Case: 19-30995     Document: 00515545334        Page: 1   Date Filed: 08/28/2020




                                 REVISED

        United States Court of Appeals
             for the Fifth Circuit
                                                                   United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                                                                    August 25, 2020
                                No. 19-30995                         Lyle W. Cayce
                                                                          Clerk

 Colonial Oaks Assisted Living Lafayette, L.L.C.;
 Colonial Oaks Memory Care Lafayette, L.L.C.,

                                                      Plaintiffs—Appellants,

                                    versus

 Hannie Development, Inc.; Cedar Crest, L.L.C.; Maurice
 Hannie; Nicol Hannie; Joyce Hannie,

                                                     Defendants—Appellees.


                 Appeal from the United States District Court
                    for the Western District of Louisiana
                          USDC No. 6:18-CV-1606


 Before Davis, Jones, and Willett, Circuit Judges.
 Don R. Willett, Circuit Judge:
       Slogging through the countless, and exacting, rules of procedure can
 daunt—and, when not mastered, doom—litigants. But these provisions
 aren’t without purpose. The aim of many rules of civil, criminal, and
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                                         No. 19-30995


 appellate procedure, is to provide notice—to give the other side fair warning
 of the claims, charges, or contentions that they must confront. 1
         That’s no less true for Federal Rule of Civil Procedure 9(b), which
 requires that allegations of fraud or mistake be pleaded with particularity. 2
 But Rule 9(b) isn’t limited in purpose to providing notice and thus, like all
 procedural rules, protecting resources. 3 It also exists to prevent harm. 4 This
 heightened pleading standard makes it especially important for courts to
 weed out those cases with no “reasonably founded hope” of substantiation,
 even after a long and expensive discovery process, 5 saving courts and litigants
 time and money.
         In this case, Colonial Oaks Assisted Living Lafayette, LLC and
 Colonial Oaks Memory Care Lafayette, LLC (collectively, Buyers)
 purchased two care facilities from Hannie Development, Inc. and Cedar



         1
          See, e.g., Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 561 (2007) (discussing the
 need to provide parties with fair notice).
         2
           Fed. R. Civ. P. 9(b) (“In all averments of fraud or mistake, the circumstances
 constituting fraud or mistake shall be stated with particularity.”).
         3
           See, e.g., Twombly, 550 U.S. at 559–60 (describing the significant costs associated
 with antitrust litigation); Ashcroft v. Iqbal, 556 U.S. 662, 685 (2009) (“Litigation, though
 necessary to ensure that officials comply with the law, exacts heavy costs in terms of effi-
 ciency and expenditure of valuable time and resources that might otherwise be directed to
 the proper execution of the work of the Government.”)
         4
           See United States ex rel. Grubbs v. Ravikumar Kanneganti, 565 F.3d 180, 190 (5th
 Cir. 2009) (explaining that Rule 9(b)’s objectives are “ensuring the complaint ‘provides
 defendants with fair notice of the plaintiffs’ claims, protects defendants from harm to their
 reputation and goodwill, reduces the number of strike suits, and prevents plaintiffs from
 filing baseless claims then attempting to discover unknown wrongs’” (quoting Melder v.
 Morris, 27 F.3d 1097, 1100 (5th Cir. 1994))); 2 James Wm. Moore et al., Moore’s
 Federal Practice § 9.03 [1] [a], at 9–16 to 9–18 (3d ed. 2005).
         5
             Twombly, 550 U.S. at 559.




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 Crest, LLC (collectively, Sellers). Believing that Sellers made fraudulent—
 or, at best, negligent—misrepresentations in the parties’ sale agreements,
 Buyers filed suit. In addition to suing Sellers, Buyers also brought claims
 against Sellers’ representatives, Nicol Hannie and Maurice (Mo) Hannie,
 and Mo’s wife, Joyce Hannie, in their individual capacities. At the
 recommendation of the Magistrate Judge, the district court dismissed all of
 Buyers’ claims with prejudice for failure to state a claim. We agree that
 Buyers have not stated a plausible claim upon which relief can be granted and
 affirm.
                                              I
           Buyers entered into two separate, but materially identical, Asset
 Purchase Agreements with Sellers to purchase two Adult Residential Care
 Provider (ARCP 6) facilities: Rosewood Retirement & Assisted Living and
 Cedar Crest Personal Memory Living.
           Each APA also included a Holdback Escrow Agreement (HEA),
 which required the parties to hold 4% of each transaction’s sale proceeds in
 escrow. 7 These holdback amounts provided the “sole and exclusive” post-
 closing remedy, except in the case of “fraud, bad faith or intentional
 misconduct,” and they were to be released to Sellers one year after closing,
 unless Buyers submitted a valid claim to them. The HEAs also included a
 mandatory arbitration clause.



