Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Plaintiff Arnold Oil Properties, LLC hired Defendant Schlumberger Technology Corp. to perform a specialized cement job on its deep-zone gas well. After Schlumberger poured too much cement into the well, Arnold sued for breach of contract and negligence. The district court concluded as a matter of law that an alleged exculpatory provision in the parties' contract was an indemnification provision and therefore did not bar Arnold's recovery. After a jury found the parties were in unequal bargaining positions, the district court denied Schlumberger's request to enforce the contractual limitation-of-liability provision. Schlumberger appealed the district court's denial of summary judgment and its denial of judgment as a matter of law. Finding that the evidence supported the jury's finding, the Tenth Circuit affirmed the district court's grant of summary judgment in favor of Arnold. View "Arnold Oil Properties LLC v. Schlumberger Technology Corp." on Justia Law

Defendant-Appellant International Bancshares Corporation (IBC) appealed the judgment of the district court in favor of Plaintiff-Appellee MCC Management of Naples (Colliers). The Colliers sued for breach of contract and fraud in a dispute over tax benefits. The dispute arose over the parties' disagreement over the entitlement to $16 million in benefits that accrued over a period of years in Local bank. Brothers and investors Miles and Barron Collier owned Local at the time the tax benefits arose. IBC now owns the bank. Local bought troubled loan assets. An agency (now the FDIC) guaranteed the value of the assets. In return, Local had to "share" some of its profits. When Congress repealed the deductions Local claimed on the losses from the assets, Local stopped paying its share from those assets and sued in federal court. The FDIC counterclaimed for non-payment. The Townsend Group had purchased Local Bank from the Colliers while the lawsuit was pending. Townsend required the Colliers promise to indemnify Townsend/Local in the event the FDIC won the lawsuit for more than the potential liability in the suit. Local eventually settled the suit for approximately $25-27 million. Townsend/Local and the Colliers signed a Resolution and Modification Agreement from which the Colliers claimed entitlement to the aforementioned tax benefits. Furthermore, through the "excess basis deduction," Local claimed a deduction on principal payments made to the FDIC and for attorney's fees. In addition to the dispute over the tax benefits, Local's former "tax director" quit over what she believed was the bonus owed to her for discovering the excess basis deduction. She began consulting for the Colliers and notified them of the millions in deductions that Local claimed. IBC counterclaimed against the Colliers, and added third-party claims against the former tax director for breaching confidentiality and tortious interference with contract. The Colliers and tax director prevailed after a jury trial. IBC appealed, arguing it was entitled a judgment as a matter of law. But after review, the Tenth Circuit found no error in the district court's findings at trial. View "MCC Mgmt of Naples v. International Bancshare " on Justia Law

Trinity Mortgage Companies, Inc. (Trinity) appealed the district court’s order granting summary judgment in favor of David Dryer and Dryer and Associates, P.C. (Dryer). Trinity, formerly a mortgage brokerage company owned by Shawn Cremeen, entered into a franchise agreement with 1st Class Lending, Inc., which was owned by Dennis Junker and Richard Gheisar. In April 2007, Junker sued Gheisar and Trinity in Oklahoma state court for breach of contract, fraud, defamation, and conversion, all concerning his alleged wrongful termination. Between May 2007 and April 2008, Dryer represented Trinity, without a written contract. In October 2007, while the lawsuit was pending, Trinity entered into an agreement to sell most of its assets and to stop originating loans. Meanwhile, after Trinity failed to file an answer in the pending lawsuit, Junker moved for a default judgment against Trinity. Because Dryer failed to object to entry of default judgment against Trinity, the state court granted the motion against Trinity in January 2008. The another firm replaced Dryer as Trinity’s counsel, who unsuccessfully sought to vacate the default judgment against Trinity. Cremeen and Junker eventually entered into a settlement agreement concerning the lawsuit. Trinity confessed a final judgment in favor of Junker but the only recovery of this amount would be through his ownership interest in Trinity, which was the action against Dryer. Trinity moved for partial summary judgment on its malpractice and breach of contract claims. Dryer moved for summary judgment, contending that all claims were barred as a matter of law because Trinity unlawfully assigned them to Junker. In response, Trinity argued that there had not been an assignment of tort causes of action; there was never any collusion between Trinity and Junker; and that the malpractice case was not contingent upon disproving the merits of the underlying suit against Trinity. The district court granted Dryer’s motion for summary judgment and denied Trinity’s motion for partial summary judgment. Upon review, the Tenth Circuit concluded that the district court properly granted summary judgment in favor of Dryer.

