National Health Finance DM, LLC v. Sea Spine Orthopedic Institute, LLC

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 21-60405-CIV-ALTMAN/Hunt NATIONAL HEALTH FINANCE DM, LLC, Plaintiff, v. SEA SPINE ORTHOPEDIC INSTITUTE, LLC, and ANDREW JOSHUA APPEL, Defendants. _________________________________________/ ORDER The Plaintiff signed several contracts with the Defendants. When the Defendants refused to pay what they owed, the Plaintiff sued them here. Now, after some litigation, the Plaintiff has moved for summary judgment. See Motion for Summary Judgment (“MSJ”) [ECF No. 45].1 In response, the Defendants advance a new argument they’ve never made before: that they owe the Plaintiff less than the Plaintiff demanded because they only signed the last of the parties’ contracts as a result of a unilateral mistake. See generally Response. Unfortunately for the Defendants, we see two dispositive problems with their new theory. One, a party cannot survive summary judgment by pressing a defense it never asserted in its pleadings. Two, Arizona law—which governs this dispute—requires a party alleging unilateral mistake to show that its counterparty knew about the mistake and purposefully took advantage of it. As we’re about to see, the Defendants have no evidence that the Plaintiff knew about their (alleged) mistake, which is really the end of that. We thus GRANT the Plaintiff’s MSJ and enter judgment against the Defendants.

THE FACTS2 In January 2012, our Plaintiff, National Health Finance DM, LLC (“NHF”), and Sea Spine Orthopedic Institute, LLC (“Sea Spine”) signed a Medical Lien Servicing Contract (the “Original Agreement”). See Joint Statement of Undisputed Facts (the “Joint SOF”) [ECF No. 43] ¶ 1. Under this Original Agreement, NHF purchased certain accounts and medical liens from Sea Spine. Id. The agreement required Sea Spine to act as NHF’s collection agent for the accounts, to collect all amounts due under those accounts, and to remit any payments stemming from the accounts directly to NHF.

Id. ¶ 2. Sea Spine also guaranteed that it would make certain minimum payments to NHF and that, if those minimum payments weren’t made, Sea Spine would have to make up the difference by either sending NHF a lump payment or assigning additional accounts to NHF. Id. ¶ 3. Although the Original Agreement was later amended, those amendments didn’t modify Sea Spine’s obligation to collect on the accounts or to remit payments to NHF. Id. ¶¶ 4–5.

During the parties’ relationship, Sea Spine failed to comply with its obligations under the Original Agreement. Id. ¶ 6. And so, the parties entered into a new agreement—the Superseding Medical Lien Servicing Agreement (the “Original Superseding Agreement”), which replaced and superseded all previous agreements between the parties. Id. ¶¶ 7–8. The Original Superseding Agreement acknowledged that Sea Spine breached its obligations for those accounts it had assigned to NHF before February 1, 2014; set forth new obligations and payment terms relating to those pre-

February 1, 2014 accounts (including a guarantee that NHF would receive payment of at least $4,735,388.80 on those accounts); and outlined the terms under which Sea Spine would assign future accounts to NHF. Id. ¶¶ 10–12. In this Original Superseding Agreement, Sea Spine also guaranteed that NHF would receive, within two years of an advance NHF paid, twice the advance amount as a minimum payment on that account. Id. ¶ 13; see also Defs.’ SOF ¶ 13. Sea Spine then agreed to make up any difference between the agreed minimum payment amount and the amounts NHF had actually received by either paying the balance in cash or assigning additional accounts to NHF. See Joint SOF ¶ 13; see also Defs.’ SOF ¶ 13.

Once again, Sea Spine failed to meet its contractual obligations. See Joint SOF ¶ 14. Specifically, it didn’t collect (or remit) the required minimum payments by the second year after NHF’s advance.

Id. To address these defaults—and to give Sea Spine yet another chance to comply with its obligations—the parties amended the Original Superseding Agreement four more times: on April 30, 2016; September 28, 2018; July 31, 2019; and April 22, 2020. Id. ¶ 15.

