Healix Infusion Therapy, Inc. v. HHI Infusion Servs., Inc.., No. 12-3768 (7th Cir. 2013)

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Justia Opinion Summary

Healix and HHI compete in the business of infusion therapy services: administration of substances such as pharmaceuticals intravenously or by any method other than ingestion. Some medical care providers offer these services to patients in their offices. Healix and HHI provide support. In 2007 Healix recruited the Clinic as a new customer. The Clinic had two members: Keller, a physician, and Porter, a nurse practitioner. Under their five-year contract, Healix would provide services after the Clinic built an in-office pharmacy and hired staff to work there. The Clinic was responsible for the cost of construction. Healix required Keller and Porter to execute personal guarantees and took a security interest in accounts receivable. Four months after signing the contract, the Clinic notified Healix that it would not fulfill its responsibilities. The Clinic was in breach, but Healix did not sue. One month later, the Clinic entered into a contract with HHI. Healix learned of the new contract and sued HHI for copyright and trademark infringement and for tortious interference with a contract. The intellectual property claims were dismissed. After a trial, the district judge rejected the tortious-interference claim. The Seventh Circuit affirmed, finding lack of causation because the evidence indicated that the Clinic would have “walked away” regardless of HHI’s actions.

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In the United States Court of Appeals For the Seventh Circuit ____________________   No.  12-­ 3768   HEALIX  INFUSION  THERAPY,  INCORPORATED,   Plaintiff-­ Appellant,   v.   HEARTLAND   HOME   INFUSIONS,   INC.,   doing   business   as   HHI   Infusion  Services,   Defendant-­ Appellee.   ____________________   Appeal  from  the  United  States  District  Court  for  the   Northern  District  of  Illinois,  Eastern  Division.   No.  10  C  3772    James  B.  Zagel,  Judge.   ____________________   ARGUED  MAY  28,  2013    DECIDED  AUGUST  16,  2013   ____________________   Before   EASTERBROOK,   Chief   Judge,   and   WILLIAMS   and   HAMILTON,  Circuit  Judges.   EASTERBROOK,   Chief   Judge.   Healix   Infusion   Therapy,   Inc.,   and   HHI   Infusion   Services   compete   in   the   infusion   therapy   services   business.   Infusion   therapy   is   the   administration   of   substances  such  as  pharmaceuticals  intravenously  or  by  any   method   other   than   ingestion.   Some   medical   care   providers   wish   to   offer   these   services   to   patients   in   the   office   of   their   No.  12-­ 3768   2   medical   practice.   For   instance,   an   oncologist s   office   might   have  an  area  where  patients  can  receive  intravenous  chemo-­ therapy.   Healix   and   HHI   provide   support:   premixed   phar-­ maceuticals,  nurses  to  administer  the  drugs,  billing  services,   and  other  necessities  of  an  in-­ office  infusion  therapy  center.   Their  customers  are  physicians  and  medical  practices.   In   June   2007   Healix   recruited   3   Tree   Infectious   Disease   Clinic,  LLC  (the  Clinic),  a  medical  practice  in  Burien,  Wash-­ ington,   as   a   new   customer.   The   Clinic   had   two   members:   David   Keller,   a   physician,   and   Chris   Porter,   a   nurse   practi-­ tioner.  Healix  and  the  Clinic  signed  a  five-­ year  contract,  un-­ der   which   Healix   would   provide   infusion   services   after   the   Clinic   built   an   in-­ office   pharmacy   and   hired   staff   to   work   there.   The   Clinic   was   responsible   for   the   expense   of   con-­ structing  the  pharmacy.  Healix  required  Keller  and  Porter  to   execute  personal  guarantees,  and  it  took  a  security  interest  in   some  of  the  Clinic s  accounts  receivable.   The   arrangement   did   not   last   long.   Four   months   after   signing  the  contract,  the  Clinic  sent  a  letter  informing  Healix   that  it  would  not  fulfill  its  responsibilities.  The  contract  does   not  allow  termination  at  will;  HHI  does  not  contest  Healix s   assertion   that   the   Clinic   was   in   breach though   Healix   did   not   sue   the   Clinic   or   seek   a   remedy   outside   of   the   judicial   system.   