The opinion
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF OKLAHOMA
CORAL LLC, an Oklahoma limited liability )
company, )
)
Plaintiff, )
)
v. ) No. CIV-23-891-R
)
RECRUITMENT SPECIALISTS, INC., a )
Nevada corporation; and DOUG GEINZER, )
)
Defendants, )
ORDER
Before the Court is Defendants Recruitment Specialists, Inc. and Doug Geinzer’s
Motion for Summary Judgment [Doc. No. 75]. Plaintiff Coral, LLC responded [Doc. No.
79], and Defendants replied [Doc. No. 81]. The matter is now at issue. For the reasons that
follow, Defendants’ Motion is GRANTED in part and DENIED in part.
BACKGROUND
Coral developed and maintains an online platform that connects healthcare
providers with payers and care managers. Doc. No. 79 at p. 2. Geinzer has experience in
the business side of the healthcare industry, and is the owner and operator of RSI, which
does business as High Performance Providers (“HPP”) [Doc. No. 79-5 at p. 8]. HPP is a
consulting company that connects medical providers with self-funded health plans. Doc.
No. 75 at p. 1.
While Coral and HPP had previously executed less formal agreements, on October
1, 2022, they entered a final, superseding Consulting Agreement [Doc. No. 79-5]. This
Agreement is the subject of the instant litigation.
Under the Agreement, HPP was to provide exclusive consulting services to Coral in
exchange for a fee. Id. §§ 1-2. The Agreement also included three purchase options. Id.
§ 4. Under the first option, Coral could purchase HPP at any time for $5,000,000. Id.
§ 4.1(a). The second option obligated Coral to purchase HPP if certain revenue benchmarks
were met by the end of March 2023. Id. § 4.1(b). The final option gave HPP the right to
sell itself to Coral for $4,000,000 upon the achievement of certain revenue goals. Id.
§ 4.1(c).
The Agreement mandated HPP to present itself exclusively as a representative of
Coral, id. § 1, to maintain all non-public information in strict confidence, id. § 9, and to
notify Coral of any on-going consulting relationships between HPP and a competitive third
party prior to execution of the Agreement, id. § 11.1, as well as to obtain Coral’s written
consent before providing any potentially competitive services to third parties during the
term of the Agreement, id. Moreover, while the Agreement could be terminated at the
convenience of either party, id. § 5, or by Coral “for cause,” id. § 6.1, HPP was barred from
competing with Coral for a period ranging from 6 to 36 months depending on the method
of termination. Id. §§ 6.1-6.3. Regardless of how the Agreement was terminated, both HPP
and Geinzer individually remained obligated to hold Coral’s non-public information in
strict confidence. Id.
As part of the Agreement, HPP gave Coral “an irrevocable, nonexclusive,
worldwide, royalty-free license” to utilize HPP’s Client Relations Management System
(“CRM System”). Id. § 10. The CRM System was maintained on a third-party server called
HubSpot. Doc. No. 75 at p. 2. HPP’s business contacts and internal information were stored
in the CRM System. Id. Upon execution of the Agreement, the HubSpot account that held
the CRM System was transferred to Coral. Doc. No. 79 at p. 8. HPP describes the transfer
as a “lease-to-own” agreement—Coral was given unrestricted access to the CRM System
to promote efficiency and maximize the likelihood that the revenue benchmarks would be
met to trigger Coral’s purchase of HPP [Doc. No. 44, ¶ 101]. Put another way, it is HPP’s
view that Coral’s ownership of the CRM System was conditional upon Coral purchasing
HPP. Id. Coral, on the other hand, views the transfer of the CRM System as memorializing
the transfer of ownership of the CRM System from HPP to Coral. Doc. No. 79 at pp. 8-9.
In that same vein, Coral states that it then allowed HPP to continue accessing the CRM
System only so it could provide Coral services under the Agreement. Id. at p. 9.
