Animal Hosp. of Nashua v. Antech Diag. ll-cv-448-LM 2/10/14 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Animal Hospital of Nashua, Inc.
v. Civil No. ll-cv-448-LM Opinion No. 2014 DNH 025 Antech Diagnostics and Sound-Eklin
VGA Cenvet, Inc. d/b/a Antech Diagnostics
v. Animal Hospital of Nashua, Inc.; AHN Pet Hospitals, Inc.; K ^ Animal Hospital S e r v i c e s T ^ c . ; and Dr. Leo Bishop, individually and d/b/a The Animal Hospital of Nashua
O R D E R
This case arises from a now-defunct business relationship
involving Animal Hospital of Nashua, Inc. ("AHN") and a supplier
of laboratory services and medical equipment, VGA Cenvet, Inc.
("Antech"). The dispute concerns AHN's dissatisfaction with the
quality of certain services and equipment provided to it by
Antech, and Antech's unhappiness over the termination of the
business relationship. Of the various claims and counterclaims
in this case, five are relevant to the issues decided in this order: AHN's claims for breach of contract and breach of the
covenant of good faith and fair dealing against Antech (Counts I
and II of AHN's complaint); and Antech's counterclaims against
Dr. Leo Bishop, for breach of contract, breach of the covenant
of good faith and fair dealing, and unjust enrichment (Count I,
II, and III of Antech's counterclaim). There are currently six
motions pending before the court, but in this order, the court
addresses only three of them: (1) Dr. Bishop's motion for
summary judgment on all three of Antech's counterclaims, which
is based, in part, on his assertion that he had no contractual
relationship with Antech; (2) Antech's motion for summary
judgment that it did have a contractual relationship with Dr.
Bishop; and (3) Antech's motion to strike an affidavit by Dr.
Bishop that he submitted in support of his motion for summary
judgment. For the reasons that follow. Dr. Bishop's summary-
judgment motion is granted in part and denied in part; Antech's
summary-judgment motion is denied; and (3) Antech's motion to
strike is denied as moot.
Summary Judgment Standard
"Summary judgment is warranted where 'there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.'" McGair v. Am. Bankers Ins. Co.
2 of Fla., 693 F.3d 94, 99 (1st Cir. 2012) (quoting Fed. R. Civ.
P. 56(a); citing Rosciti v. Ins. Co. of Penn., 659 F.3d 92, 96
(1st Cir. 2011)). "The object of summary judgment is to 'pierce
the boilerplate of the pleadings and assay the parties' proof in
order to determine whether trial is actually required.'" Davila
v. Corp. de P.R. para la Diffusion Pub., 498 F.3d 9, 12 (1st
Cir. 2007) (quoting Acosta v. Ames Dep't Stores, Inc., 386 F.3d
5, 7 (1st Cir. 2004)).
Background
AHN is an animal hospital. Dr. Leo Bishop is ANH's owner
and president. Antech is a nationwide provider of diagnostic
laboratory services for animal hospitals. In 2008, Antech
provided AHN with a digital x-ray machine, and for three years,
Antech provided various laboratory services to AHN. Two of
AHN's claims against Antech (Counts I and II) and two of
Antech's counterclaims against AHN (Counts I and II) are based
upon the presumption - alleged in the parties' respective
pleadings - that the business relationship between them was
governed by a pair of contracts.
The record includes two documents, each dated August 1,
2008, and each titled "Services Agreement." Both documents
include the following preamble:
3 This Services Agreement (this "Agreement") is entered into by and between Antech Diagnostics ("Antech") and the party or parties listed below as "Animal Hospital Owner(s)."
Countercl. Def.'s Mem. of Law, Ex. B (doc. no. 76-3), at 1, Ex.
C (doc. no. 76-4), at 1 (boldface in the original). In a
section titled "Summary Terms," each "Agreement" identifies, in
the following way, the party or parties with which Antech was
purportedly contracting:
Animal Hospital(s): The Animal Hospital of Nashua Owner(s): Dr. Leo Bishop
Id. (boldface in the original). The last page of each
"Agreement" contains two signature blocks, the top one labeled:
"ANIMAL HOSPITAL OWNER(S)." Id., Ex. B, at 4, Ex. C, at 3
(boldface in the original). That signature block, in turn,
provides spaces for two signatures. Each of those spaces is set
up in the following way:
Print Name:
Its:
Id. In each agreement, the first line of the first ANIMAL
HOSPITAL OWNER(S) signature space contains the signature of Dr.
