Igor DeCastro v. Hot Springs Neurology Clinic, P.A.; James Adams

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 23-1040
___________________________
Igor DeCastro
Plaintiff - Appellant
v.
Hot Springs Neurology Clinic, P.A.; James Adams
Defendants
James Arthur
Defendant - Appellee
Bank Ozk
Defendant
Hot Springs Neurosurgery Clinic, P.A.
Defendant - Appellee
___________________________
No. 23-1196
___________________________
Igor DeCastro
Plaintiff - Appellant
v.

-- 1 of 7 --

-2-
Hot Springs Neurology Clinic, P.A.; James Adams
Defendants
James Arthur
Defendant - Appellee
Bank Ozk
Defendant
Hot Springs Neurosurgery Clinic, P.A.
Defendant - Appellee
___________________________
No. 23-1657
___________________________
James Arthur
Plaintiff - Appellee
v.
Igor DeCastro
Defendant - Appellant
____________
Appeals from United States District Court
for the Western District of Arkansas - Hot Springs
____________
Submitted: January 9, 2024
Filed: July 10, 2024
____________

-- 2 of 7 --

-3-
Before LOKEN, ARNOLD, and STRAS, Circuit Judges.
____________
STRAS, Circuit Judge.
What does it take to plead a breach-of-employment-contract claim? The
district court concluded that it was more than we have here, a complaint filled with
legal conclusions but few facts. We affirm the district court’s decision to dismiss.
I.
For seven years, Dr. Igor DeCastro worked as a neurosurgeon at the Hot
Springs Neurosurgery Clinic. After he left, he became convinced that he had not
received what the clinic owed him. “[F]or the first 18 months,” his pay was
$650,000 per year. From then on, he was supposed to “receive the net proceeds of
his production, less 33% of the overhead.” But, according to the amended complaint,
he “never received one dime more than his salary” because Dr. James Arthur, the
clinic’s owner, had stashed the money away in a “secret account.” In other words,
Arthur and the clinic had breached their employment agreement.
In the same lawsuit, DeCastro also sued Bank OZK, where the “secret
account” was located. Rather than risk giving the disputed funds to the wrong party,
the bank asked the district court1 to decide who gets them. See Fed. R. Civ. P.
22(a)(2) (“A defendant exposed to similar liability may seek interpleader through a
crossclaim or counterclaim.”). The court accepted the funds, placed them into a
registry, and dismissed the bank as a defendant.
1 The Honorable Kristine G. Baker, then District Judge, now Chief Judge,
United States District Court for the Eastern District of Arkansas.

-- 3 of 7 --

-4-
The case moved quickly from there. The district court2 first granted Arthur’s
motion to dismiss on the ground that the amended complaint had omitted “essential”
facts. See Fed. R. Civ. P. 12(b)(6). It then asked the parties to weigh in on who
should receive the funds, but only Arthur made a claim. DeCastro, for his part, just
wanted to unwind the dismissal, so he filed a motion requesting reconsideration,
discovery, and leave to file a second amended complaint. See Fed. R. Civ. P. 59(e).
The district court tried to bring an end to the case by disbursing the funds to
Arthur and denying DeCastro’s motion. Undeterred, DeCastro tried again, this time
equipped with a copy of the agreement. See Fed. R. Civ. P. 60(b). His second
attempt to revive the case, just like the first, was unsuccessful.
And so was DeCastro’s third try, which involved filing a counterclaim in an
unrelated contribution action Arthur had brought against him. The allegations of the
counterclaim were identical to what DeCastro had alleged in his own lawsuit, so the
district court relied on res judicata and dismissed it with prejudice.3
II.
According to the district court, the problem was what DeCastro failed to put
in his amended complaint. We review the grant of a motion to dismiss de novo under
the now-familiar standard requiring a complaint to “contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
2 The Honorable Susan O. Hickey, Chief Judge, United States District Court
for the Western District of Arkansas.
3 We are not concerned about manufactured appellate jurisdiction, even though
the district court later allowed Arthur to voluntarily dismiss his contribution claims
without prejudice. See Fed. R. Civ. P. 41(a)(2). DeCastro, not Arthur, is appealing,
and even then, only the with-prejudice dismissal of his own counterclaim. See
Ruppert v. Principal Life Ins. Co., 705 F.3d 839, 843 (8th Cir. 2013) (explaining that
a “final appealable decision” requires “the appellant’s claims [to be] unequivocally
dismissed with prejudice” (emphasis added)).

