Court Opinion

ID: 6500291
Source: CourtListenerOpinion
Date Created: 2022-07-15 14:00:36.717825+00
Date Added: 2024-06-11T09:19:09.849730
License: Public Domain

Case: 21-1750   Document: 24     Page: 1   Filed: 07/15/2022

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                 JENNIFER LANCLOS,
                   Plaintiff-Appellant

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2021-1750
                 ______________________

    Appeal from the United States Court of Federal Claims
 in No. 1:15-cv-00358-PEC, Judge Patricia E. Campbell-
 Smith.
                 ______________________

                 Decided: July 15, 2022
                 ______________________

     JEFFREY DAHL, Law Office of Jeffrey Dahl, San Anto-
 nio, TX, argued for plaintiff-appellant.

     RICHARD PAUL SCHROEDER, Commercial Litigation
 Branch, Civil Division, United States Department of Jus-
 tice, Washington, DC, argued for defendant-appellee. Also
 represented by BRIAN M. BOYNTON, DEBORAH ANN BYNUM,
 MARTIN F. HOCKEY, JR.
                  ______________________

   Before MOORE, Chief Judge, REYNA and CHEN, Circuit
                        Judges.
Case: 21-1750    Document: 24     Page: 2    Filed: 07/15/2022

 2                                             LANCLOS   v. US

 REYNA, Circuit Judge.
      Appellant Jennifer Lanclos appeals the decision of the
 Court of Federal Claims interpreting a settlement agree-
 ment between Ms. Lanclos and the U.S. Government. The
 Court of Federal Claims initially determined that the Gov-
 ernment is liable for a shortfall in the settlement amounts
 received by Ms. Lanclos. The shortfall resulted when the
 insurance company contracted by the Government to pro-
 vide monthly payments to Ms. Lanclos encountered finan-
 cial difficulties and reduced the payments by a significant
 amount. The Government moved for reconsideration, ar-
 guing that a decision by this court involving similar cir-
 cumstances constituted an intervening change in the
 controlling law that required the Court of Federal Claims
 to reach a different result. The Court of Federal Claims
 agreed and upon reconsideration decided that the Govern-
 ment is not liable for the shortfall because its liability
 ended once it purchased the annuity. We reverse the Court
 of Federal Claims’ decision and remand for further pro-
 ceedings.
                         BACKGROUND
     Jennifer Lanclos was born in 1982 at the United States
 Air Force Medical Center at Keesler Air Force Base in
 Mississippi. Lanclos v. United States, 133 Fed. Cl. 113, 114
 (2017) (“Lanclos I”). During childbirth, she was seriously
 injured and as a result, Ms. Lanclos suffers from Athetoid
 cerebral palsy.      Id.   Athetoid cerebral palsy is a
 nonprogressive motor dysfunction syndrome characterized
 by a severe lack of voluntary muscle control. See generally
 Hart deCoudres Peterson, Cerebral Palsy, ACCESSSCIENCE,
 MCGRAW-HILL EDUCATION (Sept. 2019), https://www.acces
 sscience.com/content/cerebral-palsy/121500.
     Ms. Lanclos’s parents filed a medical malpractice law-
 suit on behalf of their daughter against the United States
 Air Force (the “Government”). In 1986, the parties entered
 into a settlement agreement. Lanclos I, 133 Fed. Cl.
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 LANCLOS   v. US                                           3

 at 114. Generally, the parties agreed that the Government
 would make certain lump sum payments to the parents of
 Ms. Lanclos and their attorney, and that Ms. Lanclos
 would receive a single lump sum payment followed by spe-
 cific monthly payments over 30 years, or for the remainder
 of her life, whichever was longer. J.A. 18–19. The parties
 agreed that the Government would purchase an annuity
 policy from an insurance company that would provide the
 monthly amounts expressly listed in the settlement agree-
 ment. Id. In consideration for the monetary settlement
 amounts, the Lanclos Family 1 agreed to terminate the law-
 suit and release the Government from all liability related
 to Ms. Lanclos’s injury. Id. The terms of the release are as
 follows:
    In consideration hereof, we hereby release and for-
    ever discharge the United States, its officers,
    agents and employees from all liability, claims and
    demands of whatsoever nature arising from the
    said incident.
 J.A. 19. The parties executed the settlement agreement,
 the Government made the various lump sum payments,
 and the medical malpractice suit against the Government
 was terminated. 2 Lanclos I, 133 Fed. Cl. at 115. The

