Kantsevoy v. LumenR LLC

Decision Date29 March 2019
Docket NumberCivil Action No. ELH-17-359
PartiesSERGEY KANTSEVOY, Plaintiff/Counter-Defendant, v. LUMENR LLC, Defendant/Counter-Plaintiff.
CourtU.S. District Court — District of Maryland
MEMORANDUM OPINION

Sergey Kantsevoy, M.D., Ph.D., a gastroenterologist, filed suit against LumenR LLC ("LumenR"), a medical device company, for breach of contract and related claims stemming from Kantsevoy's work in product development for LumenR. ECF 1 (Complaint). In response, LumenR asserted counterclaims for breach of contract, tortious interference with business relations, and related claims. ECF 12 (Answer and Counterclaims).1

After a lengthy and contentious discovery period, LumenR filed a motion for partial summary judgment as to its counterclaim against Kantsevoy for tortious interference with business relations. ECF 172. LumenR also asserts that Counts I, II, III, IV, and VI of the Complaint are barred in whole or in part by the statute of limitations. Id. The motion is supported by a memorandum of law (ECF 172-1 (redacted); ECF 173 (sealed)), and several exhibits (collectively, "LumenR Motion"). Kantsevoy opposes the LumenR Motion and has filed a cross-motion for partial summary judgment. ECF 178. He seeks summary judgment on Count I of the Complaint, for breach of express contract, and on all three of LumenR's remaining counterclaims. Id. Themotion is supported by a memorandum (ECF 178-1 (redacted); ECF 179 (sealed)), and many exhibits (collectively, "Kantsevoy Motion").

LumenR filed a combined opposition to the Kantsevoy Motion and a reply in support of its own Motion. ECF 185 (redacted); ECF 186 (sealed). Kantsevoy replied. ECF 189 (redacted); ECF 190 (sealed).

No hearing is necessary to resolve these motions. See Local Rule 105.6. For the reasons that follow, I shall deny the LumenR Motion. And, I shall grant Kantsevoy's Motion in part and deny it in part.

I. Factual and Procedural Background2

Kantsevoy met Gregory Piskun, M.D., at a medical conference in May 2010. ECF 178-3 (Kantsevoy Decl.), ¶ 9. Piskun is the founder of two medical device companies, LumenR and HET Systems, LLC ("HET Systems"). Id. At the time of the conference, both companies were in the process of developing new products. Id. HET Systems was designing a hermorrhoid-treatment device and LumenR was in the early stages of developing the "Tissue Retractor," a device that would aid in surgery to remove cancerous lesions and tumors from the colon, stomach, and esophagus. Id. ¶¶ 9, 10. Piskun introduced Kantsevoy to the devices at the conference, and Kantsevoy expressed his interest in joining both of the development teams. Id. ¶ 11.

Soon after the conference, Piskun sent an email to Kantsevoy on behalf of LumenR. Id. The email, dated June 12, 2010, stated, ECF 172-5:

Sergey—Thank you, It is an honor to get you involved. Let's start by introducing the technology to you?
If this is acceptable to you we would compensate your consulting time with $500/hour and $2500/day if need [sic] to spend a day on the company's business (meetings, labs, clinical studies, etc.) If it happens that you really [sic] excited aboutthe technology and believe in its future, we can create an equity ownership package which may be a very substantial exit for you.
Please let me know your thoughts. If you prefer to talk on the phone please don't hesitate to call me at [REDACTED].
Best Regards,
Greg

Kantsevoy replied: "Yes, I am interested. We can discuss more details by e-mail or by phone—both way [sic] are good for me. Sergey." ECF 172-5.

There were no further communications about Kantsevoy's potential work for LumenR in the months following this exchange. Then, in September 2011, Kantsevoy entered into a consulting agreement with Piskun's other company, HET Systems, LLC (the "Het Agreement"). ECF 185-1 (Piskun Decl.), ¶ 3. The HET Agreement specified that Kantsevoy would receive $500 for each product evaluation form he submitted and a $2,000 honorarium for any speaking engagement he attended on behalf of the HET project. ECF 172-7 (Consulting Agreement of 9/1/11 between Kantsevoy and HET Systems), at 2. The HET Agreement also provided equity compensation to Kantsevoy of 50,000 shares. Id.

After consulting on the HET project for several months, Kantsevoy began working on the Tissue Retractor for LumenR. ECF 178-3, ¶ 12. On February 25, 2012, he conducted his first animal lab with a prototype of the Tissue Retractor. Id. Soon thereafter, Piskun sent an email to Kantsevoy about his compensation. ECF 185-1, ¶ 4. The email, dated February 28, 2012, stated, ECF 172-6:

Sergey, $2K check for [L]umen[R] lab is coming to you this week. Is it acceptable? It is a different company so there be will [sic] "from LumenR" on the check. We will create an agreement for you similar to HET shortly (Scientific advisor). Ok?

Kantsevoy replied: "Sure Gregory, thank you!" Id.

