NIRP Pasadena PLLC et al v. Medstreaming LLC et al

MOTION for Summary Judgment

W.D. Wash.July 12, 2018

PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 1 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 THE HONORABLE THOMAS S. ZILLY UNITED STATES DISTRICT COURT IN THE WESTERN DISTRICT OF WASHINGTON NIRP PASADENA, PLLC, and NIRP SUGAR LAND, PLLC, Plaintiffs, v. MEDSTREAMING, LLC, a Washington limited liability company; WAEL ELSEAIDY, an individual; RYAN PLASCH, an individual, Defendants. No. 2:17-cv-01607-TSZ PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT NOTE ON MOTION CALENDAR: August 3, 2018 I. INTRODUCTION On August 3, 2017, Plaintiffs NIRP Pasadena, PLLC and NIRP Sugar Land, PLLC (“Plaintiffs”) filed this lawsuit alleging multiple claims against Defendants. After conducting discovery, it is clear that such discovery exchanged between the parties supports Plaintiffs’ claims. Thus, Plaintiff now files this motion for partial summary judgment on its claims. Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 1 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 2 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 II. STANDARD Under Federal Rule of Civil Procedure 56, summary judgment is proper if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56; see Torres v. City of Madera, 648 F.3d 1119, 1123 (9th Cir. 2011). Upon a showing that there is no genuine issue of material fact as to particular claims or defenses, the court may grant summary judgment in the party’s favor upon all or any part thereof. Sokol v. New United Motor Mfg., Inc., No. C 97-4211 SI, 2000 WL 1912724, at *3 (N.D. Cal. Feb. 29, 2000). If the moving party meets its burden, the burden shifts to the non-moving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 585-87 (1986). The non-moving party must do more than show that there is some metaphysical doubt as to the material facts. Id. at 586. Unanswered requests for admissions may be relied on as a basis for granting summary judgment. Conlon v. U.S., 474 F.3d 616, 621 (9th Cir. 2007). III. BACKGROUND FACTS Plaintiffs are in the business of providing interventional radiology medical services to patients. Interventional radiology is a medical specialty that utilizes image guidance to perform procedures within the human body through small holes, rather than through large incisions as in traditional surgery. Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 2 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 3 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 A very vital component in the delivery of care via interventional radiology is utilizing technology in the form of software to integrate various record and billing systems, including particular electronic medical records (EMR), PACS integration, cardiovascular information systems, vascular information system, and clinical data management. This integration is typically known as workflow applications. The treating physician needs to have all of a patient’s information readily available in order to provide quality care to the patient. Medstreaming publicly holds itself as a company that develops, markets, sells, installs and supports specialty-based workflow applications software to medical providers for different medical specialties, including Cardiovascular, Vascular and Cardiology. Medstreaming does not dispute this. In early February of 2016, NIRP Physician, Dr. Andrew Martin, met Ryan Plasch at the 28th International Symposium on Endovascular Therapy at the Diplomat Hotel in Hollywood, Florida. Dr. Martin spent roughly two hours with Mr. Plasch over the course of the five-day meeting listening to him describe the capabilities of Medstreaming software. Plasch promised that the software would be a tool which would amplify the efficiency of the staff and sallow NIRP to see and understand information about the lab. He expounded on the ability of the software inventory tracking capability. Another capability that Mr. Plasch touted as the ability to move the date and generate maps and reports regarding physician referrals and procedures. Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 3 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 4 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 On or about February 2016, Medstreaming demonstrated the software for Plaintiffs at Plaintiffs’ offices. The presentation was conducted by Joseph Mazzola, Medstreaming's Southern U.S. Sales Manager. As demonstrated, the software functioned fully and Mazzola represented that it would meet Plaintiffs’ integrated workflow requirements, including PACS reporting, the information systems and clinical data management. Plaintiffs relied on such representations in entering an agreement with Medstreaming. During the demonstration, Medstreaming demonstrated and represented that its product would perform autocoding of CPT codes, integrate seamlessly with peripherals, and take the place of Plaintiffs’ then computer system. During the demonstration, Medstreaming represented that its software would report nurse's notes, drug logs, and full reports of patient procedures, including