-- 4 of 7 --

-5-
Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). “[F]actual” matter does not
include “labels . . . or a formulaic recitation of the elements of a cause of action,”
“naked assertion[s] of claims,” or legal conclusions “couched as” facts. Id. (third
alteration in original) (citation omitted).
DeCastro’s amended complaint is flush with legal conclusions but short on
facts. See id. Consider what it says about the alleged breach. It describes the basic
terms of the agreement, including how the calculation was supposed to change after
18 months, but is silent about how Arthur and the clinic allegedly failed to uphold
their end of the bargain. See Ark. Dev. Fin. Auth. v. Wiley, 611 S.W.3d 493, 498
(Ark. 2020) (listing “a violation by the defendant” as an element of a
breach-of-contract claim); Chew v. Am. Greetings Corp., 754 F.3d 632, 635 (8th Cir.
2014) (noting that “we apply the substantive law of the forum state”—here,
Arkansas—while “sitting in diversity”). There is nothing, for example, about how
much DeCastro received. Nor is there anything about his “production” or the sum
of the clinic’s “overhead,” which are the key components of the compensation
formula that Arthur and the clinic allegedly failed to follow. All it says is that they
“breached th[e] contract,” which is a textbook legal conclusion. See Iqbal, 556 U.S.
at 678.
To be sure, DeCastro alleged that he “never received one dime more than his
salary.” But this allegation is just as vague as the rest of his complaint. Is “his
salary” the $650,000 in annual pay that the clinic initially promised him, or the
proceeds of the net-production formula? The answer matters because if the clinic
paid him what the agreement required (or even more), then there has been no breach
and no damages. In short, is the claim even plausible?4 See Fed. R. Civ. P. 8(a)(2);
Iqbal, 556 U.S. at 679. Unfortunately, the amended complaint does not provide us
with enough to know.
4 The Seventh Amendment does not save DeCastro’s case. It does not require
a jury trial regardless of how deficient the pleadings are. See, e.g., Perkins v. Spivey,
911 F.2d 22, 28 n.6 (8th Cir. 1990).

-- 5 of 7 --

-6-
III.
Time to tie up some loose ends. The first one is DeCastro’s suggestion that
the district court should have opted for something less than an across-the-board
dismissal. It was DeCastro’s responsibility, however, to request a second
opportunity to amend, and he did not do so until it was too late. See Hawks v. J.P.
Morgan Chase Bank, 591 F.3d 1043, 1051 (8th Cir. 2010). And to the extent he
believes he pleaded enough for a declaratory judgment and an equitable accounting,
both depended on the sufficiency of his underlying claims. See Maytag Corp. v.
Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., 687 F.3d
1076, 1081–82 (8th Cir. 2012) (describing “the declaratory judgment remedy” as “a
judicial declaration of the parties’ contractual rights and duties” (emphasis added));
A & P’s Hole-In-One, Inc. v. Moskop, 832 S.W.2d 860, 863 (Ark. Ct. App. 1992)
(explaining that “[a]n accounting is an equitable remedy” that might flow from a
successful claim for breach of the “duty to account” (emphasis added)). Not to
mention that if he really wanted an accounting, he should have made a claim on the
interpleaded funds. See United States v. High Tech. Prods., Inc., 497 F.3d 637, 641
(6th Cir. 2007) (explaining that the “second stage” of an interpleader involves
“determin[ing] the respective rights of the claimants to the fund[s] . . . at stake”).
Second, DeCastro appeals from his numerous failed attempts to revive his
lawsuit. Given our conclusion that the amended complaint did not state a claim,
there was no abuse of discretion in denying his post-dismissal motion to alter or
amend the judgment. See Fed. R. Civ. P. 59(e); see also Pub. Water Supply Dist.
No. 1 v. City of Springfield, 52 F.4th 372, 375 (8th Cir. 2022). Nor was there reason
to vacate the judgment, even though he eventually located and produced a copy of
the employment agreement. See Fed. R. Civ. P. 60(b); see also Wagstaff & Cartmell,
LLP v. Lewis, 40 F.4th 830, 843 (8th Cir. 2022) (noting that we review a denial of a
Rule 60(b) motion “for a clear abuse of discretion” (citation omitted)). The
agreement, as it turned out, was inconsistent with how he pleaded the case. It never
mentions a $650,000 salary or the net proceeds of production, meaning it would have
required DeCastro to come up with an entirely new theory after dismissal, which is

-- 6 of 7 --

-7-
“[in]appropriate” for a Rule 60(b) motion. Arnold v. ADT Sec. Servs., Inc., 627 F.3d
716, 721 (8th Cir. 2010); see Atkinson v. Prudential Prop. Co., 43 F.3d 367, 373
(8th Cir. 1994) (affirming the denial of a Rule 60(b)(3) motion when the plaintiff
“had a fair opportunity to discover [the evidence] simply by going through his own
files”).
The final loose end is DeCastro’s counterclaim. See Brown v. Kan. City Live,
LLC, 931 F.3d 712, 714 (8th Cir. 2019) (explaining that de novo review applies).
Under Arkansas law, “a dismissal of a cause of action with prejudice is a final
adjudication on the merits” entitled to res judicata effect. Orr v. Hudson, 374 S.W.3d
686, 691 (Ark. 2010); see Daredevil, Inc. v. ZTE Corp., 1 F.4th 622, 627 (8th Cir.
2021) (“[W]hen a federal court, exercising diversity jurisdiction, renders the first
judgment, then [a]s a matter of federal common law, we must give that federal
diversity judgment the same claim-preclusive effect that [the forum’s] state courts
would give to a state court judgment.” (second and third alterations in original)
(citation omitted)). Having litigated the claim once before, he could not do so again
in a different case. See Friends of Lake View Sch. Dist. Incorporation No. 25 v.
Beebe, 578 F.3d 753, 760 (8th Cir. 2009).
IV.
We accordingly grant the motion to supplement the record and affirm the
district court.
______________________________

-- 7 of 7 --