The instant dispute arose because the revenue benchmarks were not met, and the
purchase options were therefore not triggered. Id. at p. 10. When Coral did not exercise its
discretionary option to purchase HPP for a flat fee, Geinzer sought to modify HPP’s
compensation structure. Id. Coral’s CEO, Gregory Smith, found Geinzer’s proposed
modifications unreasonable and directed him to present his amendments to a group of
Coral’s non-managing members. Id.
A board meeting was held on August 16, 2023. Id. Ahead of the meeting, Geinzer
allegedly circulated an inflammatory agenda that misrepresented the terms of the
Agreement and blamed Coral for the failure to achieve the requisite revenue benchmarks.
Id. at pp. 10-11. Upon learning of the agenda, Gregory Smith requested that his son,
Morgan Smith, be given super administrative privileges to the HubSpot account, and
Morgan Smith then deactivated the HubSpot accounts of Geinzer and other HPP
employees. Id. at p. 11.
At the meeting, Geinzer allegedly repeated the contents of the agenda and accused
Coral of stealing HPP’s intellectual property. Id. After the meeting, Gregory Smith emailed
Geinzer, telling him that the Agreement was being suspended because of Geinzer’s
conduct. Id. at p. 12. The next day, Geinzer was sent a formal notice of suspension,
directing that HPP was no longer authorized to act on Coral’s behalf. Id. at pp. 11-12. Coral
then designated Steve Marler to negotiate a resolution with Geinzer. Id. at p. 12. On a call
between Geinzer and Marler, Geinzer allegedly “threatened to take affirmative action to
destroy Coral by blocking specific transactions and disrupting Coral’s relationships with
both existing and potential customers by using upcoming meetings, set while Geinzer
worked for Coral, with existing and potential Coral customers to solicit business on behalf
of himself and HPP.” Id. Geinzer also allegedly claimed that he “did not need his
relationship with Coral as certain Coral customers were paying him anyways[.]” Id. at pp.
12-13.
On August 18, 2023, Gregory Smith claims to have received calls from customers
that Geinzer was contacting them and misrepresenting the nature of the dispute and telling
them that Coral had stolen HPP’s intellectual property.1 Id. at p. 13. Smith then emailed
Geinzer, directing him to stop contacting Coral’s customers and that under the Agreement,
it was impossible for Coral to steal HPP’s intellectual property. Id.
On August 21, 2023, Geinzer emailed a group of individuals that included Coral’s
existing and prospective customers that his email had changed to his HPP email address.
Id. Coral views the email as evidence of wrongdoing, id., while Geinzer states that he
merely sent the email “to contacts whom HPP had been in communication with over the
past year to inform them that his email address had changed” after Coral removed his
access to his Coral email account, Doc. No. 75 at p. 4.
On August 23, 2023, HPP instructed HubSpot to freeze the account. Doc. No. 75 at
p. 14. HPP claims that it did so to protect its data that was in Coral’s possession during the
dispute. Doc. No. 79 at p. 4. Coral alleges that the freeze was improper because Coral was
the owner of the HubSpot account, as well as unnecessary because HPP had previously
exported the data contained in the HubSpot account. Doc. No. 79 at pp. 14-15. After contact
from Coral’s counsel, the HubSpot account was unlocked within 24 hours. Id. at p. 15. It
is undisputed that there is no evidence that anyone other than HubSpot staff individually
accessed the account. Id. at pp. 15-16.
On August 28, 2023, Coral filed the instant action in state court. In its Amended
Petition [Doc. No. 1-4], Coral brings claims for conversion,2 breach of contract, tortious
1 Defendants challenge the admissibility of this allegation as hearsay.
2 Coral has since voluntarily dismissed its conversion claim [Doc. No. 80].
interference, declaratory relief, and injunctive relief. Defendants subsequently removed the
suit to federal court [Doc. No. 1].
LEGAL STANDARD
Summary judgment is proper “if 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). “The movant bears the initial burden to show the absence of a genuine issue
of material fact.” Lazy S Ranch Properties, LLC v. Valero Terminaling and Distribution
Co., 92 F.4th 1189, 1198 (10th Cir. 2024) (citation omitted). “If successful, the burden
shifts to the nonmovant to set forth specific facts showing that there is a genuine issue for
trial.” Id. (citation and quotation marks omitted). The Court “views the facts and their
reasonable inferences in the light most favorable to the nonmovant.” Id. (citation omitted).
