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PALMARIS IMAGING v. BELLEVILLE IMAGING

May 12, 2005.

PALMARIS IMAGING, L.L.C., Plaintiff,
v.
BELLEVILLE IMAGING, INC., and EFFINGHAM OPEN MRI, L.L.C., Defendants.



The opinion of the court was delivered by: WILLIAM STIEHL, Senior District Judge

MEMORANDUM & ORDER

This matter is before the Court on cross motions for summary judgment. Defendants filed their joint motion for summary judgment (Doc. 37) to which plaintiff filed a response (Doc. 44), and a cross motion for summary judgment on defendant's counterclaims (Doc. 39).

BACKGROUND

  This case arises out of an alleged breach of contract for services between plaintiff and defendant involving x-ray imaging. Plaintiff Palmaris Imaging, L.L.C. ("Palmaris"), a Missouri corporation, has a network of licensed radiology department physicians who provide teleradiology services. "Teleradiology" is the transfer of films or images, produced by x-ray or similar studies, typically through telephone lines to a radiologist who then reads and interprets the films or images and then provides a report to the imaging company. The complaint alleges that in March of 2002, Palmaris entered into a one-year, renewable contract*fn1 with Belleville Imaging, Inc. ("Belleville Imaging"), a private x-ray and imaging laboratory located in Illinois, in which Palmaris was to provide tereradiology and other medical services to Belleville Imaging. (Doc. 1, Pl.'s Ex. 1, ¶ 2; Doc. 1, Pl.'s Ex. 3, ¶ 2.)

  At approximately the same time, Palmaris entered into a nearly identical contract with Effingham Open MRI. (Effingham MRI). This defendant's company is based in Illinois, and is also a private imaging lab offering services that are comparable to those offered by Belleville Imaging. Belleville Imaging and Effingham MRI are linked by virtue of the fact that David Horace is an officer, director, and shareholder of each, and he represented each defendant in the negotiations with Palmaris, and signed the service agreement contracts on behalf of each company. Palmaris provided services to the defendants until approximately October 14, 2002, when both Belleville Imaging and Effingham MRI notified Palmaris that they had contracted with physicians independent of Palmaris for their radiology services needs, and would no longer be using Palmaris.

  Palmaris filed the initial complaint against Belleville Imaging and Effingham MRI, alleging that the two defendants breached their Service Agreement contracts. Counts I, II, and III of the complaint seek recovery against Belleville for breach of contract, an action on account, and quantum meruit. Counts IV, V, and VI seek recovery against Effingham MRI on the same claims. Belleville Imaging's answer asserts a counterclaim against Palmaris for breach of contract, seeking recovery (Doc. 6). Effingham MRI has filed a similar counterclaim in its answer (Doc. 7).

  The parties have stipulated that their disputes shall be governed by Missouri law.

  A. Common Contract Provisions

  As part of the March 2002 contracts (entitled "Teleradiology Service Agreements"), Palmaris agreed to have its "duly licensed" physicians read and interpret images sent from Belleville Imaging and Effingham MRI and then provide reports. (Doc. 1, Pl.'s Ex. 1, ¶ 3; Doc. 1, Pl.'s Ex. 3, ¶ 3.) There are several provisions of the contracts, identical in all relevant respects, that are important to these cross motions for summary judgment.

  Paragraph 2(a) of each contract provides:
If either party breaches any material term or condition of this Agreement, the other party may give the breaching party thirty (30) days written notice of termination of this agreement, setting forth the breach in such notice. If such breach is not cured within such thirty (30) day notice period, the termination shall become effective at the conclusion of the thirty (30) day notice period. If such breach is cured within the thirty (30) day notice period, this Agreement shall remain in effect.
(Doc. 1, Pl.'s Ex. 1, ¶ 2(a); Doc. 1, Pl.'s Ex. 3, ¶ 2(a).)

  Paragraph 3(a) provides: "Palmaris will provide a preliminary or final faxed report within two (2) hours of receipt of the image. Palmaris will provide a transcribed final report within 24 hours. The 24 hours applies Monday-Friday not weekends. For example, an image is received Friday, the report will be delivered Monday." (Doc. 1, Pl.'s Ex. 1, ¶ 3(a); Doc. 1, Pl.'s Ex. 3, ¶ 3(a).) Paragraph 3(b) provides: "Palmaris represents and warrants that each physician shall: hold a medical license for the state in which client is located; hold, or be eligible to hold, a board certification in radiology from the American Board of Radiology; and have good-standing participation in Medicare and Medicaid programs." (Doc. 1, Pl.'s Ex. 1, ¶ 3(b); Doc. 1, Pl.'s Ex. 3, ¶ 3(b).)

  Paragraph 6(h) provides: "Client agrees that all teleradiological services provided to Client shall be provided exclusively by Palmaris." (Doc. 1, Pl.'s Ex. 1, ¶ 6(h); Doc. 1, Pl.'s Ex. 3, ¶ 6(h).) Paragraph 9 provides:
During the term of this Agreement and for a period of 12 months following the effective date of termination of this Agreement for any cause, Client [meaning Belleville and Effingham, respectively] agrees: (a) not to solicit the employment of or employ or otherwise contract with, directly or indirectly, any physician who provided services to Client under this Agreement or any predecessor agreement between Client and Palmaris for the purpose of obtaining radiology physician services; and (b) not to encourage or in any way induce or influence any physician who provided services to Client under this Agreement to terminate his or her relationship with Palmaris.
Upon termination of this agreement Palmaris will provide Client with a complete list of physicians effected [sic] by this clause. In the event Client does solicit or enter into an employment, independent contractor or other agreement with such physician (or with any group or entity which utilizes the services of such physician for radiology physician services) or attempts to encourage or in any way induce or influence such physician to terminate his or her relationship with Palmaris, Palmaris shall be entitled, at its sole option, to either injunctive relief or liquidated damages in the amount of $100,000 per physician.
(Doc. 1, Pl.'s Ex. 1, ¶ 9; Doc. 1, Pl.'s Ex. 3, ¶ 9.)

  Finally, paragraph 15 provides: "This Agreement constitutes the entire Agreement between the parties and may be amended only by a writing signed by both Palmaris and Client." (Doc. ...


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