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

This was the second appeal in litigation arising from the Secretary of Health and Human Services' (HHS) decision not to enter into a self-determination contract with the Southern Ute Indian Tribe (Tribe). In an initial order, the district court ruled that HHS's decision was unlawful, granted summary judgment to the Tribe, and directed the parties to prepare a proposed order for injunctive relief. After the parties were unable to agree on the proposed order, the district court issued an interlocutory order in which it endorsed HHS's approach to the contract’s start date and contract support costs. The Tribe appealed, and the Tenth Circuit dismissed the appeal for lack of jurisdiction. On remand, the district court issued a final order, directing the parties to enter a self-determination contract including HHS's proposed language regarding the contract start date and contract support costs and denying the Tribe’s request for damages. Both parties appealed. Upon review, the Tenth Circuit affirmed the district court's determination that HHS was required to contract with the Tribe and regarding the contract start date, but reversed the court's decision regarding contract support costs.

Third-party defendant Providence Holdings, Inc. appealed a partial summary judgment that awarded Skilstaf, Inc. and Park Avenue Property & Casualty Insurance Company, Inc. (PACA) damages arising out of a loan dispute. Providence is an insurance holding company. Skilstaf and PACA loaned Providence $3.1 million under three “surplus loan agreements” to help one of its subsidiaries carry out its insurance business and “meet regulatory requirements as to capital and surplus.” Providence was required to repay Skilstaf and PACA “when and as interest and principal are received on the . . . surplus note[s],” In 2005, Providence canceled the surplus certificates and converted them to paid-in capital. In 2008, Providence sold its subsidiary. At some point thereafter, the subsidiary was placed into receivership and liquidated. Providence made interest payments under the surplus loan agreements to Skilstaf and PACA through November 2009, but failed to repay any principal. Skilstaf and PACA sued Providence, and moved for summary judgment, arguing that the surplus loan agreements mandated repayment of the loans when Providence converted the surplus certificates to paid-in capital. The district court agreed, stating that “the indebtedness represented by the surplus notes was discharged by the conversion and that this discharge/conversion effected a repayment of the surplus notes within the meaning of the surplus loan agreements.” Upon review, the Tenth Circuit affirmed the lower court for substantially the same reasons.

Eric Walters was a federal employee covered by a Standard Option health insurance plan (the Plan) administered by Blue Cross Blue Shield of Kansas City (Blue Cross). In November 2007 he went to Weight Loss Healthcare Centers of America, Inc. (Weight Loss) to inquire about surgical treatment for obesity. Because Weight Loss had no contractual arrangement with Blue Cross as either a preferred provider or a participating provider, Walters would expect to pay more than if he used a provider that had a contract. Nevertheless, Walters had outpatient laparoscopic surgery at Weight Loss to help him better control his weight. Although Walters obtained preauthorization from Blue Cross for the surgery, there was no indication in the record that he requested or received information about his out-of-pocket costs. Weight Loss billed Blue Cross for the procedure. The Blue Cross Plan paid $2,300 according to the Plan’s benefit for out-of-network providers. Weight Loss appealed the payment to the federal Office of Personnel Management (OPM), which held that Blue Cross’s interpretation of Walters’s Plan was correct and it had paid the proper amount. The district court affirmed OPM’s decision. Upon review, the Tenth Circuit determined that OPM reasonably interpreted the Plan language. However, the Court reversed the district court’s decision because OPM neither (1) reviewed the evidence that would show whether Blue Cross had correctly calculated the Plan allowance, nor (2) explained why such review was unnecessary.

Plaintiff-Appellant Dawn Bunch brought suit under 42 U.S.C. 1983 alleging that Defendant Independent School District No. I-050 of Osage County (Prue Public Schools) violated her First and Fourteenth Amendment rights. She appealed a district court's grant of summary judgment in favor of the District in which the court concluded Plaintiff had no protected property interest in her employment and failed to show her speech was a motivating factor for her termination. An internal investigation found that Plaintiff “either [. . .] wasn’t properly trained or she was not doing her job as required.” The School Board in an open session, but without holding a due-process hearing, terminated Plaintiff's employment. Plaintiff's complaint claimed a property interest in her employment contract entitled her to a hearing before her employment was terminated. She also alleged the termination was in retaliation for her exercise of free speech rights because, earlier that fall, she had signed a state-court petition calling for a grand jury investigation into the activities of Board members, and she had complained to friends and family about the Board. Upon review of the trial court's record and the applicable authority, the Tenth Circuit found that Plaintiff's proffered evidence of discrimination did not amount to the requisite proof that her civil and constitutional rights were violated. The Court affirmed the lower court's grant of summary judgement in favor of the District.

Plaintiff-Appellant Larry Snyder and Company appealed a district court's grant of summary judgment to Defendant-Appellee Clark Miller, which did business as American Underground Utilities. Snyder and Miller entered into a subcontract agreement under which Miller would install utility trenches underneath what would become a parking lot for an apartment complex. Miller performed the work, but once the asphalt for the lot was installed, the trenches settled and the parking lot was damaged. Snyder requested that Miller repair the entire parking lot, but Miller refused, arguing that the subcontract only required it to repair areas of the lot that actually settled. Upon review by the Tenth Circuit, the court affirmed the district court's order that held that the subcontract unambiguously governed the extent of the repair required by Miller. Accordingly, the Court held that no genuine issue of material fact existed regarding Miller's liability for repair work that exceeded the requirements of the subcontract.

