DEVON MD LLC v. DEMAIO

CourtDistrict Court, E.D. Pennsylvania
DecidedApril 20, 2020
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. 2020).

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. April 20, 2020 Four months ago, we found a basis to exercise personal jurisdiction over two Connecticut businessmen to respond to a Pennsylvanian’s claim of partnership diversion of assets in Connecticut after the businessmen travelled to Pennsylvania and had a direct relationship with the plead de facto partnership with the Pennsylvanian. The Pennsylvanian now reaches to sue a later- formed Connecticut entity for also diverting the de facto partnership’s assets. But there is a big difference: the Pennsylvanian fails to plead and offers no evidence the Connecticut entity did anything in Pennsylvania or particularly relating to this earlier de facto partnership. In response to the Connecticut entity’s undisputed affidavit of no contacts with Pennsylvania or this de facto partnership, the Pennsylvanian did not seek discovery or adduce facts; it instead cited social media and emails possibly referencing a possible later Connecticut entity. These conclusory suppositions do not allow us to exercise personal jurisdiction consistent with due process. We cannot exercise personal jurisdiction in a partnership diversion claim over a non-partner Connecticut entity simply because the two Connecticut businessmen thought of forming this entity at some point. We grant the Connecticut entity’s motion to dismiss for lack of personal jurisdiction over it. We also see no basis to sever a viable claim and transfer to the District of Connecticut. I. Alleged facts Pennsylvanian Devon MD LLC is a medical device distributor of “[d]eep [v]ein [t]hrombosis sleeves, crutches, splints, braces, and various orthotics.”1 Messrs. Steven DeMaio and James Nardella are adult Connecticut residents.2 Alledran Med is a limited liability company

registered by Mr. Nardella under the laws of Connecticut in September 2017 and joined by Mr. DeMaio in July 2019.3 Devon MD and Messrs. DeMaio and Nardella form a partnership. In 2019, Devon MD formed a partnership Messrs. DeMaio and Nardella after “oral agreements reached in the Commonwealth of Pennsylvania” for Messrs. DeMaio and Nardella to market Devon MD’s medical devices to post-procedure patients of orthopedic surgery.4 This oral partnership hoped to form supply contracts with Connecticut orthopedic surgery practices who would prescribe Devon products to their patients.5 As we understand this business from Devon MD’s amended complaint, if a medical practice under contract prescribed a Devon MD 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.6 Devon MD had billing contracts with Dynamic Medical and USA Medical predating any contact with Messrs. Nardella and DeMaio.7 Devon MD incurred a series of expenses to assist marketing efforts in Connecticut. After Messrs. DeMaio and Nardella requested Connecticut office space to store supplies, Devon MD leased a space in Glastonbury, Connecticut for a three year term at an average $1,545.41 rent per month.8 Mr. DeMaio signed the lease as Devon MD’s “VP of Operations.”9 Devon MD 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.10 Devon MD’s relationship with Glastonbury Surgery Center. In May 2019, Devon MD contracted with Glastonbury Surgery Center in Glastonbury, Connecticut for the Partnership to inventory Devon MD medical equipment, including supplying Devon MD’s deep vein thrombosis sleeves.11 Devon MD’s Chief Executive Officer John A.

Bennett, MD signed the contract for Devon MD; Glastonbury Surgery’s Medical Director, Christopher Lena, MD, signed for Glastonbury Surgery.12 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].”13 They each could end the contract with ninety days notice.14 Devon MD 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.15 Devon MD 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.”16 Devon MD also claims it “made expenditures to develop High-End Cold Therapy

Units for the Defendants, [Messrs.] DeMaio and Nardella to market for [the Partnership].”17 Glastonbury terminates contract. On August 8, 2019, Dr. Lena terminated Glastonbury Surgery Center’s supply contract with Devon MD by letter to CEO Bennett on letterhead of “Orthopedic Associates of Hartford, P.C.”18 Devon MD 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 MD] and the [Partnership].”19 The earliest “any Glastonbury [Surgery Center] cancellation could have been effective [would have been] November 8, 2019” because of the ninety-day termination provision in the contract.20 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.”21 Devon MD “would have had a total of an additional $325,000 in insurance company benefit revenues for August, September, October and early November 2019” if Messrs. DeMaio and Nardella did not induce Glastonbury Surgery to terminate the contract without the required ninety-day notice. Devon MD claims “a total of $525,000 in lost revenue to the [Partnership] and to [Devon MD] from July 1 through November 8, 2019.”22 Messrs. DeMaio and Nardella diverted payments and sales to Alledran Med, their Connecticut limited liability company.23 Devon MD sues for diverted Connecticut business. In October 2019, Devon MD sued Messrs. DeMaio and Nardella and Alledran Medical,

LLC for diversion of partnership business opportunity, interference with partnership prospective advantage, and fraud.24 The named Defendants moved to dismiss arguing: (1) we lacked personal jurisdiction over them; (2) Devon MD failed to state a claim for diversion, interference, or fraud; and, (3) insufficient service of process upon Mr. Nardella.25 Defendants submitted a detailed fact affidavit detailing their negotiations and business dealings with Devon MD and its CEO, John Bennett, MD.26 We found Devon MD showed a prima facie basis for us to exercise personal jurisdiction over Messrs. DeMaio and Nardella:

Messrs. DeMaio and Nardella physically entered the forum state on more than one occasion and are alleged to have formed a Partnership while personally visiting Pennsylvania. As in Remick, Messrs. DeMaio and Nardella negotiated the business relationship in Pennsylvania. During their second visit to Pennsylvania, CEO Bennett insisted Messrs. DeMaio and Nardella assist Devon land a stock and bill contract with Glastonbury Surgery. Devon now alleges Messrs. DeMaio and Nardella diverted payments from Glastonbury Surgery, interfered with Devon’s contract and, in doing so, committed fraud. Like Remick, the core facts giving rise to these claims—the formation of the Partnership and the introduction to Glastonbury Surgery Center—occurred in Pennsylvania.

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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-2020.