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Integrity Medical Management, LLC v. Surgical Center at Premier, LLC

United States District Court, D. Colorado

January 30, 2017

INTEGRITY MEDICAL MANAGEMENT, LLC, Plaintiff,
v.
SURGICAL CENTER AT PREMIER, LLC, SURGICAL CARE AFFILIATES, LLC, Defendants, SURGICAL CENTER AT PREMIER, LLC and SURGICAL CARE AFFILIATES, LLC, Counterclaim Plaintiffs,
v.
INTEGRITY MEDICAL MANAGEMENT, LLC, Counterclaim Defendant.

          ORDER

          R. Brooke Jackson United States District Judge

         This order addresses plaintiff Integrity Medical Management, LLC's (IMM) motion for partial summary judgment [ECF No. 108], defendant Surgical Center at Premier, LLC's (Premier) motion for summary judgment [ECF No. 110], and defendant Surgical Care Affiliates, LLC's (SCA) motion for summary judgment [ECF No. 112]. For the reasons stated below, the Court grants IMM's motion in part and denies it in part, grants Premier's motion, and grants SCA's motion. With all of IMM's claims dismissed, this case will continue to trial only on Premier and SCA's remaining counterclaims.

         BACKGROUND

         A. Facts.

         IMM is a Texas company that provides management and development services for healthcare facilities. ECF No. 1, ¶¶ 1, 12; ECF No. 55 at 14, ¶¶ 2, 7. Premier owned and operated an ambulatory surgery center in Colorado Springs, Colorado. ECF No. 1, ¶ 13; ECF No. 55 at 15, ¶ 8. SCA owned a roughly 20% interest in Premier and had two representatives on Premier's seven-person board of managers. ECF No. 1, ¶¶ 15, 20; ECF No. 112 at 2. IMM also had an ownership interest in Premier and had one representative-IMM's chief executive officer Lewis Nichols-on its board. ECF No. 1, ¶¶ 24, 28; ECF No. 110, Ex. 5; ECF No. 112, Ex. 2, at 151:3-25.

         Effective April 1, 2013, IMM and Premier agreed for IMM to manage Premier's surgery center. ECF No. 55 at 15, ¶¶ 9-10; ECF No. 108 at 3, ¶ 3. IMM and Premier subsequently entered into an “Amended and Restated Management Agreement” effective October 16, 2013. ECF No. 108, Ex. 1, ¶ 6; ECF No. 127, Ex. 1; ECF No. 127, Ex. 2, at 54:23-25, 55:4-10. This agreement had an initial term of April 1, 2013 through June 30, 2015. ECF No. 127, Ex. 1, § 1. Section 8.02(c) of the management agreement allowed the agreement to be terminated without cause, stating:

Either party may terminate this Agreement for any reason effective as of any date after the end of the Initial Term, provided that (i) the management fee payable to [IMM] pursuant to Section 4.01(a) hereof for the period of two full consecutive calendar quarters . . . ending immediately prior to the date notice of such termination is given is less than $100, 000 (i.e. an average of $50, 000 per quarter), and (ii) the terminating Party gives the other Party at least 120 days prior notice of such termination.

Id. § 8.02(c). Unless the parties terminated the agreement, it would automatically renew for successive one-year terms through June 30, 2022. Id. § 1.

         IMM was to be paid according to a complex formula. Section 4.01(a) specifies that IMM's annual management fee was a share of Premier's net profits above a baseline level. Id. § 4.01(a). Section 4.01(b) provided IMM quarterly payment advances as follows:

Commencing on the date that is 90 days after the Effective Date, and each quarter thereafter during the term of this Agreement, [IMM] will be paid an advance quarterly management fee based on the estimated management fee for the entire year, as determined in good faith from time to time by [Premier's] outside accountant.

Id. § 4.01(b). That provision also required overpayments and underpayments of advances to be reconciled once IMM's actual management fee is calculated:

Promptly upon completion of the financial statements for each calendar year, [Premier] shall cause a final computation of the management fee for such calendar year to be delivered to [IMM]. Within 30 days after the delivery of such statement, [Premier] shall pay [IMM] any excess of the actual management fee over the advances paid during the year, and [IMM] shall pay [Premier] any excess of the advances paid during the year over the actual management fee.

