Medpace, Inc. v. InspireMD, Inc., No. 1:2016cv00830 - Document 62 (S.D. Ohio 2019)
Court Description: MEMORANDUM OPINION AND ORDER - IT IS ORDERED that the parties proceed to mediation and file a status report on or before May 31, 2019, advising the Court of the status of this matter. Signed by Judge William O. Bertelsman on 03/08/2019. (bjc)
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Medpace, Inc. v. InspireMD, Inc. Doc. 62 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION AT CINCINNATI CIVIL ACTION NO. 1:16 cv 830 (WOB SKB) MEDPACE, INC. VS. MEMORANDUM OPINION AND ORDER INSPIREMD, INC. PLAINTIFF DEFENDANT This case arises from allegations that Defendant )nspireMD breached its contract with Medpace to pay for the clinical trial services that Medpace provided pursuant to a Master Services Agreement and Task Order. The Complaint sets forth the following three counts: Count I: Breach of Contract – Medpace alleges it performed under the contract and seeks to recover four unpaid quarterly payments and Count II: pass-through costs, as wells as interest. Doc. , ¶¶ – . Unjust Enrichment – )n the alternative, if a contract is not found to exist between the parties, Medpace seeks compensation for the detriment incurred by providing benefits that )nspireMD knowingly Count III: retained. Doc. , ¶¶ – . Promissory Estoppel – Likewise, if a contract is not found to exist, Medpace seeks to recover damages under the theory of promissory estoppel. Doc. , ¶¶ – . Medpace, Inc. v. InspireMD, Inc. Dockets.Justia.com Plaintiff seeks total damages in excess of $ , , This matter is now before the Court on Defendant )nspireMD s motion for fees, and expenses. Doc. , at summary judgment Doc. ; . , plus interest, costs, attorneys Plaintiff Medpace s motion to deny Defendant )nspireMD, Ltd s motion for summary judgment . . . , or in the alternative, to defer considering defendant s motion until further discovery is complete Doc. ; and Medpace s motion to strike the declaration of )nspireMD s counsel, Jonathan Pressment Doc. . The Court previously heard oral argument on these motions and took the matter under submission. Doc. . At that hearing, the parties requested that the Court state its view of the legal issues herein, prior to ruling on the pending motions, so that the parties could participate in mediation with the benefit of the Court s opinion. After further study, the Court now issues the requested opinion. FACTUAL AND PROCEDURAL BACKGROUND A. Overview of the Contract Between the Parties On May , , Plaintiff Medpace, )nc. and Defendant )nspireMD, Ltd. entered into a contract, the Master Services Agreement MSA . Doc. - at . Under the MSA, ,¶ – Medpace agreed to conduct clinical trials for )nspireMD s new MGaurd Prime Stent System the Stent , and )nspireMD agreed to pay for the services. Doc. , ; Doc. - at . )n addition, the MSA provided that a Task Order would establish the precise services to be performed and payments to be made. Doc. - at . )n the event of a conflict between the terms of the MSA and the Task Order, the MSA would control unless the Task Order stated Medpace, Inc. v. InspireMD, Inc. otherwise. Id. at . The Task Order was eventually executed on June Schedule. Id. at . The material terms of the MSA and the Task Order are as follows. the: Scope of Work, Project Schedule, , Project Budget, and , and set forth Payment Pursuant to the MSA, )nspireMD agreed to: i pay Medpace fixed Service Fees or Direct Fees ; ii reimburse Medpace for reasonable pass-through costs identified in the Task Order ; and iii pay for Pre-funded Expenses in the Task Order s project budget in order to facilitate timely payment of such funds to Pre-funded Vendors. Doc. , – - at – , . As to the payment amount, )nspireMD agreed to pay Medpace an amount equal to the Project Budget . . ., which amount shall be payable pursuant to the Payment Schedule. Id. at ; see also id. at . The Project Budget specifically establishes: Total Service Fees (Direct Fees) of $3,347,035; and Total Pass Through Costs of $292,941. Id. at , twenty-one – . The total amount of Service Fees is divided in the Payment Schedule into payments that correspond to individual milestones. Id. at . )n relevant part, the Payment Schedule sets forth a series of ten quarterly payments. Id. There are an additional eight payments that are connected to individual milestones for the number of patients Medpace enrolls or completes, with a total of at clinical trials to be completed. Id. . )n other words, these eight additional payments are contingent upon patient enrollment and completion, similar to a bonus for exceptional progress with the clinical trials. Both the MSA and the Task Order prescribe that the Service Fees or Direct Fees Medpace, Inc. v. InspireMD, Inc. are fixed costs unless the underlying assumptions change, including but not limited to, trial duration, number of investigative sites, number of patients, and services provided by Medpace. Id. at , , emphasis added . Any changes to the Task Order, the Project Budge, Payment Schedule, Project Schedule or the underlying assumptions required a written contract amendment—signed by both parties— detail[ing] the requested changes to the applicable task, responsibility, duty, budget, timeline or other matter. Id. at . )n terms of terminating the MSA, either party could do so without cause by providing the other party sixty days written notice. Id. at . InspireMD could terminate the Task Order without cause by providing sixty days written notice. Id. at , . Medpace, on the other hand, could terminate the Task Order only if )nspireMD defaulted on its obligations. Id. )n that case, the MSA requires Medpace to give )nspireMD written notice of default and an opportunity to cure the breach before terminating the Task Order. Id. The MSA provides that any notice e.g., termination is required