angio procedures, would integrate with Plaintiffs’ Electronic Medical Records (EMR) reporting system, would integrate all billing and scheduling, and would allow all data and reports to be printed. ("Services"). These promises were false. Prior to entering into the Agreement, Medstreaming, through Mr. Mazzola and others, made representations to Plaintiffs. Medstreaming represented that its software was fully functional, ready for installation, and would provide the Services. Medstreaming assured Plaintiffs that its software would provide information templates for each medical procedure, including but not limited to peripheral Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 4 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 5 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 intervention, venous intervention, and dialysis access procedures. For each of Plaintiffs’ interventional procedures performed on its patients, Medstreaming promised to provide templates to report the information. Those promises were false. Prior to entering into the Agreement, Medstreaming represented to Plaintiffs that its software would immediately export clinical data to Plaintiffs’ Electronic Medical Record (EMR) system, with attached ICD and CPT codes so that Plaintiffs could proceed with billing on the same day as the procedure. That promise was false. In 2016, Defendant Medstreaming proposed a contractual relationship which included, without limitation, the sample and/or model demonstrated by Medstreaming to Plaintiffs, a Software License Agreement Terms and Conditions, with attached Exhibits, a written Proposal for Endovascular Data Management system and a financial arrangement through Balboa Capital, LLC (collectively “Agreement”). See Hood Dec. Exhibit A-4. The Agreement provided that Medstreaming will “deliver and install the [software] at Customer's facility.” Id. The software completely failed when Plaintiffs first attempted to use it and thereafter. The software was not ready to go live, and was still in rudimentary development stages. Despite several attempts to get Defendants to resolve issues, Defendants failed to resolve a single issue, leaving Plaintiffs with a nonfunctional system. Defendants breached the Agreement by failing to perform as promised under the Agreement. Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 5 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 6 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 Plaintiffs justifiably relied on the misrepresentations of Medstreaming, such that Plaintiffs agreed to enter into the Agreement and enter into a Payment Agreement with Balboa. It was Medstreaming that introduced Plaintiffs to Balboa and Defendants admit they received a benefit from Plaintiffs entering such agreement with Balboa. Pursuant to the Agreement, on February 28, 2017, Plaintiffs notified Medstreaming in writing of defects and breaches and demanded that Medstreaming cure. The letter made a demand to Medstreaming to cure its breach of the Software License Agreement and the Technical Assistance Services Agreement within 30 days from the date of the letter, pursuant to the terms of the Agreement. Admittedly, Defendants did not cure the defects. Plaintiffs suffered damages as a direct and proximate cause of Medstreaming's breach of its contractual obligations and violations of the Washington Consumer Protection Act. Likewise, Plaintiffs have suffered damages as a direct and proximate cause of Balboa's refusal to suspend or terminate payments based on Medstreaming's non-performance. IV. ARGUMENT A. Defendants’ Responses to Plaintiffs’ Requests for Admissions are Deemed Admitted. On May 11, 2018, Plaintiffs served Defendants, by hand delivery, Requests for Admissions. See Hood Dec. Defendants failed to timely answer the Requests for Admissions, and therefore they are automatically deemed admitted. See Hood Dec. Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 6 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 7 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 Federal Rule of Civil Procedure 36(a) states that a matter is deemed admitted “unless, within 30 days after service of the request… the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party’s attorney.” Conlon v. U.S., 474 F.3d 616, 621 (9th Cir. 2007); FED. R. CIV. P. 36(a). Unanswered requests for admissions may be relied on as a basis for granting summary judgment. Conlon, 474 F.3d at 621. Defendants failed to properly serve Plaintiffs with their responses to Request for Admissions. Specifically, Defendants served the responses late and did not serve them pursuant to the Federal Rules of Civil Procedure. Plaintiffs served their Request for Admissions via hand delivery on May 11, 2018, making Defendants’ responses due 30 days after, which fell on a Sunday, so they were due Monday June 11, 2018. FED. R. CIV. P. 6(a)(1)(C); FED. R. CIV. P. 36(a)(3); see Hood Dec. Exhibit A-1. Defendants served their responses via email a day late. See Hood Dec. Exhibit A-2. Plaintiffs’ counsel is in the central time zone and the email reflects such time zone, which is two hours ahead