Justia Contracts Opinion Summaries

Medical provider North Cypress Medical Center Operating Co., Ltd. and North Cypress Medical Center Operating Co. GP, LLC (collectively, “North Cypress” or “the hospital”) sued Cigna Healthcare, Connecticut General Life Insurance Company, and Cigna Healthcare of Texas, Inc. (collectively, “Cigna”) for breach of healthcare plans administered or insured by Cigna. North Cypress argued that Cigna failed to comply with plan terms and underpaid for covered services. Cigna counter-claimed, arguing that it paid more than was owed; that North Cypress as an out-of-network provider did not charge the patients for coinsurance, but billed Cigna as if it had. The district court dismissed North Cypress’s ERISA claims for want of standing and Cigna’s ERISA claims as time barred. Finally, the district court granted summary judgment against North Cypress’s breach of contract claims, concluding there was no breach. North Cypress appealed and Cigna cross-appealed. The Eleventh Circuit, after review, affirmed in part, reversed in part, and remanded for further proceedings. In holding that North Cypress had standing to bring ERISA claims, the Court removed the grounds for the district court’s preemption ruling. The parties did not brief the issue of whether the "Discount Agreement" claims would survive un-preempted. Accordingly, the Court vacated the grant of summary judgment and remanded so that the district court could consider the question of preemption in light of our ruling on standing. The Court affirmed the remainder of the district court’s judgment. View "North Cypress Medical Center, et al v. Cigna Health" on Justia Law

In 2001, St. Jude hired Tormey to sell cardiac-related medical devices. Tormey entered into several agreements, providing Tormey’s initial sales quota would be zero due to a noncompete agreement; that St. Jude would hire a technical support specialist (TSS) to assist Tormey; and that St. Jude could terminate Tormey if he failed to meet sales quotas. St. Jude made a $650,000 interest-free loan; Tormey executed a promissory note. Around the time he began selling for St. Jude’s, Tormey’s wife was diagnosed with terminal lung cancer. Tormey informed St. Jude of his wife’s condition. He began inquiring about when St. Jude would hire a TSS and negotiated sales quotas accordingly. Tormey rejected the TSS assigned in October 2003. Tormey’s wife’s condition worsened in November; Tormey thereafter did not meet quotas. She died in May, 2004. Two weeks later, St. Jude, terminated the agreements. Tormey claimed that he accepted St. Jude’s proposal that if Tormey waived any actions against St. Jude, it would waive repayment of the $650,000 and presumed his obligations had been discharged. There are no written documents and St. Jude denies any such agreement. The district court rejected Tormey’s counterclaims alleging fraud and, after a jury was unable to reach a verdict, entered judgment for St. Jude on the note, finding that it did not first commit a material breach. The Eighth Circuit affirmed. View "St. Jude Med. S.C., Inc. v. Tormey" on Justia Law

The 2008 contract for the design and construction of nuclear electrical generating units at a Georgia power plant specifies that it is to be governed by Georgia law. The contractor sought payment after Nuclear Regulatory Commission requirements delayed the project and imposed additional costs. The contract calls for mediation. After 60 days, either party may proceed to litigation “in a court of competent jurisdiction,” the parties “agree to the non-exclusive jurisdiction of the United States District Court for the District of Columbia for any legal proceedings.” After mediation the contractor filed its District of Columbia complaint, seeking more than $900 million. The court’s electronic filing log reported “11/01/2012 20:00:01” as the filing time. Georgia Power filed in the Southern District of Georgia, seeking to recover more than $100 million paid under protest and a declaratory judgment. The hard copy of the complaint notes November 1, 2012, 8:00 p.m. as the time of the filing. The district court did not decide who filed first, but determined that the controversy should be adjudicated in Georgia, regardless of which party filed first. The D.C. Circuit affirmed. A clause permitting first-to-file challenges (comparing one lawsuit to another) contemplated that the venue clause was permissive. View "Stone & Webster, Inc. v. Georgia Power Co." on Justia Law

