United States District Court, S.D. Mississippi, Eastern Division
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS [67, 68, 89] TO STRIKE THE AFFIDAVITS OF DANIEL WAIDE; GRANTING DEFENDANTS' MOTION  FOR SUMMARY JUDGMENT PURSUANT TO THE STATUTE OF FRAUDS; DENYING PLAINTIFFS' MOTION  FOR PARTIAL SUMMARY JUDGMENT; DENYING AS MOOT DEFENDANTS' MOTION  FOR PARTIAL SUMMARY JUDGMENT AS TO CONTRACT CLAIMS; DENYING AS MOOT DEFENDANTS' MOTION  FOR PARTIAL SUMMARY JUDGMENT DUE TO LACK OF CONTRACTUAL AUTHORITY TO BIND WESLEY; GRANTING DEFENDANTS' MOTION  FOR PARTIAL SUMMARY JUDGMENT AS TO FRAUD AND MISREPRESENTATION; GRANTING DEFENDANTS' MOTION  FOR PARTIAL SUMMARY JUDGMENT AS TO PLAINTIFFS' CLAIM FOR PUNITIVE DAMAGES AND ATTORNEYS' FEES; DENYING PLAINTIFFS' MOTIONS [47, 49] TO STRIKE DEFENDANTS' EXPERT DESIGNATIONS OF MARY BLUMENTRITT; AND DENYING PLAINTIFFS' MOTION  FOR FEES AND SANCTIONS
HALIL SULEYMAN OZERDEN, District Judge.
BEFORE THE COURT are six Motions for Partial Summary Judgment: one  filed by Plaintiffs, Raghib "Gabe" Zeitoun and EB Perfusion Labz, LLC ("EB"), and five [55, 57, 59, 61, 63] filed by Defendants, Douglas Seal and DSA Perfusion, LLC ("DSA"). Also before the Court are five Motions to Strike: two [47, 49] filed by Plaintiffs and three [67, 68, 89] filed by Defendants, as well as a Motion  for Fees and Sanctions, filed by Plaintiffs. These twelve Motions have been fully briefed. After due consideration of the record, the submissions on file, and relevant legal authorities, the Court finds that Defendants' Motions [67, 68, 89] to Strike the Affidavits of Daniel Waide should be granted; Defendants' Motion  for Summary Judgment Pursuant to the Statute of Frauds should be granted; Plaintiffs' Motion  for Partial Summary Judgment should be denied; Defendants' Motion  for Partial Summary Judgment as to Contract Claims should be denied as moot; Defendants' Motion  for Partial Summary Judgment Due to Lack of Contractual Authority to Bind Wesley should be denied as moot; Defendants' Motion  for Partial Summary Judgment as to Fraud and Misrepresentation should be granted; Defendants' Motion  for Partial Summary Judgment as to Plaintiffs' Claim for Punitive Damages and Attorneys' Fees should be granted; Plaintiffs' Motions [47, 49] to Strike the Expert Designation and Supplemental Expert Designation of Mary Blumentritt should be denied without prejudice to Plaintiffs' right to urge specific objections to Ms. Blumentritt's testimony at trial; and Plaintiffs' Motion  for Fees and Sanctions should be denied.
Plaintiffs' claims for an accounting and constructive trust will proceed to trial because Defendants did not request summary judgment on these claims. Plaintiffs' remaining claims for breach of contract, fraud and misrepresentation, breach of the duty of good faith and fair dealing, reformation, and tortious interference with contract will be dismissed.
Seal is the owner of DSA, a company that provides perfusion services on a contract basis at ten hospitals located in Louisiana and Mississippi. Dep. of Doug Seal [55-3] 10-11. Perfusionists operate heart and lung bypass machines during surgical operations. DSA entered into a Perfusion Services Agreement ("PSA") with Wesley Medical Center in Hattiesburg, Mississippi ("Wesley"). Agmt. [1-2] 14-25. The PSA was for a three-year term beginning on June 7, 2010, and continuing until June 6, 2013. Id. at 15.