DISCUSSION
I. Breach of Contract
Coral alleges that Defendants breached the Consulting Agreement by (1) soliciting
and redirecting Coral’s existing and prospective customers, (2) disparaging Coral, and (3)
using or disclosing Coral’s confidential and proprietary information. Doc. No. 1-4, ¶¶ 22,
25-33; Doc. No. 79 at pp. 17-23. Each is addressed in turn.
“The elements of a breach of contract action are: (1) formation of a contract; (2)
breach of the contract; and (3) damages as a result of that breach.” Morgan v. State Farm
Mut. Auto. Ins. Co., 2021 OK 27, ¶ 21, 488 P.3d 743 (citation omitted). However a “breach
of contract is a legal wrong independent of the existence of actual damages…[so] [t]he
plaintiff acquires the legal right to sue when the first two elements are present: formation
of a contract and breach of the contract.” Id. ¶ 24 (citation omitted). At that point, the cause
is actionable and the plaintiff is entitled to nominal damages.” Id. (citation omitted).
A. Solicitation or Redirection
Coral presents the following evidence to support its solicitation and redirection
theory of breach:
• The August 21st email sent by Geinzer to Coral’s existing and prospective
customers, notifying them that his email address had changed back to his
HPP email address;
• The email thread between Geinzer and a representative of GEM Health
spanning from April 2023 to August 21, 2023;
• An email thread between Geinzer and OrthoForum;
• A series of cancelled meeting invitations between Coral and prospective
customers; and
• The declaration of Pearl Precision Surgery’s CEO stating that HPP held side
agreements and received (or should have received) payments for providing
steering services on Coral’s platform, as well as emails between Geinzer and
BARInet showing the same.
HPP first argues that because the Agreement did not contain a non-solicitation
clause, Coral’s claim for breach predicated on solicitation cannot defeat summary
judgment. Doc. No. 75 at pp. 11-12. But Section 1 of the Agreement requires that HPP
present itself to Coral’s customers as representing Coral “and not any other business or
entity.” Doc. No. 79-5, § 1. So soliciting or redirecting business from Coral would violate
the Agreement.
HPP next contends that evidence of its side agreements with Pearl Precision and
BARInet—both Coral customers—should not be considered because Coral did not
adequately allege the claims in its Amended Petition. Doc. No. 75 at pp. 16-18. In its
Amended Petition, Coral alleges that “Defendants made multiple misrepresentations of fact
prior to, and during, the performance of the Agreement, including failing to disclose his
engagement in competition with both clients of Coral and third parties[.]” Doc. No. 1-4,
¶ 22. This sufficiently captures the alleged side agreements between HPP and Pearl
Precision and BARInet.
Considering the evidence presented by Coral in the light most favorable to Coral as
the non-moving party, a reasonable juror could find in favor of Coral on its theory of
solicitation or redirection. Both the context surrounding HPP’s conduct after the Agreement
was suspended, and the evidence of side agreements entered during the term of the
Agreement, are sufficient to create a genuine dispute of material fact regarding solicitation
and redirection.
Accordingly, Defendants’ Motion regarding solicitation or redirection is denied.
B. Disparagement
HPP also contends that Coral cannot present admissible, non-speculative evidence
that HPP disparaged Coral in violation of the Agreement. Doc. No. 75 at pp. 15.
Coral presents three pieces of evidence to support its disparagement claim. First is
an email from a representative of OrthoForum stating that she “can dig into the Coral
responsiveness issues and separate your good name from any lag[]” [Doc. No. 79-22].
Second is the testimony of Gregory Smith claiming that customers had contacted him and
told him that Geinzer was attempting to interfere with Coral’s business and was accusing
Coral of stealing HPP’s intellectual property [Doc. No. 79-1, ¶ 36]. Third are a pair of
emails sent from Gregory Smith to Geinzer directing Geinzer to stop contacting Coral
customers and stating that under the Agreement, it was not possible for Coral to steal HPP’s
intellectual property [Doc. Nos. 79-10, 79-11].