of the western time zone. The email is dated June 12, 2018 2:00AM, which is June 12, 2018 12:00AM western time. Further, even if the responses were not late, which they were, service was not proper because it was via email. Federal Rule of Civil Procedure 5(b) provides for the permissible methods of service. Rule 5(b) does not expressly provide for service via email, but does state that service Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 7 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 8 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 may be by electronic means if the person consented in writing. FED. R. CIV. P. 5(b)(2) (emphasis added). Plaintiffs have never consented to service by electronic means in this case. See Hood Dec. Further, Plaintiffs previously objected to such service by email in their responses to Defendants’ discovery requests. See Hood Dec. Exhibit A-3. Thus, not only did Plaintiffs not consent, Defendants were on notice of the complete opposite, that Plaintiffs objected to such service. Despite these facts, the only method of service attempted by Defendants was via email, which is insufficient. Thus, Plaintiffs Requests for Admissions are deemed admitted. B. Plaintiffs are Entitled to Summary Judgment on their Recovery of Licensed Payments and Breach of Contract Claims. Defendants have admitted that the software did not perform as promised. See Hood Dec. Exhibit A-2. Additionally, Defendants have no evidence of any defense to Plaintiffs’ claim for recovery of license payments, breach of contract, or alternative unjust enrichment. It is undisputed Plaintiffs entered into a license software agreement with Defendants. It is further undisputed that Defendants software did not perform as promised. See Hood Dec. Exhibit A-2. It is undisputed that there was an agreement between the parties. It is further undisputed that Defendants had a duty to perform under the agreement and Defendants admit they did not perform as promised. Therefore, Defendants breached the software agreement as a matter of law and Plaintiffs are entitled to damages. As set forth in Plaintiffs’ Responses to Defendants’ Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 8 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 9 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 Interrogatories, Plaintiffs are damaged in the amount no less than $543,431.00, plus attorneys’ fees. See Hood Dec. Exhibit A-3, Plaintiffs Responses to Defendants’ Interrogatories. Thus, Plaintiffs are entitled to summary judgment on their Recovery of License Payments, breach of contract, and alternative unjust enrichment claims as a matter of law. C. Alternatively, Plaintiffs are Entitled to Summary Judgment on Elements of their Breach of Contract Claims. A necessary element to Plaintiffs’ breach of contract claim is that Defendants’ breached a duty under the contract. Fid. & Deposit Co. of Maryland v. Dally, 148 Wn. App. 739, 745, 201 P.3d 1040, 1044. Defendants admit the software did not perform as promised. Hood Dec. Exhibit A-2. Further, Defendants admit that they did not resolve the issues with the software that Plaintiffs gave them notice of, and admit they did respond to Plaintiffs notice of issues with the software, which are breaches of the Agreement and Exhibit B to the Agreement. Hood Dec. Exhibit A-2 and Exhibit A-4. Therefore, Plaintiffs are entitled to this element of their breach of contract claim. V. CONCLUSION For the reasons set forth herein, Plaintiffs are entitled to summary judgment on their breach of contract claims or alternative unjust enrichment claim. Alternatively, Plaintiffs are entitled to summary judgment on Defendants’ failure to perform their duty under the contract. Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 9 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 10 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 Dated this 12th day of July, 2018. By: s/Lawrence R. Cock Lawrence R. Cock, WSBA No. 20326 CORR CRONIN LLP 1001 Fourth Avenue, Suite 3900 Seattle, Washington 98154 (206) 292-8800 phone Email: lrc@corrcronin.com s/ Lori Hood Lori Hood admitted pro hac vice Attorney for Plaintiffs 1301 McKinney Street, Suite 3700 Houston, TX 77010 Tel: (713) 650-9700 Fax: (713) 650-9701 lhood@bakerdonelson.com Attorneys for Plaintiffs Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 10 of 11 PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT - 11 [2:17-cv-01607 - TSZ] 4814-4843-9148 2938949-000002 4814-4843-9148 v5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 CORR CRONIN LLP 1001 FOURTH AVENUE, SUITE 3900 SEATTLE, WASHINGTON 98154 (206) 292-8800 CERTIFICATE OF SERVICE I hereby certify that on July 12, 2018, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to all recipients of ECF electronic notices in this action. I declare under the penalty of perjury under the laws of the United States and the State of Washington that the foregoing is true and correct. DATED at Seattle, Washington on July 12, 2018. s/ Lori Hood Lori Hood admitted pro hac vice Attorney for Plaintiffs Case 2:17-cv-01607-TSZ Document 30 Filed 07/12/18 Page 11 of 11