At the end of May 2011, DSA hired Zeitoun as a perfusionist to work with the DSA group at Wesley. DSA paid Zeitoun a starting salary of $80, 000.00 per year. Dep. of Gabe Zeitoun [61-1] 10-12, 19-20; Dep. of Doug Seal [55-3] 25. Both Zeitoun and Seal agree that in September 2011, the two entered into discussions regarding Zeitoun "buying out" DSA's account with Wesley. Dep. of Gabe Zeitoun [61-1] 17, 23-24; Dep. of Doug Seal [55-3] 26-31, 57. A surgeon with Wesley, Joe Rubelowsky, encouraged Zeitoun and another perfusionist, Igor Kutsar, to take over as the group providing perfusion services to Wesley. Id. at 25-28. Zeitoun and Rubelowsky met with Seal about the idea, and Seal was receptive:
Plaintiffs' Counsel: Why would you subcontract or sell a contract? Why would you want to do that?
Doug Seal: I've done that for another group. I don't need everything. I don't have to have everything. I saw an opportunity for these guys to start their own thing....
Doug Seal: Him - Gabe and Dr. Joe and Igor and Benjamin. They did things their own way.... They had talked about it, and basically we met with Dr. Joe, Gabe and I, at the cafeteria and talked about them taking it over.
Plaintiffs' Counsel: At any point in time did you tell Gabe how much it would cost to take over or buy out the contract?
Doug Seal: We threw out some numbers to try to make it happen. Initially, Gabe actually said 100, 000, and I thought about it, and I said, Gabe, it's not worth that much. So then we looked at 70, 000, and then we settled on 50, and we said, "Well, the other 20, we'll look at that down the road. That's something we can look at down the road, but let's go with 50."
Plaintiffs' Counsel: Would 50 be a good number? Why were you considering 50?
Doug Seal: Kind of based on the Touro scheme.... There's no real formula for selling or, you know, changing profusion groups.
Dep. of Doug Seal [55-3] 26-29.
Seal testified that DSA provided perfusion services for Touro Hospital in New Orleans, Louisiana, from 1999 until sometime after Hurricane Katrina. Id. at 10, 15-18. DSA approached another perfusion group, Major Perfusion, about buying the Touro contract from DSA, and Major Perfusion did. Id. at 15-18.
Plaintiffs' Counsel: When he bought out the contract, was that something that had to be approved by the hospital there?
Doug Seal: Yes. It was the OR director that approved it.
Plaintiffs' Counsel: How long did it take y'all to finalize the buyout between you and Major Perfusion?
Doug Seal: Maybe two months.
Plaintiffs' Counsel: How much was that buyout for?
Doug Seal: I believe it was 25, 000.
Plaintiffs' Counsel: How long was the contract?
Doug Seal: He took it over, and I think he worked it - I think it was maybe eight or nine months under his name and then he was able to continue to get the extension. It's not ever guaranteed that you're going to get an extension. You have to get in there and work extremely hard to do that.
Dep. of Doug Seal [55-3] 17-18.
On April 3, 2012, a Mississippi limited liability company, EB, was created as the entity through which Zeitoun, as an employee of EB, would perform perfusion services at Wesley. Dep. of Gabe Zeitoun [61-1] 15, 29-30, 33. Zeitoun's father, Mahmoud Zeitoun, is the sole member of EB, and EB is also a Plaintiff in this case. On October 14, 2011, Zeitoun's father paid Seal $50, 000.00. Wire Transfer [61-5].
Seal requested and accepted the $50, 000.00 payment before approaching Wesley. Dep. of Doug Seal [55-3] 17-18, 72, 86. After Seal accepted the payment, he met with Travis Sisson, an executive at Wesley, and Sisson would not allow a "buyout" or "direct sale" of the PSA from DSA to EB. Id. at 51.
