Lender sues Calif. firm over missing equipment

A local lender is suing a California-based medical equipment supplier because it claims the company borrowed $3 million to outfit a York County surgical center but never produced the equipment, according to the suit filed last month in the Court of Common Pleas of York County.

Lititz-based Susquehanna Commercial Finance Inc. loaned the money to investors of Brookeside Surgical Arts at York, a 16,500-square-foot medical building California-based Congero Development is developing in York Township.

Vascular Resources is based in Costa Mesa, Calif., and is a partner company of Congero. Vascular filed a motion to dismiss the case because it has an agreement with Brookeside, not Susquehanna, according to the motion the company entered into the U.S. Middle District Court Oct 23. The case was moved to federal court at Vascular's request because the company prefers the federal forum, said Daniel Sullivan, an attorney representing the company in the case.

Susquehanna argues that Vascular was supposed to use the money to buy medical equipment for the surgical center. The lender claims the company sank the money into its business instead. Susquehanna has laid out several options for Vascular in its court filings: The company can produce the equipment, give back the $3 million or put the money in a bank account until the surgical center is finished and the purchases are made, Summers said.

"(Vascular) put (the money) in their operating accounts to run their day-to-day operations. They say they will come up with the money," said Sean Summers, the attorney representing Susquehanna in the case.

Vascular has not violated its agreement terms, Sullivan said.

After issuing the loan to Brookeside, Susquehanna asked Vascular for proof of purchase, Summers said. Susquehanna wanted invoices, serial numbers or to see the equipment, he said. The company ignored Susquehanna's requests, he said.

"Susquehanna expected the equipment to be purchased by early 2009. We offered to fly out there and look at the equipment, inspect it, get pictures, and they haven't purchased the equipment," Summers said.

Sullivan shared little about the case. He said he felt uncomfortable discussing details while the matter is being litigated.

"(The lawsuit) fails to state a claim against Vascular Resources," he said.

Congero is developing Brookeside in a medical campus it planned on 7.3 acres at 2050 South Queen St. Congero develops and manages medical centers. Surgical Arts is the first of three buildings planned for the campus.

Offices in the center were supposed to open in October and the surgical center was to open this month. Lancaster County's Benchmark Construction Company Inc. is building the facility. Benchmark executives did not respond to repeated interview requests to find out why the project has been delayed or when it will be completed. York County's Digestive Disease Center is supposed to move into the building, Summers said. Doctors from the disease center also did not return phone calls before deadline for this edition.

Even though the surgical center wasn't complete, Susquehanna wired the medical-equipment money to Vascular to buy the equipment Dec. 31 because the company claimed it wanted to take advantage of year-end closeout savings, according to the lawsuit.

Summers said Vascular's story has changed several times. In the spring, the company said it purchased some of the equipment, and then it admitted to not buying any of it, he said.

Vascular claimed that some of the equipment is not yet available, Summers said. He also said Vascular claimed it didn't want to purchase some equipment before construction was complete because warranties would go into effect before the equipment could be used, which would reduce warranty coverage periods.

"That doesn't negate the fact that they had to buy the equipment before the end of the year," Summers said. "It was my understanding that they were going to commit (to the purchases). They would transfer the money that Vascular would (use to) purchase (the equipment), and they would have been obligated to buy it."