Radiologix, Inc. et al v. Radiology and Nuclear Medicine, LLC

Filing 469

MEMORANDUM AND ORDER denying 461 Defendant's Motion for Directed Verdict as a Matter of Law at the Close of Plaintiffs' Evidence. Signed by District Judge Daniel D. Crabtree on 02/19/2019. (mig)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
RADIOLOGIX, INC. and RADIOLOGY
AND NUCLEAR MEDICINE IMAGING
PARTNERS, INC.,
Plaintiffs,
v.
Case No. 15-4927-DDC-KGS
RADIOLOGY AND NUCLEAR
MEDICINE, LLC,
Defendant.
_____________________________________
MEMORANDUM AND ORDER
On February 5, 2019, a jury trial began in this case. After presenting evidence for about
five days, plaintiffs rested their case in chief. At the close of plaintiffs’ evidence, defendant filed
a 27-page Motion for Directed Verdict as a Matter of Law at the Close of Plaintiffs’ Evidence.
Doc. 461. Plaintiffs have submitted a Response opposing defendant’s motion. Doc. 465. After
considering the parties’ arguments and the evidence presented at trial—in the light most
favorable to plaintiffs, the non-moving party—the court denies defendant’s Motion for Directed
Verdict.
I.

Factual Background

This case involves a breach of contract dispute. Plaintiff Radiologix, Inc. (“Radiologix”)
is a national provider of imaging services based in California. Plaintiff Radiology and Nuclear
Medicine Imaging Partners, Inc. (“RNMIP”) is a wholly owned subsidiary of plaintiff
Radiologix. Defendant Radiology and Nuclear Medicine, LLC (“RNM”) is a Kansas limited
liability company and physician-owned radiology practice based in northeast Kansas.

Since 1997, plaintiff Radiologix or one of its predecessors-in-interest has provided
management services to defendant under a long-term management Service Agreement. This
lawsuit arises from defendant’s termination of that Agreement in 2014. Plaintiffs assert a breach
of contract claim against defendant, alleging that defendant breached the parties’ Agreement by
terminating it in 2014. As a defense to this claim, defendant argues that it had a right to
terminate the Agreement because plaintiffs had breached their material obligations to defendant
under that Agreement.
Defendant also asserts a Counterclaim against plaintiffs for breach of contract.
Defendant argues that plaintiffs breached the Agreement before the 2014 termination by failing
to provide management, administrative, and billing services, as well as management and capital
resources, to defendant as the Service Agreement requires.
Defendant’s Motion for Directed Verdict argues that plaintiffs’ evidence at trial
establishes that they failed to perform their obligations under the Service Agreement. And thus,
defendant contends, plaintiffs have failed to prove one of the essential elements of their breach of
contract claim. Also, defendant contends that plaintiffs’ evidence fails to prove their damages
claim. Thus, defendant argues, plaintiffs’ breach of contract claim fails as a matter of law. For
both of these reasons, defendant asserts that it is entitled to judgment as a matter of law against
plaintiffs’ breach of contract claim.
II.

Legal Standard

Rule 50(a) provides:
(1) In General. If a party has been fully heard on an issue during a jury trial and
the court finds that a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on that issue, the court may:
(A) resolve the issue against the party; and

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(B) grant a motion for judgment as a matter of law against the party on a
claim or defense that, under the controlling law, can be maintained or
defeated only with a favorable finding on that issue.
When considering a Rule 50(a) motion, the court must draw “[a]ll reasonable inferences
. . . in favor of the nonmoving party and [cannot] make credibility determinations or weigh the
evidence.” Liberty Mut. Fire Ins. Co. v. Woolman, 913 F.3d 977, 983 (10th Cir. 2019) (citations
and internal quotations marks omitted). “Judgment as a matter of law is appropriate only if a
‘reasonable jury would not have a legally sufficient evidentiary basis’ to find for the opposing
party.” Id. at 983–84 (quoting Fed. R. Civ. P. 50(a)(1)). In other words, “‘[t]he evidence [must]
point[ ] but one way and [be] susceptible to no reasonable inferences which may support the
opposing party’s position.’” Id. at 984 (quoting Finley v. United States, 82 F.3d 966, 968 (10th
Cir. 1996)).
III.

