DEVON MD LLC v. DEMAIO

CourtDistrict Court, E.D. Pennsylvania
DecidedDecember 19, 2019
Docket2:19-cv-05378
StatusUnknown

This text of DEVON MD LLC v. DEMAIO (DEVON MD LLC v. DEMAIO) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DEVON MD LLC v. DEMAIO, (E.D. Pa. 2019).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA DEVON MD LLC : CIVIL ACTION v. NO. 19-5378 STEVEN F. DEMAIO, et al.

MEMORANDUM KEARNEY, J. December 19, 2019

Pennsylvania businesses attempting to affix responsibility for disappointing expansion efforts in other states may justifiably attempt to sue parties outside of their home state. When a Pennsylvania business expands into other states, it may need to pursue the alleged responsible parties in their home state. To pursue those out-of-state parties in this Court, the Pennsylvania business must establish our ability to constitutionally exercise personal jurisdiction over the out- of-state business relationships. The Pennsylvanian must also plead claims which can proceed into discovery. After carefully examining the pleadings and affidavits, we today find the Pennsylvania □

business sufficiently established a constitutional basis for our exercise of personal jurisdiction for the plead tort claims over two individual Connecticut citizens who traveled into this Commonwealth but not over an apparently non-existent Connecticut limited liability company. We also find the Pennsylvania business failed to plead fraud with the required specificity but may proceed on its diversion and interference tort claims. I. Alleged facts Pennsylvanian Devon MD LLC is a medical device manufacturer of “[d]eep [v]ein [t]hrombosis sleeves, crutches, splints, braces, and various orthotics.”! Devon alleges it formed a partnership in 2019 with two Connecticut residents—Steven DeMaio and James Nardella—after

“oral agreements reached in the Commonwealth of Pennsylvania” for Messrs. DeMaio and Nardella to market Devon’s medical devices to orthopedic surgery practices in Connecticut.” This oral partnership hoped to form supply contracts with Connecticut orthopedic surgery practices who would prescribe Devon products to their patients.’ As we understand this business from Devon’s complaint, if a medical practice under contract prescribed a Devon product to a patient, one of two billing companies—Dynamic Medical or USA Medical—would bill the patient’s insurer for the product and then remit payment to the Partnership. Devon had billing contracts with Dynamic Medical and USA Medical predating this Partnership. Devon incurred a series of expenses to assist the Partnership’s marketing efforts in Connecticut. After Messrs. DeMaio and Nardella requested Connecticut office space to store supplies, Devon leased a space in Glastonbury, Connecticut for three years at an average $1,545.41 rent per month. Mr. DeMaio signed the lease as Devon’s “VP of Operations.”’ Devon spent $9,785.30 to furnish the Connecticut office space and hired a staffer to work in the office for $5,833.33 per month.® Devon’s relationship with Glastonbury Surgery Center. In May 2019, Devon contracted with Glastonbury Surgery Center in Glastonbury, Connecticut for the Partnership to inventory Devon medical equipment, including supplying Devon’s deep vein thrombosis sleeves.? Devon’s Chief Executive Officer John A. Bennett, MD signed the contract for Devon; Glastonbury Surgery’s Medical Director, Christopher Lena, MD, signed for Glastonbury Surgery.'° The contract recites “Devon is in the business of providing durable medical equipment including portable sequential [deep vein thrombosis] sleeves, crutches, splints, braces and various orthotics and related supplies (‘Inventory’),” and “Devon agrees to

