Tuesday, March 20, 2007

Virtual Physical Center - Rockville, LLC v. Phillips Medical Systems North America, Inc. (Maryland U.S.D.C.) (Approved for publication)

Signed March 16, 2007. Opinion and Order by Judge Catherine C. Blake.

Upon consideration of cross motions for summary judgment, the motion of the defendant ("Phillips") was GRANTED and the motion of the plaintiff ("Virtual") was DENIED.

In a case arising from the failure of Virtual's "whole body" imaging business, intended to screen healthy individuals for asymptomatic and potentially life-threatening diseases by means of CT scans, Virtual filed suit against Phillips, the manufacturer of the CT machines, alleging fraud, negligent misrepresentation and breach of warranty.

Phillips countered that the statute of limitations had run on the fraud and negligent misrepresentation counts, since more than three years had passed since Virtual knew or should have known that the allegedly fraudulent or negligent representations had been known to have been false. After reviewing the sequence of events and the information of which Virtual was aware, the judge agreed, finding that Virtual's claims were time-barred.

In similar fashion, Phillips argued that Virtual's warranty claims were barred by the applicable statute of limitations, The judge agreed, finding that the alleged defect was, if anything, a design defect, and not one subject to the one-year express warranty for defects and workmanship which might have extended the implied warranty period.

Finally, Virtual argued that Phillips' counter-claim for damages for breach of contract should be limited to the date Virtual advised Phillips it had ceased operations, as being effective notice of termination of the lease agreement. The judge found, while Virtual would likely prevail on the issue, it had failed to submit confirmation that the party who instituted suit against Virtual considered the lease to have been terminated at that time, and denied Virtual's motion for summary judgment on that issue.

The Opinion and Order are available in PDF format.

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