    1    References to the “Lancloses” and “Lanclos Family”
 recognize the involvement of their attorney in the settle-
 ment agreement.
     2   Relevant provisions of the agreement are as fol-
 lows:
     We, PATRICK A. LANCLOS, LINDA LANCLOS,
     both individually and on behalf of our daughter,
     JENNIFER E. LANCLOS, and JENNIFER E.
     LANCLOS, by her parents and natural guardians,
     hereby agree to accept:
        1) For Jennifer Lanclos –
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 4                                              LANCLOS   v. US

 Government selected Executive Life Insurance Company of
 New York (“Executive Life Insurance”) to provide the
 monthly annuity payments set out in the settlement agree-
 ment. Lanclos I, 133 Fed. Cl. at 114. Executive Life Insur-
 ance, however, encountered financial difficulties. Id.
 at 115. In August 2013, Executive Life Insurance reduced
 the amount of the monthly payments by approximately
 42% of the amounts listed in the settlement agreement. Id.
 Ms. Lanclos estimates that the reduction in monthly

            – $200,000.00 lump sum
            – The purchase of an annuity which will
              provide the following:
               $1,500.00 per month — from com-
               mencement of payment for a period
               of 5 years
               $2,000.00 per month — years 6–10
               $2,500.00 per month — years 11–
               15
               $3,000.00 per month — years 16–
               20
               $3,500.00 per month — years 21–
               25
               $4,000.00 per month — years 26–
               30
               $4,500.00 per month — years 31–
               life
            All monthly payments above are guaran-
            teed for 30 years or the life of Jennifer,
            whichever is longer.
 J.A. 18.
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 LANCLOS   v. US                                           5

 payments will result in a shortfall of $731,288.81 less than
 the amount called for in the settlement agreement. Id.
      In 2015, Ms. Lanclos filed a lawsuit against the Gov-
 ernment in the Court of Federal Claims alleging breach of
 the settlement agreement. Id. at 116. In her complaint,
 Ms. Lanclos asserted that the settlement agreement “un-
 ambiguously obligates defendant [Government] to ensure”
 full payment of the annuity payments. Id. The parties
 filed cross motions for partial summary judgment. On
 July 12, 2017, the Court of Federal Claims granted
 Ms. Lanclos’s motion, finding the Government liable for
 the shortfall in the payments. Id. at 119.
     On May 21, 2020, the Government filed an amended
 motion for reconsideration, primarily arguing that the res-
 olution of Shaw v. United States, 900 F.3d 1379 (Fed. Cir.
 2018), in favor of the government constituted an interven-
 ing change in the controlling law that warranted reconsid-
 eration. Lanclos v. United States, 151 Fed. Cl. 692, 694
 (2021) (“Lanclos II”). On January 7, 2021, the Court of
 Federal Claims granted the Government’s motion for re-
 consideration. Id. at 694–95.
      On reconsideration, the Court of Federal Claims
 granted the Government’s motion for partial summary
 judgment, concluding that Shaw controlled the disposition
 of Ms. Lanclos’s suit. Id. at 696. The Court of Federal
 Claims reasoned that there was no “material difference be-
 tween the language in [Ms. Lanclos’s] agreement and the
 language in the Shaw agreement.” Id. The Court of Fed-
 eral Claims explained that the “guarantee” language in the
 Lanclos agreement applies to the scheduled monthly struc-
 ture of the payments but not the actual payment of the
 listed amounts. Id. On that basis, the Court of Federal
 Claims concluded the Government was not liable for the
 shortfall in the annuity payments and, on January 7, 2021,
 entered judgment in favor of the Government. Id.
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 6                                              LANCLOS   v. US

