Justia Contracts Opinion Summaries

A "discrete, narrow legal question" came before the Supreme Court: is a health care provider who has received an assignment of personal injury protection (PIP) benefits from an insured obligated upon request to furnish to the insurer broad information with respect to the provider’s ownership structure, billing practices, and regulatory compliance? Plaintiffs in this matter consist of six “Selective Insurance Company” entities. Individuals insured by Selective sought medical treatment from defendants for injuries received in automobile accidents. Those insureds assigned to defendants the benefits to which they were entitled under their PIP coverage, giving defendants the contractual right to seek PIP reimbursement under those policies. In reviewing claims submitted for payment, Selective detected what it considered to be suspicious patterns in both the treatments defendants had provided and the corporate links among the treating entities. Selective requested that defendant supply to it a variety of data with respect to their ownership, structure, billing practices, and compliance with certain regulations. In support of its request, Selective cited the provision within the insureds’ insurance policies requiring the insureds to cooperate with Selective in the investigation of any claim under the policy. When defendants refused to supply the material Selective sought, Selective sued, alleging that defendants' failure to supply the information was a breach of they duty to cooperate and a violation of the PIP discovery statute. After hearing oral argument, the trial court denied defendants’ motion to dismiss and granted Selective the relief it had requested by directing defendants to respond to Selective’s discovery requests. Defendants thereafter moved for reconsideration, but the trial court denied that motion, together with defendants’ request for a stay. Upon review of the matter, the Supreme Court held that an insured had no duty to provide information to plaintiff with respect to the ownership structure, billing practices, or referral methods of the medical providers from whom he or she sought treatment for his or her injuries. Because an insured had no obligation to supply that information to plaintiff, the assignment of benefits executed by an insured could not serve to impose that duty on the providers.

Plaintiff-Appellant Mid-Continent Casualty Company ("Mid-Continent") brought a declaratory judgment action seeking determination of its coverage obligations related to construction defect litigation. Defendant-Appellee, The Village at Deer Creek Homeowners Association, Inc. (the "Association"), moved to dismiss, requesting that the district court not exercise jurisdiction over Mid-Continent's action. Weighing the five factors set forth in "State Farm Fire & Casualty Co. v. Mhoon," (31 F.3d 979, 982–83 (10th Cir. 1994)), the district court declined jurisdiction in favor of resolution in Missouri state court and dismissed the action. Mid-Continent appealed, arguing the district court's application of the "Mhoon" factors amounted to an abuse of discretion. Upon review of the district court record, the Tenth Circuit affirmed its order granting the Association's motion to dismiss.

Defendant-Appellant and Cross-Appellee BP America Production Company (BP) appealed a judgment from a jury verdict in favor of Plaintiffs-Appellees and Cross-Appellants, a certified class of royalty and overriding royalty owners. The judgment included $9,740,973 in damages for failure to pay royalties consistent with the underlying leases and $3,443,372.40 in prejudgment interest (calculated at 15%). The class took issue with two aspects of BP's "netback" method for market-value-at-the-well contracts: its sales price for natural gas liquids (NGLs) at the tailgate and its processing cost. Specifically, the class complained that BP sold refined NGLs at the tailgate of the processing plant to an affiliate company at a discount (called an "affiliate transfer price"), and that BP, as co-owner of the plant, deducted an inflated processing fee, thereby lessening their royalty payments. Further, the class alleged BP breached the covenants of good faith and fair dealing in their contracts. BP's theory of the case was that there is a market for gas at the well, and that its netback method resulted in royalty payments in line with market values. BP unsuccessfully moved in limine to prohibit the class from introducing evidence regarding the royalty practices of ConocoPhillips ("COP"), co-owner of the processing plant with BP. Upon review, the Tenth Circuit concluded that disputed evidence of material fact on the market-value leases existed to preclude either party from judgment as a matter of law in their favor. Admission of the COP evidence was an abuse of district court's discretion and reversible error; the Tenth Circuit reversed for a new trial on that ground. On remand, the Court ordered the district court vacate the judgment entered on the jury's verdict and the prejudgment interest award, and provide an explanation of any ruling on the breach of the implied covenant of good faith and fair dealing.

DynMcDermott Petroleum Operations Company (DM) subcontracted with Petrofac, Inc. to design and install a plant to serve the Strategic Petroleum Reserve for the Department of Energy. DM and Petrofac agreed to resolve any claim under the subcontract through binding arbitration. Later, Petrofac sent DM a multi-volume Request for Equitable Adjustment (REA), asserting that DM disputed Petrofac's ability to perform its work and seeking damages. An arbitration panel awarded Petrofac damages. The district court affirmed. The Fifth Circuit Court of Appeals affirmed, holding that the district court properly confirmed the arbitration panel's arbitration award, as DM failed to demonstrate reversible error on appeal.

