Innovative Healing Systems, Inc. v. XPI Services, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

3:21CV345

INNOVATIVE HEALING SYSTEMS, INC., et al., )

)

Plaintiff, )

)

vs. ) ORDER

)

XPI SERVICES, LLC, )

)

Defendant. )

__________________________________________)

This matter is before the Court upon the Plaintiffs’ and Defendant’s cross-motions for

summary judgment. The motions are fully briefed and ripe for disposition.

I. FACTAL BACKGROUND

The facts in this case are undisputed. Plaintiffs Innovative Healing Systems, Inc.,

Hyperbaric & WoundCare, Inc., and WoundCare MD, Inc. are three related companies that are

in the business of operating wound care facilities at hospitals. Dr. Ravi Patel owns Woundcare

MD, Inc., which is the parent company of both Innovative Healing Systems, Inc. and Hyperbaric

& WoundCare, Inc. All three companies share the same corporate officers and all three do

business under the name “Innovative Healing Systems.” David DeMik (“DeMik”) is the Chief

Financial Officer of the three Innovative Healing Systems companies.

Dr. Patel’s wound care facilities use hyperbaric chambers to promote healing process.

Hyperbaric chambers are medical devices that use pressurized oxygen to deliver therapy to

patients. This case is about two of those hyperbaric chambers. From 2012 to 2017, Dr. Patel used

those chambers at a medical facility overseas in Dubai. After that clinic closed, the chambers

were put into sealed crates, shipped back across the Atlantic, and imported into the United States

for eventual use at a new facility in western Tennessee. Mr. DeMik oversaw the importation of

the chambers and was to arrange for them to be transported to their final destination in the

United States. In July 2017, Mr. DeMik, acting on behalf of Innovative Healing Systems,

contacted Roger Soudir (“Soudir”), the President and Chief Executive Officer of Defendant XPI,

a Charlotte-based non-vessel operating common carrier and freight forwarder, to ask whether

XPI could assist Innovative Healing Systems with the importation of the chambers. XPI agreed

to assist Innovative Healing Systems with the importing phase, including obtaining customs

clearance for the chambers.

Mr. DeMik later discussed with Mr. Soudir the need to store the chambers temporarily

while Innovative Healing Systems arranged for the chambers to be transported to their final

destination.1 XPI agreed to help Innovative Healing Systems store the chambers and began

checking for warehouse availability.2 In October 2017, Mr. Soudir contacted Tony Albanese

(“Albanese”), who owned a company called Cycle Up Supply Chain Services (“Cycle Up”), to

ask whether Cycle Up could store the chambers. Mr. Soudir located Cycle Up without any

assistance from Innovative Healing Systems. Mr. Albanese told Mr. Soudir that Cycle Up could

store the chambers for XPI and that it would cost $400 per month for storage. Mr. Soudir then

communicated to Mr. DeMik that he had found a warehouse to store the chambers and that

storage would cost $550 per month. Mr. DeMik authorized XPI to proceed with having the

chambers stored at the warehouse XPI had located. XPI then accepted Cycle Up’s proposal and

directed Cycle Up to pick up the chambers from the port after they cleared customs and to have

them delivered to Cycle Up’s warehouse. Cycle Up followed XPI’s directions and began storing

1 The Tennessee facility where the chambers were originally intended to be used was not yet open.

2 While XPI does not own or operate any warehouses, it does hold itself out on its website as offering warehouse

and distribution capabilities.

the chambers at Cycle Up’s warehouse in Savannah. The chambers were stored in the same

sealed crates in which they had been shipped from Dubai.

Mr. Soudir asked Mr. DeMik where XPI should send the bill for storage fees. Mr. DeMik

responded that the invoices should be sent to Innovative Healing Systems.3 Cycle Up billed XPI

directly for the storage, since Cycle Up’s dealings regarding the chambers and their storage were

with XPI, not Innovative Healing Systems. When the chambers were first placed into storage,

Innovative Healing Systems did not know the identity of Cycle Up, did not know the exact

location of the chambers, and did not know that Cycle Up was charging XPI only $400 for the

storage of the chambers.

