United States District Court, D. Kansas
RADIOLOGIX, INC. and RADIOLOGY AND NUCLEAR MEDICINE IMAGING PARTNERS, INC., Plaintiffs,
RADIOLOGY AND NUCLEAR MEDICINE, LLC, Defendant.
MEMORANDUM AND ORDER
D. CRABTREE UNITED STATES DISTRICT JUDGE
February 5, 2019, a jury trial began in this case. After
presenting evidence for about five days, plaintiffs rested
their case in chief. At the close of plaintiffs'
evidence, defendant filed a 27-page Motion for Directed
Verdict as a Matter of Law at the Close of Plaintiffs'
Evidence. Doc. 461. Plaintiffs have submitted a Response
opposing defendant's motion. Doc. 465. After considering
the parties' arguments and the evidence presented at
trial-in the light most favorable to plaintiffs, the
non-moving party-the court denies defendant's Motion for
case involves a breach of contract dispute. Plaintiff
Radiologix, Inc. (“Radiologix”) is a national
provider of imaging services based in California. Plaintiff
Radiology and Nuclear Medicine Imaging Partners, Inc.
(“RNMIP”) is a wholly owned subsidiary of
plaintiff Radiologix. Defendant Radiology and Nuclear
Medicine, LLC (“RNM”) is a Kansas limited
liability company and physician-owned radiology practice
based in northeast Kansas.
1997, plaintiff Radiologix or one of its
predecessors-in-interest has provided management services to
defendant under a long-term management Service Agreement.
This lawsuit arises from defendant's termination of that
Agreement in 2014. Plaintiffs assert a breach of contract
claim against defendant, alleging that defendant breached the
parties' Agreement by terminating it in 2014. As a
defense to this claim, defendant argues that it had a right
to terminate the Agreement because plaintiffs had breached
their material obligations to defendant under that Agreement.
also asserts a Counterclaim against plaintiffs for breach of
contract. Defendant argues that plaintiffs breached the
Agreement before the 2014 termination by failing to provide
management, administrative, and billing services, as well as
management and capital resources, to defendant as the Service
Motion for Directed Verdict argues that plaintiffs'
evidence at trial establishes that they failed to perform
their obligations under the Service Agreement. And thus,
defendant contends, plaintiffs have failed to prove one of
the essential elements of their breach of contract claim.
Also, defendant contends that plaintiffs' evidence fails
to prove their damages claim. Thus, defendant argues,
plaintiffs' breach of contract claim fails as a matter of
law. For both of these reasons, defendant asserts that it is
entitled to judgment as a matter of law against
plaintiffs' breach of contract claim.
(1) In General. If a party has been fully heard on an issue
during a jury trial and the court finds that a reasonable
jury would not have a legally sufficient evidentiary basis to
find for the party on that issue, the court may:
(A) resolve the issue against the party; and
(B) grant a motion for judgment as a matter of law against
the party on a claim or defense that, under the controlling
law, can be maintained or defeated only with a favorable
finding on that issue.
considering a Rule 50(a) motion, the court must draw
“[a]ll reasonable inferences . . . in favor of the
nonmoving party and [cannot] make credibility determinations
or weigh the evidence.” Liberty Mut. Fire Ins. Co.
v. Woolman, 913 F.3d 977, 983 (10th Cir. 2019)
(citations and internal quotations marks omitted).
“Judgment as a matter of law is appropriate only if a
‘reasonable jury would not have a legally sufficient
evidentiary basis' to find for the opposing party.”
Id. at 983-84 (quoting Fed.R.Civ.P. 50(a)(1)). In
other words, “‘[t]he evidence [must] point[ ] but
one way and [be] susceptible to no reasonable inferences
which may support the opposing party's
position.'” Id. at 984 (quoting Finley
v. United States, 82 F.3d 966, 968 (10th Cir. 1996)).
asserts several arguments supporting its Motion for Directed
Verdict. The court addresses each argument, separately,
Does the Evidence Establish that Plaintiffs Failed to Perform
Their Obligations Under the Service Agreement?
asserts that plaintiffs' evidence failed to prove one of
the required elements of their breach of contract claim-that
plaintiffs performed their obligations under the Service
Agreement. In Kansas,  the elements of a breach of contract claim
are: “(1) the existence of a contract between the
parties; (2) sufficient consideration to support the
contract; (3) the plaintiff's performance or willingness
to perform in compliance with the contract; (4) the
defendant's breach of the contract; and (5) damages to
the plaintiff caused by the breach.” Stechschulte
v. Jennings, 298 P.3d 1083, 1098 (Kan. 2013). Here,
defendant asserts that plaintiffs cannot prove the third
element of a breach of contract claim because plaintiffs'
evidence establishes that plaintiffs failed to perform their
obligations under the Service Agreement. Defendant argues
that plaintiffs failed to perform their obligations under the
Service Agreement in eight, different ways.
Did plaintiffs fail to perform their obligations under the
Service Agreement by reducing the scope of services under
that Agreement while charging the same Service Fee?
argues that plaintiffs' evidence shows that plaintiffs
failed to perform their obligations under the Service
Agreement when they closed the Imaging Center and eliminated
Technical Operations in Topeka in 2010, but still charged the
same Service Fee under the contract.
7.1 of the Service Agreement provides:
Payment of the Service Fee is not intended to and shall not
be interpreted or implied as permitting Administrator to
share in the Group's fees for medical services but is
acknowledged as the negotiated fair market value compensation
to Administrator considering the scope of the services and
the business risks assumed by Administrator.
270-10 at 37.
contend that defendant cannot assert this argument because
defendant failed to preserve it in the Pretrial Order. In a
narrow, technical sense, plaintiffs are correct. Doc. 227 at
26 (“Defenses of Defendant[ ]”). But defendant
did provide fair notice that it would defend plaintiffs'
contract claim by establishing, among other things, that
“[p]laintiffs' were in material breach of the
Service Agreement . . . .” Id. And though
defendant advanced this defense as a reason ...