MXR Imaging, Inc. v. Zavagno

OCR transcription for search; preserved printed pages are authoritative

Case: 1:24-cv-01269-DCN Doc #: 46 Filed: 11/19/25 1 of 7. PagelD #: <pagelD>

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
MXR IMAGING, INC., ) Case No. 1:24—CV-01269
)
Plaintiff, )
) JUDGE DONALD C. NUGENT
v. )
)
DAVID ZAVAGNO, ) Memorandum Opinion and Order
)
Defendant. )

This matter is before the Court on Plaintiff/-Counterclaim Defendant MXR Imaging, Inc. s
[(“MXR”)] Motion for Partial Judgment on the Pleadings under FED. R. CIv. P. 12(c) filed on
August 21, 2025. (ECF #41). MXR seeks to dismiss Defendant-Counterclaim Plaintiff David
Zavagno’s (“Zavagno”) amended counterclaim of tortious interference with business relations
(Count Two) for failure to state a claim. (/d.). Mr. Zavagno opposed the Motion on September
22, 2025, (ECF #42), and MXR replied on October 6, 2025, (ECF #43). Mr. Zavagno then filed
for leave to file a sur-reply on October 20, 2025 (ECF #44), which this Court granted a day later.
(ECF #45). For the reasons that follow, MXR’s Motion for Partial Judgment on the Pleadings

(ECF #41) is GRANTED.

AUTHENTICATED —_ 1 _
U.S. GOVERNMENT
INFORMATION
GPO

Case: 1:24-cv-01269-DCN Doc #: 46 Filed: 11/19/25 2 of 7. PagelD #: <pagelD>

Factual and Procedural History

Mr. Zavagno formed Universal Medical Systems (“UMS”)! in 1986 to sell medical
imaging equipment. (ECF #34, Amended Counterclaim, p.1—2 4). He then sold substantially all
the assets of that company to MXR in 2017 for around $5 million. (ECF #1, Complaint, p.4
[PageID #4]). As part of the sale, Mr. Zavagno received a position as an account executive with
MXR and retained certain equipment that he was permitted to sell on his own. (ECF #34, p.2-3
q{9-11). MXR alleges that Mr. Zavagno continued to sell medical devices to its customers in
violation of his employment agreement and duty of loyalty to MXR. (ECF #41, Plaintiff-
Counterclaim Defendant's Memorandum in Support of its Motion for Partial Judgment on the
Pleadings, p.2). Mr. Zavagno defends by alleging that the employment agreement did not
preclude him from operating an independent business while employed by MXR. (ECF #34,
Amended Counterclaim, p.2).

MXR filed the instant lawsuit in the Northern District of Ohio Eastern Division on July
25, 2024. Mr. Zavagno answered the Complaint on September 30, 2024, and simultaneously filed
counterclaims for breach of contract (Count 1), accounting (Count 2), and tortious interference
with business relations (Count 3). (ECF#7, Answer and Counterclaim, p.17—-19). MXR filed a
Motion for Partial Judgment on the Pleadings on July 8, 2025, which the Court granted,
dismissing Mr. Zavagno’s counterclaim of tortious interference (Count 3). (ECF #31). He was
given leave to amend his counterclaim, which he did on July 22, 2025. (ECF #34, Amended
Counterclaim). He reinstated his claim of tortious interference and attempted to cure the
deficiency previously identified by the Court. U/d.). MXR now moves to dismiss Mr. Zavagno’s

amended counterclaim of tortious interference for failure to state a claim. (ECF #41).

' Mr. Zavagno’s company, Universal Medical Systems, Inc. (“UMS”), later became known as Universal Systems
Diagnostics, Inc. (“USD”). (ECF #7, Answer and Counterclaim, p.4 32).