    Ms. Lanclos timely appealed. We have jurisdiction
 pursuant to 28 U.S.C. § 1295(a)(3).
                    STANDARD OF REVIEW
      This court reviews summary judgment decisions of the
 Court of Federal Claims and its contract interpretations de
 novo. Shaw, 900 F.3d at 1381. “Summary judgment is ap-
 propriate if there is no genuine issue as to any material fact
 and the moving party is entitled to judgment as a matter
 of law.” Langkamp v. United States, 943 F.3d 1346, 1349
 (Fed. Cir. 2019) (quoting First Com. Corp. v. United States,
 335 F.3d 1373, 1379 (Fed. Cir. 2003)).
                         DISCUSSION
      The question before us is whether the Government
 bears any liability for the shortfall in the payments pro-
 vided to Ms. Lanclos under the terms of the settlement
 agreement. We hold that under the correct interpretation
 of the terms of the settlement agreement, the Government
 is liable for the entirety of the shortfall amount.
                               I.
      We begin our review with an interpretation of the ex-
 press terms and plain meaning of the settlement agree-
 ment. C. Sanchez & Son, Inc. v. United States, 6 F.3d 1539,
 1543 (Fed. Cir. 1993) (“A contract is read in accordance
 with its express terms and the plain meaning thereof.”).
 We give the terms of an agreement their ordinary meaning
 unless “the parties mutually intended and agreed to an al-
 ternative meaning.” Harris v. Dep’t of Veterans Affs.,
 142 F.3d 1463, 1467 (Fed. Cir. 1998). Finally, we interpret
 terms in an agreement “in a manner that gives meaning to
 all of its provisions and makes sense.” McAbee Constr., Inc.
 v. United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996). On
 these bases, we first examine the plain and ordinary mean-
 ing of the express terms in the agreement, in particular the
 term “guarantee” as used in the Lanclos agreement.
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 LANCLOS   v. US                                           7

     First, we discern no reason why the term “guarantee”
 should not be given its plain and ordinary meaning. The
 plain meaning of the term “guarantee” is to give an
 “assurance that a contract or legal act will be duly carried
 out.” Guarantee, Black’s Law Dictionary (11th ed. 2019).
 The term can also reference obligations assumed between
 parties, such as where one party agrees to answer for a debt
 or default. Id.
     The Lanclos agreement provides that “[a]ll monthly
 payments above are guaranteed for 30 years or the life of
 Jennifer, whichever is longer.” J.A. 18. Applying its plain
 meaning, we conclude that the term “guarantee” as ex-
 pressed in the agreement applies to “all monthly pay-
 ments.” The payments themselves are guaranteed, not
 solely the schedule over which they are set to occur. The
 term “guaranteed” indicates an assurance that the pay-
 ments will be made. It is a formal pledge to answer for a
 debt or default. In this case, the Government pledged that
 Ms. Lanclos would receive certain amounts, and it guaran-
 teed those amounts even in the case of another person’s de-
 fault—here, Executive Life Insurance.
      The Government argues that we should conclude that
 Executive Life Insurance, not it, made the guarantee. We
 are not persuaded. We find no reasonable basis to conclude
 that the guarantee pledged in the agreement was not made
 by the Government. There are only two parties to the Lan-
 clos agreement: the Lancloses and the Government. No
 other person or entity is referenced or mentioned in the
 agreement, including Executive Life Insurance. It would
 be absurd to conclude that the Lanclos Family guaranteed
 to pay itself the monthly payments. Rather, the agreement
 clearly indicates that the Government guaranteed to pro-
 vide the listed amounts in accordance with the temporal
 schedule for 30 years, or the remainder of Ms. Lanclos’s
 life, whichever is longer. We conclude that under the ordi-
 nary meaning of the term “guarantee” the Government
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 8                                                LANCLOS   v. US

