Interim Healthcare, Inc. v. Interim Healthcare of Se. La., Inc.

• Decision Date: 10 June 2020
• Docket Number: Case No. 19-cv-62412-BLOOM/Valle
• Parties: INTERIM HEALTHCARE, INC., Plaintiff, v. INTERIM HEALTHCARE OF SOUTHEAST LOUISIANA, INC., INTERIM HEALTHCARE HOSPICE, INC., and JULIA BURDEN, individually, Defendants.
• Court: U.S. District Court — Southern District of Florida

INTERIM HEALTHCARE, INC., Plaintiff, v. INTERIM HEALTHCARE OF SOUTHEAST LOUISIANA, INC., INTERIM HEALTHCARE HOSPICE, INC.,and JULIA BURDEN, individually, Defendants.

Case No. 19-cv-62412-BLOOM/Valle

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

June 10, 2020

OMNIBUS ORDER

THIS CAUSE is before the Court upon DefendantsInterim Healthcare Hospice, Inc.("IH Hospice") and Julia Burden's ("Burden")(collectively, "Defendants")¹Motion to Dismiss Plaintiff's Complaint and/or Motion to Transfer Venue Under 28 U.S.C. § 1404, ECF No. [40]("Motion to Dismiss"), and accompanying Memorandum of Law, ECF No. [41]; PlaintiffInterim Healthcare, Inc.'s ("Plaintiff")Motion for a Preliminary Injunction, ECF No. [30]("Preliminary Injunction Motion"); and Defendants' Amended Motion to Stay Proceedings Pending Ruling on Motion to Dismiss, ECF No. [33]("Motion to Stay"), (collectively, the "Motions").The Court has carefully reviewed the Motions, all opposing and supporting submissions, the record in this case, the applicable law, and is otherwise fully advised.For the reasons set forth below, the Motion to Dismiss is denied; the Preliminary Injunction Motion is granted in part and denied in part consistent with this Order; and the Motion to Stay is denied.

I.BACKGROUND

Plaintiff initiated this action on September 27, 2019, against IHSL and Burden as the sole shareholder and operator of IHSL.ECF No.[1].On November 8, 2019, Plaintiff moved for a preliminary injunction against IHSL and Burden, seeking to assume operation and control of IHSL's hospice business and to obtain IHSL's Hospice License and Medicare provider number.ECF No. [19].On November 22, 2019, however, Plaintiff filed a Notice of Bankruptcy Proceeding, ECF No. [21], indicating that, on November 19, 2019, IHSL filed a Chapter 11 Voluntary Petition (Non-Individual) in U.S. Bankruptcy Court for the Eastern District of Louisiana.Based on this Notice, on December 17, 2019, the Court stayed the case against IHSL and Burden, as the shareholder and operator of IHSL, pending the conclusion of IHSL's bankruptcy case.ECF No. [27].Accordingly, the case was administratively closed.

Plaintiff also initiated an action against IH Hospice and Burden, as the sole shareholder and operator of IH Hospice, on November 26, 2019, under case number 19-cv-62932.SeeInterim Healthcare, Inc. v. Interim Healthcare Hospice, Inc., No. 19-cv-62932, ECF No. [1]("IHH").On February 12, 2020, IHH was transferred to the undersigned and consolidated with the instant case number.SeeIHH, No. 19-cv-62932, ECF Nos. [25] & [26].The instant Motions address the consolidated proceedings against IH Hospice and Burden, as the sole shareholder and operator of IH Hospice.²

The Complaint alleges as follows:

8.[Plaintiff] is the franchisor of the Interim Healthcare and Hospice franchise system that provides nursing, therapy and non-medical home care, hospice and healthcare staffing services through over 300 franchisees throughout the United States.

9.[Plaintiff] owns the mark "Interim Healthcare Hospice", which is registered on the United States Patent and Trademark Office's Principal Register atNo.4,428,294.[Plaintiff] also owns the marks "Interim" and "Interim Healthcare", which are registered on the United States Patent and Trademark Office's Principal Register of Trademarks at Nos. 1,763,176 and 1,910,368, respectively (collectively, [Plaintiff's] trademarks are called the "Proprietary Marks").[Plaintiff] has continually used and advertised the Proprietary Marks throughout the country.

The Franchise Agreements

10.Interim franchisees are licensed to use [Plaintiff's] Proprietary Marks to operate under [Plaintiff's] business system pursuant to the terms and conditions of the [Plaintiff's] franchise agreement entered into between each franchisee and [Plaintiff] itself.

11.Interim franchisees are also licensed to use [Plaintiff's] proprietary business policies, trade secrets, procedures, standards, and ad specifications for operations, all of which are disclosed to Interim franchisees in confidence.

12.Under each franchise agreement, Interim franchisees must pay [Plaintiff] an initial franchise fee and ongoing, monthly royalty fees.

