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SUNRISE MEDICAL HHG, INC. v. HEALTH FOCUS

February 15, 2005.

SUNRISE MEDICAL HHG, INC. Plaintiff,
v.
HEALTH FOCUS OF NEW YORK AND ANTHONY ANDERSON, Defendants.



The opinion of the court was delivered by: HOWARD MUNSON, Senior District Judge

MEMORANDUM — DECISION AND ORDER

INTRODUCTION

  Currently before the court is plaintiff's motion seeking an order pursuant to Rule 56 of the Federal Rules of Civil Procedure granting summary judgment for amounts allegedly owed by defendants under certain agreements in effect between the parties. See Dkt. No. 15, Pl.'s Notice of Mot. Defendants oppose plaintiff's motion arguing generally that disputed material issues of fact remain and more specifically that plaintiff is an improper party, which seeks judgment on a note that it does not own or hold. See Dkt. No. 18, Defs.' Mem. of Law in Opp'n. For the reasons that follow Page 2 below, plaintiff's motion is GRANTED.

  BACKGROUND

  I. The Parties and the Procedural History

  Plaintiff, Sunrise Medical HHG, Inc. ("Sunrise"), is a California corporation with its principal place of business located at 7477 East Dry Creek Parkway, Longmont, Colorado. See Dkt. No. 1, Compl.; Dkt. No. 15, Ex.1.B. Together with its affiliates, Sunrise Medical Inc., and SunMed Finance, Inc., a Delaware corporation also located at 7477 East Dry Creek Parkway, Longmont, Colorado, Sunrise manufactures and distributes medical and hospital equipment. See Dkt. No. 15, Pl.'s Statement of Material Facts in Supp. of Summary J. at ¶ 1; Ex. 1.C. Defendant Health Focus of New York, LLC ("Health Focus") is an Arizona limited liability corporation with its principal place of business located in Scottsdale, Arizona. See Dkt. No. 16, Defs.' Statement of Material Facts in Opp'n at ¶ 1.*fn1 Defendant Anthony Anderson ("Anderson") is now, and at all times relevant has been, a domiciliary of the State of Arizona residing at 13910 North Frank Lloyd Wright #24299, Scottsdale, Arizona 85260. See Dkt. No. 17, Anderson Aff. at ¶ 2; Dkt. No. 15, Ex. 1, Compl. at ¶ 3. Anderson is the sole member and manager of Health II, LLC, an Arizona limited liability company that owns Health Focus. See Dkt. No. 17, Anderson Aff. at ¶ 7.

  II. The Parties' Dispute

  A. The Parties Meet and Reach Agreement

  In early 2000, the former owners of Harvalan Drug. Co., a New York Corporation doing business as White's Homecare, located in Schenectady, New York, approached Anderson and Page 3 offered him the opportunity to purchase their business. See Dkt. No. 17, Anderson Aff. at ¶ 3. Thereafter, White's Homecare and Anderson engaged in negotiations and by May of 2000, Anderson and Harvalan were close to finalizing Health Focus' stock acquisition of White's Homecare. See Dkt. No. 17, Anderson Aff. at ¶ 4. At this time, a representative of Sunrise, Dawn Beal ("Beal"), contacted Anderson by telephone and advised him that she was aware that he was to acquire White's Homecare. Beal expressed some concern over the acquisition, for it had been rumored that should such an acquisition occur, White's Homecare would discontinue the sale or lease of rehabilitation equipment for which Sunrise had been a longtime supplier. See id. at ¶¶ 5-6. Anderson confirmed that Health Focus, a subsidiary of his Health II company, was contemplating a stock acquisition of White's Homecare and explained the reluctance of his companies to sell or lease rehabilitation equipment. According to Anderson, his companies were not able to properly bill and collect from Medicare for sold and/or leased rehabilitation equipment. Beal assured Anderson that Sunrise could allay some of his concerns regarding White Homecare's continued relationship with Sunrise as a retailer of its rehabilitation equipment and suggested a telephone conference might assist to this end. See id. at ¶¶ 7-8. On May 22, 2000, Anderson and Sunrise representatives participated in a telephone conference in which the representatives highlighted Sunrise's consulting program designed to facilitate the approval of Medicare submissions on rehabilitation equipment.*fn2 White's Homecare was already utilizing the consulting program at the time of the telephone conference. See Dkt. No. 17, Anderson Aff. at ¶¶ 9-11.