One   month   after   sending   this   letter,   the   Clinic   en-­ tered  into  a  contract  for  infusion  services  with  HHI.  The  two   businesses  first  met  at  the  Infectious  Disease  Society  Associa-­ tion s  annual  conference  in  October  2007.  Porter  spoke  with   Landon   Lackey,   one   of   HHI s   employees,   at   its   booth   and   later  at  a  cocktail  party  HHI  had  organized.   When  Healix  found  out  that  the  Clinic  had  signed  with  a   rival,  it  sued  HHI  for  copyright  and  trademark  infringement   3   No.  12-­ 3768   and  for  tortious  interference  with  a  contract.  The  intellectual-­ property   claims   were   dismissed.   The   tortious-­ interference   claim  continued.  (The  district  judge  could  not  send  it  to  state   court  under  28  U.S.C.  §1367(c),  because  the  parties  meet  the   requirements  of  the  diversity  jurisdiction.)  The  parties  agree   that  the  tort  claim  is  governed  by  Texas  law.  The  court  held   a  bench  trial  and  ruled  against  Healix.   Healix   maintained   at   trial   that,   during   the   October   2007   conference,  Lackey  either  learned  that  Healix  had  a  contract   with   the   Clinic   or   learned   facts   that   would   have   led   a   rea-­ sonable  person  in  his  position  to  conclude  that  a  contract  ex-­ isted.   Despite   that   knowledge,   Healix   contended,   Lackey   and   HHI   sought   the   Clinic s   business,   offering   a   contract   that  did  not  require  the  Clinic  to  build  an  in-­ office  pharma-­ cy,   hire   additional   employees,   or   provide   personal   guaran-­ tees.  The  Clinic  took  HHI s  offer,  which  on  balance  was  su-­ perior  to  Healix s,  and  broke  its  promise  to  Healix.   Under   Texas   law,   to   demonstrate   tortious   interference   with  a  contract  Healix  must  show   (1)  that  a  contract  subject   to   interference   exists;   (2)   that   the   alleged   act   of   interference   was   willful   and   intentional;   (3)   that   the   willful   and   inten-­ tional  act  caused  damage;  and  (4)  that  actual  damage  or  loss   occurred.  ACS  Investors,  Inc.  v.  McLaughlin,  943  S.W.2d  426,   430   (Tex.   1997).   If   the   facts   are   as   Healix   narrates   them,   it   might  have  a  good  claim  for  tortious  interference  with  a  con-­ tract.  Its  problem,  however,  is  that  the  district  judge  did  not   find  the  facts  to  be  so.   Healix  presented  three  main  kinds  of  evidence:  first,  the   testimony  of  Porter,  who  said  that  he  told  Lackey  about  the   contract   at   the   October   2007   conference;   second,   the   UCC   statement   that   Healix   filed   with   Washington s   Secretary   of     No.  12-­ 3768   4   State;  third,  Lackey s  testimony.  Lackey  was  called  as  an  ad-­ verse  witness  and  professed  not  to  remember  what  he  talked   about   with   Porter   at   the   conference.   HHI s   main   evidence   was   the   testimony   of   Healix s   other   owner,   David   Keller,   who  stated  that  an  in-­ office  pharmacy  would  have  been  too   costly.  The  district  court  found  that  Healix   would  not  have   performed   under   the   contract   under   any   circumstances   ¦   [because]   Keller   was   profoundly   uncomfortable   with   the   fi-­ nancial   obligations   imposed   by   the   contract   and   he   would   not   do   what   he   needed   to   do   to   make   the   deal   with   Healix   work .  2012  U.S.  Dist.  LEXIS  169376  at  *4 5  (N.D.  Ill.  Nov.  29,   2012).  HHI  also  called  Neil  Stanton,  who  attended  the  Octo-­ ber   2007   conference   with   Lackey   and   expressed   confidence   that  he  would  remember  whether  Porter  told  him  about  hav-­ ing  a  contract  with  Healix;  he  had  no  recollection  of  it.   The   district   judge   found   Porter s   testimony   not   credible:   Porter s   demeanor   was   unusual   and   his   mannerisms   dis-­ closed   many   of   the   classic   indicia   of   untruthfulness.   I   con-­ clude  from  my  observation  of  Porter s  demeanor  that  he  had   significant  blanks  in  his  recollection,  which  he  tried  to  fill  in   by  telling  a  story  of  what  might  have  happened.  Id.  at  *4.  As   we  have  mentioned,  the  judge  did  believe  Keller.  