Pharma Supply, Inc. v. Stein et al
ORDER granting in part and denying in part 44 Defendants' Motion for Reconsideration of Defendants' Motion to Dismiss Complaint. See Order for details. Signed by Judge James I. Cohn on 1/26/2015. (ns)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 14-80374-CIV-COHN/SELTZER
PHARMA SUPPLY, INC.,
MITCHELL A. STEIN and STEIN LAW, P.C.,
FRANK SUESS, STEVEN THUSS, OLIVER
SUESS, NATIONAL HOME RESPIRATORY
SERVICES, INC. d/b/a DIABETIC SUPPORT
PROGRAM, DIABETIC SUPPLY OF
SUNCOAST, INC., JAMES P. SCHOOLEY,
ESQ., SCHOOLEY & ASSOCIATES, INC.,
DIGITAL E-TECHNOLOGIES, INC., and
DOES 1 through 5,
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
THIS CAUSE is before the Court upon Defendants' Motion for Reconsideration of
Defendants' Motion to Dismiss Complaint [DE 44] ("Motion"), as amended by the
Amendment to Converted Motion for Summary Judgment [DE 55]. The Court has
reviewed the Motion and the record in this case, and is otherwise advised in the
premises. For the reasons discussed herein, the Court will grant summary judgment for
Defendants on Counts III and IV of the Complaint, and will deny the Motion in all other
This action arises from the alleged professional negligence of Defendant Mitchell
A. Stein and his law firm, Stein Law, P.C. ("Stein Law"), relating to the representation of
a former client, Plaintiff Pharma Supply, Inc. ("Pharma Supply"). In March 2008, a third
party, Diagnostic Devices, Inc. ("DDI"), sued Pharma Supply for defamation, illegal
competition, and interference with contracts (the "DDI Litigation"). DE 1 (Complaint)
¶ 10. Pharma Supply engaged Defendants in April 2009 to protect its interests in the
DDI Litigation. Id. ¶ 11. Defendants represented Pharma Supply in the DDI Litigation
through its resolution in March 2012. Id. ¶ 12; DE 55 at 5.
When Pharma Supply retained Defendants for the DDI Litigation, it had an active
insurance policy with Zurich/Maryland Casualty ("Zurich"). Compl. ¶¶ 19–20. Pharma
Supply alleges that Defendants failed to review its insurance policy and did not notify
Zurich of the pendency of the DDI Litigation or cooperate with Zurich. Id. ¶¶ 14–23.
Pharma Supply contends that Defendants' lack of cooperation and communication with
Zurich caused Zurich to refuse to reimburse Pharma Supply for Defendants' legal fees.
Id. ¶ 24.
Pharma Supply also alleges that Defendants engaged in improper billing
practices and disclosed its confidential information to a co-defendant in the DDI
Litigation, TaiDoc Technology Corp. ("TaiDoc"). Id. ¶¶ 34, 59. On the basis of
Defendants' alleged failure to facilitate reimbursement from Zurich, their improper billing
practices, and the disclosure of Pharma Supply's confidences, Pharma Supply has
asserted three claims of professional negligence against Stein. Id. ¶¶ 42–59. Pharma
Supply also asserts a claim against both Defendants for money lent, alleging that it
advanced funds to Defendants that should have been paid by Zurich, and has not
received reimbursement. Id. ¶¶ 60–64. Finally, Pharma Supply brings a claim for
vicarious liability against Stein Law, alleging that Stein Law is vicariously liable for all of
the harms Stein caused. Id. ¶¶ 65–66.
Defendants responded to the Complaint by moving to dismiss on April 22, 2014.
DE 11. The Court denied the motion to dismiss on August 14, 2014. DE 39. But on
August 28, 2014, having had the benefit of some discovery, Defendants filed the instant
Motion—supported with evidence—seeking reconsideration of the Court's ruling. DE 44.
Because the Motion raised new arguments for dismissal of Pharma Supply's claims and
relied on evidence outside the pleadings, the Court converted the Motion into one for
summary judgment and directed the parties to supplement the record accordingly.