           6
            ARCPs are similar, but distinct, from nursing facilities. Unlike ARCPs, nursing
 facilities provide “nursing services for persons who, by reason of illness or physical
 infirmity or age, are unable to properly care for themselves.” LAC 48:9701. ARCPs, by
 contrast, provide supportive personal services, supervision and assistance, and activities
 and health-related services. LAC 48:6801(B).
           7
               As with the APAs, the HEAs, for the purpose of our review, are materially
 identical.




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        The APAs provided an eight-month due diligence period for Buyers
 to ensure the Facilities were above board. Those eight months passed
 without incident, and the parties closed, escrowing the holdback amounts.
        In the year following the closing, Buyers pursued arbitration, arguing,
 among other things, that Sellers had knowingly and intentionally breached
 the representations and warranties in the APAs. In relevant part, the APAs
 included two provisions confirming Sellers’ compliance with the applicable
 laws and regulations:
        Each of the Seller and the Facility is in material compliance
        with each, and is not in material violation of any, applicable
        Law to which the Facility is subject . . . .
        To the Seller’s knowledge, Seller is in compliance in all
        material respects with all applicable Health Care Laws.
 Despite these attestations, Buyers argued, Sellers were in violation of
 Chapter 68 of the Louisiana Adult Residential Care Provider Licensing
 Standards, 8 both on the date the APAs were signed and the date of closing.
 Buyers alleged that the Facilities were, knowingly and intentionally,
 improperly staffed, based on the needs of the residents, to provide the
 services required by Chapter 68.
        The arbitrator severed this claim from the arbitration proceedings,
 holding that:
        Buyers’ staffing misrepresentation claim is not arbitrable
        because it is a fraud claim which does not fall within the APA
        section 18 exclusive remedy provisions. In this instance,
        according to La. C.C. Art. 1953, “fraud is a misrepresentation
        or a suppression of the truth made with the intention either to
        obtain unjust advantage for one party or to cause a loss or


        8
            See LAC 48:1, Chapter 68.




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         inconvenience to the other.” Buyers allege Sellers
         “intentionally and knowingly breached their contract
         warranties” by “misrepresenting that the staffing at the
         facilities comply with the applicable laws.” The arbitrator
         agrees with the argument of the Sellers that the alleged
         intentional misrepresentation is a claim for intentional
         misrepresentation, or in other words, fraud. 9
         The parties continued with their arbitration, and the arbitrator
 ultimately issued a Final Award in favor of Buyers, awarding them more than
 $50,000 plus costs and fees. 10
         In the meantime, Buyers, with their fraud claims severed from the
 arbitration, sued Sellers for negligent and fraudulent misrepresentation 11 and
 the Hannies (in their individual capacities) for fraudulent misrepresentation.
         Both Sellers and Nicol Hannie, individually, moved to dismiss under
 Federal Rule of Civil Procedure 12(b)(6). At the recommendation of the
 Magistrate Judge, the district court granted Buyers leave to amend to more
 specifically support their claims against the individual defendants.




         9
           Mot./Appl. to Modify or Alternatively Partially Vacate Arbitration Awards Ex.
 G, at 3–4 in Case No. 6:19-CV-00833 (W.D. La. June 27, 2019) (cleaned up). A copy of this
 Arbitrator’s Interim Order No. 5 is not part of the record, but it is in the post-arbitration
 proceedings in the Western District of Louisiana. As both parties agree, we may take
 judicial notice of matters of public record, such as Order No. 5, when ruling upon a Rule
 12(b)(6) motion. See Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011).
         10
           The award was confirmed by the district court in a separate proceeding. R. Doc.
 18 in Case No. 6:19-CV-00833, 2019 U.S. Dist. LEXIS 130648 (W.D. La. Sept. 16, 2019).
         11
          The complaint describes the cause of action as “contractual warranty claims,”
 which Sellers have distilled as being a claim “for fraudulent and/or negligent
 misrepresent.” At the time, Buyers did not contest this description before the district
 court.