to be in writing and is effective upon receipt by August J. Troendle, Medpace s President and CEO in Cincinnati, Ohio if to Medpace and effective upon receipt by Craig Shore in Tel Aviv, )srael if to )nspireMD . Id. at . )n the event that the Task Order is terminated before completion, Medpace is obligated to submit an itemized accounting of the services performed, expenses incurred, and payments received to determine the balance due. Id. )nspireMD, in turn, must pay [Medpace] for all Services rendered pursuant to the unfinished Task Order prior to such Medpace, Inc. v. InspireMD, Inc. termination and any non-cancelable expenses incurred in connection with [Medpace] s performance of Services thereunder. Id. at . B. The Contract is Terminated On September , , Jen Folley, )nspireMD s outside consultant and project manager, sent a letter to Deborah Schmalz, Medpace s Senior Director of Regulatory Affairs. Doc. - at . The letter was a follow-up to a prior conversation. Id. )n the letter, Folley asked that certain activities related to the clinical trials be kept to a minimum and other tasks should be ceased or halted. Id. The letter also included a table listing those tasks )nspireMD wished to freeze and those tasks that should be performed on an [a]s needed basis. Id. Nowhere in this letter does it mention that )nspireMD intended to terminate the Task Order or the MSA. Approximately two months later, )nspireMD then made its sixth quarterly payment to Medpace, which was not due until November ; Doc. ,¶ ; Doc. ,¶ . Nearly a year later, on November , , . Doc. - at , roughly six days before the tenth and final quarterly payment was due Medpace sent a Notice of Termination of the Task Order and the MSA Notice of Termination to )nspireMD s Craig Shore. Doc. - at . )n the Notice of Termination, Medpace stated that )nspireMD had failed to make four previous quarterly payments quarterly payments – or cure these breaches. Doc. , ¶¶ – , - at , . Medpace included with its Notice of Termination an itemized accounting of the services performed, expenses incurred, and outstanding invoices up to that point, Doc. and requested that )nspireMD remit payment for the total itemized amount of $ , Medpace, Inc. v. InspireMD, Inc. , . Id. This suit followed when )nspireMD refused to pay. C. Procedural History Since this lawsuit was removed from state court on August twice amended its complaint. Docs. , moved for summary judgment. Doc. , , Medpace has . Roughly two months into discovery, )nspireMD . A week later, )nspireMD sought an order staying all discovery pending the resolution of its motion for summary judgment. Doc. granting the stay on discovery on March , . )n , the magistrate judge viewed Medpace s argument that it needed discovery as cursory and unpersuasive because the motion seeks to resolve, as a matter of law, the two parties differing constructions or interpretations of the same contractual language. Doc. I. at . ANALYSIS Unjust Enrichment and Promissory Estoppel (Counts II & III) A. Applicable Law When interpreting contracts in a diversity action, courts should generally enforce the parties contractual choice of governing law. See, e.g., Savedoff v. Access Group, Inc., F. d , th Cir. citing Carnival Cruise Lines, Inc. v. Shute, ; see also Tele Save Merchandising Co. v. Consumers Distrib. Co., Ltd., U.S. F. d , , )n answering Medpace s Second Amended Complaint, )nspireMD asserted four counterclaims for i breach of contract; ii fraud in the inducement; iii negligent misrepresentation; and iv violation of the Ohio Deceptive Trade Practices Act, Ohio Rev. Code § . A . Doc. at – . )nspireMD has not moved for summary judgment as to these claims. Medpace, Inc. v. InspireMD, Inc. th Cir. Ohio choice-of-law principles strongly favor upholding the chosen law of the contracting parties. . The MSA s choice-of-law clause explicitly provides that the performance, interpretation, and construction of the MSA is controlled by Ohio law. Doc. at - . As the parties do not dispute that the MSA and Task Order at issue are governed by Ohio law, the Court will apply Ohio law to the parties contractual dispute. B. Counts II & III are Not Viable Because a Valid Contract Exists. Under Ohio law, the essential elements of an enforceable contract include an offer, acceptance, contractual capacity, consideration the bargained for legal benefit and/or detriment , a manifestation of mutual assent and legality of object and of consideration. Williams v. Ormsby, N.E. d , Ohio N.E. d at Ohio quoting Kostelnik v. Helper, . The Court agrees with the parties that the MSA and the Task Order satisfy these requirements, and therefore are valid and enforceable contracts. Doc. , Compl. ¶ Doc. - at ; Doc. , Answer, ¶¶ , . )n fact, the parties contract is fully integrated. This Agreement contains the full understanding of the parties . Medpace, therefore, cannot proceed on its claims for unjust enrichment and promissory estoppel under Counts )) and ))). This result is unavoidable because it is well established that [u]njust enrichment is an equitable doctrine to justify a quasi-contractual remedy that operates in the absence of an express contract or a contract implied in fact. Wuliger v. Mfrs. Life Ins. Co. (USA), original quoting Beatley v. Beatley, F. d N.E. d , , – th Cir. Ohio Ct. App. emphasis in . As such, Ohio law is clear that a plaintiff may not recover under the theory of unjust enrichment or Medpace, Inc. v. InspireMD, Inc. quasi-contract when an express contract covers the same subject. Id. quoting Lehmkuhl v. ECR Corp., No. CA , WL , at * Ohio Ct. App. Dec. , . The same is true regarding a claim for promissory estoppel. O’Neill v. Kemper Ins. Cos., th Cir. citations omitted F. d , Where the parties have an enforceable contract . . . one party cannot recover for promissory estoppel. . Therefore, since a contract