The opinion of the court was delivered by: Lynch, District Judge.
Plaintiff Davis & Associates, Inc. ("Davis") sues defendant
Health Systems Management, Inc. ("HMS"), on a number of grounds
arising from HMS's alleged breach of an agreement to jointly
deliver and market revenue maximization services to governmental
entities and health care providers. Defendant moves for summary
judgment pursuant to Rule 56(b) of the Federal Rules of Civil
Procedure, arguing that all claims alleged in the Complaint were
the subject of a binding release agreement voluntarily executed
by plaintiff in consideration for substantial sums of money. For
the reasons stated below, defendant's motion is granted.
In October, 1999, HMS and Davis concluded an agreement to
jointly market and deliver revenue maximization services to
existing and potential public, private, and parochial school
clients. (Id. Ex. A) ("Schools Agreement.") In April, 2000,
HMS and Davis concluded a second agreement, pursuant to which
they agreed to jointly provide revenue maximization services to
all existing and potential future clients. (Id. Ex. B)
("RevMax Agreement.")*fn1 Pursuant to the Agreements, HMS was
to (a) advance "approved" precontract marketing expenses to
Davis and (b) advance "approved" marketing and operating
expenses for future projects, upon submission by Davis, and
acceptance by HMS, of a detailed budget proposal. (Id. Exs. A
& B.) HMS was not, however, obligated to make such advance
payments in the event the total amount of Davis's unpaid balance
reached $500,000. (Id. Exs. A § 3(e) & B § 3(e).)*fn2 Davis
was to have primary responsibility for operational aspects of
the venture, including selection, approval and supervision of
existing and potential clients (id. Ex. B, Schedule A), and
was to be given options to purchase a total of 20,000 shares of
HMS stock (id. Exs. A § 4 & B § 4). Davis was further provided
with a "right of first refusal," such that HMS agreed not to
utilize the services of any subcontractor to provide revenue
maximization services without first giving Davis the right to
perform such services pursuant to the RevMax Agreement. (Id. §
7(a)).
There is no dispute that between October 1999, through May 31,
2000, HMS advanced funds to Davis in the amount of $1,625,439.
(Bendes Aff. ¶ 10; Davis Aff. ¶ 9 & 10.) HMS argues that that
amount was in excess of what it was contractually obligated to
advance under the Agreements. (Bendes Aff. ¶ 10.) Although Davis
disagrees (P.'s R. 56.1 Counter Statement ¶ 10), the contractual
documents make clear that HMS was not obligated to make payments
after Davis's unrepaid advances exceeded $500,000. (Id. Exs. A
§ 3(e) & B § 3(e).) HMS never received any revenue — and thus no
return on its advance — from any client contracts entered into
pursuant to the Agreements. (Bendes Aff. ¶ 15; P's R. 56.1
Counter Statement ¶ 12.) Nor did Davis ever return any of HMS's
advance payments. (Id.)
In June 2000, Davis thrice requested additional funding and
HMS agreed, but only on condition that Davis waive some of its
rights otherwise retained under the Agreements. On June 1, HMS
agreed to advance Davis $126,000, but only in exchange for
Davis's waiver of its right to receive, pursuant to the
agreements, options to purchase shares of HMS common stock.
(D.'s R. 56.1 Statement ¶ 13; P.'s R. 56.1 Counter Statement ¶
13.) On June 16, HMS advanced Davis another $150,000, again upon
request by Davis, but this time without an attached condition.
(Id. ¶ 15.) Finally, on June 30, HMS agreed to provide Davis
with up to $1 million in additional funding, in exchange for
Davis's release of HMS from all potential claims that Davis
might otherwise have against Davis under the Agreements. (D.'s
R. 56.1 Statement 16; P.'s R. 56.1 Counter Statement ¶ 14.) The
release agreement also required that Davis repay in full "all
funds made available by HMS . . . since October 5, 1999," and
warranted that by July 31, 2000, Davis would either (1)
restructure its relationship with HMS, (2) be acquired by HMS or
a third party, or (3) terminate its business relationship with
HMS (Bendes Aff. Ex. B) ("Release"). HMS immediately advanced
Davis an additional $685,000 in exchange for Davis's execution
of the Release ("June Funding"). (D.'s R. 56.1 Statement ¶ 16;
P.'s R. 56.1 Counter Statement ¶ 14.) These June advances, plus
the amounts previously advanced between October 1999, and May
31, 2000, brought Davis's total outstanding balance to
$2,586,439.
On September 7, 2000, Davis brought this action for inter
alia, breach of contract, fraud, interference with contractual
relations, interference with prospective economic advantage and
an accounting. On November 21, 2000, HMS moved for summary
judgment on the ground that Davis has voluntarily released all
claims. Davis does not dispute that it executed the Release, or
that it received valuable consideration for its execution, but
argues that the Release is void on the ground that it was
executed under economic duress.
Summary judgment may not be granted unless "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed.R.Civ.P.
56(c). In determining whether summary judgment is appropriate,
the court must resolve all ambiguities in the light most
favorable to the nonmoving party and draw all reasonable
inferences in the nonmoving party's favor. See Wernick v.
Federal Reserve Bank of New York, 91 F.3d 379, 382 (2d Cir.
1996) (internal citations omitted). The litigant opposing
summary judgment "may not rest upon mere conclusory allegations
or denials, but must bring forward some affirmative indication
that his version of relevant events is not fanciful." Podell v.
Citicorp Diners Club, Inc., 112 F.3d 98, 101 (2d Cir. 1997)
(internal quotation marks and citations omitted). "Summary
judgment is improper when the court merely believes that the
opposing party is unlikely to prevail on the merits after
trial." American International
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