Siemens Financial Services, Inc., et al v. Stonebridge Equipment Leasing, LLC, et al
Annotate this Case
Download PDF
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
PROVIDENCE, S.C.
SUPERIOR COURT
(FILED: February 15, 2013)
SIEMENS FINANCIAL SERVICES, INC.
:
and SIEMENS MEDICAL SOLUTIONS USA, :
INC.
:
:
V.
:
:
STONEBRIDGE EQUIPMENT LEASING,
:
LLC, NEW ENGLAND RADIOLOGY & LAB :
SERVICES, P.C., MUHAMMAD M. ITANI and :
BISHER I. HASHEM
:
C.A. No. PB 09-1677
DECISION
SILVERSTEIN, J.
Before this Court are two motions brought by Plaintiffs Siemens Financial
Services, Inc. (―Siemens Financial‖) and Siemens Medical Solutions USA, Inc. (―SMS‖)
(collectively, ―Plaintiffs‖ or ―Siemens‖): (1) a Motion to Strike or Otherwise Disregard
Deposition Testimony, and (2) a Motion for Summary Judgment on all of their Claims and the
Defendants‘ Counterclaims. Defendants Stonebridge Equipment Leasing, LLC (―Stonebridge‖),
Muhammad M. Itani (―Itani‖), and Bisher I. Hashem (―Hashem‖) (collectively ―Defendants‖)
oppose both motions. Essentially, the Plaintiffs are seeking to recover for breaches of contract
relating to leased medical equipment and the guaranties associated with those leases. Defendants
allege—as both their affirmative defenses and two of their remaining Counterclaims—that the
contracts and guaranties were procured by fraud and/or intentional misrepresentation.
Defendants also assert a counterclaim for unfair or deceptive business practices under Mass.
Gen. Laws ch. 93A.
I
Facts and Travel
Around 2005 a number of physicians and investors—including Defendants Itani and
Hashem and non-party Dr. Fathalla Mashali (―Dr. Mashali‖)—became interested in opening a
medical imaging center in Woonsocket, Rhode Island. See Stonebridge Dep. 31:21-48:6. Dr.
Mashali contacted Siemens about equipment for the imaging center. See Vassallo Dep. 12:1-19.
After the initial discussions, however, Dr. Mashali had to back out of direct involvement because
he had a conflict of interest under anti-kickback laws.
(Stonebridge Dep. 48:7-49:14.)
Nevertheless, two executives from Dr. Mashali‘s company New England Medical Care
(―NEMC‖)—Controller George Conduragis and CEO Paul Vallera—continued to work on the
business plan for the proposed imaging center. See Conduragis Dep. 17:8-38:11; Vassallo Dep.
100:5-101:19.
In 2006, a business plan was formulated for the imaging center. Siemens provided a
template for the business plan, and Conduragis and Vallera worked on the plan for Stonebridge.
See Conduragis Dep. 23:4-24-5; 38:12-42:19; 45:21-46:4; 67:3-70:11; Vassallo Dep. 179:15180:16, 185:15-186:7. At least two drafts of the business plan were prepared: one in April 2006
and one in October 2006. (Vassallo Dep. 179:15-180:16, 185:15-186:7, Exs. A, ZZ.) While the
drafting was underway, the Plaintiffs also provided the Defendants with a report entitled ―A
Demographic and Economic Profile of the Area Surrounding Woonsocket, RI‖ (the
―Demographic Profile‖). (Mawn Aff., ¶11, Ex. A.)
When setting up the imaging center, two entities were created: New England Radiology
& Laboratory Services (―NERLS‖), which would actually operate the center, and Stonebridge
Equipment Leasing, which would lease the equipment from Siemens, and then sublease the
2
equipment along with office space to NERLS.1 See Stonebridge Dep. at 178:24-179:22; Hashem
Dep. 95:11-96:10. On March 29, 2007, Stonebridge and SMS entered into a Master Equipment
Lease Agreement2 (―Master Agreement‖) and six Leasing Schedules (―Leasing Schedules‖)
(collectively, the ―Leases‖) covering the lease of medical diagnostic imaging equipment,
including MRI, CT, and radiography machines (the ―Leased Equipment‖). (Compl. Ex. A-G.)
Defendants Itani and Hashem also entered into personal guaranty agreements (the ―Guaranties‖)
for the repayment of the obligations created by the Leases.3 (Compl. Ex. H-I.)