In the first of these—formally, the Amended Superseding Medical Lien Servicing Contract (the “Amended Superseding Agreement”), signed on April 30, 2016—the parties agreed that, for accounts sold and assumed by NHF “prior to May 1, 2016,” Sea Spine owed NHF “a total of $8,687,280.68.” Amended Superseding Agreement [ECF No. 33] at 14 ¶ 3(d).3 They also stipulated that, to resolve past-due amounts for accounts NHF acquired before May 1, 2016, Sea Spine would pay NHF (and NHF would accept) $6,949,824.54—all according to an agreed-upon payment schedule. Id. at 14 ¶ 3(e). That payment schedule required Sea Spine to pay NHF $3,474,912.27 by March 31, 2017, and an additional $3,474,912.27 by December 31, 2017. Id. at 14 ¶ 3(f). If Sea Spine failed to make

In the Amended Superseding Agreement, the parties also stipulated to the terms that would govern NHF’s purchase of Sea Spine accounts after May 1, 2016—including the different advance rates that would apply to the various account types. See Joint SOF ¶ 19. Sea Spine failed to pay the full amount due under the Amended Superseding Agreement by the specified dates. Id. ¶ 20.

In the second such amendment—formally, the First Amendment to the Amended Superseding Medical Lien Servicing Contract (the “First Amended Superseding Agreement”), signed on September 28, 2018—the parties agreed that Sea Spine had breached the payment schedule outlined in the Amended Superseding Agreement. Id. ¶ 21. They thus stipulated to a new payment schedule. Id. ¶ 22–23. Ultimately, Sea Spine made some payments in accordance with this new payment schedule, but it failed to make all the payments as required. Id. ¶ 24.

Given Sea Spine’s failure to comply with the payment schedule set out in the First Amended Superseding Agreement, the parties executed a third amendment—the Superseding Medical Lien Servicing Contract (the “Second Amended Superseding Agreement”), signed on July 31, 2019. Id. ¶ 25. In this Second Amended Superseding Agreement, the parties stipulated that Sea Spine owed NHF $6,483,514.31. See Second Amended Superseding Agreement [ECF No. 33] at 31 ¶ I; see also Joint SOF ¶ 26. They also set out a new payment schedule. See Second Amended Superseding Agreement at 31– 32; see also Joint SOF ¶ 26. Once again, however, Sea Spine made some payments under the updated payment schedule but failed to make all the required payments. See Joint SOF ¶ 27.

And this brought the parties to their final agreement—the Third Amended Superseding Medical Lien Servicing Contract (the “Third Amended Superseding Agreement”), signed on April 22, 2020. Id. ¶ 28. Dr. Andrew Joshua Appel—Sea Spine’s sole owner and member—signed the agreement both individually and as Sea Spine’s representative.4 Id. ¶ 29. In it, Appel agreed that he and Sea Spine would be jointly and severally liable for all obligations arising under the Third Amended Superseding Agreement. See Third Amended Superseding Agreement at 37. According to the Defendants, when the parties entered into this agreement, Sea Spine “had not conducted an audit of the many thousands of accounts on multiple dates of patient service that it sold to NHF, the amounts of NHF’s advances to [Sea Spine] to purchase each account[,] and the amounts [Sea Spine] collected and remitted to NHF under the parties’ agreement for [Sea Spine] to provide servicing of the accounts for NHF.”

Declaration of Mark Seda [ECF No. 50-1] (“Seda Decl.”) ¶ 6.5 Sea Spine says that NHF “required” it to enter into this agreement “on an expedited basis such that [Sea Spine] was unable to complete an audit of accounts before signing” the agreement. Id. Sea Spine further alleges that, when it and Dr. Appel executed the Third Amended Superseding Agreement, they “were aware that payments were made by [Sea Spine] to NHF and that NHF failed to properly apply [Sea Spine’s] payments or otherwise properly account for [Sea Spine’s] payments as required by the parties’ agreement; however, [Sea Spine] was unable to complete its analysis”—and so, the Defendants “were mistaken about what [Sea Spine] owed to NHF” when they agreed to the sums outlined in the final agreement. Id. NHF’s response to all this is to point out that, “[a]t no time prior to the Defendants’ execution of the Third Amended Superseding Agreement[,] did [the] Defendants ever notify NHF that they were unaware of

As we’ve suggested, the Defendants offer up only one defense: unilateral mistake. And they’re fairly transparent about when they discovered their mistake—during the discovery phase of this case.