The evidence brought by Coral is insufficient to defeat Defendants’ Motion.
First, the email from OrthoForum that references Coral’s responsiveness issues is
not coupled with any evidence connecting that assertion to Geinzer. OrthoForum’s negative
statement about Coral is attributed to Geinzer by nothing but speculation.
Second, HPP challenges the admissibility of Gregory Smith’s testimony as
hearsay—specifically as hearsay within hearsay. Doc. No. 81 at p. 5. Hearsay is an out-of-
court statement offered to prove the truth of the matter asserted. Fed. R. Evid. 801(c).
Hearsay within hearsay is admissible so long as there is a hearsay exclusion at each level.
Fed. R. Evid. 805. Here, the initial statement—from Geinzer to the customers—is
admissible non-hearsay because Geinzer is an opposing party. See Fed. R. Evid.
801(d)(2)(A). But the second statement—from the customers to Smith—is hearsay without
an exception, and therefore will not be considered.
Finally, the two emails sent from Smith to Geinzer are also insufficient to defeat
Defendants’ Motion. The emails were sent to Geinzer’s Coral email address on August 18,
2023. On August 16, 2023, Smith directed his son to block Geinzer’s access to his Coral
email account [Doc. No. 79-1, ¶ 29]. So Smith sent the email knowing that Geinzer would
not receive it. And the purpose and content of the emails is derived solely from the
statements deemed inadmissible in the paragraph above. These emails—without more—
do not create a genuine dispute regarding disparagement.
Accordingly, Defendants’ Motion regarding Coral’s disparagement theory of breach
is granted.
C. Use or Disclosure of Confidential and Proprietary Information
HPP lastly moves for summary judgment on Coral’s claim that HPP breached the
Agreement by using or disclosing Coral’s confidential and proprietary information. Doc.
No. 75 at pp. 15-16. Coral has filed an affidavit under Rule 56(d) of the Federal Rules of
Civil Procedure asking the Court to either deny the Motion or delay ruling on the Motion
until further discovery has been conducted [Doc. No. 79-18]. The Court declines to do so
and grants Defendants’ Motion regarding Coral’s use and disclosure theory of breach.
Under Rule 56(d) of the Federal Rules of Civil Procedure, “[i]f a nonmovant shows
by affidavit or declaration that, for specified reasons, it cannot present facts essential to
justify its opposition, the court may: (1) defer considering the motion or deny it; (2) allow
time to obtain affidavits or declarations or to take discovery; or (3) issue any other
appropriate order.” Fed. R. Civ. P. 56(d). “In the Tenth Circuit, a non-movant requesting
additional discovery under Rule 56(d) must specify in the affidavit (1) the probable facts
not available, (2) why those facts cannot be presented currently, (3) what steps have been
taken to obtain these facts, and (4) how additional time will enable the party to obtain those
facts and rebut the motion for summary judgment.” Adams v. C3 Pipeline Constr. Inc., 30
F.4th 943, 968 (10th Cir. 2021) (citation and quotation marks omitted).
Coral claims that evidence of HPP’s use or disclosure of its confidential and
proprietary information is unavailable because Defendants have not provided responsive
discovery regarding past payments from Coral’s existing and prospective customers, as
well as instances in which Geinzer claimed Coral breached the Agreement. Doc. No. 79-
18, ¶ 19. In her Affidavit, dated November 11, 2024, Coral’s former counsel states that
“Coral intends to file a motion to compel[.]” Id. ¶ 34. But to date, no motion to compel has
been filed. And while Coral asserted that discovery was on-going, it has not notified the
Court one way or another regarding HPP’s production. Coral’s pursuit of the requested
discovery, therefore, has not been sufficient—especially considering the lack of a motion
to compel—to warrant an extension of time.
Accordingly, Coral’s Rule 56(d) request is denied. And because Coral fails to
present sufficient evidence to defeat HPP’s Motion regarding Coral’s use and disclosure of
confidential and proprietary information theory of breach, Defendants’ Motion regarding
that theory is granted.
