United States District Court, W.D. Kentucky, Louisville Division
MEMORANDUM OPINION & ORDER
JOHN G. HEYBURN, II, Senior District Judge.
Plaintiff "PGXL" is in the business of personal medicine and develops diagnostic testing kits. In 2012, PGXL began searching for a team to market its tests and after a satisfactory trial period with Defendant Scott Goodman's team, it entered an agreement (the "Agreement") with an entity denominated as "Essential Molecular Testing Corporation." Goodman signed the Agreement as "Scott Goodman, President and CEO (for EMTC)." On the date of execution, "Essential Molecular Testing Corporation" did not legally exist as a valid registered corporation in any state. Indeed, it has never been incorporated as a business entity in its own right. Due to this deficiency, PGXL now seeks to declare the Agreement void ab initio to avoid the consequences of it. The parties have cross-moved for summary judgment on this issue. For the reasons discussed below, the Court finds the Agreement valid.
The following is relevant background. In December 2011, Goodman formed the Florida LLC "Scott Goodman, LLC" for purposes of conducting "any and all lawful business." Goodman is the LLC's sole member. Over the years, Goodman has renamed his LLC twice, once in September 2012 and again in February 2013. Its current name exists in the annals of Florida's Secretary of State as "Essential Molecular Testing Corporation LLC-PGXL Partners LLC, " and it is one of the named defendants in this case. After PGXL filed suit, Goodman registered "Essential Molecular Testing Corp." as a fictitious name for Defendant Essential Molecular Testing Corp, LLC-PGXL Partners, LLC, pursuant to FLA. STAT. § 865.09 (West 2014).
By early 2012, Goodman had a sales force doing business as "Essential Molecular" and/or "Essential Molecular Testing Corp." Scott Goodman, LLC established a bank account with Republic Bank and ordered checks with "Scott Goodman LLC" on the top line and "Essential Molecular Account" on the second. Around April 2012, Goodman requested that his sales force purchase business cards bearing the name "Essential Molecular Testing Corp." and the slogan "Brilliance in DNA Testing." He reimbursed the sales force with the Scott Goodman LLC/Essential Molecular Account checks. By at least April 2012, Goodman had set up an email domain for "@essentialmolecular.com" and he and his sales force used email addresses associated with that domain to correspond with each other and with others.
At some point, Goodman began negotiating with PGXL. His sales force performed work for PGXL in the summer of 2012 and Goodman paid their commissions with the same checks referenced above. Other interim expenses were paid in the same manner. By the end of July 2012, PGXL had decided to enter a multi-year agreement with Goodman's sales force to market its tests. The resulting Agreement refers to Goodman's sales force as "Essential Molecular Testing Corporation" in the first paragraph and above the signature line and "Essential Molecular" or "EMTC" throughout the rest (hereinafter, the Court will refer to the purported entity in the Agreement, i.e., Goodman's sales force that performed work under the Agreement, as "EMTC"). Roland Valdes, a doctor and founding member of PGXL, signed the Agreement as PGXL's "Authorizing Manager" and Goodman signed "Scott Goodman, President and CEO (for EMTC)." By all accounts, EMTC's sales force performed satisfactory work. Over the course of roughly one year, it helped grow PGXL's annual business from $600, 000 to $16, 000, 000. The Agreement requires PGXL to pay EMTC 50% of gross profits from tests ordered through EMTC. Thus, it becomes clear why PGXL seeks to void the Agreement.
A number of noteworthy things happened over the course of the first year of PGXL's and EMTC's relationship. First, in September 2012, Goodman filed the requisite filings with Florida's Secretary of State and changed the name Scott Goodman, LLC to "PGXL Partners, LLC." When PGXL heard of this, it protested that that name was a brand name that belonged to the enterprise between the two entities. Consequently, Goodman accomplished another name change in February 2013, this time to Defendant "Essential Molecular Testing Corp, LLC-PGXL Partners, LLC." Goodman claims he did not inform PGXL of Scott Goodman LLC's name change to PGXL Partners, LLC. Presumably, then, PGXL learned this information from Florida's Secretary of State's public website. When PGXL discussed its desire for Goodman to change the name of PGXL Partners, LLC, it1 did not raise the nonexistence of EMTC. Nor did it request PGXL Partners, LLC's name be changed to EMTC, although it is reasonable to infer that PGXL knew the entity whose name was under discussion was the sales force performing its marketing work, otherwise there likely would have been no such discussion.
Second, when it came time for PGXL to pay EMTC's commission in November, Goodman asked PGXL to make payments to the Scott Goodman, LLC bank account. PGXL asked questions and informed Goodman it would only pay EMTC, the party named in the Agreement. Goodman then showed satisfactory proof of the "Essential Molecular Account, " and PGXL made payment.
On September 6, 2013, PGXL filed suit requesting, among other things, that the Agreement be declared void ab initio due to EMTC's nonexistence. Plaintiff claims that because EMTC did not exist at the time of execution, "there is no meeting of the minds and, consequently, no contract to enforce." Defendants counterclaimed alleging breach of the Agreement's payment terms. In November 2013, this Court denied the Defendants' motion for preliminary injunction on that issue. Since then the parties have filed cross motions for partial summary judgment on the threshold question of whether there is a valid agreement.
A movant is entitled to summary judgment if it demonstrates that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A court will view the evidence and draw all reasonable inferences in favor of the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The court must decide if "the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). Here, both parties have moved for summary judgment. The Court will consider each of the parties' arguments in turn.
The threshold question is whether the Agreement is valid and, therefore, enforceable. This question is separate and distinct from who may enforce it and against whom. To focus, as the litigants do, on EMTC's capacity to contract on August 1, 2012 or the consequences of any imperfections in EMTC's relationship with the state of Florida and/or Kentucky is to skip a step. These inquiries do not answer the basic ...