Justia Contracts Opinion Summaries

Plaintiff is a former federal employee and participant in a health-insurance plan (“Plan”) that is governed by the Federal Employees Health Benefits Act (“FEHBA”). The Plan stems from a contract between the federal Office of Personnel Management (“OPM”) and Blue Cross Blue Shield Association and certain of its affiliates (together, “Blue Cross”). Blue Cross administers the Plan under OPM’s supervision. Plaintiff suffered from cancer, and she asked Blue Cross whether the Plan would cover the proton therapy that her physicians recommended. Blue Cross told her the Plan did not cover that treatment. So Plaintiff chose to receive a different type of radiation treatment, one that the Plan did cover. The second-choice treatment eliminated cancer, but it also caused devastating side effects. Plaintiff then sued OPM and Blue Cross, claiming that the Plan actually does cover proton therapy. As against OPM, she seeks the “benefits” that she wanted but did not receive, as well as an injunction directing OPM to compel Blue Cross to reform its internal processes by, among other things, covering proton therapy in the Plan going forward. As against Blue Cross, she seeks monetary damages under Texas common law. The district court dismissed Plaintiff’s suit.   The Fifth Circuit affirmed. The court held that neither the advance process nor the proton-therapy guideline poses an immediate threat of injury, so injunctive relief is therefore unavailable. Further, the court found that FEHBA preempts Plaintiff’s common-law claims against Blue Cross. Accordingly, the court held that no relief is available under the relevant statutory and regulatory regime. View "Gonzalez v. Blue Cross Blue Shield" on Justia Law

A major data breach compromised sensitive consumer information on thousands of credit cards. In this appeal, we address who must pay for the cleanup. Beginning in 2014, hackers compromised credit card data at multiple businesses owned by Landry’s Inc. (“Landry’s”). Many of those cards belonged to Visa and Mastercard. In response, Visa and Mastercard imposed over twenty million dollars in assessments on JPMorgan Chase and its subsidiary Paymentech (collectively, “Chase”), who were responsible for securely processing card purchases at Landry’s properties. Chase then sued Landry’s for indemnification, and Landry’s impleaded Visa and Mastercard. The district court dismissed Landry’s third-party complaints against Visa and Mastercard and granted summary judgment for Chase, finding that Landry’s had a contractual obligation to indemnify Chase. Landry’s argued that it should not have to indemnify Chase because the assessments are not an enforceable form of liquidated damages.   The Fifth Circuit affirmed. The court explained that since Landry’s indemnification obligation stems from its own acts or omissions under the Merchant Agreement, the debt is its own. Further, the court wrote that Landry’s alleged for its deceptive business practices claims that the assessments were “invalid” under the Payment Brand Rules and “applicable law” and, therefore, the Payment Brands’ “imposition and collection of the [assessments] was an unlawful business practice.” Because these claims turn on the assessments’ enforceability under Chase’s contracts with the Payment Brands, they are functionally the same as the subrogated claims. Since Landry’s cannot challenge the Payment Brands over those contracts as Chase’s subrogee, it cannot do so through a change in labeling. View "Paymentech v. Landry's" on Justia Law

PHI Group, Inc. (“PHI”), offers helicopter services for numerous global customers in the oil and gas, air medical, technical services, and healthcare industries. Zurich American Insurance Company (“Zurich”) sold an “all-risk” insurance policy covering PHI. PHI sued Zurich in a civil action in diversity to recover economic losses for the partial interruption of its business during the COVID pandemic. The district court dismissed PHI’s claims because its losses were not caused by a physical loss or damage to corporeal property, its claims were not novel in the post-pandemic legal environment, and the Fifth Circuit has resolved comparable cases similarly.   The Fifth Circuit affirmed. The court explained that PHI alleged a material difference in the insurance policies in Q Clothier and here. In Q Clothier, the policy covered “direct physical loss of or physical damage” to property, while here, the policy covers “direct physical loss or damage” to property. But the Fifth Circuit has found no ambiguity here, regardless of whether “physical” modifies only loss or both loss and damage. Further, PHI has not established any facts that indicate that coronavirus caused direct physical loss or damage, which remains at the crux of any recovery under its insurance policy. Regardless of the contamination exclusion, PHI does not have a plausible claim for coverage. An exclusion cannot create coverage that does not exist under the plain meaning of the policy. View "PHI Group v. Zurich American Insurance" on Justia Law