As contemplated, Stonebridge and NERLS entered into a sublease agreement
(―Sublease‖) whereby NERLS subleased the Leased Equipment and office space from
Stonebridge.4 (Compl. Ex. J.) SMS consented to the sublease provided that timely payments
were made and ownership of the Leased Equipment remained with SMS. (Compl. Ex. K.) SMS
later assigned all of its rights and remedies under five of the six Leasing Schedules, as well as the
Guaranties, to Siemens Financial, but SMS retained its rights and remedies under Leasing
Schedule #13275, along with its related guaranty. (Mawn Aff. ¶¶ 8-9; Mawn Dep. 14:9-20;
Abreu Aff. ¶ 8; Abreu Dep. 22:15-23.)
NERLS opened for business in approximately June 2007. (Rami Itani Dep. 18:1-7.)
However, NERLS made only one payment to Stonebridge pursuant to the Sublease.
(Stonebridge Ans. to Interrog. 16; Stonebridge Dep. 261:23-262:15.)
Stonebridge stopped
making payments under the Leases to the Plaintiffs in November 2008. (Resp. to Req. for
1
NERLS‘ obligations to Stonebridge for the office space and the sublease of the equipment were
bundled into one payment, and Dr. Mashali personally guaranteed those payments. (Stonebridge
Dep. 178:24-180:2). Dr. Mashali has filed for personal bankruptcy. Id. at 180:3-4.
2
The Master Agreement was ―Dated: 12/14/06‖ and signed by Itani on behalf of Stonebridge on
February 19, 2007 and by John P. Boyle on behalf of SMS on March 29, 2007.
3
The Guaranties were signed on February 19, 2007 and February 26, 2007, respectively.
4
This ―Facility & Equipment Use Agreement‖ was made on February 9, 2007 and its terms were
to begin on June 1, 2007 and end on May 30, 2012. (Compl. Ex. J.)
3
Admission 11.) In letters dated December 16, 2008, Plaintiffs notified each Defendant that they
were in default of their obligations under their respective Leases and Guaranties and demanded
payment and return of all the Leased Equipment. (Compl. ¶¶ N-S.)
On March 29, 2009, the Plaintiffs filed a fourteen-count Complaint for replevin and
breach of contract damages against the Defendants.5 The Defendants responded by asserting
affirmative defenses and a four-count Counterclaim alleging Intentional Misrepresentation,
Negligent Misrepresentation, Fraud and Deceit, and a violation of Mass. Gen. Laws ch. 93A,
which makes unfair or deceptive business practices unlawful. After this Court‘s July 2009
issuance of a writ of replevin, the Defendants voluntarily surrendered the Equipment in October
2009. The equipment was then sold for $600,000.
The Plaintiffs filed a Motion to Dismiss the Defendants‘ Counterclaims. This Court
denied the motion as to the Intentional Misrepresentation, Fraud and Deceit, and Mass. Gen.
Laws ch. 93A Counterclaims because the Defendants had alleged fraud in the inducement of the
Leases; thus, this Court held that the integration and waiver clauses in the Leases and Guaranties
do not bar the Counterclaims. Siemens Financial Services, Inc. and Siemens Medical Solutions
USA, Inc. v. Stonebridge Equipment Leasing et al., C.A. No. PB 09-1677, Nov. 24, 2009, Slip.
Op. at 15-16. The Court did, however, dismiss the Defendants‘ Negligent Misrepresentation
Counterclaim because that cause of action was barred by the waiver and integration clauses. Id.
at 16.
Thus, the remaining Claims are for breach of contract against Stonebridge (Counts IIIVIII) and breach of the Guaranties against Itani and Hashem (Counts IX-XII); the remaining
Counterclaims are Intentional Misrepresentation (Count I), Fraud and Deceit (Count III), and a
5
NERLS was originally a defendant, but NERLS and the Plaintiffs agreed to dismiss all claims
against each other on September 15, 2009.
4
violation of Mass. Gen. Laws ch. 93A (Count IV). The Plaintiffs seek summary judgment in
their favor on all Claims and Counterclaims. Additionally, after the Defendants used deposition
testimony of Dr. Mashali to support their arguments in opposition to summary judgment, the
Plaintiffs filed a ―Motion to Strike or Otherwise Disregard Certain Portions of Dr. Fathalla
Mashali‘s Testimony.‖
II
Standard of Review
Summary judgment is proper when ―no genuine issue of material fact is evident from the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, and the motion justice finds that the moving party is entitled to prevail as a
matter of law.‖ Smiler v. Napolitano, 911 A.2d 1035, 1038 (R.I. 2006) (quoting Rule 56(c)). On
consideration of a motion for summary judgment, this Court must draw ―all reasonable
inferences in the light most favorable to the nonmoving party.‖ Hill v. Nat‘l Grid, 11 A.3d 110,
113 (R.I. 2011) (quoting Fiorenzano v. Lima, 982 A.2d 585, 589 (R.I. 2009)). However, the
burden lies on the nonmoving party to ―prove the existence of a disputed issue of material fact by
competent evidence,‖ rather than resting on the pleadings or mere legal opinions and
conclusions. Hill, 11 A.3d at 113. Further, testimony should not be considered where the
witness ―laid no foundation for his personal knowledge[,] . . . gave no indication of the source of
his knowledge, and . . . made no showing that he was competent to testify to the facts alleged in
his affidavit.‖ Nichola v. Fiat Motor Co., Inc., 463 A.2d 511, 513-14 (R.I. 1983) (noting
affidavit amounted to ―little more than hearsay‖).