In  addition   to  its  credibility  findings,  the  court  found  that  the  financing   statement  did  not  alert  HHI  to  the  contract s  existence.   Healix   contends   that   the   judge   made   three   errors.   With-­ out  them,  it  argues,  the  district  court  should  have  found  that   HHI   tortiously   interfered   with   its   contract.   First,   Healix   ar-­ gues,  the  court  misapplied  Texas  law  by  not  fully  appreciat-­ ing  that  it  does  not  require  the  defendant  to  have  had  direct   knowledge   of   the   contract.   Rather,   the   knowledge   require-­ ment   is   satisfied   if   the   interfering   party   had   knowledge   of   5   No.  12-­ 3768   facts   from   which   a   reasonable   person   would   conclude   the   existence  of  a  contract.  Kelly  v.  Galveston  County,  520  S.W.2d   507,  513  (Tex.  Civ.  App.  1975).  Second,  Healix  argues  that  the   judge   overlooked   evidence   showing   that   a   reasonable   per-­ son   in   Lackey s   position   would   have   known   that   the   Clinic   had  a  contract  with  Healix.  Finally,  Healix  contends  that  the   court  erred  in  finding  that  Healix  could  not  show  causation,   and   it   argues   that   it   demonstrated   that   the   Clinic   broke   its   contract  because  HHI  offered  better  terms.   Texas  does  not  require  a  demonstration  that  the  interfer-­ ing  party  knew  that  a  contract  was  in  place;  it  is  enough  if  a   reasonable  person  in  the  party s  position  would  have  known   about  the  contract.    See  Kelly,  520  S.W.2d  at  513;  Armendariz   v.   Mora,   553   S.W.2d   400,   406   (Tex.   Civ.   App.   1977).   But   Healix s  argument  that  the  district  court  erred  in  its  applica-­ tion  of  the  standard  fails  for  several  reasons.  The  first  is  that   the   argument   was   not   properly   before   the   district   judge.   Healix   asked   the   judge   to   rule   in   its   favor   based   either   on   HHI s  actual  knowledge  of  the  contract  or  on  the  theory  that   HHI   should   have   known   about   it   because   Healix   filed   a   UCC  financing  statement.  Healix  did  not  argue  to  the  district   court   that   HHI   should   have   known   about   the   contract   as   a   result   of   its   knowledge   of   any   facts   or   circumstances   other   than   the   financing   statement.   (One   sentence   in   the   closing   argument   implying   that   Lackey   ignored   information   that   might   have   caused   him   to   discover   the   plans   for   construc-­ tion  of  an  in-­ office  pharmacy  is  not  sufficient.)  An  argument   or  legal  theory  not  raised  before  the  district  court  is  forfeited.   See  In  re  Willett,  544  F.3d  787,  793  n.5  (7th  Cir.  2008);  Domka   v.  Portage  County,  Wis.,  523  F.3d  776,  783  n.11  (7th  Cir.  2008);   Horn  v.  Transcon  Lines,  Inc.,  7  F.3d  1305,  1308  (7th  Cir.  1993).     No.  12-­ 3768   6   And  if  Healix s  argument  had  been  raised  before  the  dis-­ trict  court,  the  result  would  have  been  the  same.  Healix s  on-­ ly  evidence  that  HHI  should  have  known  about  the  contract   was   the   financing   statement:   a   record   in   a   state   office   that   contained  the  names  and  addresses  of  the  Clinic  and  Healix,   plus   an   account   of   the   security   interest   as   office   infusion   center   accounts   receivables   excluding   Medicare   and   Medi-­ caid   accounts   receivables.   Healix   argues   that   Lackey s   knowledge   of   the   infusion   business   should   have   led   him   to   infer  from  this  financing  statement  that  the  Clinic  was  build-­ ing   an   in-­ office   pharmacy,   which   in   turn   should   have   led   him  to  infer  that  it  had  a  contract  with  another  infusion  pro-­ vider.   See   Top   Value   Enterprises,   Inc.   v.   Carlson   Marketing   Group,   Inc.,   703   S.W.2d   806,   810   (Tex.   App.   1986);   Amigo   Broadcasting,  LP  v.  Spanish  Broadcasting  System,  Inc.,  521  F.3d   472,  490  (5th  Cir.  2008).  The  problem  is  that  the  best  evidence   that  Healix  can  produce  to  show  that  Lackey  knew  about  the   plan  to  construct  a  pharmacy  is  his  failure  to  recall  in  perfect   detail  on  the  witness  stand  the  substance  of  his  pretrial  dec-­ laration   (which   was   silent   regarding   his   knowledge   of   the   plan).   