DE 46. Now that briefing is complete, the Court turns to the merits of Defendants'
arguments for summary judgment.
A district 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). The moving party "always bears the initial
responsibility of informing the district court of the basis for its motion, and identifying
those portions of [the record] which it believes demonstrate the absence of a genuine
issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To satisfy this
burden, the movant must show the court that "there is an absence of evidence to
support the nonmoving party's case." Id. at 325.
After the movant has met its burden under Rule 56(a), the burden of production
shifts, and the non-moving party "must do more than simply show that there is some
metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). As Rule 56 explains, "[i]f a party fails to properly
support an assertion of fact or fails to properly address another party's assertion of
fact . . . the court may . . . grant summary judgment if the motion and supporting
materials—including the facts considered undisputed—show that the movant is entitled
to it." Fed. R. Civ. P. 56(e)(3). Therefore, the non-moving party "may not rest upon the
mere allegations or denials in its pleadings" but instead must present "specific facts
showing that there is a genuine issue for trial." Walker v. Darby, 911 F.2d 1573, 1576–
77 (11th Cir. 1990). In deciding a summary-judgment motion, the Court must view the
facts in the light most favorable to the non-moving party and draw all reasonable
inferences in that party's favor. Davis v. Williams, 451 F.3d 759, 763 (11th Cir. 2006).
Defendants seek summary judgment on each of Pharma Supply's claims. The
bulk of Defendants' arguments relate to a settlement that Zurich and Pharma Supply
executed in July 2013. See DE 44 at 24–34 ("Zurich Settlement"). In the Zurich
Settlement, Pharma Supply released its claims against Zurich relating to the DDI
Litigation, including any claims for reimbursement of Defendants' fees. Id. § 2.A. In
exchange, Zurich paid Pharma Supply and related parties $605,000. Id. § 3. Defendants
argue that this arrangement had the collateral effect of discharging any liability they may
have had on Counts I and II for professional negligence based upon unreasonable legal
fees paid by Pharma Supply.
Defendants also contend that a Confidential Representation Agreement dated
October 27, 2012 (DE 44 at 16–19 ("CRA")), bars Pharma Supply's claim for
professional negligence arising from a failure to provide detailed invoices in Count II. In
the CRA, Stein Law agreed to provide Pharma Supply with "consolidated monthly billing
statement[s]." CRA § 2.2. Nowhere does the CRA expressly require the itemized billing
to which Pharma Supply claims it was entitled. Defendants maintain that the CRA thus
shows Count II to be meritless.
With regard to Count III, for Stein's alleged disclosure of Pharma Supply's
confidential information to TaiDoc, Defendants contend that the record reflects a total
absence of evidence to show either that Stein disclosed Pharma Supply's confidences
to TaiDoc or that Pharma Supply suffered any damages as a result. Finally, Defendants
argue that Pharma Supply's own records show that it has already recouped the sums at
issue in Count IV.1
Upon review of the briefs and evidence submitted by the parties, the Court
determines that Defendants have not established their entitlement to summary
judgment on Counts I and II. Defendants have not shown that the Zurich Settlement, by
its express terms or otherwise, bars the claims in those Counts. Nor is it clear that the
terms of the CRA apply to the representation at issue in Count II. The Court thus will
deny Defendants' Motion as it pertains to Counts I and II.
However, Pharma Supply has produced no evidence in support of its contention
in Count III that Defendants disclosed its confidences to TaiDoc. And with regard to
Count IV, Pharma Supply now concedes that the loan it seeks to collect from
Defendants has already been repaid. Accordingly, Defendants are entitled to summary
judgment on Counts III and IV.
Pharma Supply's fourth claim, asserting a cause of action for money lent,
appears misnumbered in the Complaint as "Count V." Compl. at 11. For purposes of
this Order, the Court will refer to Pharma Supply's claim for money lent as "Count IV."