When it is concluded ―that no genuine issue of material fact exists and that the moving
party is entitled to judgment as a matter of law,‖ summary judgment shall properly enter.
5
Malinou v. Miriam Hosp., 24 A.3d 497, 508 (R.I. 2011) (quoting Poulin v. Custom Craft, Inc.,
996 A.2d 654, 658 (R.I. 2010)); see also Holliston Mills, Inc. v. Citizens Trust Co., 604 A.2d
331, 334 (R.I. 1992) (stating ―summary judgment is proper when there is no ambiguity as a
matter of law‖). Conversely, ―if the record evinces a genuine issue of material fact, summary
judgment is improper.‖ Shelter Harbor Conservation Soc‘y, Inc. v. Rogers, 21 A.3d 337, 343
(R.I. 2011) (citations omitted). ―Summary judgment is an extreme remedy that should be
applied cautiously.‖ Hill, 11 A.3d at 113 (quoting Plainfield Pike Gas & Convenience, LLC v.
1889 Plainfield Pike Realty Corp., 994 A.2d 54, 57 (R.I. 2010)). ―Nevertheless, Rule 56 of the
Superior Court Rules of Civil Procedure constitutes a procedural device that, in the proper
circumstances, plays an appropriate role in separating the wheat from the chaff in the litigation
process.‖ Young v. Warwick Rollermagic Skating Center, Inc., 973 A.2d 553, 557 (R.I. 2009).
III
Discussion
A
Motion to Strike
The Plaintiffs request that the Court strike or otherwise disregard Dr. Mashali‘s
deposition testimony that is cited in the Defendants‘ Memorandum in Opposition to Summary
Judgment. The Plaintiffs argue that Dr. Mashali‘s testimony is inadmissible because he is not
competent to testify with respect to: (1) the business plan developed by the Defendants in an
effort to convince SMS to provide financing, or (2) the resulting agreements between the
Defendants and SMS. Defendants respond by pointing to passages in Dr. Mashali‘s testimony
that purportedly establish his personal knowledge.
6
Dr. Mashali‘s deposition testimony was sometimes contradictory and frequently
unresponsive to the questions posed.
Parts of his testimony are based on his personal
knowledge, while others are not. Therefore, the Court will discuss the statements most relevant
to the Motion for Summary Judgment.
Dr. Mashali may not testify as to the use of information in the formulation of the business
plan because he did not help create the business plan. See Nichola, 463 A.2d at 513-14; Mashali
Dep. 17:21-18:1 (noting that he was not ―directly involved‖ in the imaging center business
planning). For example, the following testimony of Dr. Mashali cannot be considered:
―Q. Did George Conduragis, to your knowledge, have any
involvement in putting together a business plan for the imaging
center?
A. I think that most of the documents came from Siemens. So, I
don‘t really think that he offered as much input other than
presenting Siemens‘ documents.‖ Id. at 18:15-22.
In addition to being nonresponsive to the question, Mashali never established that he had any
knowledge of the contents of the business plan, let alone the source of related documents. See
Nichola, 463 A.2d at 513 (describing affiant‘s failure to describe his source of knowledge).
Later, Dr. Mashali further demonstrates his lack of personal knowledge about the business plan
by failing to remember whether he had reviewed it; nevertheless, he then claimed that 99 percent
of it came from Siemens:
―Q. Do you ever recall reviewing this particular business plan?
A. That I don‘t know.
Q. Do you know who prepared this business plan?
A. I think -- looking at the circles this is what Siemens provided.
So, I believe that probably 99 percent of that is provided by
Siemens. Maybe one page here where who is going to contribute
was provided by Mr. Itani, but most of the stuff here was provided
by Siemens.‖ Id. 34:15-35:2 (emphasis added).