Id. Section 8.04 explains that such surplus or deficient advances must also be settled immediately if the contract is terminated:

Upon any termination of this Agreement, [Premier] shall promptly pay to [IMM] any accrued but unpaid sums due under this Agreement and [IMM] shall promptly pay to [Premier] any accrued but unpaid sums due under this Agreement including but not limited to the excess of the advances paid during the year over the actual management fee pursuant to Section 4.01(b).

Id. § 8.04.

         Premier's profits did not exceed the baseline level at any time during the contract term, so IMM was not contractually entitled to any payment for its work. See ECF No. 55 at 17, ¶ 24; ECF No. 108, Ex. 1, ¶ 10. However, Premier decided to pay IMM $15, 000 every month for its services anyway. ECF No. 1, ¶ 23; ECF No. 55 at 17, ¶¶ 23-25. On April 23, 2014 Premier's board of managers held a meeting and ratified these payments. ECF No. 108, Ex. 5; ECF No.110, Ex. 5. The meeting's minutes state:

Motion was made by Dan Kopacz to forgive 2013 management shortfall under the management contract, pay IMM $15, 000 per month through December 31, 2014 consistent with what IMM has been being [sic] paid without additional true-up under the contract . . . . Motion seconded by John Pak and approved unanimously. Discussion included agreeing to go back to contract calculation in 2015 once all cost-cutting measures had been implemented.

ECF No. 108, Ex. 5.

         In April 2014, with more than a year left in IMM's initial term managing Premier's facilities, Premier considered merging with Audubon Ambulatory Surgery Center. ECF No. 1, ¶ 21; ECF No. 55 at 4, ¶ 21. A non-binding letter of intent indicated that SCA rather than IMM would provide management services to the merged entity. ECF No. 1, ¶¶ 24-25; ECF No. 55 at 4, ¶ 25; ECF No. 112, Ex. 3, § 3(d). The letter further stated that Audubon and Premier “shall mutually agree upon the terms and conditions by which the Management Agreement between Premier and [IMM] would be terminated.” ECF No. 112, Ex. 3, § 4(d). Premier's board of managers, including IMM's representative, signed this letter of intent. ECF No. 112, Ex. 3, at 7. SCA subsequently offered to buy out the remainder of IMM's management contract with Premier, but IMM rejected the offer. ECF No. 1, ¶ 27; ECF No. 55 at 4, ¶ 27.

         With negotiations unsuccessful, Premier's board of managers invoked Section 8.02(c) to terminate the management agreement with IMM. On March 3, 2015 Premier sent IMM a notice to terminate the agreement 120 days later on July 1, 2015. ECF No. 55 at 20, ¶¶ 36-37; ECF No. 108, Ex. 7.

         B. Procedural History.

         IMM filed this action on October 9, 2015. ECF No. 1. IMM argues that Premier breached their contract and breached the duty of good faith and fair dealing by terminating the management agreement despite the April 23, 2014 board meeting's amendment. Id. ¶¶ 39-53. IMM also contends that SCA's involvement in Premier's termination of the management agreement makes it liable for intentional interference with IMM's contract, intentional interference with IMM's prospective business relations, unjust enrichment at IMM's expense, and civil conspiracy to commit these wrongful acts. Id. ¶¶ 54-67, 72-75.

         Defendants submitted counterclaims against IMM on December 28, 2015 and amended these counterclaims on February 26, 2016. ECF Nos. 18, 55. Premier maintains that it was IMM who breached the contract or, in the alternative, was unjustly enriched by failing to provide required services, failing to repay money owed to Premier, failing to pay for Mr. Nichols's health benefits, and improperly delegating tasks it was obligated to perform without paying for their performance. ECF No. 55, ¶¶ 42-51. SCA similarly argues that IMM was unjustly enriched by having SCA perform services without compensation that IMM was supposed to perform under the management agreement. Id. ¶¶ 52-56.

         At the close of discovery, IMM filed a motion for partial summary judgment against Premier while Premier and SCA each submitted a motion for summary judgment on every one of IMM's claims. ECF Nos. 108, 110, 112.

         STANDARD OF REVIEW

         The Court may grant summary judgment if “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). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must “designate specific facts showing that there is a genuine issue for trial.” Id. at 324. A fact is material “if under the substantive law it is essential to the proper disposition of the claim.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998). A material fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court ...


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