DocketNumber: C.A. No. PC 07-1782
Judges: SILVERSTEIN, J.
Filed Date: 12/8/2010
Status: Precedential
Modified Date: 7/6/2016
BAMM was formed in 2000 to provide health care facilities with the equipment necessary to perform extracorporeal shock wave lithotripsy services. See Mercurio Aff. ¶ 3. In 2001, BAMM entered into a contract (BAMM Agreement) with St. Joseph to become its exclusive provider of lithotripsy services.3 Id. ¶ 5.
According to Colagiovanni, BAMM proceeded to meet with the urologists who had privileges at St. Joseph, including Colagiovanni and Dr. Joseph Cambio (Cambio), 4 the Chief of Urology, to offer them the opportunity to purchase membership units in BAMM.5 (Colagiovanni Dep. 5:5-25, Sept. 28, 2010.) Despite his initial interest, Cambio decided his practice would not invest in BAMM at that time. Id.
In 2001, following Colagiovanni's departure from the practice, Cambio's urological practice purchased a membership interest in BAMM. (Mercurio Aff. ¶ 7.) That unit was later transferred, with the approval of BAMM's Board of Managers, to an entity known as Quaker *Page 3 Lane Investors.6 Id. In or about 2005, Quaker Lane Investors' membership unit was converted into individual units for Cambio and the other urologists in his practice.Id. ¶ 8. As part of the conversion, Cambio and his associates were each required to pay an additional $10,000 per membership unit to ensure that each paid fair market value. Id. ¶ 9.
In or about December 2005, St. Joseph and BAMM negotiated an extension of the original BAMM Agreement. (Mercurio Aff. ¶ 10.) Although a three-year term was initially discussed, the extension agreement (Extension Agreement) executed on December 23, 2005, consisted of a fifteen month base term with automatic rollovers, unless terminated for cause.7Id.; Pl.'s Opp'n Br. Ex. C.
According to Plaintiff, in or about June 2006, Colagiovanni received a phone message from John Fogarty (Fogarty), St. Joseph's Executive Vice President and Chief Operating Officer, informing him that BAMM's contract with St. Joseph was to expire on December 31, 2006.8 See Pl.'s Opp'n Br. Ex. D. Additionally, in June 2006 BAMM alleges that Colagiovanni had discussions with and received phone messages from employees of Ocean Lithotripsy and Counter Pulsations. Id.; Colagiovanni Dep. 10:3-14, 13:10-14:1-20, Sept. 28, 2010.
BAMM alleges that during the summer and fall of 2006, Colagiovanni, Olsson, and Dr. Vincent J. Zizza III (Zizza) contacted Gregory A. Mercurio, Jr. (Mercurio), its Director of *Page 4 Administration and Business Development, regarding the possibility of investing in and becoming members. (Colagiovanni Aff. ¶ 7; Mercurio Aff. ¶ 11; Mercurio Dep. 84:8-93:7, Apr. 29, 2010.) On August 1, 2006, Olsson and Colagiovanni executed a confidentiality agreement (Confidentiality Agreement)9 with BAMM, and Mercurio subsequently forwarded them confidential information (Confidential Information)10 pursuant to its terms.See Pl.'s Opp'n Br. Ex. F ¶ 1; Colagiovanni Aff. ¶ 7-8; Mercurio Aff. ¶ 12-13. However, by October 2006, negotiations came to an impasse.11 (Colagiovanni Dep. 32:5-14, Sept. 28, 2010.) *Page 5
According to BAMM, in September or October 2006, Harold Breinig (Breinig), director of lithotripsy sales and services for Vantage Mobile Services Ltd. (Vantage)12 began discussions with Andrew Stinton (Stinton), the procurement manager and director of material services at St. Joseph.13 (Stinton Dep. 97:12-21, 102:19-103:2, Aug. 22, 2010.) On October 16, 2006, Stinton and Breinig held a meeting in which they discussed the services that Vantage could provide, the pricing that would get St. Joseph interested, and the physicians who would be involved in the process. See Stinton Dep. 105:5-108:24, Aug. 22, 2007; Pl.'s Opp'n Br. Ex. G. Following the meeting, Vantage provided St. Joseph with a proposal which included pricing for the equipment and an outline of how Vantage could help St. Joseph maintain and grow its business. See Pl.'s Opp'n Br. Ex. G.