7
At no point had Dr. Mashali clearly indicated the basis of his personal knowledge about the
business plan, thus his testimony about its contents is speculation. Dr. Mashali did not show
how he has personal knowledge of what documents were incorporated into the business plan, let
alone how much comparative weight the documents carried. See Nichola, 463 A.2d at 513. Dr.
Mashali also testified that reimbursement rates for procedures were discussed at a meeting, then
continued ―I think most of the documents about reimbursement -- almost all of it came from
Siemens. I didn‘t have any access to any -- we didn‘t do those procedures.‖ Id. at 29:17-20.
While he then claimed that he thought that Vassallo had provided documents to him, Dr. Mashali
later recanted that statement and testified that he ―didn‘t personally get any documents.‖ (Id. at
29:24-30:6; 67:10-11; 68:5-7). Therefore, Dr. Mashali‘s statements about the contents of the
business plan must be stricken.
The record does support Dr. Mashali‘s personal knowledge that he saw documents passed
to Conduragis and/or Itani. Id. at 68:13-23 (reimbursement rates); 69:24-70:7 (demographic
information). Dr. Mashali also testified that Conduragis told him that Conduragis got a map,
reimbursement rates, and projections from Vassallo. Id. at 105:7-106:7. While this would
normally be stricken as inadmissible hearsay, it can be considered here to the extent that it rebuts
Conduragis‘ deposition testimony.
However, while this testimony can be considered, its
evidentiary value is only to the proposition that Stonebridge had the information. Dr. Mashali
did not have any personal knowledge as to whether the Defendants‘ use of or reliance on the
information discussed, as evident from his lack of knowledge about the business plan.6
6
Even if Mashali‘s testimony about Conduragis‘ use of documents purportedly given to him by
Vassallo was considered, the relevant information consists of projections so the dispute of fact is
not material. See infra Sec. III.B.2.c-d.
8
Therefore, the Motion to Strike is granted in part and denied in part as indicated above.
Accordingly, the Court will disregard the inadmissible statements in its consideration of the
Motion for Summary Judgment.
B
Motion for Summary Judgment
1
Choice of Law
In deciding the Plaintiffs‘ Motion to Dismiss the Defendants‘ Counterclaims, this Court
held that ―the substantive law of Massachusetts should apply to the Defendants‘ counterclaims.‖
Siemens Financial Services, Inc. and Siemens Medical Solutions USA, Inc. v. Stonebridge
Equipment Leasing et al., C.A. No. PB 09-1677, Nov. 24, 2009, Slip. Op. at 15. Applying a
torts-based analysis and responding to Plaintiffs‘ argument that New Jersey law should apply, the
court stated:
―The Defendants claim that most of the meetings that took place
among Itani, Hashem, and the Plaintiffs‘ agents, who allegedly
made misrepresentations, took place in South Easton,
Massachusetts. Additionally, the Leases and the guaranties, which
were allegedly procured through fraud, were executed by
Stonebridge, Itani, and Hashem in Massachusetts. While the
Plaintiffs are Delaware corporations, registered to transact business
in Rhode Island, their agent who primarily interacted with Itani
and Hashem concerning the proposed facility, has an office in
Burlington, Massachusetts. Furthermore, Defendants Itani and
Hashem, who are domiciled in Massachusetts, are also the owners
and members of Stonebridge Equipment Leasing, which is a
Massachusetts limited liability company with a place of business in
Woonsocket, Rhode Island. Although the Leased Equipment is
located in Rhode Island, it is clear the parties‘ relationship,
particularly concerning negotiations for the agreements, was
centered in Massachusetts. The only connection to New Jersey is
the boilerplate Leases executed by the parties.‖ Id. at 8-9.
9
In connection with this Motion for Summary Judgment, the Plaintiffs now argue that
Rhode Island law should apply to the Defendants‘ Counterclaims. To support this argument, the
Plaintiffs contend that ―[d]iscovery has since confirmed that no statement alleged to be a
misrepresentation was ever made, much less made in the Commonwealth of Massachusetts,
whereas the equipment and imaging center at the heart of the dispute are located in Rhode
Island.‖
(Pls.‘ Mem Supp. Summ. J. 21.)
The Defendants respond that ―[t]he discovery
developed in this case does not alter [the Motion to Dismiss] ruling, but rather has buttressed the
averments in the Defendants‘ Counterclaim that most of the meetings and activities that are the
subject of this dispute took place in Massachusetts.‖ (Defs.‘ Mem. Opp. Summ. J. 8.)
The Court cannot rest on its Motion to Dismiss Decision because the standard is different
when a party moves under Super. R. Civ. P. 56, as opposed to Super. R. Civ. P. 12(b)(6).