Analysis

Defendant asserts several arguments supporting its Motion for Directed Verdict. The
court addresses each argument, separately, below.
A. Does the Evidence Establish that Plaintiffs Failed to Perform Their
Obligations Under the Service Agreement?
Defendant asserts that plaintiffs’ evidence failed to prove one of the required elements of
their breach of contract claim—that plaintiffs performed their obligations under the Service
Agreement. In Kansas,1 the elements of a breach of contract claim are: “(1) the existence of a
contract between the parties; (2) sufficient consideration to support the contract; (3) the
plaintiff’s performance or willingness to perform in compliance with the contract; (4) the
defendant’s breach of the contract; and (5) damages to the plaintiff caused by the breach.”

1
The parties agree that Kansas law governs the Service Agreement and the parties’ competing
claims for breach of that Agreement. Doc. 227 at 2 (Pretrial Order ¶ 1.d.).

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Stechschulte v. Jennings, 298 P.3d 1083, 1098 (Kan. 2013). Here, defendant asserts that
plaintiffs cannot prove the third element of a breach of contract claim because plaintiffs’
evidence establishes that plaintiffs failed to perform their obligations under the Service
Agreement. Defendant argues that plaintiffs failed to perform their obligations under the Service
Agreement in eight, different ways.2
1. Did plaintiffs fail to perform their obligations under the Service
Agreement by reducing the scope of services under that Agreement while
charging the same Service Fee?
Defendant argues that plaintiffs’ evidence shows that plaintiffs failed to perform their
obligations under the Service Agreement when they closed the Imaging Center and eliminated
Technical Operations in Topeka in 2010, but still charged the same Service Fee under the
contract.
Section 7.1 of the Service Agreement provides:
Payment of the Service Fee is not intended to and shall not be interpreted or implied
as permitting Administrator to share in the Group’s fees for medical services but is
acknowledged as the negotiated fair market value compensation to Administrator
considering the scope of the services and the business risks assumed by
Administrator.

2
Defendant asserts that plaintiffs “must show that they performed all material obligations” of the
parties’ Agreement. Doc. 462 at 3. Plaintiffs argue that defendant misstates the burden of proof. The
court agrees. Plaintiffs have the burden to prove that they performed, or were willing to perform, their
obligations under the Agreement. As a defense, defendant argues that it had the right to terminate the
Agreement because plaintiffs failed to perform material obligations to defendant under that Agreement.
To prove that defense, defendant bears the burden to prove that plaintiffs materially breached the
Agreement. In the analysis above, the court considers only whether plaintiffs’ evidence presents a legally
sufficient evidentiary basis for a reasonable jury to find that plaintiffs performed their obligations under
the Service Agreement sufficient to support their breach of contract claim.
During a conference outside the jury’s presence, the court commented that it doesn’t read Kansas
law as requiring a plaintiff to prove during its case in chief that it satisfied every one of its obligations
under a contract to prevail on a breach of contract claim. The court still holds that view. But defendant
has identified specific provisions of the Service Agreement that it asserts plaintiffs failed to perform. And
defendant has pointed to evidence presented in plaintiffs’ case that—it contends—shows plaintiffs have
failed to perform those obligations. The court thus considers those arguments below.

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Doc. 270-10 at 37.
Plaintiffs contend that defendant cannot assert this argument because defendant failed to
preserve it in the Pretrial Order. In a narrow, technical sense, plaintiffs are correct. Doc. 227 at
26 (“Defenses of Defendant[ ]”). But defendant did provide fair notice that it would defend
plaintiffs’ contract claim by establishing, among other things, that “[p]laintiffs’ were in material
breach of the Service Agreement . . . .” Id. And though defendant advanced this defense as a
reason providing it the right to terminate that Agreement, the court concludes it sufficed to
preserve the argument defendant makes in its motion.
In contrast, the court is not persuaded by the substance of defendant’s argument.
Certainly, the parties could have made a bargain that entitled defendant to pay a reduced Service
Fee if the services provided by plaintiffs should evolve or reduce. But that isn’t what their
contract provides. Section 7.1 specified a fee that defendant promised to pay. Also, the parties’
Agreement reduced the size of that fee over time. See Doc. 270-10 at 57 (Exhibit 7.1 to Service
Agreement). Had the parties necessarily intended for the Service Fee to reduce if, for example,
Technical Operations were to cease, the Service Agreement shows they knew how to apply a
reduced Service Fee. They didn’t do that, however.
Last, defendant’s argument fails to carry the day for one more reason. Defendant’s
premise is that plaintiffs owed a duty to do whatever was required to keep the Technical
Operations operating. But that’s not what their contract provides. Instead, it obligated plaintiffs
to provide “all ordinary, necessary or appropriate services for the efficient operation of the
Group and the Technical Operations . . . .” Id. at 16 (Section 3.1(f)). Under the standard adopted
by Rule 50(a), a reasonable jury might find that plaintiffs’ performance fell short of this
standard. But also, they might reach the opposite conclusion. Given its duty to give the benefit

