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CURAFLEX HEALTH SERVS. v. BRUNI

September 14, 1995

CURAFLEX HEALTH SERVICES, INC., Plaintiff,
v.
LARRY M. BRUNI, M.D., P.C., et al., Defendants.



The opinion of the court was delivered by: FRIEDMAN

 This case was tried before the Court without a jury over three days to resolve the sole issue remaining in the case, plaintiff's claim for tortious interference with contract. Upon consideration of the evidence presented at trial and the parties' pretrial briefs, and for the following reasons, the Court finds in favor of the defendants.

 I. BACKGROUND

 A. The Parties

 Curaflex Health Services, Inc. ("Curaflex") was a business that provided home infusion products and services to patients infected with the HIV virus. *fn1" Defendant Larry M. Bruni, M.D., P.C. ("Bruni P.C.") was a medical practice located in Washington, D.C., that primarily served such patients. Defendant Larry M. Bruni, M.D. ("Dr. Bruni") was the president, sole shareholder and principal physician of Bruni P.C. He is also a director and shareholder in Medical Office Management Systems, Inc. ("MOMS"). MOMS is a D.C. corporation that develops and supplies a medical software package called MEDSYS. Defendant Gary P. Whaley is both MOMS' president and one of its shareholders. He also was the corporate secretary and business manager of Bruni P.C. Defendant Whaley was responsible for all the bookkeeping and financial administration of both MOMS and Bruni P.C. Michael Anestos was Bruni P.C.'s outside general counsel.

 B. Procedural History

 On December 23, 1992, Curaflex brought suit against Dr. Bruni, Bruni P.C., MOMS and Mr. Anestos. Curaflex subsequently amended its complaint to add a count and a fifth party, Mr. Whaley. Counts I, II and III of the amended complaint alleged conversion; Count IV alleged breach of contract with respect to the Product and Service Supply Agreement ("PSSA") between Curaflex and Bruni P.C.; Count V alleged tortious interference with the PSSA; Count VI alleged breach of contract on a promissory note (against Bruni P.C. only); Count VII alleged breach of contract on the guaranty of the promissory note (against Dr. Bruni only); Count VIII alleged conspiracy to convert; Count IX alleged aiding and abetting conversion; and Count X alleged tortious interference with prospective economic and business relations.

 On January 21, 1993, defendants filed their answer and five counterclaims against Curaflex. In Counterclaims I and II, Bruni P.C. alleged breach of contract; in Counterclaim III, Bruni P.C. alleged conversion; in Counterclaim IV, MOMS alleged breach of contract; and in Counterclaim V, Dr. Bruni and Bruni P.C. alleged slander.

 On May 18, 1994, Bruni P.C. filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. On October 19, 1994, Bankruptcy Judge Martin Teel granted Bruni P.C.'s motion to convert the Chapter 11 proceeding into one under Chapter 7. Plaintiff has filed a proof of claim in the Bankruptcy Court for all sums due under the PSSA.

 On November 18, 1994, the Court granted defendant Michael Anestos' Motion for Summary Judgment and dismissed him from the case. On the same day, the Court granted Plaintiff's Motion for Partial Summary Judgment on Count VI of the Amended Complaint (breach of contract on the promissory note) and entered judgment against the now bankrupt Bruni P.C., the only defendant named in that count. On February 27, 1995, the Court entered judgment in the defendants' favor on Counts I, II, III, VII, VIII, IX and X of the Amended Complaint.

 Pursuant to a Consent Order dated July 10, 1995, the parties consented to a judgment in favor of plaintiff and against Bruni P.C. on Count IV of the Amended Complaint (breach of contract), with damages in the amount of $ 850,000. The parties also consented to a judgment in favor of defendant Bruni P.C. on the Second Counterclaim, with nominal damages in the amount of $ 1.00. Finally, the parties consented to a judgment in favor of defendant MOMS on the Fourth Counterclaim, with damages in the amount of $ 20,442.80. Counterclaims I, III and V were abandoned by defendants.

 The remaining claim in this lawsuit, which was tried before the Court on July 12-14, 1995, is Count V of Plaintiff's Amended Complaint. The crux of plaintiff's claim is that defendants Dr. Larry Bruni, Mr. Gary Whaley and MOMS tortiously interfered with Bruni P.C.'s performance of its contractual obligations under the PSSA and that, as a proximate result of their interference, Bruni P.C. breached its contract with Curaflex.

 C. Stipulated Facts

 The parties stipulated to the following facts in their Joint Pretrial Statement of June 28, 1995, or agreed to them in their Consent Order of July 10, 1995.

 On May 11, 1992, Curaflex entered into a Product and Service Supply Agreement ("PSSA") with Bruni P.C. Joint Ex. No. 1. Pursuant to the terms of the PSSA, Curaflex would provide certain home infusion products and services to Bruni P.C. and its patients. Joint Ex. No. 1, P 2. Under the PSSA, Curaflex would also bill those patients and/or their insurers as Bruni P.C.'s billing agent. Joint Ex. No. 1, P 2.9. The PSSA provided that Bruni P.C. would compensate Curaflex seventy percent (70%) of the total amount billed for Curaflex services, regardless of whether or not Bruni P.C. actually received payment for the services. Joint Ex. No. 1, P 5.1.

 From May 11, 1992, until the termination of the PSSA on March 17, 1993, Curaflex duly provided services to patients of Bruni P.C., which generated accounts receivable. Some patients and third-party payors paid funds in excess of $ 900,000 directly to Bruni P.C. Joint Pretrial Statement at 3. Other patients and third-party payors deposited funds in excess of $ 400,000 into a lock box at Riggs Bank, as required under the PSSA. Joint Pretrial Statement at 3. From May 11, 1992 until December 23, 1992, when this suit was filed, Bruni P.C. paid a total of $ 128,680 to Curaflex for services rendered pursuant to the PSSA. Joint Pretrial Statement at 3-4.

 The PSSA provided that Bruni P.C. would periodically instruct Riggs Bank to sweep the lock box funds into a Curaflex bank account. Joint Ex. No. 1, P 5.2. Curaflex would retain any fees due it and transfer the remainder, if any, to Bruni P.C. Joint Ex. No. 1, P 5.2. The PSSA also provided that independent of the lock box arrangement, Bruni P.C. was obligated to make payments owed to Curaflex on the sums paid directly to Bruni P.C. by its patients and other third-party payors within ninety (90) days of the third party invoice date. Joint Ex. No. 1, P 5.1.

 By November 1992, Bruni P.C. had fallen behind in making what Curaflex considered to be full and timely payments. Despite Curaflex's demands that Bruni P.C. perform its obligations under the PSSA, Bruni P.C. stopped making payments to Curaflex in November 1992. Bruni P.C. admits that it intentionally breached the PSSA. The parties have stipulated that the resulting damages from Bruni P.C.'s breach of the PSSA are $ 850,000. Consent Order, June 10, 1995, P 1.

 II. FINDINGS OF FACT

 Plaintiff called Mr. Gary Whaley and Dr. Larry Bruni as hostile witnesses at trial. Having evaluated the totality of Gary Whaley's testimony, including his attitude and demeanor in the courtroom and the significant contradictions between his trial and earlier deposition testimony, the Court finds him to have been a reluctant and inherently incredible trial witness. A comparison of his trial testimony with his deposition statements patently demonstrates that his testimony at trial was fraught with inconsistencies, incredible failures of recollection and outright misstatements of fact. Consequently, the Court finds defendant Mr. Whaley to be an unreliable witness. ...


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