A. Defendants Have Not Shown that the Zurich Settlement Bars Count I
Pharma Supply claims in Count I that it was harmed when Defendants' conduct
caused its insurer, Zurich, to refuse reimbursement for legal fees Pharma Supply
incurred in the DDI Litigation. See Compl. ¶¶ 42–51. In the Motion, Defendants argue
that Pharma Supply forfeited its claim based upon this failure of reimbursement when it
executed the Zurich Settlement. But the Zurich Settlement does not by its terms release
any of Pharma Supply's claims against Defendants. Nor have Defendants established
that the releases in the Zurich Settlement otherwise discharge Pharma Supply's claims
against them. Though funds Pharma Supply received as a result of the Zurich
Settlement may reduce the damages available on Count I, Defendants have not clearly
shown that these funds have made Pharma Supply whole for the legal fees at issue.
Defendants thus have not satisfied their burden of establishing that the Zurich
Settlement entitles them to summary judgment on Count I.2
Defendants first suggest that the language of the Zurich Settlement releases any
claims Pharma Supply might have against them. DE 44 at 4–5. The Zurich Settlement
does contain a handful of releases, including some releases relating to claims for
reimbursement of Defendants' fees. Zurich Settlement § 2.A. But the releases of
Pharma Supply's claims pertain only to its claims against Zurich. Id. The Settlement's
terms do not expressly release Pharma Supply's claims against Defendants.
Defendants also argue that Count I fails as a matter of law because they had
"no duty to cooperate with Zurich as admitted by Pharma [Supply] in its mediation
statement." DE 55 at 9. Defendants cite to the mediation statement in its entirety for
Pharma Supply's "admission." But upon review of the mediation statement (see DE 44
at 49–52), the Court perceives no such sweeping admission.
Defendants further contend that, even if the Zurich Settlement's terms did not
contain an express release of the claim in Count I, Pharma Supply forfeited that claim
all the same. DE 44 at 8. Defendants note that under Florida law,3 an initial tortfeasor
may be liable for injuries caused by a subsequent tortfeasor who aggravates the initial
injury. See Underwriters at Lloyds v. City of Lauderdale Lakes, 382 So. 2d 702, 703–04
(Fla. 1980). When a plaintiff settles his claim against an initial tortfeasor, the plaintiff is
presumed to have been made whole for any resulting injuries. See Broz v. Rodriguez,
891 So. 2d 1205, 1208 (Fla. 4th DCA 2005). A settlement with an initial tortfeasor
therefore will bar the plaintiff from further recovery against a subsequent tortfeasor,
unless the settlement specifically excludes from its scope claims against a subsequent
Defendants imply that though their negligence might have resulted in Zurich
refusing to reimburse Pharma Supply, Zurich also acted wrongfully in refusing to
reimburse. Defendants reason that Zurich is thus a tortfeasor with shared responsibility
for the amounts Pharma Supply was forced to pay in legal fees, and which form the
basis for Count I. In other words, Defendants characterize Zurich as a joint tortfeasor.
Defendants conclude that because Pharma Supply settled its reimbursement dispute
with Zurich without expressly preserving its claims against Defendants, the rule
discussed in Broz results in a presumption that Pharma Supply was made whole for the
legal fees it paid, extinguishing the claim in Count I. DE 44 at 8–11.
The cases Defendants cite on this point arise in the context of apportioning
liability for personal injuries among an initial tortfeasor and a subsequent tortfeasor who
The parties appear to agree in their papers that Florida law governs Pharma
Supply's claims for professional negligence. See DE 44 at 8; DE 69 at 4–5.
aggravated a plaintiff's injuries through medical malpractice. See id. at 8 (citing
Vanalstine v. Palms W. Hosp., L.P., 90 So. 3d 990 (Fla. 4th DCA 2012) (per curiam);
Univ. of Miami v. Francois, 76 So. 3d 360 (Fla. 3d DCA 2011); Broz, 891 So. 2d 1205).
These precedents thus are of questionable relevance in the instant case involving a
claim for legal malpractice and a discrete dispute between Pharma Supply and its own
insurer over the extent of coverage.
