Vascular Ventures, LLC v. Am. Vascular Access, LLC

• Decision Date: 16 October 2017
• Docket Number: CIVIL ACTION: 16-00481-KD-B
• Parties: VASCULAR VENTURES, LLC, Plaintiff, v. AMERICAN VASCULAR ACCESS, LLC and JANET R. DEES, Defendants.
• Court: U.S. District Court — Southern District of Alabama

VASCULAR VENTURES, LLC, Plaintiff, v. AMERICAN VASCULAR ACCESS, LLC and JANET R. DEES, Defendants.

CIVIL ACTION: 16-00481-KD-B

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

October 16, 2017

ORDER

This matter is before the Court on Defendants' motion for summary judgment (American Vascular Access, LLC (Access) and Janet R. Dees (Dees)) (Doc. 91), Plaintiff Vascular Ventures, LLC (Plaintiff)'s Response (Doc. 93) and Defendants' Reply (Doc. 99).

I. Background

This action stems from Plaintiff's August 9, 2016 complaint, 02-CV-2016-901640, filed in the Circuit Court of Mobile County, Alabama against Dees, Access, "any subsidiary" of Access "formed after December 30, 2009[,]" and "nominal" defendants. (Doc. 1-2). On September 12, 2016, Access removed the case on the basis of federal diversity subject matter jurisdiction. (Doc. 1). On December 7, 2016, the Court issued an R&R on the parties' respective motions to dismiss, transfer and remand, through which the Court denied remand and transfer, dismissed all defendants except Access and Dees, and dismissed all claims except for breach of contract based on a December 30, 2009 letter (Count One), promissory fraud (Count Three) and civil conspiracy (Count Six). (Doc. 28). On December 28, 2016, the R&R was adopted. (Doc. 29); Vascular Ventures, LLC v. American Vascular Access, LLC, 2016 WL 7471642 (S.D. Ala. Dec. 7, 2016), R&R adopted (S.D. Ala. Dec. 28, 2016).¹ On August 18, 2017, Access and Deesmoved for summary judgment on the three (3) remaining claims.

II. Findings of Fact²

From 2008-2009, Access negotiated with Plaintiff and its members (physicians)³ to purchase a 40% interest in Plaintiff's lab-based interventional nephrology practice in Mobile, Alabama (which ultimately became Mobile Vascular Labs, LLC). As an "additional incentive" to Access' payment to Plaintiff for that 40% interest, Access promised to reserve a minimum of up to 10% of Access' portion of future joint ventures and business opportunities for Plaintiff.

In November 2009, the parties discussed what those future opportunities might entail. Also, Access' President Janet Dees (Dees) explained to Plaintiff that she intended for the ventures to be entered into by separate new holding companies that would be created as co-owners in other dialysis access clinics. (Doc. 95-2 SEALED (Dep. Dees at 181-189). Specifically, separate holding companies, originating from Access, would be formed to hold equity positions in new ventures through which Access would perform development and management services for the holding companies and have an ownership interest in them.(Doc. 91-1 (Dep. Dees at 493); Doc. 95-2 SEALED (Dep. Dees at 183-185).

The parties discussed the first such "deal" for a business in the Atlanta, Georgia area. On November 24, 2009, Access' Chief Operating Officer William G. Wright (Wright) e-mailed preliminary figures and estimates for the Atlanta "deal" (including investment cash flow, revenue assumptions, start up costs, etc.) to Plaintiff c/o Butera (Plaintiff's President), with a copy to Dees.⁴ (Doc. 95-4 SEALED; Doc. 91-2 (Dep. Butera at 170-171, 173); Doc. 91-2 at 54; Doc. 95-3 SEALED (Dep. Wright at 154); Doc. 95-6 SEALED (Dep. Butera at 68)). On December 30, 2009, Access issued a letter to Plaintiff (the Side Letter) stating the parties' intentions:

AMERICAN

VASCULAR

DIALYSIS ACCESS CENTERS

December 30, 2009

Dr. Phil Butera

Dr. Craig Klinemann

Vascular Ventures L.L.C.