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         Buyers filed their Amended Complaint, and Sellers and the Hannies
 once again sought dismissal. 12 This time, the Magistrate Judge recommended
 that the district court grant the motions and dismiss all claims with prejudice
 because (1) any claim for negligent misrepresentation was referable to
 arbitration under the APA, and (2) Buyers had failed to plead sufficient facts
 to state a fraud claim against Sellers or the Hannies.
         The district court adopted the Magistrate Judge’s report and
 recommendation in full, and Buyers now appeal.
                                                II
         We review a district court’s dismissal for failure to state a claim de
 novo, accepting the complaint’s well-pleaded allegations as true. 13 A
 complaint should not be dismissed unless it fails to raise a right to relief above
 the speculative level. 14
         But because Buyers have raised a fraud claim, the complaint must also
 survive the particularity requirements of Federal Rule of Civil Procedure
 9(b). 15 “At a minimum,” this Rule requires Buyers to plead the “who, what,
 where, when, and how of the alleged fraud,” and “where allegations are
 based on information and belief, the complaint must set forth a factual basis



         12
           Specifically, Sellers filed a second 12(b)(6) Motion to Dismiss and a Motion for
 Summary Judgment (on an unrelated issue), which Nicol Hannie joined. Mo and Joyce
 Hannie filed a separate 12(b)(6) Motion to Dismiss, a Motion to Strike, and a Motion for
 Sanctions. Only the motions to dismiss are relevant to this appeal.
         13
              Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017 (5th Cir. 1996).
         14
              Twombly, 550 U.S. at 55; see also Fed. R. Civ. P. 12(b)(6).
         15
           Fed. R. Civ. P. 9(b) (“In all averments of fraud or mistake, the circumstances
 constituting fraud or mistake shall be stated with particularity.”); Tuchman v. DSC
 Communications Corp., 14 F.3d 1061 (5th Cir. 1994).




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                                            No. 19-30995


 for such belief.” 16 Although the actor’s malice, intent, or knowledge “may
 be averred generally,” Buyers “must set forth specific facts that support an
 inference of fraud.” 17 This requirement can be satisfied if Buyers either
 (1) show the defendants’ motive to commit fraud; or (2) identify
 circumstances that indicate their conscious behavior, “though the strength
 of the circumstantial allegations must be correspondingly greater.” 18
                                                 III
        Buyers argue that the district court erred in dismissing because they
 adequately stated claims for (1) negligent misrepresentation and breach of
 contractual representations and warranties against Sellers, (2) fraud against
 Sellers, and (3) fraud against the Hannies individually. Specifically, Buyers
 argue that they have sufficiently pleaded Sellers made material
 misrepresentations in the APAs, either knowingly or negligently, by claiming
 that the Facilities were in compliance with all laws and regulations when, in
 fact, they were not.
         Regarding Rosewood, which did not provide staff administration of
 medication as a service, Buyers pleaded that Chapter 68 of the Louisiana
 Adult Residential Care Provider Licensing Standards requires that only
 residents who are aware of their medication and its purpose be allowed to
 self-administer their medication (with or without assistance). They further
 pleaded that, prior to the sale, Sellers and the Hannies knew that dozens of
 residents did not actually qualify for self-administration, meaning Rosewood




         16
           U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th
 Cir. 1997) (internal quotations omitted).
         17
              Tuchman, 14 F.3d 1068.
         18
              Id.; see also Lovelace, 78 F.3d at 1018–19.




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 was not in compliance with Chapter 68 and should have employed qualified
 nursing staff to administer medication for those residents.
         With respect to Cedar Crest, which did provide staff administration
 of medication, Buyers pleaded that Chapter 68 requires ARCPs to employ
 both RNs and LPNs for staff administration of medication, yet Cedar Crest
 only staffed LPNs. Buyers alleged that, based on pre-sale conversations
 between the Hannies and one of their staff members, Sellers were on notice
 that Cedar Crest needed to hire an RN to comply with Chapter 68, but
 knowingly declined to do so.
         Finally, Buyers allege that, because the Hannies effectuated the fraud
 on behalf of Sellers, they are personally liable for any damages Buyers
 incurred. We first address Buyers’ non-fraud claims, and then turn to their
 allegations of fraud against Sellers and the Hannies.
                                             A
         The district court dismissed Buyers’ non-fraud claims for negligent
 misrepresentation and breach of contractual representations and warranties 19
 because, as the Magistrate Judge determined, these claims were subject to
 arbitration. We agree.
         First, the text of the APAs explicitly states that the holdbacks “shall
 constitute the sole and exclusive remedies (except with respect to Losses arising
 from fraud, bad faith or intentional misconduct . . .), for all matters relating to
 this Agreement, the transactions contemplated hereby and for the breach of