 agreed to assure fulfillment of the listed monthly payments
 owed to Ms. Lanclos.
     Second, we see no reasonable basis to conclude that the
 parties sought to define “guarantee” or to give the term an
 alternative meaning. See King v. Dep’t of Navy, 130 F.3d
 1031, 1033 (Fed. Cir. 1997) (“The paramount focus is the
 intention of the parties at the time of contracting; that in-
 tention controls in any subsequent dispute.”).
     Third, our interpretation of the meaning of the term
 “guarantee” is consistent and in harmony with the agree-
 ment as a whole. For example, the agreement provides
 that the Lancloses agreed that “[i]n consideration hereof,
 we hereby release and forever discharge the United
 States . . . from all liability.” J.A. 19. The phrase “[i]n con-
 sideration hereof” indicates an exchange of promises, in
 particular a contractual exchange. The Lanclos Family
 agreed to release the Government from all future liability
 in exchange for the totality of promises made by the Gov-
 ernment. This includes the assurance that the Lancloses
 would be provided with (1) annuity payments in specific
 amounts (2) paid in accordance with a monthly schedule.
 It does not “make sense” that the Government’s promise or
 obligation extends only to the monthly schedule and not
 the payments, as the Government claims. We refuse to re-
 write the agreement to make the schedule the sole consid-
 eration of the settlement agreement. We also refuse to
 place the obligation for the monthly payments on an entity
 that is not a party to the agreement, or even mentioned in
 the agreement. Ms. Lanclos suffered a debilitating, life-
 long injury, allegedly at the hands of the Government.
 When read as a whole, it is unreasonable to interpret the
 agreement to mean that Ms. Lanclos terminated the law-
 suit and forever released and discharged the Government
 from any liability in consideration for a mere schedule.
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 LANCLOS   v. US                                           9

                             II.
      This appeal is the fourth in a series of appeals that
 have come before this court involving similar circum-
 stances. 3 All four cases involve a lawsuit against the gov-
 ernment that was terminated under the terms of a
 settlement agreement providing that the plaintiffs would
 receive a sum certain paid in monthly payments. In each
 case, the government purchased an annuity policy from an
 insurance company to provide monthly payments. In each
 case, the payments either stopped or their amounts were
 reduced when the insurance company encountered finan-
 cial difficulties. What distinguishes the four cases are the
 express terms set out in the respective settlement agree-
 ments underlying each case. We address each case in turn.
     In Massie, we held the government responsible for
 guaranteeing the annuity payments. We explained “[t]he
 language specifying that the annuity ‘will result in distri-
 butions’ and that the disbursements ‘shall be paid’ is un-
 ambiguously mandatory . . . that the Massies must receive
 the payments.” Massie, 166 F.3d at 1190. We reasoned
 that the terms of the agreement made the payments man-
 datory, and that the government was responsible for the
 payments because “no one else is a party to the Agree-
 ment.” Id. The same reasoning applies here.
     The Lanclos agreement unambiguously provides that
 the Government was obligated to obtain an annuity “which
 will provide” the listed payments. J.A. 18. As in Massie,
 the Lanclos agreement’s terms are unambiguously manda-
 tory. In exchange for a complete release, the Government
 promised to provide sum certain that would be paid

    3    Massie v. United States, 166 F.3d 1184 (Fed. Cir.
 1999); Nutt v. United States, 837 F.3d 1292 (Fed. Cir.
 2016); Shaw, 900 F.3d 1379; Lanclos I, 133 Fed. Cl. 113;
 Lanclos II, 151 Fed. Cl. 692.
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 10                                              LANCLOS   v. US

 pursuant to a monthly timetable. Further, as in Massie,
 the only parties to the agreement are the Lancloses and the
 Government. The insurance company is not identified in
 any manner in the Massie agreement or the Lanclos agree-
 ment. Appellant’s Br. 14–15. As in Massie, here, the Gov-
 ernment is liable for the payments.
      In Nutt, we held that the government was not liable for
 the annuity payments. But the Nutt agreement is substan-
 tively dissimilar to the Lanclos agreement. The Nutt
 agreement included a provision purporting to grant plain-
 tiffs standing to sue the insurance company in the event of
 default, and a promise that the government would assist in
 such a suit. Nutt, 837 F.3d at 1296–97. We distinguished
 Nutt from Massie on the basis that the Nutt agreement
 clearly did not obligate the government as guarantor of the
 monetary payments. The Nutt agreement did not contain
 similar mandatory language to the Massie agreement. Ad-
 ditionally, unlike the Massie and Lanclos agreements, the
 Nutt agreement referenced and expressly contemplated a
 third party—the insurance company. The Nutt agreement
 expressly provided that the insurance company was re-
 sponsible for the payments and purportedly provided the
 right to sue the insurance company in case of default with
 assistance from the government. The agreement stated:
 “[I]f the insurance company hereinafter referred to defaults
 in the performance of its obligations under the annuity
 agreement with the United States, [the Nutt fam-
 ily] . . . shall have standing to sue the said insurance com-
 pany for breach of contract. In such event, the United
 States shall assist.” Id. at 1297. These terms unambigu-
 ously made the insurance company the guarantor.
      Here, the Lanclos agreement does not identify Execu-
 tive Life Insurance as a party. Nor is there a shift of liabil-
 ity from the Government by purportedly creating standing
 for the Lancloses to sue the insurance company in the event
 of default. Nor does the Lanclos agreement contain a prom-
 ise by the Government to assist in any suit against the
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 LANCLOS   v. US                                             11

