Credentials Plus, LLC v. Calderone

• Decision Date: 07 November 2002
• Docket Number: No. 3:01-CV-0602 CAN.,3:01-CV-0602 CAN.
• Citation: 230 F.Supp.2d 890
• Parties: CREDENTIALS PLUS, LLC, Plaintiff/Counter-Defendant, v. Jill S. CALDERONE, Defendant/Counter-Plaintiff, and National Credentials Corporation, Defendant.
• Court: U.S. District Court — Northern District of Indiana

230 F.Supp.2d 890

CREDENTIALS PLUS, LLC, Plaintiff/Counter-Defendant, v. Jill S. CALDERONE, Defendant/Counter-Plaintiff, and National Credentials Corporation, Defendant.

No. 3:01-CV-0602 CAN.

United States District Court, N.D. Indiana, South Bend Division.

November 7, 2002.

COPYRIGHT MATERIAL OMITTED

Paul J. Peralta, D. Lucetta Pope, Baker and Daniels, South Bend, IN, for Plaintiff.

Timothy W. Woods, J. Thomas Vetne, Jones Obenchain LLP, South Bend, IN, for Defendants.

MEMORANDUM AND ORDER

NUECHTERLEIN, United States Magistrate Judge.

Plaintiff Credentials Plus, LLC brought this action on August 22, 2001 alleging violations of both Indiana and federal law against Defendants Jill S. Calderone and National Credentials Corporation stemming from Calderone's March 2001 departure from Credentials Plus. Calderone counterclaimed with two counts against Plaintiff. On June 18, 2002, both Plaintiff [Doc. No. 35] and Defendants [Doc. No. 37] moved for summary judgment on various aspects of this case. The parties' motions were soon followed by Defendants' Motion to Strike affidavit statements from Plaintiffs' supporting documents [Doc. No. 45]. For the following reasons, Plaintiff's Partial Motion for Summary Judgment [Doc. No. 35] is GRANTED. Defendants & Counter-Plaintiff's Motion for Summary Judgment [Doc. No. 37] is GRANTED IN PART and DENIED IN PART. Defendants' Motion to Strike [Doc. No. 45] is

DENIED IN PART and DENIED AS MOOT IN PART.

I. FACTUAL HISTORY

While many factual allegations in the parties' filings conflict, the basic factual framework of this case is as follows. As of 1997, Defendant Jill Calderone and Anthony Nyers were members of Midwest Medical Services (MMS), an Indiana corporation with its principle place of business in Indiana. MMS served as a credentialing service for physician practice groups and health care providers. MMS's primary services included the assembly of credential-related data for physicians in client practice groups, delivering applications to health care organizations and government reimbursement programs, and providing client practice groups with reports of their physicians' data in relation to health providers and reimbursement programs. MMS's business prospects, unfortunately, were not bright. By July 1998, MMS only had one client, the South Bend Clinic (SBC), forcing Calderone and Nyers to look for outside assistance and investment. The two soon associated with Joseph Crowley to form Credentials Plus, LLC.

A. Formation and Operation of Credentials-Plus, LLC

On July 1, 1999 Nyers, Crowley, and Calderone entered into a "Letter Agreement" outlining Credentials-Plus's makeup and operation. Credentials-Plus was composed of MMS and Healthcare Economics Group, LLC (HEG), a South Carolina limited liability company. MMS was to provide the daily management and professional services for Credentials-Plus, and Healthcare Resources Group, a wholly-owned subsidiary of HEG, was to provide the new LLC with support services. (Letter Agreement at 1). Calderone, Nyers, and HEG each owned one-third of Credentials-Plus. Id. at 3. Credentials-Plus's stated purpose was to "provide medical credentials management services to providers, including complete, turnkey credentials management and on-demand credentials services." Id. The agreement also provided that Calderone would serve as president and chief operating officer of Credentials-Plus, as well as provided for Calderone's salary and vacation pay. Id. at 2. The company registered with the Indiana Secretary of State on October 4, 1999.

Until her departure, Calderone served as Credentials-Plus's sole officer and operating employee. Calderone's service, however, was marred by internal conflict.¹ Beginning in 1999, Calderone began to complain about sexually illicit comments and behavior directed at her by Nyers. She first complained to Crowley about the alleged harassment in September 1999. In November 2000, Calderone confronted Nyers about an alleged rumor that the two were having an affair. On March 15, 2001, Calderone told Crowley that she would have to leave Credentials-Plus due to the alleged incidents. The events culminated on March 28, 2001, when Calderone telephoned Crowley and told him that she was quitting due to the alleged harassment. That same day, Calderone's attorney sent Nyers and Crowley a letter offering to sell them Calderone's shares in Credentials-Plus.

