Fonar loses California lawsuit

After a one-week trial, a California court Thursday ruled against Fonar Corp. of Melville in a breach of contract lawsuit, ordering Fonar to return a $300,000 deposit to a former customer.

The customer, Matt Malek Madison, sued Fonar to recoup the $75,000-per-machine deposit paid in 2005 on four of Fonar's $1.5 million Magnetic Resonance Imaging devices.

Madison, a San Francisco real estate investor, had planned to go into the MRI business.

Fonar agreed to the lower deposit — it normally requires $300,000 per machine — "because FONAR was anxious to make the deal to improve the appearance of its financial condition,” Judge Ronald M. Whyte said in his decision.

The case was heard Aug. 25-26 in U.S. District Court for the Northern District of California, in San Jose.

The judge found that Madison, the customer, "was not a credible witness in many respects."

But the judge’s ruling also disparaged testimony from Fonar's founder and president, Dr. Raymond Damadian.

Damadian testified that he had explained in a June 2005 telephone conversation with the customer that Madison had to ask for the refund within a year — it wouldn’t come automatically.

"The testimony about Madison's having to ask for a refund within a year ... appeared to be the result of Dr. Damadian's self-serving, litigation motivated construction of the language" in a June 2005 letter from Madison, the judge said.

Above, a Fonar photo of one of their MRI machines.

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