Bone & Joint Treatment Centers of Am. v. Healthtronics Surgical Servs., Inc.

• Court: Florida District Court of Appeals
• Writing for the Court: ROTHENBERG
• Citation: Bone & Joint Treatment Centers of Am. v. Healthtronics Surgical Servs., Inc., 114 So.3d 363 (Fla. App. 2013)
• Decision Date: 22 May 2013
• Docket Number: 3D12–82.,Nos. 3D12–52,s. 3D12–52
• Parties: BONE & JOINT TREATMENT CENTERS OF AMERICA, Appellant/Cross–Appellee, v. HEALTHTRONICS SURGICAL SERVICES, INC., Appellee/Cross–Appellant, HT Orthotripsy Management Company, LLC, and SanuWave, Inc., Appellees.

114 So.3d 363

BONE & JOINT TREATMENT CENTERS OF AMERICA, Appellant/Cross–Appellee,

v. HEALTHTRONICS SURGICAL SERVICES, INC., Appellee/Cross–Appellant,HT Orthotripsy Management Company, LLC, and SanuWave, Inc., Appellees.

Nos. 3D12–52, 3D12–82.

District Court of Appeal of Florida, Third District.

May 22, 2013.

Carlton Fields, P.A., and Charles M. Rosenberg and Nancy C. Ciampa, Miami, for appellant/cross-appellee.

Petros & Elegant, and William L. Petros and Serena A. Witter, Coral Gables, for appellees and for cross-appellant HealthTronics Surgical Services, Inc.

Before ROTHENBERG and EMAS, JJ., and SCHWARTZ, Senior Judge.

ROTHENBERG, J.

The plaintiff below, Bone & Joint Treatment Centers of America (“BJA”), appeals from the final judgment entered in its favor against defendant HealthTronics Surgical Services, Inc. (“HealthTronics”), and from the final judgment entered in favor of defendants HT Orthotripsy Management Company, LLC (“HTO”), a wholly-owned subsidiary of HealthTronics, and SanuWave, Inc. (“SanuWave”). HealthTronics cross-appeals from the final judgment entered in favor of BJA. We reverse the final judgment entered in favor of BJA, and remand for entry of a final judgment in favor of HealthTronics, and affirm the final judgment entered in favor of HTO and SanuWave.

This appeal and cross-appeal stem from an agreement entered into between five entities following months of negotiations—HealthTronics; BJA, whose partners are Dr. Marvin Madorsky (“Dr. Madorsky”) and Dr. Richard Levitt; HTO; Miami Medical Management, Inc.; and Bone & Joint Center of South Florida, Ltd. (“Agreement”). One of the primary issues asserted in the cross-appeal relates to Paragraph 11 of the Agreement, which grants “tag along” rights to BJA in the event that “HTO accepts an offer to Dispose of all or substantially all of [its] interest” to a third party, but does not grant HealthTronics any tag along rights.

A few years after the five entities entered in the Agreement, HealthTronics entered into a purchase agreement with SanuWave, whereby HealthTronics agreed to sell its entire orthotripsy division, which was held by its subsidiary HTO, to SanuWave. Following the execution of the purchase agreement, BJA attempted to exercise the tag along rights set forth in Paragraph 11 of the Agreement. The transaction between HealthTronics and SanuWave closed without BJA exercising any tag along rights. Following the closing, BJA filed suit against HealthTronics, HTO, and SanuWave, asserting several causes of actions, including equitable reformation of the Agreement to include HealthTronics in the tag along provision set forth in Paragraph 11.

The predecessor judge, Judge Peter Adrien, bifurcated the reformation claim from the remaining claims asserted by BJA. During the bench trial, Judge Adrien heard evidence regarding the parties' intent when entering into the Agreement and he reviewed several emails between HealthTronics' counsel, Ted Biderman (“Mr. Biderman”), and BJA's counsel, Marsha Madorsky (“Ms. Madorsky”), relating to the tag along provision. At the conclusion of the bench trial, Judge Adrien ruled that (1) due to the parties' mutual mistake, HealthTronics was not named in the tag along provision, or (2) if there was no mutual mistake, there was a unilateral mistake on BJA's part coupled with inequitable conduct on HealthTronics' part. Specifically, Judge Adrien found that Mr. Biderman, HealthTronics' counsel, assured Dr. Madorsky that HealthTronics would accommodate the request for a tag along provision, and in reliance, BJA relinquished its exclusive right to distribute the OssaTron machine and provide orthotripsy services in Florida. Judge Adrien also found that HealthTronics acted inequitably by structuring the sale to SanuWave in a way that denied BJA of its tag along rights. In May 2010, Judge Adrien entered an order granting equitable reformation of the Agreement to add HealthTronics to the tag along provision, and ordering that a jury determine the tag along damages.

