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Focus Enterprises, Inc. v. Zassi Medical Evolutions

May 31, 2007


The opinion of the court was delivered by: Gladys Kessler United States District Judge


Plaintiff, Focus Enterprises, Inc. ("Focus") brings this claim against Zassi Medical Evolutions, Inc. ("Zassi") for breach of an alleged oral contract. This matter is before the Court on Defendants' Motion to Dismiss the Complaint and/or to Transfer the Action [Dkt. No. 3]. Upon consideration of the Motion, Opposition, Reply, and the entire record herein, and for the reasons stated below, Defendant's Motion to Transfer is granted and its Motion to Dismiss is denied without prejudice.*fn1


Focus, a middle market investment banking firm, is a Virginia corporation with its principal place of business in the District of Columbia. It also has offices in San Francisco, Chicago, and Atlanta. Part of Focus's business involves conducting research regarding potential investors in its client companies. Zassi is a Florida corporation with its principal place of business in Fernandina Beach, Florida. Zassi designs, develops, and manufactures gastrointestinal waste management systems and medical devices. It has a longstanding relationship with two of Focus's Atlanta-based employees, William Inman ("Inman") and George Shea ("Shea").

On August 30, 2005, in Florida, Focus and Zassi entered into a written agreement ("August 30, 2005 Agreement") that provided for Focus to research potential investors for Zassi. The August 30, 2005 Agreement provided that if Zassi entered into a transaction with an investor identified by Focus, Zassi would pay Focus a fee equal to five percent of the agreed transaction price. The parties dispute whether the August 30, 2005 Agreement encompassed transactions involving the sale of Zassi's assets, but there is no dispute that it covered sales of debt and equity. The August 30, 2005 Agreement provided that Zassi would pay Focus a monthly fee of five thousand dollars for six months.*fn2 The Agreement also provided that it is governed by Florida law. It was signed by Peter von Dyck, Zassi's President and Chief Executive Officer, and Inman.

After execution of the August 30, 2005 Agreement, Focus assigned Jeffrey A. Anderson ("Anderson") to the Zassi account. Anderson is employed at Focus's District of Columbia office. Focus claims that Anderson worked in that office to gather information and prepare a draft Confidential Information Memorandum ("CIM") detailing information about Zassi's

business, its markets, its projected prospects for the future, and such further information as Focus, using its experience and expertise[,] deemed relevant and appropriate to allow prospective Financial Investors and prospective Strategic Buyers to quickly proceed with further investigation and negotiation of a transaction between such Financial Investor or Strategic Buyer and [Zassi].

Compl. ¶ 22; see Pl.'s Opp'n at 4. Anderson also researched and prepared a list of potential financial investors for Zassi. He traveled to Zassi's office in Florida at least once in connection with his preparation of the CIM and list of financial investors. See Def.'s Mot. at 33. Some of his communications with Zassi employees indicated that his contact information was in Vienna, Virginia, and others indicated the District of Columbia.

Focus claims that Zassi found the list of financial investors inadequate. Focus alleges that consequently, in early 2006, "it was suggested, and agreed, that Focus would prepare a list of potential strategic investors/buyers. It was understood by all parties that if Focus identified a strategic investor/buyer, Focus would be paid its previously agreed fee." Pl.'s Opp'n at 4.

On February 7, 2006, Zassi's shareholders met in Fernandina Beach, Florida. Two of Focus's Atlanta-based partners, Inman and Shea, attended that meeting. Seven Zassi shareholders also attended, five of whom reside in Northeast Florida, one of whom works in Florida, and one of whom resides in Alabama. Focus alleges that the early-2006 oral agreement was disclosed at that meeting and no objection was raised. Anderson subsequently prepared a list of potential strategic buyers.

On April 13, 2006, Inman provided that list, which included Hollister International, Incorporated ("Hollister"), to Zassi. Focus alleges that Zassi, after receiving the list, contacted Hollister and provided it with the CIM that Focus had prepared regarding Zassi's business.

On July 14, 2006, Zassi and Hollister executed a letter of intent regarding Hollister's purchase of one of Zassi's product lines. On September 13, 2006, Zassi sold that product line to Hollister for a price not less than $85,000,000, $35,000,000 of which was paid at closing, with the balance to be paid in the future depending on certain conditions or events. Focus alleges that the fee payable in connection with the sale is five percent of the price, or $3,750,000, of which $1,750,000 should have been paid at the time the sale closed. On September 27, 2006, Zassi informed Focus that it would not pay the fee. Zassi claims that it had known and done business with Hollister for several years, and that Focus "played no role in locating Hollister or negotiating the transaction." Def.'s Mot. at 5.

Focus sues for breach of contract, unjust enrichment, and quantum meruit. It seeks $1,750,000 and an order directing Zassi to provide Focus with five percent of all future payments by Hollister as a result of the sale. Zassi has filed a Motion to Dismiss or to Transfer, arguing that the Court has no personal jurisdiction over it, or in ...

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