A   few   moments   later,   Lackey   explicitly   denied   knowledge   of   the   plan.   The   judge   believed   Lackey   and   so   was  right  to  reject  this  theory.   It   is   true   that,   when   discussing   the   financing   statement,   the   judge   used   the   term   actual   knowledge   rather   than   what   a   reasonable   person   in   HHI s   position   should   have   known.  That  is  unimportant  because,  if  this  was  an  error,  it   was  harmless.  Healix  cites  a  Texas  case  that  admonishes  that   [o]nce  put  on  notice  [of  a  security  agreement  via  a  UCC  fi-­ nancing  statement],  a  third  party  must  make  inquiry  to  dis-­ cover   the   complete   nature   of   the   agreement   between   the   debtor   and   creditor.   Crow-­ Southland   Joint   Venture   No.   1   v.   7   No.  12-­ 3768   North  Fort  Worth  Bank,  838  S.W.2d  720,  724  (Tex.  App.  1992).   Healix  takes  this  to  mean  that  anyone  who  learns  of  a  financ-­ ing  statement  must  stop  and  inquire  about  the  nature  of  the   underlying   agreement.   Either   this,   or   any   time   two   people   form  a  contract,  each  must  search  to  determine  whether  the   other  is  encumbered  by  a  competitor s  security  interest.  Nei-­ ther  is  accurate.   Filing  a  financing  statement  is  one  method  of  perfecting  a   security   interest,   which   ensures   a   position   superior   to   new-­ comers  who  wish  to  use  the  same  asset  to  secure  their  own   debt.   See   UCC   §9 308,   Official   Comment   2.   A   filing   state-­ ment  tells  the  world  who  holds  what  interests  in  a  given  as-­ set.   Possession   is   another   method,   but   filing   statements   al-­ low  more  flexibility  in  the  asset s  use.  See  Douglas  G.  Baird   &  Thomas  H.  Jackson,  Possession  and  Ownership:  An  Examina-­ tion   of   the   Scope   of   Article   9,   35   Stan.   L.   Rev.   175,   176   (1983).   Wise   creditors   looking   to   use   a   particular   asset   as   security   for  a  debt  look  for  a  financing  statement  covering  the  asset,   and,   if   one   is   in   place,   inquire   into   the   nature   of   the   agree-­ ment.   Otherwise   they   risk   ending   up   with   a   junior   security   interest.   That s   what   happened   in   Crow-­ Southland,   where   a   secured   creditor   foreclosed   on   a   debtor s   asset   but   had   to   turn  the  proceeds  over  to  a  senior  creditor  it  had  not  discov-­ ered  because  its  inquiry  was  not  complete.  See  838  S.W.2d  at   724 25.   There   are   no   security   interests   at   stake   in   this   case,   no   dispute   about   priority   in   assets,   and   no   claim   that   HHI   ever  saw  the  financing  statement,  so  the  fact  that  Healix  filed   it  is  irrelevant.  Article  9  of  the  UCC  does  not  cover  disputes   about   tortious   interference   with   contracts,   and   HHI   has   not   cited  any  decision  in  Texas  (or  another  state,  for  that  matter)   extending  the  role  of  financing  statements  beyond  resolving   claims  of  priority.     No.  12-­ 3768   8   One  final  point  about  Healix s  contention  that  the  district   judge   erred   in   finding   that   HHI   did   not   have   actual   knowledge.  When  arguing  that  the  court  used  the  improper   standard,   Healix   refers   exclusively   to   the   court s   oral   state-­ ments  immediately  after  the  end  of  the  trial.  By  contrast,  we   have   been   discussing   the   district   judge s   written   opinion.   Healix   contends   in   a   footnote   of   its   brief   that   the   oral   re-­ marks   are   what   matter   because   the   district   court s   opinion   does  not  comply  with  Fed.  R.  Civ.  P.  52.  Rule  52(a)(1)  obliges   the  court  to   find  the  facts  specially  and  state  its  conclusions   of  law  separately.  The  court  did  so.  The  judge  believed  Kel-­ ler,   disbelieved   Porter,   and   found   the   UCC   financing   state-­ ment   to   be   unimportant.   These   findings   led   it   to   conclude   that   Healix   had   failed   to   meet   its   burden,   so   no   more   find-­ ings  were  required.   