  Soon thereafter, Health Focus acquired White's Homecare. Anderson, relying on the ability Page 4 of the Sunrise Consulting Program to facilitate proper billing and collection for sold and/or leased rehabilitation equipment, authorized the continued sale and leasing of Sunrise's rehabilitation equipment by White's Homecare. See Dkt. No. 17, Anderson Aff. at ¶¶ 12-15. As such, the parties signed a series of agreements, detailed below, which set forth their obligations to each other.

  B. The Agreements

  1. The Account Agreement and Continuing Guarantee

  Sunrise Medical Inc., created a credit account with defendants in connection with its sale of durable medical goods to Health Focus for resale to end-users in the Upstate New York area. See Dkt. No. 15, Pl.'s Statement of Material Facts in Supp. of Summ. J. at ¶ 1, Ex. 1.A. On June 22, 2000, Anderson, as the Managing Member of Health Focus, executed an Account Agreement and Terms of Sale, which provides in pertinent part, that Health Focus

 
makes this application for credit to Sunrise Medical Inc. and/or any of its subsidiaries or affiliates now owned or hereafter acquired ("Creditor") . . . [Health Focus] agrees that all amounts payable on or before the due date as shown on each invoice will be paid, and if not paid on or before said date, [Health Focus] is then in default . . . In the event of default, [Health Focus] further agrees to pay all costs of collection, including reasonable attorney's fees, plus court costs and/or collection agency fees together with interest thereon at the maximum amount allowed by law to [Sunrise Medical Inc.] or its assignee.
See Dkt. No. 15, Ex. 1.A. (emphasis added).*fn3

  In connection with the Account Agreement, Anderson also executed a Continuing Guarantee in his individual capacity, which provides that he, as guarantor, would "personally and individually, jointly and severally, unconditionally guarantee and promise to pay Creditor [Sunrise Medical Inc., and its subsidiaries or affiliates] on demand any and all present and future indebtedness, obligations, Page 5 and liabilities owed by [Health Focus] to Creditor [Sunrise Medical Inc., and its subsidiaries or affiliates]." Dkt. No. 15, Ex. 1.A.

  2. Guaranty

  On June 22, 2000, Anderson also executed, in his individual capacity, a Guaranty in connection with the extension of credit by Sunrise Medical Inc., to Health Focus.*fn4 The terms set forth in the Guaranty provide that Anderson will

 
unconditionally guarantee and promise to pay to Sunrise Medical Inc., and its current and future subsidiaries and affiliates (collectively the "Seller"), whose address is c/o Sunrise Medical HHG, Inc., 7477 East Dry Creek Parkway, Longmont, Colorado 80503 . . . all indebtedness of any kind of Health Focus of New York . . . and all divisions, subsidiaries and affiliates thereof . . ., including without limitation all debts, obligations, and liabilities of [Health Focus] to Seller [Sunrise Medical Inc. and its current and future subsidiaries and affiliates] currently existing or now or hereafter made, incurred or created, however arising or evidenced, whether direct or acquired by assignment or succession, whether due or not due, absolute or contingent, liquidated or unliquidated, whether recovery upon such debt may be or become barred by any statute of limitation or otherwise unenforceable . . . [Anderson] also promise[s] to pay all attorneys' fees and costs incurred in enforcing this Guaranty against [Anderson], regardless of whether any legal action is commenced against [Anderson].
Id., Ex. 1.B. (emphasis added).