governs the parties dispute, Medpace cannot recover under its alternative theories of equitable relief. Coma Ins. Agency v. Safeco Ins. Co., App x II. , th Cir. ; Wuliger, Breach of Contract (Count I) F. d at ; O’Neill, F. d at The elements of a breach of contract claim under Ohio law are: contract; performance by the plaintiff; breach by the defendant; and ; Jarupan v. Hanna, N.E. d , . the existence of a loss to the plaintiff as a result of the breach. V&M Star Steel v. Centimark Corp., th Cir. F. Ohio Ct. App. damage or F. d , . As noted above, the first element is satisfied. The only element that is somewhat in dispute is whether Medpace performed as required. Doc. pay Medpace for quarterly payments – ,¶ . )ndeed, )nspireMD admits that it did not , and instead merely contends Medpace was not entitled to these payments under the terms of the MSA and Task Order. Doc. cf. Doc. ,¶ , ¶¶ , ; . Thus, the Court must determine the parties rights and duties under the MSA and Task Order, as applied to the undisputed facts in the record. A. Principles of Contract Interpretation The interpretation of written contract terms, including the determination of whether Medpace, Inc. v. InspireMD, Inc. those terms are ambiguous, is a matter of law for initial determination by the court. Savedoff F. d v. Access Group, Inc., , th Cir. applying Ohio law . When confronted with an issue of contract interpretation, [the court s] role is to give effect to the intent of the parties. Sunoco, Inc. (R&M) v. Toledo Edison Co., N.E. d , Ohio the agreement. State ex rel. Petro v. R.J. Reynolds Tobacco Co., N.E. d , Ohio . [T]hat intent is presumed to reside in the language [the parties] chose to employ in ; Sunoco, Inc. N.E. d at . Where a contract is found to be integrated, courts consider the language of the contract alone to define the obligations by which the parties intended to be bound. Dottore v. Huntington Nat’l Bank, citing Bellman v. Am. Int'l Grp., N.E. d , – F. App x Ohio , . th Cir. [T]he meaning of a contract is to be gathered from a consideration of all its parts, and no provision is to be wholly disregarded as inconsistent with other provisions unless no other reasonable construction is possible. Savedoff, Grange Mut. Co., N.E. d , Ohio F. d at quoting Burris v. . This includes writings executed as part of the same transaction. Textileather Corp. v. GenCorp Inc., F. d , th Cir. citation and internal quotations omitted . Common, undefined words appearing in a contract will be given their ordinary meaning . . . Sunoco, Inc., N.E. d at . But courts do not give words their ordinary meaning if manifest absurdity results, id., or some other meaning is clearly evidenced from the face or overall contents of the agreement. Lockheed Martin Corp. v. Goodyear Tire & Rubber Co., Sunoco, Inc., N.E. d at . F. App x , Medpace, Inc. v. InspireMD, Inc. th Cir. quoting Only if the contract is ambiguous will courts look to facts outside the four corners of the contract to determine intent. Yellowbook Inc. v. Brandeberry, F. d , th Cir. . Otherwise, courts must apply the plain language of the contract. Textileather Corp. F. d v. GenCorp Inc., , th Cir. v. Franklin Cty. Convention Facilities Auth., v. Auglaize Cty. Bd. of Comm’rs, N.E. d quoting Foster Wheeler Enviresponse, Inc. N.E. d , , Ohio Ohio ; City of St. Marys Where the terms in a contract are not ambiguous, courts are constrained to apply the plain language of the contract. . )f a contract, or, term in a contract . . . is ambiguous then extrinsic evidence of reasonableness or intent can be employed. Cal. Fitness I, Inc. v. Lifestyle Family Fitness, Inc., F. App x , th Cir. citation and internal quotations omitted . This so- called parole evidence, however, is admissible to interpret, but not to contradict, the express language of the contract. United States v. Ohio, F. d citations and internal quotations omitted . , th Cir. Contractual language is ambiguous only where its meaning cannot be determined from the four corners of the agreement or where the language is susceptible of two or more reasonable interpretations. Savedoff, F. d at omitted ; Eastham v. Chesapeake Appalachia, L.L.C., citation and internal quotation marks F. d , th Cir. . [C]ourts may not use extrinsic evidence to create an ambiguity; rather, the ambiguity must be patent, i.e., apparent on the face of the contract. Savedoff, added quoting Covington v. Lucia, N.E. d , F. d at Ohio Ct. App. . emphasis On the other hand, a contract is unambiguous if it can be given a definite legal Medpace, Inc. v. InspireMD, Inc. meaning. LM Ins. Corp. v. Criss, quoting Westfield Ins. Co. v. Galatis, F. App x N.E. d , th Cir. , emphasis added Ohio . A contractual term is not ambiguous merely because —as in this case— two parties offer substantially different interpretations. Coma Ins. Agency v. Safeco Ins. Co., F. App x , th Cir. citation and internal quotation marks omitted . )n the same vein, [t]he fact that a contract . . . is silent on a particular point does not make it ambiguous. Savedoff, quoting Statler Arms v. Apoca, Inc., N.E. d , Ohio Ct. App. . F. d at )f a contract is clear and unambiguous . . . there is no issue of fact to be determined, Lincoln Elec. Co. v. St. Paul Fire & Marine Ins. Co., F. d Inland Refuse Transfer Co. v. Browning Ferris Indus. of Ohio, , th Cir. N.E. d , – quoting Ohio , and a court may look no further than the writing itself to find the intent of the parties. Sunoco, Inc., B. N.E. d at . InspireMD’s Payment Obligations The parties dispute here turns on )nspireMD s payment obligations under the MSA. With the above principles of interpretation in mind, the Court turns to the language governing payments in the MSA and Task Order. Section E of the MSA provides that: )n the event of any termination of a Task Order before completion, )nspireMD must pay Medpace for: [ ] all services rendered [)]f a term cannot be determined from the four corners of a contract, factual determination of intent or reasonableness may be necessary to supply the missing term. Bank One, N.A. v. Echo Acceptance Corp., F. App x , th Cir. quoting Inland Refuse Transfer Co., N.E. d at – . Medpace, Inc. v. InspireMD, Inc. pursuant to the unfinished Task Order prior to such termination and [ ] any non cancelable expenses incurred in connection with MEDPACE s performance of Services. Doc. emphasis added . - at The parties dispute when the contractual relationship ended. )nspire MD contends it terminated the Task Order by virtue of a letter sent in September of not obligated to pay for services beyond that point in time. Doc. , and therefore it is - at however, maintains that the Task Order remained in effect until November – , . Medpace, when it sent its Notice of Termination because )nspireMD had failed to make the multiple quarterly payments. Doc. at – . Determining when the contractual relationship between the parties ended is a question of law. See, e.g., Stonehenge Land Co. v. Beazer Homes Invs., LLC, Ohio Ct. App. ; Gollihue v. Nat’l City Bank, N.E. d Daniel E. Terreri & Sons v. Bd. of Mahoning Cty. Comm’rs, . 1. , N.E. d N.E. d Ohio Ct. App. , , ; Ohio Ct. App. InspireMD did Not Terminate the Task Order in September 2014. )nspireMD argues that its letter, dated September unambiguous notice of termination. Doc. )nspireMD s September - at , . The Court is not persuaded. letter did not constitute valid termination. The MSA s notice of termination provision is unambiguous. Under Section required to give Medpace , is a clear and days notice of termination. Doc. B , )nspireMD was - at . Section mandates that any such notice must be in writing and is effective upon receipt by August J. Medpace, Inc. v. InspireMD, Inc. Troendle, Medpace s President and CEO at the Cincinnati, Ohio address provided in the MSA. Doc. - at ; see id. at . (ere, )nspireMD s letter does not comply with any of the termination requirements. First, and most importantly, nothing in the letter even remotely suggests )nspireMD intended to terminate the Task Order or the MSA. )n the letter, )nspireMD simply asks Medpace personnel to please keep [clinical trial] activity to a minimum and specifies certain services that should continue and others that should be ceased or halted. Doc. - at . The letter unequivocally speaks for itself. )nstead of evidencing an intent to terminate the parties relationship, the letter indicates a continuing engagement. Second, the letter was not sent to August J. Troendle, as required by the MSA. )nstead, the letter was sent to Deborah Schmalz. This is in all likelihood because it was not a termination notice. But rather, as the letter states, it was in follow-up to a recent conversation. Id. Finally, the letter was sent to the wrong location. The letter is addressed to Schmalz in Blaine, Minnesota, not the Cincinnati, Ohio address plainly set forth in the MSA. As such, )nspireMD s September letter is no different from any of the numerous other communications between the parties agents discussing the progress of the clinical trials. Moreover, the fact that )nspireMD made another quarterly payment—over two months after sending its purported termination letter—dispels any doubt that )nspireMD never terminated the Task Order in September . Doc. ,¶ ; Doc. - at . Thus, there is not even evidence of constructive or actual notice to cure the fatal defects in )nspireMD s Medpace, Inc. v. InspireMD, Inc. . letter. Gollihue, N.E. d at citing Daniel E. Terreri & Sons, Inc, N.E. d at This result is not altered by the declaration of Jonathan Pressment, counsel for )nspireMD. Doc. - . An affidavit or declaration used to support or oppose a motion for summary judgment must be made on personal knowledge. )f the affiant or declarant could not have perceived or observed what he or she testified to, he or she could not have personal knowledge. d ed. Fed. R. Evid. James W. Moore et al., MOORE S FEDERAL PRACT)CE § . b Matthew Bender emphasis added [hereinafter MOORE S ] citing Fed. R. Civ. P. c and . The personal knowledge requirement is not satisfied by merely stating that a statement is made to the best of [the affiant s or declarant s] knowledge or on information and belief or based upon the declarant s personal awareness. Id. (ere, )nspireMD s counsel was neither the drafter nor the sender of the September letter and is retained merely as outside counsel. Put differently, the statement by )nspireMD s counsel in the declaration characterizing the September letter as a Termination Notice is merely based upon belief. See, e.g., id.; Brainard v. Am. Skandia Life Assurance Corp., F. d , th Cir. district court improperly considered attorney s declaration to extent it was not based on personal knowledge ; Doc. Therefore, the Court will not consider counsel s statement. - ,¶ . The Court, however, will consider the discovery materials attached to the declaration. Brainard, F. d at . Under the current version of Rule , a litigant may support or oppose a motion for summary judgment by citing to materials in the record. . . [E]vidence Medpace, Inc. v. InspireMD, Inc. submitted in support of or opposition to summary judgment need not be authenticated. MOORE S § . ; Fed. R. Civ. P. amendment; Ganesh v. United States, c ; see id. advisory committee note to F. App x , th Cir. . Accordingly, Jonathan Pressment s declaration with the exception of paragraph and the attached documents constitute evidence that may—and will —be considered as evidence that is part of the record. Ondo v. City of Cleveland, )n sum, )nspireMD s September F. d , th Cir. . letter is not a termination notice because the letter does not evidence )nspireMD s intent to terminate the Task Order, and the purported termination notice was not properly sent to Medpace s authorized representative. As such, the letter did not affect the parties contractual relationship. 