Walsh Healthcare Solutions Inc. v. Amerisource Corp.

91 F. App'x 323
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 25, 2004
Docket02-41373
StatusUnpublished

This text of 91 F. App'x 323 (Walsh Healthcare Solutions Inc. v. Amerisource Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walsh Healthcare Solutions Inc. v. Amerisource Corp., 91 F. App'x 323 (5th Cir. 2004).

Opinion

PER CURIAM. **

Walsh Healthcare Solutions, Inc. (“Walsh”) sued AmeriSource Corporation (“AmeriSource”) seeking lost profits under Department of Veteran Affairs (‘VA”) pharmaceutical prime vendor (“PPV”) contracts. Both Walsh and AmeriSource appeal the district court’s order granting and denying various portions of each party’s motion for summary judgment. Because the express terms of a settlement agreement entered into by the parties bars each claim raised by Walsh and AmeriSource, we reverse and remand.

BACKGROUND

In 1993, Walsh and AmeriSource separately entered into PPV contracts with the VA. AmeriSource’s PPV contract covered several geographic regions, while Walsh’s PPV contract covered only the South Central region. 1 The contracts both lasted for one year, with four optional one-year extensions. Because the VA invoked all the extensions, the contracts were set to expire in September 1998.

Approximately one year after the parties entered into their PPV contracts, the VA introduced a new mail-order prescription refill system. Rather than having out-patient pharmacies fill these prescriptions, the VA formed a network of government-run Consolidated Mail Outpatient Pharmacies (“CMOPs”) to handle all mail-order prescription refills. The medical facilities in the South Central region, which belonged to Walsh under its PPV contract, were assigned to CMOPs in AmeriSource’s territory. As a result, AmeriSource became the sole CMOP supplier in the South Central region and Walsh lost a significant portion of the business for which it had contracted.

In December 1995, Walsh and AmeriSource signed a letter agreement (“December Agreement”), which provided that Walsh would supply certain “mainstream” pharmaceuticals to one particular CMOP on a regular basis and act as a back-up supplied to other CMOPs. The parties hoped that the arrangement would allow Walsh to recover its lost sales volume. By November 1996, however, Walsh claimed an $8.5 million deficit. As a result, AmeriSource agreed to compensate Walsh for its lost profits, which would be calculated based on an agreed-upon formula. Walsh began submitting invoices to AmeriSource on a regular basis, and AmeriSource paid each invoice in full, though the payments were sometimes delayed.

As the PPV contract term neared its end, the VA realized it was not prepared to enter into new PPV contracts and signed one-page interim contracts (“First Interim Contract”) with both Walsh and AmeriSource. The First Interim Contracts were set to expire in March 1999. During the First Interim Contract term, Walsh continued to submit invoices to AmeriSource. In fact, AmeriSource paid Walsh $394,161 for the period of October to December *325 1998. Walsh later sought compensation in the amount of $404,481 for the period of January to March 1999, which AmeriSource never paid.

Meanwhile, on December 28, 1998, the VA awarded a new PPV contract to AmeriSource that covered the entire country. Walsh filed a bid protest with the General Accounting Office (“GAO”) on January 19, 1999, and argued that the VA had failed to adhere to the proper procedures when awarding the new PPV contract. As a result of the bid protest, the VA entered into a second set of interim contracts (“Second Interim Contracts”) with Walsh and AmeriSource that would last until June 30, 1999. The GAO ultimately denied Walsh’s bid protest on April 28, 1999.

In May 1999, Walsh filed suit against the VA in federal district court. AmeriSource intervened in the suit as a defendant to protect the contract award. In July 1999, Walsh, AmeriSource, and the VA entered into a settlement agreement that accomplished the following: (1) Walsh’s Second Interim Contract with the VA would be extended an additional 92 days and would end in September 1999; (2) AmeriSource’s new PPV contract would become effective on October 1, 1999; and (3) the parties entered into a release of claims.

In April 2000, Walsh sued AmeriSource in Texas state court, claiming that AmeriSource failed to compensate it for lost profits through March 1999, relying on theories of express and implied contract, third-party beneficiary status, and promissory estoppel. AmeriSource removed the case to federal district court and filed conversion and unjust enrichment counterclaims for $394,161, which AmeriSource alleged it mistakenly paid to Walsh for lost profits from October to December 1998. Walsh then amended its complaint to add a claim for lost profits through September 1999, when the Second Interim Contract expired.

On cross motions for summary judgment, the district court held that (1) the settlement agreement did not preclude the parties’ claims; (2) the December Agreement between Walsh and AmeriSource expired in September 1998; and (3) the parties’ actions gave rise to an implied contract throughout the duration of the First Interim Contract. The district court denied Walsh’s motion for summary judgment on express contract grounds, but granted Walsh’s motion on implied contract grounds only for the period of October 1998 to March 1999. 2 Thus, AmeriSource owed Walsh its lost profits of $404,481 for the second half of the First Interim Contract term, or January to March 1999, plus attorneys’ fees. Consequently, AmeriSource’s cross-motion for summary judgment for conversion and unjust enrichment was denied. Finally, the district court denied Walsh’s motion for summary judgment on promissory estoppel. Both parties appealed.

DISCUSSION

We review de novo a district court’s decision to grant or deny summary judgment. Patterson v. Mobil Oil Corp., 335 F.3d 476, 487 (5th Cir.2003). “Under Texas law, summary judgment may be granted if the terms of a contract are not ambiguous, such that they ‘can be given a certain or definite legal meaning or inter-pi*etation.’ ” Petula Assocs., Ltd. v. Dolco Packaging Corp., 240 F.3d 499, 502 (5th Cir.2001) (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983)). A district court’s interpretation of an unambiguous *326 contract is a question of law subject to de novo review. Guidry v. Halliburton Geophysical Servs., Inc., 976 F.2d 938, 940 (5th Cir.1992). Because a settlement agreement is a contract, its interpretation is also subject to de novo review. Id.

AmeriSource argues that the plain language of the settlement agreement prevents the parties from asserting the claims in this suit. 3 Conversely, Walsh argues that the settlement agreement was never intended to preclude claims pertaining to the First Interim Contract. The settlement agreement, signed by Walsh and AmeriSource as well as the government, provides that

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Related

Petula Associates, Ltd. v. Dolco Packaging Corp.
240 F.3d 499 (Fifth Circuit, 2001)
Patterson v. Mobil Oil Corp.
335 F.3d 476 (Fifth Circuit, 2003)
Coker v. Coker
650 S.W.2d 391 (Texas Supreme Court, 1983)
Victoria Bank & Trust Co. v. Brady
811 S.W.2d 931 (Texas Supreme Court, 1991)
Memorial Medical Center v. Keszler
943 S.W.2d 433 (Texas Supreme Court, 1997)

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91 F. App'x 323, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walsh-healthcare-solutions-inc-v-amerisource-corp-ca5-2004.