Inhalation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc.

638 F. App'x 489
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 10, 2016
DocketNos. 14-3946, 14-3947
StatusPublished
Cited by6 cases

This text of 638 F. App'x 489 (Inhalation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Inhalation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc., 638 F. App'x 489 (6th Cir. 2016).

Opinion

KAREN NELSON MOORE, Circuit Judge.

This consolidated appeal arises out of a contract dispute between two medical device manufacturers: Medex Cardio-Pul-monary, Inc, (“Medex CP”) and Inhalation Plastics, Inc. (“IPI”). In 2002, Medex CP and IPI entered into two agreements through which Medex CP purchased and leased IPI’s assets. Both agreements contained anti-assignment provisions. In 2005, Medex CP’s upstream parent merged with a subsidiary of Smiths Medical Limited Holdco (“SMLH”), another medical supply manufacturer. SMLH also owned Smiths Medical ASD, Inc. (“Smiths Medical ASD”), a competitor of IPI. IPI alleges that, in the wake of the merger, Medex CP impermissibly “assigned” the assets it acquired and leased from IPI to Smiths Medical ASD. Medex CP counters that there was no “assignment” at all—just a merger, which by law does not effect an assignment.

IPI sued Medex CP and Smiths Medical ASD (together, “Medex/Smiths”). Me-dex/Smiths filed counterclaims against IPI [491]*491and two IPI executives, Walter and David Levine (together, “IPI/Levines”). The district court granted partial summary judgment to Medex/Smiths on the counts contained in IPI’s complaint, and partial summary judgment to IPI/Levines on Me-dex/Smiths’s counterclaims. Over a year later, the district court partially granted Medex/Smiths’s motion to certify the resolved claims for immediate appellate review under Federal Rule of Civil Procedure 54(b). IPI/Levines argue that the certification order was erroneous.1 Me-dex/Smiths disagree and urge this court to affirm the district court’s entry of summary judgment on the certified claims. For the reasons set forth below, we AFFIRM the district court’s entry of summary judgment on the certified claims.

I. FACTS AND PROCEDURE

The history of this case is long, complicated, and recounted in detail in the district court’s March 13, 2013 and August 18, 2014 opinions. See R. 251 (3/13/13 Op. and Order at 2-5) (Page ID # 8648-51); R. 313 (8/18/14 Op. and Order at 2-5) (Page ID #9842-45). We provide an abbreviated account below.

A. Facts

1. Medex CP and IPI enter into the APA and Production Lease.

IPI and Medex CP both manufacture and distribute medical products. R. 251 (3/13/13 Op. and Order at 2) (Page ID # 8648). On May 10,2002, IPI and Medex CP entered into two agreements through which Medex CP acquired and leased IPI’s assets: the Asset Purchase Agreement (“APA”) and the Machinery and Equipment Production Lease (“Production Lease”). R. 187-1 (Asset Purchase Agreement (“APA”)) (Page ID #2498); R. 187-2 (Machinery and Equipment Production Lease (“Production Lease”)) (Page ID #2523).

Through the APA Medex CP acquired “all of those assets, rights and properties, which are used in or are related to [IPI’s] Business or are necessary for the operation of the Business.” R. 187-1 (APA § 1.1) (Page ID # 2499). Pursuant to the Production Lease, Medex CP leased “machinery, equipment and other assets” at IPI’s Chicago manufacturing facility in order to produce IPI’s medical products. R. 187-2 (Production Lease ¶ 1) (Page ID # 2523); R. 251 (3/13/13 Op. and Order at 2) (Page ID # 8648).

Both the APA and the Production Lease contained anti-assignment provisions. The APA contained one such provision that covered both Medex CP and IPI:

8.5 No Assignment Neither this Agreement nor any rights or obligations under it are assignable without the prior written consent of the other party.

