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Patton Medical of Gulf Coast, Inc. v. Relle

Court of Appeals of Mississippi

April 3, 2018

PATTON MEDICAL OF GULF COAST, INC. APPELLANT
v.
MICHAEL RELLE, INDIVIDUALLY, AND ORTHOTIC & PROSTHETIC SPECIALISTS, INC. APPELLEES

          DATE OF JUDGMENT: 01/19/2017

          HARRISON COUNTY CIRCUIT COURT, FIRST JUDICIAL DISTRICT HON. LAWRENCE PAUL BOURGEOIS JR.

          ATTORNEYS FOR APPELLANT: JAMES KENNETH WETZEL GARNER JAMES WETZEL

          ATTORNEY FOR APPELLEES: BLEWETT W. THOMAS

          BEFORE GRIFFIS, P.J., CARLTON AND TINDELL, JJ.

          CARLTON, J.

         ¶1. Patton Medical of Gulf Coast, Inc. ("Patton Medical") claims that it entered into a joint business venture with Michael K. Relle ("Relle Sr.") and Orthotic & Prosthetic Specialists, Inc. ("O&P") to furnish orthotics and prosthetics in the Mississippi Gulf Coast area. The business arrangement failed. Believing it was still owed a portion of the joint venture's profits, Patton Medical sued Relle Sr. and O&P in Harrison County Court, seeking recovery under the parties' business venture agreement and under Mississippi's open-account statute, Mississippi Code Annotated section 11-53-81 (Rev. 2012).

         ¶2. On Relle Sr.'s motion, the county court granted summary judgment in his favor, finding Patton Medical could not establish a triable issue of fact on its claim that Relle Sr. was individually liable to it for unpaid profits. Having prevailed on all counts against him, including the open-account claim, Relle Sr. then moved for attorney fees under section 11-53-81. The county court granted Relle Sr.'s motion and awarded him $7, 000 in attorney fees. The case proceeded to trial on Patton Medical's joint venture claims against O&P, and the jury returned a verdict for Patton Medical, assessing $101, 316.69 in damages. The county court denied O&P's motion for a judgment notwithstanding the verdict ("JNOV motion"). ¶3. The parties appealed the county court judgment and respective decisions against them to the Harrison County Circuit Court. The circuit court affirmed the county court's summary judgment in Relle Sr.'s favor, and its $7, 000 attorney fees award under section 11-53-81. It reversed the county court's denial of O&P's JNOV motion and rendered judgment in O&P's favor.

         ¶4. Now on appeal to this Court, Patton Medical asserts that the circuit court (1) erred in granting O&P's JNOV motion, which reversed the county court's denial of that motion and reversed the jury verdict in Patton Medical's favor; (2) erred in affirming the county court's decision granting Relle Sr.'s motion for summary judgment; and (3) erred in affirming the county court's decision granting Relle Sr.'s motion for attorney fees brought pursuant to Mississippi's open-account statute.

         ¶5. Finding error in the circuit court's reversal of the county court's judgment on O&P's JNOV motion, we reverse and reinstate the county court jury verdict and $101, 316.69 damages award in Patton Medical's favor because there was sufficient evidence to support its verdict and award. Finding no error in the circuit court's affirmance of the county court's summary judgment order in Relle Sr.'s favor and its related award of $7, 000 in attorney fees under section 11-53-81, we affirm that aspect of the circuit court's judgment.

         FACTS

         ¶6. Patton Medical is a medical supply business that sells orthotics and prosthetics and is located in Ocean Springs, Mississippi. Its principals are Jay Rubenstein and Keith Wade. In April 2010, Patton Medical's certified prosthetist gave notice. Neither Rubenstein nor Wade were certified orthotists or prosthetists at the time. Patton Medical needed a certified orthotist/prothetist to continue serving its patients, so Rubenstein and Wade weighed various options to fill that void. They ultimately decided to contact Relle Sr., then president of O&P, about Patton Medical's need to associate a licensed orthotist and prosthetist to treat its clients.

         ¶7. Relle Sr. and his son, Michael S. Relle ("Relle Jr."), [1] worked as O&P's certified practitioners, both were licensed to provide orthotic and prosthetic services. O&P's primary facility is in Covington, Louisiana. ¶8. Rubenstein, Wade, Relle Sr., and Relle Jr. had their first meeting in Slidell, Louisiana to discuss O&P and Patton Medical doing business on the Gulf Coast. In late April 2010 these individuals met a second time. Relle Sr. and Relle Jr. traveled to Ocean Springs to view Patton Medical's facilities and examine one of Patton Medical's clients.

         ¶9. According to Patton Medical, Relle Sr. participated in these meetings both individually and on behalf of his company, O&P. Relle Sr., on the other hand, contends he participated solely on O&P's behalf as its president.

         ¶10. According to the deposition testimony of Relle Sr. and the testimony of Patton Medical's principals, Wade and Rubenstein, at the second meeting Patton Medical, O&P, and, according to Patton Medical, Relle Sr., consummated an oral agreement to do business together on a temporary basis to see whether O&P could meet Patton Medical's needs. The parties agreed that there would be a 50/50 split of the profits from the business.