Bishop, followed by the printed notation "For AHN Pet Hospitals
Inc." Id. In the second line. Dr. Bishop printed his name, and
in the third line, he entered "President." Id. The second
4 space in the ANIMAL HOSPITAL OWNER(S) signature block, i.e., the
space for a second signature, is scratched out. That suggests
that the contract, if any, memorialized in the "Agreements" was
between Antech and only one other party. In the body of each
"Agreement," that is, below the preamble and above the signature
blocks, there is language that appears to impose obligations on
both "Animal Hospital Owner" and "Animal Hospital" and there is
language tending to suggest that the "Agreement" could be
breached by either "Animal Hospital Owner" or by "Animal
Hospital."
Each "Agreement" indicates an effective date of August 1,
2008, and a term of six years. In each "Agreement," the
principal obligations owed to Antech were for AHN and/or Dr.
Bishop to pay for $200,000 worth of Antech's laboratory services
per year, and for Antech to be the exclusive provider of such
services to AHN and/or Dr. Bishop. Beyond that, one of the two
"Agreements" contains terms related to a loan made by Antech as
an incentive to AHN and/or Dr. Bishop to make Antech its
exclusive provider of laboratory services. Specifically, that
agreement provided that "Antech [would] loan to Animal Hospital
Owner an amount equal to $125,000." Countercl. Def.'s Mem. of
Law, Ex. B (doc. no. 76-3), at 1 (emphasis added). It is
undisputed that in August of 2008, Antech provided Dr. Bishop
5 with a check, made out to him, and that Dr. Bishop deposited
that check into a bank account. The other "Agreement" contains
terms related to the x-ray machine that Antech provided to AHN
and/or Dr. Bishop, also as an incentive. In August of 2011,
three years into the six-year term of the purported agreement,
AHN and/or Dr. Bishop stopped using Antech's services and began
to have AHN's laboratory work performed by another provider.
Based upon the foregoing, AHN sued Antech1 for breach of
contract, breach of the covenant of good faith and fair dealing
and unjust enrichment, alleging that: (1) the x-ray machine it
received from Antech became obsolete; (2) Antech's laboratory
results were frequently erroneous; (3) Antech provided poor
customer service; and (4) Antech was non-responsive to AHN's
concerns over the allegedly erroneous laboratory results and the
obsolesce of the x-ray machine. Antech has counterclaimed
against Dr. Bishop,2 asserting claims for breach of contract,
breach of the covenant of good faith and fair dealing, and
unjust enrichment, all arising out of the decision by AHN and/or
1 AHN has also sued the manufacturer of the x-ray machine, Sound-Elkin, but AHN's claims against Sound-Eklin do not figure into any of the three motions upon which the court rules in this order.
2 Antech has also counterclaimed against ANH and two related corporate entities, but those claims do not figure into any of the three motions upon which the court rules in this order.
6 Dr. Bishop to stop using Antech's laboratory services and to
procure such services from a different provider.
Discussion
This order addresses document nos. 76, 80, and 88. In
document no. 76, Dr. Bishop moves for summary judgment on all
three counts of Antech's counterclaim, arguing that: (1) Counts
I and II fail because he was not a party to the "Agreements" on
which Antech bases its claims for breach of contract and breach
of the covenant of good faith and fair dealing; and (2) Count
III, a claim for unjust enrichment, fails because he received no
personal benefit from Antech. Antech objects, categorically
and, in document no. 80, it moves for summary judgment on its
assertion that Dr. Bishop was a party to the "Agreements."
Finally, in document no. 88, Antech moves to strike an affidavit
by Dr. Bishop that "addresses a single topic - the identity of
the bank account into which Dr. Bishop supposedly deposited
Antech's $125,000 loan check." Countercl. P L ' s Mot. to Strike
(doc. no. 88) 2. The court begins with the two motions for
summary judgment and then turns to Antech's motion to strike.
