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Antech Diagnostics, Inc. v. Morwalk, Inc.

United States District Court, Fourth Circuit

July 2, 2013

ANTECH DIAGNOSTICS, INC.
v.
MORWALK, INC., et al.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for review in this breach of contract dispute are the motion to dismiss filed by Defendants Wendy Walker, D.V.M., and Morwalk, Inc. (ECF No. 11), and several motions to seal (ECF Nos. 5, 13, & 14). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the reasons set forth below, all pending motions will be denied.

I. Background

A. Factual Background

The following facts are alleged in the first amended complaint. (ECF No. 8). Plaintiff Antech Diagnostics, Inc. ("Antech"), is a California corporation that maintains its principal place of business in Los Angeles, California. Defendant Morwalk, Inc., doing business as Town & Country Animal Clinic ("Morwalk" or "Town & Country"), is a Maryland corporation that operates an animal hospital in Olney, Maryland. Defendant Wendy Walker, D.V.M., is a citizen of Maryland and a Morwalk shareholder.

In January 2010, Antech and Dr. Walker, "as president of Town & Country, " signed a Lab Services Agreement ("the 2009 LSA"). (ECF No. 8 ¶ 6).[1] Antech alleges that, pursuant to the 2009 LSA, Morwalk agreed to use Antech "exclusively to provide laboratory services in an amount equal to [a] minimum of [$7, 000] per month for twenty-four (24) months." ( Id. ). Antech, in turn, agreed to pay Town & Country a monthly rebate "equal to a percentage of the total qualified services" for which it paid Antech each month. ( Id. ).

In early 2011, prior to the expiration of the 2009 LSA, Walker allegedly approached Antech for a loan to fund the purchase of new laboratory equipment. Antech agreed to provide the loan in exchange for a new Lab Services Agreement ("the 2011 LSA") pursuant to which Antech both "reduced the monthly minimum require[d] services expected from Walker and/or Town & Country" and "continued to provide the benefits of the 2009 LSA." (ECF No. 8 ¶ 10).

The first page of the 2011 LSA states as follows:

This Services Agreement (this "Agreement") is entered into by and between Antech Diagnostics ("Antech") and the party or parties listed below as "Animal Hospital Owner(s)" as of the Effective Date (defined below). This Agreement shall consist of this cover page, the attached terms and conditions and all annexes and attachments referred to below.

(ECF No. 11-1, at 1) (emphases in original).[2] Immediately below that, under the heading "SUMMARY, " the following appears:

( Id. ) (emphases in original). Also under the heading "SUMMARY, " the 2011 LSA states that the "Term of Agreement" is sixty (60) months and that its effective date was March 1, 2010. ( Id. ). Antech alleges, however, that the reference to 2010 was a typographical error and that "the parties understood the effective date of the 2011 LSA was March 1, 2011." (ECF No. 8 ¶ 8). The cover page also contains the following provisions:

MINIMUM AVERAGE ANNUAL FEE: Animal Hospital Owner is required to utilize Antech to provide Laboratory Services required by Animal Hospital in an amount equal to a minimum of $300, 000 or $5, 000 net per month (the "Minimum Average Annual Fee"), in accordance with the provisions of Section 1 below.
LOYALTY COMMITMENT As an incentive to enter into this Agreement, Antech will rebate to Animal Hospital Owner a monthly amount as outlined in Annex #2 (the "Loyalty Rebate"). The Loyalty Rebate will be subject to the terms and conditions set forth in Section 3.

(ECF No. 11-1, at 1) (emphases in original).

The 2011 LSA requires the Animal Hospital Owner to "cause all veterinary diagnostic and clinical laboratory services (Laboratory Services') that are to be performed for and on behalf of the Animal Hospital, to be performed by a veterinary diagnostic laboratory owned by Antech (an Antech Lab')." ( Id. § 1.1) ("the Exclusivity Provision"). The 2011 LSA establishes three exceptions to the Exclusivity Provision. First, Section 1.1.1 allows the Animal Hospital Owner to cause its Laboratory Services to be performed by a non-Antech laboratory so long as:

the fees paid to such other entity in the aggregate during each Contract Year' (i.e., each twelve month period beginning on the date or anniversary date of this Agreement) are less than 10% of all fees paid by or on behalf of the Animal Hospital in ...

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