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of “[a]ll reasonable inferences” to plaintiffs, the court cannot adopt defendant’s argument.
Woolman, 913 F.3d at 983.
2. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to provide all non-physician professional support
reasonably necessary for the efficient conduct of the Professional
Operations, as Section 3.6 of the Service Agreement requires?
Defendant next asserts that plaintiffs’ evidence establishes that they failed to perform
their obligations under the Service Agreement because they didn’t provide all non-physician
professional support reasonably necessary for the efficient conduct of the Professional
Operations, as Section 3.6 of the Service Agreement requires.
Section 3.6 of the Service Agreement requires plaintiffs to provide “non-physician
professional support . . . .” Doc. 270-10 at 20. Defendant asserts that plaintiffs failed to satisfy
their obligations under these provisions in two ways: (1) by eliminating David Smith’s position
as a Practice Administrator; and (2) failing to provide IT support. The court rejects both
arguments.
Section 3.6 lists several specific positions that the Administrator must provide. But it
doesn’t say anything about employing a Practice Administrator or one meeting specific criteria
that Jayne Rarrick, Melissa McCall, or other Radiologix or RNMIP employees (Mr. Smith’s
functional replacements) didn’t meet. The parties could have entered a contract requiring
plaintiffs to supply and fund a full time Practice Administrator with David Smith’s degrees,
certification, and experience—but that’s not the Agreement they made. Instead, plaintiffs
promised in Section 3.6 to provide personnel “as is reasonably necessary for efficient conduct of
Professional Operations and Technical Operations.” Doc. 270-10 at 20. Perhaps the personnel
plaintiffs provided weren’t qualified by education or experience to satisfy these provisions, but

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that’s not the only reasonable conclusion a jury could reach based on the evidence presented in
plaintiffs’ case.
Also, defendant argues that plaintiffs failed to perform their obligations under Recital F
when they refused to provide defendant with plaintiffs’ eRad system (plaintiffs’ proprietary
PACS system) unless defendant paid for the system and someone to support it. Recital F
provides that the “Administrator is willing to commit significant management and capital
resources to the Group to allow for the Group’s further growth, all as provided in this
Agreement.” Id. at 6. To say the least, Recital F is susceptible to multiple interpretations. A
reasonable jury could conclude that plaintiffs’ refusal to provide the eRad system to defendant
failed its obligation to “commit significant management and capital resources to the Group to
allow for the Group’s further growth.” But, viewing the evidence in the light most favorable to
plaintiffs—the nonmoving party—a reasonable jury also could reach the opposite conclusion.
Defendant’s argument assumes that Recital F is a term adopted by the parties’
Agreement. The court’s analysis makes the same assumption even though there is good reason
to question this premise. Recital F is the last of six paragraphs comprising the Recitals. Those
six paragraphs precede the following language: “NOW, THEREFORE . . . and on the terms and
subject to the conditions herein set forth, the parties hereto agree as follows . . . .” Doc. 270-10
at 6 (emphasis added). A reasonable jury might find that the Recital paragraphs are a term of the
contract—or they might not.
3. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to maintain Technical Operations in or around
Topeka after December 2010?
Defendant next argues that plaintiffs’ evidence shows that plaintiffs failed to perform
their obligations under the Service Agreement because they failed to maintain Technical