7 A. Document Nos. 7 7 and 8 8
1. Counts I and II oI IofeAh'e Counterclaim
The parties' most contentious dispute concerns whether Dr.
Bishop was a party to the "Agreements" in this case. Resolution
of that dispute has obvious implications for Dr. Bishop's motion
for summary judgment on Counts I and II of Antech's
counterclaim, as he could hardly be liable for breaching a
contract to which he was not a party.
In both AHN's complaint and Antech's counterclaim (and in
the arguments advanceb yy Dr. Bishop and Antech on the question
of whether Dr. Bishop was a paaty rt the "Agreements"" the
parties proceed as if there was an agreement between Antech and
one or more other parties. As a consequence. Dr. Bishop and
Antech devote no attention to the validity or enforceability of
the two "Agreements" described above. The court, however,
cannot so lightly presume that there is an enforceable contract
in this case. Cf. Antech Diagnostics, Inc. v. Downers Grove
Animal Hosp. & Bird Clinic, P.C., Civ. No. 12 C 2736, 2012 WL
2567045, at *1 (N.D. 111. June 29, 2012) ("if an allegation in
the complaint conflicts with the written agreement, the
agreement usually controls") (citing Massey v. Merrill Lynch &
Co., 464 F.3d 642, 645 (7th Cir. 2006)); see also 3 James Wm.
8 Moore, Moore's Federal Practice § 10.05[5], at 10-35 (3d ed.
2013).
Each of the two "Agreements" includes a provision directing
that it "shall be . . . construed . . . in accordance with the
laws of the State of California." Countercl. Def.'s Mem. of
Law, Ex. B (doc. no. 76-3), at 3, Ex. C (doc. no. 76-4), at 3.
With regard to contract interpretation, California law provides:
"Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. ([Cal.] Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The 'clear and explicit' meaning of these provisions, interpreted in their 'ordinary and popular sense,' unless 'used by the parties in a technical sense or a special meaning is given to them by usage' (id., § 1644), controls judicial interpretation. (Id., § 1638.)
In re Marriage of Lewis, F061164, 2012 WL 489682, at *2 (Cal.
Ct. App. Feb. 15, 2012) (emphasis added). That is, "[t]he
fundamental goal of contract interpretation is to give effect to
the parties' mutual intent." Id. at *3 (citing Morey v.
Vannucci, 75 Cal. Rptr. 2d 573, 578 (Cal. Dist. Ct. App. 1998))
(emphasis added).
In the usual contract-interpretation case, there is a
contract, the parties in court are parties to the contract, and
their dispute concerns the scope of the rights granted and/or
the obligations imposed by the contract, as expressed by its
9 terms. Here, the situation different; Dr. Bishop's motion for
summary judgment rests upon an argument that he has been sued
for breaching a contract to which he was not a party. But,
because language in a contract that identifies the parties to it
must surely be considered a provision of that contract, the
court applies the principles of contract interpretation
described above to determine whether Dr. Bishop was a party to
either of the two "Agreements" in this case.
Neither of the "Agreements" in this case may be reasonably
construed as expressing an intention, shared by Antech and Dr.
Bishop, for Dr. Bishop to be contractually bound to Antech. The
court prefaces the following discussion by noting that: (1)
California law encourages courts to rely upon written
contractual provisions, if possible, when attempting to discern
the mutual intentions of contracting parties, see Marriage of
Lewis, 2012 WL 489682, at *2; and (2) both Dr. Bishop and Antech
insist that the "Agreements" in this case are unambiguous.
While each party contends that the "Agreements" are unambiguous
and supports his or its position, what those two writings
demonstrate most clearly is that there was no meeting of the
minds between Antech and Dr. Bishop as to whether Dr. Bishop was
a party to them.
10 The preamble to each "Agreement" demonstrates Antech's
intention to form a contract with one or more animal hospital
owners,3 and the section describing the parties to the
"Agreement" designates Dr. Bishop as the owner of AHN. The
heading to the top signature block further demonstrates Antech's
intention to contract with Dr. Bishop, by asking for the
signature(s) of one or more animal hospital owners.
