Paasch, et al. v. INVO Bioscience, Inc., et al. (Lawyers Weekly No. 12-150-16)
COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 2009-05519-BLS1 RONALD PAASCH & others1 vs. INVO BIOSCIENCE, INC. & others2 MEMORANDUM OF DECISION AND ORDER ON PLAINTIFFS’ MOTION FOR ENTRY OF DEFAULT JUDGMENT AND ASSESSMENT OF DAMAGES AGAINST MEDELLE CORPORATION PURSUANT TO RULES 54 AND 55 AND DEFENDANTS’ MOTION FOR ENTRY OF FINAL JUDGMENT OF DISMISSAL OF INVO BIOSCIENCE, INC., BIO-X-CELL, INC., AND KATHELEEN KARLOFF This case arises out of the 2006 auction of the assets of the Medelle Corporation (Medelle), a Delaware business corporation formed in or about 1996 to develop and market products to treat human infertility. Plaintiffs Ronald Paasch, Francis G. Gleason, Jr., and Jo Ann Gorge, minority shareholders of Medelle, claimed that the sale was improper and filed the present lawsuit against Medelle, INVO Bioscience, Inc. (INVO), Bio-X-Cell, Inc. (Bio-X-Cell)3 Claude Ranoux, and Katheen Karloff. Medelle never appeared and was defaulted under Mass. R. Civ. P. 55(a). Plaintiffs subsequently moved for an assessment of damages and default judgment under Rule 55(b)(2) but the court deferred a hearing on the motion. As the case 1 Francis G. Gleason, Jr. and Jo Ann Gorge. 2 Medelle Corp., Bio-X-Cell, Inc., Claude Ranoux, and Katheen Karloff. 3 Bio-X-Cell is a wholly-owned subsidiary of INVO. Plaintiffs asserted that INVO and Bio-XCell were successors to Medelle by de facto merger and therefore subject to successor liability. proceeded, the other defendants filed motions to dismiss, which the court granted in full as to INVO, Bio-X-Cell, and Karloff but only in part as to Ranoux. Plaintiffs now renew their motion for entry of default judgment and assessment of damages against Medelle. In response, INVO and Bio-X-Cell have filed an opposition to plaintiffs’ renewed motion and have also filed, along with Karloff, a motion seeking an entry of final judgment of dismissal as to the claims asserted against them. For the reasons that follow, plaintiffs’ motion is DENIED and defendants’ motion is ALLOWED. BACKGROUND For several years, Medelle sought FDA approval for an intra-vaginal incubation device invented by Claude Ranoux, Medelle’s founder, president, chief scientist, and a director of the company. This effort, however, proved unsuccessful and by the autumn of 2006, the company was heavily in debt, almost out of cash, and unable to raise additional capital. As a result, in November 2006, Medelle’s directors voted unanimously to assign the company’s assets for the benefit of creditors. An auction was held on December 22, 2006, during which time Ranoux, the only bidder, submitted the winning bid. Ranoux subsequently conveyed the assets to Bio-X-Cell, a corporation that Ranoux had formed following the auction. Bio-X-Cell eventually became a wholly-owned subsidiary of INVO. INVO (through Bio-X-Cell) continued to develop Ranoux’s device. Ranoux is currently INVO’s president […]