         19
           As the Magistrate Judge observed, the pleadings are “somewhat ambiguous as to
 the precise classification of the Buyers’ claim.” Buyers now contend their non-fraud claims
 included both negligent misrepresentation and breach of contractual representations and
 warranties under “Count I: Contractual Warranty Claims Against All Defendants.”




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 any representation, warranty, covenant or agreement contained herein.” 20
 Therefore, by the APAs’ own terms, Buyers may only recover the holdbacks,
 governed by the HEAs, for any breaches of representations or warranties, or
 any other non-fraud claim. And the HEAs require all disputes to be submitted
 to final and binding arbitration. Buyers cannot now circumvent the plain
 terms of the APAs and HEAs to seek recovery outside of arbitration and for
 remedies other than the holdbacks. 21
         Second, even if the text of the APAs and HEAs was not explicit, the
 arbitrator’s order certainly was, unequivocally providing that only the fraud
 claim was severed from the arbitration proceedings. The arbitrator held that
 “Buyers’ staffing misrepresentation claim is not arbitrable because it is a
 fraud claim.” 22 The arbitrator went on to define “fraud” as being an
 intentional misrepresentation or suppression of the truth, and then observed
 that “Buyers allege Sellers ‘intentionally and knowingly breached their
 contract warranties’ by ‘misrepresenting that the staffing at the facilities
 comply with the applicable laws.’” 23 And, the arbitrator concluded, “the
 alleged       intentional   misrepresentation         is   a   claim    for   intentional
 misrepresentation, or in other words, fraud.” Order No. 5 demonstrates that
 the arbitrator was only dismissing Buyers’ claims of intentional
 misrepresentation—fraud. The Order does not reach claims of negligent
 misrepresentation or non-fraudulent breaches of contract. Because Buyers’



         20
              Am. Compl. Ex. A, at 53 (emphasis added).
         21
            See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218–21 (1985) (holding that
 district courts must “rigorously enforce” written arbitration agreements, even where doing
 so would be inefficient, bifurcate proceedings, or result in “piecemeal” litigation).
         22
            Mot./Appl. to Modify or Alternatively Partially Vacate Arbitration Awards Ex.
 G, at 3–4 in Case No. 6:19-CV-00833 (W.D. La. June 27, 2019) (cleaned up).
         23
              Id.




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  non-fraud claims were subject to arbitration, the district court did not err in
  dismissing them.
          But that doesn’t end our inquiry. Buyers further argue that, even if the
  non-fraud claims were not excluded from the arbitration, the district court
  should have either stayed the claims pending arbitration or, alternatively,
  dismissed the claims without prejudice so that Buyers could pursue
  arbitration. Sellers disagree, arguing that dismissal with prejudice was proper
  because claim preclusion applies. The law is on Sellers’ side.
          Claim preclusion, or res judicata, “bars [1] the parties to a prior
  proceeding or those in privity with them from [2] relitigating the same claims
  that [3] were subject to a final judgment on the merits [4] by a court of
  competent jurisdiction.” 24 Here, three of the four requirements are easily
  met: we have the same parties and a valid and final judgment on the merits
  by a court of competent jurisdiction. 25 The only dispute is whether this action
  and the arbitration involve the same claims.
          As Buyers emphasize, neither of the non-fraud claims were
  adjudicated in the arbitration, but “claim preclusion applies not only to
  ‘causes of action’ raised in pleadings, but also to claims which were raised,
  or could have been raised, as part of the same action.” 26 Buyers could have