However, the manner in which Dr. Bishop completed the
ANIMAL HOSPITAL OWNER(S) signature block in each of the two
"Agreements" demonstrates that he did not share Antech's
intention that he be a party to a contract with Antech. Dr.
Bishop did not cross out the designation of the entity or
entities completing the first signature blocks as "ANIMAL
HOSPITAL OWNER(S)," but he clearly expressed his intention not
to sign the "Agreements" as an animal hospital owner by
describing his signature as "For AHN Pet Hospitals Inc.," as its
3 While Antech objects to Dr. Bishop's invocation of the rule that ambiguous contract terms should be construed against the drafter, on grounds that the terms of the "Agreements" in this case were negotiated by the parties, see Countercl. P L ' s Mem. of Law (doc. no. 79-1) 15-16, the idea that Antech was the initial drafter of these "Agreements," and that their printed portions reflect Antech's intentions, is strongly supported by the fact that Antech has sued at least three other animal hospitals for breaching similarly worded contracts. See Antech Diagnostics, Inc. v. Morwalk, Inc., Civ. No. DKC 13-0068, 2013 WL 3353772, at *1-3 (D. Md. July 2, 2013); Downers Grove, 2012 WL 2567045, at *3-4; VCA Cenvet, Inc. v. Chadwell Animal Hosp., LLC, Civ. No. JKB-11-1763, 2011 WL 6257190, at *3 (D. Md. Nov. 29, 2011) .
11 president. Thus, while Antech intended to form a contract with
Dr. Bishop, Dr. Bishop intended something else, presumably, for
Antech to form a contract with AHN Pet Hospitals Inc.
Accordingly, in the written "Agreements," the court can discern
no mutual intention for Dr. Bishop to be a party to them.
Because the written "Agreements" express no mutual
intention for Dr. Bishop to be a party to them, Antech's motion
for summary judgment in its favor on that issue is denied. For
the same reason. Dr. Bishop is entitled to judgment as a matter
of law on Counts I and II of Antech's counterclaim against him.
If there was no mutual intention for Dr. Bishop and Antech to
enter into a contract with each other, there was no contract,
enforceable against him, for him to breach. See Scott v. Pac.
Gas & Elec. Co., 904 P.2d 834, 841 (Cal. 1995) ("it is requisite
to [the] enforceability [of a contract] that it must evidence a
meeting of the minds upon the essential features of the
agreement") (citations omitted).
Dr. Bishop, however, is only one of the four parties named
as defendants in Counts I and II of Antech's counterclaim;
Antech has also asserted claims for breach of contract and
breach of the covenant of good faith and fair dealing against
AHN. And, AHN has asserted similar claims against Antech. For
the same reasons that the "Agreements" do not demonstrate a
12 meeting of the minds regarding Dr. Bishop's status as a party to
them, the court can easily envision an argument that those
"Agreements" do not demonstrate a meeting of the minds regarding
AHN's status as a party, either. Both Dr. Bishop and Antech
insist that the two "Agreements" are unambiguous, but as the
court reads them, the thing they express most unambiguously is
confusion over who the parties are. That is, the written
Agreements could be quite reasonably construed as a transcript
of two (or three) parties talking past one another, rather than
a memorialization of a meeting of the minds. Given that under
California law, a contract is enforceable only if it
"evidence[s] a meeting of the minds upon the essential features
of the agreement," Scott, 904 P.2d at 841, and that
identification of the parties to a contract is one of its
essential features, the court harbors grave concerns over
whether there is an enforceable contract in this case at all.
The lack of a contract would: (1) entitle the three remaining
counterclaim defendants to dismissal of Counts I and II of
Antech's counterclaim; (2) entitle Antech to dismissal of Counts
I and II of AHN's complaint; and (3) leave unjust enrichment as
the only cause of action asserted by AHN against Antech and as
the only cause of action asserted by Antech against the
counterclaim defendants.
13 In light of the substantial consequences of a determination
that there is no enforceable contract in this case, and the fact
that the court has not heard from either Antech or AHN on the
question of whether an enforceable agreement between them was
ever formed, AHN and Antech are ordered, within fifteen days of
the date of this order, to show cause why the court should not
rule that there is no enforceable contract in this case. As the
parties brief this issue, they should bear in mind that the
question before them is one of contract interpretation. Cf.
