces Office 

presents no credible argument that they were.  See ECF No. 165 at 13–16.  The situations 
to which the comparative fault statute might apply to contract claims are not present here.  
Affirmative Defense G is insufficient as a matter of law and does not fairly present a 
question which the court ought to hear.  See Lunsford, 

.  The defense will 
be stricken.                                                              

Based on the foregoing, and on all the files, records, and proceedings herein, IT IS 
ORDERED THAT:                                                             

1.   Fairview Health Services’ Motion to Dismiss the Armed Forces Office’s 
Amended Counterclaim [ECF No. 148] is GRANTED.  Claims 1 and 2 are DISMISSED 
with prejudice.                                                           
2.   Sherif Saad’s Motion to Dismiss [ECF No. 166] is DENIED.        
3.   Medical Cost Advocate, Inc.’s Motion to Dismiss Armed Forces Office of 

Royal Embassy of Saudi Arabia’s Amended Third-Party Complaint [ECF No. 146] is 
GRANTED in part.  Claim 7 is DISMISSED with prejudice.  The motion is in all other 
respects DENIED.                                                          
4.   Fairview’s  Motion  to  Strike  the  Armed  Forces  Office’s  Affirmative 
Defense G [ECF No. 153] is GRANTED.                                       


Dated:  October 10, 2024           s/ Eric C. Tostrud                     
                              Eric C. Tostrud                        
                              United States District Court