Justia Contracts Opinion Summaries

The U.S. Department of Energy entered into standard contracts to accept spent nuclear fuel from utility companies by January 1998 and has not yet accepted delivery, resulting in suits by several nuclear utilities. The district court awarded Dominion damages. The Federal Circuit affirmed, first holding that the Nuclear Waste Policy Act, 42 U.S.C. 10222, permitted assignment by Dominion's predecessor, that the assignment complied with the Act and the contract, and that the assignment included the right to pre-assignment damages. The district court properly denied discovery on the government's claim that Dominion has benefited from its breach because it has not yet been required to pay a one-time fee for disposal of waste generated prior to 1983.

The Court was asked to consider whether state law allows a sophisticated party in a commercial transaction, represented by counsel, with full knowledge of all the circumstances, without mistake or duress of any kind, to include in a contract a disclaimer, and later disavow that disclaimer as having been false at the time it was made. Petitioner Italian Cowboy Partners entered into a lease agreement with Respondents to open a new restaurant. Petitioners had been in the restaurant business for twenty-five years. The lease Petitioners signed contained a disclaimer against representations or promises with respect to the leased site. But Petitioners sued claiming Respondents misled them regarding the suitability of the chosen rental space for a new restaurant. The Court held that the lower court erred in granting Petitioners damages and attorneys fees based on its interpretation of the disclaimer in the lease, and remanded the case for an additional hearing.

A non-profit hospital ("plaintiff") that provided medical services to beneficiaries of Local 272 Welfare Fund ("Fund"), an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1101, filed a complaint against defendants seeking payment for over $1 million in medical services provided to beneficiaries that the Fund had allegedly failed to reimburse. At issue was whether a healthcare provider's breach of contract and quasi-contract claims against an ERISA benefit plan were completely preempted by federal law under the two-pronged test for ERISA preemption established in Aetna Health Inc. v. Davila. The court held that an "in-network" healthcare provider may receive a valid assignment of rights from an ERISA plan beneficiary pursuant to ERISA section 502(a)(1)(B); where a provider's claims involved the right to payment and not simply the amount or execution of payment when the claim implicated coverage and benefit determinations as set forth by the terms of the ERISA benefit plan, that claim constituted a colorable claim for benefits pursuant to ERISA section 502(a)(1)(B); and in the instant case, at least some of plaintiff's claims for reimbursement were completely preempted by federal law. The court also held that the remaining state law claims were properly subject to the district court's supplemental jurisdiction.

The company filed civil claims under Massachusetts state laws and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961 after discovering a scheme under which its employees and outsiders duped it into paying fraudulent invoices. Other defendants settled. After a trial, a former employee and an outsider, who advanced funds for the scheme, were found liable to the company. The First Circuit affirmed. There was sufficient evidence that the outsider knowingly and willfully participated in the scheme to support a verdict under RICO. That the jury did not find her liable for conspiracy to violate RICO is irrelevant. The evidence also supported a verdict of common law fraud; any error in a "willful blindness" jury instruction was harmless. Inclusion of anticipated attorney fees in an appeal bond was appropriate.

The company purchased a disability benefits plan, regulated by the Employee Retirement Income Security Act. A part-owner and employee of the company received benefits for about four years before the insurer terminated benefits because her non-salary income was higher than her salary income had been. The plan defines "pre-disability earnings" as: "your monthly rate of earnings from the employer in effect just prior to the date disability begins" and "basic annual earnings" as the amount reported by the policyholder on a W-2, excluding commissions. The company argued that a provision allowing termination of benefits when "current earnings" reach a percentage of pre-disability earnings referred to earnings from all sources. The district court held that the employee was not entitled to benefits but denied the insurer reimbursement. The First Circuit reversed, in favor of the employee, finding that the insurer's interpretation of the plan was unreasonable.

Plaintiffs sued Atlas Van Lines, Inc. ("Atlas") and Pickens Kane Moving & Storage Co. ("Pickens") for carrier liability under the Carmack Amendment to recover damages plaintiff paid to its insureds after the insureds' shipment of household goods were destroyed by a fire while in transit. Pickens was the receiving carrier and the goods were destroyed in the custody of Atlas. At issue was whether the district court properly interpreted sections 14706(f) and 14706(b) of the Carmack Amendment when apportioning the replacement value of household goods and apportioning costs. The court held that the district court properly apportioned the damages as it did under section 14706(f)(2), (3) to limit Atlas' liability to the tariff amount of $5.00 per pound in the absence of a declared value. The court also held that the district court did not abuse its discretion in apportioning costs where Atlas had custody of the shipment when it was destroyed and was liable to Pickens.

This appeal asks whether the bankruptcy court correctly determined that an operating agreement between the Debtor C.W. Mining Company (CWM) and Appellant C.O.P. Coal Development Company (COP) was property of the debtor's bankruptcy estate, and could therefore be sold off by the trustee. Appellant claims that the agreement automatically terminated shortly after the bankruptcy petition was filed, and that the bankruptcy court erred in including it. The terms of the operating agreement provided that it should cancel should CWM default on its payments to COP before the close of business on January 8, 2008. On that day, at 3:36PM, an involuntary bankruptcy petition was filed against CWM in bankruptcy court. CWM argued to the bankruptcy court that the operating agreement automatically terminated with the filing of the bankruptcy petition, but the court disagreed. The trustee assumed the operating agreement and sold mine assets. This Court affirmed the lower court's decision, finding that the operating agreement did not automatically terminate, and could be sold by the bankruptcy trustee.

The insured was treated as an outpatient for "mental or nervous disorder" in 2005-2007, allegedly incurring expenses of more than $125,000. In 2006 the company informed her that it had already paid $8,506 and would pay only $1,494 more toward the lifetime cap of $10,000. The district court held that the contract was not ambiguous and that the limit was not prohibited by New Hampshire law. The First Circuit affirmed. The policy limit for mental health benefits, stated as "the amount shown on page 3" is not ambiguous simply because that page refers to both the "Mental and Nervous Disorder Limit" of $10,000, and the "Maximum Benefit Limit Per Covered Person" of $1 million. A state law prohibiting unfair trade practices, including discrimination in insurance does not provide a private right of action until after the claimant obtains a favorable ruling from the insurance commissioner.

The Court affirmed the lower courtâs decision dismissing Plaintiff-Appellant David Gerasâ contract claim for unpaid commissions and severance against his former employer International Business Machines (IBM). IBM canceled its sales incentive plan under which Geras maintained he accrued sales commissions worth over $100,000. The Court held that under Colorado law, the planâs incentive letter contained an effective disclaimer, and did not manifest an intent to be bound by the terms of its plan.

The owner of patents for computer modems and methods of identifying modems licensed the patents to Rockwell; a related agreement gave Rockwell sub-licensing rights. Rockwell reorganized and assigned its rights. The patent owner acknowledged the assignment. Defendants obtain modem chips from a "spin off" of the companies formed in the Rockwell reorganization. The patent owner sued for infringement. The district court held that the defendants are licensed and entered summary judgment that certain patents are invalid. The Federal Circuit reversed in part, first holding that the assignment was within Rockwell's sub-licensing rights without further consent. Two patent claims were invalid for indefiniteness, but there was a material issue of fact on whether two others were invalid for failure to disclose necessary algorithms.