  3. Promissory Note

  On June 26, 2000, Anderson executed, on Health Focus' behalf, a Promissory Note (the "Note" secured by Security Agreement valued at $189,006.48. The Note, payable to the order of SunMed Finance, Inc., set forth an agreed upon schedule of repayment to SunMed Finance, Inc., for the principal amount of $156,255.31 of debt incurred by Health Focus to Sunrise. Interest on the Page 6 principle accrued at a rate of nineteen percent. Health Focus was to pay the amount owed under the Note in twenty-four monthly installments of $7,875.27, plus interest accrued. The Note required payments to commence on July 15, 2000, and continue through June 15, 2002, at which time the entire remaining principal amount and all accrued interest would become due and payable in full. See Dkt. No. 15, Pl.'s Statement of Material Facts in Supp. of Mot. for Summ. J. at ¶¶ 10-14 and Ex. 1.C. In its final paragraph, the Note indicates that it is "secured by a Security Agreement dated as of May 3, 2000, between Lender [SunMed Finance, Inc.] and the undersigned [defendants], as Debtor." See Dkt. No. 15, Ex. 1.C. The Note also provides that its holder "shall have the right to sell, assign or otherwise transfer, either in part or in its entirety, this Note and any instrument or agreement securing this Note, to one or more persons without the undersigned's [defendants'] consent." Id. SunMed Finance, Inc., subsequently assigned the Note to Sunrise. See Dkt. No. 19, Ex. A. Hopp. Aff. at ¶ 3.

  Anderson insists that but for the assurances made by the Sunrise Consulting Program, he would not have signed these three agreements. He also emphasizes that he negotiated and executed the three agreements in Scottsdale, Arizona, and that his wife was not a signatory to the Guaranty. See Dkt. No. 17, Anderson Aff. at 16-18.

  4. The Security Agreement

  On May 3, 2000, Health Focus executed a Security Agreement with Sunrise Medical Inc., and its current and future subsidiaries and affiliates granting them a security interest in the personal property identified as "all inventory of goods and merchandise, and all equipment, wherever located, now held or hereafter acquired by [Health Focus] from any Secured Party" and, inter alia, all proceeds of such property. See Dkt. No. 15, Ex. 1.D. Page 7

  C. Sale and Delivery of Goods from Sunrise to Health Focus and Amount Owed

  From June 2000, through September 2000, Sunrise sent over 110 invoiced shipments of goods and services to Health Focus doing business as White's Homecare in Schenectady, New York. See Dkt No. 15, Ex. 1.E. While Health Focus apparently accepted the shipped goods without objection, it made only one payment in the amount of $55.16 against $102,102.43 of outstanding account balance. See id., Pl.'s Mem. of Law in Supp. of Mot. at 5-6. Sunrise contends that defendants, pursuant to the Account Agreement, the Continuing Guarantee, the Guaranty, Promissory Note and Security Agreement, owe it at least $255,767.25 plus interest, which continues to accrue. See Dkt. No. 15, Pl.'s Statement of Material Facts in Supp. of Summ. J. at ¶ 22. Sunrise now moves for summary judgment on this outstanding indebtedness.

  DISCUSSION

  I. Summary Judgment Standard

  The standard for summary judgment is well-settled. Rule 56 allows for summary judgment where the evidence demonstrates that "there is no genuine issue of any material fact and the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). Summary judgment is properly regarded as an integral part of the Federal Rules as a whole, which are designed "to secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1991) (quoting Federal Rule of Civil Procedure 1). A court may grant a motion for summary judgment when the moving party carries its burden of showing that no triable issues of fact exist. See Thompson v. Gjivoje, 896 F.2d 716, 720 (2d Cir. 1990). In light of this burden, any inferences to be drawn from the facts must be viewed in the light most favorable to the Page 8 non-moving party. See id.; United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 994, 8 L. Ed. 2d 176 (1962) (per curiam). If the moving party meets its burden, the burden shifts to the non-moving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). To defeat a motion for summary judgment, however, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). A dispute regarding a material fact is genuine "if evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248, 106 S. Ct. at 2510. When reasonable minds could not differ as to the import of the evidence, then summary judgment is proper. See Anderson, 477 U.S. at 250-251, 106 S. Ct. at 2511.

  In contract actions, summary judgment is appropriate where the contract's language is unambiguous. See Metropolitan Life v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990). "Contract language is unambiguous if it has `a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference of opinion.'" Id. (quoting Breed v. Ins. Co. of N. Am., 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 355, 385 N.E.2d 1280, 1283 (1978)) cf. Krumme v. W. Point Stevens Inc., 238 F.3d 133, 138-39 (2d Cir. 2000) ("The language of a contract is ambiguous if it is `capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement.'") (quoting Seiden Assocs. v. ANC Holdings, 959 F.2d 425, 428 (2d Cir. 1992)). ...


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