But even applying the general principle that a release of one tortfeasor may also
discharge the liability of joint tortfeasors (see Boone v. Atl. Coast Line Rr. Co., 85 So.
2d 834, 840–41 (Fla. 1956)), Defendants have not shown that Zurich should rightly be
classified as a joint tortfeasor. Whether parties are joint tortfeasors is a question of fact.
Ins. Co. of N. Am. v. Edmondson, 354 So. 2d 887, 888 (Fla. 1st DCA 1977) (per
curiam). Pharma Supply argues in its Opposition that its settlement with Zurich related
to a purely contractual dispute. DE 69 at 6. Defendants counter that the Zurich
Settlement purports to release Zurich from not only contract claims, but also tort claims
that would overlap with any harms of Defendants' making. DE 80 at 3–4.
The record as it stands, however, contains insufficient information about the
nature of the dispute between Pharma Supply and Zurich to allow the Court to find as a
matter of law that Zurich and Defendants were joint tortfeasors, or that a release relating
to one of them would function as a release of both for any tort claims relating to
Defendants' legal fees. The Court therefore determines that Defendants have not
established their entitlement to summary judgment on Count I based upon the releases
contained within the Zurich Settlement.4
However, it bears noting that the Zurich Settlement may impact the damages
Pharma Supply can recover on Count I. Pharma Supply alleges in that Count that
Defendants' actions resulted in Zurich refusing to reimburse Pharma Supply for
Defendants' fees. Compl. ¶ 51. In other words, the extent of damages claimed in
Count I is the amount of "unreimbursed attorneys' fees paid by [Pharma Supply to
To the extent payments made under the Zurich Settlement relate to fees charged
by Defendants, they reduce the amount of damages at issue in Count I. However, the
total fees Pharma Supply paid to Defendants and the amount of funds from the Zurich
Settlement devoted to those fees are ambiguous on the present record. Defendants
assert that Zurich paid the entirety of the $605,000 settlement "expressly designated
solely for [Defendants'] fees" (DE 55 at 10), but the materials they rely upon do not
reflect this designation. Further, though Defendants discuss in their papers a number of
payments and invoices pertaining to their legal fees (see id. at 11–12), it is unclear
whether those amounts paint a full picture of the dealings among the parties.
Accordingly, the impact of payments made under the Zurich Settlement on the amounts
Pharma Supply can recover on Count I raises a factual issue inappropriate for
resolution by summary judgment.
The Court similarly rejects Defendants' parallel argument based on the Zurich
Settlement with regard to Count II.
B. Defendants Have Not Shown that the CRA Bars Count II
In Count II, Pharma Supply alleges that Stein acted negligently by providing
billing statements that did not conform to the requirements set forth in the
representation agreement between the parties relating to the DDI Litigation. Compl.
¶¶ 26, 52–55. Pharma Supply alleges, among other things, that Stein "agree[d] to
provide detailed itemized billing." Id. ¶ 53. Pharma Supply contends that Stein breached
this obligation by refusing to provide detailed billing statements, and also by acting
unreasonably in connection with billing disputes. Id. ¶ 54.
Defendants counter that the CRA between the parties shows Count II to be
factually baseless. The CRA provides that Defendants should "provide to [Pharma
Supply] a consolidated monthly billing statement setting forth the work that has been
performed . . . ." CRA § 2.2. Nowhere does the CRA specifically require itemized billing.
Defendants argue that the CRA thus demonstrates the absence of any such obligation.
However, the CRA also states at its outset that it pertains to Pharma Supply's
engagement of Stein Law as counsel in connection with the "design, development,
manufacturing and sale of products, including blood glucose meters and test strips." Id.
at 1. It provides that this engagement is "independent from the prior relationship
between the parties." Id.
Defendants acknowledge that they began to represent Pharma Supply with
regard to the DDI Litigation in April 2009, months before the execution of the CRA.