From November 2017 to July 2020, XPI sent monthly invoices to Innovative Healing

Systems for a storage fee of $550, even though Cycle Up was only charging XPI a monthly

storage fee of $400. According to XPI, it added on a “handling fee of $150” to the total monthly

storage fee that it charged Innovative Healing Systems. Innovative Healing Systems timely paid

each of the invoices that it received from XPI. XPI, however, failed to pay Cycle Up for over

nine months at one point.

In May 2020, Innovative Healing Systems notified XPI that it planned to retrieve the

chambers from storage within the next several months. XPI then asked Cycle Up to check on the

chambers to ensure that they were still intact as they had been delivered. Cycle Up informed XPI

that the chambers were still at the same location at that point. This was the first time that XPI had

asked Cycle Up to check on the condition of the chambers since late 2017. XPI never itself

inspected the chambers while they were in storage. In July 2020, Innovative Healing Systems

3 Thereafter, XPI sent invoices to “Innovative Healing System” for $550 each month, and denoted that as a “storage

fee.” Innovative Healing Systems timely paid each of those invoices.

became aware that an individual claiming to be a salvage buyer had contacted Perry Baromedical

Corporation4 to inquire about the value of two hyperbaric chambers with serial numbers

matching the chambers that XPI was supposed to be storing for Innovative Healing Systems.

This individual reported that he had found the chambers outdoors in a dumpster and exposed to

the elements. Mr. DeMik asked Mr. Soudir to investigate the matter. Mr. Soudir later informed

Mr. DeMik that the owner (Cycle Up) of the warehouse where the chambers were supposed to be

stored believed that the chambers had been stolen during a move from one warehouse to another.

This was the first time Innovative Healing Systems became aware of Cycle Up’s identity and the

arrangement between XPI and Cycle Up regarding the storage of the chambers. Innovative

Healing Systems ultimately learned that the chambers had been left outside Cycle Up’s old

warehouse, out of their crates, and exposed to the elements. It remains unknown exactly how the

chambers got there.

After recovering the chambers, Innovative Healing Systems had the damage to the

chambers assessed by an expert. It was determined that the chambers were so damaged that the

total cost to repair them exceeded the cost to purchase replacement chambers of comparable

quality.5

Plaintiffs have asserted claims against XPI for breach of bailment, breach of contract,

negligence, and unjust enrichment. (Am. Compl. ¶¶ 45–75, ECF No. 23). They have moved for

summary judgment as to each of their claims.6 Defendant XPI likewise moves for summary

judgment in its favor as to each of Plaintiffs’ claims.

4 Perry Baromedical Corporation had acquired the hyperbaric division of the original manufacturer of the chambers.

5 It was determined that the total cost to replace the chambers with those of comparable quality and features was

$308,179.44, while the cost to repair was estimated at $386,350.00.

6 Plaintiffs are moving for summary judgment on their unjust enrichment claim in the alternative.

II. DISCUSSION

A. Summary Judgment Standard

Summary judgment is appropriate when “the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). A dispute is “genuine” if the evidence would permit a reasonable jury to find for

the nonmoving party, and “[a] fact is material if it might affect the outcome” of the case. Jacobs

v. N.C. Admin. Off. of the Cts., 780 F.3d 562, 568 (4th Cir. 2015) (citations omitted).

B. Breach of Bailment

Under North Carolina law, “[a] bailment is created upon the delivery of possession of

goods and the acceptance of their delivery by the bailee.” Atl. Contracting & Material Co. v.

Adcock, 588 S.E.2d 36, 39 (N.C. Ct. App. 2003) (quoting Flexlon Fabrics, Inc. v. Wicker Pick-

Up & Delivery Serv., Inc., 250 S.E.2d 723, 726 (N.C. Ct. App. 1979)). “[T]ransactions

constituting bailments include ‘the delivery and acceptance of custody of personal property for

safekeeping, transportation, or storage.’” Id. at 40. (quoting 8A Am. Jur. 2d Bailments § 5

(1997). “When a bailment is created for the benefit of both the bailor and bailee, the bailee is

required to exercise ordinary care to protect the subject of the bailment from negligent loss,

damage, or destruction.” Barnes v. Erie Ins. Exch., 576 S.E.2d 681, 683–84 (N.C. Ct. App.

2003).