2. Medpace Terminated the Contract in November 2015. Medpace, on the other hand, substantially complied with the termination requirements and thereby terminated the Task Order on November Section - at . C of the MSA requires Medpace to give )nspireMD written notice of a payment default and Doc. , days in which to cure the breach before terminating the Task Order. . Under Section , the Task Order is considered terminated when )nspireMd receives Medpace s termination notice. See id. at . Unlike )nspireMD s September letter, Medpace s intent to terminate the Task Order is clear from the face of its Notice of Termination. Medpace s Notice of Termination, dated November Doc. - at , , clearly states that it is a Notice of Termination of Task Order. . The letter was also sent to )nspireMD s designated representative, Craig Medpace, Inc. v. InspireMD, Inc. Shore, in Tel Aviv, )srael, as required by the plain terms of the MSA. Id.; Doc. - at . Further, Medpace included an itemization of the services and expenses for which it avers )nspireMD is responsible. Thus, as of November , , the Task Order was terminated. (owever, Medpace did not scrupulously adhere to every term of the termination provision in the MSA. Medpace neglected to provide )nspireMD with notice of default and days in which to cure before sending its Notice of Termination. Doc. - at . But unlike constructive or actual notice to terminate the Task Order. See, e.g., Gollihue, N.E. d at )nspireMD s letter, here, Medpace s error is harmless because there is evidence of citing Daniel E. Terreri & Sons, Inc., N.E. d at . Specifically, Medpace sent )nspireMD the four quarterly invoices. )nspireMD was thereby constructively on notice that it was in default when it failed to make a payment for nearly a year and that as a result, Medpace could terminate the Task Order. Thus, Medpace s failure to provide notice and an opportunity to cure does not vitiate the effectiveness of Medpace s termination or preclude recovery. See, e.g., Triangle Props. v. Homewood Corp., N.E. d , – Ohio Ct. App. . As a matter of Ohio law: The long and uniformly settled rule as to contracts requires only a substantial performance in order to recover upon such contract. Merely nominal, trifling, or technical departures are not sufficient to breach the contract . . . For the doctrine of substantial performance to apply, the part unperformed must not destroy the value or purpose of the contract. Stonehenge Land Co. v. Beazer Homes Invs., LLC, N.E. d citation omitted ; Go Travel Toledo, Inc. v. Am. Airlines, , F. App x , Ohio Ct. App. th Cir. . (ere, Medpace sent its Notice of termination six days before the tenth and final Medpace, Inc. v. InspireMD, Inc. quarterly payment was due—after )nspireMD had already defaulted on three quarterly payments. Doc. - ; Doc. - at . Although Medpace failed to provide )nspireMD with an opportunity to cure beforehand, this is merely a nominal, trifling, or technical departure[] that hardly destroy[s] the value or purpose of the contract. Stonehenge Land Co., N.E. d at . As such, the Court will not hold Medpace to a standard of strict compliance with the MSA s opportunity-to-cure requirement. Accordingly, Medpace is entitled to damages for all services rendered and any non cancelable expenses incurred in connection with [Medpace] s performance of Services up to and until November C. , . Doc. Measure of Damages - at . The only issue remaining is to determine the appropriate measure of damages owed by )nspireMD under the terms of the MSA and Task Order. The parties have widely divergent views on this matter. Medpace claims )nspireMD owes $ , )nspireMD contends that, at most, Medpace is entitled to $ four outstanding quarterly invoices. Doc. - at – , , . Doc. , ¶ . , the total amount of the . Therefore, the question is whether Medpace is entitled to anything more than the four outstanding quarterly payments quarterly payments – in the Payment Schedule, Doc. admittedly has yet to tender, Doc. , ¶¶ , ; cf. Doc. - at ,¶ . , which )nspireMD The Court concludes that Medpace would be entitled to the four outstanding quarterly payments $ most—total $ , , and non-cancelable expenses actually incurred, which—at . To reach this determination, it is helpful to first determine the total Medpace, Inc. v. InspireMD, Inc. amount Medpace could hope to realize under the parties agreement, and then calculate Medpaces damages. 1. Section The Total Value of the Contract of the MSA details )nspireMD s payment obligations. )n particular, )nspireMD has three payment obligations: Pre-funded Expenses. Doc. Service Fees; Pass-Through Costs; and - at – . The total value of the parties agreement is simply the sum of these three payment obligations. Before turning to the language of the contractual documents, it bears emphasis that the terms of the MSA control in the event of a conflict with the terms of the Task Order, unless the Task Order explicitly states otherwise. Doc. . The MSA states under Section - at A , that: [)nspireMD] agrees to pay MEDPACE for Services rendered pursuant to the Project Budget and Payment Schedules included in the Task Order. Doc. payment amounts - at . The Payment Schedule lists Milestone Payments . Doc. only be interpreted as follows: - at milestones with corresponding . The Milestone Payments can a one-time payment Upon Execution ; ten unconditional quarterly payments due at the stated time; four separate payments that are each due upon Medpace enrolling a certain number of patients; four separate payments that are each due if and when Medpace completes the clinical trial for a certain number of patients; Medpace, Inc. v. InspireMD, Inc. a one-time payment for the Database Lock ; and a