At the conclusion of the six-day trial, the defendants moved for a directed verdict as to all counts, including equitable reformation. The trial court granted the motion as to several counts, but denied the motion as to equitable reformation. Therefore, the only issue remaining for the jury's determination was the amount of tag along damages, if any. The jury awarded $278,996 to BJA against HealthTronics. Thereafter, the trial court entered final judgment in favor of BJA and against HealthTronics. The trial court also entered final judgment in favor of defendants SanuWave and HTO. This appeal ¹ and cross-appeal followed.

In the cross-appeal, HealthTronics contends that the trial court erred by granting BJA's claim for equitable reformation of the Agreement to add HealthTronics to the tag along provision. We agree.

Reformation of a contract is proper if the plaintiff establishes by clear and convincing evidence that the contract is the product of (1) the parties' mutual mistake, or (2) a mistake on the part of one party coupled with the inequitable conduct on the part of the other party. See Providence Square Ass'n. v. Biancardi, 507 So.2d 1366, 1369, 1372 n. 3 (Fla.1987); Romo v. Amedex Ins. Co., 930 So.2d 643, 649 (Fla. 3d DCA 2006) (noting that reformation of a contract is proper if there is either a mutual mistake of the parties or a unilateral mistake by one party coupled with the inequitable conduct of the other party, and therefore, the written document fails to express the agreement of the parties).

The “clear and convincing” standard is “an intermediate standard of proof between the ‘preponderance of the evidence’ standard used in most civil cases, and the ‘beyond a reasonable doubt standard’ of criminal cases.” Morey v. Everbank, 93 So.3d 482, 489 n. 10 (Fla. 1st DCA 2012). The clear and convincing standard requires that the evidence “be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.” Id. (quoting Reid v. Estate of Sonder, 63 So.3d 7, 10 (Fla. 3d DCA 2011) (citations omitted)). An appellate court “may not overturn a trial court's finding regarding the sufficiency of the evidence unless the finding is unsupported by record evidence, or as a matter of law, no one could reasonably find such evidence to be clear and convincing.” Morey, 93 So.3d at 489 (quoting Reid, 63 So.3d at 10).

In the instant case, the trial court granted the reformation of the Agreement finding that, based on a mutual mistake of the parties, HealthTronics was not included in the tag along provision or, in the alternative, if there was no mutual mistake, there was a unilateral mistake on the part of BJA coupled with the inequitable conduct of HealthTronics, namely HealthTronics' counsel, Mr. Biderman. A review of the record before this Court does not support the trial court's finding that BJA established by clear and convincing evidence that there was either a mutual mistake by the parties or, in the alternative, a unilateral mistake by one party coupled with the inequitable conduct of the other party.

The record evidence demonstrates that prior to the execution of the Agreement in 2003, the parties to the Agreement were operating under several contracts/agreements relating to the OssaTron, a medical device that treats orthopedic conditions using shock waves, and orthotripsy services utilizing the OssaTron. Over the years, the relationship between the parties deteriorated, and therefore, they met to address their future business relationship (“Blue Lagoon meeting”). BJA's counsel, Ms. Madorsky, acknowledges that the tag along issue was not addressed at the Blue Lagoon meeting. Moreover, the first draft of the agreement that Mr. Biderman emailed to Ms. Madorsky on February 25, 2003, does not contain a tag along provision. Likewise, the revised drafts emailed by Mr. Biderman to Ms. Madorsky on March 17, 2003, and April 28, 2003, do not contain a tag along provision.

Tag along rights, however, were addressed in a May 8, 2003, email sent from Dr. Madorsky to BJA's counsel, Ms. Madorsky, which was then forwarded to Mr. Biderman. In relevant part, Dr. Madorsky stated, “If [HealthTronics] sells their share of the partnership, BJA should have the option to sell their partnership share at the same terms of [HealthTronics].” On the following day, Friday, May 9, 2003, Mr. Biderman responded directly to Dr. Madorsky, stating: “Dr. Madorsky, these are all good points for which we can accommodate.... I will revise to address your comments and return wednesday [sic] when i[sic] am back in the office.” However, on Thursday, May 15, 2003, Mr. Biderman emailed Ms. Madorsky, explaining that the revised draft did not include the requested “ ‘tag along’ sale rights to BJA as the typical arrangement provides that [HealthTronics] syndicate its interest to physician investors and it does not make sense to try to syndicate a ‘profit interest’ at the same time.” Approximately thirty minutes later, Ms. Madorsky emailed Mr. Biderman, objecting to his failure to include the tag along provision, stating, in part: “I don't quite understand what you mean about the tag along rights not being included. Why if [HealthTronics] is selling shouldn't we be afforded the like rights whether profits interest or otherwise....” A few minutes later, Mr. Biderman responded to Ms. Madorsky's email, stating, in part: “This agreement clearly states our agreement at our [Blue Lagoon] meeting and none of these issues were raised in our numerous prior drafts.” Mr. Biderman also explained that a tag along provision is contrary to HealthTronics' model.

On May 27, 2003, Ms. Madorsky sent a revised draft of the Agreement to Mr. Biderman that included two drafts of a tag along provision for Mr. Biderman's consideration. Importantly, the two proposed drafts included tag along rights for BJA only...