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Heart v. AVR Management, LLC

United States District Court, W.D. Pennsylvania

August 6, 2019

JOHNSTOWN HEART AND VASCULAR CENTER, INC., Plaintiff,
v.
AVR MANAGEMENT, LLC, and WASHINGTON VASCULAR INSTITUTE, LLC, Defendants and Counter-Plaintiffs,
v.
SAMIR HADEED, MD, and JOHNSTOWN HEART AND VASCULAR CENTER, INC., Counter-Defendants.

          MEMORANDUM OPINION

          KIM R. GIBSON UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Pending before the Court is Plaintiff/Counter-Defendant Johnstown Heart and Vascular Center, Inc. ("JHVC") and Counter-Defendant Samir Hadeed, MD's (collectively, "Plaintiffs") Daubert Motion to Preclude the Report and Testimony of John W. (Jack) Teitz (ECF No. 119 at 5-19). This Motion has been fully briefed and is ripe for disposition. (See ECF Nos. 120, 128, 152, 153.)

         This case arises from disputes over the operation of a vascular center located in Johnstown, Pennsylvania. In short, Dr. Hadeed and JHVC entered into a series of contracts with Defendants/Counter-Plaintiffs AVR Management, LLC ("AVR Management") and Washington Vascular Institute, LLC ("WVI") (collectively, "Defendants") by which Plaintiffs would operate the "medical side" of the vascular center and Defendants would manage the "business side" of the center. Plaintiffs and Defendants argue that the other side failed to comply with the duties imposed by these contracts.

         For the reasons that follow, Plaintiffs' Daubert Motion to Preclude the Report and Testimony of John W. (Jack) Teitz (ECF No. 119 at 5-19) is GRANTED.

         II. Background [2]

         The present case arises from various disputes related to the operation of Advanced Vascular Resources of Johnstown ("AVR-Johnstown"), a limited liability company created to operate and manage a vascular center in Johnstown, Pennsylvania. (ECF No. 78 at 4.)

         Advanced Vascular Resources, LLC ("AVR, LLC")[3] was formed by Mubashar Choudry, MD to develop vascular facilities on a national level. (Id.) Dr. Hadeed and JHVC, the entity through which Dr. Hadeed's cardiovascular practice is conducted, reached an agreement with AVR, LLC to open a vascular lab in Johnstown, which would become AVR-Johnstown. (Id.) To foster the development and operation of vascular facilities across the country, Dr. Choudry also formed AVR Management to oversee the management of AVR, LLC's vascular labs and WVI to oversee the compensation for JHVC. (Id.) Numerous contracts were executed to govern the relationships between the various parties. (Id. at 4-5.)

         After opening, AVR-Johnstown was an immediate success. (Id. at 5.) However, complications soon arose with cash flow, timely bill paying, insurance credentialing, and employee salary and benefit payments. (Id. at 5-6.)

         After encountering these problems, JHVC terminated some of the parties' agreements. (Id. at 6-7.) Shortly thereafter, the parties' business relationship ended as a practical matter. (Id.) Plaintiffs changed the locks on the vascular-center premises and ran a profitable business at the same physical location without Defendants' meaningful involvement. (Id.)

         Plaintiffs then initiated this lawsuit on January 23, 2015. (ECF No. 1.) In essence, the Complaint alleges severe mismanagement of AVR-Johnstown by Defendants.[4] (See Id. ¶¶ 44-64.) The Complaint is divided into five counts: (1) breach of contract based on Defendants' mismanagement of AVR-Johnstown; (2) an accounting; (3) partition/dissolution of AVR-Johnstown; (4) breach of contract based on Defendants' failure to pay Plaintiffs' wages; and (5) fraudulent misrepresentation. (Id.)

         Defendants denied all liability and brought five counterclaims against Plaintiffs: (1) breach of contract based on a sublease between JHVC and AVR-Johnstown (the "Sublease") and JHVC's Group Physician Agreement (the "GPA") with WVI; (2) tortious interference with contractual relations; (3) conversion; (4) unjust enrichment; and (5) breach of fiduciary duty. (ECF No. 10 ¶¶ 114-36.)

