993 F. Supp. 2d 379
S.D.N.Y.2014Background
- Summit (provider) and APS (customer/administrator) entered a January–March 2011 subcontract (Summit Health Services Agreement) for on-site employee health screenings; Exhibit B set pricing including a per-screen fee ($37) and a per-clinic “standard minimum”: “40 screenings, or 90% of Customer projection, whichever is greater.”
- APS’s Tennessee operations team (Watson/Glazer/Hines) supplied clinic-by-clinic participation estimates (the “Watson estimates”); Summit relied on those estimates for staffing and invoiced minimum fees based on them for early months.
- Technical problems and staffing complaints occurred; Summit suspended data feeds until a BAA was in place and the Agreement was signed March 15, 2011. After signing, APS disputed application of the 90% minimum and paid only actual per-screen amounts, withholding contested minimums.
- Summit sued for breach of contract seeking unpaid minimum fees (~$2.25M). Summit moved for summary judgment on liability; APS moved for leave to amend to add a unilateral-mistake rescission counterclaim and to expand affirmative-defense facts.
- The court construed the contract under New York law, found “Customer projection” unambiguous as estimates provided by APS, granted summary judgment to Summit for the first 150 clinics, denied summary judgment for clinics beyond 150 (latent ambiguity in §(g)(4) of Exhibit A and factual disputes post-March 18 regarding which projections APS provided), and denied APS leave to amend (counterclaim futile).
Issues
| Issue | Plaintiff's Argument (Summit) | Defendant's Argument (APS) | Held |
|---|---|---|---|
| Whether the phrase “Customer projection” in Exhibit B is ambiguous | It is unambiguous and refers to participation estimates provided by APS | APS contends it could mean online appointments (not Watson estimates) or is ambiguous | Court: Unambiguous — “Customer projection” means estimates provided by APS (dictionary + contract context); summary judgment for Summit on this point |
| Whether the minimum-fee scheme continues to apply after the first 150 clinics (Exhibit A §(g)(4)) | Minimums apply generally; Summit entitled to fees unless contract language plainly removes them | §(g)(4) may limit Summit to the per-on-site default rate after 150 clinics | Court: Ambiguous as to post-150 clinics; genuine issue of fact — denied summary judgment for clinics beyond first 150 |
| Whether Watson estimates (pre- and post-Mar 18) constitute APS’s “Customer projections” for computing 90% minimums | Watson estimates (provided by APS staff) are APS projections and support minimums for Jan–Feb; after Mar 18, disputed whether APS directed use of online appointments | APS says post-Mar 18 Hines email directed use of online appointments; before Mar 18 only online appointments could be "true" projections | Court: For clinics before Mar 18, Summit may rely on Watson estimates; for clinics after Mar 18, a factual dispute exists about what APS provided as Customer projections — summary judgment denied for those clinics |
| Whether APS may amend to add rescission counterclaim (unilateral mistake) and expand defenses | Summit opposes amendment as futile because APS failed ordinary-care requirement and mistake claim lacks evidentiary support | APS asserts it reasonably (but mistakenly) understood “Customer projection” to mean online appointments and seeks rescission | Court: Denied leave to amend — rescission counterclaim futile as APS did not exercise ordinary care, contract unambiguous, and APS had opportunity to review/clarify; proposed affirmative-defense amendments also futile |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden rules)
- Anderson v. Liberty Lobby, 477 U.S. 242 (evidence standard to defeat summary judgment)
- Foman v. Davis, 371 U.S. 178 (standards for leave to amend pleadings)
- Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42 (Second Circuit on interpreting contract unambiguity)
- W.W.W. Assocs., Inc. v. Giancontieri, 566 N.E.2d 639 (N.Y. 1990) (extrinsic evidence inadmissible unless contract ambiguous)
- Kasowitz, Benson, Torres & Friedman, LLP v. Duane Reade, 98 A.D.3d 403 (N.Y. App. Div. 2012) (four-corners rule; enforcement of written intent)