Xenon Health, L.L.C. v. Baig, 102516 FED5, 15-20627

Docket Nº:15-20627
Opinion Judge:PER CURIAM:
Party Name:XENON HEALTH, L.L.C.; HAROON W. CHAUDHRY, M.D., Plaintiffs - Appellants v. MIRZA BAIG, Defendant - Appellee
Judge Panel:Before DAVIS, ELROD, and HIGGINSON, Circuit Judges. HIGGINSON, Circuit Judge, concurring in part and dissenting in part:
Case Date:October 25, 2016
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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XENON HEALTH, L.L.C.; HAROON W. CHAUDHRY, M.D., Plaintiffs - Appellants

v.

MIRZA BAIG, Defendant - Appellee

No. 15-20627

United States Court of Appeals, Fifth Circuit

October 25, 2016

Appeal from the United States District Court for the Southern District of Texas

Before DAVIS, ELROD, and HIGGINSON, Circuit Judges.

PER CURIAM: [*]

Plaintiffs-Appellants appeal the district court's grant of summary judgment dismissing their tortious interference with a contract claim on the grounds that the underlying agreements were illegal and void under the Texas Medical Practice Act because they provided for the practice of medicine in Texas without a license. We AFFIRM.

I.

Plaintiff Xenon Health, L.L.C. ("Xenon") is a California company that provides anesthesia services to medical facilities and management services to anesthesia providers. Plaintiff Haroon W. Chaudhry, M.D. ("Dr. Chaudhry"), a resident of California, is the president and chief executive officer of Xenon. Xenon sought to expand its services to Texas in early 2011, but Dr. Chaudhry was not licensed to practice medicine in Texas and could not provide medical services without a Texas license. Xenon's chief operating officer, Fahim Hashim ("Hashim"), contacted his friend and business associate, Defendant Mirza Baig. Baig introduced Plaintiff Dr. Chaudhry to Dr. Mutjaba Ali Khan ("Dr. Khan"), a physician licensed to practice medicine in Texas.

Dr. Chaudhry was in the process of seeking a Texas medical license and agreed with Dr. Khan to establish a Texas entity, Xenon Anesthesia of Texas PLCC ("Xenon Texas"), to provide anesthesia services in Texas. Dr. Chaudhry and Dr. Khan entered into three agreements in July 2011: (1) a Purchase and Sale Agreement ("PSA"), (2) an Equity Interest Assignment Agreement ("Equity Agreement"), and (3) an Exclusive Management Services Agreement.

Under the Exclusive Management Services Agreement, Dr. Khan acted as managing member of Xenon Texas, but the services were provided by Dr. Chaudhry through Xenon in California. Additionally, under the PSA and the Equity Agreement, within seven business days of Dr. Chaudhry obtaining his Texas medical license, Dr. Khan agreed to sell his interest in Xenon Texas to Dr. Chaudhry. Until that sale, Xenon would perform services for Xenon Texas for a monthly fee of $750, 000. These agreements were all signed contemporaneously in July 2011 and became effective on that date.

Xenon's chief operating officer, Hashim, left the business in December 2011, believing that he would be terminated. At that point, Plaintiffs Xenon and Dr. Chaudhry filed this suit, alleging that Baig, Hashim, Dr. Khan, and Dr. Khan's attorney all conspired to take control of Xenon Texas. Plaintiffs alleged that Baig, as the "leader" of the effort, caused the termination of all three agreements before Dr. Chaudhry obtained his Texas medical license on October 1, 2012.

Plaintiffs' suit alleged that Baig tortuously interfered with the agreements between Xenon/Dr. Chaudhry and Xenon Texas/Dr. Khan. Baig moved for summary judgment. Finding that the three agreements were illegal and void, the district court granted Baig's motion for summary judgment and dismissed the suit. The district court held that the three interrelated contracts were void under the Texas Medical Practice Act, which prohibits any person from practicing medicine in Texas without a Texas license to do so.1 It followed that no suit could lie for interference with a void contract.2

II.

We review the district court's grant of summary judgment de novo.3Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."4 The Court views all evidence in the light most favorable to the nonmoving party, drawing all reasonable inferences in that party's favor.5

III.

Plaintiffs-Appellants Xenon and Dr. Chaudhry raise several interrelated issues on appeal, arguing that the district court erred in granting Baig's motion for summary judgment. The district court wrote a comprehensive opinion addressing these arguments. We consider below the issues Plaintiffs raise on appeal.

Plaintiffs argue on appeal that the district court erred in finding that the three agreements were illegal and void under the Texas Medical Practice Act.[6]

The district court correctly concluded that Dr. Khan's corporation, Xenon Texas, was organized to furnish anesthesia services in Texas, this corporation was a sham, and these services were being provided by Dr. Chaudhry. The Exclusive Management Services Agreement with Dr. Chaudhry's corporation, Xenon, makes it clear that Dr. Chaudhry and Xenon had total control of Xenon Texas. This...

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