Med-Intelliflux, LLC v. RainTree Care Management LLC
MEMORANDUM OPINION AND ORDER that the 38 MOTION for Partial Summary Judgment is DENIED as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 3/16/2016. (AHI)
2016 Mar-16 AM 10:15
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
MANAGEMENT, L.L.C., and
RT ONCOLOGY SERVICES
Civil Action No. 5:14-cv-0111-CLS
MEMORANDUM OPINION AND ORDER
This action is before the court on a motion for partial summary judgment filed
by plaintiff, wherein plaintiff requests that the court grant summary judgment in its
favor on: its claim for breach of contract; defendants’ counterclaim for breach of
contract; and defendants’ counterclaim for unjust enrichment.1 Upon consideration
of the pleadings, briefs, and evidentiary submissions, the court concludes that the
motion should be denied.
The case originally was filed in the Circuit Court of Madison County, Alabama
on December 17, 2013.2 The case was removed to this court on January 17, 2014, on
Doc. no. 39 (Brief in Support of Motion for Partial Summary Judgment), at ECF 3.
See doc. no. 1 (Notice of Removal-Exhibit A), at ECF 10. “ECF is the acronym for
Electronic Case Filing, a filing system that allows parties to file and serve documents electronically.”
Atterbury v. Foulk, No. C-07-6256 MHP, 2009 WL 4723547, *6 n.6 (N.D. Cal. Dec. 8, 2009).
the basis of the parties’ complete diversity of citizenship and satisfaction of the
requisite amount in controversy.3 See 28 U.S.C. §§ 1332(a)(1), (c)(1); 28 U.S.C. §
1441(b). Plaintiff Med-Intelliflux, L.L.C., is an Alabama limited liability company
with its principal place of business in Madison County, Alabama.4 Defendant
RainTree Care Management, L.L.C., is a Delaware limited liability company with its
principal place of business in San Diego, California.5 Defendant RT Oncology
Services Corporation is a Delaware corporation with its principal place of business
in San Diego, California.6 The defendants will collectively be referred to in this
opinion as “RainTree.”
Med-Intelliflux was formed in Madison County, Alabama on September 30,
2011.7 The company’s stated purpose was to analyze “medical data related to the
Bluebook Rule 7.1.4 allows citation to “page numbers generated by the ECF header.” Wilson v.
Fullwood, 772 F. Supp. 2d 246, 257 n.5 (D.D.C. 2011) (citing The Bluebook: A Uniform System
of Citation R. B. 7.1.4, at 21 (Columbia Law Review Ass’n et al. Eds., 19th ed. 2010)). Even so,
the Bluebook recommends “against citation to ECF pagination in lieu of original pagination.”
Wilson, 772 F. Supp. 2d at 257 n.5. Thus, unless stated otherwise, this court will cite to the original
pagination in the parties’ pleadings. When the court cites to pagination generated by the ECF
header, it will, as here, precede the page number with the letters “ECF.”
See doc. no. 1 (Notice of Removal), at ECF 1.
See id. at ECF 12, ¶ 1.
See id. at ECF 12, ¶2.
See doc. no.16 (Amended Complaint), at ECF 1. RT Oncology Services Corporation was
first named as a defendant in the amended complaint.
Doc. no. 40-5 (Walton Deposition), at 34; see also id. at 250 (characterizing Med-Intelliflux
as a “start-up” company at the time of the events made the basis of this action); see also Business
Entity Details: Med-Intelliflux, ALABAMA SECRETARY OF STATE (last accessed Feb. 8, 2016),
application and/or use of certain prescription drugs,” and track “the usage of those
drugs to the treatment of certain specific cancers,” in order to subsequently sell that
data to “hedge funds, mutual funds, broker dealers and other investment entities.”8
An individual named Gary Walton is the President and Chief Executive Officer
of Med-Intelliflux.9 Walton possesses both a bachelor’s and a doctorate degree in
pharmacy, and a master’s degree in business administration.10 He trained as a
“clinical pharmacy specialist at [the] Huntsville Hospital residency program and . .
. trained as an oncology pharmacy specialist at MD Anderson in Texas.”11 Walton
became the Director of Pharmacy Operations at Clearview Cancer Institute (“CCI”)
in Huntsville, Alabama in 1997, and became CCI’s first Chief Executive Officer in
Notwithstanding his extensive background in pharmacy and business
administration, Walton has no experience in professional sales, the financial services
Doc. no. 16 (Amended Complaint), ¶¶ 6-7. Walton testified that his company sought to
“follow diseases that we knew were going to have some new launches on the market and might
impact market share, and so we started with seven cancers that were pretty hot in the research arena.”
Doc. no. 40-5 (Walton Deposition), at 196. Those included malignant neoplasm of prostate;
malignant neoplasm of colon; malignant neoplasm of female breast; malignant neoplasm of trachea
bronchus and long; malignant melanoma of skin; secondary malignant neoplasm of bone and bone
marrow; and multiple Myeloma. See doc. no. 40-8 (Statement of Work), at 3.
Doc. no. 40-5 (Walton Deposition), at 192.
Id. at 17.
Id. at 18 (alteration and ellipsis supplied).
Id. at 20, 24. Walton still is the CEO of Clearview Cancer Institute. See Gary Walton,
LINKEDIN.COM (last accessed Mar. 15, 2016), https://www.linkedin.com/in/gary-walton-30bb8611.
industry, or computer programming.13
The concept of Med-Intelliflux materialized in December of 2010, when CCI
transitioned to the use of electronic medical records (“EMRs”),14 and began to
explore ways in which to monetize that electronic data.15 As Walton recalled:
Once we integrated EMR into [CCI’s] practice, which was December
2010, I’ve got several colleagues and, you know, counterparts around
the country who had practices and they were selling data to
pharmaceutical companies; and they already had EMR in place. And so
I went to — I called in a couple of pharmaceutical partners that we use
their products and so forth, and I said we’ve got an EMR. We’d like to
monetize our data. This was strictly for CCI. We’d like to monetize our
data. And, you know, they came through — yeah, you know, your data
set looks decent but it’s a single-center data. And if we want singlecenter data we can go to some larger practices around the country and
get that. Really what you need to do is you need to combine your data
and — with other practices and it makes it a more robust data set that
probably has more value.
I did that. I called a few colleagues around the country and they agreed
to do it, but they wanted — they didn’t want it to be a CCI project. They
wanted it to be another company and that company purchased data from
the practices including CCI. And so that was — that was the origination
of the Med-Intelliflux concept.
Doc. no. 40-5 (Walton Deposition), at 31-32 (alteration, emphasis, and ellipsis
Doc. no. 40-5 (Walton Deposition), at 51-52, 149.
“An electronic medical record (EMR) is a digital version of a paper chart that contains all
of a patient’s medical history from one practice.” What is an Electronic Medical Record (EMR)?,
HEALTHIT.ORG (last accessed Mar. 15, 2016), https://www.healthit.gov/providersprofessionals/electronic-medical-records-emr.
Doc. no. 40-5 (Walton Deposition), at 31-32.
Walton, at that time, served upon the advisory board of RainTree, an entity that
had “started out as a company that went to pharmaceutical manufacturing firms to get
GPO contracts for people — practices who were having to start and purchase oral
oncolytics.”16 RainTree later expanded its business into the realm of data sales.17
RainTree previously had undertaken data sales projects for CCI, so Walton
approached John Dempsey at RainTree regarding the prospect of a data purchase
arrangement for his new company, Med-Intelliflux.18 In Walton’s own words,
I approached John about this business that we had just recently got
funding for and what we were going to do. I approached him about
what they were going to do and how, you know, okay, if you’re going
into the pharmaceutical [sector] I don’t want to compete with you and
your data. You own the data so we’ll go into Wall Street in the financial
sector, financial services sector, but it would be more efficient for us to
buy it from one data pipe versus a bunch of pipes all over the country.
And he thought that that would be a good revenue stream for
Doc. no. 40-5 (Walton Deposition), at 179 (alterations supplied).
Med-Intelliflux and RainTree had commenced contract negotiations by late
Doc. no. 40-5 (Walton Deposition), at 165. “GPO” stands for “group purchasing
Id. at 40-41.
Id. at 178. RainTree, like Med-Intelliflux, was a fairly new company, and Gary Walton
was RainTree’s third customer. See doc. no. 40-1 (Burks Deposition), at 22, 27, 56.
2012. Walton realized, based upon discussions with colleagues around the country,
that Med-Intelliflux needed to acquire data from “at least 500 physicians who
regularly utilized or prescribed cancer drugs” in order to obtain and keep investment
entities as clients.19 He testified that, during late February or early March of 2012,
“we [i.e., Med-Intelliflux] were told that our footprint was too small for the number
of physicians that we had.”20 Walton dealt almost exclusively with John Dempsey
(RainTree’s Director of Pharmacy Services)21 and Lisa Burks (Senior Director of
RainTree’s Program Management Office)22 in negotiating the Agreement with
RainTree.23 According to Walton, both Dempsey and Burks said, during “multiple
discussions,” that they could obtain data from 600 medical oncologists, which was
critically important, because “the primary reason for using RainTree was because of
their medical oncology footprint.”24
See doc. no. 40-5 (Walton Deposition), at 31-32.
Id. at 87 (alteration supplied); see also id. at 88 (wherein Walton discusses MedIntelliflux’s need for a bigger “footprint”).
Doc. no. 40-2 (Dempsey Deposition), at 6.
Doc. no. 40-1 (Burks Deposition), at 8; see also id. at 17-18 (wherein Burks testified that
he role, with regard to Med-Intelliflux, was to work on “requirements” after the Agreement was
signed, and to “collect that information from Gary [Walton] as to what he was looking to obtain
from RainTree”) (alterations supplied).
See doc. no. 40-5 (Walton Deposition), at 277-78 (only John Dempsey and Lisa Burks were
involved, on RainTree’s end, in the negotiation of the Statement of Work and Master Services
Id. at 217.
Med-Intelliflux asserts in its amended complaint that Dempsey and/or Burks
represented, in or about March of 2013 — the month preceding the execution of the
parties’ written Agreement — that:
(1) RainTree had more than six hundred (600) medical oncologists in its
network who utilized and/or prescribed cancer drugs and from which
RainTree could obtain data that Med-Intelliflux could use to track the
prescriptions of cancer drugs to the treatment of specific actual cancers;
(2) RainTree had approximately thirty (30) oncology practice members
comprised of oncologists and radiation oncologists from which it
collected data which Med-Intelliflux could use to track the prescriptions
of cancer drugs to the treatment of specific actual cancers; (3) RainTree
could provide the data reports in a longitudinal fashion25 so MedIntelliflux could use it to track or map the use of certain cancer drugs to
the treatment of certain cancers; and (4) RainTree had the ability to
provide data that could be used by Med-Intelliflux to conduct its
Doc. no. 16 (Amended Complaint), ¶ 9 (emphasis and footnote supplied).
The parties’ negotiations finally culminated in the signing of a “Master
Services Agreement” on April 1, 2013.26 The parties subsequently executed a
“Statement of Work” on April 16, 2013, and that document was incorporated by
reference into the Master Services Agreement.27 The Master Services Agreement and
Statement of Work collectively embody the parties’ written “Agreement.” RainTree
primarily authored the documents comprising the Agreement, but Gary Walton
“Longitudinal fashion” means that data could continuously be uploaded. Id. at 220.
Doc. no. 40-7 (Master Services Agreement), at 1.
See doc. no. 40-8 (Statement of Work), at 2, 7.
participated in, and offered feedback during, the editing process.28
Significantly, the finalized Statement of Work did not include a provision
stating that RainTree had a duty to provide data from at least thirty oncology practices
or 500 medical oncologists. Rather, the totality of what was said in the Statement of
Work about “thirty practices” was set forth in an introductory section entitled
“Executive Summary,” which reads as follows:
RT Oncology Services Corporation operates through RainTree
GPO, RainTree Care Management, and RainTree Administrative
Services. RT Oncology Services Corporation has approximately 30
(thirty) oncology practice members, comprised of oncologists, radiation
oncologists and collocated physicians in related specialties. Our
member practices represent some of the leading community oncology
practices in the country and include many community-based oncology
thought leaders. RainTree has several capabilities, which include the
ability to generate data reports that provide data elements from infusible,
injectible, and oral oncology medications both for active treatment and
supportive care in a de-identified patient format. In addition, RainTree
is able to provide these reports in a longitudinal fashion so as to provide
insights around practice patterns which should lead to enhancements in
patient care. These reports can typically be delivered 2-to-4 weeks from
the date product was dispensed. The scope of work listed here in [sic]
will address reports such as these to meet needs of the Company [i.e.,
Doc. no. 40-8 (Statement of Work), at ECF 2 (emphasis and alterations supplied). In
the operative section of the Statement of Work, entitled “Scope of Work,” there is no
Doc. no. 40-1 (Burks Deposition), at 46-48; see also doc. no. 40-5 (Walton Deposition),
mention of a “30-practice-group” or “500-medical-oncologist” requirement.29 There
also is no mention of any such requirements in the Master Services Agreement.30
Gary Walton conceded, during his deposition, that there was no explicit “30
practices” requirement set forth in the Statement of Work:
Where does the contract — where does the Statement of Work
say that they’re going to extract data from 30 practices and give
it to Med-Intelliflux?
Oh, I’m sorry. The title [of the Statement of Work] is the data
extract and in the executive summary it says 30 practices. I didn’t
connect these two words but that’s what I’m basing it on is that
it’s a data extract agreement and it mentions 30 practices, so —
no one told me that they could not get — that we have 30
practices but we’re only going to get them from 18. They just —
and the data extract document it mentions 30 practices so . . .
So you put those two things together?
Doc. no. 40-5 (Walton Deposition), at 219-220 (alteration supplied).
Additionally, the Master Services Agreement contains an integration clause,
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, whether written or oral, between the
parties regarding the subject matter hereof, provided, however, that any
information regarding the subject matter hereof disclosed and required
See doc. no. 40-8 (Statement of Work), at ECF 3-5.
See generally doc. no. 40-7 (Master Services Agreement).
to be maintained as confidential under a confidentiality agreement
heretofore entered into between the parties shall hereafter be treated as
Confidential Information disclosed under this Agreement and subject to
the rights and obligations hereunder relating thereto. No additional
terms shall be implied by usage of trade, by course of dealing, or by
course of performance. In the event of any conflict between the terms
and conditions in the main body of this Agreement and those in any
Statement of Work, the terms and conditions in the main body of this
Agreement shall govern and control, unless otherwise specifically set
forth in an amendment to this Agreement.
Doc. no. 40-7 (Master Services Agreement), Subsection “D,” at 8 (emphasis
With regard to the methodology for delivering the data, the parties agreed that
RainTree would upload data files to Med-Intelliflux’s secure website: as Walton
stated, “the process [was] we received the data, . . . QuantiTech would QA it and
make sure there are no duplicate values, et cetera, and then post it to the website.”31
(QuantiTech was a company hired by Walton to build Med-Intelliflux’s website and
perform quality assurance reviews of incoming data).32 Upon receiving the first data
report from RainTree on or about April 22, 2013, Walton noticed that RainTree had
not provided data from at least thirty oncology practices or 500 medical oncologists;
instead, RainTree had provided data from only eighteen practices.33 According to
Doc. no. 40-5 (Walton Deposition), at 209 (alteration and ellipsis supplied).
See doc. no. 46-1 (Wortman Deposition), at 35, 46.
Doc. no. 40-5 (Walton Deposition), at 224, 238; doc. no. 40-1 (Burks Deposition), at 56;
doc. no. 40-2 (Dempsey Deposition), at 78-79.
John Dempsey and Lisa Burks, although RainTree had thirty practices that were socalled “members” of its network, it was still “in the process of acquiring data from .
. . all of its members.”34 As Burks explained during her deposition, RainTree was still
“in its infancy.”35
The most significant holdout among RainTree’s members was an entity named
Florida Cancer Specialists, which had the greatest number of medical oncologists of
any of RainTree’s members — 111, to be exact.36 Obtaining data from Florida
Cancer Specialists would have propelled Med-Intelliflux’s “footprint” to a total of
392 medical oncologists, but that number still would have fallen short of MedIntelliflux’s target of at least 500 medical oncologists.37
By the time Walton learned that RainTree’s data-gathering capabilities were
more aspirational than they were actual, he had already marketed the services of
Med-Intelliflux to “numerous customers/Investment Entities” on Wall Street, and had
specifically advertised data from approximately thirty oncology firms and/or 500
Doc. no. 40-1 (Burks Deposition), at 55-56 (ellipsis supplied); see also id. at 57 (“We were
still negotiating for . . . medical data [from Florida Cancer Specialists].”) (ellipsis and alteration
supplied); see also doc. no. 40-2 (Dempsey Deposition), at 38 (“[T]here could have been members
that he signed up that we weren’t getting the data from yet.”); id. at 40 (“I recall in November of
2012 there were 30 practices that were members of RainTree.”).
Doc. no. 40-1 (Burks Deposition), at 56.
See doc. no. 40-2 (Dempsey Deposition), at 48; doc. no. 40-5 (Walton Deposition), at 227.
See doc. no. 40-5 (Walton Deposition), at 227.
medical oncologists.38 Med-Intelliflux even had two clients at that time: Viking
Global Investors, L.P. (an entity that wanted to purchase historical data)39 and
Discovery Capital Management, L.L.C. (an entity that had pre-paid Med-Intelliflux
for three months of prospective data and was interested in an ongoing subscription).40
Well, the significant problem was that I was telling, you know,
potential clients that we had a large footprint because that’s what Lisa
and John had told me. And when that didn’t happen we didn’t get data
from the number of physicians that they had told me that they were
getting it from, I had — basically had to stop marketing, stop — you
know, I couldn’t — there’s not much you can do with physicians, you
know, less than 600 [medical oncologists]. We attempted, I believe, a
few times to see if 281 was — you know, would generate any interest.
I don’t think it ever did.
Doc. no. 40-5 (Walton Deposition), at 244 (alterations supplied).41
Walton continued a telephone and email dialogue with John Dempsey and Lisa
Burks for several months. Both of those individuals allegedly represented that
RainTree “could and would” provide reliable data from thirty oncology practices.42
Doc. no. 16 (Amended Complaint), ¶ 10.
See doc. no. 40-5 (Walton Deposition), at 207.
Id. at 292; see also doc. no. 46-3 (“License and User Agreement” between Med-Intelliflux
and Discovery Capital).
See also doc. no. 40-5 (Walton Deposition), at 262 (“[W]e had to postpone operations
while RainTree got into the physician practices that they were supposed to get into.”) (alteration
Doc. no. 16 (Amended Complaint), ¶ 11.
The parties therefore executed a “Change Order” on August 28, 2013, by which the
monthly rate of payment specified in the Statement of Work — that is, $28,000 per
month — would be modified to a rate of $20 per reported patient per week, “[s]hould
the contributing medical oncologist number remain below 500.”43 In the event that
a minimum of 500 medical oncologists began to contribute to the data repository, the
rate of $28,000 would be reinstated.44 Walton points out that, in the Change Order,
RainTree “mentioned the 500, so everybody [was] aware that 500 [was] a magic
number.”45 Even so, RainTree never ultimately provided data to Med-Intelliflux from
all of its thirty practice members, or from a minimum of 500 medical oncologists.46
Walton testified that he never would have agreed to the execution of a Change Order,
or to a continuation of the business relationship with RainTree, if he had “known the
truth about the number of physicians from which RainTree could obtain data.”47
There appears to have been a critical failure to communicate within RainTree.
John Dempsey testified that, once the Statement of Work was executed, he “left it to
Lisa [Burks] and the team to work with Gary [Walton] to provide the end product,”48
Doc. no. 40-9 (Change Order), at ECF 3 (alteration and emphasis supplied).
Doc. no. 40-5 (Walton Deposition), at 269 (alterations and emphasis supplied).
See doc. no. 40-1 (Burks Deposition), at 56.
Doc. no. 40-5 (Walton Deposition), at 268.
Doc. no. 40-2 (Dempsey Deposition), at 61 (alterations supplied).
and instructed Burks to be “very clear” with Walton about the number of oncology
practices and medical oncologists from which RainTree could provide data.49 Even
so, Lisa Burks appeared ignorant of all of that during her deposition. For example,
she testified that she was not aware that Walton needed “a certain amount of doctors
to make his product work,”50 and thought that Walton’s “ultimate goal” had to do
with the “amount of data or the number of record lines that were showing on his
reports.”51 That cannot be true, however. On March 28, 2013 — nineteen days prior
to the execution of the Statement of Work52 — Burks responded to an email written
by Walton, wherein Walton asked, “We will be collecting data from all of the 600
med-oncs [i.e., medical oncologists] once we have an agreement in place, correct?”53
Burks replied in unconditional terms: “Yes, we will be providing data from all our
practices as you require.”54
John Dempsey also cannot feign ignorance regarding Walton’s expectations
of a robust “footprint,” as Walton told Dempsey in an email transmitted on December
Id. at 51.
Doc. no. 40-1 (Burks Deposition), at 69; see also id. at 70 (Burks testified that prior to the
execution of the Statement of Work, she was not aware that Gary expected to receive data from 500
Id. at 73.
See doc. no. 40-8 (Statement of Work), at ECF 8 (signed on April 16, 2013).
Doc. no. 40-14 (March 28, 2013 email) (alteration supplied).
Id. (emphasis supplied).
17, 2012 — approximately four months prior to the execution of the Statement of
Work — that he “want[ed] to make sure that the data collections [would] include data
from FCS [i.e., Florida Cancer Specialists].”55 Dempsey testified that he told Walton
that RainTree was “in negotiations” with Florida Cancer Specialists to obtain their
medical data, but that FCS was non-committal and difficult to work with: “one day,
they [would] tell me one thing, and the next day, they [would] tell me another
thing.”56 Importantly, Dempsey testified that it would not have been accurate if
someone had told Walton that he was going to receive data from 600 medical
oncologists (as Lisa Burks did in her March 28, 2013 email) at the time the
Agreement was signed.57
The problems did not end there, however. In addition to failing to provide the
“footprint” that Walton desired, RainTree began in October of 2013 to deliver
inaccurate data to Med-Intelliflux.
Walton discovered that the data being provided by RainTree was unreliable
when Med-Intelliflux’s quality assurance employee, Darryl Wortman, brought some
See doc. no. 40-2 (Dempsey Deposition), at 41 (citing an email with Bates Stamp Numbers
RainTree 014672 through 014674, dated Dec. 17, 2012) (alterations supplied).
Id. at 43, 47 (alterations supplied).
Id. at 50.
so-called “red flags” to Walton’s attention.58 Drawing upon his own pharmaceutical
expertise, Walton conducted a “line of therapy” review of the data — i.e., “Does it
make sense that this drug is used in this line of therapy for this disease?”59 The
answer, in many cases, was no. The source of the problem was a computer logic
implemented by RainTree, which had caused “the reports [to] [associate] diseases and
drugs that may not have [had] any association.”60 In other words, “the reports at times
would incorrectly state that Patient A had taken Drug B and had had the diagnosis
when the patient may have taken Drug B but didn’t have that diagnosis at all.”61
Gary Walton therefore transmitted an email to Lisa Burks, Timothy Reese
(RainTree’s Business Analyst),62 and Darryl Wortman on October 18, 2013, in which
Just wanted to make sure we all agree on what we have and next steps.
We feel like the developer has been arbitrarily assigning at least
Treanda to Myeloma reports. Could be multiple other drugs into
other diseases but won’t know for sure until the logic is reviewed.
See doc. no. 40-5 (Walton Deposition), at 237, 243, 273-75; doc. no. 46-1 (Wortman
Deposition), at 91-92 (In the fall of 2013, “Gary [Walton] pointed out that we weren’t seeing
Abraxane being used for lung cancer and he was expecting to see it. And so that was the first
indication that there may be something wrong with the data since we were not seeing that.”)
Doc. no. 40-5 (Walton Deposition), at 212.
Doc. no. 40-3 (Skellenger Deposition), at 57 (alterations supplied).
Id. at 58.
Doc. no. 40-1 (Burks Deposition), at 43.
Once the extraction logic has been identified, we can then
determine the impact across all diseases.
After the above is known, we will need to reconvene for next
steps or decide if the project is not executable by RainTree.
Doc. no. 40-12.
RainTree’s employees reacted to the situation by sending a flurry of emails to
one another which, by their content, reveal that those individuals knew they had
“screwed up.”63 For example, on October 30, 2013, Lisa Burks transmitted the
following email to Scott Skellenger (RainTree’s Vice President and Chief
Information Officer),64 with Timothy Reese and John Dempsey copied as corecipients of the email:
If the drug is associated to multiple disease states[, then] the ICD9
located within the patient record was listed.
However, if the drug is associated to one disease state[, then] the
ICD9 listed on the SOW was applied. This caused misrepresentation of
the patient’s diagnosis. [Timothy Reese] is identifying the impact. . . .
Doc. no. 40-11 (alterations supplied).
Scott Skellenger told Doug Hostler
(RainTree’s Director of Information Services)65 on November 12, 2013, “We screwed
See, e.g., doc. no. 40-10.
See doc. no. 40-3 (Skellenger Deposition), at 9.
See Doug Hostler, ZOOMINFO.COM
up med-intelliflux and need to fix it.”66 Timothy Reese told Lisa Burks on November
27, 2013, “Med-Intelliflux is an absolute mess.”67 Ray Hwang (RainTree’s Business
Analyst)68 told David Abdelgawad (RainTree’s Database and Business Intelligence
Engineer),69 on December 11, 2013, that there was an issue with the extract “either
not pulling in . . . an ICD9 code at all or . . . pulling in the incorrect ICD9.”70
The extent of the inaccuracies in the data provided to Med-Intelliflux never has
been determined.71 Scott Skellenger testified that he tried to call Gary Walton many
times in an attempt to work with him to fix the problem, but Walton ceased to
communicate with him in December of 2013 and filed this lawsuit the following
month.72 RainTree contends that the production of data reports is an “iterative
process,” and that Gary Walton should have continued to work with RainTree
employees until the final product met his standards.73
RainTree attempted to correct the software defect that emerged after the
Doc. no. 40-10 (Sealed Ex. J, at RainTree 028510) (emphasis supplied).
Doc. no. 40-15 (Sealed Ex. O., at RainTree 012487) (emphasis supplied).
See doc. no. 40-1 (Burks Deposition), at 40-41.
See David Abdelgawad, ZOOMINFO.COM (last accessed Mar. 15, 2016),
Doc. no. 40-13 (Sealed Ex. M, at RainTree 029405) (ellipses supplied). An ICD9 is a
diagnosis code. Doc. no. 40-1 (Burks Deposition), at 39.
See doc. no. 40-2 (Dempsey Deposition), at 76;
Doc. no. 40-3 (Skellenger Deposition), at 45-46.
Doc. no. 46 (RainTree’s Brief in Opposition to Med-Intelliflux’s Motion for Partial
Summary Judgment), at 24-25; see also doc. no. 40-3 (Skellenger Deposition), at 40.
implementation of the logic change mandated by the agreed-upon
Change Order. This “iterative process” of observing a defect and
working through it to the customer’s satisfaction is “the normal cycle”
in the industry, as each project “is a custom engagement.” However,
when RainTree’s work on the Med-Intelliflux issue had gotten to the
point of potential customer satisfaction, Walton had “been disengaged
from the process,” and filed suit against RainTree a short time later.
Doc. no. 46 (RainTree’s Brief in Opposition to Med-Intelliflux’s Motion for Partial
Summary Judgment), at 24-25 (internal footnotes omitted).
John Dempsey characterized Gary Walton’s desires as a “moving target,”
meaning “[t]hat things changed from what . . . Gary originally wanted . . . to what we
ended up providing to him.”74 Even so, Dempsey allegedly told Walton that “if he
had to do it over again he wouldn’t have taken [Med-Intelliflux] on as an account
because [RainTree] [was not] ready.”75
Med-Intelliflux seeks damages in the amount of $3.9 million for the entire
value of the business.76 RainTree contends that Med-Intelliflux’s failure to succeed
was not its fault; but, instead, was due to other factors, including: Walton’s lack of
experience;77 Walton’s “jumping the gun” in advertising data from thirty practices
and/or at least 500 medical oncologists before he actually had obtained such a
Doc. no. 40-2 (Dempsey Deposition), at 20, 22 (alteration supplied).
Doc. no. 40-5 (Walton Deposition), at 201 (alterations supplied).
See id. at 290.
See, e.g., id. at 51-52, 83-84.
footprint from RainTree;78 and Med-Intelliflux’s inability to achieve early targets
outlined in its business plan.79 Moreover, RainTree contends that it supplied valuable
services to Med-Intelliflux and, accordingly, is owed $112,000: the difference
between the amount for which it invoiced Med-Intelliflux (i.e., $166,280) and the
amount Med-Intelliflux paid (i.e., $54,280).80 RainTree alternatively seeks damages
under a theory of unjust enrichment.81
Med-Intelliflux currently is “[s]itting idle,” but is maintaining its permits with
the Alabama Secretary of State.82 It has asserted claims of “Fraudulent Inducement
to the Agreement,”83 “Fraudulent Inducement to the Change Order,”84 “Breach of
Contract,”85 “Fraud,”86 “Suppression,”87 and “Tortious Interference with Business
and/or Contractual Relations”88 against defendants RainTree Care Management,
L.L.C., and RT Oncology Services Corporation. Med-Intelliflux also requests a
See id. at 131-35, 137, 139, 141, 227-78, 230, 234.
See, e.g., id. at 84-87, 94-96, 129, 145.
See doc. no. 5 (Answer and Counterclaim), at 17-18, ¶¶ 9-12; see also doc. no. 40-5
(Walton Deposition), at 298-99.
See doc. no. 5 (Answer and Counterclaim), at 18-19, ¶¶ 13-16.
Doc. no. 40-5 (Walton Deposition), at 288-89 (alteration supplied).
Doc. no. 16 (Amended Complaint), ¶¶ 17-22.
Id. ¶¶ 23-28.
Id. ¶¶ 29-33.
Id. ¶¶ 34-38.
Id. ¶¶ 39-46.
Id. ¶¶ 47-51.
judgment declaring that it “does not owe [RainTree] the amounts demanded.”89
I. STANDARD OF REVIEW
Federal Rule of Civil Procedure 56 provides that a court “shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In
other words, summary judgment is proper “after adequate time for discovery and
upon motion, against a party who fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
“In making this determination, the court must review all evidence and make
reasonable inferences in favor of the party opposing summary judgment.” Chapman
v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000) (en banc) (quoting Haves v.
City of Miami, 52 F.3d 918, 921 (11th Cir. 1995)). Inferences in favor of the
nonmoving party are not unqualified, however. “[A]n inference is not reasonable if
it is only a guess or a possibility, for such an inference is not based on the evidence,
but is pure conjecture and speculation.” Daniels v. Twin Oaks Nursing Home, 692
F.2d 1321, 1324 (11th Cir. 1983) (alteration supplied). Moreover,
[t]he mere existence of some factual dispute will not defeat summary
Doc. no. 16 (Amended Complaint), ¶¶ 52-56 (alteration supplied).
judgment unless that factual dispute is material to an issue affecting the
outcome of the case. The relevant rules of substantive law dictate the
materiality of a disputed fact. A genuine issue of material fact does not
exist unless there is sufficient evidence favoring the nonmoving party
for a reasonable jury to return a verdict in its favor.
Chapman, 229 F.3d at 1023 (quoting Haves, 52 F.3d at 921) (alteration and emphasis
supplied). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)
(asking “whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a
matter of law”).
II. DISCUSSION OF MED-INTELLIFLUX’S CLAIM FOR BREACH OF
The parties’ Agreement is governed by the laws of Delaware.90 “The elements
necessary to create a contract include mutual assent to the terms of the agreement,
also known as the meeting of the minds.” Thomas v. Thomas, No. 2008-10-102, 2010
WL 1452872, at *4 (Del. Com. Pl. 2010) (emphasis supplied). “Mutual assent
requires an offer and an acceptance wherein ‘all the essential terms of the proposal
must have been reasonably certain and definite.’” Id. (quoting Gleason v. New, No.
78-C-MR-10, 1981 WL 88231, at *1 (Del. Ch. 1981)) (emphasis supplied). “Thus,
See doc. no. 40-7 (Master Services Agreement), at 8, § G (“This Agreement shall be
governed by and interpreted in accordance with the laws of the State of Delaware, excluding its
choice of law provisions.”).
if any portion of the proposed terms is not settled there is no agreement.” Id. “Where
there is no meeting of the minds, there is no enforceable contract in Delaware.”
Rodgers v. Erikson Air-Crane Co., L.L.C., No. 98C-07-014-WTQ, 2000 WL
1211157, at *6 (Del. Super. 2000); see also Hindes v. Wilmington Poetry Society, 37
Del. Ch. 80, 83 (1958) (“[M]aterial provisions of an agreement can be so indefinite
that the agreement will not be enforced. The Most Worshipful, etc., v. Hiram Grand
Lodge, 32 Del. Ch. 85, 80 A.2d 294; see 1 Williston on Contracts, (3rd ed., Jaeger),
§ 45. However, it is equally true that a court will not upset an agreement where the
indefinite provision is not an essential term.”) (alteration and emphasis supplied).
The court finds that there was no enforceable provision in the parties’ written
Agreement that placed RainTree under an obligation to provide data from
“approximately thirty” oncology practice members.
As an initial matter, the
Executive Summary of the Statement of Work merely appears to be a mere recital that
provides a description of RainTree’s general capabilities, rather than a description
of RainTree’s duties to Med-Intelliflux for purposes of this specific contract.
Three additional factors favor a finding that RainTree was not obligated, at
least under the terms of the written Agreement, to provide data from “approximately
thirty” oncology practices. The first is the placement of that language before the
“Scope of Work” section — i.e., the operative or granting part of the Statement of
Work. See New Castle County v. Crescento, 1985 Del. Ch. LEXIS 449, at *8 (Feb.
11, 1985) (citing Stabler v. Ramsay, 62 A.2d 464 (Del. Ch. 1948)) (“Generally,
recitals are not a necessary part of a contract and can only be used to explain some
apparent doubt with respect to the intended meaning of the operative or granting part
of the instrument.”) (emphasis supplied).
The second is the use of the word “approximately.” See Carlson v. Hallinan,
925 A.2d 506, 524 (Del. Ch. 2006) (“Three elements are necessary to prove the
existence of an enforceable contract: 1) the intent of the parties to be bound by it, 2)
sufficiently definite terms and 3) consideration.”) (emphasis supplied); see also the
Rest. (2d) of Contracts § 33(2) (“The terms of a contract are reasonably certain if they
provide a basis for determining the existence of a breach and for giving an
appropriate remedy.”). It would be difficult for a court to enforce a quantitative
contract term containing the word “approximately,” as that word breeds inherent
confusion as to whether a party has sufficiently performed.
Further weakening plaintiff’s position is the presence of an integration clause
in the Master Services Agreement. “The presence of an integration clause is not
conclusive, however, because the intent of the parties always controls.” Carlson v.
Hallinan, 925 A.2d 506, 522 (Del. Ch. 2006). The factual disputes in this record
must be resolved in order to determine whether the Agreement was a partially
integrated, or fully integrated, writing. See id. (“A partially integrated agreement is
a final expression of the terms it contains, but is not a complete and exclusive
statement of the terms on which agreement was reached.”) (internal quotation marks
omitted, emphasis supplied). If the Agreement was only partially integrated, then it
could be supplemented by additional, consistent terms (such as a term setting forth
the required quantity of medical oncologists and/or oncology practices from whom
data would be forthcoming). See McGrew v. Vanguard Corp., No. C.A. 5743, 1979
WL 4635, at *3 (Del. Ch. Sept. 25, 1979) (“[W]here a writing is intended to be final
but is in fact incomplete it is said to consist of a partial integration and although such
a writing may not be contradicted by evidence of prior agreements, it may be
supplemented by additional consistent evidence.”) (alteration and emphasis supplied).
In summary, the record contains genuine disputes of material fact regarding:
whether the number of oncology practices from which RainTree was to provide data
to Med-Intelliflux was an “essential term”; whether RainTree’s employees actually
promised Walton data from at least 500 medical oncologists, or thirty practice groups
and, if so, whether Walton reasonably relied upon such promises; the extent of the
damage caused by RainTree’s use of an unreliable computer logic; and whether MedIntelliflux failed to mitigate its damages. Resolution of those factual disputes is
essential to determining the appropriate legal vehicle and the proper measure of
damages, if any. Accordingly, summary judgment is due to be denied as to MedIntelliflux’s breach of contract claim.
III. DISCUSSION OF RAINTREE’S COUNTERCLAIM FOR BREACH OF
RainTree counterclaims that Med-Intelliflux breached the contract, because (1)
RainTree “diligently and timely performed its obligations pursuant to the revised
contract between the Parties in reasonable reliance upon Med-Intelliflux’s promise
to compensate RainTree in accordance with the terms of the August 28, 2013
Agreement [the Change Order, doc. no. 40-9],” and, (2) “[t]o date, RainTree has
billed Med-Intelliflux $166,280 for work performed and has received payment from
Med-Intelliflux of only $54,280; thus leaving a deficiency of $112,000 in the
contractual sums due and owed to RainTree for work performed.”91
RainTree’s representatives admitted, in emails and in deposition testimony, that
the data they submitted to Med-Intelliflux contained errors. Even so, the extent of
those errors is unclear, and it is not known whether any qualitative issues could have
been resolved through Walton’s continued participation in an “iterative process.”
Accordingly, there exist genuine disputes of material fact, and summary judgment is
due to be denied as to RainTree’s breach of contract counterclaim.
Doc. no. 5 (Answer), at 17 (alterations supplied).
IV. DISCUSSION OF RAINTREE’S COUNTERCLAIM FOR UNJUST
Whether or not the parties entered into an enforceable contract,
Medintelliflux [sic] knowingly accepted and retained valuable
data provided to it by RainTree.
RainTree had a reasonable expectation that it would receive
compensation for compiling the data and producing it to MedIntelliflux.
Med-Intelliflux has been unjustly enriched in that it has received
and retained and presumably put to use and received
compensation for the benefits of work performed by RainTree at
the expense and to the detriment of RainTree.
Doc. no. 5 (Answer), at 18-19.
Med-Intelliflux contends that, because the relationship between it and RainTree
was governed by an express, written contract, an unjust enrichment claim will not lie.
See, e.g., Nemerc v. Shrader, 991 A.2d 1120, 1130 (Del. 2010) (stating that one
element of an unjust enrichment claim is the “absence of a remedy provided by law”);
Segovia v. Equities First Holdings, LLC, No. 06C-09-149-JRS, 2008 WL 2251218,
at *20 (“The existence of an express contract governing the relationship between the
parties precludes a party from seeking restitution through unjust enrichment.”);
Bakerman v. Sidney Frank Importing Co., 2006 WL 3927242, at *18 (Del. Ch. Oct.
16, 2006) (“When the complaint alleges an express, enforceable contract that controls
the parties’ relationship, . . . a claim for unjust enrichment will be dismissed.”)
(ellipsis supplied); the Rest. (3d) of Restitution & Unjust Enrichment § 2(2) (2011)
(“A valid contract defines the obligations of the parties as to matters within its scope,
displacing to that extent any inquiry into unjust enrichment.”).
Even so, there are genuine disputes of material fact regarding whether the
quantity of medical oncologists and/or practice groups was an essential term of the
parties’ bargain. If agreement was not reached as to an essential term, the there may
not have been a valid contract.
Accordingly, summary judgment is due to be denied as to RainTree’s
counterclaim of unjust enrichment.
In accordance with the foregoing, plaintiff’s motion for partial summary
judgment is DENIED. This case will be set by separate order for pretrial conference
and a bench trial.
DONE and ORDERED this 16th day of March, 2016.
United States District Judge
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