5

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Standard of Review

The standard of review used by a district court to rule on a motion for judgment on the
pleadings pursuant to FED. R. CIv. P. 12(c) is the same standard used to rule on Rule 12(b)(6)
motions. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. Tenn. 1998). A motion to dismiss
under FED. R. Crv. P. 12(b)(6) lets a defendant test the legal sufficiency of a complaint without
being subject to discovery. See Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir. Ohio
2003). In evaluating a motion to dismiss, the court must construe the complaint in the light most
favorable to the plaintiff, accept all factual allegations as true, and draw reasonable inferences in
favor of the plaintiff. See Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. Ky. 2007). The court
will not, however, accept conclusions of law or unwarranted inferences cast in the form of
factual allegations. See Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. Tenn. 2000).

In order to survive a motion to dismiss, a complaint must provide the grounds of the
entitlement to relief, which requires more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action. See Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65
(2007). That is, “[fJactual allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in the complaint are true (even if
doubtful in fact).” Jd. (internal citation omitted); see Ass’n Cleveland Fire Fighters v. City of
Cleveland, No. 06-3823, 2007 WL 2768285, at *2 (6th Cir. Ohio Sep. 25, 2007) (recognizing
that the Supreme Court “disavowed the oft-quoted Rule 12(b)(6) standard of Conley v. Gibson,
355 U.S. 41, 45-46 (1957)”). Accordingly, the claims set forth in a complaint must be plausible,
rather than conceivable. See Twombly, 127 8. Ct. at 1974.

On a motion brought under Rule 12(b)(6), the Court’s inquiry is limited to the content of

the complaint, although matters of public record, orders, items appearing in the record of the

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case, and exhibits attached to the complaint may also be taken into account. See Amini v. Oberlin

College, 259 F.3d 493, 502 (6th Cir. Ohio 2001).?

Tortious Interference with Business Relations
In order to establish a claim of tortious interference with a business relationship, a

plaintiff must show:

“(1) a business relationship; (2) the wrongdoer’s knowledge thereof;
(3) an intentional interference causing a breach or termination of the
relationship, and[,] (4) damages resulting therefrom. The basic
principle of a ‘tortious interference’ action is that one, who without
a privilege, induces or purposely causes a third party to discontinue
a business relationship with another is liable to the other for the harm
caused thereby. However . . . acts performed within a business
relationship are considered subject to a qualified privilege. In order
to overcome a defense of qualified privilege, a party must show that
the wrongdoer acted with actual malice [which] denotes an
unjustified or improper interference with the business relationship.”

Sancap Abrasives Corp. v. Swiss Indus. Abrasives, 19 Fed.Appx. 181, 193 (6th Cir. 2001)
(quoting Chandler & Assocs., Inc. v. America’s Healthcare Alliance, Inc., 125 Ohio App.3d 572,
583 (1997) (internal quotations and citations omitted)).

“{T]he doctrine of qualified privilege is applicable to tortious interference cases, and acts
performed within a business relationship are considered subject to a qualified privilege.”
Chandler & Assoc., Inc. v. America’s Healthcare Alliance, Inc., 125 Ohio.App.3d 572, 583
(1997). A qualified privilege exists in circumstances where parties have a “business

relationship,” which can be created when parties enter into a contract. Jd. at 584.

? For the purposes of this Motion, the Court will consider the schedules of the Asset Purchase Agreement (“APA”)
attached by Plaintiff Counterclaim-Defendant MXR to its Reply in Support of its Motion for Partial Judgment on the
Pleadings. (ECF #43, Exhibit A, p.2-223 [PageID #504—725]). A court “may consider . . . exhibits attached to
defendant’s motion to dismiss so long as they are referred to in the [c]omplaint and are central to the claims
contained therein.” Devlin v. Kalm, 531 Fed. Appx. 697, 703 (6th Cir. 2013). There is no doubt that the schedules to
the APA are central to the claims in this case. The schedules help identify which customers had a business
relationship with MXR and, therefore, the customers with whom it had a qualified privilege.

—4-

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“TO|nce a qualified privilege has been asserted, ‘actual malice[]’ must be demonstrated
in order to defeat the qualified privilege defense.” Smith v. Ameriflora 1992, Inc., 96 Ohio
App.3d 179, 188 (1994) (emphasis retained). “Actual malice in a tortious interference claim is
not ill-will, spite or hatred; rather, it denotes an unjustified or improper interference with the
business relationship.” Chandler, 125 Ohio App.3d at 583 (citing Smith v. Amerifloral992, Inc.,
96 Ohio App.3d 179, 644 N.E.2d 1038 (1994); Hoyt, Inc. v. Gordon & Assoc., Inc., 104 Ohio
App.3d 598, 662 N.E.2d 1088 (1995)).

