United States District Court, E.D. Pennsylvania
diversity action, Co-Plaintiffs Signature Medical and
Clifford Hall bring state law claims against Defendant U.S.
Med-Equip, Inc., stemming from a rental agreement involving
used medical equipment. The defendant filed a motion to
dismiss, and the plaintiffs responded. For the following
reasons, I will grant the motion in its entirety.
Hall is the sole owner of Signature Medical, a Pennsylvania
corporation which buys, sells, repairs, and leases medical
equipment. Defendant U.S. Med-Equip, owned by Greg Salario
and Ghurmit Bhatia, is a Texas corporation whose business
includes the purchase, sale, lease, and repair of biomedical
equipment. Attorney Jeffrey Hofferman began representing U.S.
Med-Equip in August 2006, and along with Mr. Salario and Mr.
Bhatia acted as an agent for U.S. Med-Equip.
Hall and Mr. Salario met as co-employees at Freedom Medical,
Inc. They both left Freedom Medical in 2000 when they started
their own separate businesses. Mr. Salario and Mr. Bhatia
started U.S. Med-Equip. Mr. Hall started Signature Medical.
Both businesses are involved in the renting and repairing of
used medical equipment.
October 2003, Mr. Salario contacted Mr. Hall for the purpose
of renting medical equipment from Signature Medical. Mr. Hall
and Mr. Salario agreed that U.S. Med-Equip would pay
Signature Medical for any equipment that U.S. Med-Equip
rented from Signature Medical at the current market rental
amended complaint alleges that this arrangement continued
until August 2006, when U.S. Med-Equip stopped paying the
rent on the equipment it had rented from Signature Medical.
It further alleges that U.S. Med-Equip has refused to return
the equipment owned by Signature Medical, and now owes over
$170, 000 in past rent due.
20, 2006, Freedom Medical instituted legal action in this
court against twenty-three defendants, including U.S.
Med-Equip, Mr. Salario, Mr. Bhatia, Signature Medical, and
Mr. Hall. See Freedom Medical, Inc. vs. Thomas R.
Gillespie, III, et al., Civ. No. 06-3195. One of the
allegations asserted by Freedom Medical was that Mr. Hall, on
behalf of Signature Medical, purchased medical equipment that
he knew had been stolen from Freedom Medical. Mr. Hall
vehemently denied that allegation. Freedom Medical also
asserted that Mr. Bhatia and Mr. Salario knowingly obtained
rental equipment from Signature Medical and from other
vendors that they knew to be stolen from Freedom Medical.
They denied that allegation.
August 17, 2006, Attorney Hofferman allegedly advised Mr.
Salario and Mr. Bhatia to withhold the payment of rent owed
to Signature Medical. Ronald Ashby, Mr. Hall's attorney,
advised Mr. Hall that U.S. Med-Equip was suspending further
payment of rental fees for equipment it had leased from
Signature Medical pending the termination of the Freedom
Medical litigation. U.S. Med-Equip further advised the
plaintiffs that the leased equipment would be held in
quarantine pending resolution of the litigation.
2012, most of the defendants in the Freedom Medical
litigation had settled. These defendants, however, did not
include Signature Medical, Mr. Hall, U.S. Med-Equip, Mr.
Salario, or Mr. Bhatia.
2012, Mr. Hall considered filing an affidavit in the Freedom
Medical litigation formally documenting his assertion that he
did not know that he had purchased medical equipment that had
been stolen from Freedom Medical and correspondingly, that
neither Mr. Bhatia nor Mr. Salario conspired with Mr. Hall to
lease medical equipment from Signature Medical that was known
to have been stolen from Freedom Medical. He recognized that
such an affidavit would serve to exculpate U.S. Med-Equip,
Mr. Salario, and Mr. Bhatia and possibly contribute to the
end of the litigation against all of them.
amended complaint alleges that before Mr. Hall signed the
affidavit, he requested an agreement with U.S. Med-Equip, Mr.
Salario, and Mr. Bhatia regarding payment of the outstanding
rent owed to Signature Medical by U.S. Med-Equip. Attorney
Ashby contacted Attorney Hofferman and informed him that Mr.