See Seda Decl. ¶ 7. Based on the documents NHF produced, Sea Spine “was able to begin its own analysis of [its] Business Records of the number of advances from NHF to [Sea Spine] and payments from [Sea Spine] to NHF[,] and [to] compare NHF’s analysis with [its own] Business Records.” Id. Comparing NHF’s records with its own, Sea Spine identified several discrepancies. See id. ¶¶ 8–11; see also Audit Summary [ECF No. 50-1] at 6.7 Based on these discrepancies, Sea Spine determined that, “[s]ince [it] repaid NHF a total of $16,670,069.64, the net amount [it] owed [to] NHF is $3,482,321.62 . . . not the amount NHF [claims] is owed under the parties’ agreement.” Seda Decl. ¶ 12.

The parties now dispute whether the Third Amended Superseding Agreement is enforceable given the Defendants’ (claimed) unilateral mistake. Compare MSJ at 4–5 (“[The] Defendants’ remaining debt to NHF according to the Third Amended Superseding Agreement is $8,549,726.67, including contractual interest.”), with Response at 5 (“NHF is not entitled to the entry of final summary judgment against [Sea Spine] and Appel because the Third Amended Superseding Agreement is unenforceable under applicable Arizona law based on [Sea Spine] and Appel’s unilateral mistake.”).

One thing the parties do agree on, though, is that Arizona law governs this dispute. See MSJ at 6 (“The Agreement is governed by Arizona law.”); Response at 3 (“[Sea Spine] does not dispute that Arizona law applies.”).8 So, here we are.

THE LAW Summary judgment is appropriate when “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). “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).

An issue of fact is “material” if it might affect the outcome of the case under the governing law. Id. at 248. A dispute about a material fact is “genuine” if the evidence could lead a reasonable jury to find for the non-moving party. Id. At summary judgment, the moving party bears the initial burden of “showing the absence of a genuine issue as to any material fact.” Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (“[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.”). Once the moving party satisfies its initial burden, the burden then shifts to the non-moving party to “come forward with specific facts showing there is a genuine issue for trial.” See Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir. 2002) (emphasis omitted) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

The Court, in ruling on a motion for summary judgment, “need consider only the cited materials, but it may consider other materials in the record.” FED. R. CIV. P. 56(c)(3); see also Green v. Northport, 599 F. App’x 894, 895 (11th Cir. 2015) (“The district court could consider the record as a whole to determine the undisputed facts on summary judgment.”); HRCC, Ltd. v. Hard Rock Cafe Int’l (USA), Inc., 703 F. App’x 814, 817 (11th Cir. 2017) (noting that a “court may decide a motion for summary judgment without undertaking an independent search of the record” (quoting Fed. R. Civ. P. 56 advisory committee’s note to 2010 amendment)). In any event, on summary judgment, the Court must “review the facts and all reasonable inferences in the light most favorable to the non-moving party.” Pennington v. City of Huntsville, 261 F.3d 1262, 1265 (11th Cir. 2001).

In sum, then, “if there are any genuine issues of material fact, the Court must deny summary judgment and proceed to trial.” Torres v. Wal-Mart Stores E., LP, 555 F. Supp. 3d 1276, 1282 (S.D. Fla. 2021) (Altman, J.). On the other hand, the Court must grant summary judgment if a party “has failed to make a sufficient showing on an essential element of her case.” Celotex, 477 U.S. at 323; see also Lima v. Fla. Dep’t of Children & Families, 627 F. App’x 782, 785–86 (11th Cir. 2015) (“If no reasonable jury could return a verdict in favor of the nonmoving party, there is no genuine issue of material fact and summary judgment will be granted.” (quoting Beal v. Paramount Pictures Corp., 20 F.3d 454, 459 (11th Cir. 1994))).

ANALYSIS As we’ve hinted, the parties agree on almost everything. The facts are undisputed. So is the law.

But, in responding to the MSJ, the Defendants do dispute one thing—how much they owe the Plaintiff. In a nutshell, their argument is this: Because of their unilateral mistake—a mistake that implicates only the last contract (what we’re calling the Third Amended Superseding Agreement)— the Defendants should be absolved of some of their obligations under the contract and, as a result, owe the Plaintiff less than it’s asking for. See Response at 3–5. The Plaintiff disagrees for two main reasons—first, because the Defendants have waived their mistake defense by failing to raise it earlier in the litigation, Reply at 4–6; and, second, because unilateral mistake wouldn’t render the contract unenforceable in the circumstances of this case, id. at 6–8. We address each argument in turn.

