Kantsevoy v. Lumenr LLC

• Citation: 301 F.Supp.3d 577
• Decision Date: 13 March 2018
• Docket Number: Civil Action No. ELH–17–359
• Parties: Sergey KANTSEVOY, Plaintiff/Counter–Defendant, v. LUMENR LLC, Defendant/Counter–Plaintiff.
• Court: U.S. District Court — District of Maryland

301 F.Supp.3d 577

Sergey KANTSEVOY, Plaintiff/Counter–Defendant,

v.LUMENR LLC, Defendant/Counter–Plaintiff.

Civil Action No. ELH–17–359

United States District Court, D. Maryland.

Signed March 13, 2018

Jeffrey A. Wolfson, Gina N. Falaschi, pro hac vice, Michael J. Scanlon, pro hac vice, Philip G. Hampton, II, pro hac vice, Haynes and Boone LLP, Washington, DC, for Plaintiff/Counter–Defendant.

Edward T. Colbert, Kenyon and Kenyon LLP, Washington, DC, Gary Abelev, pro hac vice, Paul D. Ackerman, pro hac vice, New York, NY, Gregory Miller, pro hac vice, Andrews Kurth Kenyon LLP, New York, NY, for Defendant/Counter–Plaintiff.

MEMORANDUM OPINION

Ellen Lipton Hollander, United States District Judge

Sergey Kantsevoy, M.D., a gastroenterologist, has sued 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). LumenR has asserted counterclaims for breach of contract, tortious interference with business relations, and related claims. ECF 12 (Answer and Counterclaims).¹

Since suit was filed in February 2017, the parties have engaged in the proverbial scorched-earth style of litigation, requiring resolution of numerous discovery disputes and the filing of thousands of pages of vitriolic submissions. Ten motions and cross-motions are pending. This Memorandum Opinion addresses three of them. The first two are cross-motions for judgment on the pleadings under Fed. R. Civ. P. 12(c). ECF 25; ECF 27. LumenR filed its motion first, seeking to dismiss five of Kantsevoy's six claims. ECF 25. The motion is supported by a memorandum of law (ECF 25–1) (collectively, the "LumenR Motion"), and one exhibit. Kantsevoy opposes the LumenR Motion. ECF 26 ("Kantsevoy Opposition"). LumenR replied ("LumenR Reply").

Thereafter, Kantsevoy filed his motion for judgment on the pleadings, seeking to dismiss LumenR's counterclaim for deceit; strike LumenR's affirmative defenses of deceit and promissory estoppel; and strike from LumenR's pleadings "all allegations regarding Dr. Kantsevoy's financial disclosures to third parties." ECF 27. The motion is supported by a memorandum of law (ECF 27–1) (collectively, the "Kantsevoy Motion") and two exhibits. LumenR opposes the Kantsevoy Motion. ECF 29 ("LumenR Opposition"). Kantsevoy replied. ECF 30 ("Kantsevoy Reply").

The third motion addressed in this Memorandum Opinion is LumenR's Motion for Leave to Amend Its Answer, Affirmative Defenses and Counterclaims. ECF 120 ("Motion to Amend"). The Motion to Amend seeks to add a fifth counterclaim, styled "Breach of Contract—Third Party Beneficiary." ECF 120–2 (proposed Amended Answer and Counterclaims) at 20. Kantsevoy opposes the Motion to Amend. ECF 144. LumenR replied. ECF 158.

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

I. Factual Background

Given the procedural posture of this case, I must assume the truth of all factual allegations in the Complaint. See E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc. , 637 F.3d 435, 440 (4th Cir. 2011). Because both parties have filed motions for judgment on the pleadings under Rule 12(c), I shall include the factual allegations in Kantsevoy's Complaint as well as LumenR's Answer and Counterclaims, noting where they conflict. Additionally, where relevant facts are contained in exhibits incorporated into the pleadings (discussed, infra ), I shall refer to those exhibits, as well.

In 2009, LumenR was founded by Gregory Piskun, M.D. ECF 1, ¶ 9. The company focused on developing a medical device that would aid in surgery to remove cancerous lesions and tumors from the colon, stomach, and esophagus. Id. The device is called the LumenR Tissue Retractor System ("Tissue Retractor"). Id. In May 2010, Piskun approached Kantsevoy at a convention to discuss the Tissue Retractor, and Kantsevoy said that the device could be useful. Id. ¶¶ 10–11.