one-time payment for Delivery of Final Study Report. Id. The total of these payments is $ , , . This is significant because the Project Budget for Direct Fees or Service Fees , not surprisingly, is also $ , , . Thus, where the MSA states )nspireMD must pay Medpace for Services rendered pursuant to the Project Budget and Payment Schedules, this means that $3,347,035 is the maximum amount of Service Fees that Medpace could potentially earn, provided that each Milestone is met. )ndeed, Section change A states that Service Fees are fixed costs unless the underlying assumptions e.g., trial duration, number of patients, services provided , and even then such changes shall be documented in a Contract Amendment. Doc. - at . But here, Medpace has not produced any evidence of a Contract Amendment extending the Project Budget for Service Fees. The logical conclusion that the Service Fees Medpace could possibly claim are fixed or capped at $ , , is bolstered by the provision in the Task Order under the heading Compensation, which provides that: [)nspireMD] shall pay to MEDPACE an amount equal to the Project Budget . . . which amount shall be payable pursuant to the Payment Schedule. Id. at emphasis added . Therefore, if Medpace achieved each Milestone, it could claim no more than $3,347,035 in Service Fees. With respect to Pass-Through Costs, Section B of the MSA adds: [)nspireMD] Section , entitled Contract Amendments, states that a Contract Amendment is not effective unless and until it is signed by both parties. Doc. - at . Medpace, Inc. v. InspireMD, Inc. agrees to reimburse MEDPACE for reasonable pass-through costs identified in the Task Order and incurred by MEDPACE in providing the Services in accordance with the relevant Task Order Pass-Through Costs . Doc. - at . Further, the Pass-Through Costs shall be included in each respective Task Order s project budget as a good faith estimate. Id. at . The total for Pass-Through Costs according to the Project Budget is $ , . Id. at . Before Medpace can exceed the budgeted amount for Pass-Through Costs, it must notify [)nspireMD] and seek approval for the excess expense amount before it is incurred. Id. at . (ere again, Medpace has adduced no evidence that )nspireMD approved Pass- Through Costs in excess of that specified in the Project Budget. Therefore, Medpace is limited to Pass Through Costs of $292,941. Next, )nspireMD s obligations regarding Pre-funded Expenses. Section C of the MSA states that: The parties will work to establish a process for payment of Pre-funded Expenses in the applicable Task Order which allows for timely payment of such funds to Pre- funded Vendors. Doc. - at . To that end, the Pre-funded Expenses will be included in each respective Task Order s project budget as a good faith estimate. Doc. - at . (owever, the Project Budget does not contain an estimate for Pre-funded Expenses. The only With regard to Pre-funded Expenses, Section Doc. C of the MSA further states that: )f it becomes apparent to Medpace during the performance of its duties under a Task Order that that amount estimated . . . will be exceeded, it will notify [)nspireMD] and seek approval for the excess expense amount before it is incurred. . . [)nspireMd] will be responsible for the payment of such excess Pre-funded expense only if it approved such excess expense. - at . Medpace, Inc. v. InspireMD, Inc. provision that sheds any light on what constitutes a Pre-funded Expense is on the last page of the Task Order, which states: Pre-funded expenses may include, but are not limited to, investigator fees. Doc. - at . Thus, this is not a case where the contractual language is ambiguous, but rather a situation where the contractual language is silent. Savedoff, F. d at – . Ohio law prohibits a court from creating a contract for the parties when their contract has failed to address a particular matter. Id. )nstead, [t]he parties to a contract are required to use good faith to fill the gap of a silent contract. Id. Nevertheless, a contract must be construed in its entirety and in a manner that does not leave any phrase meaningless or surplusage. Eastham v. Chesapeake Appalachia, L.L.C., F. d , th Cir. internal quotation marks omitted . To fulfill that objective, there can only be one reasonable interpretation that does not render the payment provisions, Payment Schedule, and Project Budget meaningless: The Pre-funded Expenses are, in fact, already included in the Task Order s project budget as a good faith estimate. Doc. - at . The covenant of good faith simply does not permit a party to shoehorn into an [agreement] additional terms [the party] now wish[es] had been included. Fifth Third Mortg. Co. v. Chi. Title Ins. Co., th Cir. F. d citation and internal quotation marks omitted applying Ohio law . , Therefore, based on the unambiguous terms of the MSA and Task order, the total Service Fees Direct Fees plus the total Pass-Through Costs, yields the total value of the parties agreement. Accordingly, $3,639,976 is the most that Medpace could hope to see come to fruition during the parties’ engagement. Medpace, Inc. v. InspireMD, Inc. 2. Medpace’s Damages The unambiguous language of Section E of the MSA instructs that [i]n the event of any termination of a Task Order before completion, )nspireMD is obligated to pay Medpace for: [ ] all services rendered pursuant to the unfinished Task Order prior to such termination and [ ] any non cancelable expenses incurred in connection with MEDPACE s performance of Services. Doc. - at emphasis added . )nspireMD leaves out the phrase non-cancelable expenses in arguing that damages should be limited to the four outstanding quarterly invoices. Doc. - at – . Thus, the appropriate measure of damages is services rendered plus non-cancelable expenses incurred, prior to when the Task Order was terminated. As concluded supra, the