A. Waiver “Under Federal Rule of Civil Procedure 8(c), defendants are required to ‘affirmatively state any avoidance or affirmative defense’ in their pleadings.” Keyband Nat’l Ass’n v. Hamrick, 576 F. App’x 884, 888 (11th Cir. 2014) (quoting FED. R. CIV. P. 8(c)(1)). “Failure to plead an affirmative defense generally results in a waiver of that defense.” Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1239 (11th Cir. 2010); see also Hassan v. U.S. Postal Serv., 842 F.2d 260, 263 (11th Cir. 1988) (“[T]he general rule is that, when a party fails to raise an affirmative defense in the pleadings, that party waives its right to raise the issue at trial.”). As relevant here, when a defendant first raises an affirmative defense at summary judgment, that defendant’s “failure to specifically plead the defense in its answer or amended answer results in the waiver of this defense.” Easterwood v. CSX Transp., Inc., 933 F.2d 1548, 1551 (11th Cir. 1991) (citing Morgan Guar. Tr. Co. of N.Y. v. Blum, 649 F.2d 342, 345 (5th Cir. 1981)); see also Ross v. Chisholm, 2006 WL 8432311, at *5 (S.D. Fla. Apr. 28, 2006) (Cohn, J.) (“[A] defendant cannot raise an affirmative defense for the first time in a response to a summary judgment motion unless the response is the defendant’s first pleading in the matter. Many of these defenses are therefore waived, unless [the] Defendants should later amend their pleadings.”). That said, “[a] court may consider an affirmative defense that did not appear in the answer, if the plaintiff has suffered no prejudice from the failure to raise the defense in a timely fashion.” Miranda de Villalba v. Coutts & Co. (USA) Int’l, 250 F.3d 1351, 1353 (11th Cir. 2001) (emphases added).

Our Defendants didn’t assert unilateral mistake as a defense until they responded to the MSJ.

See generally Docket; see also Response at 3–5 (arguing, for the first time, that the Third Amended Superseding Agreement isn’t enforceable because of the Defendants’ unilateral mistake). Recognizing this problem, the Defendants now insist that they did advance unilateral mistake as a defense in their Amended Answer—just not in so many words. In that Amended Answer, the Defendants “assert[ed] that they made payments to NHF that NHF failed to properly apply to the subject patient accounts and otherwise properly account for as required under the subject agreements[.]” Amended Answer [ECF No. 36] at 8.9 This “payments made” defense, the Defendants now maintain, was just their (abstruse) way of claiming unilateral mistake. See Response at 2 (“At the time [the] Defendants signed the Third Amended Superseding Agreement, [the] Defendants were aware th[at] [Sea Spine’s] payments to NHF were not applied or properly applied to sold accounts. . . . [The] Defendants were mistaken about what [Sea Spine] owed NHF when they signed the Third Amended Superseding Agreement.”); id. at 2 n.1 (“[The] Defendants’ [sic] have raised the issue of NHF[’s] failure to apply or improperly applied [Sea Spine’s] payments to NHF in [the] Defendants’ [Amended] Affirmative Defenses.”). We’re unconvinced.

We start with common sense: The Defendants were represented by seasoned lawyers.

Unilateral mistake is one of those canonical defenses to contract formation that appears in every first- year contracts course. And it’s so well-established in the lexicon of contract defenses that it finds its way into almost every breach-of-contract answer—not through cryptic assemblages of unrelated phrases (like “payments made”), but by the straightforward typing of two simple words: unilateral mistake. And it’s undisputed that those two words appear nowhere in either of the Defendants’ pleadings: not in the Original Answer and certainly not in the expanded (and now-operative) Amended Answer. Despite two bites at the apple, in other words, the Defendants now want us to believe that their experienced lawyers somehow intended to present the defense of unilateral mistake without ever actually saying so. That’s nonsense.

Logic aside, we know that the Amended Answer didn’t assert the Defendants’ new unilateral- mistake defense because that pleading includes none of the factual allegations on which the defense now relies. The “payments made” defense, in other words, simply alleged that NHF may not have properly accounted for all of Sea Spine’s payments. See Amended Answer at 8. This is a fairly common affirmative defense, and it just isn’t the same as unilateral mistake. When you get sued for non-payment on a contract, it’s a valid defense to say: “yes, you’re right; we didn’t pay you what you’re owed, but we did pay you something, so we owe you less than you think.” That’s the essence of the “payments made” defense. And it’s in keeping with some of the other defenses Sea Spine asserted in both answers—including, as relevant here, the various setoff defenses we mentioned earlier, see note 9, supra. The point, though, is that unilateral mistake implicates a somewhat different concept—not so much that we’ve paid you part of what you say we owe (which is the province of “payments made”), but that, when we signed the contract, we didn’t know what we were agreeing to. See Ertl v. Ertl, 502 P.3d 466, 472 (Ariz. Ct. App. 2021) (“A unilateral mistake is an erroneous belief of fact.”); see also Restatement (Second) of Contracts § 151 (1981) cmt. a (“[T]he word ‘mistake’ is used to refer to an erroneous belief. A party’s erroneous belief is therefore said to be a “mistake” of that party. The belief need not be an articulated one, and a party may have a belief as to a fact when he merely makes an assumption with respect to it, without being aware of alternatives. . . . [T]he erroneous belief must relate to the facts as they exist at the time of the making of the contract.”).

