Pharmacy Corp. of Am. v. Premier Healthcare Mgmt.
| Decision Date | 25 November 2019 |
| Docket Number | Civil Action No. 3:18-cv-754-RGJ |
| Parties | PHARMACY CORPORATION OF AMERICA, et al., Plaintiff, v. PREMIER HEALTHCARE MANAGEMENT, LLC, et al., Defendants. |
| Court | U.S. District Court — Western District of Kentucky |
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This matter is before the Court on Plaintiffs' Motion for Entry of Agreed Orders of Judgment (the "Motion") [DE 7], Plaintiffs' Motion for Status Conference [DE 27], and Plaintiffs' Motion for Entry of Scheduling Order [DE 28]. Fully briefed, the matter is ripe. For the reasons below, the Motion [DE 7] is GRANTED IN PART, Plaintiffs' Motion for Status Conference [DE 27] is DENIED AS MOOT, and Plaintiffs' Motion for Entry of Scheduling Order [DE 28] is GRANTED IN PART.
In late-2012, Plaintiffs1 and Defendants2 entered into a Pharmacy Services Agreement ("PSA"), in which Plaintiffs agreed to provide Defendants with pharmacy-related goods and services. [DE 7-5 at 381]. By mid-2017, Defendants were "significantly in arrears for past due invoices." [DE 1 at 7]. The parties began negotiating to resolve the matter. As a result of their negotiations, Plaintiffs and Defendants entered into seven settlement and forbearance agreements(the "Settlement Agreements") to settle outstanding amounts owed by Defendants to Plaintiffs under the PSA.3 [DE 7-5 at 381].
Article V of the Settlement Agreements contains the terms of payment.4 [DE 1-2 at 66]. Under § 5.01 ("Acknowledgement of Debt"), Defendants agreed to pay Plaintiffs for all goods and services provided through and including May 31, 2017 (the "Old Balance"). Id. Under § 5.02 ("Payment"), Defendants agreed to pay Plaintiffs the Old Balance plus interest at 5% per year (the "Forbearance Amount"). Id. at 66. Under § 5.03 ("Payment for Goods and Services Provided After May 31, 2017"), Defendants agreed to pay Plaintiffs for all goods and services provided after May 31, 2017 (the "New Balance"). Id. Under § 5.04 ("Agreed Order of Judgment"), Defendants agreed to sign Agreed Orders of Judgment. [DE 7-1 at 241] ("As an inducement for [Plaintiffs] to enter into the Settlement Agreements, the parties agreed that in the event of an uncured default under the Settlement Agreements by Defendants, [Plaintiffs] would be entitled to seek immediate entry by a court of the Agreed Orders"). § 5.06 ("Rights Upon Default"), the liquidated damages provision, provides:
Upon the occurrence of an uncured Forbearance Default by [the Defendants], as set out in Section 4.02, [Plaintiffs] may file the Agreed Order of Judgment, and the entire Old Balance (less any payments made in accordance with Section 5.01, applied first to interest and then to principal, plus all amounts owed under Section 5.02, will be immediately due and payable without further notice or demand to [Defendants] (the 'Accelerated Balance'). The Accelerated Balance will earn interest at the rate of 18% per annum from the date of a non-cured default until paid in full . . ."
[DE 1-2 at 67] (emphasis added).
Plaintiffs allege that by January 2018 "Defendants were behind on payments due for invoices issued after May 31, 2017 and had failed to make payments due under the Settlement Agreements." [DE 7-5 at 383]. According to the Settlement Agreements, Plaintiffs notified Defendants of their defaults. Id. at 384. Defendants "paid the amounts owed under the Settlement Agreements" for the Old Balances but did not pay all the post-May 31, 2017 invoices. Id. Plaintiffs assert that Defendants ultimately "never became current with respect to the post-May 31, 2017 invoices" and eventually defaulted again on payments on the Old Balances. Id. To collect on Defendants' debt, Plaintiffs filed the present motion asking the Court to enter the Agreed Orders of Judgment against Defendants. [DE 7]. Defendants responded [DE 23], and Plaintiffs replied [DE 24].