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Operations in or around Topeka after December 2010. Plaintiffs assert that defendant is
precluded from arguing that plaintiffs breached the Agreement by closing the Technical
Operations because defendant never asserted this claim in the Pretrial Order. Indeed, the court
ruled in limine that—although defendant had not asserted a claim of this nature in the Pretrial
Order—defendant could present evidence that plaintiffs’ closing of the Technical Operations was
a symptom of plaintiffs’ other alleged breaches of the Agreement. But the court has precluded
defendant from asserting that closing the Technical Operations breached the Agreement or
otherwise provided defendant with the right to terminate the contract.
Here, defendant isn’t arguing that closing the Technical Operations establishes that
plaintiffs breached the contract or provided defendant a right to terminate. Instead, defendant
argues, this evidence shows that plaintiffs cannot prove one of the essential elements of
plaintiffs’ breach of contract claim—that it performed its obligations under the Agreement.
Article VI of the Agreement provides: “The parties recognize that the services to be provided by
the Administrator hereunder shall be feasible only if the Group operates active Professional
Operations and, in conjunction with Administrator, Technical Operations to which the
physicians associated with the Group devote their full medical time and attention.” Doc. 270-10
at 22 (emphasis added). Several other provisions of the Agreement refer to the Technical
Operations. The court finds that Section 3.1(a) is the provision that comes the closest to making
a specific promise of what plaintiffs must provide under the contract for Technical Operations. It
authorizes the Administrator “to perform its services hereunder as necessary or appropriate for
the efficient operation of the Professional Operations and the Technical Operations . . . .” Id. at
12. A reasonable jury could conclude that plaintiffs failed to meet this obligation when it closed
the Technical Operations. But—viewing the evidence in the light most favorable to plaintiffs—

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that’s not the only conclusion the jury could reach based on the contract language and the
evidence submitted in plaintiffs’ case.
4. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to “relieve the Group to the maximum extent
possible” of the administrative and other non-medical business aspects of
the Group, as Section 3.2(a) of the Service Agreement requires?
Defendant argues that plaintiffs’ evidence shows that plaintiffs failed to perform their
obligations under the Service Agreement because plaintiffs didn’t “relieve the Group to the
maximum extent possible” of the administrative and other non-medical business aspects of the
Group. Section 3.2(a) of the Service Agreement provides:
The Group agrees that the purpose and intent of this Agreement is to relieve the
Group to the maximum extent possible of the administrative, accounting,
purchasing, non-physician personnel and other non-medical business aspects of the
Group.
Doc. 270-10 at 13 (emphasis added).
The evidence shows, defendant asserts, that defendant’s physicians spent significant time
on non-medical, i.e., business aspects of defendant’s business, and thus plaintiffs did not meet
their obligation to “relieve” defendant of administrative obligations. Plaintiffs respond that
defendant never asserted this alleged breach as a material default in the Pretrial Order, and thus it
has waived this argument. Again, the court considers this argument—not because defendant
asserts it was a material default—but because defendant argues that this evidence shows that
plaintiffs failed to satisfy its obligations under the Service Agreement.
Yet again, the language of the Service Agreement uses a mushy standard: It requires
plaintiffs to “relieve” defendant of administrative work “to the maximum extent possible.” It is
difficult to imagine—on a motion for judgment as a matter of law—a record capable of
establishing that the service plaintiffs provided failed to meet the Agreement’s mushy standard.

9

Although defendant cites evidence of administrative work defendant’s physicians performed, the
evidence presented in plaintiffs’ case also includes evidence of the administrative support
plaintiffs provided. Also, a reasonable jury could conclude that defendant’s physicians
unreasonably rejected plaintiffs’ support and voluntarily undertook their own efforts to engage in
administrative functions. Thus, viewing the evidence in light most favorable to plaintiffs, a
reasonable jury could conclude that plaintiffs met the contract’s requisite standard for providing
administrative support. Plaintiffs’ evidence also shows that defendant’s physicians chose to
organize a wide range of business oriented committees. Plaintiffs’ evidence also shows that
defendant’s physicians wanted to participate significantly in business matters affecting their
practice. There is nothing wrong with that and, indeed, that they chose to do so makes perfect
sense. But their engagement does not mean that plaintiffs failed to meet their contractual
obligation. And it certainly doesn’t mean that as a matter of law.
5. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to provide all ordinary, necessary, and appropriate
computer and information management services, as Section 3.2(f) of the
Service Agreement requires?
Next, defendant argues that plaintiffs’ evidence shows that plaintiffs failed to perform
their obligations under the Service Agreement because they didn’t provide all ordinary,
necessary, and appropriate computer and information management services in breach of Section
3.2(f) of the Service Agreement.
Section 3.2(f) requires: “Administrator shall supply to the Group all ordinary, necessary
or appropriate services for the efficient operation of the Group and the Technical Operations,
including without limitation, . . . computer services [and] information management.” Doc. 27010 at 16.