Task Order was terminated on November , . Therefore, )nspireMD is obligated to pay for services rendered and non-cancelable expenses actually incurred up to that point. a. Damages for Services Rendered Services rendered, as discussed above, is calculated according to the Payment Schedule. Thus, Medpace is entitled to quarterly payments – , regardless of whether or not Medpace enrolled or completed a certain number of patients. Medpace, however, is not entitled to the eight payments corresponding to patient enrollment and completion because these payments are contingent upon the number of patients enrolled or completed, Doc. - Milestones tied to patient enrollment and completion. Doc. . at , and Medpace admitted in response to interrogatories that it never achieved the - at – )nterrog. No. Therefore, under the facts of this case, the total Service Fees to which Medpace can claim Medpace, Inc. v. InspireMD, Inc. is the sum of the ten quarterly payments. That amount is $2,046,714. See Doc. . - at To be sure, )nspireMD cannot minimize its payment obligations by relying on its September letter, which purports to unilaterally freeze Medpace s ability to perform certain services. Doc. Pursuant to Section - . This is because the fees are fixed. Doc. - at , . A of the MSA, the fees can be altered only if certain factors change, such as trial duration, number of patients, and services provided by Medpace, and [a]ll such changes must be documented in a Contract Amendment. amendment under Section , must written, Doc. - at . Such an signed by both parties, and detail the requested changes to the applicable task, responsibility, duty, budget, timeline or other matter. Doc. executed. Doc. - at - at . )nspireMD readily admits that no contract amendment was ever ; Doc. although )nspireMD s September - at request for production No. . Thus, letter purports to set forth a change in certain services to be provided, Medpace was free to perform those services and )nspireMD was in turn obligated to pay the fixed fee associated with the unconditional quarterly payments. There is no dispute that )nspireMD has only made quarterly payments – . Thus, Medspace would be entitled to the remaining four quarterly payments (7–10) under the Payment Schedule, the total of which is $468,586. Doc. - at . Therefore, Medpace cannot recover the nearly $ . million in additional Service Fees it claims it is owed. The Court will not prorate quarterly payment . Only substantial performance is required, and here, Medpace terminated the Task Order just six days before that payment was due. Medpace, Inc. v. InspireMD, Inc. b. Damages for Non Cancelable Expenses Next, the non-cancelable expenses owed by )nspireMD. The term non-cancelable expenses is not defined. Undefined terms in a contract are interpreted using the plain, ordinary meaning of the words. Daniel E. Terreri & Sons, Inc., N.E. d at Nationwide Mut. Fire Ins. Co., N.E. d at ; Sunoco, Inc., N.E. d at citing . The Ohio Supreme Court has consistently used dictionary definitions to determine the common meaning of a word. Eclipse Res. Ohio, LLC v. Madzia, citing Campus Bus. Serv. v. Zaino, N.E. d , F. App x Ohio , th Cir. . (owever, courts do not give words their ordinary meaning if some other meaning is clearly evidenced from the face or overall contents of the agreement. Lockheed Martin Corp., Sunoco, Inc., N.E. d at . F. App x at quoting (ere, the meaning of non-cancelable expenses is supplied by the overall contents of the Project Budget, Payment Schedule, and the payment provisions in both the MSA and Task Order. Section A – C of the MSA states that the Service Fees, Pass-Through Costs, and Pre-Funded Expenses were intended to be included in the Project Budget and that any amount in excess of that stated in the Project Budget required either a Contract Amendment or )nspireMD s approval. Doc. - at – . The parties clearly intended to provide a limited and well-delineated list of expenses in the Project Budget. As discussed, the expenses under The dictionary defines noncancelable simply as not cancelable. Noncancelable, MER)AM-WEBSTER, https://www.merriam-webster.com/dictionary/noncancelable last visited Feb. , . Medpace, Inc. v. InspireMD, Inc. the column heading Direct Fees, corresponds to twenty-one Milestone Payments in the Payment Schedule. The only Project Budget amount not accounted for in the Payment Schedule is the Pass-Through Costs of $ , . The Task Order explains that Pass-Through Costs may include, but are not limited to project-specific printing, shipping, copying and binding costs, telecommunication and data costs, travel costs, . . . literature search and article retrieval costs, translation costs, and/ pharmacy fees. Doc. are inherently non-cancelable. Moreover, Section - at . Costs such as these B states that )nspireMD was required to reimburse Medpace for these costs, regardless of whether the Task Order was ever terminated. Doc. - at . )t follows then that the “non cancelable expenses” are, in fact, the “Pass Through Costs.” The only alternative interpretation is that non- cancelable expenses can be determined ad hoc in the event that the Task Order is terminated. But this interpretation would render the provisions requiring a Contract Amendment or notice and approval to exceed the Project Budget, essentially meaningless. Coma Ins. Agency v. Safeco Ins. Co., quotation marks omitted F. App x th Cir. citation and internal [W]here two interpretations can be given to a term in a contract, [but ] one will make a provision meaningless, and one. . .will give full force to all provisions, the latter must be adopted. . Moreover, this interpretation would inevitably permit a party to achieve minimal Milestones under the contract and terminate the Task Order just before the end of the contract term and then lay claim to substantially more in payments