          24
               Lubrizol Corp. v. Exxon Corp., 871 F.2d 1279, 1287 (5th Cir. 1989).
          25
              U.S. Postal Serv. v. Gregory, 534 U.S. 1, 16 (2001) (Ginsburg, J., concurring)
  (“[A] valid and final award by arbitration has the same effects under the rules of res
  judicata . . . as a judgment of a court.”); Grimes v. BNSF Ry. Co., 746 F.3d 184, 188 (5th
  Cir. 2014) (“As a general matter, arbitral proceedings can have preclusive effect . . . .”
  (emphasis omitted)).
          26
            Lubrizol Corp., 871 F.2d at 1287 (emphasis added) (quoting Aerojet-General Corp.
  v. Askew, 511 F.2d 710, 715 (5th Cir. 1975) (“Looking beyond the pleadings to what could




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  raised their non-fraud claims in the arbitration based on the facts alleged in
  their arbitration filings; 27 therefore, res judicata applies and the district court
  was correct to dismiss with prejudice.
                                              B
          Now to the remaining fraud claims. In Louisiana, a contractual fraud
  claim involves three elements:
          (1)     a misrepresentation, suppression, or omission of true
                  information;
          (2)     the intent to obtain an unjust advantage or to cause
                  damage or inconvenience to another; and
          (3)     the error induced by a fraudulent act must relate to a
                  circumstance substantially influencing the victim’s
                  consent to (a cause of) the contract. 28
          Without a false statement, there can be no misrepresentation. Here,
  Buyers allege that Sellers falsely claimed to be in compliance with all
  applicable laws and regulations when both Facilities were in violation of
  Chapter 68. So the first question is whether, assuming all of Buyers’
  allegations are true, Sellers actually did violate the regulation. Buyers falter
  at this first step.




  have been pleaded, however, is precisely what is required by the federal law of res
  judicata.”)).
          27
           See generally Sellers’ Mot. to Modify or Alternatively Partially Vacate Arbitration
  Awards, Ex. E, R. Doc. 18, USDC WDLA No. 6:19-cv-00833.
          28
            Koerner v. CMR Construction & Roofing, L.L.C., 910 F.3d 221, 228 (5th Cir. 2018)
  (formatting altered) (quoting Shelton v. Standard/700 Associates, 798 So.2d 60, 64 (La.
  2001)).




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                                                  1
          With respect to Rosewood, Buyers allege that Sellers were in violation
  of Chapter 68 because a number of residents were not capable of
  understanding what their medications were or what they were for, meaning
  they were not eligible for “Self Administration” or “Assistance with Self-
  Administration.” Despite this ineligibility, Buyers argue, Rosewood did not
  employ licensed RNs or LPNs to permit “Staff Administration of
  Medication.”
          But Buyers’ interpretations of Chapter 68 are not entirely accurate,
  and we do not accept legal conclusions in a complaint as true. 29 To ascertain
  the correct understanding of Louisiana law, we first look to final decisions of
  the Louisiana Supreme Court. 30 But because there are none on this topic, we
  “must make an Erie guess and determine, in our best judgment, how [the
  Louisiana Supreme Court] would resolve the issue if presented with the same
  case.” 31 As always, we begin with our alpha and omega: the enacted text. 32
          In relevant part, Chapter 68 states that:
          The ARCP shall record in the resident’s [Person-Centered
          Service Plan] PCSP whether the resident can self-administer
          medication, needs assistance with self-administration . . . or
          requires staff administration of medication. . . .
          Unless otherwise indicated in the PCSP, residents shall have the
          option to self-administer their own medications. Residents who



          29
               See Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007).
          30
               In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007).
          31
               Id.
          32
            See Thomas v. Reeves, 961 F.3d 800, 810 (5th Cir. 2020) (en banc) (Willett, J.,
  concurring) (quoting United States v. Maturino, 887 F.3d 716, 723 (5th Cir. 2018)).