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Defendant asserts that the evidence establishes it spent significant capital to purchase a
universal PACS system called Ramsoft. Plaintiffs provided no money or capital for the system,
and also failed to provide necessary technical support to implement and support the system.
Plaintiffs respond that Section 3.6(f) did not require them to purchase and support the Ramsoft
system. Indeed, a reasonable jury could conclude that purchasing and supporting the Ramsoft
system was not an “ordinary, necessary or appropriate service[ ]” that plaintiffs were required to
provide under the contract. A reasonable jury also could find that plaintiffs provided the
requisite support to defendant—for example, plaintiffs presented evidence that John Keffer
visited Topeka and provided certain IT assistance. A jury also could reach the opposite
conclusion. But the court cannot find that the evidence establishes—as a matter of law—that
plaintiffs failed to perform this obligation under the Service Agreement.
6. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to commit significant capital resources to
defendant, as Section 3.5(b) and Recital F of the Service Agreement
require?
Defendant argues that plaintiffs’ evidence shows that plaintiffs failed to perform their
obligations under the Service Agreement because they failed to commit significant capital
resources to defendant, as Section 3.5(b) of the Service Agreement requires. Plaintiffs argue that
defendant never asserted this alleged failure in Dr. Allen’s November 26, 2010, notice of default
letter. Also, defendant never asserted in the Pretrial Order that this alleged failure was a material
breach of the parties’ Agreement. Again, the court considers whether plaintiffs’ evidence
establishes that plaintiffs failed to perform their obligations under this provision of the
Agreement—thus, failing to satisfy one of the elements of their breach of contract claim.
Section 3.5(b) requires the Administrator to “make funds available for capital
expenditures and improvements by Administrator” for budgeted and non-budgeted expenses.
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Doc. 270-10 at 19. Also, Recital F provides that the “Administrator is willing to commit
significant management and capital resources to the Group to allow for the Group’s further
growth, all as provided in this Agreement.” Id. at 6.
Defendant argues that the evidence shows that plaintiffs failed to perform their
obligations under these provisions by refusing to purchase and support a PACS system for RNM.
As previously discussed, Recital F is susceptible to many interpretations. Section 3.5(b) suffers
from the same limitations. A reasonable jury could conclude that plaintiffs’ refusal to provide a
PACS system to defendant failed to satisfy plaintiffs’ obligations under the Agreement to “make
funds available for capital expenditures and improvements” and to “commit significant
management and capital resources to the Group to allow for the Group’s further growth.” But,
viewing the evidence in the light most favorable to plaintiffs—the nonmoving party—a
reasonable jury also could reach the opposite conclusion.
7. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to implement an appropriate local public relations
or advertising program for defendant, as Section 3.9 of the Service
Agreement requires?
Defendant argues that plaintiffs’ evidence shows that plaintiffs failed to perform their
obligations under the Service Agreement because they failed to implement an appropriate local
public relations or advertising program for defendant, as Section 3.9 of the Service Agreement
requires.
Section 3.9 provides: “In consultation with the Joint Planning Board, Administrator shall
implement (and design where requested) an appropriate local public relations or advertising
program, with appropriate emphasis on public awareness of the availability of services at the
Practice Sites.” Doc. 270-10 at 21.