place Inventory and purchased products with [Glastonbury Surgery Center].”!! The parties could end the contract with ninety days notice.!* Devon claims at “Messrs. DeMaio and Nardella’s request,” it provided inventory for “Glastonbury’s Orthopedic Surgeon[s] and/or the [Partnership] office . . . for billing to” Dynamic Medical or USA Medical.!? Devon claims it inventoried: “(a) Breg Units; (b) 270 Devon-24 Units; (c) 800 Cold Therapy Units [and] 1,300 Sleeves; and (d) 200 Devon 24D 3-chambers sleeves.”"4 Devon also claims it “made expenditures to develop High-End Cold Therapy Units for the Defendants, [Messrs.] DeMaio and Nardella to market for [the Partnership].”!° Devon alleges around July 2019 “upon information and belief. . . Defendants [Messrs.] DeMaio and Nardella . . . registered their own separate entity, Defendant Alledran [Medical], LLC and diverted payments from USA Medical ... [to the] Alledran [Medical], LLC entity.”!6 Glastonbury terminates contract. On August 8, 2019, Dr. Lena terminated Glastonbury Surgery Center’s supply contract with Devon by letter to CEO Bennett on letterhead of “Orthopedic Associates of Hartford, P.C.”!” Devon reasons “upon information and belief,” because Dr. Lena did not send the letter on Glastonbury Surgery Center letterhead, “[Messrs.] DeMaio and/or Nardella requested Dr. Lena to write [this] letter purporting to immediately cancel the Glastonbury Surgery Center’s May 16, 2019 Contract with [the Partnership], . . . to divert its business as well from [Devon] and the [Partnership].”'® Devon alleges the earliest “any Glastonbury [Surgery Center] cancellation could have been effective [would have been] November 8, 2019” because of a ninety-day termination provision in the contract.!° Devon and Messrs. “DeMaio and/or Nardella jointly projected the [Partnership] would have revenues of $100,000 per month in insurance reimbursements in the first year . . .; $200,000

per month in [Partnership] year two; and $300,000 per month in year three.””° Messrs. DeMaio and Nardella “‘collect[ed] some $200,000 in insurance payments that would otherwise have gone to the [Partnership] for July 2019 when [the Partnership] provided Durable Medical Devices to Glastonbury Surgery Center.”?! Devon also alleges it “would have had a total of an additional $325,000 in insurance company benefit revenues for August, September, October and early November 2019” if Glastonbury Surgery did not terminate the contract without the required ninety-day notice. Devon claims “a total of $525,000 in lost revenue to the [Partnership] and to [Devon] from July 1 through November 8, 2019.” Devon now sues Messrs. DeMaio and Nardella and Alledran Medical LLC in tort for: (1) diversion of Partnership business opportunity; (2) interference with Devon and Partnership’s prospective economic advantage; and, (3) fraud. Devon pleads the diversion as: e ‘{I}mplicit in their [Partnership], Defendants DeMaio and Nardella agreed to expend substantially all their work efforts in the marketing of Durbale Medical Devices only for their [Partnership] with [Devon].”” e “Included in Defendants DeMaio [and] Nardella’s duties to [Devon] and their [Partnership] was the solicitation of new Durable Medical Devices sales for their [Partnership] with Plaintiff, as well as the maintenance and furtherance of then-current sales business for the [Partnership].””4 e “Defendants DeMaio and Nardella, while enjoying the [Devon]-provided assets and resources, upon information and belief began to divert sales from the [Partnership’s] customers for the benefit of their own entity Alledran, LLC to compete with their [Partnership] with [Devon].”*° Devon pleads interference as: e Devon and Glastonbury Surgery Center “entered in to (sic) a Product Inventory Agreement for Plaintiff to supply Durable Medical Equipment to Glastonbury Surgery Center and its orthopedic patients.””° e Devon Messrs. DeMaio and Nardella “projected that Glastonbury Surgical and ancillary arrangements with their orthopedic surgeons to whom Plaintiff

was marketing for the [Partnership] would produce some $6.2 in revenues over the following three (3) years.””’ e Messrs. DeMaio and Nardella “were, as partners in the [Partnership], obligated to their partner (Plaintiff) to act, as to that Glastonbury Surgical contract, solely in the best interest of the [Partnership].”7° e Messrs.

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Bluebook (online)
DEVON MD LLC v. DEMAIO, Counsel Stack Legal Research, https://law.counselstack.com/opinion/devon-md-llc-v-demaio-paed-2019.