Contrast Palazzo v. Alves, 944 A.2d 144, 149 (R.I. 2008) (on Rule 12(b)(6) motion, the court
―examines the allegations contained in the plaintiff's complaint, assumes them to be true, and
views them in the light most favorable to the plaintiff‖) with Hill, 11 A.3d at 113 (on Rule 56
motion, nonmoving party must ―prove the existence of a disputed issue of material fact by
competent evidence; it cannot rest on allegations or denials in the pleadings or on conclusions or
legal opinions‖) (internal quotations and citations omitted). Here, the Court remains satisfied
that Massachusetts law should apply to the Defendants‘ Counterclaims. There is evidence in the
record to support the allegations that the statements which are alleged to be misrepresentations, if
made, were made in Massachusetts. Dr. Mashali references multiple meetings with Richard
Vassallo at Attorney Filipek‘s Office in South Easton, MA.
(Mashali Dep. 1, 20:13-21.)
Additionally, the Defendants rely heavily upon a presentation that allegedly occurred at Thomas
Quin‘s Office in Norwood, MA. (Vassallo Dep. 45:4-52:7.) Moreover, the Plaintiffs only point
10
to the fact that the equipment and imaging center are located in Rhode Island; they do not allege
that any purported misrepresentations occurred in Rhode Island. In its previous analysis, the
Court recognized that the situs of the subject matter of the Leases was not the sole or even
primary factor, but rather the place where the allegedly fraudulent statements were made was
paramount. Siemens, C.A. No. PB 09-1677, at 9 (―Although the Leased Equipment is located in
Rhode Island, it is clear the parties‘ relationship, particularly concerning negotiations for the
agreements, was centered in Massachusetts.‖) Accordingly, the Court will continue to apply
Massachusetts law to the Defendants‘ Counterclaims.
As to the law governing the breach of contract Claims, the Plaintiffs argue that New
Jersey law controls, as is contemplated by the choice of law provision in the Leases and
Guaranties.7 Presumably, the Plaintiffs also mean for this argument to apply to the Defendants‘
affirmative defenses. The Defendants do not directly confront this issue in their objection
memorandum, but it seems as though they do not think that New Jersey law should apply to any
of the Claims. Fortunately, the Court need not and will not decide this issue.8 See National
7
The choice of law provision provides: ―The agreement and the lease . . . shall be governed and
construed in accordance with the laws of the state of New Jersey without giving effect to the
principles of conflict of laws thereof.‖ (Compl. Ex. A.)
8
For the parties‘ edification, had the Court needed to decide this issue, the Supreme Court
spelled out the rule that would govern this situation in a case uncited by either party, Sheer Asset
Management Partners v. Lauro Thin Films, Inc., 731 A.2d 708, 710 (R.I. 1999):
―As a general rule, parties are permitted to agree that the law of a
particular jurisdiction will govern their transaction. Rhode Island
law recognizes choice of law clauses, with some limitations. For
example, this Court has previously stated that ‗the right of parties
to a contract to have their reciprocal duties and obligations under
that contract governed by the law of some particular jurisdiction is
limited to the selection or stipulation by them of the law of a
jurisdiction which has a real relation to the contract.‘ Moreover,
the Restatement (Second) Conflict of Laws § 187(2)(a) (1971)
states that ‗[t]he law of the state chosen by the parties to govern
11
Refrigeration, Inc. v. Standen Contracting Co., Inc., 942 A.2d 968, 973-74 (R.I. 2008) (―A
motion justice need not engage in a choice-of-law analysis when no conflict-of-law issue is
presented to the court.‖). Neither party has pointed to any difference in the relevant law among
Rhode Island, New Jersey, or Massachusetts. Furthermore, both sides imply that the law does
not actually conflict. See Defs.‘ Mem. Opp. Summ. J. 8.) (―In any event, whether Massachusetts
or Rhode Island or New Jersey law applies, if the contracts at issue were procured by fraud, they
are vitiated and subject to rescission.‖); Pls.‘ Reply Mem. Supp. Summ. J. 10 (certain evidence
―could not possibly form a binding obligation under either Rhode Island or Massachusetts law.‖).
2
Plaintiffs’ Claims and Defendants’ Misrepresentations and Fraud Counterclaims
The Defendants do not argue that they did not breach the terms of the Leases by nonpayment. Their theory is wholly based on affirmative defenses—which are essentially the same
as their Counterclaims—that the contracts were procured by fraud in the inducement and/or
intentional misrepresentations. They claim that because there was fraud in the formation of the
contracts, they are entitled to rescission.