Delivery occurs when the “bailor relinquish[es] exclusive possession, custody, and

control to the bailee.” Flexlon Fabrics, 250 S.E.2d at 726. “An acceptance is established upon a

showing directly or indirectly of a voluntary acceptance of the goods under an express or implied

contract to take and redeliver them.” Id. The delivery and acceptance requirements of a bailment

are met when a bailee’s agent accepts delivery of possession of the property. See, e.g., id.

(determining that there was “ample evidence of delivery and acceptance . . . to establish a

bailment” where the “[d]efendant, through its agents, . . . voluntarily and knowingly accepted

exclusive control of the” property); see also 8A Am. Jur. 2d Bailments §§ 41, 44, Westlaw

(database updated Jan. 2023) (explaining that delivery and acceptance can be completed through

the bailee’s agent). Plaintiffs argue that the undisputed facts establish that the parties created a

mutual benefit bailment for the storage of the chambers and that XPI failed to exercise ordinary

care to protect the chambers from damage.

XPI contends that no bailment existed between Plaintiffs and XPI because at the time the

alleged bailment was created the chambers were still owned by Dr. Patel.7 Plaintiff Hyperbaric

and Woundcare, Inc. acquired ownership of the chambers from Dr. Patel via a bill of sale dated

October 19, 2017.8 However, the exact date Hyperbaric and Woundcare, Inc. acquired ownership

of the chambers and the date the agreement between Plaintiffs and XPI was entered into is of no

consequence. A bailor “need not have absolute title to the thing bailed, provided the bailor is

invested with such possessory interest as will entitle the bailor to hold it against all the world

except the rightful owner.” 8A Am. Jur. 2d Bailments § 30, Westlaw (database updated Jan.

2023) (citations omitted)); see also 8 C.J.S. Bailments § 26, Westlaw (database updated Nov.

2022) (“It is not essential that a bailor have an absolute title to the subject matter of the bailment,

as it suffices that the bailor is vested with a possessory interest in the subject matter that will

7 In support of its argument that a plaintiff must be the owner of the property in order to create a bailment XPI cites

the North Carolina Pattern Jury Instructions on bailment. However, a “pattern jury instruction . . . has neither the

force nor the effect of law.” State v. Warren, 499 S.E.2d 431, 453 (N.C. 1998).

8 While it is disputed as to when the agreement between XPI and Plaintiffs was actually formed, XPI’s first invoice

to Plaintiffs indicated that it covered a “Storage Fee” for “Monthly – Oct 19, 2017 to Nov 19, 2017).” (DeMik Decl.

Ex. A, at p. 8, ECF No. 29-4). Coincidentally, this is the same day that ownership of the chambers transferred from

Dr. Patel to Hyperbaric & WoundCare, Inc. (ECF No. 19-8).

entitle the bailor to assert her interest against all the world except the rightful owner.”).

Moreover, in North Carolina a possessory interest is a recognized property interest. See Dunbar

Corp. v. Lindsey, 905 F.2d 754, 757–58, 760 (4th Cir. 1990).

The Court finds that Plaintiffs have produced undisputed evidence of a possessory

interest in the chambers sufficient to form a bailment. First, Hyperbaric & Woundcare, Inc. was

the owner of the chambers during the period when they were in storage. WoundCare MD, Inc.,

as Hyperbaric & Woundcare’s parent, also had a possessory interest in the chambers during that

same period and is likewise entitled to seek damages. Mr. DeMik’s deposition testimony and

declaration establish that Innovative Healing Systems, Inc. is the administrative arm of all three

entities doing business as Innovative Healing Systems, including Hyperbaric & WoundCare, Inc.

(the owner of the chambers). (DeMik Dep. 103:12–19, ECF No. 29-2; DeMik Decl. ¶ 5, ECF

No.18- 4). In this administrative role, Innovative Healing Systems, Inc. had authority to make

decisions relating to the importing, storage, and transportation of the chambers and to take

possession of the chambers once they arrived in the United States. (DeMik Decl. at ¶ 9, ECF No.

