Patel v. Dhaduk

$9.45M Verdict

Date of Verdict: Dec. 2.

Court and Case No.: U.S. District Court, M.D. Pa. No. 3:17-cv-02243.

Judge: Richard Caputo.

Type of Action: Breach of contract.

Injuries: Loss of profits.

Plaintiffs Counsel: Casey Green, Sidkoff, Pincus & Green.

Defense Counsel: George Reihner, Wright, Reihner & Mulcahey, Scranton.

Comment:

A federal judge has entered a $9.45 million award to a businessman seeking to sell off his ownership stakes in two medical-pharmaceutical companies.

U.S. District Judge Richard Caputo of the Middle District of Pennsylvania granted summary judgment to Mukeshkumar Patel, the plaintiff in the case, captioned Patel v. Dhaduk. Caputo determined that Patel's former business partner, Vithalbhai Dhaduk, breached their memorandum of understanding outlining Patel's exit from the companies when he failed to pay his former partner the money they had agreed upon.

Dhaduk had argued that the memorandum of understanding was only a guideline for their business separation and he only had to pay Patel with proceeds from the companies that Patel was exiting.

The federal district judge determined that the memorandum of understanding was legally binding, and that it made no mention of how the defendant would make the payment, but only that he would make the payment "as soon as he can."

"Dhaduk breached paragraph three of the MOU because Dhaduk had the ability to pay Patel $9.45 million some time after the MOU's execution," Caputo said. "Dhaduk's argument that he procured that funding from 'bank loans' and 'that he is unaware of his net worth because he has so many loans pending' is unavailing."

According to Caputo, Patel and Dhaduk started as friends and business partners, and one of their joint ventures involved a 50-50 partnership in the medical-pharmaceutical companies, Somahlution and Global Pharma Analytics. The two began talking about how to separate their business interests in July 2015, and those talks resulted in the memorandum of understanding, which included the provision saying that Dhaduk would pay Patel $9.45 million as soon as Patel exited Somahlution and Global Pharma Analytics.

Caputo said Patel released his ownership interest in both Somahlution and Global Pharma Analytics when the memorandum of understanding was executed. However, Dhaduk did not immediately pay Patel. Caputo also noted Dhaduk has personally invested $30 million into the two companies since the memorandum was executed.

Patel sued Dhaduk in 2017 alleging breach of contract. Dhaduk filed numerous counterclaims, including fraud, but those were eventually dismissed.

On the remaining breach of contract claim, Dhaduk argued that the memorandum was only meant to memorialize an "informal outline to address how any profits would be split, should certain entities become profitable," according to Caputo.

Caputo, however, determined that both parties agreed the memorandum would govern their separation and that it would be a reference point if there were any misunderstandings. The judge also noted the document was drawn up after various negotiations between the parties. Although Dhaduk had contended that the memorandum did not set forth the governing law or reflect the sentiments of prior negotiations, Caputo said that does not mean the parties did not mean for the agreement to be binding.

Caputo also rejected Dhaduk's argument that the phrase "as soon as he can" was ambiguous because it did not outline a specific time when the payment had to be made, or set forth any measurement to gauge whether Dhaduk could make the payments.

Casey Green of Sidkoff, Pincus & Green, who represented Patel, said Caputo's opinion delved into the history of how courts analyze these issues and came to the right decision.

George Reihner of Wright, Reihner & Mulcahey in Scranton represented Dhaduk. Reihner did not return a call seeking comment.

—Max Mitchell, of the Law Weekly