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Segenvo, LLC v. Providian Medical Equipment, LLC

United States District Court, S.D. Texas, Houston Division

October 17, 2019

Segenvo, LLC, and Oakridge Imaging, LLC, Plaintiffs,
v.
Providian Medical Equipment, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Gray H. Miller Senior United States District Judge.

         Pending before the court is a motion to dismiss or, in the alternative, transfer venue, filed by defendant Providian Medical Equipment, LLC (“Providian”). After reviewing the motion, response, reply, and applicable law, the court is of the opinion that the motion to dismiss should be GRANTED.

         I. Background

         This case involves a dispute over the purchase of medical equipment. Dkts. 1, 7. On November 26, 2018, Providian, an Ohio company, filed a claim in Ohio state court against plaintiffs Segenvo, LLC, and Oakridge Imaging, LLC, which are Texas companies that both do business as “Go Imaging” (collectively, “Go Imaging”). Dkt. 7. The Ohio complaint contains allegations that Go Imaging owed Providian money for an MRI machine.[1] Dkt. 7.

         Go Imaging filed its claim against Providian in this court on April 10, 2019. Dkt. 1. Go Imaging asserts claims of fraudulent inducement, concealment, breach of contract, and rescission. Id. Go Imaging contends that Providian did not provide the type of MRI machine that was promised and that the machine Providian did provide-later than promised-did not work. Id.

         According to the complaint filed in this court, Providian originally sent Go Imaging a Sales Agreement on October 11, 2017, but it was for a Symphony MRI machine, which was not the type of machine that Go Imaging wanted. Id. The parties thereafter negotiated because Go Imaging wanted an Avanto machine, and Go Imaging signed a Sales Agreement for the Avanto machine on November 10, 2017. Id. & Ex. 2. Go Imaging asserts that Providian did not deliver as promised on that contract and instead again offered to sell Go Imaging a Symphony machine. Id. On March 15, 2018, Providian sent Go Imaging a Sales Agreement for the Symphony machine (the “Sales Agreement”) and a Repurchase Agreement in which Providian promised to repurchase the Symphony machine once an Avanto machine became available. Id. & Ex. 4. The repurchase was for the price at which the Symphony machine was sold minus $8, 500 per month (essentially rent) that Go Imaging used it. Id. & Exs. 3, 4. Go Imaging contends that, despite Providian's representation that it was going to eventually provide an Avanto machine, Providian never intended to do so. Dkt. 1. Go Imaging, however, endorsed the Sales Agreement and the Repurchase Agreement, expecting to eventually receive an Avanto. Id. The Sales Agreement contained a provision that indicated the attached “Terms of Sale” were incorporated into the document. Dkt. 1, Ex. 3. Providian's “Standard Terms and Conditions of Sale, ” which is the formal name of the attached document, has a forum selection clause that requires disputes between the parties be brought in Ohio. Dkt. 7, Ex. A.

         Providian moves for dismissal or transfer under the Colorado River doctrine, arguing that the court should abstain from hearing this case because of the first-filed parallel claim in Ohio. Dkt. 7. It also argues that the case should be dismissed under the doctrine of forum non conveniens because there is a valid, enforceable and mandatory forum selection clause in the parties' contract requiring that all disputes between the parties be brought exclusively in the state or federal courts of Lake County, Ohio. Id. Providian additionally contends that Go Imaging fails to state a claim for which relief can be granted because (1) its claim was filed in this court more than one year after the equipment purchase, and the parties agreed to a one-year statute of limitations; and (2) the fraudulent inducement claim is not pled with particularlity. Id. Providian requests, as an alternative to dismissal pursuant to Colorado River or forum non conveniens, that any claims that survive the motion to dismiss for failure to state a claim be transferred to the Northern District of Ohio, Eastern Division, in accordance with the forum selection clause. Id.