At issue in this shareholder class action was the Schwab Total Bond Market, a mutual fund (the Fund). The Fund was created by Schwab Investments (“Schwab Trust”), and its investment adviser was Charles Schwab Investment Management, Inc. (“Schwab Advisor”). The named plaintiff, a registered investment advisery and financial planning firm that had over 200,000 shares of the Fund under its management, filed the class action on behalf of investors who alleged that the managers of the Fund failed to adhere to the Fund’s fundamental investment objectives. The district court dismissed the complaint. The Ninth Circuit reversed in part, vacated in part, and remanded, holding (1) Northstar had standing to prosecute this case; (2) the district judge erred in dismissing Northstar’s breach of contract claims, as Northstar adequately alleged the formation of a contract between the investors and the trustees; (3) the district judge erred in concluding that Northstar failed to successfully allege a breach of any duty owed directly to Fund investors and that those claims would have to be asserted derivatively; and (4) the district judge erred in dismissing Northstar’s third-party beneficiary breach of contract claim, as Northstar adequately alleged that the investors were third-party beneficiaries of the Investment Advisory and Administration Agreement between Schwab Trust and Schwab Advisor. View "Northstar Fin. Advisors v. Schwab Investments" on Justia Law

Defendant-Appellant First Health Settlement Class appealed a superior court order that granted partial summary judgment in favor of plaintiff-appellee Chartis Specialty Insurance Company. This was one of a number of class action cases filed against First Health and others in the State of Louisiana. In those actions, medical service providers alleged that First Health violated notice provisions contained in a Louisiana statute known as the Preferred Provider Organizations Act. First Health ultimately entered into a settlement in which it resolved all of the Louisiana litigation. Chartis was First Health's errors and omissions insurance insurer. The policy had a number of exclusions, one of which was an exclusion for "penalties." The issue this case presented for the Delaware Supreme Court's review was whether the amount that First Health paid to settle the Louisiana litigation was a "penalty," and, therefore, not a covered loss under the insurance policy. The superior court concluded that the amount paid was a "penalty." The Delaware court disagreed, concluding that it was not a "penalty," and that the policy's exclusion for "penalties" did not apply. View "The First Health Settlement Class v. Chartis Speciality Insurance Co." on Justia Law

Defendant-Appellant CorVel Corporation appealed a superior court order that granted partial summary judgment in favor of plaintiff-appellee Homeland Insurance Company of New York. This was one of a number of class action cases filed against CorVel and others in the State of Louisiana. In those actions, medical service providers alleged that CorVel violated notice provisions contained in a Louisiana statute known as the Preferred Provider Organizations Act. CorVel ultimately entered into a settlement in which it resolved all of the Louisiana litigation. Homeland was CorVel's errors and omissions insurance insurer. The policy had a number of exclusions, one of which was an exclusion for "penalties." The issue this case presented for the Delaware Supreme Court's review was whether the amount that CorVel paid to settle the Louisiana litigation was a "penalty," and, therefore, not a covered loss under the insurance policy. The superior court concluded that the amount paid was a "penalty." The Delaware court disagreed, concluding that it was not a "penalty," and that the policy's exclusion for "penalties" did not apply. View "Corvel Corporation v. Homeland Insurance Company of New York" on Justia Law

The Department of Agriculture’s Rural Utilities Service (RUS) made a $267 million loan to Open Range to finance construction of wireless broadband networks in 540 RUS-approved markets. Open Range subcontracted with G4S. The FCC suspended a permit, so that Open Range lost the spectrum rights necessary to operate the planned network. RUS gave notice of its intent to terminate remaining funds on the loan unless Open Range could obtain replacement rights. Open Range began failing to meet its obligations to subcontractors. The Secretary of Agriculture made loan money available, provided a press release, and offered to reassure subcontractors, but Open Range was unable to regain the full spectrum rights necessary to complete the original project. RUS and Open Range executed an amendment to reflect a loan amount reduced to $180 million, and 160 RUS-approved markets, but Open Range remained unable to satisfy its debts and filed for bankruptcy. G4S filed suit. The Claims Court held that G4S was not a third party beneficiary to the agreement. The Federal Circuit affirmed, stating that G4S asked that the government incur liability simply because it talked to the individuals in charge of a failing project in an attempt to fix the problems. View "G4S Tech., LLC v. United States" on Justia Law

