Samir Hadeed, MD, & Johnstown Heart & Vascular Ctr., Inc. v. Advanced Vascular Res. of Johnstown, LLC
| Decision Date | 30 October 2017 |
| Docket Number | Case No. 3:15-cv-22 |
| Parties | SAMIR HADEED, MD, and JOHNSTOWN HEART AND VASCULAR CENTER, INC., Plaintiffs, v. ADVANCED VASCULAR RESOURCES OF JOHNSTOWN, LLC; AVR MANAGEMENT, LLC; WASHINGTON VASCULAR INSTITUTE, LLC; and MUBASHAR CHOUDRY, MD, Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
MEMORANDUM OPINION
Pending before the Court is Plaintiff Samir Hadeed, MD ("Hadeed") and Plaintiff Johnstown Heart and Vascular Center, Inc.'s ("JHVC") Motion for Summary Judgment (ECF No. 40) and Defendant Advanced Vascular Resources of Johnstown, LLC ("AVR-Johnstown"), Defendant AVR Management, LLC ("AVR-Management"), Defendant Washington Vascular Institute, LLC ("WVI"), and Defendant Mubashar Choudry, MD's ("Choudry") Motion for Judgment on the Pleadings and Motion for Summary Judgment on Plaintiffs' Complaint (ECF No. 44). These motions have been fully briefed. (See ECF Nos. 42, 43, 45, 46, 59, 60, 61, 62, 63, 64, 67.)
This case arises from disputes over the operation of a vascular services center located in Johnstown, Pennsylvania. In short, Plaintiffs, who already operated a heart and vascular center in Johnstown, entered into a series of contracts with Defendants (or, at least, some of the Defendants) by which Plaintiffs would operate the "medical side" of the vascular services center and Defendants would manage the "business side" of the center. The present case ensued because Plaintiffs and Defendants argue that the other side of the dispute failed to comply with the duties imposed by these contracts.
For the reasons that follow, Plaintiffs' Motion for Summary Judgment (ECF No. 40) is GRANTED IN PART and DENIED IN PART, and Defendants' Motion for Judgment on the Pleadings and Motion for Summary Judgment on Plaintiffs' Complaint (ECF No. 44) is GRANTED IN PART and DENIED IN PART.
The Court has diversity jurisdiction over this case pursuant to 28 U.S.C. § 1332(a)(1) because Plaintiffs are citizens of different states than Defendants and the amount in controversy exceeds $75,000. (See ECF Nos. 1 ¶¶ 1-7, 55-56; 10 ¶¶ 1-6.) Because a substantial part of the events underlying this case—namely, the alleged mismanagement of AVR-Johnstown—occurred in the Western District of Pennsylvania, venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(2).
Plaintiffs initiated this lawsuit by filing their Complaint on January 23, 2015. (ECF No. 1.) In essence, the Complaint alleged severe mismanagement of AVR-Johnstown by Defendants. (See id. at ¶¶ 44-64.) The Complaint is divided into five counts: (1) breach of contract based on Defendants' mismanagement of AVR-Johnstown; (2) an accounting; (3) partition/dissolution of AVR-Johnstown; (4) breach of contract based on Defendants' failure to pay Plaintiffs' wages; and(5) fraudulent misrepresentation. (ECF No. 1 ¶¶ 44-64.) Plaintiffs seek damages for lost profits and revenues, diminution in ownership value, and attorneys' fees and costs. (Id. at 8-13.) Plaintiffs also seek a full and accurate accounting and the dissolution and distribution of the assets of AVR-Johnstown. (Id. at 9-10.)
In response, Defendants filed their Answer on March 16, 2015, denying all liability and bringing five counterclaims against Plaintiffs, namely (1) breach of contract based on the Sublease and JHVC's Group Physician Agreement with WVI; (2) tortious interference with contractual relations; (3) conversion; (4) unjust enrichment; and (5) breach of fiduciary duty. (ECF No. 10 ¶¶ 114-36.)
The Court denied Defendants' Motion for Leave to Amend Defendants' Answer, Affirmative Defenses and Counter-Claims to Plaintiff's Complaint (ECF No. 47) by Memorandum Opinion and Order of September 26, 2017. (ECF No. 77.)
Most pertinent here, on October 17, 2016, Plaintiffs filed their Motion for Summary Judgment (ECF No. 40) and Defendants filed their Motion for Judgment on the Pleadings and Motion for Summary Judgment on Plaintiff's Complaint (ECF No. 44). The extensive briefing and responses on these motions concluded on November 17, 2016. (See ECF Nos. 42, 43, 45, 46, 59, 60, 61, 62, 63, 64, 67.)
The following facts are undisputed unless otherwise noted.1
The present case arises from various disputes relating to the operation of AVR-Johnstown—a limited liability company created under Delaware law to operate and manage a vascular center within Hadeed's already existing solo cardiovascular practice in Johnstown, Pennsylvania. (ECF No. 46 ¶ 1; ECF No. 61 ¶ 1.) Hadeed's cardiovascular practice is conducted through JHVC. (ECF No. 46 ¶ 2; ECF No. 61 ¶ 2.)
