Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Witasick was covered by a disability policy and a business overhead expense policy. His claims against both policies were honored. A dispute arose concerning coverage of some claimed business expenses. After years of negotiation, the parties settled: the insurer agreed to pay more than $4 million and Witasick agreed to release known, unknown, and future claims. The settlement contained a covenant not to sue, based on “any conduct prior to the date the Parties sign this document, or which is related to, or arises out of” the policies. During negotiations, the U.S. Government notified Witasick that he was the target of a grand jury investigation related to fraud and business expense claims on his income tax returns. Witasick was indicted in 2007. To support its charge of mail fraud, the government relied on information and documents Witasick had submitted to the insurer. An employee of the insurer testified before the Grand Jury and at Witasick’s trial. Witasick was convicted on most counts, but acquitted of mail fraud, and was sentenced to 15 months’ imprisonment. In 2011, Witasick sued the insurer based on the policies and cooperation with the prosecution. The Third Circuit affirmed dismissal, finding the claims prohibited by the settlement agreement. View "Witasick v. Minn. Mut. Life Ins, Co." on Justia Law

Brand developed Thermablaster, a vent-free heater, to be manufactured by a Chinese company, Reecon. Reecon suggested using Intertek testing to ensure the heaters met U.S. safety standards. Brand spoke with Intertek representatives and visited the company’s website to ensure that Intertek could test to American National Standards Institute (ANSI) standards. Satisfied that Intertek’s China facility had the necessary expertise, Brand allowed Reecon to use Intertek for testing against the most recent applicable ANSI standard. The $22,000 testing cost was part of the per-unit price. Ace Hardware agreed to pay Brand $467,000 for 3,980 Thermablasters. Brand visited China to monitor production. Reecon gave Brand an Intertek document signed by its engineers, showing that the heaters had passed all relevant tests. Brand bought 5,500 heaters and delivered them to Ace. Ace began selling the heaters in 2011 but halted sales permanently after learning from a competitor that they did not meet ANSI standards. Ace obtained a default judgment of $611,060 against Brand. Brand sued Intertek. Intertek countersued, alleging trademark infringement because Brand had placed Intertek’s testing certification mark on boxes before receiving permission. Intertek bought Ace’s judgment against Brand for $250,000 and aggressively tried to collect before trial. The Third Circuit affirmed a verdict finding Intertek liable to Brand for negligent misrepresentation and awarding Brand $1,045,000 in compensatory and $5 million in punitive damages. View "Brand Mktg. Grp. LLC v. Intertek Testing Servs. NA" on Justia Law

Devon acquired the rights to distribute robotic medical devices, CytoCare and i.v. Station, from Robotics. DeViedma, Robotics's general counsel, negotiated the contracts. Each contained an arbitration clause. Robotics later agreed to provide management consulting services through DeViedma. DeViedma allegedly obstructed a possible sub-licensing contract with McKesson; Devon failed to make franchise payments, leading Robotics to draw down a $5 million line of credit from Itochu, guaranteed by Devon. Itochu eventually sued Devon. The parties terminated the management consulting services. Robotics terminated Devon's CytoCare contract and entered into an agreement with McKesson. Robotics also alleged breaches of the i.v. Station agreement. DeViedma e-mailed hospital customers telling them that Devon faced financial difficulties and lacked staff qualified to manage i.v. Station installations. Devon sued DeViedma and McKesson, claiming breach of fiduciary duty, tortious interference with current and prospective contractual relations, defamation, and conspiracy. The court rejected a motion to dismiss in favor of arbitration. DeViedma did not appeal that order. Extensive litigation followed. DeViedma later moved for summary judgment on the remaining claims for breach of fiduciary duty and tortious interference with contractual relations. The court rejected his arguments in favor of arbitration. The Third Circuit dismissed DeViedma’s interlocutory appeal, rejecting an argument that the denial of summary judgment was an appealable order under the Federal Arbitration Act, 9 U.S.C. 16(a)(1)(C). View "Devon Robotics LLC v. DeViedma" on Justia Law

Realtor Willis planned Southgate, involving the purchase of 68 acres on St. Croix, re-zoning, subdivision, building infrastructure, and selling individual lots. Willis worked with defendants Cheng and Dubois and their entities (OMEI, Ocean View) for financing, but the defendants did not actually intend to develop the property. Pollara, a 47-year veteran of the construction industry, was hired to create the subdivision’s entrance. Ultimately Cheng and Dubois stopped paying Pollara and locked him out of his site office. Pollara was never paid for repair work to the roadway after flooding. Defendants, standing on both sides of the financing, refused any extension of the financing terms; they withheld their consent to selling the land at a profit to a buyer whom Willis had found. They caused Ocean View to foreclose, acquiring the property free of Willis’s and Pollara’s interests. The jury found that Ocean View and Cheng had made intentional misrepresentations and that OMEI had made negligent misrepresentations and that Dubois had made negligent misrepresentations with respect to the building permit and proposals for the development plan, and intentional misrepresentations as to the other three subjects. The jury awarded Pollara compensatory damages of $391,626 from all of the defendants and punitive damages of $90,000 against Cheng. The Third Circuit affirmed. View "Frank C Pollara Grp. LLC v. Ocean View Inv. Holding, LLC" on Justia Law