II. Tortious Interference
Coral asserts a claim for tortious interference with contracts and prospective
business relationships. Doc. No. 1-4, ¶¶ 45-53.3 The factual basis for Coral’s tortious
interference claims largely mirrors that of its breach of contract claims.
To succeed on a claim for tortious interference with a present contractual or business
relationship, the plaintiff must prove: “(1) interference with a business or contractual right;
(2) malicious and wrongful interference that is neither justified, privileged, nor excusable;
3 Oklahoma law recognizes two separate forms of tortious interference: (1) tortious
interference with a present contractual or business relationship; and (2) tortious
interference with a prospective economic advantage. See Loven v. Church Mut. Ins. Co.,
2019 OK 68, ¶ 21, 452 P.3d 418. Because Coral asserts that HPP interfered with both its
present and prospective business relationships, the Court interprets the pleadings as
asserting two separate claims.
and (3) damage proximately sustained as a result of the interference.” Tuffy’s, Inc. v. City
of Okla. City, 2009 OK 4, ¶ 14, 212 P.3d 1158 (citations omitted).
To prevail on a claim for tortious interference with a prospective economic
advantage, a plaintiff must allege and prove: “(1) the existence of a valid business relation
or expectancy; (2) knowledge of the relationship or expectance on the part of the interferer;
(3) an intentional interference inducing or causing a breach or termination of the
relationship or expectancy; and (4) resultant damage to the party whose relationship has
been disrupted.” Loven, 2019 OK 68, ¶ 21. A showing of bad faith is required, which can
be proven by evidence that the “interference [was] the purpose of the tortfeasor’s act, and
their motive [includes] a desire to interfere and disrupt the others’ prospective economic
business advantage.” Id.
Coral asserts that HPP harmed its existing business relationships by soliciting
business and receiving double payments from Coral customers during the term of the
Consulting Agreement. Doc. No. 79 at pp. 34-35. But Coral fails to present evidence that
HPP’s alleged interference damaged Coral’s business. Unlike its breach of contract claim
in which nominal damages were sufficient to proceed, tortious interference requires actual
damages. See Morgan, 2021 OK 27, ¶ 24 (“But, unlike a tort claim, a breach of contract is
a legal wrong independent of the existence of actual damages.”). Accordingly, Defendants’
Motion regarding Coral’s tortious interference with an existing business relationship claim
is granted.
Coral’s claim for tortious interference with prospective economic advantage, on the
other hand, is supported by evidence—specifically the email from the representative of
GEM Health to Geinzer on August 21, 2023—sufficient to defeat Defendants’ Motion.
Coral held an expectancy in GEM Health’s business, as Geinzer was negotiating
with GEM Health on Coral’s behalf for months to bring GEM Health on to Coral’s
platform. Doc. No. 79-20. Geinzer was aware of Coral’s expectancy, as he took the lead on
attempting to bring GEM Health on to Coral’s platform. Id. Following Coral’s suspension
of the Consulting Agreement, and before Geinzer emailed other contacts that his email
address had changed, Geinzer first notified the representative of GEM Health that his email
had changed. See Doc. No. 75-5; Doc. No. 79-20. And the representative for GEM Health
updated Geinzer’s email in the same email thread that Geinzer had been using to negotiate
on behalf of Coral for months. Doc. No. 75-20 at p. 1. Finally, Coral was damaged by this
alleged interference because the only step remaining between Coral receiving GEM
Health’s business was Geinzer sending the contract to GEM Health’s CEO for final
signature. That the deal fell through following Geinzer's email creates a reasonable
inference that Geinzer interfered with Coral relationship with GEM Health, and that such
interference was Geinzer’s primary purpose.
Accordingly, Defendants’ Motion regarding interference with prospective business
relationships is denied.