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Defendant argues that the evidence shows that plaintiffs failed to meet their obligations
under this provision of the Agreement after the Imaging Center closed in 2010. Specifically,
defendant argues that the evidence shows that plaintiffs’ marketing expenses decreased from
$31,774.55 in 2010, to $878 in 2011. But plaintiffs respond that the evidence also shows that
defendant never complained about a lack of advertising, defendant never asked plaintiffs to
engage in any further advertising efforts above what plaintiffs already were doing, and defendant
never told plaintiffs that the amount of advertising was insufficient. Viewing the evidence in the
light most favorable to plaintiffs, a reasonable jury could conclude from this evidence that
plaintiffs engaged in an “appropriate” amount of advertising—which is all the Agreement
requires. A reasonable jury also could reach the opposite conclusion. But, the court can’t make
that determination as a matter of law on this record.
8. Did plaintiffs fail to perform their obligations under the Service
Agreement by failing to provide consulting and advisory services as
reasonably requested by defendant, as Section 3.11 of the Service
Agreement requires?
Finally, defendant argues that plaintiffs’ evidence shows that plaintiffs failed to perform
their obligations under the Service Agreement because they didn’t provide consulting and
advisory services as reasonably requested by defendant, as Section 3.11 of the Service
Agreement requires.
Section 3.11 requires the Administrator to “provide such consulting and other advisory
services as reasonably requested by the Group in all areas of the Group’s business functions,
including without limitation, financial planning, acquisition and expansion strategies,
development of long-term business objectives and other related matters.” Doc. 270-10 at 22.
Defendant cites evidence that—it argues—shows it requested consulting services from
plaintiffs, but plaintiffs ignored those requests. Plaintiffs respond with citations to other
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evidence that—they contend—shows that plaintiffs provided the requisite level of consulting and
advisory services. Plaintiffs correctly argue that the jury must make the credibility decisions
here and determine whether the evidence supports a finding that plaintiffs satisfied their
obligations under the Agreement. Viewing the evidence in plaintiffs’ favor, a reasonable jury
could find that plaintiffs satisfied these obligations under the Agreement by providing
appropriate consulting and advisory services. A reasonable jury also could reach the opposite
conclusion. But it’s not a question for the court to decide on defendant’s Motion for Directed
Verdict.
B. Defendant asserts that it provided the requisite notice of defaults under
the contract on both November 26, 2010, and October 6, 2014.
Next, defendant argues that it provided the requisite notice to plaintiffs of their alleged
material defaults and gave plaintiffs the required opportunity to cure those defaults, but plaintiffs
failed to cure. Doc. 462 at 22. Thus, defendant argues, the evidence establishes that it had a
right to terminate the Service Agreement.
Section 10.3(b) allows RNM to terminate the Agreement “by giving written notice
thereof to Administrator (after the giving of any required notices and the expiration of any
applicable waiting periods set forth below)” if: (1) plaintiffs materially have defaulted on the
duties imposed by the agreement and failed to cure their default within 60 days after being
notified in writing of the default; and (2) two-thirds of RNM’s equity holders have voted to
approve the agreement’s termination. Doc. 270-10 at 41 (emphasis added). Section 10.5 of the
Service Agreement requires that “[a]ny termination of this Agreement shall be effective (the
“Termination Date”) as follows: (a) Immediately upon receipt of a termination notice pursuant
to Section 10.3 or Section 10.4 (a “Termination Notice”) and expiration of applicable cure
periods . . . .” Id. at 43.
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Defendant cites to evidence that, it contends, shows defendant properly notified plaintiffs
of their default and gave them the opportunity to cure. Plaintiffs respond with citations to other
evidence that—plaintiffs contend—shows defendant failed to provide plaintiffs with a notice of
default and an opportunity to cure as the Service Agreement requires before defendant is
permitted to terminate the Agreement. The court agrees that this is a fact issue that the jury must
decide. And the court cannot conclude on the current record that the jury can only reach one
conclusion on this issue.
C. Defendant asserts that plaintiffs have failed to prove that they are entitled
to recover damages.
Last, defendant argues that plaintiffs’ breach of contract claim fails as a matter of law
because they have not presented sufficient evidence of damages. Defendant makes two damages
arguments.
1. Defendant argues that the evidence establishes that plaintiff
Radiologix has no rights under the Service Agreement—just
obligations.
Defendant asserts that plaintiff Radiologix has no right to recover damages under the
Service Agreement. The Service Agreement designates plaintiff RNMIP as the “Administrator”
and plaintiff Radiologix as the “Parent.” Doc. 270-10 at 6. Section 7.1 of the Agreement
requires that “Administrator shall be paid the service fee . . . .” Id. at 37. Based on this
language, defendant argues that its obligation to pay the Service Fee runs only to plaintiff
RNMIP (the “Administrator”)—and not Radiologix. Thus, defendant argues, it owes no Service
Fee—or any monetary obligation—to plaintiff Radiologix and plaintiff Radiologix has no right
to recover any damages against defendant under the Service Agreement.
Plaintiffs respond that the court already decided that both plaintiffs can recover under the
contract when it denied defendant’s Motion to Exclude plaintiffs’ damages expert, Marc
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Vianello. Thus, plaintiffs argue, defendant is precluded from making this argument based on the
law of the case doctrine. The court disagrees. The court never before was presented with this
specific issue—whether plaintiff Radiologix has a right to recover under the contract since the
contract only requires payment of the Service Fee to the Administrator—RNMIP.
Nevertheless, the court declines to direct a verdict against plaintiff Radiologix’s breach of
contract claim based on Section 7.1 of the Service Agreement. Plaintiffs have presented a
plausible damage theory at trial suggesting that both plaintiffs—as parties to the Agreement—
sustained damages from defendant’s alleged breach of it. Defendant had the opportunity to
cross-examine plaintiffs’ damages expert on this theory. The record presents a factual dispute
about this question, and the court cannot conclude that the evidence (when viewed in plaintiffs’
favor) establishes as a matter of law that plaintiff Radiologix can recover no damages.
One final observation is warranted. This argument by defendant tries to inject a new
issue into the trial at the last minute. Defendant has known for several years that plaintiff
Radiologix sought to recover contract damages. Defendant never identified this as an issue at
summary judgment, nor when it disclosed it defenses in the Pretrial Order. Defendant’s motion
challenging Mr. Vianello’s testimony never raised this question either. And defendant’s motion
asks the court to decide this undisclosed, substantive defense mid-trial even though granting
defendant’s motion wouldn’t shorten this trial by one moment. Defendant never asserts that
RNMIP can’t recover damages, and the damages claim will continue whether Radiologix
continues as a plaintiff—or not. If plaintiffs recover, defendant can raise this question in posttrial motions. But the court declines to dismiss a party’s claim on a previously undisclosed basis
when the litigants and the court already have devoted substantial trial efforts to the case.