Kantsevoy describes himself as "an internationally known gastroenterologist," practicing at Mercy Hospital in Baltimore. ECF 1, ¶ 4. He claims that on June 12, 2010, Piskun "invited Dr. Kantsevoy to formally join the [LumenR] development team." Id. ¶ 12. Kantsevoy alleges that Piskun made an "offer" that "included a promise to pay Dr. Kantsevoy the lesser of $500 per hour or $2500 per day for his consulting services." Id. Kantsevoy insists that the "offer" "also included a promise to ‘create an equity ownership package’ " for Kantsevoy, by which "[t]he parties understood that LumenR would provide Dr. Kantsevoy a reasonable equity package [in LumenR], the precise amount of which would be mutually and reasonably agreed upon later." Id. Kantsevoy alleges that he "accepted the offer that day," and the next day "Dr. Piskun acknowledged in writing that Dr. Kantsevoy accepted the offer to work for LumenR." Id.

LumenR alleges a somewhat different story. LumenR agrees that Piskun and Kantsevoy met in May 2010, but alleges that in June, Piskun "sent an email to Kantsevoy inquiring regarding Kantsevoy's interest in consulting on the LumenR project." ECF 12, ¶ 9. The email, dated June 12, 2010, stated, ECF 25–2:

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 to spend a day on the company's business (meetings, labs, clinical studies, etc.) If it happens that you really [sic] excited about the 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 25-2. LumenR asserts that there were "no further communications on the topic of Kantsevoy's potential consulting arrangement until nearly a year later." ECF 12, ¶ 9.

LumenR claims that when Kantsevoy and Piskun met again in June 2011, Kantsevoy expressed interest in the Tissue Retractor. Id. ¶ 10. LumenR alleges that in September 2011, Piskun and Kantsevoy executed an agreement as to a different project, concerning the "HET" project ("HET Agreement"), not associated with LumenR, but also supervised by Piskun. Id. ¶ 11. 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. Id. The HET Agreement also provided equity compensation to Kantsevoy of 50,000 shares. Id. In addition, the HET Agreement contained a confidentiality provision and a requirement that Kantsevoy assign to HET any intellectual property rights obtained in the course of the HET project. Id.

According to LumenR, Piskun's email forwarding the HET Agreement stated that "we will create the identical agreement for LumenR when ready to execute." Id. (internal quotation marks omitted).² LumenR asserts that Kantsevoy executed the HET Agreement, but then later asked to rescind it. Id. Although the HET Agreement was rescinded on an unspecified date, LumenR alleges that Kantsevoy still wished to consult for LumenR on the Tissue Retractor, and Kantsevoy suggested lowering his per diem rate to $2,000. Id. ¶ 12.

LumenR maintains that when LumenR's patent application for the Tissue Retractor was filed, at an unspecified time, Kantsevoy was named as a co-inventor, but he assigned all his rights in the product to a corporation called "Macroplata, Inc.," and his rights were subsequently assigned to LumenR. Id. ¶ 16. Kantsevoy states that he signed away his intellectual property rights, "for a symbolic fee of $1 and ‘other good and valuable consideration,’ " which Kantsevoy alleges was understood to include an " ‘equity ownership package’ " in LumenR. ECF 1, ¶ 18.

According to LumenR, between February 2012 and November 2013, Kantsevoy conducted several tests of the Tissue Retractor on animals and received seven payments from LumenR at his per diem rate. ECF 12, ¶ 17. Further, LumenR maintains that Kantsevoy "expressed interest in conducting human clinical trials" with the Tissue Retractor, but that he "insisted on not being compensated by LumenR as this would allow him to publish peer reviewed articles, and participate in seminars and speaking engagements while being free of financial conflicts of interest." Id. ¶ 18.

LumenR alleges that it "agreed to have Kantsevoy self-sponsor clinical work," and "support[ed] Kantsevoy's efforts" with sample devices, technical support, and selective reimbursements. Id. ¶ 19. In "exchange" for this support, Kantsevoy was expected to "provide copies of the completed clinical trial data sheets to LumenR and to publish the results of his work." Id. LumenR alleges that Kantsevoy never provided the clinical trial data sheets. Id. Further, LumenR insists that throughout Kantsevoy's clinical work, Kantsevoy continually "represented to LumenR, to peer reviewed publications, to professional organizations and...to the [Institutional Review Board] of Mercy Hospital, that Kantsevoy had no relevant financial disclosures and no financial conflicts." Id. ¶ 20. LumenR asserts that it believed these representations to be true. Id.

Only in April of 2016, LumenR maintains, did Kantsevoy begin ‘‘making unwarranted, unjustified and highly unethical demands for substantial retroactive payment, including company equity." Id. ¶ 21. LumenR contends that it attempted to negotiate a contract with Kantsevoy, but Kantsevoy repeatedly "escalat[ed] his demands." Id. ¶ 22.

For his part, Kantsevoy asserts that he "invested time and effort into marketing the Tissue Retractor," in addition to...