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          are appropriate for this service will be aware of what the
          medication is, what it is for and the need for the medication. . . .
          Unless otherwise indicated in the PCSP, residents may elect
          assistance with self-medication if it is a service offered by the
          ARCP. Residents who are appropriate for this service will be
          aware of what the medication is, what it is for and the need for
          the medication. . . .
          The ARCP shall administer medications to ARCP residents in
          accordance with their PCSP. . . .
          Medications shall be administered . . . by an individual who is
          currently licensed as an RN or LPN by the appropriate state
          agency. 33
          This text demonstrates that each residents’ Person-Centered Service
  Plan—not the individual views of the ARCP’s staff—determines what level
  of administration a resident shall receive. Therefore, a fair reading of the
  statute demonstrates that the only ways an ARCP can knowingly violate
  Chapter 68, in the context of Buyers’ claims here, are if the ARCP: (1) fails
  to abide by a resident’s PCSP; 34 (2) fraudulently fills out PCSPs;35 or
  (3) knowingly permits staff administration of medication by an unqualified
  employee. 36 Buyers have failed to adequately plead any of these possible
  violations.




          33
            LAC 48:6843(B)-(C) (emphasis added); see also LAC 48:6839 (“An ARCP shall
  ensure that services meet a resident’s personal and health care needs as identified in the
  resident’s PCSP.”).
          34
               See LAC 48:6839; LAC 48:6843(B), (C)(1), (2), and (3)(a).
          35
            Cf. LAC 48:6835 (providing requirements for how to develop a resident’s PCSP
  and explaining that PCSP’s must reviewed at least every 90 days and on an ongoing basis
  to determine whether the PCSP is still appropriate).
          36
               See LAC 48:6843(C)(3)(b).




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         Failure to Abide by PCSPs. Buyers do not plead any facts to suggest that
  Sellers did not abide by a resident’s PCSP or suggest that any PCSPs
  classified anyone at a level other than being able to self-administer. And, the
  regulations state that “unless otherwise indicated in the PCSP, residents shall
  have the option to self-administer their own medications.” So this cannot be
  the violation at the root of the fraud claim.
         Fraudulent PCSPs. Buyers argue that the Amended Complaint
  adequately alleges that Nicol Hannie fraudulently filled out residents’
  PCSPs, knowingly misrepresenting their administration statuses. But the
  Amended Complaint tells a different story, particularly when viewed through
  the lens of Rule 9(b)’s heightened pleading requirement. The only paragraph
  that Buyers identify to support their argument reads, in its entirety:
         Further, Nicol Hannie was the individual in charge of
         preparing Person-Centered Service Plans (“PCSP”) for each
         Rosewood resident while [Sellers] owned and operated
         Rosewood, prior to the closing of the transaction at issue.
         Chapter 68 defines a PCSP as “a written description of the
         functional capabilities of the resident, the resident’s need for
         personal assistance and the services to be provided to meet the
         resident’s needs.” (Chapter 68 § 6803). Chapter 68 requires
         that ARCPs must update PCSPs at least quarterly (§6835(E)).
         Among the items assessed on a PCSP would be the resident’s
         capacity for understanding what their medications are, what
         the medications are for and the need for the medication. (§6835
         and 6843(B)).
         Reading this paragraph, and the Amended Complaint as a whole, in
  the most Buyer-friendly light possible, Buyers have not alleged that Nicol
  Hannie fraudulently prepared residents’ PCSPs. As noted, to state a fraud
  claim, Rule 9(b) requires a plaintiff to claim the “who, what, where, when,




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  and how of the alleged fraud.” 37 Even assuming that the Amended Complaint
  alleges that Nicol knowingly misidentified residents’ administration statuses
  (an assumption that requires stretching the imagination), the Amended
  Complaint lacks all details regarding the where, when, and how 38 of Nicol’s
  allegedly       fraudulent     PCSP      preparations.      Pleading      fraud    requires
  particularity, and without this information, Rule 9(b) is not satisfied.
          Administration by an Unqualified Employee. The third option for how
  Sellers could have violated Chapter 68—knowingly permitting staff
  administration of medication by an unqualified employee—has the strongest
  basis in the Amended Complaint, but not strong enough.
          In one paragraph, Buyers allege that:
          [N]on-nursing Rosewood employees had stated to
          management that they were uncomfortable administering
          medications to Rosewood residents who did not meet the
          Chapter 68 standard for self-administration of medications.
          The Rosewood employees in question expressly raised their
          concerns to Nicol Hannie and his assistant during the relevant
          time period. Nicol Hannie and his assistant both told the