St. Joseph's in-house communications indicate that these materials were subsequently forwarded to and reviewed by St. Joseph staff during the first week of November 2006. See Opp'n Br. Ex. H; Stinton Dep. 113:10-115:12, Aug. 22, 2007. Although Vantage's proposal appeared to be more expensive than the current agreement, Stinton contacted Breinig to ensure *Page 6 that St. Joseph had correctly interpreted Vantage's proposal.Id. Following this conversation, Stinton confirmed Vantage's flat fee rate of $4200 per day for four or more patients.14Id.
On November 21, 2006, Vantage delivered a Memorandum of Agreement (MOA) to Colagiovanni. See Pl.'s Opp'n Br. Ex. J. The MOA outlined the potential terms and requirements of a partnership agreement with Vantage. In particular, the MOA provided that the membership shares would be offered at "a cost of $10,000 per share" but that the "offering of investments shares shall be [] dependent on [Vantage] securing an agreement to provide [lithotripsy services] to [St. Joseph]."15 Id.
On December 1, 2006, Breinig contacted Colagiovanni to set-up a meeting and speak with him about a demonstration of the mobile lithotripsy machine for St. Joseph.16 See Pl.'s Opp'n Br. Ex. K. On December 8, 2006, in response to Stinton's note about the additional extension of the BAMM Agreement, Fogarty ordered a re-evaluation and competitive re-bid for St. Joseph's lithotripsy services. See Pl.'s Opp'n Br. Ex. M. According to Fogarty, the re-bid process was to be "led by purchasing [with the] involvement of nursing leaders [and] certainly input from urologists."Id. Fogarty also acknowledged that "the BAMM contract goes month to *Page 7 month after [December 31st,]" giving St. Joseph "plenty of flexibility if [they] decide[d] to switch vendors."17Id.
On December 15, 2006, Vantage countersigned the MOA. See Pl.'s Opp'n Br. Exs. J P. On that same day, Bill Henwood, Vantage's Vice President, contacted CIU and Colagiovanni about the demonstration day that had been scheduled for early January18 and about setting a time to speak with him about the partnership between Vantage and the Physician Defendants. See Pl.'s Opp'n Br. Ex. P.
On January 10, 2007, a meeting — attended by Vantage, a number of doctors including Colagiovanni, and possibly hospital personnel — was held to discuss the potential partnership with Vantage. See Colagiovanni Dep. 49:13-51:2, Sept. 28, 2010; Pl.'s Opp'n Br. Ex. P. As a result of the meeting, and at Breinig's direction, a draft of the Lithotripsy Service Agreement between St. Joseph and Vantage was forwarded to Stinton for his review.See Pl.'s Opp'n Br. Ex. Q.
As a result of Vantage's failure to secure proper licensing and certification, the Rhode Island Department of Health (RIDOH) cancelled Vantage's in-house trial. (Squillante Dep. 11:17-12:11, Sept. 1, 2010.) According to Mercurio, RIDOH contacted BAMM, informing them *Page 8 that a new lithotripter had been brought into St. Joseph and alerting them of Vantage's negotiations with St. Joseph.19 (Mercurio Dep. 158:21-164:3, Apr. 29, 2010.)
On January 15, 2007, Stinton informed Breinig that there were a number of follow-up issues that needed to be resolved, but directed him to develop a contract that was acceptable to both St. Joseph and Vantage.20 See Pl.'s Opp'n Br. Ex. U. Correspondence between St. Joseph and Vantage indicates that although St. Joseph appeared willing to move forward with the Vantage contract, Vantage was hesitant to interfere with St. Joseph's current agreement with BAMM. See Pl.'s Opp'n Br. Ex. E. Specifically, on January 15, 2007, Henwood emailed Stinton informing him that in light of "the developments from last week . . . Vantage's position is to respect all contracts and not to have any affect on Hospital-Vendor relations. Should the Hospital have the ability and decide to sever its contractual relationship with the current vendor, we will be ready to be of service." Id. Additionally, Henwood emailed Colagiovanni to "schedule [a] time to speak with [him] about the path forward for ESWL through Vantage."21See Pl.'s Opp'n Br. Ex. V. *Page 9
Despite, Vantage's hesitations, on January 16, 2007, Fogarty instructed Squillante to arrange an offsite trial of Vantage's equipment for Colagiovanni, Olson, and Zizza.22 See Pl.'s Opp'n Br. Ex. X. On January 22, 2007, Fogarty sent an email to Stinton updating him on the regulatory issues related to the Vantage contract. See Pl.'s Opp'n Br. Ex. Y. Several days later, Breinig emailed Colagiovanni to update him on the status of the "Lithotripsy project" at St. Joseph and to arrange a meeting for Colagiovanni and his associates with Allonge and Henwood.See Pl.'s Opp'n Br. Ex. Z.
