Premier Medical Systems LLC v. NeuroLogica Corp.

Background

Premier Medical Systems, LLC was NeuroLogica Corp.’s sales representative and dealer for specified Samsung ultrasound products. Their relationship was governed by a sales representative and dealership agreement dated January 1, 2016. Premier alleged that NeuroLogica changed the parties’ longstanding process for replacing malfunctioning ultrasound probes during the warranty period. Under the new policy, Premier had to make an initial determination about whether customer damage caused a probe to malfunction, quickly order a replacement, and potentially pay NeuroLogica if NeuroLogica later determined that the damage was customer-caused.

Premier alleged that NeuroLogica also required onsite inspections and written condition reports, refused to pay several invoices, imposed shorter payment terms and a 20% restocking fee, repudiated a 2017 oral modification concerning additional services and clinical-support work, interfered with two workers’ efforts to provide services to Premier, and made defamatory statements to a Premier customer. NeuroLogica moved to dismiss the amended complaint for failure to state legally sufficient claims.

Contract and Quantum-Meruit Claims

The court denied the motion to dismiss Premier’s breach-of-contract claim concerning the probe replacement policy. Applying New York law, the court found that the agreement was ambiguous about who had to pay for replacement probes when a product was still within its warranty period but NeuroLogica later determined that customer-caused damage excluded the replacement from warranty coverage. Because Premier’s interpretation was plausible, the court held that the claim could not be dismissed at this stage.

The court also held that Premier sufficiently pleaded breach-of-contract claims based on NeuroLogica’s requirement that Premier pay for out-of-warranty parts within 15 days and NeuroLogica’s imposition of a 20% restocking fee. The court did not dismiss Premier’s claim concerning the $2,278.33 HM70 probe invoice because Premier had adequately pleaded other contract claims, allowing the court to retain jurisdiction over that invoice claim.

The court did not dismiss Premier’s quantum-meruit claims. Quantum meruit is a claim seeking the reasonable value of services when no enforceable contract governs those services. The court found that Premier plausibly alleged that its preliminary determinations about customer-caused probe damage were outside the clear scope of the agreement. The court also allowed the quantum-meruit claim concerning the $13,050 Product Issues Invoice to proceed because NeuroLogica had not adequately challenged that theory in its motion papers.

Dismissed or Unconsidered Claims

The court declined to consider Premier’s arguments about breach of the implied covenant of good faith and fair dealing because Premier had not pleaded that claim in the amended complaint and raised it for the first time in its opposition to the motion.

The court dismissed the declaratory-judgment claim because it duplicated Premier’s contract and quantum-meruit claims. The requested declarations concerned the same rights that would be decided through those claims and therefore would not provide separate relief.

The court dismissed the claim for tortious interference with prospective business relationships. Premier alleged that NeuroLogica blocked Mary Hellsund and Moriah Hoover from providing services to Premier, but the court found that Premier had not plausibly alleged that NeuroLogica used criminal or independently wrongful means or acted solely to harm Premier. Premier’s allegations instead indicated that NeuroLogica acted to advance its own economic interests.

The court dismissed the defamation claim. Premier relied on statements in an email to a customer that Premier had a responsibility to visit the customer’s site and that Premier had been “uncooperative” in responding to service needs. The court found that the first statement did not accuse Premier of misconduct or lack of integrity, and that “uncooperative” was an opinion rather than a provable fact. The court also found that Premier’s general allegation that other defamatory statements had been made was too conclusory.

Premier did not oppose NeuroLogica’s argument about attorneys’ fees under the agreement, so the court treated that issue as waived. The court granted Premier leave to replead the dismissed claims and required any amended complaint to be filed by March 30, 2022.

Disposition

Judge Gregory H. Woods denied NeuroLogica’s motion to dismiss with respect to Premier’s breach-of-contract and quantum-meruit claims. He granted the motion with respect to Premier’s claims for breach of the implied covenant of good faith and fair dealing, declaratory judgment, tortious interference with prospective business relationships, and defamation. The court also granted Premier leave to replead those dismissed claims.