         On October 17, 2016, Plaintiffs filed a Motion for Summary Judgment (ECF No. 40) and Defendants filed a Motion for Judgment on the Pleadings and Motion for Summary Judgment on Plaintiff's Complaint (ECF No. 44). After extensive briefing, the Court issued a Memorandum Opinion and Order on these Motions. (ECF No. 78.) After deciding the parties' Motions, the following claims remained: (1) JHVC's breach-of-contract claim based on AVR Management's mismanagement of AVR-Johnstown in violation of AVR-Johnstown's operating agreement (the "Operating Agreement"), with an accounting as a potential remedy for this breach; (2) JHVC's breach-of-contract claim against WVI; (3) AVR-Johnstown, AVR Management, and WVI's counterclaim against JHVC for breach of contract; and (4) AVR-Johnstown, AVR Management, and WVI's counterclaim for unjust enrichment against JHVC and Dr. Hadeed. (See generally id.)

         After the Court decided the parties' Motions for Summary Judgment, AVR-Johnstown filed for bankruptcy. (See ECF No. 93 at 2-3.)

         Then, on January 2, 2018, the Court issued a Memorandum Order sua sponte noting an apparent lack of complete diversity between the parties and ordering the parties to brief whether this Court possessed subject-matter jurisdiction and whether AVR-Johnstown could be dismissed as a dispensable party. (ECF No. 88 at 1-2.) The Court noted that the citizenship of an LLC is determined by the citizenship of its members and, thus, AVR-Johnstown's citizenship is determined by the citizenship of its members. (Id. at 1.) The Court indicated that JHVC is a member of AVR-Johnstown. (Id. at 2.) Because JHVC is a citizen of Pennsylvania, AVR- Johnstown would also be a citizen of Pennsylvania. (Id.) Therefore, based on the information before the Court, there would not be complete diversity between Plaintiffs and Defendants. (Id.)

         The parties concluded that there was not complete diversity between Plaintiffs and Defendants and that AVR-Johnstown was an indispensable party. (ECF No. 93 at 2.) Therefore, the Court issued a Memorandum Order on January 17, 2018, concluding that the Court could not cure the lack of diversity by dismissing AVR-Johnstown. (Id.) However, the Court agreed with Defendants that 28 U.S.C. § 1334 provided this Court with a basis for subject-matter jurisdiction. (Id. at 2-3.) The Court thus referred the case to the Bankruptcy Court. (Id. at 3.)

         On September 24, 2018, the Bankruptcy Court dismissed AVR-Johnstown's bankruptcy case, finding that the case was commenced without the requisite corporate authority. See In re Advanced Vascular Res. of Johnstown, LLC, 590 B.R. 323, 328 (Bankr. W.D. Pa. Sept. 24, 2018). This Court thus withdrew its referral of the case to the Bankruptcy Court. (ECF No. 94.) On the same day, the Court dismissed this case for lack of subject-matter jurisdiction, as there was no longer any basis for jurisdiction under 28 U.S.C. § 1334 and complete diversity was still lacking between the parties. (ECF No. 95.)

         Four days after the dismissal, Defendants filed a Motion for Reconsideration and corresponding Brief in Support (ECF Nos. 96, 97). In their Brief, Defendants argued that AVR-Johnstown was a dispensable party that should be dismissed in order to restore complete diversity. (ECF No. 97 at 3.) Plaintiffs disagreed and claimed that AVR-Johnstown was an indispensable party. (ECF No. 99.)

         On November 13, 2018, this Court dismissed AVR-Johnstown from this lawsuit to restore subject-matter jurisdiction. (See ECF No. 100.)

         Plaintiffs filed the present Motion on February 8, 2019. The Court held a Daubert hearing on June 10, 2019. Trial is scheduled to begin on September 3, 2019.

         III. Legal Standards

         A. ...


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