DE 55 at 4. The CRA thus does not appear to apply to Defendants' involvement in the
DDI Litigation, which was part of the parties' "prior relationship" that the CRA's terms
exclude from its scope. Instead, the CRA describes a distinct representation relating to
the development and marketing of new products.5
Count II is premised on Stein's alleged billing failures in connection with the DDI
Litigation. Stein relies solely upon the CRA to show that he breached no duty of
itemized billing. But the CRA does not appear to relate to the DDI Litigation, and
therefore does not resolve the extent of Stein's duties in the representation at issue in
Count II. Accordingly, the Court will deny the Motion as it pertains to Count II. See
Celotex Corp., 477 U.S. at 323.
Defendants argue that Pharma Supply should be judicially estopped from
arguing that the CRA did not apply to the DDI Litigation. Judicial estoppel will generally
arise where: (1) a party has taken a position clearly inconsistent with an earlier position;
(2) the party succeeded in persuading a court to accept the earlier position, so that
acceptance of the new position would give the impression that one of the courts was
misled; and (3) the party advancing the inconsistent positions would gain an unfair
advantage. Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1285 (11th Cir. 2002).
Defendants contend that Pharma Supply asserted in a related case, Stein Law, P.C. v.
Suess, No. 14-269 (W.D.N.C.) (the "North Carolina Case"), that the CRA applied to the
DDI Litigation, precluding a contrary position herein. DE 80 at 5.
But as Defendants acknowledge, Pharma Supply did not convince the court in
the North Carolina Case that the CRA pertained to the DDI Litigation. Instead,
Defendants themselves agreed that the CRA governed their representation of Pharma
Supply in the DDI Litigation, and amended their pleadings accordingly. See id. at 5
nn. 4–5. Any changes in the posture of the North Carolina Case arising from the
existence of the CRA thus resulted from Defendants' own actions, not Pharma Supply's
success in persuading the court to adopt its position. Success in persuading a court of
the merits of one's prior arguments is an important element of judicial estoppel, as it
gives rise to the risk of inconsistent determinations and implicates the integrity of the
judicial process. See Sandlin v. Ameriquest Mortg. Co. (In re Sandlin), No. 08-00191,
2010 WL 1416699 at *14 (Bankr. N.D. Ala. Apr. 8, 2010) (citing New Hampshire v.
Maine, 532 U.S. 742, 750–51 (2001)). But because Pharma Supply did not obtain a
ruling in the North Carolina Case regarding the applicability of the CRA, and instead
obtained only Defendants' acquiescence on the matter, this Court finds that judicial
estoppel does not bar Pharma Supply from taking a contrary position in this action. See
Burnes, 291 F.3d at 1285.
C. Count III Fails for Lack of Evidence of
Disclosure of Pharma Supply's Confidences
In Count III, Pharma Supply alleges that Stein obtained its confidential business
information during the DDI Litigation, then wrongfully disclosed this information to
TaiDoc. Pharma Supply contends that as a result, it lost competitive advantages in its
relationship with TaiDoc. Compl. ¶¶ 57–59. Defendants respond that Pharma Supply
has produced no evidence that any confidential information was ever disclosed, or that
it suffered any harms from such disclosure. DE 55 at 14–15. The Court agrees with
Defendants, and will grant summary judgment in their favor on Count III.
Where the nonmoving party bears the burden of proof at trial, the moving party
may show the absence of a genuine issue of material fact by pointing to the lack of
evidence supporting an element of the nonmoving party's case. Hickson Corp. v. N.
Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004). To survive summary judgment,
the nonmoving party must then produce "evidence sufficient to withstand a directed
verdict motion." Id.
Causation and damages are elements of a claim for an attorney's professional
negligence, such as the claim contained in Count III. Witko v. Menotte (In re Witko), 374
F.3d 1040, 1043–44 (11th Cir. 2004). Defendants argue that Count III fails because
Pharma Supply has produced no evidence that they disclosed Pharma Supply's
confidences to TaiDoc, or that such disclosure caused Pharma Supply any damages.
To survive summary judgment on this point, Pharma Supply therefore must come
forward with some evidence of the wrongful disclosure and resulting injury. See Hickson
Corp., 357 F.3d at 1260.