Mobile, Alabama

Doctors,

Pursuant to our letter of intent dated March 11, 2009 under section 8, titled Additional Incentive. As additional incentive to Vascular Ventures or its physician members, American Vascular (AVA) will reserve a minimum of up to 10% of AVA's portion of any future joint venture or business opportunity that may arise out of AVA's general course of business, for Vascular Ventures doctors to invest. Vascular Ventures and its physicians will be offered the same terms and conditions as other investors and may elect or be offered additional ownership beyond 10%, but will always be offered at least 10% of AVA's position.

It is understood that Vascular Ventures or its physician members involvement in these opportunities are optional and is on a "as may arise" basis. Investment in these ventures will most likely occur as a silent partner in the vascular access entity that will be created. Investment in these deals will bo solely optional on the part of Vascular Ventures.

Should Vascular Ventures provide information or additional contacts, support and opportunities to American Vascular that results In a business opportunity, then AVA will reserve additional ownership and investment opportunity to Vascular Ventures up to a minimum of 25% of AVA's portion. This opportunity is again at the option of Vascular Ventures.

Janet R. Dees

/s/_________

American Vascular Access

(Doc. 91-2 at 52).

Dees testified that per the Side Letter, Access planned for holding companies to be created for new vascular centers that Access might do business with and have ownership interest in, and Plaintiff would then have opportunities to buy at least a 10% interest in those holding companies. (Doc. 95-2 SEALED (Dep. Dees at 186-186); Doc. 95-3 SEALED (Dep. Wright at 240)). Per Access, the Side Letter created a contractual obligation on the part of Access to offer to Plaintiff at least a 10% interest in future investment opportunities. (Doc. 95-2 SEALED (Dep. Dees at 364-365)). See also (Doc. 95-3 SEALED (Dep. Wright at 217) ("Our [Access] intent with them was always just as the document reads, to give them a 10 percent offering on the new deals...."). The Side Letter was executed as part of the overall closing for Access to be a 40% member in Mobile Vascular Labs. (Doc. 95-2 SEALED (Dep. Dees at 356).

On February 8, 2010, approximately six (6) weeks later, Access entered into the first of a series of ventures⁵ without Plaintiff. (Doc. 93 at 5 (citing 95-5 SEALED); Doc. 95-3 SEALED (Dep. Wright at 196); Doc. 95-2 SEALED (Dep. Dees at 365)).⁶ This first venture resulted in Access (c/o the Florida holding company it created for said purpose, AVA Newman Holdings, LLC) purchasing a 45% equity interest in the Georgia dialysis access clinic, without Plaintiff. (Doc. 95-5 SEALED); Doc. 95-3 SEALED (Dep. Wright at 213)). Plaintiff alleges that thereafter, Access entered into other ventures -- 13 known -- without Plaintiff. The parties dispute what was communicated between them and what (and whether) the promised 10% interest offers for new ventures were made from Access to Plaintiff.

III. Standard of Review

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). Rule 56(c) provides as follows:

(1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

(2) Objection That a Fact Is Not Supported by Admissible Evidence. A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.

(3) Materials Not Cited. The court need consider only the cited materials, but it may consider other materials in the record.

(4) Affidavits or Declarations. An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.

FED.R.CIV.P. Rule 56(c).

Defendants, as the parties seeking summary judgment, bear the "initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11^th Cir. 1991) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the nonmoving party fails to make "a sufficient showing on an essential element of her case with respect to which she has the burden of proof," the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323. "In reviewing whether the nonmoving party has met its burden, the court must stop short of weighing theevidence and making credibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998-999 (11^th Cir. 1992).

IV. Breach of Contract

At the outset, the parties dispute which state's law applies to the breach of contract claim. This Court exercises diversity-of-citizenship jurisdiction over this case such that the choice of law principles of Alabama, the forum state, apply. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941); Fioretti v. Mass. Gen. Life Ins. Co., 53 F.3d 1228, 1235 (11^th Cir. 1995). Alabama applies the law of the state where the contract was formed (made) (lex loci contractus) unless: 1) a provision in a contract specifies the governing law (Cherokee Ins. Co. v. Sanches, 975 So.2d 287, 292 (Ala. 2007) and Fairhope Piggly Wiggly-Inc. v. PS2 LED, Inc., 2017 WL 2865528, *3 (S.D. Ala. Jul. 5, 2017);⁷ or 2) the contract is to be performed in another state (Owens v. Superfos A/S, 170 F.Supp.2d 1188, 1194-1195 (...