Downers Grove, 2012 WL 2567045, at *1.
3. Count III of Antech's Counterclaim
Dr. Bishop also moves for summary judgment on Count III of
Antech's counterclaim, which is based upon the equitable theory
of unjust enrichment. Specifically, Antech asserts that the
"Counterclaim-Defendants have been unjustly enriched because
they have received the benefits of a $125,000 loan, over
$138,000 in digital radiography equipment, and valuable
discounts from Antech for their laboratory service needs."
Def.'s Answer (doc. no. 12) 18. Dr. Bishop contends that he was
not enriched because he received no laboratory services from
Antech and deposited the check he received from Antech into
ANH's bank account, not his own personal account. In other
14 words, he argues that he cannot have been unjustly enriched
because he, personally, received no benefit from Antech.
The court notes, at the outset, an interesting legal issue
that will need to be addressed eventually, but not quite yet.
That issue concerns the law under which the court will
ultimately resolve the claims and counterclaims for unjust
enrichment. Both "Agreements" include the following choice-of-
law provision: "This Agreement shall be governed by and
construed both as to validity and performance and enforced in
accordance with the laws of the State of California without
giving effect to the choice of law principles thereof."
Countercl. Def.'s Mem. of Law, Ex. B (doc. no. 76-3), at 3, Ex.
C (doc. no. 76-4), at 3. But since claims for unjust enrichment
only arise in the absence of an enforceable contract, it is not
at all clear that a choice-of-law provision in a written
document that is not an enforceable contract has any bearing on
the law to be applied to the unjust enrichment claim that arises
from that document's unenforceability. Thus, it seems possible
that the unjust enrichment claims in this case should be decided
under New Hampshire law. In any event, the parties will need to
address this issue in the future, but there is no need to
address it now, given the nature of Dr. Bishop's defense against
Antech's unjust enrichment claim against him.
15 He says he received no benefit from Antech, but the
undisputed facts are to the contrary. The "Agreement"
pertaining to the loan, which bears Dr. Bishop's signature,
demonstrates the signatories' intention for Antech to make a
loan to Dr. Bishop, not AHN. There is no language anywhere else
in the "Agreement" that could be construed as expressing an
intention for anyone other than Dr. Bishop to be the recipient
of the loan from Antech. Moreover, Dr. Bishop has testified
that the check for the loan proceeds was made out to him alone,
not to AHN or any other corporate entity. See Countercl. P L ' s
Obj. to Summ. J., Ex. C (doc. no. 79-4), at 20. Dr. Bishop
devotes all of his attention to what he did with the check from
Antech after he received it, but offers no authority for the
proposition that what he did with the check has any bearing on
whether he, as opposed to some other entity, received a benefit
from Antech in the first instance. Accordingly, Dr. Bishop's
motion for summary judgment, as to Count III of Antech's
counterclaim, is denied.
B. Document No. 8 8
Document no. 88 is Antech's motion to strike the affidavit
in which Dr. Bishop says that he deposited the check he received
from Antech into AHN's operating account and that the proceeds
from the loan were used for business purposes. Given the
16 court's disposition of Dr. Bishop's motion for summary judgment
on Count III of Antech's counterclaim, Antech's motion to strike
is denied as moot.
Conclusion
For the reasons detailed above. Dr. Bishop's motion for
summary judgment (doc. no. 76) is granted as to Counts I and II
of Antech's counterclaim, but denied as to Count III, and
Antech's motion for summary judgment (doc. no. 80) is denied.
Thus, as to Dr. Bishop, the only counterclaim that remains is
Count III, Antech's claim for unjust enrichment. Antech's
motion to strike (doc. no. 88) is denied as moot. Finally, as
explained above, AHN and Antech are ordered to show cause why
the court should not rule that there is no enforceable contract
between them in this case.
SO ORDERED.
Landy^ ^fcpkfferty United S p i t e s District Judge
February 10, 2014
cc: Phillip A. Baker, Esq. Julie B. Brennan, Esq. Adam J. Chandler, Esq. Robert M. Folo, Esq. Brian H. Lamkin, Esq. Christopher T. Vrountas, Esq.