Choudry formed Advanced Vascular Resources, LLC ("AVR")2 to develop vascular facilities on a national level. (ECF No. 46 ¶ 5; ECF No. 61 ¶ 5.) AVR-Johnstown is one such facility. (ECF No. 46 ¶ 5; ECF No. 61 ¶ 5.) To foster the development and operation of vascular facilities across the country, Choudry also formed AVR-Management to oversee the management of AVR's vascular labs and formed WVI to oversee compensation, namely the compensation for JHVC. (ECF No. 42 ¶¶ 25-26; ECF No. 63 ¶¶ 25-26.)
Sometime in 2013, Donald Greer ("Greer"), the Chief Operating Officer of AVR, flew to Johnstown, Pennsylvania to meet with Hadeed to discuss opening an outpatient vascular center in the Johnstown area. (ECF No. 42 ¶ 11; ECF No. 63 ¶ 11.) After numerous discussions and negotiations, Hadeed and JHVC reached an agreement with AVR to open a vascular lab in Johnstown, which would become AVR-Johnstown. (ECF No. 42 ¶ 13; ECF No. 63 ¶ 13.) Numerous contracts were executed to govern the relationships between the various parties, including (1) a Sublease between JHVC and AVR-Johnstown governed by Pennsylvania law, (2)a Group Physician Agreement ("GPA") between JHVC and WVI governed by Maryland law, (3) an Operating Agreement between AVR, AVR-Management, and JHVC governed by Delaware law, (4) a Management Agreement between AVR-Johnstown and AVR-Management governed by Delaware law, and (5) a Subscription Agreement between AVR-Johnstown and JHVC governed by Delaware law. (ECF No. 42 ¶¶ 15, 46; ECF No. 46 ¶ 12; ECF No. 61 ¶ 12; ECF No. 63 ¶¶ 15, 46.) Under the Operating Agreement, JHVC owns a 55% majority ownership interest in AVR-Johnstown and AVR holds a 45% ownership interest. (ECF No. 46 ¶ 17; ECF No. 61 ¶ 17.)
After opening in April 2014, AVR-Johnstown was an immediate success. (ECF No. 46 ¶ 6; ECF No. 61 ¶ 5.) Both parties directly attribute this success to Hadeed and recognize him as "one of the best" physicians. (ECF No. 42 ¶ 70; ECF No. 63 ¶ 70.) However, complications soon arose.
While it is undisputed that AVR-Johnstown soon experienced cash flow problems, the parties disagree as to whether these problems were naturally caused by the great success of AVR-Johnstown or by Defendants' failure to properly fund AVR-Johnstown as required by contract. (ECF No. 46 ¶ 7; ECF No. 61 ¶ 7.) Despite having the contractual duty and authority to manage the business affairs of AVR-Johnstown—including staffing, accounting, management of employees, credentialing, billing, coding, compliance, and marketing of AVR-Johnstown (ECF No. 46 ¶¶ 20-21; ECF No. 61 ¶¶ 20-21), Defendants failed to timely pay at least some bills and invoices, including bills relating to contractors retained to build-out the vascular lab, vendors and/or suppliers of medical supplies and equipment, rent payments, and compensation to JHVC for physician services. (ECF No. 42 ¶¶ 73-94; ECF No. 63 ¶¶ 73-94.).
As a consequence, various third parties dealing with AVR-Johnstown placed credit holds on AVR-Johnstown, preventing AVR-Johnstown from receiving medical supplies and equipment for at least some period of time and inducing threats of mechanic's liens against the vascular lab. (ECF No. 42 ¶¶ 73-94; ECF No. 63 ¶¶ 73-94.) However, the parties dispute the duration of this non-payment, i.e., whether and, if so, when nonpayment issues were resolved, the cause of the non-payment/untimely payment, and whether the lack of supplies and equipment resulted in patients being turned away or other detriment to the business.
Despite having a contractual responsibility for insurance credentialing and informing AVR-Johnstown that it was approved for UPMC insurance, AVR-Management failed to secure credentialing and approval for UPMC insurance, resulting in AVR-Johnstown not being reimbursed for procedures performed on patients insured by UPMC. (ECF No. 42 ¶¶ 100-105; ECF No. 63 ¶¶ 100-105.) Additionally, WVI stopped remitting any salary payment for Hadeed after the end of November 2014. Although the parties dispute the extent of the issue, there were at least some issues with the payment of AVR-Johnstown's employees' health care coverage (ECF No. 42 ¶ 108; ECF No. 63 ¶ 108.)
After encountering these problems,3 on or around November 3, 2014, JHVC gave 90 days' notice to WVI that JHVC was exercising its option to terminate the GPA. (ECF No. 42 ¶¶ 117-118; ECF No. 61 ¶¶ 117-118.) JHVC also terminated the Sublease,4 effective December 1, 2014, butdid not do so with 120 days' notice. (ECF No. 42 ¶ 119; ECF No. 63 ¶ 119.) Shortly thereafter, in December 2014, regardless of the state of the parties' legal relationship, the parties' actual business relationship ended as a practical matter. Plaintiffs changed the locks on the vascular center premises (ECF No. 42 ¶ 120; ECF No. 63 ¶ 120) and ran a profitable business at the same physical location without Defendants' meaningful involvement (ECF No. 46 ¶¶ 8-11; ECF No. 61 ¶¶ 8-11.) Plaintiffs are also currently creating a vascular center in Richland Township, seven miles from the prior place of business. (ECF No. 46 ¶ 11; ECF No. 61 ¶¶ 8-11.)
Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are closed—but early enough...
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