         Go Imaging argues that the relevant conduct occurred in Texas and the court should not reward Providian for winning the race to the courthouse. Dkt. 9. It asserts that the court also should not rely on the venue provision in Providian's Standard Terms and Conditions of Sale because it is contained in a document that is separate from the Sales Agreement, and Go Imaging's representative did not sign the separate document. Id. It also argues that even if the court finds that the unsigned Terms and Conditions of Sale was incorporated into the Sales Agreement by reference, the court should not enforce the venue provision because doing so would be unreasonable. Id. Go Imaging contends that all of its claims are adequately pled and that they are not time barred because the one-year statute of limitations is contained in the unenforceable Terms and Conditions of Sale. Id. Go Imaging also argues that the Sales Agreement was procured by fraud and should not be enforced. Id. Additionally, it argues that its complaint was filed within one year of accrual of the causes of action. Id. Finally, with regard to the alternative motion to transfer, Go Imaging contends that there is not good cause to transfer this case to Ohio. Id.

         In reply, Providian points out that Go Imaging's representative signed the Sales Agreement, and directly above his signature is a provision that incorporates the Standard Terms and Conditions of Sale. Dkt. 10. Additionally, it argues that there was no “race to the courthouse, ” as Go Imaging did not even file its claim until five months after Providian filed its Ohio lawsuit. Id. Providian contends that this case has materially the same parties as the Ohio case and resolution of the claims in Ohio will dispose of the claims here. Id. Thus, it urges the court to abstain or transfer. Id.

         II. Colorado River Abstention

         The court will first consider Providian's argument that the court should abstain from hearing Go Imaging's claims and leave the matter to the Ohio state court in which Providian filed its lawsuit against Go Imaging.

         A. Legal Standard

         “Colorado River abstention is a narrow exception to a federal court's virtually unflagging duty to adjudicate a controversy that is properly before it.” African Methodist Episcopal Church v. Lucien, 756 F.3d 788, 797 (5th Cir. 2014) (discussing Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236 (1976)). Under Colorado River, “a federal court may abstain only under exceptional circumstances.” Id. (internal citation omitted). The Fifth Circuit instructs that a decision to abstain “must be based on considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Id.

         Before applying the Colorado River factors, the court must determine whether the state proceeding and the federal action are sufficiently parallel to make consideration of abstention proper. Id. Parallel actions are those “involving the same parties and the same issues.” Id. The court should look to the named parties and to the substance of the claims asserted in the two proceedings. Id.

         If the court determines the two proceedings are parallel, then the court must balance six factors on a case-by-case basis to determine whether exceptional circumstances warrant abstention. Id. at 798. Those factors are: (1) assumption by either court of jurisdiction over a res; (2) relative inconvenience of the forums; (3) avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained by the concurrent forums; (5) to what extent federal law provides the rules of decision on the merits; and (6) the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction. Id. Courts balance those factors carefully with “the balance heavily weighted in favor of exercise of jurisdiction.” Id.

         B. Are the Claims Parallel?

         Providian argues that Go Imaging “cannot hide the fact that Providian filed suit against [it] and [its] related Go Imaging entities in the Ohio Action-alleging breach of contract and unjust enrichment claims for unpaid amounts owed-related to the very same contract and medical equipment as in Plaintiffs' Complaint.” Dkt. 7. Providian asserts that the Ohio lawsuit and this lawsuit involve substantially similar allegations related to the identical sales transactions and contractual agreements. Id.

         Go Imaging points out that the parties and claims in the Ohio lawsuit are different. The Ohio lawsuit was filed by Providian and Providian Medical Field Services, LLC, and these entities filed suit against (1) Go Imaging, Penn Imaging of Humble, LP d/b/a/ Go Imaging; (2) JK Radiant, LP d/b/a Go Imaging; (3) Segenvo, LLC d/b/a Go Imaging; (4) John Doe Corporation d/b/a Go Imaging; and (5) John Engelhardt (d/b/a Go Imaging). Dkt. 9. This case was filed by only one of the four defendants in the Ohio state case, Segenvo, LLC, and an additional party not named in the Ohio case, Oakridge Imaging, LLC, and the only defendant is Providian, not Providian Medical Field Service, LLC. Dkt. 1. Go Imaging also contends that Providian has not established that the two cases have the same claims. Dkt. 9.

         Providian argues in reply that the two cases involve materially the same parties. Dkt. 10. It asserts that the only reason the parties are nominally different is because the plaintiffs in this case added Oakridge Imaging “to game federal court abstention rules.” Id. Providian contends that the “Ohio litigation and this case involve the same effective parties, the exact same medical equipment, and the exact same contracts and agreements.” Id. It points out that the Ohio case “will ...


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