As contract negotiations between St. Joseph and Vantage progressed, Vantage made several "unusual" requests. First, Vantage sought an indemnity from St. Joseph from any potential litigation stemming from BAMM's termination. See Pl.'s Opp'n Br. Ex. BB. In fact, Breinig emailed Colagiovanni on February 13, 2007, informing him that the contract would be ready to be signed "as soon as the hospital signs off on the letter exempting Vantage from any trouble from their current vendor."Id. Breinig also reiterated that Vantage would be willing to offer Colagiovanni the partnership after the indemnity and contract were finalized.23 Id.
Although Fogarty initially expressed concerns about indemnifying Vantage, 24 on February 14, 2007, he executed the indemnity.See Pl.'s Opp'n Br. Ex. CC. Under its terms, *Page 10 Vantage would be indemnified "from any and all legal action brought against [St. Joseph] as a result of termination of the existing vendor's service contract."25 Id.
Despite these requests, the final Lithotripsy Service Agreement was executed by St. Joseph on March 9, 2007, and BAMM was subsequently terminated on March 15, 2007.26 At a May 10, 2007 meeting of the Board, H. John Keimig, St. Joseph's Chief Executive Officer, informed the Board that Vantage's selection was "done under prudent business practice, resulting in operational savings to the Hospital." (Pl.'s Opp'n Br. Ex. EE.)
In order to establish a breach of contract claim, a party must provide evidence that there has been a "violation of a contractual obligation, either by failing to perform one's promise or by interfering with another party's performance." Demicco v. MedicalAssocs. of R.I., Inc., No. 99-251L,
However, to be credible and reliable, evidence need not be direct.Michalic v. Cleveland Tankers, Inc.,
Moreover, if a primary inference is the only reasonable one that may be drawn from an established fact, a secondary inference may be drawn from it. In re Derek,
Considering the evidence as a whole and in a light most favorable to the Plaintiff, this Court finds that sufficient evidence exists from which a trier of fact could infer that the Physician Defendants disclosed the Confidential Information. Despite Mercurio's concession in his Super. R. Civ. P. 30(b)(6) deposition that neither he nor BAMM had direct knowledge that the Physician Defendants disclosed the Confidential Information to Vantage, a review "of the pleadings, affidavits, admissions, answers to interrogatories and other similar matters," viewed in the proper light, reveals that BAMM's Breach Claims are not ripe for summary judgment.See Industrial Nat'l Bank v. Peloso,
Here, Plaintiff's affidavits indicate that Colagiovanni not only threatened to disclose BAMM's Confidential Information to competitors if BAMM failed to provide the Physician Defendants with membership units in accordance with the "original offering" terms, but Colagiovanni and Olsson also made statements that they "did not want to make more money for BAMM," that the BAMM contract had "been taken care of," and that BAMM was finished at St. Joseph. See Mercurio Aff. ¶ 14; McShane Aff. ¶¶ 3, 5, 8. Further, Plaintiff's evidence indicates that following the breakdown in negotiations with BAMM, the Physician Defendants began negotiating a similar partnership with Vantage — an out-of-state competitor — which was memorialized in the MOA. See Pl.'s Opp'n Br. Ex. J. *Page 15
Not only were the terms of the MOA identical to those sought from BAMM, but the Physician Defendant's financial interest in Vantage was also "dependent on Vantage securing an agreement to provide [lithotripsy services] to [St. Joseph]." Id. Moreover, Plaintiff's evidence indicates that Vantage's proposal was nearly identical to BAMM's pricing, and that the MOA was executed concurrently with the scheduling of Vantage's equipment trial and the intensification of negotiations between St. Joseph and Vantage.See Pl.'s Opp'n Br. Exs. J, K, P Q; Colagiovanni Dep. 49:13-51:2, Sept. 28, 2010; Mercurio Aff. ¶ 15.