R. 187-1 (APA § 8.5) (Page ID #2520). The Production Lease contained two anti-assignment provisions: one applied to IPI (“Lessor”), the other to Medex CP (“Lessee”). IPI’s provision stated, in relevant part:

20. ASSIGNMENT BY LESSOR. Lessor shall have no right to assign, pledge, transfer, mortgage or otherwise convey any of its interests hereunder or in any Equipment, in whole or in part, without notice to, and consent of, Lessee.

[492]*492R. 187-2 (Production Lease ¶ 20) (Page ID # 2529). Medex CP’s provision was much narrower. It provided, in relevant part:

21. ASSIGNMENT OR SUBLEASE BY LESSEE. Without Lessor’s prior written consent, Lessee shall not assign this Agreement or any schedule or assign its rights in or sublet the [Equipment or any interest therein; provided, however, that Lessee may sublease or assign all or any part of the Equipment to an affiliate or a wholly-owned subsidiary of Lessee if [certain conditions are met].

Id. ¶ 21 (Page ID #2529).

IPI’s President, Walter Levine, and its Vice President of Sales and Marketing and Corporate Secretary, David Levine, signed a Guaranty pursuant to which they “agree[d] to indemnify and hold harmless [Medex CP], its successors, subsidiaries, affiliates and assigns ... from all injury, expense or loss arising directly or indirectly from ... any representation or warranty or the breach of any ... such covenant” contained in the APA or Production Lease. R. 187-3 (Guaranty) (Page ID # 2532); R. 251 (3/13/13 Op. and Order at 2) (Page ID # 8648).

2. Medex CP’s upstream parent, MedVest, merges with an SMLH subsidiary.

At the time it entered into the APA and Production Lease, Medex CP was owned by Medex, Inc., a subsidiary of MedVest Holdings Corporation (“MedVest”). R. 251 (3/13/13 Op. and Order at 3) (Page ID # 8649). In March 2005, MedVest merged with Forest Acquisition Corp. (“Forest”), a subsidiary of SMLH; MedVest was the “surviving corporation” under this merger. Id.; R. 311-3 (Agreement and Plan of Merger § 2.01) (Page ID # 9796). SMLH also owned another medical device manufacturer, Smiths Medical ASD—a competitor of IPI. R. 185 (Third Am. Compl. at 4) (Page ID # 2445); R. 208 (Det’s Mot. for Partial Summ. J. at 9) (Page ID # 3613).

In 2005, Medex CP filed a certificate with the Ohio Secretary of State to register “Smiths Medical” as its “Fictitious Name.” R. 251 (3/13/13 Op. and Order at 31) (Page ID # 8677); R. 226-17 (8/18/05 Name Registration Certificate at 2) (Page ID # 8197). Thereafter, Medex CP started doing business in Ohio under the name “Smiths Medical.” R. 251 (3/13/13 Op. and Order at 31) (Page ID # 8677).

3. IPI accuses Medex CP of breaching the anti-assignment provisions.

The merger triggered the parties’ instant dispute. IPI alleges that in the wake of the merger, “Medex CP transferred or assigned the IPI business, along with the IPI assets and machinery and equipment, 'to Smiths Medical [ASD]” without obtaining IPI’s prior consent. R. 217 (Mot. for Summ. J. of IPI and Walter Levine at 5) (Page ID # 5747). By IPI’s account, “Medex permitted Smiths Medical to take over all of its business operations and allowed it to assume and to succeed to all of its rights, duties, assets and liabilities”—including those rights, duties, assets, and liabilities that Medex CP had purchased or leased from IPI. R. 185 (Third Am. Compl. at 4) (Page ID # 2445); see R. 217 (Mot. for Summ. J. of IPI and Walter Levine at 5) (Page ID #5747) (“Medex CP transferred or assigned the IPI business, along with the IPI assets and machinery and equipment, to Smiths Medical [ASD].”).

Walter Levine objected to this alleged assignment.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
638 F. App'x 489, Counsel Stack Legal Research, https://law.counselstack.com/opinion/inhalation-plastics-inc-v-medex-cardio-pulmonary-inc-ca6-2016.