McCurdy Group, LLC v. American Biomedical Group, Inc.

9 F. App'x 822
Court of Appeals for the Tenth Circuit·Decided May 21, 2001·No. 00-6183, 00-6332·Unpublished·Cited by 27 cases

Opinions

ORDER AND JUDGMENT *

BRISCOE, Circuit Judge.

Defendant American Biomedical Group, Inc., (ABGI) appeals from a final judgment, entered after a jury verdict, awarding plaintiff McCurdy Group, LLC, (MG) $228,406.82 on its claim for breach of contract, and $148,800.00 on its claim for quantum meruit. ABGI has also filed a separate appeal challenging the district court’s award of attorney fees in favor of MG. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.

I.

Dave McCurdy is a former Oklahoma Congressman, having served in the United States House of Representatives from 1980 until January 1995. In March 1995, McCurdy formed MG, a Virginia limited liability company, with its principal office [825] and place of business in Virginia. McCurdy’s intent was for MG “to be a business consulting and investment group,” and “not a lobbying group” or “a political group.” Aplt.App. (00-6183) at 218.

On April 7, 1995, McCurdy, on behalf of MG, signed a written agreement with ABGI, an Oklahoma corporation with its principal office and place of business in Oklahoma. ABGI provided hospitals and other healthcare providers with systems to reduce equipment maintenance expenses. Prior to entering into the agreement with MG, ABGI had unsuccessfully attempted to obtain contracts with federally-run hospitals. ABGI’s purpose in entering into the agreement with MG was to have MG assist in marketing ABGI’s products and services to federal government officials.

The April 7 agreement between MG and ABGI stated that McCurdy would become a director of and consultant to ABGI. In return for his role as director, McCurdy was to receive an annual fee of $24,000. MG was to perform the following services for ABGI:

(1) establish an office for ABGI in the Washington, D.C. area;
(2) provide and direct a marketing strategy and effort to secure additional business for ABGI with the Veterans Administration (VA), other hospitals under the Department of Defense (DOD), Indian Health Services, and other public, government, and private sector hospitals identified in advance and agreed to by ABGI and MG;
(3) consult with Jim Burgess and ABGI regarding long-range planning, capital information, potential mergers and acquisitions, and future public offering or sale of ABGI;
(4) perform such other duties and services as may be requested by ABGI and agreed to be performed by MG; and
(5) report no less than monthly on its efforts in fulfilling the above-outlined contractual obligations.

Aplee.App. (00-6183) at 299-300. MG was to receive the following compensation:

(1) a marketing/consulting fee equal to 2.0% of the VA/DOD and other identified contract business obtained and completed by ABGI and entered into by ABGI during the term of the contract or any extension thereof and renewals of these contracts;
(2) a monthly office and staff overhead fee of $16,600; and
(3) reimbursement of out-of-pocket travel and business expenses.

Id. at 301-02. In addition, MG was granted an option to acquire up to 5% of the outstanding common stock of ABGI, either by purchase of such stock or by waiver of MG’s consulting/marketing fee on an equal dollar-waived to dollar-acquired basis. Lastly, the contract provided that either party could terminate the contract upon 120 days’ written notice.

Upon signing the agreement, both parties began performing their respective obligations. In particular, McCurdy and MG began efforts to market ABGI’s products and services to various government officials and organizations (e.g., VA hospitals located on the east coast). In return, ABGI helped establish an office for MG in Washington, D.C., and began paying MG the amounts of compensation set forth in the agreement (except for the director’s fee to be paid to McCurdy). ABGI continued to make payments to MG through June 1996, when the payments from ABGI to MG ceased. According to McCurdy, the only reason given by Burgess for ABGI’s failure to pay was cash flow problems, and that at no time did Burgess or anyone else at ABGI indicate the parties’ written agreement had been terminated.

[826] Notwithstanding ABGI’s failure to pay, MG continued to perform its obligations under the written agreement. Indeed, MG continued to market ABGI’s products and services to potential customers through approximately August 1997. Beginning in the fall of 1996 and continuing into August 1997, MG repeatedly asked ABGI why payments had not been made under the agreement and, according to McCurdy, Burgess repeatedly attributed the failure to ABGI’s alleged cash flow problems. ,

MG filed this diversity action on July 1, 1997, and the case proceeded to trial in April 2000. At the conclusion of all the evidence, the jury returned a verdict in favor of MG on its claim for breach of contract and awarded MG damages in the amount of $228,406.82. The jury also returned a verdict in favor of MG on its claim for quantum meruit and awarded MG damages on that claim in the amount of $148,800. The district court granted MG’s request for attorney fees in the amount of $221,921.51, but denied its request for prejudgment interest.

II.

No. 00-6183

Quantum meruiN-jury instructions

According to the record, MG’s primary theory at trial was that the April 7 agreement was not terminated until after this lawsuit was filed and that ABGI was therefore liable for damages under the agreement through that time period. The district court, however, chose to instruct the jury that a breach of contract on the part of ABGI (e.g., failure to pay MG) would result in triggering the 120-day notice provision and the ultimate termination of the contract.1 Apparently concerned whether this instruction was correct, and also concerned that this would limit the amount of damages recoverable by MG, the district court allowed MG to pursue, in addition to its breach of contract claim, a quantum meruit theory under which the jury could award MG damages for any services that MG rendered to ABGI after termination of the contract.

ABGI contends it was improper for the district court to permit MG to recover on its quantum meruit claim. According to ABGI, quantum meruit is only appropriate where there is no contract in place covering the transactions at issue. Here, ABGI argues, MG should have been limited to damages that accrued during the 120-day notice period set forth in the parties’ written agreement2 and should not have been permitted to recover any damages that accrued after that period.

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McCurdy Group, LLC v. American Biomedical Group, Inc., 9 F. App'x 822 (10th Cir. 2001).

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