In light of the Physician Defendants' threats and statements, their motivations to ensure that the Vantage deal succeeded, the nature of the materials disclosed to them, the fact that Vantage's proposal was nearly identical to BAMM's pricing, and the likelihood of an outside vendor compiling such a comprehensive and competitive proposal in such a short amount of time, the Court finds that a genuine issue of fact remains as to whether the Physician Defendants disclosed Confidential Information. See State v.Mercado,
Considering the evidence as a whole and in a light most favorable to the Plaintiff, the Court finds that a genuine issue of material fact exists as to whether the Physician Defendants intentionally and improperly interfered with BAMM's present and future contractual relations with St. Joseph. Although the Physician Defendants aver that no disputed issue remains in light of Fogarty and Stinton's testimony that they were not involved in BAMM's termination, the Court finds that when the timing of events, the party's actions, and the statements allegedly made, are viewed as a whole, a reasonable trier of fact could find intentional and improper interference by the Physician Defendants.
In support of its Interference Claims, BAMM has presented evidence that representatives of St. Joseph contacted Vantage — despite the exclusivity provision of the BAMM Agreement — after conversations with Colagiovanni. See Allonge Aff. ¶ 4. Moreover, after BAMM provided the Physician Defendants with the Confidential Information and their negotiations came to an impasse, the Physician Defendants were able to obtain a similar deal with Vantage that was contingent upon Vantage reaching an agreement with St. Joseph. See Pl.'s Opp'n Br. Ex. J.
Despite having committed BAMM to a 2007 operating room schedule in November 2006, and having negotiated an additional extension of the BAMM Agreement, in December and January — shortly after the MOA was finalized — St. Joseph suddenly ordered a re-evaluation and competitive rebid. While, the Physician Defendants have failed to provide any indication that a re-bid process took place, by January 2007 — one month after the MOA was finalized — Vantage's equipment was scheduled for a demonstration and a contract between Vantage and St. Joseph was being negotiated. Colagiovanni, Olsson, and Fogarty all testified that the occurrence *Page 18 of these events generally indicated that Vantage had been or would be chosen as St. Joseph's new lithotripsy vendor. See Colagiovanni Dep. 20:13-21, Sept. 28, 2010; Olsson Dep. 22:6-9, Oct. 1, 2010; Fogarty Dep. 38:1-14, Apr. 9, 2010.
Moreover, Vantage and St. Joseph Hospital worked with Colagiovanni to establish an agreement. See Allonge Aff. ¶ 5. In fact, following the execution of the MOA, the evidence indicates that the Physician Defendants held meetings and had discussions with Vantage regarding their partnership and the status of the negotiations between Vantage and St. Joseph. See Pl.'s Opp'n Br. Exs. P, V, Z, BB; Colagiovanni Dep. 49:13-51:2, Sept. 28, 2010.
BAMM further points to numerous statements to further support its Interference Claims. Through affidavits and deposition testimony, BAMM alleges that Colagiovanni not only threatened to disclose its Confidential Information, but also to take his lithotripsy business to a competing surgical center if St. Joseph continued its relationship with BAMM. See Mercurio Dep. 168:7-15, Apr. 29, 2010. In addition to these threats, (1) Colagiovanni told McShane that he did not want use BAMM's machines anymore — despite believing them to be the best machines — because he did not want to make more money for BAMM; (2) Olsson told McShane that BAMM's contract "had been taken care of" and would be out of St. Joseph in three weeks; and (3) Squillante told Mercurio that "it was all being done at Dr. Colagiovanni's request." See Mercurio Dep. 158:21-164:3, Apr. 29, 2010; McShane Aff. ¶¶ 3, 5.
As a result, despite the testimony proffered by the Physician Defendants stating that they were not involved with the decision to terminate BAMM, the Court finds that when viewed in its entirety and in the proper light, the evidence elicited in the affidavits and testimony raises a genuine issue of fact as to whether the Physician Defendants intentionally and improperly interfered with BAMM's present and future contractual and business relations. In view of the *Page 19 conflicting evidence and disputed issues of material fact, it is clear that summary judgment is not appropriate with respect to the Interference Claims.