Hall was considering signing an affidavit that would
exculpate U.S. Med-Equip in the Freedom Medical litigation
provided that U.S. Med-Equip would agree to pay the rental
owed on the medical equipment. Attorney Hofferman told
Attorney Ashby that U.S. Med-Equip would pay the outstanding
rent due to Signature Medical upon conclusion of the Freedom
Medical litigation. Drafts of the affidavit were exchanged,
and once satisfied with the language, Mr. Hall signed the
final affidavit on July 23, 2012. See Document #5
13, 2014, Attorney Sharon Cherry, the plaintiffs' new
counsel, wrote a letter to Attorney Hofferman, requesting
payment of U.S. Med-Equip's outstanding rental fees. She
indicated that she was unaware of any legal authority that
supported the withholding of amounts due to Signature Medical
because of pending litigation. On the following day, Attorney
Hofferman responded by email, stating that the terms of the
agreement between Mr. Hall and U.S. Med-Equip were contained
in the affidavit signed by Mr. Hall. The amended complaint
alleges that Attorney Hofferman informed Attorney Cherry by
telephone that the rental payments would be made upon
conclusion of the entire litigation.
December 18, 2014, Attorney Cherry notified Attorney
Hofferman that Mr. Hall and Signature Medical had settled
with Freedom Medical, and asked when a check for the overdue
rental payments might be expected. She also notified Attorney
Hofferman that Signature Medical was terminating the rental
agreement on the equipment and asked that the equipment be
returned. On December 22, 2014, Attorney Hofferman responded
requesting more specifics on the equipment, i.e., invoice and
serial numbers. Attached to the amended complaint is a
spreadsheet prepared by U.S. Med-Equip which lists the
equipment for which U.S. Med-Equip owed rent payments to
amended complaint further alleges that it became clear to Mr.
Hall as of March 19, 2015, that U.S. Med-Equip had no
intention of paying Signature Medical the rental fees owed
for the leased equipment. It also allegedly became clear to
Mr. Hall that U.S. Med-Equip had no intention of returning
the rented equipment to Signature Medical. In fact, the
amended complaint insists that at the time the affidavit was
negotiated and executed, Mr. Salario and Mr. Bhatia had no
intention of paying Signature Medical the total rental due
for the equipment leased by Signature Medical, but
nevertheless willfully and intentionally lured Mr. Hall into
signing the affidavit so that U.S. Med-Equip could use the
affidavit in the Freedom Medical litigation to its advantage.
The fair market value of the equipment which U.S. Med-Equip
has refused to return is $30, 025.00.
Medical and Mr. Hall filed this action against the defendant
alleging fraudulent misrepresentation/fraud in the inducement
in Count One, breach of contract in Count Two, unjust
enrichment/quasi contract in Count Three, promissory estoppel
in Count Five, and conversion in Count Six.
motion to dismiss under Rule 12(b)(6) of the Federal Rules of
Civil Procedure for failure to state a claim upon which
relief can be granted examines the sufficiency of the
complaint. Conley v. Gibson, 355 U.S. 41, 45-46
(1957). Following the Supreme Court decisions in Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) and
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009),
pleadings standards in federal actions have shifted from
simple notice pleading to a more heightened form of pleading,
requiring a plaintiff to plead more than the possibility of
relief to survive a motion to dismiss under Fed. R. Civ.
P.12(b)(6). Fowler v. UPMC Shadyside, 578 F.3d 203,
210-211 (3d Cir. 2009); see also Phillips v. County of
Allegheny, 515 F.3d 224, 230 (3d Cir. 2008).
when presented with a motion to dismiss for failure to state
a claim, district courts should conduct a two-part analysis.
First, the factual and legal elements of a claim should be
separated. The court must accept all of the complaint's
well-pleaded facts as true but may disregard legal
conclusions. Iqbal, 556 U.S. at 679. Second, a
district court must determine whether the facts alleged in
the complaint are sufficient to show that the plaintiff has a
“plausible claim for relief.” Id. In
other words, a complaint must do more than allege the
plaintiff's entitlement to relief. A complaint has to
“show” such an entitlement with its facts.
Id.; see also Phillips, 515 F.3d at
234-235. “Where the well-pleaded facts do not permit