          37
               Thompson, 125 F.3d at 903 (internal quotations omitted).
          38
             Regarding the “how,” it’s worth noting that ARCPs do not work independently
  to develop PCSPs. For instance, when a resident first moves into an ARCP, the ARCP is
  required to assess the resident to determine his needs and preferences, and then the ARCP,
  “in conjunction with the resident or the resident’s representative, if applicable, shall
  develop a PCSP using information from the assessment.” LAC 48:6835(A), (B). And
  residents, or their representatives, must sign off on the PCSP. LAC 48:6835(E). ARCPs
  have no authority to classify a resident for staff administration; “[t]he determination of the
  need for staff administration of medication will be made by resident’s physician after
  assessment of the resident, and after consultation with the resident, resident’s legal
  representative if applicable, and the ARCP staff.” LAC 48:6843(B) (emphasis added).
  Based on these regulations, which go unmentioned by Buyers, it’s entirely unclear how
  Nicol could have fraudulently prepared PCSPs to misrepresent residents’ administration
  statuses.




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         employees that their employment would be terminated if they
         did not administer the medications as instructed, including to
         residents for whom self-administration or assistance with self-
         administration of medications was inappropriate under
         Chapter 68.
         Distilled down to its most important elements, this allegation, if
  accepted as true, reflects that employees told Nicol Hannie they did not feel
  comfortable administering medications to residents, and Nicol Hannie told
  the employees to “administer the medications as instructed.”
         Even assuming that the phrase “administer(ing) medication”—
  which has multiple meanings—here means “staff administration of
  medication,” as opposed to overseeing or assisting residents in self-
  administration, this allegation, likewise, does not hurdle Rule 9(b)’s high bar.
  Buyers are required to either show Sellers’ motive to commit fraud or to
  identify circumstances that indicate Sellers’ conscious behavior, and “the
  strength of the circumstantial allegations must be correspondingly
  greater.” 39 This allegation falls into the latter category—a circumstance
  indicating Sellers’ conscious behavior. But the Amended Complaint only
  alleges that employees expressed a discomfort and Nicol Hannie told
  employees to administer medications “as instructed.” The pleadings are
  devoid of allegations regarding what instructions the employees received,
  who gave the instructions, whether anyone followed the instructions, and
  whether Sellers were aware of the specific instructions given. Because Buyers
  do not provide this information, we would have to make guesses to fill in the




         39
              Tuchman, 14 F.3d 1068.




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                                            No. 19-30995


  blanks, but “Rule 9(b) does not allow the plaintiffs to force the defendants—
  or the court—to make such assumptions.” 40
          Buyers have not adequately pleaded a misrepresentation with respect
  to Rosewood. And without a misrepresentation, there can be no fraud.
                                                 2
          As was the case with Rosewood, the first questions regarding the sale
  of Cedar Creek is whether, assuming all of Buyers’ allegations are true,
  Sellers actually did violate Chapter 68. As was the case with Rosewood,
  Buyers have not alleged the possibility of any violation.
          Unlike Rosewood, Cedar Creek did provide “Staff Administration of
  Medication” as one of its stated services, so everyone agrees that Cedar
  Creek was required to have some level of professional nursing staff. But the
  parties disagree on the number and type of nursing staff required. Buyers
  allege that Sellers were in violation of Chapter 68 because it did not have an
  RN on staff to supervise the LPNs. The Louisiana Supreme Court has not
  addressed this question, so we must do our best to stand in the Court’s
  shoes. 41



          40
             Dorsey v. Portfolio Equitis, Inc., 540 F.3d 333, 340 (5th Cir. 2008); see also United
  States ex rel. Integra Med Analytics, L.L.C. V. Baylor Scott & White Health, 2020 WL
  2787652, at *5 (5th Cir. May 28, 2020) (finding allegations that corporation gave employee
  instructions to behave unethically insufficient to state a fraud claim because the allegations
  failed to state the exact content of the directives). And even if we could make an
  assumption, the logical assumption would not be in Buyers’ favor. As noted, the regulations
  instruct employees to abide by the requirements set forth in the PCSPs, and Buyers have
  not alleged that anyone did or was instructed to violate a PCSP. So the only logical inference
  is that “as instructed” means “as indicate in the resident’s PCSP,” which would not be a
  violation of—and in fact would be affirmative of and compliant with—Chapter 68.