18-4; Patel Decl. ¶ 9, ECF No.18-5; Patel Dep. 27:1–15, ECF No. 18-3). Accordingly, even if

Innovative Healing Systems, Inc. did not have legal title to the chambers, it nevertheless had a

valid possessory interest in the chambers that permitted it to form a bailment with XPI.9

XPI next argues that no bailment existed because the chambers were not delivered to XPI

and XPI did not have exclusive possession and control of the chambers. However, the fact that

Cycle Up had physical possession does not mean that no bailment was formed if Cycle Up was

acting as XPI’s agent. See Flexlon Fabrics, 250 S.E.2d at 726 (determining that there was

9 Alternatively, the Court finds that XPI is estopped from denying that Innovative Healing Systems, Inc. had a

possessory interest in the chambers, as it never questioned Innovative Healing Systems, Inc.’s authority to enter into

any agreements with XPI relating to the importing and storage of the chambers, and instead accepted payment from

Innovative Healing Systems for storage for almost three years.

“ample evidence of delivery and acceptance . . . to establish a bailment” where the “[d]efendant,

through its agents, . . . voluntarily and knowingly accepted exclusive control of the” property);

8A Am. Jur. 2d Bailments §§ 41, 44, Westlaw (database updated Jan. 2023) (explaining that

delivery and acceptance of property subject to a bailment can be completed through the bailee’s

agent).

There are “two essential ingredients in the principal-agent relationship: (1) authority,

either express or implied, of the agent to act for the principal, and (2) the principal’s control over

the agent.” Holcomb v. Colonial Assocs., L.L.C., 597 S.E.2d 710, 716 (N.C. 2004) (quoting 24

Strong’s North Carolina Index 4th Principal and Agent § 1 (1993)). The Court finds that

Plaintiffs have produced undisputed evidence of both these elements.

First, it is undisputed that XPI located and selected Cycle Up to store the chambers and

that Cycle Up dealt exclusively with XPI and never with Plaintiffs. XPI contends that Cycle Up

did not have the authority to do anything on behalf of XPI. According to the uncontested

declaration of Tony Albanese (Cycle Up’s owner) and XPI’s own deposition testimony, Cycle

Up transported the chambers and stored them at Cycle Up’s facility—all at the request and

direction of XPI. (XPI Dep. 53:8–54:23, ECF No.18-6; Albanese Decl. ¶¶ 3–7 & Ex. A, ECF

No. 18-7). Cycle Up sent monthly invoices to XPI. (XPI Dep. 53:18-54:15; Albanese Decl. ¶ 7 &

Ex. B). In fact, Cycle Up never had any dealings or otherwise communicated with Innovative

Healing Systems and was not even aware of Innovative Healing Systems’ identity until July

2020, years after XPI engaged Cycle Up. (XPI Dep. 55:24–56:3; Albanese Decl. ¶¶ 5–6, 13.)

XPI also had sufficient control over both Cycle Up and the chambers, as evidenced by the

declaration of Tony Albanese, Cycle Up’s owner:

XPI Services retained control over the equipment. Had XPI Services given us any

specific instructions regarding the equipment and how to handle its storage, Cycle

Up would have followed those instructions. Cycle Up did not at any point believe

that it had superior control over the equipment and its storage or otherwise attempt

to exercise any such control.

(Albanese Decl. ¶ 10).

Based on similar facts, the North Carolina Supreme Court held that an agency

relationship existed between the defendant and a nonparty in a bailment case. See U.S.

Helicopters, Inc. v. Black, 347 S.E.2d 431, 433 (N.C. 1986). In this case the plaintiff chartered a

helicopter to the defendant for use in flying lessons. Id. at 432. Although plaintiff had a regular

instructor that it offered for those lessons, defendant insisted on using a friend, Ron Manning,

who was also a qualified instructor. Id. While Mr. Manning was piloting the helicopter just

above the ground, the helicopter crashed. Id. at 432.

At trial, the plaintiff introduced evidence that Mr. Manning had been negligent. Id. at

432-33. The Court of Appeals held that this evidence failed to show that the defendant had

himself been negligent. Id. The North Carolina Supreme Court reversed, finding that Mr.

Manning was defendant’s agent and holding that “the rule in North Carolina is that a bailee is

liable not only for the results of his own negligence but also for that of his agents.” Id. at 433

(citing Vincent v. Woody, 76 S.E.2d 356 (N.C. 1953)).