The Torres own land and a house in Mantoloking, New Jersey, that was covered by a National Flood Insurance Program Dwelling Form Standard Flood Insurance Policy (SFIP) issued by Liberty under the National Flood Insurance Act. The National Flood Insurance Program “is underwritten by the United States Treasury in order to provide flood insurance below actuarial rates.” The Torres’ property sustained substantial damage during Hurricane Sandy, and they submitted claims under the SFIP for that damage to Liberty. Liberty administered a total payment1 to the Torres of $235,751.68, which included the cost of removing debris from their house. The Torres sought an additional payment of $15,520 for the cost of removing sand and other debris deposited on their land in front of and behind their house. Liberty denied that claim on the ground that the SFIP does not cover it. The Third Circuit affirmed judgment in Liberty’s favor. The SFIP provides coverage for structures and other items of property but not for an entire parcel of land; the provision requiring Liberty to pay for removal of non-owned debris that is “on or in insured property” does not apply to expenses incurred in removing non-owned debris from land outside the home. View "Torre v. Liberty Mut. Fire Ins. Co." on Justia Law

CCC, an investment fund incorporated in Guernsey, a British Crown dependency in the English Channel, invested in residential mortgage-backed securities issued by Fannie Mae and Freddie Mac. Moonmouth purchased CCC shares for $60 million under a 2006 Subscription Agreement, which contained a forum selection clause giving Delaware state courts exclusive jurisdiction over any action and specifying that Delaware law was to govern. In 2008, CCC entered liquidation. A Guernsey court appointed liquidators, who sued Carlyle and others (plaintiffs in this action) in Guernsey for breach of fiduciary duties owed to CCC. Subsequent Transfer Agreements involving the parties released then-existing claims against Carlyle. In 2012, a Dutch law firm representing Moonmouth sent letters alleging that plaintiffs took unacceptable risks in connection with CCC-managed investments and that they would hold plaintiffs liable for damages sustained by investors in connection with CCC. Plaintiffs sought to enforce the Subscription Agreement’s forum selection clause and the Transfer Agreements’ releases. After removal to federal court, the district court remanded to state court. The Third Circuit affirmed. The Subscription Agreement’s forum selection clause pertains to the case, may be enforced against defendants, and may be invoked by plaintiffs; the Transfer Agreement provides an alternative ground supporting remand. View "Carlyle Inv, Mgmt., LLC v. Moonmouth Co., SA" on Justia Law

In 1999, Allstate reorganized its business and terminated the at-will employment contracts of about 6,200 sales agents, offering them conversion to independent contractor status; $5,000 and an economic interest in their accounts, to be sold to buyers approved by Allstate; severance pay equal to one year’s salary; or severance pay of 13 weeks’ pay. Employees who chose independent contractor status received a bonus of at least $5,000, were not required to repay any office-expense advances, and acquired transferable interests in their business two years after converting. All employees who chose not to convert and left the company were bound by noncompetition covenants in their original contracts. As a condition of becoming independent contractors, agents were required to sign a release waiving existing legal claims against Allstate. The Equal Employment Opportunity Commission sued, claiming that the company violated federal anti-retaliation laws. The district court reversed. The Third Circuit affirmed, noting the settled rule that employers can exchange consideration for releases of claims and that EEOC established neither protected activity nor an adverse action. View "Equal Emp't Opportunity Comm'n v. Allstate Ins. Co" on Justia Law

Facing asbestos-related personal injury lawsuits filed in the 1980s, a group of producers of asbestos and asbestos-containing products formed the Center for Claims Resolution to administer such claims on behalf of its Members. About 20 Members negotiated and signed the Producer Agreement, which established and set forth the mechanics of the Center and the obligations of the Members. After G-I failed to pay its contractually-calculated share of personal injury settlements and Center expenses, U.S. Gypsum and Quigley were obligated to pay additional sums to cover G-I’s payment obligations. G-I filed for bankruptcy and the Center, U.S. Gypsum, and Quigley each filed a proof of claim, seeking to recover for G-I’s nonpayment under the Producer Agreement. The Center settled its claim with G-I. The Bankruptcy Court granted summary judgment in G-I’s favor. The district court affirmed. The Third Circuit vacated, holding that the Producer Agreement permits the Former Members to pursue a breach of contract action against G-I for its failure to pay contractually-obligated sums due to the Center, in light of their payment of G-I’s share. View "In re: G-I Holdings, Inc." on Justia Law

The Providers supply outpatient cardiac telemetry (OCT) services, used by doctors to monitor cardiac arrhythmias. The device differs from conventional technology in that it transmits electrocardiographic (EKG) data in real time to certified technicians, who forward the data to a physician. OCT is approved by the FDA, and has long been covered by Medicare and commercial insurers. CIGNA administers employer sponsored health benefit plans. CIGNA pays its in-network providers directly for the services rendered to patients. In 2007, the Providers joined CIGNA’s network by Agreements that set the reimbursement rate and define “Covered Services.” In 2012, CIGNA issued a statement that it would no longer cover OCT “for any indication because it is considered experimental, investigational or unproven.” The 2012 Policy acknowledged that this new position would be trumped by any conflicting language in the coverage policies themselves. In arriving at the new policy, CIGNA relied on the same medical literature it had previously relied upon in concluding that OCT should be covered. The Providers claim that CIGNA indicated that its motive was financial, but refused to reconsider the 2012 Policy. The district court found that the Providers’ claims fell within the arbitration clause of the Agreement. The Third Circuit vacated. The clause at issue is limited in scope to disputes “regarding the performance or interpretation of the Agreement” and the claims at issue do not relate to the performance or interpretation of the Agreement.View "Cardionet Inc v. Cigna Health Corp." on Justia Law

Fair Wind owns sailing schools, including one in St. Thomas, Virgin Islands. In 2007 Fair Wind hired Bouffard as a captain and instructor, under a contract precluding Bouffard from joining a competitor within 20 miles of the St. Thomas school for two years after the end of his employment. In 2010, relying on Bouffard View "Fair Wind Sailing Inc v. Dempster" on Justia Law