And, while we agree that it’s possible to assert both defenses together—say, because the mistake inhered in a misunderstanding about how much had been paid and, thus, how much the defendant owed under the contract—the Amended Answer never suggests that the Defendants were in any way mistaken about what they owed. Remember, the word “mistake” never appears there. Put differently, as NHF points out, “notably absent [from the Amended Answer] are any facts that support the unilateral mistake defense asserted here—that NHF forced Defendants to sign the agreement on an expedited basis, that Defendants did not have sufficient time to perform an audit, and that [the] Defendants were therefore unaware of the amounts owed to NHF at the time they executed the agreement.” Reply at 4–5 (emphases added). Far from alleging mistake, in fact, the Amended Answer was clear that the “Superseding Agreement, amendments, and Third Amended Superseding Agreement speak for themselves”—as a result of which the Defendants specifically “den[ied] any allegations inconsistent” with those agreements. Amended Answer ¶ 61 (emphases added). Today, of course, the Defendants are suggesting that the agreements don’t quite speak for themselves. They now insist, in other words, that extra-contractual clues—like the total number of agreements, the “expedited” way in which those agreements were signed, and the absence of any pre-agreement audit—are necessary to any proper understanding of what the parties, through the agreements, intended to convey. See Response at 3–5 (pointing to extra-contractual clues for their position that the contract is unenforceable due to Sea Spine’s unilateral mistake). Nor are the Defendants still willing to “deny any allegations inconsistent” with the agreements. To the contrary, as we’ve seen, they now want to undo those agreements precisely because (they claim) those agreements don’t actually reflect—read: are inconsistent with—the bargain the Defendants say they thought they were striking. Because the Defendants never raised unilateral mistake as a defense in their answer—indeed, because they said precisely the opposite—they cannot survive summary judgment by sandbagging the Plaintiff with it now.

We may (it’s true) “consider an affirmative defense that did not appear in the answer if the plaintiff has suffered no prejudice from the failure to raise the defense in a timely fashion.” Miranda de Villalba, 250 F.3d at 1353. But the Plaintiff would suffer extreme prejudice if we were to allow the mistake defense to proceed. Discovery, remember, closed more than two months ago. See Amended Scheduling Order [ECF No. 39] at 1 (resetting the discovery deadline to April 1, 2022). Had NHF known about this defense—a defense whose basic contours would’ve been readily available to the Defendants from the moment the Complaint was filed10—NHF could have deposed witnesses with knowledge of the parties’ pre-agreement positions; or it could have subpoenaed emails, text messages, and other records that might’ve shed light on what each side understood at the time the agreements were signed; or it might have retained an expert to explain why the Defendants’ audit, had it been conducted, wouldn’t have altered the parties’ agreements. But the Plaintiff didn’t get a chance to do any of these things because it didn’t know that the Defendants would be relying on unilateral mistake at summary judgment. And it’s now way too late to go back. See Jameson v. Arrow Co., 75 F.3d 1528, 1534–35 (11th Cir. 1996) (district court didn’t abuse its discretion by denying leave to amend “after [the plaintiff] retained counsel, discovery was closed, and the complaint had been amended twice, and [the defendant] had filed two motions for summary judgment,” even though the plaintiff “was unable to obtain important information needed to pursue th[e] claim,” because “it appear[ed] that the basic facts giving rise to the retaliation theory were available when the second amended complaint was filed”); see also Saewitz v. Lexington Ins. Co., 133 F. App’x 695, 699–700 (11th Cir. 2005) (district court didn’t abuse its discretion by denying leave to amend when “the district court was unwilling to reopen discovery, which the court ha[d] already extended for one month past the initial deadline” due to the plaintiff’s “total lack of diligence” since the plaintiff “knew of and had documentation to support the facts underlying its newly-proposed affirmative defense before litigation even began”); Hamrick, 576 F. App’x at 888–89 (“By failing to assert their notice argument in any of their three answers, we conclude the Hamricks have waived this affirmative defense.”).11 Because the Defendants have waived