In order to establish claims of fraudulent misrepresentation, a plaintiff must show that the
defendant made a false representation of a material fact with knowledge of its falsity for the
purpose of inducing the plaintiff to act thereon, and that the plaintiff reasonably relied upon the
representation as true and acted upon it to his damage. Russell v. Cooley Dickinson Hosp., Inc.,
their contractual rights and duties will be applied * * * unless * * *
the chosen state has no substantial relationship to the parties or the
transaction and there is no other reasonable basis for the parties‘
choice.‘ Among those jurisdictions in which there is a reasonable
basis for choosing the law of that jurisdiction are: (1) the place of
performance of one of the parties; (2) the domicile of one of the
parties; or (3) the principal place of business of a party.‖
12
772 N.E.2d 1054, 1066 (Mass. 2002) (citing Danca v. Taunton Sav. Bank, 429 N.E.2d 1129,
1133 (1982)). Additionally, a statement on which liability for misrepresentation may be based
must be one of fact, not of opinions, conditions to exist in the future, or matters promissory in
nature. Stolzoff v. Waste Systems Intern., Inc., 792 N.E.2d 1031, 1041 (Mass. App. Ct. 2003);
see also Zimmerman v. Kent, 575 N.E.2d 70, 79 (Mass. App. Ct. 1991). In order to constitute a
―fact,‖ the statement‘s content must be ―susceptible of knowledge‖ at the time it is made.
Zimmerman, 575 N.E.2d at 79.
Plaintiffs argue that no facts support the Defendants‘ Counterclaims for intentional
misrepresentation, fraud, deceit, or affirmative defenses based thereon. To support this claim,
the Plaintiffs contend that: (1) the Plaintiffs made no misrepresentations; (2) the Defendants did
not reasonably rely on any alleged misrepresentations by Plaintiffs; (3) the alleged
representations were non-actionable projections; and (4) the Defendants can never establish
actual or proximate causation.
The Defendants counter that four factual disputes preclude
summary judgment: (1) Siemens provided more than medical equipment and financing; (2)
Siemens provided demographic and economic data to the Defendants upon which they
reasonably relied to their detriment; (3) Siemens sold a $40,000 ―Compass Program‖ to the
Defendants, but never provided services; and (4) Siemens provided financial projections for the
business plan.
a
The Compass Program
Regarding the Compass Program, the Defendants argue that ―Siemens required that
Stonebridge purchase the consulting product as part of Siemens‘ underwriting of the lease
obligations, and the unpaid cost of the program ($36,000) was added to the lease balances.‖
13
(Defs.‘ Mem. Opp. Summ. J. 12.) To support this argument, Defendants cite to Vassallo‘s
deposition testimony at page 179, lines 1-10. That testimony reads:
―Q. . . . There were three large pieces of equipment that were
leased, and then a $40,000 Compass Program was added to the
leases. Do you remember anything about that?
A. I think the Compass Program, now that I look at this document,
the Compass Program typically was paid for, it was cash, so they
got – looks like they got approval to include it in the lease. So that
only a $4,000 deposit was required as opposed to a payment of
$40,000.‖
This testimony does not support the statement that Siemens required that Stonebridge to
purchase the Compass Program, and it makes no mention of underwriting. It is also unclear from
a wider perusal of the deposition transcript exactly which document Vassallo was looking at.
See id. at 177:24-179:21. While the Defendants are correct that they paid $4,000 and no services
were provided, there is no evidence to support a misrepresentation of fact, and the $4,000 was
later credited toward the Leases.
b
Allegation that Siemens Would Provide More Than Medical Equipment and Financing
Apart from the Compass Program, the Defendants allege that the Plaintiffs fraudulently
induced the Defendants to enter into the Leases ―by offering and providing consulting services
and data that turned out to be fraudulent.‖ (Defs.‘ Mem. Opp. Summ. J. 11.) To support this
claim, Defendants point to a presentation made by Vassallo.
The Defendants allege that
Vassallo, orally and through PowerPoint slides, represented that: (1) ―Siemens would provide
the service of assessing the market and the demand for the prospective client;‖ (2) ―Siemens
would create a business plan for the prospective client,‖ and (3) ―Siemens would provide
consulting services to its prospective client including targeting marketing opportunities with both
referring physicians and the general public.‖ Id. at 11-12. This is a distortion of the record. The
14
Defendants use of ―would‖ implies that Siemens agreed to provide such services. However, the
record only indicates that the presentation was about the full panoply of services that Siemens is
able to provide.
See Vassallo Dep. 151:6-157:4.
