Evans v. Scribe One Ltd.
| Docket Number | CV-19-04339-PHX-DLR |
| Decision Date | 20 January 2022 |
| Parties | Kellye Evans, Plaintiff, v. Scribe One Limited LLC, et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
This order resolves (1) Defendants Scribe One Limited, LLC ("Scribe One"), Dr. Bruce Tizes, and Sydney Stern's motion for summary judgment (Doc. 143); (2) Plaintiffs Kellye Evans and Evans Consulting's motion to strike certain statements, arguments, and exhibits in Defendants' reply brief (Doc. 222); Plaintiffs' motion to strike a supplemental exhibit filed in support of Defendants' summary judgment motion (Doc. 274); and Plaintiffs' motion for summary judgment (Doc. 242). For reasons explained below, Plaintiffs' motion to strike certain statements, arguments, and exhibits to Defendants' summary judgment motion is denied Plaintiffs' motion to strike Defendants' supplemental exhibit in support of their summary judgment motion is granted, Plaintiffs' motion for summary judgment is granted, and Defendants' motion for summary judgement is granted in part and denied in part.
Plaintiffs' first motion asks the Court to strike certain statements, arguments, and exhibits in Defendants' summary judgment reply brief. (Doc. 222.) Plaintiffs argue that Defendants' reply makes a number of factual assertions that are not supported by citations to admissible portions of the record and raises new arguments. Plaintiffs also argue that Defendants submitted evidence with their reply in violation of paragraph 6(c) of the Scheduling Order. (See Doc. 93 at 4.) This motion is denied.
The rules governing summary judgment motions already permit the Court to disregard unsupported assertions of fact and new arguments raised for the first time in reply. See, e.g., Fed. R. Civ. P. 56(c)(3); In re Allstate Life Ins. Co. Litigation, Nos. CV-09-08162-PCT-GMS, CV-09-8174-PCT-GMS, 2013 WL 5161688, at *14 (D. Ariz. Sept. 13, 2013) (); Marlyn Nutraceuticals, Inc. v. Improvita Health Products, 663 F.Supp.2d 841, 848 (D. Ariz. 2009) ( . A motion to strike therefore is unnecessary. See AIRFX.com v. AirFX LLC, No. CV 11-01064-PHX-FJM, 2012 WL 129804, at *1 (D. Ariz. Jan. 17, 2012) (). If, in its review, the Court determines that a party's factual assertions are unsupported, it will not consider them. Likewise, if the Court determines that Defendants have raised new arguments for the first time in their reply, then it will not consider them.
As for the evidence attached to Defendants' reply, when "new evidence is presented in a reply ... the district court should not consider the new evidence without giving the [non-movant] an opportunity to respond." Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996) (quotation omitted). This District has repeatedly recognized, however, that "[w]hile a party may not file 'new' evidence with a reply, it may file 'rebuttal' evidence to contravene arguments first raised by the non-moving party in its opposition." TSI Inc. v. Azbil BioVigilant Inc., No. CV-12-00083-PHX-DGC, 2014 WL 880408, *1 (D. Ariz. Mar. 6, 2014); see also Advanced Reimbursement Solutions LLC v. Spring Excellence Surgical Hospital LLC, No. CV-17-01688-PHX-DWL, 2020 WL 2768699, at *4 (D. Ariz. May 28, 2020) (same). Here, Defendants argue in their summary judgment motion that several of Plaintiffs' claims are barred by the statute of frauds. In response, Plaintiffs argue that the part performance exception to the statute of frauds applies and proceed to lay out evidence that, in their view, demonstrates that they fall within this exception. The evidence that Defendants attached to their reply brief is designed to contravene Plaintiffs' arguments about the part performance exception. It therefore qualifies as rebuttal evidence (which is appropriate), rather than new evidence (which is not).[1]
Plaintiffs' second motion asks the Court to strike a supplemental exhibit filed by Defendants, without the Court's permission, over 7 months after Defendants filed their reply brief. (Doc. 274.) This motion is granted. Regardless of any distinction between new and rebuttal evidence, an exhibit filed 7 months after Defendants filed their reply cannot reasonably be considered evidence submitted with the reply. The summary judgment process would become unworkable if new evidence trickled in throughout the entire time the Court has the motion under advisement. The Court will strike Defendants' supplemental exhibit (Doc. 270) because it was not authorized by any rule or court order.
The crux of this case is a dispute over the ownership of Scribe One, a medical scribe company. Scribe One was formed as a Delaware limited liability company with Stern as the sole member on June 29, 2017. Stern signed Scribe One's operating agreement, paid its registration fee, obtained its insurance policy, applied for its EIN, opened its bank account, registered it with the Arizona Corporation Commission, and secured a credit card for it. On paper, Scribe One appears to be wholly owned by Stern.
Evans, however, claims that she owns the company. According to Evans, she and Dr. Tizes agreed to form Scribe One in June 2017 ("Formation Agreement"), though no written copy of this agreement exists. Pursuant to the alleged Formation Agreement, Evans would transfer ownership of her preexisting medical scribe company, Evans Consulting, to Scribe One, Evans would own 70% of the new company, and Dr. Tizes would own 30%, contingent upon him making a payment to Evans equal to 30% of the gross revenues Scribe One would generate between July 1, 2017 and December 31, 2018 ("Buy-In Payment"). Tizes allegedly agreed to make the Buy-In Payment no later than 18 months after the formation of Scribe One. In breach of the Formation Agreement, Evans claims Dr. Tizes never made the Buy-In Payment and instead surreptitiously had Stern form Scribe One with Stern as its sole owner and member. In Evans' view, while Scribe One might appear on paper to be owned by Stern, it actually belongs to her based on the Formation Agreement she reached with Dr. Tizes in June 2017.
Dr. Tizes and Stern see it differently. According to them, Stern owns 100% of Scribe One and Evans was a Scribe One employee. Scribe One did not formally acquire Evans Consulting. Instead, Scribe One and Evans Consulting entered into an agreement whereby Scribe One would provide staffing and back office support to service Evans Consulting's preexisting contracts with the San Carlos Apache Healthcare Corporation ("SCAHC") at cost, while Evans Consulting (and, consequently, Evans herself) would remain entitled to the profits from those contracts ("Management Agreement"). Like the Formation Agreement, this Management Agreement is not in writing.
In her Second Amended Complaint ("SAC"), Plaintiffs bring a litany of claims, some premised on the belief that Evans owns Scribe One, others pled in the alternative and predicated on the alleged Management Agreement. (Doc. 236.) Defendants have moved for summary judgment on all of Plaintiffs' claim except Count XII, which alleges that certain noncompete agreements signed by current or former Scribe One employees are invalid, and Count XV, which alleges defamation. (Doc. 143.)
Summary judgment is appropriate when there is no genuine dispute as to any material fact and, viewing those facts in a light most favorable to the nonmoving party, the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A fact is material if it might affect the outcome of the case, and a dispute is genuine if a reasonable jury could find for the nonmoving party based on the competing evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002). Summary judgment may also be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322(1986).
The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323. The burden then shifts to the non-movant to establish the existence of a genuine and material factual dispute. Id. at 324. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts," and instead "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (internal quotation and citation omitted).
Count III of the SAC alleges that Dr. Tizes breached the Formation Agreement. (Doc. 236 at 21-22.) Dr. Tizes argues he is entitled to summary judgment on Evans' breach of contract claim because the Formation Agreement is unenforceable under the statute of frauds. (Doc. 143 at...
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