B M W Medical Inc v. X O N Holdings L L C et al
Filing
94
MEMORANDUM RULING re 79 MOTION for Summary Judgment filed by Alpha Genomix Laboratories Inc, Paul Wesley Warrington is denied. Signed by Magistrate Judge Mark L Hornsby on 1/9/2019. (crt,Bunting, M)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
BMW MEDICAL, INC.
CIVIL ACTION NO. 14-cv-3338
VERSUS
MAGISTRATE JUDGE HORNSBY
XON HOLDINGS, LLC, ET AL
MEMORANDUM RULING
Introduction; Background Facts
BMW Medical, Inc. (“BMW”) entered into a contract with XON Holdings, LLC
(“XON”) and its sole member, Kevin Jones. The agreement granted BMW the right to
distribute and sell clinical diagnostic testing services, primarily involving genetic DNA
testing, in the United States for a term of five years. Mr. Jones requested that BMW sell a
specific genetic testing service provided by Alpha Genomix Laboratories, Inc. (“Alpha”).
BMW alleges in its complaint, and provides backing evidence, that Mr. Jones/XON
represented that the Alpha test was the subject of a clinical study at Johns Hopkins
University. BMW also presents evidence that Paul Wesley Warrington, the CEO of Alpha,
made the same representation. BMW alleges that it relied on those representations to sell
the Alpha product to physicians, and the existence of the Johns Hopkins study was an
important factor in the decision of many physicians to order the Alpha test. Some
physicians expressed doubts about the study’s existence. BMW contacted Johns Hopkins
and learned that the study did not exist.
BMW asserts in Count 1 a claim of breach of contract against XON for $72,275 in
unpaid commissions. It asserts a related claim against Kevin Jones, as it appears XON may
have been dissolved at the time Jones signed the contract on its behalf. BMW asserts in
Count 2 a second breach of contract claim against XON for violation of the terms of a nonsolicitation agreement that provided the parties would not, for a certain term, seek to retain
sale representatives or other principals of the other. BMW alleges that XON and Kevin
Jones have breached this provision by soliciting BMW’s sales representatives and other
contractors.
Counts 3 and 4 of BMW’s complaint are for fraud and negligent misrepresentation.
The counts are aimed at both XON/Jones as well as Alpha and its CEO, Paul Wesley
Warrington. BMW points to communications from Warrington in which he represented
things such as, “Kevin and I are working on the study as we speak,” and “we are now doing
a legitimate study, IRB approved and run through John Hopkins.” Other communications
may not have included such direct misrepresentations, but they implied that a study was
ongoing and did not make any effort to correct BMW’s stated belief that there was a Johns
Hopkins study.
Alpha and Warrington’s Motion for Summary Judgment
Before the court is a Motion for Summary Judgment (Doc. 79) filed by Alpha and
Mr. Warrington. They argue that BMW has failed to present sufficient evidence to
establish its claims for fraud and negligent misrepresentation. They attack BMW’s ability
to prove each of the elements of the claims under Louisiana law or that BMW suffered any
damages. The motion is denied because it is untimely and BMW has submitted sufficient
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evidence to create genuine disputes of material fact that warrant denying summary
judgment.
The amended scheduling order (Doc. 78) provided that dispositive motions (not
relying on experts) were due by May 30, 2018. A later deadline of October 31, 2018 was
set for dispositive motions (relying on experts). This motion was not filed until October
31, 2018, and it does not rely on any expert testimony. It is a rather ordinary motion for
summary judgment that merely challenges the plaintiff’s ability to present evidence in
support of its claims. The movants’ contention that the court allowed them to file a motion
for summary judgment of any kind by the October 31 deadline (that coincided with the
deadline for Daubert motions) is mistaken. Motions such as the one before the court were
due by May 30, 2018, which warrants denying the motion as untimely.
The motion is denied, in the alternative, because there are genuine disputes of
material facts that preclude summary judgment.
BMW points to emails and other
communications in which Mr. Warrington, on behalf of Alpha, misrepresented that Alpha
was participating in a Johns Hopkins study, and those misrepresentations were apparently
made to persuade BMW to continue selling the Alpha product to physicians and other
customers. BMW asserts that it was damaged because it provided service that directly
benefitted Alpha, for which BMW never received payment.
Movants cite no authority for their contention that a lack of contractual privity
between BMW and Alpha necessarily defeats BMW’s fraud and negligent
misrepresentation claims. Louisiana allows recovery in tort for economic loss caused by
negligent misrepresentation even where privity of contract is absent. BMW also alleges
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that its relationships with physicians, customers, and other professional contacts were
impaired because of the scandal. BMW has not produced specific evidence of such
impairments, but such damages can be reasonably inferred from the summary judgment
evidence and uncontested facts that are in the record. The movants make some additional
arguments in their reply memorandum, but arguments raised for the first time in a reply
should be disregarded because the opponent has not been afforded a fair opportunity to
respond to them. For these reasons, the Motion for Summary Judgment by Warrington
and Alpha Genomix (Doc. 79) is denied.
THUS DONE AND SIGNED in Shreveport, Louisiana, this the 9th day of January,
2019.
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