III. Declaratory Relief
Coral requests a declaration that it is not required to purchase HPP because the
necessary revenue benchmarks were not met under the Agreement. Doc. No. 1-4, ¶¶ 40-
44. Defendants seek summary judgment on grounds that Coral’s declaratory relief claim is
duplicative of Defendants’ counterclaim for breach of contract. Doc. No. 75 at p. 9. Coral
responds that summary judgment is not proper because Coral was only required to purchase
HPP if certain revenue benchmarks were met within a specific period, irrespective of
whether Coral prevented HPP from meeting those benchmarks. Doc. No. 79 at pp. 32-33.
When deciding whether to declare the rights of litigants, district courts in the Tenth
Circuit apply the factors announced in State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979,
983 (10th Cir. 1994):
(1) Whether a declaratory action would settle the controversy; (2) whether it
would serve a useful purpose in clarifying the legal relations at issue; (3)
whether the declaratory remedy is being used merely for the purpose of
procedural fencing or to provide an arena for a race to res judicata; (4)
whether use of a declaratory action would increase friction between our
federal and state courts and improperly encroach upon state jurisdiction; and
(5) whether there is an alternative remedy that is better or more effective.
Golf Club, L.L.C. v. Am. Golf Corp., 2017 WL 1655259, at *2 (citation omitted). Where
there is no parallel state litigation, the third and fourth factors hold little to no relevance.
Here, like in Golf Club, the Court is presented with a largely duplicative claim. See
Id. (“the Court finds all applicable factors weigh in favor of dismissal of Plaintiff’s
duplicative claim.”). Coral’s requested relief would not resolve Defendants’ corresponding
breach of contract counterclaim. And because Defendants’ duplicative claim must also be
resolved, declaratory relief would not serve a useful purpose or clarify the parties’ legal
relations. Finally, the alternative remedy of adjudicating Defendants’ counterclaim is a
more effective means of resolving the instant dispute.
Accordingly, Defendants’ Motion regarding Coral’s claim for declaratory relief is
granted.
IV. Injunctive Relief
Coral requests that Defendants be enjoined from the following conduct:
• Competing with Coral;
• Soliciting customers from Coral;
• Using or possessing Coral’s confidential and proprietary information; and
• Disparaging Coral.
Doc. No. 1-4, ¶¶ 59(a)-(d).
“In diversity cases, the law of the forum state governs claims for injunctive relief.”
Combs v. Shelter Mut. Ins. Co., 551 F.3d 991, 1002 (10th Cir. 2008) (citation omitted).
“‘Under Oklahoma law, injunctive relief is not warranted where a plaintiff has a plain,
speedy, and adequate remedy at law.’” Id. (quoting Australian Gold, Inc. v. Hatfield, 436
F.3d 1228, 1242 (10th Cir. 2006)). “If a plaintiff’s injury may be compensated by an award
of monetary damages then an adequate remedy at law exists.” Id. (citation and quotation
marks omitted).
Here, the conduct that is the subject of Coral’s request for injunctive relief mirrors
its grounds for breach of contract. See Doc. No. 1-4, ¶¶ 27-31. Coral seeks money damages
as the remedy for Defendants’ alleged breach. Id. ¶ 33. There is no indication that money
damages are not a sufficient remedy to the conduct at issue. Accordingly, the Court finds
injunctive relief in this case to be inappropriate under Oklahoma law and therefore grants
Defendants’ Motion on Coral’s claim for injunctive relief.
CONCLUSION
Accordingly, Defendants’ Motion for Summary Judgment is GRANTED in part and
DENIED in part. Specifically, the Court finds as follows:
e Defendants’ Motion regarding Coral’s breach of contract claim is DENIED
regarding Coral’s solicitation theory, but is GRANTED as to Coral’s remaining
theories of breach.
e Defendants’ Motion regarding Coral’s tortious interference claim is DENIED as to
Coral’s claim for interference with prospective business relations, but is GRANTED
as to Coral’s claim for interference with existing business relations.
e Defendants’ Motion regarding Coral’s prayer for declaratory relief is GRANTED.
e Defendants’ Motion regarding Coral’s prayer for injunctive relief is GRANTED.
IT IS SO ORDERED this I“ day of April, 2025.
UNITED STATES DISTRICT JUDGE
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