          41
               In re Katrina, 495 F.3d at 206.




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                                    No. 19-30995


           Buyers point us to LAC 48:6865(B)(1), which reads:
           In ARCPs that offer staff medication administration . . . the
           ARCP shall provide a sufficient number of RNs and LPNs to
           provide services to all residents in accordance with each
           resident’s PCSP 24 hours per day.
  Buyers argue that the “conjunctive ‘and’ shows that ARCPs that offer staff
  administration of medication do not have the option of employing LPNs
  only.”
           This argument is befuddling. First, the ordinary, everyday meaning of
  the phrase “shall provide a sufficient number of RNs and LPNs” is that
  ARCPs should have a sufficient number of RNs and a sufficient number of
  LPNs, whatever the ARCPs determine those numbers to be, to satisfy their
  residents’ needs. The provision does not, by its plain terms, require an ARCP
  to have at least one RN and at least one LPN, and “[t]he principle that a
  matter not covered is not covered is so obvious that it seems absurd to recite
  it.” 42 By Buyers’ logic, an ARCP would be prohibited from employing RNs
  only, and would be required to hire LPNs, even though RNs’ licenses are
  more permissive than LPNs’.
           The futility of Buyers’ argument is further highlighted by the text of
  LAC 48:6843(C)(3)(b), which provides that:
           Medications shall be administered . . . by an individual who is
           currently licensed as an RN or an LPN by the appropriate state
           agency.
           Despite Buyers’ suggestion otherwise, nothing in this provision
  requires an LPN to be under the supervision of a licensed RN at a facility like



           42
                Antonin Scalia & Bryan Garner, Reading Law 93 (2012).




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                                         No. 19-30995


  Cedar Creek. Tellingly, the regulations only provide one instance where an
  LPN’s administration of medicine is required to be “under the supervision
  of a licensed RN, physician, or advanced practice nurse.” 43 This requirement
  only exists at level 4 facilities (which Cedar Creek is not) where intravenous
  therapy is being provided (which Cedar Creek does not). 44 The fact that the
  regulations specifically note the requirement of RN supervision in one
  circumstance, but not in the circumstances relevant to Cedar Creek, further
  demonstrates that these regulations impose no such requirement on Cedar
  Creek. 45
          Buyers’ allegations that a Cedar Creek employee told Joyce and Mo
  Hannie that they needed to hire an RN are of no moment. Those allegations
  demonstrate only that an employee believed the regulations required hiring an
  RN; they do not reflect what the law actually did require. And because
  Chapter 68 did not in fact require Sellers to employ an RN at Cedar Creek to
  oversee its LPNs, Sellers could not have misrepresented Cedar Creek’s
  compliance, and Buyers have not pleaded a cognizable fraud claim. 46




          43
               LAC 48:6843(C)(3)(c).
          44
               Id.
          45
             See Scalia & Garner, Reading Law at 124 (“Where the legislature has
  specifically used a word or term in certain places within a statute and excluded it in another
  place, the court should not read that term into the section from which it was excluded.”).
          46
             Buyers also contend that Sellers were noncompliant because Sellers “had not
  employed the required activities personnel or had required equipment.” However, Buyers’
  single-sentence, non-specific allegation is too conclusory to satisfy any pleading standard,
  let alone Rule 9(b). Buyers gave this argument similar short shrift in their opening brief,
  effectively abandoning the claim on appeal. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th
  Cir. 1994) (“A party who inadequately briefs an issue is considered to have abandoned the
  claim.”).




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                                           No. 19-30995


                                                 C
         Under Louisiana law, and in relevant part to this dispute, shareholders
  can be held personally liable for the debts of a company “where fraud or
  deceit has been practiced by the shareholder acting through the
  corporation.” 47 But, as we just explained, because there was no
  misrepresentation, there was no fraud. And if there was no fraud, there’s no
  claim against the Hannies as individuals. The district court, therefore, was
  correct to dismiss the claims against Nicol, Mo, and Joyce Hannie.
                                                IV
         Buyers’ non-fraud claims were subject to arbitration, and though their
  fraud claims may have survived under a lower standard, Rule 9(b) requires
  particularity to protect the time and resources of both courts and litigants.
  Since Buyers have failed to satisfy Rule 9(b)’s heightened pleading standard,
  the judgment of the district court is AFFIRMED.




         47
              Riggins v. Dixie Shoring Co., Inc., 590 So. 2d 1164, 1168 (La. 1991).




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