than it otherwise would be able to recover. Principles of contract interpretation prohibit this Court from sanctioning Medpace, Inc. v. InspireMD, Inc. such manifest absurdity. Sunoco, Inc., App x at . N.E. d at – ; Lockheed Martin Corp., Therefore, Medpace cannot be entitled to any more than $ , F. in non-cancelable expenses. Medpace, however, admits that its computation of damages is reflected in the itemized accounting attached to its Notice of Termination letter, Doc. . That accounting summary states that Medpace has incurred $ Costs, of which )nspireMD has paid $ , , - . Doc. - at in Pass-Through . Therefore, in the end, Medpace may recover no more than $2,285 in damages for non cancelable expenses. Whether Medpace actually incurred the non-cancelable expenses is a question that the parties should address following receipt of this Opinion. Refer to the tables in the attached Appendix, detailing the calculation of damages in accordance with this Opinion in light of the Project Budget Doc. Schedule, id. at , Payment , and the itemized accounting of expenses and payments attached to Medpace s Notice of Termination Doc. IV. - at CONCLUSION - at . Consistent with the accompanying Memorandum Opinion, and the Court being advised, IT IS ORDERED that the parties proceed to mediation and file a status report on or before May , , advising the Court of the status of this matter. Medpace, Inc. v. InspireMD, Inc. This th day of March . Medpace, Inc. v. InspireMD, Inc. APPENDIX CORRECTED ITEMIZED ACCOUNTING OF SERVICES PERFORMED *The following table includes a comparison between Medpace's itemized accounting of service fees in its Notice of Termination (Doc. 46-7) and the Project Budget (Doc. 20-1 at 26) detailing the allowable expenses. The Direct Fee column is the amount listed in Medpace's itemized accounting of Services. Several of Medpace's claimed expenses exceed the Project Budget. Note that the total amount for Start-up and Interactive Voice Services was miscalculated in Medpace's Notice and has been corrected herein. Service Category Start-up Services CRF Review (Includes Development of Annotated CRF) Kick-Off Meeting Project Specific Training Investigator and Vendor Contract Negotiations Site Selection/Feasibility Investigator File Set-Up Initial Essential Document Collection Meetings Conference Calls Sponsor Meetings Interactive Voice/Web Response System (IVRS/IWRS) IVRS Development System Utilization and Hosting IVRS Maintenance and Help Desk Project Budget Management (PM) (U.S. only) Study Management (incl. oversight of EU CRO) Ongoing Essential Document Collection **Medpace incl. cost of Final Report in PM Clinical Safety Safety Plan Development SAE Reporting (Incl. initial report from site, draft of narrative, medical review, generation of regulatory reporting form, correspondence and SAE query resolution with site, and sponsor notification) Annual Safety Reports Safety Management Medpace, Inc. v. InspireMD, Inc. Direct Fee Project Bdgt Amt. $ 719,069 $ 61,819 $ 7,065 $ 39,285 $ 186,726 $ 218,382 $ 9,464 $ 6,551 $ 14,123 $ 61,172 $ 424,174 $ 113,271 $ 208,236 $ 162,104 $ 46,132 $ 127,621 $ 76,338 $ 24,413 $ 26,870 $ 987,587 $ 966,080 $ 21,507 $ 363,532 $ 6,010 $ 66,651 $ 50,295 $ 16,356 $ 140,643 $ 56,496 $ 24,413 $ 59,735 $ 721,192 $ 699,934 $ 21,257 $ 18,008 $ 339,198 $ 8,621 $ 350,056 $ 317,579 $ 7,466 $ 12,998 $ 576,478 $ 10,725 $ 71,329 $ 112,479 $ 381,945 $ 558,245 $ 1,025,846 $ 16,854 $ 69,175 $ 84,213 $ 855,604 $ 800,052 $ 121,533 $ 52,347 $ 296,913 $ 629,953 ****TOTAL DIRECT FEES**** $ 46,414 $ 93,385 Incl. in PM Incl. in PM $ 3,540,768 $ 17,075 $ 100,677 $ 35,071 $ 18,008 $ 3,347,035 Pass-Through Services PT Fee Monitoring Plan Qualification Visits Study Initiation Visits Routine Monitoring Clinical Monitoring (U.S. only) Data Management Data Management Manual Data Entry System Development (Incl. database development and all associated validation, including EDC User Acceptance Testing, data entry screen set-up, and edit check programming) Database Transfers Data Cleaning (Incl. edit review, query generation and tracking, label integration, and coding medications and AEs.) EDC Help Desk DM Coordination and Status Reports System Utilization and Hosting Medical Writing Final Report Pass-Through Costs Meeting Travel Central IRB Expenses Monitoring Travel Communication Expenses Misc. Printing, Copying, Shipping Expenses Translation Expenses ****TOTAL PASS-THROUGH SERVICES**** $ 242,419 $ 27,299 $ 86,640 $ 45,153 $ 562 $ 22,767 $ 59,998 $ 242,419 Project Bdgt. Amt. $ 292,941 $ 21,831 *Not in Bdgt. $ 202,933 $ 12,929 $ 54,582 *Not in Bdgt. $ 292,941 ACCOUNTING SUMMARY (per Medpace's Notice of Termination) $ 3,540,768 Service (Direct) Fees Performed to Date: $ 242,419 Pass-Through Expenses to Date: Medpace, Inc. v. InspireMD, Inc. Service (Direct) Fees Paid to Date: Pass-Through Fees Paid to Date: Amount Due Per Notice of Termination: $ 1,578,128 $ 240,134 $ 1,964,925 QUARTERLY PAYMENTS (Doc. 20-1 at 28) Total Service Fee Payments to Date $ 502,055 Execution Payment $ 286,172 Quarterly Payment 1 $ 137,228 Quarterly Payment 2 $ 200,822 Quarterly Payment 3 $ 150,617 Quarterly Payment 4 $ 150,617 Quarterly Payment 5 $ 150,617 Quarterly Payment 6 $ 1,578,128 Total: Total Service Payments Owed to Date $ 150,617 Quarterly Payment 7 $ 150,617 Quarterly Payment 8 $ 100,411 Quarterly Payment 9 $ 66,941 Quarterly Payment 10 $ 468,586 Total: *See (Doc. 20-1 at 28) Total Value of Quarterlies: Total Value of the Contract: $ 2,046,714 $ 3,639,976 MEDPACE'S POSSIBLE DAMAGES AWARD Four Quarterly Payments: $ 242,419 Pass-Through Expenses to Date: $ 240,134 Pass-Through Fees Paid to Date: Non-Cancelable Expenses (i.e., Pass-Through Fees): Total Possible Judgment: Medpace, Inc. v. InspireMD, Inc. $ 468,586 $ 2,285 $ 470,871.00
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