Mr. Zavagno alleges that “MXR has improperly contacted MXR’s customers and
business partners and falsely and in bad faith told them they could not do business with Mr.
Zavagno, causing Mars and Canon (and potentially others) to cease their business relationships
with Mr, Zavagno.” (ECF #42, p.5). Mr. Zavagno incorrectly asserts that “[he] only needs to
show actual malice if and when MXR establishes its conduct was privileged and that it acted in
good faith.” (ECF #42, p.7) (emphasis added). However, MXR needs only to establish the
existence of a privilege, which Mr. Zavagno must then overcome by a showing of actual malice.

MXR has established the existence of a privilege. The record reflects that MXR
purchased distributor relationships from Mr. Zavagno including, Philips, Canon/Toshiba, Esaote,
Siemens, Mars, and others. (ECF #43, p.3 [PageID #494]). Accordingly, MXR has established
that it shared a contractual relationship, and thus a business relationship, with all the customers
with whom Mr. Zavagno alleges it interfered. (ECF #43, p.6 [PageID #497]). Therefore, the acts

between MXR and the customers in question are subject to a qualified privilege.’

3 “The question of whether a privilege exists is a question of law for the court,” and “[a] privilege’s existence and
whether it has been abused can be properly decided on a motion to dismiss.” Bowles v. Macomb Community
College, 558 F.Supp.3d 539, 553 (E.D. Mich. 2021) (citing Elias v. Federal Home Loan Mortg. Corp., 581 F.App’x
461, 467-68 (6th Cir. 2014)).

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Mr. Zavagno must overcome this privilege by proving that MXR acted with actual
malice. He has refused to do so, and he cannot; “[iJnherent in the concept of actual malice is the
notion that a wrongful act has been done without any plausible legal justification.” Ament v.
Reassure Am. Life Ins. Co., 180 Ohio App.3d 440, 457 (2009). There is no evidence in the record
to support the claim that MXR acted with the intent to maliciously interfere with Mr. Zavagno’s
business relationships. Rather, the record demonstrates that MXR was acting to protect its
relationships with the customers it purchased from Mr. Zavagno.

In this case, the absence of actual malice exhibited by MXR also cuts against a finding of
“improper interference,” an element required to bring a claim of tortious interference. In
determining whether a defendants actions were improper, the court considers the nature of the
actor’s conduct; the actor’s motive; the interests of the other with which the actor’s conduct
interferes; the interest sought to be advanced by the actor; the social interests in protecting the
freedom of action of the actor and the contractual interests of the other; the proximity or
remoteness of the actor’s conduct to the interference; and, the relations between the parties.
RESTATEMENT (SECOND) OF TORTS § 767 (1979); Super Sulky, Inc. v. U.S. Trotting Ass’n, 174
F.3d 733, 742 (6th Cir. 1999). “Although all these factors must be weighed against each other
and balanced in arriving at a judgment, [t]he nature of the actor’s conduct is a chief factor in
determining whether the conduct is improper or not.” Jd. at Comment c. As discussed above,
MXR sought to protect the relationships with the customers it purchased from Mr. Zavagno,

rather than improperly interfere with his business relationships.

Case: 1:24-cv-01269-DCN Doc #: 46 Filed: 11/19/25 7 of 7. PagelD #: <pagelD>

Given that MXR acted to protect the relations with its customers and because Mr.
Zavagno cannot show actual malice, his amended counterclaim for tortious interference with
business relations fails. Accordingly, MXR’s Motion for Partial Judgment on the Pleadings
(ECF #41) is GRANTED.

IT IS SO ORDERED.

all 0. Hut

DONALD C. gl
United States District/Judge

DATED: Nvoinbe 4, Los