LumenR and Kantsevoy never executed a formal agreement. Over the next few years, however, Kantsevoy performed a variety of services for LumenR in connection with the TissueRetractor. ECF 178-3, ¶¶ 19, 20. He conducted animal labs, led several presentations and training sessions, and published a paper. Id. ¶¶ 14-16. Kantsevoy also performed approximately fifty human clinical trials with the Tissue Retractor. Id. ¶¶ 14-15. He and Piskun agreed that the clinical trials would be self-sponsored and, thus, that Kantsevoy would not be paid by LumenR for his work on the trials. Id. However, LumenR provided devices and other in-kind support for the clinical trials. ECF 185-1, ¶ 5.

Piskun was impressed by Kantsevoy's work for LumenR. He described Kantsevoy's contribution to the Tissue Retractor as "instrumental," "tangible" and "outstanding." ECF 172-8 (email from Piskun, 12/4/12); ECF 179-6 (email from Piskun, 8/9/13). However, LumenR did not pay Kantsevoy for many of the services that he performed in connection with the Tissue Retractor. ECF 178-3, ¶ 18; see also ECF 172-9 (Kantsevoy Resp. Interrog.) at 18, 33-55 Specifically, according to Kantsevoy, LumenR did not pay him for over thirty-seven presentations and training sessions at which he "championed" the Tissue Retractor. ECF 178-3, ¶ 18. In addition, LumenR made only twelve payments of $2,000 each for the twenty-one animal experiments that Kantsevoy conducted. Id. Although the parties agree that Kantsevoy was not entitled to compensation for the human clinical trials that he performed, they vehemently dispute the terms of compensation for the other services that Kantsevoy provided. See ECF 178-3, ¶ 14; ECF 185-1, ¶ 5.

For his part, Kantsevoy maintains that he is entitled to the fees and equity outlined in Piskun's email of June 12, 2010, for his work on the Tissue Retractor. ECF 178-3, ¶ 18. He asserts that Piskun asked him to "defer payment until the Tissue Retractor sold" and, because Kantsevoy trusted Piskun, he "very rarely complained" about LumenR's failure to pay him fees. Id. Further,he claims that on several occasions between 2015 and 2016, Piskun told him that LumenR would provide him a reasonable equity ownership package. ECF 172-9 at 5.

Piskun tells a very different story, however. He asserts that Kantsevoy informed him in 2013 that he no longer wanted to serve as a paid consultant for LumenR because he did not want any financial conflicts. ECF 185-1, ¶ 5. Thus, LumenR "did not provide further compensation for his consulting services" but continued to provide in-kind support. Id. Further, Piskun states that Kantsevoy never submitted invoices to LumenR and that LumenR did not engage Kantsevoy to perform many of the services for which he now seeks compensation. Id. ¶ 6.

Kantsevoy's consulting relationship with LumenR ended in 2016. In April of that year, Kantsevoy learned that LumenR was in negotiations to sell the Tissue Retractor to Olympus Corporation ("Olympus"). ECF 178-3, ¶ 19. In anticipation of the sale, Kantsevoy demanded compensation for his contribution to the product, including an equity package in LumenR. Id. Kantsevoy and LumenR negotiated his claim for compensation for several months but were unable to reach an agreement.

In the summer of 2016, LumenR broke off negotiations with Olympus and began negotiating the sale of the Tissue Retractor with Boston Scientific Corporation ("BSC"). ECF 179-12, Tr. 196:2-197:13. LumenR and BSC signed a letter of intent for the transaction on July 14, 2016. See ECF 173-2 ("Memorandum Of Terms For Proposed Transaction"). This "Term Sheet," as the parties call it, summarized the proposed transaction. Id.; see also ECF 173 at 23; ECF 179 at 10. In relevant part, the Term Sheet provided for BSC's acquisition of various products, or assets, of LumenR, and compensation from BSC in the form of a [Redacted] payment, upon closing; a total of [Redacted] in milestone payments, and ongoing royalty payments. ECF173-2 at 2. The [Redacted] in milestone payments included a [Redacted] Development Milestone payment and a [Redacted] Technology Transfer Milestone. Id. Id. at 3.

In the following months, while the negotiations were ongoing between LumenR and BSC, Kantsevoy engaged in a series of communications with Brandon Gunther, a BSC employee. ECF 172-19; ECF 172-4, Tr. 59:5-7, 92:2-4. Gunther discussed these conversations with another BSC employee, Michael Ryan, who led the company's negotiations with LumenR. ECF 172-13, Tr. 9:19-24, 91:10-92:11. Ryan testified that, in these conversations, Kantsevoy represented that he "felt that the LumenR technology had been stolen from him ... by LumenR." Id. at 92:3-11. Ryan also testified that Kantsevoy had threatened to "burn the data" from his clinical trials and that BSC "considered Dr. Kantsevoy's threats when evaluating the transaction." Id. at 114:13-118:5.

On October 5, 2016, Kantsevoy sent an email to Gunther in which he outlined ways that BSC could structure its deal with LumenR to "address [Kantsevoy's] fair compension." ECF 172-19. First, he suggested that BSC "resolve all outstanding...

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