This action is in federal court based on diversity jurisdiction. See 28 U.S.C. § 1332. Because Kentucky is the forum state, the Court will use its substantive law. Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521, 526 (6th Cir.2006). That said, federal procedural law will govern, including in establishing the appropriate summary judgment standard. Weaver v. Caldwell Tanks, Inc., 190 Fed. App'x 404, 408 (6th Cir.2006).
Summary judgment is required when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The movingparty bears the burden of specifying the basis for its motion and showing the lack of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party satisfies this burden, the nonmoving party must produce specific facts showing a material issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). Factual differences are not material unless the differences are such that a reasonable jury could find for the party contesting the summary judgment motion. Id. at 252.
The Court must view the evidence and draw all reasonable inferences in a light most favorable to the nonmoving party. Williams v. Int'l Paper Co., 227 F.3d 706, 710 (6th Cir. 2000). But the nonmoving party must do more than show some "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Instead, the nonmoving party must present specific facts showing that a genuine factual issue exists by "citing to particular parts of materials in the record" or by "showing that the materials cited do not establish the absence . . . of a genuine dispute[.]" Shreve v. Franklin Cty., Ohio, 743 F.3d 126, 136 (6th Cir. 2014). "The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]." Liberty Lobby, 477 U.S. at 252.
Plaintiffs have moved the Court to enter the tendered Agreed Orders of Judgment, thereby allowing Plaintiffs to collect on Defendants' outstanding debt. [DE 7-1 at 248]. Plaintiffs' request, on its face, seems straightforward. Defendants agreed in § 5.04 that their signature on the Agreed Orders of Judgment is "sufficient and proper evidence of the justness of the debt and their confession of the judgment and that no further evidence or appearance in open court is necessarybefore entry by the Court of, and execution upon, the Agreed Order[s] of Judgment." [DE 7-1 at 242]. But the parties dispute the meaning of § 5.06.
Plaintiffs contend that § 5.06 contains a typographical or scrivener's error:
Sections 5.06 of the Settlement Agreements and the Agreed Orders mistakenly reference Sections 5.01 and 5.02, rather than Sections 5.02 and 5.03. This was clearly a scrivener's error, as Section 5.01 was merely an acknowledgment by Defendants of the Old Balance that contains no payment obligations, and Section 5.02 sets forth the payment schedule of the Old Balance. Instead, it is clear that the reference to payments made in accordance with Section 5.01 of the Agreement should have been a reference to payments made in accordance with Section 5.02, and the reference to all amounts owed under Section 5.02 being owed in addition to the amount of the Old Balance should have been a reference to the amounts owed under Section 5.03.
[DE 7-1 at 243-244] (emphasis added).
Defendants, on the other hand, claim that § 5.06 reflects the parties' intent and should not be modified: [DE 23 at 461].
Implicit in Plaintiffs' Motion is a request for the Court to reform the Agreed Orders of Judgment so that Plaintiff can collect on both the Old and New Balances. As discussed below, Plaintiffs have not provided "clear and convincing evidence" of the parties' intent. Thus, the Court finds that there is a genuine issue of material fact about whether the parties intended § 5.06 and the Agreed Orders of Judgment to reference § 5.01 or § 5.03. That said, the Court finds that there are no genuine issues of material fact precluding it from entering the Agreed Orders of Judgment as to the Old Balance owed under § 5.02.
Plaintiffs acknowledge that the plain language of § 5.06 only includes repayment under § 5.01 and § 5.02. [DE 7-1 at 242]. But Plaintiffs contend that § 5.06 contains a scrivener's error and thus does not reflect the parties' intent for § 5.06 to reference § 5.03, not § 5.01. Id.
Although Plaintiffs do not explicitly move the Court to reform the Agreed Orders of Judgment under the doctrine of mutual mistake, courts have analyzed contentions of scrivener's error as allegations of mistake. See Rams v. Cordish Operating Ventures, LLC, No. 3:16-CV-233-DJH-CHL, 2018 WL 2765818, at *4 (W.D. Ky. Apr. 9, 2018) (); see also Pannell v. Shannon, 425 S.W.3d 58, 67 (Ky. 2014) () (quoting Nichols v. Nichols, 182 Ky. 18, 205 S.W. 953, 954 (1918) (internal quotations omitted).
A court has the power to reform a written agreement "where,...
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