The  Supreme  Court  has  held  that,  to  satisfy  Rule  52,  find-­ ings   must   be   sufficient   to   indicate   the   factual   basis   for   the   ultimate   conclusion.   Kelley   v.   Everglades   Drainage   District,   319   U.S.   415,   422   (1943)   (interpreting   both   Rule   52(a)   and   a   provision   of   the   Bankruptcy   Act   containing   similar   lan-­ guage);   see   also   Bartsh   v.   Northwest   Airlines,   Inc.,   831   F.2d   1297,   1304   (7th   Cir.   1987)   (stating   that   the   rule s   dual   pur-­ poses  are   (1)  to  provide  appellate  courts  with  a  clear  under-­ standing   of   the   basis   of   the   trial   court s   decision,   and   (2)   to   aid  the  trial  court  in  considering  and  adjudicating  the  facts ).   The   district   court s   opinion   was   not   as   elaborate   as   it   could   have  been,  but  it  satisfied  the  requirements  of  Rule  52(a)(1).   Because   the   district   judge s   written   opinion   is   adequate,   his   oral   remarks   are   unimportant.   The   judge   was   not   an-­ nouncing   a   criminal   sentence.   If   he   had   been,   the   writing   would  have  been  no  more  than  evidence  of  the  sentence  an-­ 9   No.  12-­ 3768   nounced   orally,   and   both   pronouncements   would   be   rele-­ vant.   But   whatever   justifications   exist   for   the   criminal   sen-­ tencing   rule   do   not   extend   to   judgments   in   civil   suits.   See   United  States  v.  Cephus,  684  F.3d  703,  709  (7th  Cir.  2012),  cit-­ ing  United  States  v.  Weathers,  631  F.3d  560,  561 62  (D.C.  Cir.   2011).   In   civil   suits,   the   opinion   and   judgment   are   conclu-­ sive.  As  this  court  has  recently  noted,  it  would  not  like  to  be   bound  by  its  statements  at  oral  argument  rather  than  written   opinions.   See   In   re   Canopy   Financial,   708   F.3d   934   (7th   Cir.   2013);  see  also  Okaw  Drainage  District  of  Champaign  and  Doug-­ las   County   v.   National   Distillers   and   Chemical   Corp.,   882   F.2d   1241,   1244   (7th   Cir.   1989)   (noting   the   danger   that   an   oral   opinion  may  fail  to  identify  and  resolve  all  of  a  suit s  issues).   The  district  court  deserves  the  same  treatment.   In   any   event,   the   case   can   be   disposed   of   on   another   ground.   Keller   held   a   majority   membership   interest   in   the   Clinic.   The   district   judge   assumed   that   this   entitled   him   to   decisionmaking   power,   and   Healix   does   not   dispute   this   finding.  Keller  testified  that  the  Clinic  would  have  breached   the   Healix   contract   regardless   of   HHI s   involvement,   be-­ cause   securing   financing   for   the   in-­ office   pharmacy   would   have   been   impossible.   The   district   judge   found   Keller s   statements   to   be   credible.   Healix   does   not   challenge   this   finding,  and  it  is  enough  to  dispose  of  Healix s  claim.   One   element   that   Healix   must   prove   is   that   the   willful   and  intentional  act  proximately  caused  damage .  ACS  Inves-­ tors,  Inc.,  943  S.W.2d  at  430.  Healix  cites  a  number  of  cases  in   which   courts   have   considered   as   evidence   the   fact   that   the   interfering   party   offered   better   terms.   See,   e.g.,   Davis   v.   HydPro,  Inc.,  839  S.W.2d  137,  139  (Tex.  App.  1992);  John  Paul   Mitchell  Systems,  Inc.  v.  Randalls  Food  Markets,  Inc.,  17  S.W.3d     No.  12-­ 3768   10   721,   731   (Tex.   App.   2000).   Whether   an   interfering   party   of-­ fered   better   terms   can   be   evidence   of   the   active   part   the   party  took  in  bringing  about  the  breach,  which  Texas  courts   have  found  to  be  an  element  of  cause.  See  Davis,  839  S.W.2d   at   139.   This   court   need   not   grapple   with   such   questions.   Healix s   uncontroverted   evidence   demonstrates   that   the   Clinic  would  have  walked  away  from  Healix  no  matter  what   HHI   did.   The   causation   inquiry   ends   there.   See   Top   Value,   703   S.W.2d   at   812.   Healix   needed   to   demonstrate   that   HHI   was  at  fault  in  the  breakup  of  the  arrangement,  and  it  cannot   do  so  if  the  contract  was  doomed  from  the  start.   AFFIRMED