13.On May 11, 1970, Personnel Pool of America, Inc.("PPA") and Personnel Pool of New Orleans, Inc.("PPNO") entered into a franchise agreement (the "New Orleans Franchise Agreement") under which PPNO was granted the right and undertook the obligation to operate an "Interim Healthcare" franchise in several Parishes in and around New Orleans, Louisiana.PPA assigned the New Orleans Franchise Agreement to [Plaintiff] and PPNO subsequently assigned the New Orleans Franchise Agreement to Interim Healthcare of New Orleans, Inc.("IHNO").On May 1, 2012, IHNO assigned the New Orleans Franchise Agreement to Interim Healthcare of Southeast Louisiana, Inc.("IHSL"), an entity owned and controlled by Burden (the "Assignment").A true and correct copy of the New Orleans Franchise Agreement and the Assignment are attached as Exhibit "A."

14.In conjunction with the New Orleans Franchise Agreement, Burden executed a personal guarantee and agreed to be bound by Sections 18and27 of the New Orleans Franchise Agreement (the "New Orleans Guaranty").See Exhibit "A."

15.On March 12, 2012, [Plaintiff] and IHNO entered into a franchise agreement (the "Livingston Franchise Agreement") pursuant to which IHNO was granted the right and undertook the obligation to operate an "Interim Healthcare" franchise in several Parishes in and around Livingston Parish, Louisiana.A true and correct copy of the Livingston Franchise Agreement is attached as Exhibit "B."In 2013, the charter of IHNO was revoked by the State of Louisiana.Since then, the Livingston Franchise Agreement has been operated by IHSL, [IH Hospice,] and Burden with the consent of [Plaintiff].

16.In conjunction with the Livingston Franchise Agreement, Burden executed a personal guarantee and agreed to be bound by "the covenants and conditions of Sections 10,15and20.5" of the Livingston Franchise Agreement (the "Livingston Guaranty").See Exhibit B. The New Orleans Guaranty and the Livingston Guaranty are collectively referred to as the "Guarantees."

17.[IH Hospice], Burden and IHSL have held themselves out as the successors of IHNO and they have performed under, and enjoyed the benefits of, the Livingston Franchise Agreement.Accordingly, [IH Hospice], Burden and IHSL have adopted the terms of the Livingston Franchise Agreement and are liable to Interim for all of IHNO's obligations thereunder.The Livingston Franchise Agreement and the New Orleans Franchise Agreement are collectively referred to as the "Franchise Agreements."

18.Pursuant to Section 19 of the New Orleans Franchise Agreement (as amended by the Addendum dated December 9, 2004) and Section 11.1 of the Livingston Franchise Agreement, [IH Hospice] was required to pay to [Plaintiff] a weekly service charge equal to: (1) three and one quarter percent of their weekly Medicare and Medicaid sales; and (2) five and one quarter percent of their weekly sales other than Medicare and Medicaid sales.

19.Pursuant to the Franchise Agreements, any amounts not paid when due to Interim within five days of the due date incur a late fee of $25.Furthermore, any amounts not paid within thirty days of being due under the Livingston Franchise Agreement shall accrue interest at the lesser of: (1) one and one-half percent per month; or (2) the maximum interest rate allowed by applicable law.

20.Section 30 of the New Orleans Franchise Agreement provides that:

Upon any such termination, [Plaintiff] shall have the immediate right to place its employees upon the premises of Franchisee for the purpose of continuing the operation of the business for the benefit of [Plaintiff].Franchisee agrees to turn over to [Plaintiff] the names of all of its customers and the names of all of its permanent and temporary employees, and any manuals furnished or made available to it by [Plaintiff].Franchisee further agrees that, upon any such termination, it will no longer do business as a corporation under, or use as an assumed or registered trade name, the names set forth in Paragraph l(b) hereof and, Franchisee agrees to execute, or cause to be executed, such document or documents and to take such further steps as may be necessary so as to entitle [Plaintiff] to exercise the sole rights of use and ownership with respect to any of [Plaintiff's] trade names, trademarks or service marks.

21.Section 17.1 of the Livingston Franchise Agreement, pursuant to which hospice services were provided, states in pertinent part:

Upon expiration or termination of this Agreement for any reason, including the rejection of this contract by Franchisee in connection with any bankruptcy proceedings filed by or against Franchisee, Franchisee's right to use plans, methods and procedures of [Plaintiff] together with the trade names, trademarks, and/or service marks, now or hereafter licensed or acquired, and any derivatives thereof, shall immediately cease, and Franchisee shall immediately discontinue the use thereof . . .22. In addition, Section 17.2 of the Livingston Franchise Agreement, pursuant to which hospice services were provided, states:

Upon any such expiration or other termination, [Plaintiff] shall have the immediate right to place its employees, or those of its designee, upon the premises of Franchisee for the purpose of continuing the operation of the Franchise Business for the benefit of [Plaintiff].Franchisee agrees to turn over to [Plaintiff], and to no other party without the express written consent of [Plaintiff], the names, addresses and telephone numbers of all of the customers and the permanent and temporary employees of the Franchise Business (all of which information Franchisee hereby acknowledges has been co-developed by [Plaintiff] and Franchisee during the term of this Agreement, and which

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