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LVC Surgical Center, LLC v. Insight Surgical Equipment Co.

United States District Court, D. Nevada

December 11, 2019

LVC SURGICAL CENTER, LLC, a Nevada Limited Liability Corporation; Plaintiff,
INSIGHT SURGICAL EQUIPMENT CO, an Arizona Corporation; DOES 1 through 10, inclusive; and ROE BUSINESS ENTITIES I through X, inclusive, Defendant.




         Before the Court is Plaintiff's Renewed Motion for Preliminary Injunction (ECF No. 20), Defendant's Response (ECF No. 23), and Plaintiff's Reply (ECF No. 27). Because Plaintiff has failed to demonstrate irreparable harm, that the balance of the equities favors Plaintiff, and that a preliminary injunction is in the public interest, the Court denies the Motion.


         Plaintiff filed the operative complaint in this action in the Eighth Judicial District Court on September 12, 2019, asserting several causes of action against Defendant related to a contract to deliver equipment for use in Plaintiff's ambulatory surgical center. ECF No. 1-2. Defendant filed the Petition for Removal to federal court on October 4, 2019. ECF No. 1. On October 7, 2019, Plaintiff filed a Motion for Preliminary Injunction. ECF No. 3. The Court ordered briefing on the motion, ECF No. 8, and a hearing was held on October 16, 2019, ECF No. 13. The Court denied the motion without prejudice at the hearing, referred the action to the magistrate judge for the purposes of settlement mediation, and ordered the parties to file a joint status report “identifying each piece of equipment under the contract, the relevant industry standard or certification protocol for the identified equipment if applicable, when the equipment must be certified if required and who is responsible for ensuring that it is compliant, and a detailed description of the certification process by the State of Nevada, ” as well as any indication of disagreement as to these items. Id. A settlement conference was ordered for January 3, 2020. ECF No. 14. On October 21, 2019, Defendant filed a Notice of Related Cases. ECF No. 15. On October 30, 2019, the parties filed separate status reports. ECF No. 16, 17. On November 4, 2019, Plaintiff filed the instant motion pursuant to the Court's Order issued on October 31, 2019 in response to the parties' respective status reports (ECF No. 18). ECF No. 20. Defendant responded on November 13, 2019, ECF No. 23, and Plaintiff replied on November 15, 2019, ECF No. 27.


         The controversy arises out of an alleged breach of contract. Plaintiff alleges that Defendant failed to provide conforming equipment for use in Plaintiff's ambulatory surgical center in accordance with their contract, and that delivery of the equipment was continually delayed. Defendant disputes the equipment was non-conforming and states that the delay was the consequence of Plaintiff's own conduct. With regard to whether the equipment conformed to the terms of the contract, the parties disagree, inter alia, about which standards apply to the certification of the equipment for use in the ambulatory surgical center, whether those standards have been satisfied for the delivered equipment, whose responsibility it is to ensure compliance with those standards, and when the equipment must be deemed in compliance.

         The Court makes the following factual findings. On May 28, 2018, the parties entered into the contract for Defendant to deliver to Plaintiff specified goods for use in the ambulatory surgical center. The original delivery date was delayed but an agreement on a revised delivery date was reached on or about April 19, 2019. ECF No. 20 at 3. Defendant provided a projection for delivery dates beginning May 1, 2019 that asserted all equipment would be delivered by June 14, 2019. Id. Plaintiff asserts the delivery of this equipment was continually delayed and has not yet been provided in full. Id. at 4. Plaintiff further asserts the equipment has not been certified for use in the ambulatory surgical center in accordance with the various certification procedures, resulting in delay of the opening of the surgical center. Id. at 4-13.

         On June 10, 2019, Plaintiff sent Defendant a letter proposing new dates for items as yet undelivered under the original schedule. Id. at 3. Plaintiff also told Defendant in this letter that it expected perfect tender on or before June 14, 2019. Id.

         On June 17, 2019, Plaintiff sent Defendant an email asking for an update relating to the delivery of the remaining equipment, id. at 4, and on June 25, 2019 sent another email requesting an update on delivery with notice that “22 separate pieces of equipment or 51% of the order still had not been delivered, ” id. On July 31, 2019, Plaintiff asserts equipment was still outstanding. Id. Plaintiff gave Defendant a new deadline of August 21, 2019 to tender the certified equipment, then an additional extension until August 28, 2019. Id. On August 23, 2019, Plaintiff sent Defendant a demand for adequate assurances of performance for delivery by August 28, 2019 and put Defendant on notice of its failure to provide conforming equipment that would be fit for the surgical center's particular purpose. Id.

         Defendant's sales representative, Brian Case, sent an email on August 27, 2019 acknowledging receipt of an Excel spreadsheet listing delivered items and their deficiencies. Id. On August 29, 2019, due to Defendant's alleged failure to address the demand letter and/or provide the missing equipment, Plaintiff declared default and demanded that Defendant remove the allegedly non-conforming equipment from the surgical center. Id. at 6.

         On September 3, 2019, Plaintiff's attorney provided Defendant's counsel a list indicating Defendant had only delivered 61% of the ordered equipment, of which 70% was “defective/not certified, ” and told Defendant that an autoclave Defendant installed was defective because it was not certified by the State of Nevada and would subject Plaintiff to state fines of up to $5, 000. Id. at 6-7. Plaintiff reiterated this message on September 5, 2019 and Defendant's counsel stated Defendant would have the boiler removed. Id. at 8. Plaintiff asserts that it told Defendant on September 24, 2018 via email of the applicable requirements for autoclave installation and certification. Id. Plaintiff argues Defendant failed to meet these requirements and that on September 6, 2019, attempted to install an autoclave that had not been certified by Nevada. Id.

         Defendant states Plaintiff is responsible for the delay in delivery and asserts a slightly different timeline of events. On March 13, 2018, Defendant tendered an invoice memorializing the agreement with Plaintiff and requested a 60% deposit pursuant to standard practice. ECF No. 23 at 3. This deposit was paid in June 2018 after some delay. Id. at 3-4. LVC principal Ngan Le informed Defendant shortly thereafter that construction of the surgical center was delayed and the October 2018 installation deadline would not be met. Id. at 4.

         In October 2018, another LVC principal, Dr. Thomas Le, requested a meeting to establish a second quote for another medical center which was finalized later that month. Id. The deposit for the second surgical center was negotiated as a loan. Id. Defendant asserts Plaintiff's architects caused a seven-month delay in preparing the ...

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