Plaintiff Kansas Penn Gaming, LLC (KPG), a limited liability corporation formed by Penn National Gaming, Inc. (Penn National), entered into a real estate sale contract with HV Properties of Kansas, LLC (HV), pursuant to which KPG purchased from HV parcels of land in southeast Kansas for $2.5 million for the purpose of seeking to develop a lottery gaming facility on the land. KPG ultimately chose not to develop a lottery gaming facility on the land. HV thus did not receive $37.5 million of payments that it had hoped to receive from KPG under the contract. KPG filed suit seeking a declaratory judgment that it did not breach the terms of the contract. HV filed a counterclaim alleging that KPG breached the terms of the contract. HV also filed a separate action against Penn National alleging breach of Penn National’s obligation as guarantor to make the payments due under the contract between KPG and HV. The district court consolidated the two cases and granted summary judgment in favor of KPG and Penn National. Following the entry of judgment, the district court awarded attorneys' fees and expenses to KPG and Penn National. HV appealed these rulings. Upon review of the trial court record and the applicable legal authority, the Tenth Circuit affirmed the district court's order.

Defendant-Appellant, The Siebel Living Trust Dated 7/27/93 (Trust), appealed a district court’s order denying the Trust’s motion to recover its attorney fees and costs pursuant to a real estate sales contract with Plaintiff-Appellee Michael J. Ward (Ward). In addressing the question of whether the Trust or Ward was the "prevailing party" (and thereby entitled to recover reasonable fees and costs under the contract), the Tenth Circuit followed Colorado law to review the competing claims of the parties to the contract. Although Ward recovered the commission he sought, he did not recover against the Trust. The Trust was successful defending itself from Ward's claims brought against it and, therefore, as between Ward and the Trust, the Trust prevailed. The Tenth Circuit reversed the district court and remanded the case for further proceedings.

Boston Scientific Corporation and Boston Scientific Neuromodulation Corporation (Boston Scientific) filed suit to enforce a non-compete agreement against Mikelle Mabey, a former employee, and St. Jude Medical Neuromodulation Division (St. Jude), her new employer. The district court held in favor of Mabey and St. Jude, and Boston Scientific appealed. In 2009, after Mabey had worked for Boston Scientific for three years, the company asked her to sign a non-compete agreement. If she signed, she would remain eligible for a quarterly bonus that had been offered the year before. If she did not sign, Boston Scientific would reduce her bonus eligibility by $1,000 for each of the final three quarters of 2009; however, she would remain employed at-will and would continue to receive the same base salary. Mabey signed the agreement in March. As a result, she earned $3,000 more in bonus pay than if she had not signed the agreement. In May 2010, Mabey left Boston Scientific to work for its competitor, St.Jude. Boston Scientific filed suit in Utah federal district court to enforce the non-compete agreement. Both sides moved for summary judgment. The district court concluded that the non-compete was unenforceable due to a lack of consideration because Boston Scientific "merely kept Mabey’s compensation the same" in exchange for her signing the agreement, and that "no more constituted a 'clear additional benefit' than continuing a person’s employment does in an at-will employment situation." Upon review, the Tenth Circuit was unpersuaded by Mabey's "failure of consideration" argument: in exchange for signing the non-compete, Mabey received a benefit to which, as an at-will employee, she had no legal right. This was sufficient to form a valid agreement. The Court reversed the district court's judgment and remanded the case for further proceedings.