Plaintiff ClearOne Communications, Inc. (ClearOne) filed suit against Defendant Biamp Systems (Biamp) alleging that Biamp misappropriated ClearOne's trade secrets by licensing a product from another company that incorporated those trade secrets. A jury found in ClearOne's favor on all of its claims against Biamp. The district court assessed damages for lost profits and unjust enrichment, and awarded ClearOne exemplary damages, attorneys' fees and nontaxable expenses. Biamp raised multiple issues on appeal pertaining to the trial court's application of the applicable statutory authority and in its award of damages. Upon review, the Tenth Circuit affirmed all aspects of the district court's judgment except for the lost profits and exemplary damages awards. The Court reversed and remanded the case for reconsideration of damages owed to ClearOne Communications.

In one of Plaintiff Leprino Foods Company's warehouses, flavoring compounds derived from nearby-stored fruit products contaminated a large quantity of cheese. Leprino's "all-risk" insurance policy with Defendant Factory Mutual Insurance Company excluded contamination unless with was caused by "other physical damage." When Factory Mutual refused coverage on the basis of the contamination exclusion, Leprino sued. A jury determined that the contamination was caused by other physical damage and therefore was covered by the Factory Mutual insurance policy. On appeal, Factory Mutual contended the verdict was not supported by the evidence presented at trial. Specifically, Factory mutual argued that: (1) expert testimony was not presented to prove causation; (2) the jury instructions pertaining to Leprino's cold-storage guidelines were given in error; and (3) Leprino's damages should have been reduced by its settlement with the warehouse. Upon review of the trial record and applicable legal authority, the Tenth Circuit found that Leprino presented sufficient evidence with regard to expert testimony to prove causation. The Court did not find jury instructions to be erroneous. The Court did agree that Leprino's damages should be reduced by the amount of the settlement received from the warehouse. The Court therefore affirmed part and reversed part of the lower court's decisions and remanded the case for recalculation of damages.

Plaintiff ClearOne Communications, Inc. (ClearOne) filed suit against Defendants Andrew Chiang, Jun Yan, Lonny Bowers, WideBand Solutions, Inc. and Versatile DSP, Inc. (collectively the WideBand Defendants), alleging misappropriation of trade secrets. Mssrs. Chiang, Yan and Bowers are all former engineers of ClearOne who had a hand in developing "acoustic echo cancelling" technology. The court ordered an injunction against the former engineers for their part in transferring the assets of WideBand to a "new, sham company" under the control of Donald Bowers. In this case, Donald Bowers as an Interested Nonparty appealed from an order of contempt issued against him by the district court for violation of the injunction. Upon review, the Tenth Circuit found that Mr. Bowers made no attempt to explain how the court abused its discretion in issuing the contempt order. Accordingly, the Tenth Circuit affirmed the district court.

Plaintiff ClearOne Communications, Inc. (ClearOne) filed suit against Defendants Andrew Chiang, Jun Yan, Lonny Bowers, WideBand Solutions, Inc. and Versatile DSP, Inc. (collectively the WideBand Defendants), alleging misappropriation of trade secrets. Mssrs. Chiang, Yan and Bowers are all former engineers of ClearOne who had a hand in developing "acoustic echo cancelling" technology. Prior to their departure, the technology had been licensed from ClearOne by WideBand. When WideBand ended its licensing agreement with ClearOne, ClearOne became suspicious and conducted an internal investigation to find that its former engineers were now associated with WideBand. Furthermore, WideBand was using the proprietary technology it had once licensed. The case proceeded to trial, and ClearOne prevailed on all of its claims. The district court entered a final judgment, as well as a permanent injunction in favor of ClearOne. The court later learned that the Defendants along with several interested parties violated the terms of the injunction. The WideBand Defendants and the interested parties filed a number of appeals. The Tenth Circuit consolidated twelve cases into its holding, taking each Defendant-Appellant's arguments in turn. After careful consideration of the parties' arguments, the Court found no abuse of discretion by the trial court. The Court affirmed the trial court's decision in favor of ClearOne.

BancInsure, Inc. appealed a declaratory judgment in favor of Columbian Financial Corporation and a former director, Carl McCaffree (collectively the Insureds). The insurance policy at issue here was a "claims-made" policy covered any claim made to BancInsure against any Columbian officer or director for a "Wrongful Act" as defined by the policy. A disputed provision of the policy pertained to the scope of coverage if Columbian was placed in receivership or otherwise ceased to engage in active banking business. The parties interpreted the provision differently. The Insureds contended that if Columbian went into receivership, the policy covered all claims made through the end of the original policy period, although only for Wrongful Acts committed before the receivership. BancInsure contended that the policy covered only claims made before the receivership. The operation of the disputed provision became relevant in August 2008 when the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as its receiver. Soon thereafter, Columbian’s management sent BancInsure a letter to notify it of potential claims by the FDIC and others. The parties disputed many of the claims against Columbian which led to Columbian filing suit to the district court to determine which claims were covered under the policy. The sole issue on appeal to the Tenth Circuit was whether the district court had jurisdiction. Though no party disputed jurisdiction, the Tenth Circuit found that there was no actual controversy between the parties when the district court below rendered its judgment. The court therefore lacked jurisdiction. The Tenth Circuit reversed the lower court’s decision and remanded to case with instructions to the court to vacate its judgment.