B. The Merits Even if the Defendants hadn’t waived the unilateral-mistake defense, that defense would fail on the merits. Again, the parties agree that Arizona law governs this dispute. See MSJ at 6 (“The Agreement is governed by Arizona law.”); Response at 3 (“[Sea Spine] does not dispute that Arizona law applies.”). “A unilateral mistake is an erroneous belief of fact.” Ertl, 502 P.3d at 472. Under Arizona law, “[a] mistake of only one of the parties to a contract in the expression of his agreement or as to the subject matter does not affect its binding force and ordinarily affords no ground for its avoidance, or for relief, even in equity.” Nationwide Res. Corp. v. Massabni, 658 P.2d 210, 217–18 (Ariz. Ct. App. 1982). At the same time, “Arizona . . . recognizes that a unilateral mistake induced by misrepresentations or contractual ambiguities may constitute grounds for avoiding a [contract].”

Parrish v. United Bank of Ariz., 790 P.2d 304, 306 (Ariz. Ct. App. 1990). But “[a] party will be relieved from an agreement based on unilateral mistake only if the other party knew of and unfairly took advantage of the other party’s error.” Hartford v. Indus. Comm’n of Ariz., 870 P.2d 1202, 1207 (Ariz. Ct. App. 1994) (emphasis added); see also Ertl, 502 P.3d at 472 (“To escape a contractual obligation because of a unilateral mistake of fact, a party must have made a mistake of fact about a material and basic assumption of an agreement, and the other party knew of the mistake of fact and unfairly exploited the other party’s error[.]” (emphasis added & citations omitted)).

But the Defendants have no evidence either that NHF knew about their (supposed) mistake or that NHF unfairly exploited that mistake. They haven’t, for instance, uncovered any NHF emails or

1324, 1330 (11th Cir. 2004) (“In the first place, the law is by now well settled in this Circuit that a legal claim or argument that has not been briefed before the court is deemed abandoned and its merits will not be addressed.”). phone messages that suggest NHF knew about the error, nor have they deposed any NHF witnesses whose testimony betrayed NHF’s knowledge. And, to their credit, they never really suggest otherwise.

Rather than give us evidence that NHF knew about their mistake, they offer up four (wholly inapposite) points of context.

First, they note that, when they “entered into the Third Amended Superseding Agreement, [Sea Spine] had not conducted an audit” of its NHF transactions. Seda Decl. ¶ 6. So what? Sea Spine’s audit may have helped Sea Spine understand what Sea Spine owed NHF—but the absence of that audit tells us nothing about what NHF knew. And, again, the Defendants never argue that this missing audit proves anything about NHF’s knowledge, see generally Response (never arguing that NHF knew about Sea Spine’s supposed mistake), which is reason enough to disregard this first point, see, e.g., Campbell, F.4th at 873 (holding that the “failure to raise an issue in an initial brief . . . should be treated as a forfeiture of the issue”); Access Now, 385 F.3d at 1330 (“In the first place, the law is by now well settled in this Circuit that a legal claim or argument that has not been briefed before the court is deemed abandoned and its merits will not be addressed.”).

Second, the Defendants say that Sea Spine was only “able to begin its own analysis of [its] own Business Records” once the parties exchanged some discovery in this case. Seda Decl. ¶ 7. Again, irrelevant. Sea Spine’s analysis of its own records—like the audit it wishes it had conducted—tells us only that (maybe) there were discrepancies between NHF’s figures and Sea Spine’s. And it’s these discrepancies that Seda’s declaration spends some time highlighting. See generally Seda Decl. (summarizing the discrepancies between the Defendants’ and NHF’s records without suggesting that NHF knew about those discrepancies). But the question under Arizona law isn’t whether Sea Spine was mistaken. The question, as we’ve said, is whether NHF “knew of the mistake and unfairly exploited the other party’s error[.]” Ertl, 502 P.3d at 472. And, on this crucial issue, Sea Spine’s analysis of its own business records is neither here nor there.