Plaintiffs' Counsel: Did you ever tell Gabe that you needed to get the $50, 000 in order to start moving towards the buyout of the Wesley contract?
Doug Seal: We discussed some figures, but my idea all along was to approach Travis, like I did at Touro, and just suggest basically me being a lobbyist to go in and substitute Gabe and get him started in January . Originally, he did not agree with the two-week - or three-week deal. So then we went to an understanding between Gabe and I that it would start in January - basically the substitution- of me going in and basically mentor him, coach him, and just try to give him the opportunity to eventually take over the contract.
Plaintiffs' Counsel: You said substitution. Is that basically a subcontract deal that -
Doug Seal: Well, no. Just a substitute of him taking over the contract in January. But that didn't work out. I met with Travis; he did not go for that idea. So we then - Gabe approached me with the subcontract idea, and that's when we decided to meet, per his request, [attorney] Mary Blumentritt and just explore that option, subcontract.
Plaintiffs' Counsel: What was the purpose of that $50, 000?
Doug Seal: It was to try to get Gabe into the account. My job was to mentor and coach him, help him set up his company. And then his job was to perform his duties, maintain a high professional status. I said, Gabe, you've got to make these people love you and feel that they can't do anything without you so at the end of my current term you can take over the contract. They'll want you to get it - the hospital, the administration, the surgeons, the OR people.
Plaintiffs' Counsel: Did you ever email any of this to Gabe or was this verbal?
Doug Seal: This was verbal.
Plaintiffs' Counsel: If you didn't know if you could give Gabe the contract, why did you accept the $50, 000?
Doug Seal: I told him I thought it would be the same model that it was at Touro, that I would go in there, meet with them and they would have no problem with it. Travis did have a problem with it, so then it was going to have to be explored as something different - you know, the subcontract scenario. Then at the end of that term, a year and a half, you know, if everything went well, then he would assume the contract.
Plaintiffs' Counsel: How often did you speak with Travis about substituting EB for DSA?
Doug Seal: I only met with him that first time, and I think I briefly saw him one time after that, but I knew he did not agree with the concept.
Dep. of Doug Seal [55-3] 30-32.
Plaintiffs' Counsel: Now, why was there never a contract for the $50, 000? Why is that not written down anywhere?
Doug Seal: Well, it was a verbal agreement, and that's the way I do everything. I honor my verbal agreements, and I expect everyone else to honor them as well.... Again, I said, Gabe, this is what I'll do for you. If we can't do it, we'll find another way to skin the cat but I will honor my commitment, but you have to honor yours.
Id. at 57.
Plaintiffs' Counsel: But when Mike, his father, sent you the $50, 000, that was to buy out the contract, wasn't it?
Defense Counsel: Object. It's been asked and answered. Doug Seal: That was to substitute EB in place of DSA starting January 2012.
Plaintiffs' Counsel: Didn't you at one point email Gabe and tell him y'all could go through the same kind of contract that you had used with Touro?
Doug Seal: Well, that was something I was going to look at, and I went in there and talked with Travis and then I realized he did not want to go that route. I don't know if he had reservations about Gabe or not at that point. I don't know. But I felt something there. So, I said, Well, if there's an opportunity here for Gabe, we're going to have to revisit this and think about it. I think it's something I can still help him with, and we will look at something else.
Plaintiffs' Counsel: So when you originally requested the money, the $50, 000, you did so not knowing that Travis wasn't going to allow it?
Doug Seal: Well, with the knowledge from previous experience that there weren't any issues, I was basing it on that at Touro Hospital.
Id. at 71-72.
Plaintiffs' Counsel: When you originally accepted the $50, 000, it was for a buyout of the contract, correct?
Defense Counsel: Object to the form of the question. It's been asked and answered more than once.
Doug Seal: Well, originally it was going to be the scenario I had at Touro Hospital.
Plaintiffs' Counsel: Which was for a buyout, correct?
Defense Counsel: Same objection. It's been asked and answered. ...