An individual owing a debt sued a debt collection agency. The suit alleged the agency's debt-collection letter violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, by contradicting and overshadowing the statutory notices in the letter. The standard for evaluating any potential deception in the letter was whether an unsophisticated or least sophisticated consumer would be confused by the letter. The district court concluded that the letter did not violate the statute. The Fifth Circuit Court of Appeals affirmed, holding (1) the debt collection agency's letter was not inconsistent with and did not overshadow the letter's Section 1692g(a)'s notice; and (2) therefore, a least-sophisticated or unsophisticated consumer would not be confused by the letter.

Appellant was injured in a car accident. The other car in the accident was owned by Amanda Salgado, a superintendent of a church (the Church), and driven by Michael Meyer, a member of the Church. The accident occurred while Meyer and other Church members were taking a lunch break from cleaning and repairing Church property. Appellant sued the Church, Salgado, and Meyer in state court. The Church's insurer (Insurer) then sought a declaratory judgment in federal court resolving whether its insurance policy covered Appellant's accident. The district court held that Insurer had no duty to defend the Church and Salgado. The Fifth Circuit Court of Appeals vacated the district court's judgment, holding that the district court (1) erroneously held that Insurer had no duty to defend the Church and Salgado, (2) improperly adjudicated the scope of Insurer's duty to indemnify, and (3) improperly asserted jurisdiction over Appellant's state-law claims. Additionally, the Court held (1) Insurer had a duty to defend the Church and Salgado in Appellant's underlying state lawsuit, and (2) the scope of Insurer's duty to indemnify could not be adjudicated until after Appellant's claims are decided in state court.

This matter arose out of a controversy over a phrase in a trust. The language at issue established the calculation of the price of trust property offered for sale to certain trust beneficiaries. One of the trust beneficiaries filed a complaint for declaratory judgment, seeking judicial interpretation of the disputed provision. The trial court concluded that the disputed phrase was unambiguous and that the option price was the fair market value as determined by the appraisal. The court of appeals reversed after reviewing the trust document de novo, finding that the option language was susceptible to more than one interpretation and that the option price was the federal and/or Ohio qualified-use value. At issue on appeal was what standard of review an appellate court should employ in reviewing legal issues in a declaratory-judgment action. The Supreme Court affirmed, holding that the de novo standard of review is the proper standard for appellate review of purely legal issues that must be resolved after the trial court has decided that a complaint for declaratory judgment presents a justiciable question.

GRT and Marathon are engaged in attempting to convert methane gas into fuel. They entered into interrelated agreements, including a Securities Purchase Agreement (Marathon purchased $25 million of GRT’s stock), mutual licensing agreements, and a Cooperative Development Agreement, governing collaboration to develop gas-to-fuels technology. Marathon built a multi-million dollar “Demonstration Facility” to test the technology on a large scale and a smaller research facility (Pilot Unit). Under the Development Agreement, GRT obtained access the Demonstration Facility and the ability to modify the Facility, to expire on December 31, 2012. The Facility began operations in 2008. Marathon executed a run campaign and shared data with GRT. In November 2009, Marathon decided to permanently close the Facility because of operational difficulties. Marathon followed procedures prescribed by the Agreement, gave notice, and extended GRT the right to acquire the Facility. GRT did not exercise that right. Although the Facility is currently closed, the Pilot Unit is operational, and both parties continue to test there. GRT claimed breach of contract. The chancellor found that the Development Agreement is not ambiguous and does not impose an affirmative duty on Marathon to operate the Facility through December, 2012, but provides GRT protection in other ways that would be internally inconsistent with such an affirmative duty.

NuVasive alleges that Lanx improperly persuaded NuVasive employees and a NuVasive consultant to leave NuVasive and work for Lanx instead, in breach of agreements that the employees had with NuVasive, to misappropriate NuVasive’s trade secrets and other proprietary information. Both are medical corporations. NuVasive claimed unfair competition, tortious interference with contractual relations, tortious interference with prospective contractual relations, aiding and abetting breach of fiduciary duty, civil conspiracy, and misappropriation of trade secrets. Lanx argued that the former NuVasive employees were necessary and indispensable parties to the action because NuVasive’s claims are predicated upon their acts. The chancellor declined to dismiss. While the former employees’ interests are not adequately protected by Lanx, the chancellor reasoned that a remedy could be crafted to avoid prejudice to their interests. The former employees were not indispensable to the misappropriation claim.

This case involved a wire transfer from Plaintiff's bank account to Defendant's wife. Plaintiff claimed that Defendant, a former employee of Plaintiff, initiated the transfer unlawfully. Defendant moved for summary judgment, offering evidence of another explanation for the transfer. Plaintiff did not offer any evidence in response, and the district court entered summary judgment for Defendant. At issue on appeal was whether Defendant made the initial showing required by Fed. R. Civ. P. 56 that there was no genuine issue of material fact and that he was entitled to judgment as a matter of law, thereby shifting the burden to Plaintiff to present affirmative evidence showing that a genuine issue of material fact existed. The Eighth Circuit Court of Appeals affirmed, holding that Defendant made the required showing.