To establish a claim of civil conspiracy, a party must establish that "(1) there was an agreement between two or more parties and (2) the purpose of the agreement was to accomplish an unlawful objective or to accomplish a lawful objective by unlawful means."Smith v. O'Connell,
However, in order to prove a civil conspiracy, 31 a claimant need not produce direct evidence of an explicit agreement by the parties. DM Research v. College of Am. Pathologists,
Considering the evidence in a light most favorable to the Plaintiff, this Court finds that sufficient evidence exists from which a trier of fact could infer that a civil conspiracy existed between the Physician Defendants and St. Joseph. Although BAMM does not have direct evidence of a civil conspiracy, the Court finds that through affidavits and deposition testimony, it has established that a dispute as to a material issue of fact exists. In fact, Plaintiff's evidence indicates that as early as June 2006, Fogarty inappropriately contacted Colagiovanni to inform him that the BAMM Agreement expired in December 2006. See Pl.'s Opp'n Br. Ex. D; Fogarty Dep. 61:11-24, Apr. 9, 2010.
Moreover, despite having already committed BAMM to the 2007 operating calendar and negotiated an extension of the BAMM Agreement, St. Joseph proceeded to negotiate with Vantage. While, St. Joseph claims it entered into an agreement with Vantage after undergoing an objective evaluation and re-bid, neither Fogarty nor the Physician Defendants have produced any evidence of such a process. See Fogarty Dep. 26:16-27:18, Apr. 9, 2010. In fact, despite ordering the re-bid on December 8, 2006, the Physician Defendants and St. Joseph's actions indicated that — as early as December or January — Vantage would be St. Joseph's new lithotripsy *Page 21 vendor. See Pl.'s Opp'n Br. Ex. K, Q; Colagiovanni Dep. 20:13-21, Sept. 28, 2010; Olsson Dep. 22:6-9, Oct. 1, 2010; Fogarty Dep. 38:1-14, Apr. 9, 2010. For the Court, these actions raise reasonable inferences of improper intentional interference particularly when viewed in light of Colagiovanni's threat that he would take his lithotripsy business to a competing surgical center if St. Joseph continued with BAMM. See Mercurio Dep. 168:7-15, Apr. 29, 2010.
Fogarty's actions also raise a question as to whether a conspiracy existed. Plaintiff points out that Fogarty ordered an immediate trial of Vantage's equipment and later instructed an offsite trial, despite the fact that it was not typical for him to get involved with the demonstration of equipment. See Fogarty Dep. 47:14-19, Apr. 9, 2010; Squillante Dep. 7:16-20, Sept. 1, 2010; Pl.'s Opp'n Br. Ex. X. Moreover, despite expressing concerns about indemnifying Vantage, and stating "I can't imagine we'd do this for any equip [sic] vendor," Fogarty agreed to the indemnity.See Pl.'s Opp'n Br. Exs. AA CC.
Therefore, in light of the Plaintiff's evidence, the Court finds that a trier of fact could reasonably infer that a civil conspiracy to inappropriately and tortiously terminate BAMM existed between St. Joseph and the Physician Defendants. After viewing the evidence presented in connection with this summary judgment proceeding, the Court is satisfied that reasonable inferences could be drawn by the trier of fact — from the evidence as a whole — to establish that the parties acted tortiously and unlawfully in order to terminate BAMM. As a result, the Court denies the Physician Defendants and St. Joseph's request for summary judgment as to Count IX.
Prevailing counsel may present an order consistent herewith which shall be settled after due notice to counsel of record.
"all documents, materials and information provided by BAMM to Olsson, Colagiovanni, CIU, Zizza or TCU under this Agreement regarding the proposed Arrangement, including, without limitation, contracts, formal documents, marketing plans, business plans and projections, patients lists, financial statements, appraisals, depersonalized patient data and other materials which contain written or other physically embodied information related to BAMM's organizational structure, business or operations." See Pl.'s Opp'n Br. Ex. F ¶ 1.
Furthermore, the parties agreed to "hold all Confidential Information provided to them in trust and confidence and [to] refrain from using or disclosing any or all of said Confidential Information for any purpose other than for evaluating the desirability of the Arrangement." See Pl.'s Opp'n Br. Ex. F ¶ 3. The parties were not to
"sell, assign, lease, license, disclose, give, or otherwise transfer or use in any way any Confidential Information or any copy thereof provided to them to any person or entity other than their own agents, partners, employees and consultant who have a need to know such information in order to enable said party to evaluate the desirability of the Arrangement." Id.
"information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Sec.
6-41-1 .
The Physician Defendants do not dispute that the Confidential Information disclosed to them pursuant to the Confidentiality Agreement were trade secrets under the UTSA.
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