Plaintiff is a black woman who worked for Lincare, Incorporated. She sued her former employer under Title VII, claiming that she suffered from a racially hostile work environment and that Lincare both failed to address the situation and retaliated against her when she complained. She also sued for breach of contract. The district court granted summary judgment in favor of Lincare. On appeal, Plaintiff contended that summary judgment was improper on her Title VII claims for a hostile work environment and unlawful retaliation.   The Fifth Circuit affirmed. The court explained that even assuming that Plaintiff suffered from severe or pervasive harassment, Lincare cannot be liable under Title VII because it took prompt remedial action. Aside from one remark, Plaintiff could not remember any use of the N-word in the office after she made her reports to HR. Nor does she identify a single racially insensitive comment that occurred after the offending parties received final warnings. In short, Lincare “acted swiftly in taking remedial measures, and the harassment ceased.” Because of its prompt and effective response, Lincare cannot be liable under Title VII for creating a hostile work environment.   Further, the court explained, there is no evidence that Plaintiff’s working conditions were impacted, only that the plan opened up the possibility of further action (which never occurred). An employment decision is not an adverse action if it does not objectively worsen the employee’s working conditions. View "Hudson v. Lincare, Inc." on Justia Law

This dispute involves three construction projects (the “Projects”) in Galveston County, Texas. Defendants, Binnacle Development, Lone Trail Development, and SSLT, are land developers. Each developer contracted with R. Hassell Properties, Inc. to complete paving and infrastructure projects in Galveston County Municipal Utility District (“MUD”) No. 31. The three Hassell contracts were form MUD contracts created by MUD attorneys. Each contract stated that it was “for Galveston County Municipal Utility District No. 31.” Hanover subsequently sued the developers in federal court to recover the contract balances on the Projects. The liquidated-damages clause would, if enforced, amount to an offset of $900,000. Both parties moved for summary judgment. The district court concluded that because no district is a party to the contracts at issue, the economic disincentive provision from the Water Code does not apply. On the second issue, the district court found that the damages clauses in the contracts constitute an unenforceable penalty. The court granted summary judgment for Hanover.   The Fifth Circuit affirmed. The court held that Section 49.271 allows “economic disincentive” clauses only in contracts where a district is a contracting party. Because no district is party to the Hassell contracts, they cannot incorporate “economic disincentive” clauses permitted under the Texas Water Code. The court also wrote it would not disturb the district court’s finding that the clause is an unenforceable penalty under Texas law. View "Hanover Ins v. Binnacle Development" on Justia Law

Plaintiff, an investor and venture capitalist and the CEO of InterOil Corporation (“InterOil”), developed a business relationship. Throughout that relationship, Plaintiff (and “entities controlled and beneficially owned by him”) provided loans, cash advances, and funds to the CEO and InterOil. Plaintiff and the CEO continued to have a business relationship until 2016, at which point the CEO’s actions and words made Plaintiff concerned he would not receive his shares back from the CEO. In late 2017, as part of a larger suit against the CEO, Plaintiff and Aster Panama sued the J.P. Morgan Defendants for (1) breach of trust and fiduciary duty, (2) negligence, and (3) conspiracy to commit theft. The district court granted summary judgment on all counts relating to the J.P. Morgan defendants and awarded them attorneys’ fees under the Texas Theft Liability Act (“TTLA”).   The Fifth Circuit affirmed. Under Texas law, the only question is whether the J.P. Morgan Defendants expressly accepted a duty to ensure the stocks were kept in trust for Plaintiff or Aster Panama. That could have been done by express agreement or by the bank’s acceptance of a deposit that contained writing that set forth “by clear direction what the bank is required to do.” Texas courts require a large amount of evidence to show that a bank has accepted such a duty. Here, no jury could find that the proffered statements and emails were sufficient evidence of intent from the J.P. Morgan Defendants to show an express agreement that they “owe[d] a duty to restrict the use of the funds for certain purposes.” View "Civelli v. J.P. Morgan Chase" on Justia Law

In a case involving the denial of coverage for an automobile accident, the Fifth Circuit addressed whether uninsured motorist coverage can be denied simply because the driver, who was the son of the insured, was not listed on the policy? The court answered that question “no.” The other is whether the policy can be voided because the insured committed a material misrepresentation by failing in her application for insurance to name, as required, those of driving age who lived in her household? The court answered that question, “yes.”   The Fifth Circuit affirmed the district court’s ruling granting Viking Insurance’s motion for summary judgment in Plaintiffs’ suit seeking damages for a wrongful denial of benefits. The court concluded that if an insurer declines to exercise the greater power to void a policy, it still retains the lesser power to exercise a contractual right to deny coverage. The court explained that here, a knowing misstatement in the application about the drivers in the household was material if it would have caused Viking either not to issue the policy or to increase the premium. The court accepted that materiality is not affected by the relationship between the false statement and the specific coverage being sought in litigation. It is enough that the falsity was material to the decision of the company to issue the policy at the agreed price. Consequently, Viking could have voided the policy. By not voiding, Viking’s policy remained in effect. Accordingly, Viking had the right to deny Plaintiffs’ claim. View "Bradley v. Viking Insurance" on Justia Law