In 2005, Appellant CCCOK, Inc. filed a complaint at the Oklahoma Corporation Commission (OCC) against Southwestern Bell Telephone, L.P.(SWBT). CCCOK sought an order directing SWBT to pay it over two-million dollars in compensation for SWBT's alleged breach of a contract between them. The OCC rejected CCCOK’s claim, concluding that CCCOK was not entitled to compensation under the "clear and unambiguous" language of the Parties' contract. The federal district court affirmed the OCC's ruling. CCCOK appealed. On appeal, CCCOK contended that the OCC's ruling was arbitrary and capricious because it: (1) disregarded the terms of the parties' contract; (2) contradicted record evidence; and (3) violated CCCOK's rights under state and federal law. Upon review, the Tenth Circuit concluded that the OCC's ruling was not arbitrary and capricious and it affirmed the district court's decision.

In 1999, Christopher Sullivan learned through a business acquaintance, Robert Weaver, acquired all interests in a particular oil and gas lease. The then-current operators of the wells on the lease, QEP Energy, made regular payments to Mr. Sullivan for several years. In early 2006 QEP determined that the total payments to Mr. Sullivan by all operators on the lease exceeded his interest in the leases. QEP therefore ceased further payments and sought reimbursement of the overpayment from Mr. Sullivan. He disputed the claim, asserting that QEP owed him additional payments. QEP brought this action in Utah state court, seeking a declaration of the amounts due Mr. Sullivan. It also sought recovery from Mr. Sullivan for the alleged overpayment. Both parties filed motions for partial summary judgment on their claims for declaratory relief. The district court held that the terms of Mr. Sullivan's interest (from when he acquired the original interest in the lease) unambiguously described he should have only received a three percent production-payment. The court granted partial summary judgment in favor of QEP, and dismissed Mr. Sullivan's claims with prejudice. Mr. Sullivan appealed. Upon review, the Tenth Circuit agreed with the district court's analysis of the leases in question and affirmed its decision in favor of QEP.

In this interlocutory appeal, Defendants Medtronic, Inc. (and several of its subsidiaries) appealed a district court's denial of their motion to compel Plaintiff Lenox MacLaren Surgical Corporation (LM) to arbitrate its antitrust claims against them even though none of the Defendants signed the distribution and licensing agreement containing the arbitration provision. Upon review of the district court record, the Tenth Circuit concluded that even if LM's antitrust claims either expressly or implicitly alleged collusion between subsidiary Medatronic Danek USA and one or more of the other Medtronic subsidiaries, they were not "intimately founded in or intertwined with" the obligations in the agreement at issue in this case. "In sum, equity does not demand that LM be compelled to arbitrate its antitrust claims against the Medtronic Defendants. The district court therefore did not err in denying the Medtronic Defendants’ motion to compel arbitration."

Carolina Internet Ltd. appealed the entry of default judgment against it in favor of TW Telecom Holdings Inc. for more than three million dollars. During the pendency of this appeal, Carolina Internet filed a voluntary Chapter 11 bankruptcy petition. The Tenth Circuit had previously interpreted the automatic stay provisions in section 362 of the Bankruptcy Code as not preventing a Chapter 11 debtor-in-possession (like Carolina Internet) from pursuing an appeal even f it was an appeal from a creditor's judgment against the debtor. Nine other circuit courts disagreed with the Tenth Circuit's interpretation, holding that a bankruptcy filing automatically stays all proceedings, even appellate proceedings where the debtor has filed an appeal from a judgment entered in a suit against the debtor. The Court overruled its prior interpretation of the automatic stay provisions in the Bankruptcy Code, which prevented it from proceeding with Carolina Internet's appeal of the default judgment against it. This case was stayed pending bankruptcy court proceedings.