In 2003, the VA entered into a contract with Reliable for electrical improvements at a VA medical center, requiring installation of three backup generators, “new and of the most suitable grade.” Federal Acquisition Regulation 52.211-5, incorporated by reference, requires that supplies be “new, reconditioned, or remanufactured,” and defines “new” as “composed of previously unused components.” Reliable sub-contracted to Fisk, which contracted with DTE. In 2004, DTE delivered two Cummins Power Generation generators to the construction site. The VA’s senior resident engineer inspected the generators and determined that they were not “new.” He wrote to Reliable, stating: They show a lot of wear and tear including field burns to enlarge mounting holes. Are they new and will you certify them as such? I cannot pay you … without that certification. Fisk and Reliable initially agreed that the generators did not meet the contract specification. After investigation, they concluded that the generators, manufactured in 2000, had been previously purchased by others but never used. Fisk obtained different generators, which were accepted by the VA. In 2007, Reliable submitted a claim, seeking $1,100,000 for additional costs incurred as a result of rejection of the original generators. In 2013, the Board of Contract Appeals denied Reliable’s claim. The Federal Circuit vacated, holding that the Board erred in its interpretation of the contract. View "Reliable Contracting Grp., LLC v. Dep't of Veterans Affairs" on Justia Law

James Stanley, Barbara Stanley and Northeast Marine Services, Inc. (collectively, “Stanley”) were parties to a binding arbitration with Michael Liberty and five corporations under his control (“the Liberty corporate entities”) regarding contractual and fiduciary disputes arising from Stanley’s tenure as an officer and director of the Liberty corporate entities. Many of Stanley’s claims were rejected, but the three main issues relevant to this appeal were decided in favor of Stanley. The business and consumer docket affirmed the arbitration award in full. The Supreme Court affirmed, holding (1) in challenging the arbitrator’s findings that Stanley had not engaged in a breach of fiduciary duty regarding transactions involving the Liberty corporate corporate entities, Liberty and the Liberty corporate entities asked the court to review fact-findings by the arbitrator, and such findings were not reviewable; (2) Liberty and the Liberty corporate entities did not demonstrate that the arbitrator exceeded his broad authority in interpreting the retirement contract that generated this litigation; and (3) the arbitrator did not exceed his authority by deciding to pierce the corporate veil and make Liberty personally liable for obligations of his closely-controlled corporations. View "Stanley v. Liberty" on Justia Law

In September 2006, Blue Shield, canceled DuBeck’s medical insurance policy, claiming DuBeck had made material misrepresentations in her application and concealed that she had undergone a fine needle aspiration for a lump in her breast days before submitting the application. The policy had been in effect 17 months. Blue Shield had paid medical claims unrelated to the breast cancer, deemed a pre-existing condition. The cancellation letter expressly stated that Blue Shield was electing to cancel coverage prospectively, rather than rescind the policy, and that any claims for covered services incurred prior to cancellation would be covered. In September 2008, DuBeck filed suit, alleging that Blue Shield had failed to pay covered claims while the policy was in force. Blue Shield asserted its right to rescind the policy, voiding it ab initio. The trial court granted Blue Shield summary judgment. The court of appeal reversed, holding that the 2006 decision to cancel, rather than rescind the policy; the affirmation of coverage up to that date and assurance that it would pay for services covered prior to cancellation; retention of premium; and failure to assert a right to rescind until more than two years after Blue Cross had all the pertinent facts, constituted a waiver of the right to rescind. View "DuBeck v. Cal. Physicians' Serv." on Justia Law