In response to Defendants' contention that Count III fails for a lack of evidence,
Pharma Supply argues that Defendants' representation of Pharma Supply gives rise to
a presumption that they obtained its confidential information. Pharma Supply also
suggests that if Defendants were dissatisfied with its discovery responses relating to the
issue of damages, they could have moved to compel better responses. DE 69 at 12.6
But Pharma Supply's Opposition ignores the applicable legal standard.
Defendants have argued the total absence of evidence of damages arising from any
disclosure of Pharma Supply's confidential information. As the party that bears the
burden of proving its case at trial, Pharma Supply was required to respond with
evidence of harms it suffered as a result of Stein's disclosure of its confidential
information to TaiDoc. See Hickson Corp., 357 F.3d at 1260. In its papers, however,
Pharma Supply does not attempt to provide any evidence that Stein disclosed its
confidential information to TaiDoc, or that it was harmed by such disclosures. Because
Pharma Supply has produced no evidence to support its claim that Stein caused the
damages it alleges in Count III, Stein is entitled to judgment as a matter of law on that
Count. See McCaleb v. A.O. Smith Corp., 200 F.3d 747, 753 (11th Cir. 2000) (affirming
Pharma Supply further argues that the Court should not consider Defendants'
arguments on Count III because they were raised for the first time in Defendants'
Amendment to Converted Motion for Summary Judgment [DE 55]. When the Court
converted Defendants' motion for reconsideration into one seeking summary judgment,
it directed Defendants to supplement the record, but did not explicitly grant leave to
raise new grounds for dismissal. DE 69 at 2 n.3. Pharma Supply thus argues that
arguments first appearing in the Amendment should be disregarded. However, Pharma
Supply plainly had notice of—and an opportunity to respond to—the handful of
additional arguments raised in the Amendment, as illustrated by the substantive
responses on those points in its Opposition. Cf. Massey v. Congress Life Ins. Co., 116
F.3d 1414, 1417–18 (11th Cir. 1997) (discussing necessity of notice and opportunity to
respond in summary-judgment briefing). Perceiving no unfair prejudice to Pharma
Supply from the addition of arguments in Defendants' Amendment to the Motion, the
Court will consider those arguments as they relate to Count III.
grant of summary judgment where record contained no evidence linking defendant's
acts to injuries suffered by plaintiff).
D. Pharma Supply Concedes that Judgment Is Proper on Count IV
In Count IV, Pharma Supply asserts a cause of action against both Defendants
for money lent. A plaintiff with a claim for money lent must plead and prove: "(1) money
was delivered to the defendant, (2) the money was intended as a loan, and (3) the loan
has not been repaid." Wane v. Loan Corp., 926 F. Supp. 2d 1312, 1324 (M.D. Fla.
2013) (internal quotation marks omitted), aff'd, 552 F. App'x 908 (11th Cir. 2014) (per
curiam). In the Complaint, Pharma Supply alleges that it loaned Defendants $88,507.65
as an advance of attorneys' fees, which Defendants represented would be repaid by
Zurich. Compl. ¶¶ 61, 63. Pharma Supply alleges that it never recouped these funds. Id.
¶ 64. However, Defendants have submitted documents in support of their Motion
purporting to illustrate that Zurich did pay these amounts to Pharma Supply as
promised. See DE 47-2 at 16–18. In response, Pharma Supply concedes that it was
repaid the money it loaned to Defendants. DE 69 at 12. Accordingly, the Court will grant
judgment in Defendants' favor on Count IV.
It is accordingly ORDERED AND ADJUDGED that Defendants' Motion for
Reconsideration of Defendants' Motion to Dismiss Complaint [DE 44], as amended by
the Amendment to Converted Motion for Summary Judgment [DE 55], is GRANTED in
part and DENIED in part as follows:
Summary judgment is hereby GRANTED in Defendants' favor with regard to
Counts III and IV of the Complaint [DE 1].
Defendants' Motion is DENIED in all other respects.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,
Florida, this 26th day of January, 2015.
Copies provided to:
Counsel of record via CM/ECF
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