Third, the Defendants claim that, during the discovery phase of this case, they for the first time realized that they owed NHF less than what they had promised to pay in the Third Superseding Agreement. See Seda Decl. ¶¶ 7–12 (“It was only after the NHF and [Sea Spine] exchanged documents and interrogatory responses in this case pursuant to discovery that [Sea Spine] was provided NHF’s records of advances made to [Sea Spine] and payments remitted by [Sea Spine] to NHF. . . . Since [Sea Spine] repaid NHF a total of $16,670,069.64, the net amount owed NHF is $3,482,321.62 . . . not the amount NHF is claiming is owed under the parties’ agreements.” (citing the Audit Summary)). Again, this may be true—but it’s irrelevant to the question we face today, which is whether NHF knew about this discrepancy and unfairly took advantage of it.

Fourth, the Defendants suggest that they were pressured into signing the Third Amended Superseding Agreement. Response at 4 (“Although Defendants were aware that [Sea Spine’s] payments to NHF were not applied or improperly applied to sold accounts, [Sea Spine] was unable to complete its audit of the accounts to determine the exact amounts owed before signing the Third Amended Superseding Agreement because NHF required that such agreement be signed on an expedited basis.”). For this proposition, though, they cite only Seda’s declaration, which says that NHF “required” the Defendants “to enter into the Third Amended Superseding Agreement on an expedited basis[.]” Seda Decl. ¶ 6. Even accepting this as true—and NHF doesn’t deny it—the record is clear that NHF wanted to move quickly “to provide Sea Spine with an opportunity to comply with its obligations[.]” Joint SOF ¶ 14. The parties, recall, only entered into the Third Amended Superseding Agreement after Sea Spine failed to meet its obligations under the Original Agreement, the Original Superseding Agreement, the Amended Superseding Agreement, the First Amended Superseding Agreement, and the Second Amended Superseding Agreement.12 In other words, “[t]he Third See Joint SOF ¶ 6 (“During the course of the relationship, Sea Spine failed to comply with its obligations under the Original Agreement, as amended.”); id. ¶ 14 (“Sea Spine failed to meet all of its Amended Superseding Agreement merely extended the deadline for [the] Defendants to pay and set forth a new payment schedule. It did not change the amounts due and owing NHF. [And it] was executed on an expedited basis because [the] Defendants needed an extension of the payment schedule to avoid default.” Cruz Decl. ¶¶ 10–12. The Defendants cite no evidence for their position that NHF insisted on an “expedited” execution of the Third Amended Superseding Agreement for some other, more sinister reason. And no evidence isn’t enough to survive summary judgment. See, e.g., Harrell v. City of Opa-Locka, 2022 WL 898565, at *20 (S.D. Fla. Mar. 28, 2022) (Altman, J.) (“[A]t summary judgment, a plaintiff must produce evidence to support her contention[s.]”); Versfelt v. Sanza Food Serv., 2022 WL 479881, at *12, *17 (S.D. Fla. Feb. 16, 2022) (Altman, J.) (granting summary judgment for the defendant in an employment-discrimination case because the plaintiff “presented no direct evidence of discrimination” and because “none of the evidence [the plaintiff] cite[d] support[ed] [his] claim”); RLI Ins. Co. v. Alfonso, 2021 WL 430720, at *22–24 (S.D. Fla. Feb. 8, 2021) (Altman, J.) (discussing the Eleventh Circuit’s definition of “a scintilla of evidence” and granting summary judgment because the non-movant “failed to meet that standard”).

To the contrary, as we’ve said, the parties have stipulated that NHF wanted to move quickly “to provide Sea Spine with an opportunity to comply with its obligations” in light of its prior defaults.

Joint SOF ¶ 14. Again, this tells us nothing about whether NHF knew about Sea Spine’s (purported) misunderstanding. On this point—NHF’s knowledge—the only apposite piece of evidence in the record is this passage from the Cruz Declaration (which conclusively rejects any implication that NHF contractual obligations under the Original Superseding Agreement by failing to collect and/or remit the minimum payments due by the second year after NHF’s advance.”); id. ¶ 20 (“Sea Spine failed to pay the full amounts due under the Amended Superseding Agreement on each of the dates set forth in [the] paragraphs . . . above.”); id. ¶ 24 (“Sea Spine made some payments required in the First Amended Superseding Agreement, but failed to make all of the payments as required.”); id. ¶ 27 (“Sea Spine made some payments, but failed to make all of the payments required by the Second Amended Superseding Agreement.”). had any such knowledge): “At no time prior to the Defendants’ execution of the Second Amended Superseding Agreement or the Third Amended Superseding Agreement did [the] Defendants notify NHF that they were unaware of the amounts owed and needed additional time to determine the same.” Cruz Decl. ¶ 11. As we’ve said, the Defendants never even try to rebut this assertion.