Innovative Healing Systems, like the helicopter company, entrusted its property—two

hyperbaric chambers—to XPI for safekeeping, just as U.S. Helicopters entrusted its helicopter to

Mr. Black. XPI, even though it advertises as offering “warehousing services,” chose to hire an

agent, Cycle Up, to perform the actual storage. This is much like Mr. Black’s choice to hire an

agent, Mr. Manning, to assist with his flying lessons. Whether it was XPI’s negligence or Cycle

Up’s negligence that led to the chambers being uncrated and exposed to the elements, XPI as the

bailee is responsible.

XPI counters that Cycle Up was an independent contractor, not an agent of XPI. In

support of its argument, XPI relies on the eight factors outlined in McKenzie v. Charlton, 822

S.E.2d 159 (N.C. Ct. App. 2018) that distinguish an independent contractor from an employee.

The Court finds these factors inapplicable in determining whether a general agency relationship

existed between XPI and Cycle Up. Compare McKenzie, 822 S.E.2d at 162 (stating that the eight

factors are considered “in determining whether one acts as an employee or as an independent

contractor”), with U.S. Helicopters, 347 S.E.2d at 433–34 (analyzing whether a non-party was

the defendant bailee’s agent without considering the eight factors), and Wyatt v. Walt Disney

World Co., 565 S.E.2d 705, 710 (N.C. Ct. App. 2002) (evaluating, in a personal jurisdiction case,

whether a company was the agent of the defendants without considering the eight factors).

XPI next argues that even if an agency relationship existed between it and Cycle Up,

Cycle Up’s actions occurred outside the scope of its alleged authority and thus cannot be

imputed to XPI. It is undisputed that XPI arranged for Cycle Up to store the chambers;

accordingly, Cycle Up had broad authority to store the chambers. It is apparent from the monthly

invoices Cycle Up sent to XPI that it had authority for “warehouse charges” (ECF No. 29-8 at

pp. 9–44). Thus, any actions that Cycle Up took while storing the chambers were directly linked

to the broad authority that XPI conferred upon Cycle Up when XPI tasked Cycle Up with storing

the chambers. See Vaughn v. N.C. Dep’t of Hum. Res., 245 S.E.2d 892, 896 (N.C. Ct. App. 1978)

(determining that there was a “direct link” between the agent’s conduct and the agent’s authority

to act on behalf of the principal such that the agent’s conduct was within the scope of his

authority).

Based upon the foregoing, the Court finds that a bailment was formed when XPI, through

its agent, Cycle Up, accepted delivery and possession of the chambers for storage.

C. Negligence

Where, as here, a negligence claim is based on an underlying bailment, courts will

analyze and resolve the negligence claim and any accompanying breach of bailment claim

together. See, e.g., Rush Indus., Inc. v. MWP Contractors, LLC, No. 1:08CV810, 2011 WL

13076759, at *3–4 (M.D.N.C. Mar. 3, 2011), aff’d, 539 F. App’x 91 (4th Cir. 2013); see also 46

Am. Jur. Proof of Facts 3d 361, at Part I.B., § 7, Westlaw (originally published in 1998) (“When

bailed property is damaged, lost or stolen, the bailor may bring an action for recovery of

damages from the bailee based on breach of bailment, negligence or both.”).

The North Carolina Supreme Court has held:

[W]hen a bailor . . . offers evidence tending to show (1) that the property was

delivered to the bailee, (2) that bailee accepted it and therefore had possession and

control of the property, and (3) that bailee failed to return the property, or returned

it in a damaged condition, a prima facie case of actionable negligence is made out

and the case must be submitted to the jury. When a prima facie case is made out,

it warrants but does not compel a verdict for plaintiff. The jury is simply

authorized to find either way, and either party may lose if he offers no further

proof.

Clott v. Greyhound Lines, Inc., 180 S.E.2d 102, 110 (N.C. 1971).

The Plaintiffs have established that a bailment existed, and it is undisputed that

XPI returned the chambers in a damaged condition. Therefore, Plaintiffs have made a

prima facie showing of negligence. While “the presumption of negligence does not entitle

plaintiff to a directed verdict if defendant fails to produce evidence of his own due care,

defendant risks an adverse jury verdict if it fails to introduce evidence of its own due

care.” Flexlon Fabrics, 250 S.E.2d at 726. When, as here, the record leaves the cause of

damage unexplained, the plaintiff is entitled to have the case submitted to the jury for

resolution. Id. Accordingly, the Court denies summary judgment on the claim of

negligence and will proceed to leave this fact-finding to the jury.