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2. Defendant argues that plaintiffs’ damages estimates are based on
revenues and expenses of non-parties.
Next, defendant asserts that plaintiffs have not proved that they sustained damages from
defendant’s alleged breach of the Service Agreement because plaintiffs’ expert bases his damage
calculations on revenues and expenses of RadNet, Inc. and RadNet Management, Inc.—neither
of whom are parties to the lawsuit. Plaintiffs elicited testimony from Mr. Vianello (plaintiffs’
damages expert) about how and why he calculated plaintiffs’ damages in the way that he did.
Mr. Vianello explained why—in his expert opinion—he has calculated the damages sustained by
the named plaintiffs. Defendant had an opportunity to cross-examine Mr. Vianello about his
calculations—and specifically about whether he improperly considered revenue and expenses of
non-parties to the case. The jury must decide the weight and credibility to give to Mr. Vianello’s
damages testimony. Viewing the evidence in the light most favor to plaintiffs, the jury could
decide that he properly calculated the damages that the named plaintiffs sustained. The jury also
could reach the opposite conclusion—finding that Mr. Vianello improperly calculated plaintiffs’
damages by including the revenue and expenses of other RadNet entities. But the court cannot
decide this issue on a Motion for Directed Verdict.
IV.

Conclusion

For the reasons explained above, the court denies defendant’s Motion for Directed
Verdict as a Matter of Law at the Close of Plaintiffs’ Evidence.
IT IS THEREFORE ORDERED BY THE COURT THAT defendant’s Motion for
Directed Verdict as a Matter of Law at the Close of Plaintiffs’ Evidence (Doc. 461) is denied.
IT IS SO ORDERED.

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Dated this 19th day of February, 2019, at Kansas City, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge

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