Where (as here) the party asserting unilateral mistake “present[s] no evidence” that “the other party knew of and unfairly took advantage of the [first] party’s error,” Hartford, 870 P.2d at 1207, Arizona law provides no relief.13 For this separate reason, then, we GRANT the Plaintiff’s MSJ.14 *** For the two reasons we’ve given—Sea Spine’s waiver and NHF’s lack of knowledge—we enter judgment in NHF’s favor. We add here only that, as we read Arizona law, it’s not at all clear that, in the circumstances of this case, there was any mistake at all. That’s because Arizona courts distinguish between genuine “mistakes”—the kind that would justify the rescission of an otherwise-enforceable contract—and “conscious ignorance.” Nelson v. Rice, 12 P.3d 238, 242 (Ariz. Ct. App. 2000); see also Deluca v. McMahon, 2010 WL 682189, at *4 (Ariz. Ct. App. Feb. 25, 2010) (“Buyers argue the principle of ‘conscious ignorance’ does not apply because Sellers were obligated to disclose defects in the

“Because [the non-art appraiser] did not say they needed an additional appraiser, [the representatives] did not hire anyone qualified to appraise fine art.” Id. at 242. Unfortunately for the estate, the buyer of one of the paintings—who, like the estate, originally believed the painting to be a reproduction—

Under these circumstances, the [e]state was a victim of its own folly and it was reasonable for the [lower] court to allocate to it the burden of its mistake.” Id. We could say the same about our Defendants. Like the estate in Nelson, they admit that they had reason to doubt NHF’s figures. See Seda Decl. ¶ 6 (“At the time [Sea Spine] and Appel had entered into the Third Amended Superseding Agreement, . . . . [Sea Spine] and Appel were aware that payments were made by [Sea Spine] to NHF and that NHF failed to properly apply [Sea Spine’s] payments or otherwise properly account for [Sea Spine’s] payments as required by the parties’ agreements[.]”). But they elected to sign the contract anyway—without conducting any further diligence. See id. (“At the time [Sea Spine] and Appel had entered into the Third Amended Superseding Agreement, [Sea Spine] had not conducted an audit of the many thousands of accounts based on multiple dates of patient service that it sold to NHF, the amounts of NHF’s advances to [Sea Spine] to purchase each account and the amounts [Sea Spine] collected and remitted to NHF under the parties’ agreement for [Sea Spine] to provide servicing of the accounts for NHF.”); see also Defs.’ SOF ¶ 14 (“At the time [the] Defendants signed the Third Amended Superseding Agreement, [the] Defendants were aware [Sea Spine’s] payments to NHF were not applied or improperly applied to sold accounts but [Sea Spine] was unable to complete its audit of the accounts to determine the amounts owed before signing the Third Amended Superseding Agreement.”). That the Defendants chose to sign the contract without conducting the necessary diligence isn’t evidence of unilateral mistake—“a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract[.]” Restatement (Second) Contracts § 153 (1981). It’s “conscious ignorance.” See zd. § 154 emt. c. That’s because □□□□ party bears the risk of a mistake when . . . he 1s aware, at the time the contract 1s made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient[.]” Id § 154. Or, as the Ne/son Court put it: “[T]he [e]state had ample opportunity to discover what it was selling and failed to do so... Under these circumstances, the [estate was a victim of its own folly and it was reasonable for the [lower] court to allocate to it the burden of its mistake.” Nedson, 12 P.3d at 242. Substitute “Sea Spine” for “estate” and “selling” for “paying,” and Ne/son 1s on all-fours here.

CONCLUSION After careful review, the Court hereby ORDERS and ADJUDGES as follows: 1. The PlaintifPs Motion for Summary Judgment [ECF No. 45] is GRANTED.

2. Pursuant to FED. R. CIv. P. 58, we'll enter final judgment separately.

3. ‘This case shall remain CLOSED.

4, All other pending motions ace DENIED as moot, all other deadlines are TERMINATED, and any remaining hearings are CELLED: DONE AND ORDERED in Miami, Florida, this ep?

ROYK.ALTMAN UNITED STATES DISTRICT JUDGE cc: counsel of record