Fourteen women (“Plaintiffs”) from seven states brought the present putative class action against Ashley Black and her companies (“Defendants”), alleging false and deceptive marketing practices. They take issue with various representations in Defendants’ ads about a product called the FasciaBlaster, a two-foot stick with hard prongs that is registered with the Food and Drug Administration as a massager. The district court dismissed Plaintiffs’ claims in their entirety.  Plaintiffs appealed the order striking the class allegations and the dismissal of individual claims.   The Fifth Circuit found that the district court correctly struck Plaintiffs’ class allegations and properly dismissed all but two of their claims. Accordingly, the court affirmed in part, reversed in part, and remanded the case to the district court. The court explained that it agreed with the district court that Plaintiffs’ allegations suffer from a combination of defects, including a failure to plead adequately what representations were actually made when those representations were made, who made the representations, and where those representations occurred.   However, the court reversed the dismissal of Plaintiffs’ breach of express warranty under, respectively, California Consumer Code Sections 2313 & 10210, and Florida Statutes Sections 672.313 & 680.21. The court wrote that the district court did not apply the law of a specific jurisdiction when conducting its analysis. Plaintiffs on appeal cite various Fifth Circuit cases in addition to Texas and California state law precedents. Defendants proffer Fifth Circuit, California, and Florida precedents. Neither party, however, briefed what law should be applied to each claim. View "Elson v. Black" on Justia Law

Two former students of Tulane University, on behalf of a putative class of current and former students, sued the University for failing to provide a partial refund of tuition and fees after Tulane switched from in-person instruction with access to on-campus services to online, off-campus instruction during the COVID-19 pandemic. The district court agreed with Tulane that the student's complaint should be dismissed for failure to state a claim.   The Fifth Circuit reversed and remanded. The court concluded that the claim is not barred as a claim of educational malpractice because the Students do not challenge the quality of the education received but the product received. Second, the court rejected Tulane’s argument that the breach-of-contract claim is foreclosed by an express agreement between the parties because the agreement at issue plausibly does not govern refunds in this circumstance. And third, the court concluded that Plaintiffs have not plausibly alleged that Tulane breached an express contract promising in-person instruction and on-campus facilities because Plaintiffs fail to point to any explicit language evidencing that promise. But the court held that Plaintiffs have plausibly alleged implied-in-fact promises for in-person instruction and on-campus facilities. Moreover, the court found that the Students’ alternative claim for unjust enrichment may proceed at this early stage. Finally, genuine disputes of material fact regarding whether Plaintiffs saw and agreed to the A&DS preclude reliance on the agreement at this stage. Thus, Plaintiffs have plausibly alleged a claim of conversion. View "Jones v. Admin of the Tulane Educ" on Justia Law

Appellant in his capacity as Litigation Trustee for the Erickson Litigation Trust, appeals the dismissal of his avoidance and recovery claims under the bankruptcy laws. In broad terms, these claims seek avoidance of settlement releases approved in Delaware state court, as well as two payments related to Erickson Air-Crane, Inc.’s acquisition of Evergreen Helicopters, Inc. (EHI) (the “Evergreen Transaction”).   The Fifth Circuit affirmed the dismissal of the claims relating to the settlement releases and reversed in part the dismissal of the payments relating to the Evergreen Transaction itself. The court concluded that consistent with Besing and Erlewine, there was reasonable equivalence as a matter of law. The Delaware settlement “should not be unwound by the federal courts merely because of its unequal division of [settlement proceeds].” Further, the court wrote that Appellant’s attempt to attack the Delaware releases as actually fraudulent transfers also fails. The court wrote it saw no error in the lower court's conclusion that Appellant failed to adequately plead actual fraud, and his arguments on appeal do not convince the court otherwise. Moreover, the court found that acting in his specific capacity, Appellant is not enjoined by the Delaware settlement from asserting creditor claims that arose only under the Bankruptcy Code. View "Ogle v. Morgan, et al" on Justia Law