 insurance company. Given these dissimilarities between
 the Nutt agreement and the Lanclos agreement, we con-
 clude that Nutt is inapplicable to this action.
      In Shaw, we determined the government was not liable
 for the annuity payments. The Shaw court interpreted the
 term “guaranteed” as a term of art to mean that the pay-
 ments would continue for a certain amount of time, or until
 the death of the annuitant. Shaw, 900 F.3d at 1383–84.
 The intent to limit the meaning of “guarantee” was clear in
 the Shaw agreement. The Shaw agreement provided a de-
 tailed description for “guarantee” that identified it as a
 term of art within the context of the agreement. Id. at
 1383. The agreement stated:
     To [plaintiff], the sum of $4,166.00 each month,
     continuing for the life of [plaintiff]. These monthly
     payments are guaranteed for a period of twenty
     (20) years; thus, should [plaintiff] die before the
     240th payment, then the payments set forth herein
     shall be paid, as they become due, to his estate
     through and including the 240th payment. Should
     [plaintiff] die after the 240th payment, the pay-
     ments set forth herein shall ceases [sic].
 Id. The second and third sentences above explained how
 the guarantee would function and these sentences limited
 the meaning of guarantee to the period of time. This made
 “guarantee” a term of art in the Shaw agreement and gave
 it a meaning other than its plain and ordinary meaning.
 As noted above, the Lanclos agreement does not indicate
 that the term “guarantee” has a meaning beyond its plain
 and ordinary meaning. “Guarantee” is not used as a term
 of art in the Lanclos agreement as it was in the Shaw
 agreement.
     The release language in the Shaw agreement was also
 narrower than the terms of the Lanclos release. The Shaw
 agreement stated, in relevant part, “[T]he [government’s]
 purchase of annuities which will . . . provide certain future
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 12                                             LANCLOS   v. US

 periodic payments as set forth below in paragraph 6 shall
 constitute a complete release . . . .” 4 Shaw, 900 F.3d
 at 1381. This meant that the government’s purchase of an-
 nuities would trigger a complete release from future liabil-
 ity. The Lanclos agreement contains no similar release
 language.
     The Shaw agreement further expressly provided that
 the government would purchase the annuities from Merrill
 Lynch Settlement Services. Id. at 1381. As such, Merrill
 Lynch was specifically identified within the agreement as
 the party responsible for providing the annuity payments.
 But the Lanclos agreement does not reference any insur-
 ance company. Rather, the Government here bears sole re-
 sponsibility for identifying and selecting the insurance
 company that it would use to facilitate the payments. Be-
 cause no third party was identified as responsible for mak-
 ing the payments, the Government remains responsible for
 the annuity payments to Ms. Lanclos in the event of de-
 fault.
     Based on the foregoing, we conclude that the terms of
 the Nutt and Shaw agreements are materially different
 than the Lanclos agreement. We hold that when read as a
 whole, the ordinary meaning of the unambiguous terms of
 the settlement agreement establishes that the Government
 pledged to guarantee payment of the settlement amounts
 in consideration of the complete release from all liability
 related to the injuries Jennifer Lanclos sustained during
 delivery. As such, the Government is liable for the shortfall
 in payments provided to Ms. Lanclos.

      4   The release in Shaw absolves the government of all
 liability after the government’s payment of various sums to
 the Shaws and their attorneys, and after the purchase of
 annuities.
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 LANCLOS   v. US                                         13

                         CONCLUSION
      We reverse the judgment of the Court of Federal
 Claims and hold that the Government is responsible for the
 shortfall in the annuity payments. We remand to the Court
 of Federal Claims to determine the amount of that short-
 fall.
                REVERSED AND REMANDED
                            COSTS
 Costs to Appellant.