Specifically, Vasallo stated, ―We [i.e.,
Siemens] could help with the planning stage, we could help with the building stage, and we
could help with the operational stage. Not that that‘s what we‘re committing to, not that that‘s
what we wanted to do, it was just the full scope of the services they provide.‖ Id. 155:6-11
(emphasis added). Therefore, there is no misrepresentation to form the basis of an affirmative
defense or Counterclaim.
c
Numbers in the Business Plan
Next, the Defendants claim that there are disputed issues of material fact as to the source
of certain numbers in the business plan. The Defendants claim that ―[s]ome witnesses say that
Siemens absolutely was the source of the numbers (Mashali and Itani) . . .‖ without citation to
the record. (Defs.‘ Mem. Opp. Summ. J. 13.) Then, the Defendants claim that ―Stonebridge,
Itani, and Hashem should be allowed at trial to show that Siemens made false representations of
material fact with knowledge of their falsity for the purpose of inducing them to act thereon by
entering into the leases and guaranties, and that they reasonably relied upon the representations
as true and acted upon it to their damage.‖ Id. at 14. Again, the Defendants provide no citation
to the record to support this conclusion.
Although counsel to the parties are responsible for directing the Court to the pertinent
portions of the record, the Court came upon some relevant information in its review of portions
of the record cited for other purposes and some uncited portions. Itani, in his Rule 30(b)(6)
deposition for Stonebridge, first claims that certain documents—a profit/loss statement, revenue
15
model, staffing model, and equipment model—were given to him by Quin, and Quin told Itani
that Siemens provided the numbers.9 (Stonebridge Dep. 304:12-311:12.) The statement that
Siemens was the source of the numbers is, on its face, hearsay; however, because this testimony
could potentially rebut evidence that Siemens did not provide the numbers, it can create a dispute
of fact. Similarly, Itani‘s testimony may create a dispute about the source of the numbers used in
the business plan. See Stonebridge Dep. 323:3-12 (testifying that Vassallo was the source of the
numbers in the business plan). Nevertheless, these disputes of fact—the source of certain
numbers provided to Itani and the source of certain numbers in the business plan—are not
material because the numbers are non-actionable projections and the Defendants did not rely on
the numbers. See Super R. Civ. P. 56(c) (requiring genuine issue of material fact to defeat
summary judgment).
The Defendants admit that the numbers are projections. (Stonebridge Dep. 304:21-25;
329:10-330:1.) Liability for fraud or misrepresentation must be based on a statement of fact; not
on opinion, conditions to exist in the future, expectation, estimate, or judgment. Stolzoff, 792
N.E.2d at 1041; Zimmerman v. Kent, 575 N.E.2d 70, 75 (Mass. App. Ct. 1991). Because the
projections relate to predictions of the future—e.g., number of days in operation per year,
number of procedures per day, projected income, year-to year growth, etc.—they cannot form
the basis of a misrepresentation claim.
Finally, even if the numbers were provided by Siemens, and those numbers were
actionable, the Defendants did not rely on them. Reasonable reliance upon the representation as
true is required for a claim of misrepresentation.
See Russell, 72 N.E.2d at 1066.
Itani
repeatedly described how he cut the projections in half, on his belief that they were exaggerated.
9
These documents comprise Exhibit 24 to the Stonebridge Deposition. A copy of this exhibit
was not supplied in connection with this motion.
16
(Stonebridge Dep. 320:11-23, 321:21-23, 331:1-17.) Therefore, Stonebridge did not actually
rely on the projections.
d
The Demographic Profile
Finally, the Defendants contend that the Plaintiffs made factual misrepresentations about
the perceived need for and viability of an imaging center in Woonsocket because the Plaintiffs
provided the Demographic Profile to the Defendants. The Plaintiffs admit that they provided this
report to the Defendants. See Pls.‘ Mem. Supp. Summ. J. 18. On the first page inside the cover,
the Demographic Profile contained a disclaimer:
―The report is provided as a convenience to assist the customer in
understanding various healthcare market scenarios. The customer
should not assume any expressed or implied warranties regarding
this report. The forecasts are based upon the best available data
but should not be taken as a prediction of the future. We
encourage the customer to seek independent verification of current
or future demand for healthcare services.‖ (Mawn Aff., Ex A., at
01132)
―Although disclaimers, under Massachusetts law, do not serve as automatic defenses to
allegations of fraud, they obviously may be considered when assessing the reasonableness of a
party‘s reliance.‖ Rodi v. Southern New England School of Law, 532 F.3d 11, 17 (1st Cir.
