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Barbourville Diagnostic Imaging Center v. Philips Medical Systems, Inc.

United States District Court, E.D. Kentucky, Southern Division, London

January 20, 2015

BARBOURVILLE DIAGNOSTIC IMAGING CENTER, Plaintiff,
v.
PHILIPS MEDICAL SYSTEMS, INC., Defendant.

MEMORANDUM OPINION & ORDER

GREGORY F. VAN TATENHOVE, District Judge.

Barbourville Diagnostic Imaging Center purchased a magnetic resonance imaging scanner from Philips Medical Systems, Inc., in August of 2001. Seven years later, the scanner began malfunctioning, rendering incorrect diagnostic images because of a defective part. After dealing with the malfunctioning MRI equipment for roughly two years, Barbourville Diagnostic decided to file suit against Philips Medical. The suit was initially filed in Knox County Circuit Court, but it was removed to this Court. Barbourville now sues Philips for breach of contract.[1] [R. 17.] Philips has asserted counterclaims for both breach of contract and unjust enrichment. [R. 21.]

I

The present motion for summary judgment relates specifically to service agreements that the parties entered into in 2009 and 2010. The first service agreement was executed on July 13, 2009 and the second agreement was executed on July 26, 2010. [ See R. 35-2; R. 35-3.] According to Philips, the second agreement was a more expensive maintenance plan and had the effect of superseding the first agreement. [R. 35-1 at 4.] The agreements between Philips and Barbourville contain two separate places for the parties to sign. [R. 35-3.] The first set of signature lines is on page two and the second set is on the bottom of page four. [R. 35-3 at 2, 4.] The parties signed the agreement on page two but left page four blank. Inches above the second signature block on page four is Section nine of the Agreement, titled "Limitations of Remedies and Damages." [R. 35-3 at 4.] That provision provides:

Philips' total liability, if any, and Customer's exclusive remedy with respect to the Services and Philips' performance hereunder is limited to an amount not to exceed the price stated herein for service that is the basis for the claim. IN NO EVENT WILL PHILIPS BE LIABLE FOR ANY INDIRECT, PUNITIVE, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOST REVENUES OR PROFITS, OR THE COST OF SUBSTITUTE PARTS OR SERVICES, WHETHER ARISING FROM BREACH OF THE TERMS IN THIS AGREEMENT, BREACH OF WARRANTY, NEGLIGENCE, INDEMNITY, STRICT LIABILITY OR OTHER TORT. PHILIPS WILL HAVE NO LIABILITY FOR ANY ASSISTANCE PHILIPS PROVIDES THAT IS NOT REQUIRED UNDER THIS AGREEMENT.

[R. 35-3 at 4 (emphasis in original).] The parties' central dispute does not relate to the meaning of this provision or its effect if it is determined that the provision does apply. The parties' disagreement is more fundamental. They disagree about whether this paragraph is to be given any effect at all since the signature line on page four, inches below the provision limiting damages, is blank.

Barbourville argues that page four is unsigned because the parties did not agree to it. They argue the limitations do not apply and that they are entitled to recover over $4.7 million dollars.[2] Philips argues that the parties intended to limit damages and that there is no legal requirement that the signature appear at the end of the agreement. Therefore, it argues that that the provision does apply and that damages are limited to a much-lesser, contractually-specified amount of $249, 300.[3] As a result of this disagreement, the parties' case valuations differ by $4, 485, 200. [R. 35-1 at 1.] Both parties agree that New York law is to be applied in resolving this dispute.

The issues being fully briefed, the Court now turns to the presently pending motion for partial summary judgment which asks the Court for a ruling on whether Section nine, the provision limiting remedies and damages, is to be given effect. For the following reasons, the Defendant's motion will be GRANTED and Section nine of the agreement does apply.

II

A

Rule 56 provides that a party may move for summary judgment on either an entire claim or defense or a "part of each claim or defense." Fed.R.Civ.P. 56. Summary judgment is appropriate where "the pleadings, discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). "A genuine dispute exists on a material fact, and thus summary judgment is improper, if the evidence shows that a reasonable jury could return a verdict for the nonmoving party.'" Olinger v. Corp. of the President of the Church, 521 F.Supp.2d 577, 582 (E.D. Ky. 2007) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).

In deciding a motion for summary judgment, the Court must review the facts and draw all reasonable inferences in favor of the non-moving party. Logan v. Denny's, Inc., 259 F.3d 558, 566 (6th Cir. 2001) (citing Liberty Lobby, 477 U.S. at 255). The moving party has the initial burden of demonstrating the basis for its motion and identifying those parts of the record that establish the absence of a genuine issue of material fact. Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). The movant may satisfy its burden by showing "that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325. Once the movant has satisfied this burden, the non-moving party must go beyond the pleadings and come forward with specific facts to demonstrate there is a genuine issue. Hall Holding, 285 F.3d at 424 (citing Celotex, 477 U.S. at 324.) Moreover, "the nonmoving party must do more than show there is some metaphysical doubt as to the material fact. It must present significant probative evidence in support of its opposition to the motion for summary judgment." Id. (internal citations omitted).

The trial court is under no duty to "search the entire record to establish that it is bereft of a genuine issue of material fact." In re Morris, 260 F.3d 654, 655 (6th Cir. 2001) (citing Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir. 1989). Instead, "the nonmoving party has an affirmative duty to direct the court's attention to those specific portions of the record ...


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