D. Breach of Contract

“The elements of a claim for breach of contract are (1) existence of a valid contract and

(2) breach of the terms of that contract.” Poor v. Hill, 530 S.E.2d 838, 843 (N.C. Ct. App. 2000).

It is undisputed that Mr. DeMik and Mr. Soudir agreed that XPI would arrange for and handle

the storage of the chambers after they cleared customs. When they finalized that arrangement,

Mr. Soudir wrote to Mr. DeMik: “I need to send you the invoice for the customs inspection fees

and for Warehouse storage. Could you please let me know who should I bill this to.” (Second

DeMik Decl. ¶ 15 & Ex. C, ECF No. 29-6). Mr. DeMik responded that Mr. Soudir should send

the invoices to “Innovative Healing Systems.” Id. Each of XPI’s invoices was then addressed to

“Innovative Healing System (sic).” (DeMik Decl. Ex. A, ECF No. 29-4). Pursuant to this

agreement, Innovative Healing Systems paid XPI a monthly storage fee of $550 for almost three

years. This arrangement constitutes an enforceable contract for the storage of the chambers. XPI

thus breached an express term of the parties’ contract by failing to safekeep the chambers while

they were in XPI’s custody, as demonstrated by the extensive damage to the chambers.

XPI contends that any contract between it and Plaintiffs was merely for locating a storage

facility for the chambers and arranging for their transportation to the warehouse, and not for XPI

to actually store them. Thus, there can be no breach of any term of the agreement. The evidence

shows otherwise. After XPI located a warehouse and arranged for transportation of the chambers

to that warehouse, the next communication from Mr. Soudir stated: “Hi Dave, I need to send you

the invoice for the customs inspection fees and for Warehouse storage. Could you please let me

know who should I bill this to?” (ECF No. 29-6, Ex. C) (emphasis added). The invoices

(prepared by XPI) expressly state that the service that XPI was providing and charging

Innovative Healing Systems for monthly was the “Storage” of the chambers. (ECF No. 29-4, Ex.

A). “When the language of a contract is clear and unambiguous, construction of the contract is a

matter of law for the court.” Hagler v. Hagler, 354 S.E.2d 228, 234 (N.C. 1987). “It is a well-

settled principle of legal construction that ‘[i]t must be presumed the parties intended what the

language used clearly expresses, and the contract must be construed to mean what on its face it

purports to mean.’” Id. (quoting Hartford Acc. & Indem. Co. v. Hood, 40 S.E.2d 198, 201 (N.C.

1946)). The plain meaning of the term “storage” encompasses “the safekeeping of goods in a

depository (such as a warehouse).” Merriam-Webster Dictionary, www.merriam-

webster.com/dictionary/storage (last visited January 27, 2023).

Moreover, the Court notes that if, as XPI now contends, its role ended when the chambers

were delivered to Cycle Up’s warehouse, XPI would have arranged for Cycle Up to send its

invoices directly to Plaintiffs. Instead, XPI send 34 monthly invoices to Plaintiffs for a “Storage

Fee,” which included a $150 markup.

Defendant also argues that not all the Plaintiffs are parties to any contract. XPI contends

it was unaware that Innovative Healing Systems was the business name used by all three entities

and understood that the party with whom it was dealing was Innovative Healing Systems, Inc.

However, the invoices were not addressed to Innovative Healing Systems, Inc., nor did Mr.

DeMik ask XPI Services to address them as such—he asked XPI to address them to “Innovative

Healing Systems.” (ECF No. 29-6, ¶ 15 & Ex. C). All three plaintiffs do business as Innovative

Healing Systems. The natural inference is that all three plaintiffs were parties to the agreement

with XPI and are entitled to enforce it following XPI’s breach.10

10 Plaintiffs argue that even if Hyperbaric & Woundcare, Inc. and Woundcare MD were not direct parties to the

contract with XPI, they are entitled to enforce the contract as third-party beneficiaries. The Court finds it

unnecessary to address this argument given its determination that all three Plaintiffs may enforce the contract

directly.