         ¶11. The evidence in the record reflects that the parties also agreed to the following division of responsibilities:

Patton Medical's Responsibilities

O&P's Responsibilities

supply patients

supply a prosthetist once a week to see

patients at the Patton Medical Ocean

Springs facility

provide the facility for seeing patients

provide patient billing, technical support,

purchasing, and accounting services

perform marketing and sales

cover warranty items

secure medical information for patient

charts

         ¶12. According to O&P, Patton Medical was responsible for fabricating (manufacturing) the orthotics and prosthetics. Patton Medical did start off sending someone to O&P's facility to do the fabrication for a few weeks. After about a month, however, O&P told Patton Medical it would take over the fabrication at O&P. Patton Medical agreed, and O&P did the fabricating from that point forward.

         ¶13. The business venture continued for four or five months. During this time O&P had business cards made for Rubenstein and Wade, identifying them as "practice managers" under O&P's name. In his deposition, which was read at trial, Relle Sr. admitted the business cards were prepared in furtherance of the oral agreement to do a joint venture with Patton Medical. O&P also hired another orthotist/prosthetist to work primarily with Patton Medical. O&P received all payments from billings, periodically provided an accounting to Patton Medical, and paid Patton Medical over $196, 000 in 2010. Though, as noted, the parties agreed that there would be a 50/50 split of the profits; they ultimately disagreed on whether some costs, primarily fabrication costs, should be deducted as expenses before dividing the profits. According to Patton Medical, the profits were to be split after subtracting the cost of component goods. The record shows that the cost of component goods did not include fabrication costs.

         ¶14. According to O&P, Patton Medical was responsible for fabrication, and, under that scenario, it would receive 50% of the profits. O&P asserts that when Patton Medical was unable to fulfill this responsibility, O&P took over fabrication. Taking over fabrication caused O&P to incur these costs. The record shows that at this point, O&P then began subtracting the fabrication costs from profits before the 50/50 split.

         ¶15. Both Patton Medical's principals, Rubenstein and Wade, testified at trial that there was never an agreement that either company would charge fabrication costs against the income derived in the business. The jury also heard testimony from Relle Sr. (via his deposition read at trial) and Relle Jr. that they did not recall advising Patton Medical that O&P would deduct fabrication costs in the expense calculation. Relle Jr. also testified, however, that when Patton Medical agreed to have O&P do the fabrication, the parties never discussed that O&P would assume the fabrication costs.

         ¶16. The record reflects that before the end of 2010, O&P terminated the parties' oral agreement to supply orthotics and prosthetics. O&P described several reasons for termination, including, among other reasons, patient overload that O&P could not service, and Patton Medical's inability to do the fabrication, which further burdened O&P's limited resources. The last payment O&P made to Patton Medical was in November 2010.

         ¶17. When the periodic accountings and payments stopped, Patton Medical repeatedly tried to get in contact with O&P regarding the status of payments, account receivables, and expenses. Patton Medical received no satisfactory response from O&P, so it hired an attorney who then sent a demand letter to O&P under Mississippi's open-account statute. In that demand letter Patton Medical sought "to collect an open-account with your firm . . . for funds owed to Patton Medical . . . for work performed for your company." There was no mention of Relle Sr.'s potential individual liability in the demand letter.

         ¶18. Patton Medical was unsuccessful in obtaining a satisfactory response to its demand letter, so it sued O&P and Relle Sr. Patton Medical sought to recover its remaining share of profits under the parties' business venture and also sought to recover for an open-account under section 11-53-81.

         ¶19. In its answer, O&P denied it was liable to Patton Medical on an unpaid account. Likewise, in his answer, Relle Sr. denied that he was personally or individually liable to Patton Medical on an unpaid open-account. As for the joint venture claim, O&P acknowledged that Patton Medical's complaint concerned a joint venture between O&P and Patton Medical but denied that Patton Medical was due any additional sums earned through the joint business venture and affirmatively stated that O&P had previously paid Patton Medical one-half of the joint venture's net profits. Relle Sr. similarly acknowledged the existence of a joint venture between O&P and Patton Medical in his answer but made no acknowledgment or admission as to the existence of a joint venture between himself, personally, and Patton Medical. Additionally, the evidence in the record showed that during his deposition, Relle Sr. admitted to the existence of a joint venture between O&P and Patton Medical.

         Dismissal of Relle Sr.

         ¶20. Before filing his answer, Relle Sr. moved to dismiss Patton Medical's complaint against him under Mississippi Rule of Civil Procedure 12(b)(6) asserting that it failed to state a claim against him. This motion was eventually converted to a summary judgment motion when both parties submitted matters outside the pleadings during briefing.

         ¶21. After a hearing and considering all briefing before it, the county court granted summary judgment in Relle Sr.'s favor on January 14, 2013. This order was not certified as a final judgment under Mississippi Rule of Civil Procedure 54(b). Nevertheless, Patton Medical appealed this ruling to the circuit court on February 11, 2013.

         Trial on Patton Medical's claims against O&P

         ¶22. Beginning January 22, 2013, the case proceeded to a two-day trial on Patton Medical's claims against O&P for its remaining share of profits under the parties' joint venture. At the close of Patton Medical's case, O&P moved for a directed verdict, arguing that Patton Medical had not established the existence of a joint venture under Mississippi law. O&P also argued that it was impossible for Patton Medical to prove that it had any degree of control over patient treatment because, for it to do so, would violate Mississippi law governing the practice of ...


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