Despite the poor working environment, Credentials-Plus thrived under Calderone's stewardship. In November 2000, Tony Walz created a website for Credentials-Plus allowing the company to advertise with potential clients and share information with existing customers. By March 2001, Credentials-Plus's clients included SBC, Lake Park Surgicare, Allied Physicians of Michiana, Grossnickle Eye Center, Chandana Surgery Center, Mercy Health Systems, and Coast-to-Coast Medical, LLC. Additionally, Credentials-Plus solicited business with other health care providers throughout the country. Calderone's duties included maintaining a database of physician credentials data, pricing information, client contacts, and health organizations' credentialing requirements. The database was protected using access passwords.

B. Formation of National Credentials Corporation and Calderone's Departure from Credentials-Plus

As previously stated, Calderone had expressed concern about her working environment to Crowley until her departure on March 28, 2001. The parties disagree as to whether Calderone's performance at Credentials-Plus waned prior to her departure. Amidst these conflicting stories, however, several documents establish a timeline pertinent to Plaintiff's allegations.

On March 17, 2001, prior to her departure, Calderone registered a domain name for National Credentials Corporation with the internet site Register.com, setting up an email for herself and listing the site's administrative contact as National Credentials Corporation. (Verisign, "Whois" internet search report). After her departure, while still owning shares in Credentials-Plus, Calderone filed articles of incorporation with the Georgia Secretary of State, incorporating National Credentials on April 6, 2001.² Calderone also sent several letters and emails to health care providers soliciting business for her new company. See e.g. (April 7, 2001 email from Calderone to Neal Russell at Critical Health Systems). Calderone sold her shares in Credentials-Plus to her father, Antonio Taveres, on June 7, 2001.

C. Credentials-Plus's Status After Calderone's Departure

Because Calderone served as Credentials-Plus's sole operating officer, the company was virtually unable to function after Calderone's departure.³ After its contract ran out, SBC, Credentials-Plus's longest running customer accounting for over half the company's business, took its credentialing services in-house. Credentials-Plus's contracts were also terminated with Allied Physicians, Lake Park Surgery Center, Mercy Health Services, and Grossnickle Eye Center.

II. PROCEDURAL HISTORY

Plaintiff brought this action on August 22, 2001 alleging five causes of action under both Indiana and federal law against Defendants Jill S. Calderone and National Credentials: (1) violation of the Indiana Trade Secrets Act, Ind.Code § 24-2-3-2 et seq.; (2) intentional interference by Defendants with Plaintiff's business relations, (3) conversion of property under Ind.Code § 35-43-4-3 et seq.; (4) breach of fiduciary duty; and (5) violation of the federal Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030 et seq. Calderone counterclaimed for unpaid vacation and general wages as well as reimbursement for the purchase of office furniture. The parties consented to proceed before this Court on October 2, 2001.

On June 18, 2002, the parties filed simultaneous motions for summary judgment. Plaintiff moved for summary judgment on count four of its complaint, and Defendants moved for summary judgment on all aspects of the case. On August 6, 2002, Defendants filed a Motion to Strike affidavit statements from Plaintiffs' pleadings.

III. SUMMARY JUDGMENT STANDARD

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); Lawson v. CSX Transp., Inc., 245 F.3d 916, 922 (7th Cir.2001). In determining whether a genuine issue of material fact exists, this Court must construe all facts in the light most favorable to the nonmoving party as well as draw all reasonable and justifiable inferences in favor of that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); King v. Preferred Technical Group, 166 F.3d 887, 890 (7th Cir.1999). To overcome a motion for summary judgment, the nonmoving party cannot rest on the mere allegations or denials contained in its pleadings. Rather, the nonmoving party must present sufficient evidence to show the existence of each element of its case on which it will bear the burden at trial. Celotex v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Robin v. Espo Engineering Corp., 200 F.3d 1081, 1088 (7th Cir.2000); See also N.D. Ind. L.R. 56.1(b) ("In determining a motion for summary judgment, this court will assume that the facts as claimed and supported by admissible evidence by the moving party are admitted to exist without controversy, except to the extent that such facts are controverted ... as supported by the depositions, discovery responses, affidavits, and other admissible evidence on file."). Where a factual record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing ...