Metro Springdale Treatment Center, Inc. et al v. Welliver et al

Filing 67

MEMORANDUM OPINION. Signed by Honorable Jimm Larry Hendren on February 12, 2010. (src)

IN THE UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF ARKANSAS F A Y E T T E V I L L E DIVISION M E T R O SPRINGDALE TREATMENT CENTER, I N C . , AND MICHAEL DICKERSON v. R O S E M A R Y WELLIVER AND M A R V I N LYNN DICKERSON M E M O R A N D U M OPINION O n the 27th day of January, 2010, the captioned matter came on f o r trial to the Court. In their Complaint and Amended Complaint, plaintiffs assert c l a i m s for: * C i v i l No. 09-5037

PLAINTIFFS

DEFENDANTS

civil conspiracy; breach of oral contract; tortious interference with contract; interference with business expectation; unjust enrichment; unlawful detainer; trespass; replevin; constructive trust; conversion; breach of fiduciary duty; and "appropriation of likeness."

* * * * * * * * * * *

Plaintiffs seek both compensatory and injunctive relief based on the foregoing claims.

In

their

counterclaim,

defendants

allege

claims

against

plaintiffs for breach of oral contract and fraud.
E a c h side denies the claims of the other. Both plaintiffs were represented by counsel and both

d e f e n d a n t s appeared pro se.

All parties announced ready for trial,

w h e r e u p o n the Court heard the testimony of witnesses and received d o c u m e n t a r y evidence, and now makes the following findings of fact a n d conclusions of law. F I N D I N G S OF FACT 1. T h i s case involves a family quarrel over the financial

a f f a i r s of a family business which ran aground. Plaintiffs are Metro Springdale Treatment Center, Inc. are ("MSTC") and Michael Welliver Marvin is

Dickerson

("Michael").

Defendants

Rosemary

( " R o s e m a r y " ) and Marvin Lynn Dickerson ("Marvin"). 1 M i c h a e l ' s father, and Rosemary is Marvin's wife. 2. M i c h a e l incorporated MSTC in 2003.

He planned to use the

c o r p o r a t i o n to operate a methadone treatment center in Springdale, Arkansas. Michael was the sole incorporator and shareholder and According to corporate documents,

C h a i r m a n of the Board of MSTC.

R o s e m a r y was the Secretary, but all parties referred to her and c o n s i d e r e d her as both Secretary and Treasurer.

1 For the sake of convenience, the Court will refer to the individual parties by their given names, because one of the plaintiffs and one of the defendants have the same last name.

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3.

M a r v i n helped Michael form MSTC on-line, and paid the

f i l i n g fee with his credit card, but his name does not appear on a n y of the MSTC corporate documents. This appears to be because

M a r v i n had a drug conviction and the DEA would not authorize a m e t h a d o n e treatment center in which he was involved. It is clear,

h o w e v e r , that from the start Marvin was fully involved in all a s p e c t s of MSTC, and that the parties treated the corporation as "a f a m i l y business," disregarding corporate formalities. 4. M S T C failed to obtain the necessary government permits

t o operate a methadone treatment center, and Michael and Marvin d e c i d e d to use the corporation as a vehicle to operate some other b u s i n e s s . It was Michael's understanding that Marvin would help f i n a n c i a l l y with the start-up of the business, but they did not d i s c u s s ownership. 5. In the Spring of 2005, it came to the attention of

M i c h a e l and Marvin that the medical practice of Dr. Stephan Van Ore ( " t h e Practice"), located in Springdale, Arkansas, was in trouble d u e to Dr. Van Ore's health problems. 6. O n May 21, 2005, Michael and Marvin bought the Practice,

i n c l u d i n g its fixtures and furnishings, its patient charts and r e c o r d s , and the right to use "the names and titles" used by Dr. V a n Ore in his business. The purchase price was $5,000, and Michael testified that he was

M i c h a e l and Marvin each paid half.

" a c t i n g as the corporation" when he bought in to the Practice, although no documents support this. Marvin testified that the

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corporation was no part of the purchase, but that corporate bank a c c o u n t s were used to "clear" payments coming in from the Practice. 7. M i c h a e l and Marvin commenced to operate the Practice on

M a y 30, 2005, using contract medical employees to provide general m e d i c a l services. Neither Michael nor Marvin drew a salary from

M S T C , but the corporation paid their expenses and provided them w i t h housing. It also provided Michael with a car -- a Dodge Marvin co-signed the financing

C h a r g e r titled in the name of MSTC.

p a p e r s in connection with the purchase of the Dodge. 8. including billings, MSTC patient fees were paid in all card, of the usual ways, and the insurance fees were and

cash, but by

personal far the to

check, largest Medicaid

credit

proportion and

electronically

billed

Medicare.

Medicaid

M e d i c a r e billing required the billing party to have a "provider n u m b e r , " and payment was made by wire transfer to the account of t h e billing party. 9. A number of "billing entities" were used by the Practice,

i n c l u d i n g Dr. Van Ore, Med Check First, Lake Harrison Clinic, and O z a r k Family Practice. For the first year, bills were submitted

u n d e r Dr. Van Ore's provider number, but eventually MSTC obtained a provider number and began to bill using it sometime in 2006. There was some evidence that monies were diverted away from MSTC c o f f e r s during the time before MSTC began to bill under its own p r o v i d e r number, but the problems that led to this litigation

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relate to the time after MSTC began billing under its own provider number. 10. b y MSTC. actual S e v e r a l different electronic billing systems were tried Michael was ultimately responsible for billing, but the was done by clerical people known as "billing

work

coordinators."

There were problems with the electronic billing,

a n d the business did not cash flow as expected by the individual parties. 11. I n June, 2005, Rosemary loaned money to MSTC, placing This money was not documented

$ 5 1 , 0 0 0 into an MSTC bank account.

a s a loan in the corporate books, but the Court finds that it was such. Rosemary so characterized it in her testimony, and Michael At the

s o characterized it in a letter to attorney Westbrook Doss.

t i m e of trial, Michael was not aware of any payments having been m a d e on this loan, but Rosemary testified that it had been paid d o w n to about $40,000 by monthly checks from MSTC to Countrywide B a n k , where she had obtained the funds. 12. I n November, 2005, Michael and Marvin became aware of a

h o u s e for sale, located at 127 Woodcliff Drive in Springdale ("the H o u s e " ) , and the two made an offer to purchase it. They were not

a b l e to obtain financing, however, and the deal fell through. 13. M a r v i n then approached Rosemary about buying the House.

Rosemary was able to obtain financing, and the House was purchased a n d financed in her name.

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14.

The

parties

gave

very

different

descriptions

of

the

t r a n s a c t i o n involving the House. (a) M i c h a e l testified that MSTC actually funded the down

p a y m e n t , by issuing six checks for $5,000 -- three made payable to Michael for "expenses" and three made payable to Marvin for

" e x p e n s e s " -- which were used to "gather the funds" for the down payment. There is, however, nothing in the corporate books

d o c u m e n t i n g that these expense checks related to the purchase of t h e House, and all parties agreed that MSTC did reimburse Michael a n d Marvin for expenses, which would be consistent with these checks. A c c o r d i n g to Michael, the House was to be owned one half by h i m s e l f / M S T C and one half by Marvin and Rosemary; MSTC was to make

t h e mortgage payments; and Marvin and Rosemary were to receive half o w n e r s h i p in return for Rosemary obtaining the financing. In

a d d i t i o n , Michael testified that if MSTC could not make any given m o r t g a g e payment, Marvin and Rosemary would have been responsible f o r it. (b) R o s e m a r y testified that Marvin really wanted the House,

a n d when he and Michael could not obtain financing, he prevailed on h e r to buy it "as an investment." She testified that she withdrew

t h e money for the down payment from a retirement account. Rosemary t e s t i f i e d that she made an agreement -- with Marvin -- for MSTC to l e a s e the House for $5,000 per month, which was sufficient to make t h e mortgage payments. She was comfortable with this oral lease

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agreement

with

Marvin,

even

though

Marvin

had

no

formal

r e l a t i o n s h i p with MSTC, because "it was family." (c) of the M a r v i n corroborated Rosemary's version of the purchase House, and testified that the purchase was a good

i n v e s t m e n t , because Rosemary was able to buy the House for about 4 0 % of what it was worth. 15. T h e Court credits the version of the House purchase given

b y Rosemary and Marvin, because it is in closer accord with the d o c u m e n t a r y evidence and has more basis in common sense. The

p u r c h a s e was made in Rosemary's name and financed by Rosemary, and t h e checks said by Michael to represent the down payment were n o t a t e d as expense checks, with nothing in the corporate books to c o n t r a d i c t this notation. In addition, the Court believes it is

u n l i k e l y that Michael would give half ownership in a house costing o v e r $400,000 to someone who put no money in it but merely acted as a straw man to obtain financing. 16. All parties agreed that the House would be used by MSTC

a s housing for agents and employees of the Practice, and it appears t h a t the primary occupants were Michael and his wife Laura; Marvin; M a r v i n ' s other son, Marvin, Jr.; and consultants and doctors who c a m e from out of town to work in the Practice. 17. M S T C made payments to PHH, the mortgage holder on the When MSTC

H o u s e , more or less regularly through August 1, 2007.

f a i l e d to make the full mortgage payment, a corporation owned by

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Rosemary sometimes made up the difference.

The evidence showed

t h a t a total of $53,758.14 was paid to PHH by MSTC. 18. in MSTC. O n or about December 1, 2006, Michael invested $50,000 On or about May 1, 2007, Michael invested another

$ 5 0 , 1 0 0 . 0 0 in MSTC by way of two checks -- one in the amount of $35,100.00 and the other in the amount of $15,000.00. This

$ 1 0 0 , 1 0 0 . 0 0 was part of $105,121.61 he had received by way of an i n h e r i t a n c e from his grandmother. These deposits were not reflected o n the corporate books as either a loan or a stock purchase. Michael, himself, did not characterize these investments as loans b u t he did testify that he expected "to be paid back". 19. B y January, 2007, the cash flow problems of the Practice Michael testified that they were "looking

w e r e becoming pressing.

f o r a wire transfer from Medicare in the amount of $19,516.55, and t h a t this finally came in. The documentary evidence reflected,

h o w e v e r , that the wire transfer to MSTC came -- not from Medicare - - but, rather, from Michael's own personal bank account. This

f a c t was unknown to Marvin and Rosemary until litigation commenced. 20. 2007. T h e Practice was still not cash flowing by the summer of

Michael continued to take the position that this was a

b i l l i n g problem, and he moved to Wichita, Kansas (where Rosemary a n d Marvin lived) to "focus" on billing without the "distractions" o f operating the Practice. Marvin, for his part, thought the cash

f l o w problem was related to someone stealing money, and Michael was

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one suspect he had in mind.

Marvin testified, however, that he had

n o proof that Michael stole any money. 21. A t some point -- it is not clear whether this took place

i n 2006 or 2007 -- billing began to be submitted under another yet a n o t h e r name, Metro Springdale Med Center, Inc. ("MSMC"). d e f i n i t e l y appears to have begun at least by August, 2007. 22. On August 21, 2007, Michael approached Rosemary in This

W i c h i t a and requested that the terms of ownership on the House be r e d u c e d to writing. Rosemary directed Michael to speak with his

f a t h e r about the matter. 23. well. T h e discussion between Michael and Marvin did not go Michael immediately left

In fact, the two came to blows.

W i c h i t a ; went to Springdale and closed two of MSTC's four bank a c c o u n t s ; and moved to Florida and thereafter had no further direct contact with Marvin. However, he hired a lawyer to write Rosemary The letters from the

a n d demand a "settlement" on the House issue.

l a w y e r -- which referenced a different piece of property -- were i n t e r c e p t e d by Marvin and never received by Rosemary. w a s made to the letters. 24. A f t e r leaving for Florida, Michael took no further part No response

i n the operation of the Practice, and took no further action vis a v i s MSTC other than to remove Rosemary as Secretary/Treasurer in J a n u a r y , 2008. MSTC. In essence, he abandoned both the Practice and

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25. lawsuit

Marvin was

continued in

to

operate 2009.

the He

Practice set up

until yet

this

filed

January,

another

c o r p o r a t i o n , BCI Health Management Systems, Inc., d/b/a MSTC, and o p e n e d a new bank account, in which he deposited payments received f o r services rendered by the Practice. 26. M S T C or the Practice (it is not clear which) kept the Rosemary still owns the

l e a s e on the House until March, 2009. House.

At some point, Marvin and Rosemary took over the payments

o n the House. 27. O f the three items of personal property sought to be

r e p l e v i e d by Michael, the Dodge Charger has been repossessed; the T o y o t a Corolla was last seen in a repair shop; and the whereabouts o f Michael's college diploma are unknown. C O N C L U S I O N S OF LAW 28. T h i s matter is before the Court on the basis of diversity

j u r i s d i c t i o n , plaintiffs being a Delaware corporation with its p r i n c i p a l place of business in Arkansas and an individual resident o f either Arkansas or Florida, and defendants being residents of Kansas. More than $75,000 is in controversy. The Court applies Erie R. Co.

Arkansas law to a resolution of the issues presented. v . Tompkins, 304 U.S. 64 (1938). 29.

A s previously noted, plaintiffs' Complaint and Amended

C o m p l a i n t make allegations of civil conspiracy, breach of oral

contract, tortuous interference with contract, interference with business expectation, unjust enrichment, -10unlawful detainer,

trespass, replevin, constructive trust, conversion, breach of fiduciary duty, and "appropriation of likeness." Both compensatory and injunctive relief are sought. Defendants allege breach of

oral contract and fraud, and seek damages.
30. P l a i n t i f f s ' Claims of Civil Conspiracy:

U n d e r Arkansas law, civil conspiracy is defined as: a combination of two or more persons to accomplish a p u r p o s e that is unlawful, or oppressive, or to accomplish s o m e purpose, not in itself unlawful, oppressive, or i m m o r a l , but by unlawful, oppressive, or immoral means, t o the injury of another. M a s o n v. Funderburk, 247 Ark. 521, 529, 446 S.W.2d 543, 548 (Ark. 1969). Civil conspiracy is not "actionable in and of itself, but

a recovery may be had for damages caused by acts committed pursuant t o the conspiracy." Faulkner v. Arkansas Children's Hospital, 347

A r k . 941, 961, 69 S.W.3d 393, 406 (Ark. 2002). I t will be seen from the remainder of this Opinion that the C o u r t finds no injury sustained by either MSTC or Michael on any p l e a d e d cause of action. c i v i l conspiracy fails. 31. P l a i n t i f f s ' Claim for Breach of Oral Contract: That being the case, their claim for

Plaintiffs' claim for breach of oral contract is based on the theory that there was an oral contract between MSTC and Rosemary, whereby the House would be purchased in Rosemary's name, with the down payment and monthly payments to be made by MSTC, and the

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property to be owned in undivided shares, half by MSTC/Michael and half by Marvin and Rosemary. Under Arkansas law, [u]nless the agreement, promise, or contract, or some memorandum or note thereof, upon which an action is brought is made in writing and signed by the party to be charged therewith, or signed by some other person properly authorized by the person sought to be charged, no action shall be brought to charge any . . . [p]erson upon any contract for the sale fo lands, tenements, or hereditaments, or any interest in or concerning them. . .. A.C.A. §4-59-101. In the case at bar there is no written evidence whatsoever of an agreement between Michael or MSTC and Rosemary that the House would be owned jointly, and thus no suit can be maintained to establish that proposition. That being the case, plaintiffs'

claim for breach of oral contract fails.
32. Contract: Pl aintiffs' Claim for Tortious Interference with

Plaintiffs' claim for tortious interference with contract is also without merit, given that the underlying contract cannot be proven.
33. Pl aintiffs' Claim for Interference With Business

Expectation:

Plaintiffs' claim that defendants interfered with MSTC's business expectancy in the use of the House requires MSTC to show that it had a valid business expectancy in the use of the House;

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that Rosemary and Marvin knew of that business expectancy; that Rosemary or Marvin intentionally and improperly induced or caused a disruption or termination of that business expectancy; and that MSTC was damaged by such disruption or termination. AMI 403.

The evidence showed that MSTC had a business expectancy that it could use the House as a residence for agents and employees of MSTC, and that all parties were aware of this business expectancy. There was no showing that this expectancy was ever disrupted or terminated. Michael, Marvin, and various doctors employed by MSTC all lived in the House from time to time, even after Michael left the Springdale area in August, 2007. The evidence showed that the House continued to be leased to and used by MSTC as long as MSTC continued operations. Because there is no showing that any business expectancy of MSTC was disrupted or terminated, this claim is without merit.
34. P l a i n t i f f s ' Claim for Unjust Enrichment:

An action based on unjust enrichment "is maintainable where a person has received money or its equivalent under such

circumstances that, in equity and good conscience, he or she ought not to retain [it]." DePriest v. AstraZeneca Pharmaceuticals,

L.P., 2009 Ark. 547, --- S.W.3d ---, 2009 WL 3681868 (2009). Plaintiffs claim that Rosemary has been unjustly enriched by MSTC's payment of the mortgage on the House.

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The credible evidence on this issue is that the payments made from MSTC accounts toward the mortgage on the House were lease payments, albeit made directly to the mortgage-holder, in return for which MSTC received housing for its agents and employees. While Rosemary's and Marvin's testimony as to the lease implicates very sloppy business practices -- i.e., a verbal lease entered into by the Secretary of a corporation with one who on paper was a stranger to the corporation -- it is clear that throughout the time they did business together the parties disregarded MSTC's corporate form and treated Marvin as a decision-maker in MSTC. When the Court factors in the evidence that the House was bought in Rosemary's name and the financing was obtained in her name, it credits the evidence that the House was leased to MSTC for members of Michael's and Marvin's family to live in while working in the Practice or for MSTC. Thus, Rosemary was not unjustly enriched by receiving lease payments for the House.
35. P l a i n t i f f s ' Claim for Unlawful Detainer & Trespass:

Plaintiffs' claims for unlawful detainer and trespass are without merit. Marvin is alleged to have unlawfully detained the

House, and to have trespassed thereon, but given the Court's conclusion that he had a right to be on the property, and that he did nothing to prevent Michael from using it, these claims are without merit.

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36.

Plaintiffs' Claims for Replevin: By

Plaintiffs' claim for replevin is also without merit.

this claim Michael seeks return -- from Rosemary or Marvin -- of two cars (a 1995 Toyota Corolla and a 2006 Dodge Charger) and a college diploma. The evidence showed that neither Rosemary nor

Marvin had possession of the two cars in question, and that the whereabouts of the college diploma are unknown. 37. Plaintiffs' Claim for Constructive Trust:

Plaintiffs seek to impose a constructive trust on the House. The Arkansas Supreme Court has explained that [a] constructive trust is imposed where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it. A constructive trust may be imposed when the elements necessary for constructive fraud are not present; it is not necessary to show a material misrepresentation of fact to recover under the theory of constructive trust. The duty to convey the property may arise because it was acquired through fraud, duress, undue influence or mistake, breach of a fiduciary duty, or wrongful disposition of another's property. A constructive trust normally arises without regard to the intention of the person who transferred the property. Cox v. Miller, 363 Ark. 54, 65, 210 S.W.3d 842, 848-49 (2005) (internal citations omitted). Put in terms of this case, to recover on this theory

plaintiffs would have to persuade the Court that Rosemary would be unjustly enriched if she were allowed to retain title to the House. As explained in ¶34, the evidence does not justify such a

finding. -15-

38.

Plaintiffs' Claim for Conversion:

P l a i n t i f f s ' conversion claim requires proof that MSTC was e n t i t l e d to possession of payments made in respect of its billings, a n d that Marvin or Rosemary took control of those payments in v i o l a t i o n of the rights of MSTC. AMI 425. While there is no question that MSTC was entitled to payments f o r its billings, the Court concludes that Michael abandoned both M S T C and the Practice in August, 2007, and that Marvin operated the P r a c t i c e , using the names Metro Springdale Med Center, Inc., and B C I Health Management Systems, Inc. d/b/a MSTC, thereafter. Given

t h e Court's further conclusion that Marvin was an integral part of t h e business operations of MSTC, and that the parties disregarded its corporate form and operated merely "a family business,"

M a r v i n ' s operation of the Practice, and his deposit of checks for b i l l i n g s of the Practice -- under whatever billing entity -- do not c o n s t i t u t e conversion. 39. P l a i n t i f f s ' Claim for Breach of Fiduciary Duty:

P l a i n t i f f s ' claim for breach of fiduciary duty requires proof t h a t Marvin or Rosemary owed a fiduciary duty to MSTC, and breached t h a t duty. Under Arkansas law, "an officer or director of a corporation o w e s a fiduciary duty to the corporation and its shareholders." This duty requires that the officer or director act in good faith, w i t h ordinary care, and in a manner which he or she reasonably b e l i e v e s to be in the best interests of the corporation." Wal-Mart

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Stores, Inc. v. Coughlin, 369 Ark. 365, 369-70, 255 S.W.3d 424, 428 ( A r k . 2007). B e c a u s e Marvin had no formal office with MSTC, plaintiffs' b r e a c h of fiduciary duty claim against him must fail. Rosemary, as

S e c r e t a r y , had a fiduciary duty to MTSC, but the Court finds no e v i d e n c e that she breached it. There is no proof that any of her

c o n d u c t -- from loaning the corporation money to leasing the House t o the corporation -- was done without a reasonable belief on her p a r t that it was in the best interests of MSTC.

40.

Plaintiffs' Claim for "Appropriation of Likeness":

Plaintiffs' claim for injunctive relief alleges that Marvin "has usurped apparent and actual control of the Plaintiff

corporation," and seeks to restrain him from continuing to do so. This appears to be related to plaintiffs' claim of "appropriation of likeness," and the Court concludes that both are without merit. As has been noted herein, all parties ignored the corporate form of MSTC and operated the Practice as a family business, using MSTC (and later MSCM) only as facades to obtain provider numbers and open bank accounts to clear payments. Marvin was fully involved Michael

in the business affairs of both MSTC and the Practice.

abandoned the corporation in August, 2007, leaving Marvin to conduct its business affairs, and had no further contact with Marvin until suit was filed in January, 2009.

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Under these circumstances, it would be an abuse of the corporate form to grant Michael any relief on his claim of "usurpation" or "appropriation." The substance of the matter is

that Michael abandoned the Practice and Marvin continued to operate it. The Practice is now closed, but even if it were not,

the Court finds there would be no basis to enjoin Marvin from operation of the Practice.
41. Defendants' Claim for Breach of Oral Contract:"

D e f e n d a n t s claim that Michael breached an oral contract with them. While the nature of such oral contract is not clearly

a l l e g e d in their Counterclaim, it is said to have to do with an a g r e e m e n t "to provide labor, business equipment, and professional e x p e r t i s e " to Michael, and with placing money "in the complete c o n t r o l " of Michael. The Court finds no merit in this claim. Under Arkansas law,

f o r a valid contract to exist, "all terms should be definitely a g r e e d upon, and the terms must be 'reasonably certain.' Terms are

r e a s o n a b l y certain if they provide a basis for determining the e x i s t e n c e of a breach and for giving an appropriate remedy." Key

v . Coryell, 86 Ark. App. 334, 341, 185 S.W.3d 98, 103 (Ark. App. 2 0 0 4 ) (internal citations omitted). T h e r e is evidence that Rosemary loaned money to MSTC, but no e v i d e n c e of any agreement relating time of repayment, amount of i n t e r e s t , or amount of payments. There is also evidence that both

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Marvin and Rosemary worked for MSTC and its various iterations, but n o evidence of the terms of such labor. evidence, there is not sufficient In the absence of such to determine the

certainty

e x i s t e n c e of a breach, or to give an appropriate remedy.

The Court

c a n n o t determine what compensation was agreed upon for the services o f Marvin or Rosemary, or even if there was any such agreement. Nor can it determine how much was repaid to Rosemary of the m o n e y loaned, and why more was not paid. between November, 2005, and August, There was evidence that MSTC paid $8,500.00

2007,

t o w a r d this loan. left, Marvin and

The evidence further shows that after Michael Rosemary operated the business of MSTC from

A u g u s t , 2007, until January, 2009.

During this time they had the

o p p o r t u n i t y , should they have so chosen, to make payments on the l o a n , but there was no showing as to how much, if any, was paid on i t or could have been paid. 42. D e f e n d a n t s ' Claim for Fraud: claim for fraud is also without merit. To

Defendants'

e s t a b l i s h fraud, defendants must prove that Michael made a false

representation of material fact; that he either knew or believed that the representation was false or knew or believed that he did not have sufficient information to make the representation; that he intended them to rely on the representation; that they did justifiably rely on the representation; and that they sustained damages as a result. AMI 402.

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The alleged fraud is said to lie in the use of "hidden" billing practices and cashing checks made out to the various billing entities of the Practice in unknown bank accounts, such that Michael deceived defendants "in matters regarding cash flow." There was evidence that Michael was ultimately responsible for billing at the Practice, and that money was diverted from the Practice, but the only evidence of falsehood on the part of Michael himself which was relied upon by the defendants was Michael's statement that a Medicare wire transfer in the amount of $19,516.55 had been received. In fact, Michael himself had made

a wire transfer in that amount from his personal account to an MSTC account. Defendants justifiably relied on this to support their

expectation that the electronic billing system was finally "hooked up," and would finally start paying off, but there is no evidence of any damages sustained as a result.
While money did not start

t o flow in from Medicare, there is no proof as to why it did not, n o r any proof as to how much money might have been diverted. The

C o u r t cannot engage in speculation about these issues, and cannot g r a n t any recovery in the absence of proof. CONCLUSION 43. This case involves a family quarrel over the financial In such a case, it seems incongruous

a f f a i r s of a family business.

f o r that family to be, as here, essentially suing itself. Families - - rightly and properly -- do many things for their members which

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are not based upon legal contracts or arrangements, but which are b a s e d upon the strength and vitality of the familial relationship. H o w e v e r , when a family conducts business as a family, and not as a p r o p e r l y set-up and operated business entity, it should not be s u r p r i s i n g that there may not be any legal recourse available when t h e enterprise fails. T h a t is the case here. If the family members had utilized a p p r o p r i a t e business practices in dealing with MSTC and each other, their business might well have succeeded, but even if it had

f a i l e d , the legal rights and obligations of the parties could have b e e n ascertained and adjudicated. They did not so operate their b u s i n e s s , and the Court finds insufficient evidence to support any o f the claims made by any of the parties in this case. For this r e a s o n , the claims of all parties will be dismissed by separate J u d g m e n t entered concurrently herewith. I T IS SO ORDERED, this 12th day of February, 2010. / s / J i m m Larry Hendren J I M M LARRY HENDREN U N I T E D STATES DISTRICT JUDGE

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