Altrutech, Inc. v. Hooper Holmes, Inc.

6 F. Supp. 2d 1269, 1998 U.S. Dist. LEXIS 8323, 1998 WL 293288
CourtDistrict Court, D. Kansas
DecidedJune 2, 1998
DocketCivil Action 96-2091-GTV
StatusPublished
Cited by14 cases

This text of 6 F. Supp. 2d 1269 (Altrutech, Inc. v. Hooper Holmes, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Altrutech, Inc. v. Hooper Holmes, Inc., 6 F. Supp. 2d 1269, 1998 U.S. Dist. LEXIS 8323, 1998 WL 293288 (D. Kan. 1998).

Opinion

MEMORANDUM AND ORDER

VAN BEEBER, Chief Judge.

In this diversity of citizenship case, plaintiff Altrutech, Inc. alleges that defendants breached a purchase agreement and a management agreement (Counts I-IV), acted in bad faith in breaching the agreements (Count V), engaged in unfair trade practices (Count VI), and tortiously interfered with plaintiff’s relationships with employees, contractors, and clients (Count VII). Plaintiff seeks punitive damages on the tort claims. By stipulation, the parties dismissed Count I, and the court dismissed Counts V and VI in a January 26, 1998 memorandum and order. The ease is before the court on the motions for partial summary judgment (Does. 163 & 165) of defendants Hooper Holmes, Inc. (“Hooper Holmes”) and American Service Bureau, Inc. (“ASB”). The first motion seeks summary judgment on Counts II, III, and IV. The second motion seeks summary judgment oh Count VII and plaintiffs request for punitive damages. For the reasons set forth below, defendants’ first motion (Doc. 163) is denied, *1272 and defendants’ second motion (Doc. 165) is granted.

I. Factual Background

On April 1, 1991, Altrutech entered into a purchase agreement with Lifetime Corporation in which Lifetime purchased assets Al-trutech used in its paramedical.business. Lifetime transferred its interest in the assets to ASB, its wholly-owned subsidiary. On May 1, 1991, the parties entered into a Special Contractor Agreement designed to memorialize the parties’ relationship until the pending management agreément became effective. On July 1, 1991, Altrutech and ASB entered into a management agreement, under which Altrutech agreed to manage the paramedical business it had previously sold to ASB. The management agreement was for an initial period of four years, with an option to renew for two years in 1995, and with a further option to renew annually for an indefinite period.

The effect of the management agreement was to transfer ownership of the business to ASB, while Altrutech continued to handle the day-to-day operations of the business. The primary functions of the business were to provide physical examinations of applicants applying for life insurance and other services relating to the life, insurance industry. The management agreement provided that Altru-tech could be terminated only for cause or breach and that, in the event of a breach, it had the right, to cure. Also, in the event of termination for cause, Altrutech was to receive thirty days notice before such termination took effect.

In August 1993, Lifetime, including its subsidiary ASB, was purchased by Olsten Corporation. In October 1995, Olsten sold ASB to defendant Hooper Holmes, Inc. 1 By letter dated January 19, 1996, Hooper Holmes terminated Altrutech as manager for alleged undisclosed breaches of confidentiality. The letter informed Altrutech that Hooper Holmes planned to, resume possession of the business assets Altrutech was using in its management business. On January 26, 1996, Hooper Holmes accelerated the termination to become effective January 29,1996. Altru-tech asserted that the notice' of termination was defective, and refused to surrender various business assets to Hooper Holmes. Al-trutech continued to provide paramedical services while using the assets that Hooper Holmes had purchased under the purchase agreement.

When Hooper Holmes terminated the management agreement in January 1996, it merged the entity known as ASB with a second paramedical service company known as Portamedic. In order to avoid possible confusion caused by this merger, defendants claim that it was necessary to perform a “sales blitz” to inform local insurance agents about the change of ownership of ASB and about Altrutech’s recent termination as manager. This sales blitz was directed at 240-260 offices of insurance agents regardless of whether they previously worked with Altru-tech. Altrutech contends that this sales blitz, in conjunction with Hooper Holmes’ breach of the management contract, was designed to drive Altrutech out of business. Regardless of defendants’ intent in conducting the sales blitz, the record indicates that no intentional interference with plaintiffs business relationships occurred until January 22, 1996 — three days, after Hooper Holmes terminated the management agreement.

II. Summary Judgment Standards

A moving party is entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). One of the-principal purposes of summary judgment is to isolate and dispose of factually unsupportable claims or defenses, and Rule 56 should be interpreted in a way that accomplishes this purpose. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court’s proper inquiry is whether there is. a need for a trial; in other words, whether “there are any genuine factual issues that properly can be resolved only by a finder of *1273 fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed,2d 202 (1986).

The moving party bears the initial burden of demonstrating the absence of a -genuine issue of material fact. This burden may be discharged by “showing” that there is an absence of evidence to support the nonmov-ing party’s case. Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmov-ing party, who “may not rest on mere' allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine.issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. See id.

III. Discussion

Defendants have submitted two motions for partial summary judgment. The first seeks summary judgment on plaintiffs breach of contract claims (Counts II, III, and IV). The second seeks summary judgment on plaintiffs claim of tortious interference with business contracts (Count VII) and plaintiffs request for punitive damages.

A. Breach of Contract Claims (Count II, III, and IV)

Defendants claims that summary judgment should be granted on plaintiffs remaining breach of contract claims for three reasons. First, defendants claim that Altruteeh has already elected its remedy for any damages by retaining control of the business that it formerly managed.

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6 F. Supp. 2d 1269, 1998 U.S. Dist. LEXIS 8323, 1998 WL 293288, Counsel Stack Legal Research, https://law.counselstack.com/opinion/altrutech-inc-v-hooper-holmes-inc-ksd-1998.