2008). While the Court acknowledges that the disclaimer is only a few sentences in a 125 page
report, it is on the first page inside the cover, and that page contains only the disclaimer quoted
above, a one sentence dissemination restriction, and title and author information. See Mawn
Aff., Ex A., at PLTFS 01132. Furthermore, the disclaimer‘s content clearly states that the
information contained in the Demographic Profile consists of ―forecasts,‖ thus it relates to
conditions to exist in the future. Therefore, it would not be reasonable for the Defendants to rely
on the contents, and the alleged misrepresentations are not actionable because they are
17
projections. See Rodi, 532 F.3d at 17; Stolzoff, 792 N.E.2d at 1041; Zimmerman, 575 N.E.2d at
75.
The Defendants have not shown that there is a genuine dispute of material fact as to their
fraud and misrepresentation affirmative defenses and Counterclaims. Therefore, the Plaintiffs
are entitled to summary judgment on their Claims and Counts I and III of the Defendants‘
Counterclaim.10
3
Defendants’ 93A Counterclaim
Mass. Gen. Laws ch. 93A is a unique Massachusetts statute; thus, it requires a separate
The statute provides: ―Unfair methods of
analysis from the misrepresentation claims.
competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are
hereby declared unlawful.‖ Mass. Gen. Laws ch. 93A, § 2(a). Additionally, the statute requires
that ―the alleged . . . unfair or deceptive act or practice occurred primarily and substantially
within the commonwealth.‖ Id. § 11. Therefore, the Court must determine whether the conduct
alleged by the Defendants occurred primarily and substantially within Massachusetts, and
whether that conduct constitutes an unfair or deceptive practice.
a
Did the Actions Occur Primarily and Substantially in Massachusetts?
Dr. Mashali references multiple meetings with Richard Vassallo at Attorney Filipek‘s
Office in South Easton, MA. (Mashali Dep. 1, 20:13-21.) Additionally, the Defendants allege
that misrepresentations occurred during a presentation at Thomas Quin‘s Office in Norwood,
MA. (Vassallo Dep. 45:4-52:7.) At a minimum, the Defendants have created an issue of fact as
10
Because the Court resolves these issues in favor of the Plaintiffs, the Court need not address
the alternative arguments advanced by them. See Pls.‘ Mem. Supp. Summ. J. 29-30, 32-39.
18
to whether the allegedly unfair or deceptive acts occurred primarily and substantially in
Massachusetts.
b
Was Siemens’ Conduct Unfair or Deceptive?
―Conduct is unfair or deceptive if it is within at least the penumbra of some common-law,
statutory, or other established concept of unfairness or immoral, unethical, oppressive or
unscrupulous.‖ Rodi, 532 F.3d at 19; see also Maruho Co., Ltd. v. Miles, Inc., 13 F.3d 6, 10 (1st
Cir. 1993) (quoting Tagliente v. Himmer, 949 F.2d 1, 7 (1st Cir.1991)) (noting that claimant
must ―show conduct that involves some kind of ‗rascality.‘‖).
As described above, the
Defendants do not have a claim for misrepresentation because there was no evidence of an
actionable misrepresentation, and even if there was, there is no evidence that the Defendants
reasonably relied on the purported misrepresentations.
Under Mass. Gen. Laws ch. 93A,
however, if the Defendants could show how these facts fall within at least the penumbra of one
of the listed unfairness or unethical concepts, then it would be the court‘s duty to deny summary
judgment.
See Rodi, 532 F.3d at 19. But the Defendants only advanced the same
misrepresentation claims described above as the basis for their 93A claim, and they have not
argued a separate 93A theory that the actions of the Plaintiffs were allegedly unfair or
deceptive.11 Therefore, the Court grants summary judgment to the Plaintiffs on Defendants‘
Counterclaim Count IV.
11
The Court notes that the Defendants did not actually make any direct 93A argument in its
Objection Memorandum.
19
IV
Conclusion
This Court finds that there are no genuine issues of material fact because nothing in the
record supports the Defendants‘ allegations of misrepresentations by the Plaintiffs, or the
Defendants‘ reasonable reliance thereon. Therefore, the Court grants the Plaintiffs Motion for
Summary Judgment on all Claims and Counterclaims. The Defendants did not dispute the
Plaintiffs‘ damages calculations. See Abreu Aff. ¶¶ 11, 18, Ex. B.; Mawn Aff. ¶ 19; Mawn Dep.,
Ex. 8. However, while the Master Lease provides for reasonable attorneys‘ fees, costs, and
expenses, the Plaintiffs have not proven the amount of attorneys‘ fees, costs, or expenses, or the
reasonableness thereof. Thus, those amounts remain unresolved.
Prevailing counsel may present an Order consistent herewith which shall be settled after
due notice to counsel of record.
20
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.