Innovative Healing Systems, Inc., as the operating company, cut the checks that it sent to

XPI for the storage fees. Id. at ¶ 17. Hyperbaric & Woundcare, as the owner of the chambers,

was a party to the contract for their storage. And WoundCare MD, Inc., as the parent company

doing business as Innovative Healing Systems, would also have been entitled to enforce the

contract. The North Carolina Court of Appeals has found that tightly related companies, even if

they have different legal names, can be considered one and the same for purposes of enforcing a

contract. Manpower of Guilford County, Inc. v. Hedgecock, 257 S.E.2d 109, 114 (N.C. Ct App.

1979) (rejecting argument that contract was unenforceable by plaintiff because the contract’s

face said “Manpower, Inc.,” an entity different from “Manpower of Guilford County, Inc.”).

The undisputed facts show that Plaintiffs entered into a contract for storage with XPI, and

that XPI breached that contract by failing to return the chambers in the condition which they had

been delivered.

E. Unjust Enrichment

Plaintiffs have moved for summary judgment on their unjust enrichment claim in the

alternative should the Court conclude there was no contract between the parties. Given the

Court’s determination as to Plaintiffs’ breach of contract claim, there is no need for the Court to

address this claim.

F. Damages

Plaintiffs are seeking replacement cost as well as other incurred costs as damages. XPI

argues that replacement cost is an inappropriate measure of damages and that the proper measure

is the fair market value of the chambers before they were damaged versus after the damage.

While the general rule for “the measure of damages for injury to personal property is the

difference between the market value of the damaged property immediately before and

immediately after the injury,” the North Carolina Supreme Court has recognized that the rule

should be “applied with caution, and often with modifications designed to relax its rigidity and

fit it to the facts of the particular case.” Carolina Power & Light Co. v. Paul, 136 S.E.2d 103,

104 (N.C. 1964). “When no market exists for the property, as can occur when the property is

custom made or has been destroyed, courts often determine its value based on the amount paid

for the property in the most recent transaction for it (not arising from a settlement).” Weener

Plastics, Inc. v. HNH Packaging, LLC, 590 F. Supp. 2d 760, 766 (E.D.N.C. 2008). Courts may

also award damages based on the replacement value of the property when no market exists for it.

See id. (collecting authorities supporting the use of replacement cost of property as an

appropriate measure of damages, including in bailment cases); 8A Am. Jur. 2d Bailments § 254,

Westlaw (database updated Jan. 2023) (explaining that “where the goods are unique and their

market value is therefore difficult to ascertain, damages for breach of the bailment may be

awarded using another reasonable calculation of value such as their replacement cost.”).

Plaintiffs have produced expert evidence from the Executive Director of the Undersea &

Hyperbaric Medical Society, John Peters, that the chambers are unusable in their current

condition. (Peters Decl. Ex. A, ECF No. 29-11). Mr. Peters explained that the only way to repair

the chambers would require “custom manufacture” of replacement components. Id. Further

expert evidence from Mary Pat Finn, president of Perry Baromedical, states that the chambers

are unique pieces of complex medical equipment that cannot be safely used in their current

condition. (Finn Decl. ¶ 11–12, ECF No. 29-9). The Plaintiffs’ CEO, Catherine Todorovich,

testified in her deposition that the secondary market to purchase used hyperbaric chambers was

“very limited.” (Todorovich Dep. 87:15–17, ECF No. 29-12), see also id. at 76:1–3 (“Here, in

the United States, there isn’t much of a secondary market for chambers because they’re not

readily available”). She also testified that she was not aware of clearing houses or auction houses

where large numbers of chambers were for sale. /d. at 88:19—22. Ms. Todorovich also testified

that used hyperbaric chambers are “very difficult to find.” Jd. at 88:13-18.

Thus, Plaintiffs have produced some evidence that the chambers may be unique and that

there may not be a secondary market for them. However, they have not established that there

exists vo market for them. Moreover, there is conflicting evidence with regard to the market

value of the chambers as evidenced by their most recent transaction price. Accordingly, the

Court declines to grant summary judgment as to the issue of damages.

IT IS THEREFORE ORDERED THAT Defendant’s Motion for Summary Judgment is

hereby DENIED, and Plaintiffs’ Motion for Summary Judgment is hereby GRANTED IN PART

and DENIED IN PART such that the claim for negligence and the issue of damages will be

decided at trial.

Signed: January 30, 2023

Libor l Uae

Graham C. Mullen ee

United States District Judge mga

16