Court Opinion

ID: 4384504
Source: CourtListenerOpinion
Date Created: 2019-04-05 14:00:53.175066+00
Date Added: 2024-06-11T14:50:11.709108
License: Public Domain

17-2955-cv(L)
MVP Health Plan, Inc. v. OptumInsight, Inc.

                      UNITED STATES COURT OF APPEALS
                          FOR THE SECOND CIRCUIT

                                SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a
summary order filed on or after January 1, 2007, is permitted and is
governed by Federal Rule of Appellate Procedure 32.1 and this Court’s Local
Rule 32.1.1. When citing a summary order in a document filed with this
Court, a party must cite either the Federal Appendix or an electronic
database (with the notation “Summary Order”). A party citing a summary
order must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 5th day of April, two thousand and nineteen.

Present:
             REENA RAGGI,
             PETER W. HALL,
             RICHARD J. SULLIVAN
                 Circuit Judges.

MVP Health Plan, Inc.,

             Plaintiff-Appellant-Cross-Appellee,

v.                                                                    17-2955-cv

                                                                      17-3207-cv

OptumInsight, Inc.,

            Defendant-Appellee-Cross-Appellant.

For Appellant:                    ROBERTA KAPLAN, Kaplan & Company, LLP, New
                                  York, New York (John C. Quinn, Alexander J.
                                  Rodney, on the brief); Arthur J. Siegel, Clifford G.
                                  Tsan, Bond Schoeneck & King, PLLC, Albany, New
                                  York.

For Appellee:                     KARL GEERCKEN, Alston & Bird LLP, New York,
                                  New York.
      Appeal from a judgment entered August 24, 2017 in the Northern District of

New York (Sannes, J.).

      UPON      DUE      CONSIDERATION,          IT    IS   HEREBY       ORDERED,

ADJUDGED, AND DECREED that the district court’s judgment is AFFIRMED

and OptumInsight’s cross-appeal is DISMISSED.

      MVP Health Plan, Inc. (“MVP”) and OptumInsight entered into an agreement

in 2012 to provide MVP with, among other things, actuarial services related to MVP’s

2013 Medicare bids. The parties, who had a long-standing business relationship,

developed this agreement over time through correspondence and invoices. MVP

brought suit against OptumInsight alleging: (1) breach of contract; (2) negligence; (3)

gross negligence; (4) negligent misrepresentation; (5) unjust enrichment; (6) quantum

meruit; and (7) a claim for return of moneys paid under the parties’ 2012 agreement.

The district court, pursuant to Federal Rule of Civil Procedure 12(b)(6), dismissed

MVP’s tort claims. In so doing, it determined that this case was predicated on breach

of contract, and under applicable New York law, MVP’s tort claims were duplicative

of the breach of contract claim such that the tort claims were not cognizable.

      On cross-motions for summary judgment, the district court ruled the parties

had contracted for the performance of the 2013 Medicare bid work. After a four-day

bench trial, it found that OptumInsight, as part of its contract with MVP, agreed to

comply with the Actuarial Standards of Practice (“ASOPS”) and perform its actuarial

services in a non-negligent manner. The district court concluded OptumInsight

breached its agreement with MVP by “its generally negligent performance” and its

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noncompliance with the ASOPs. MVP Health Plan, Inc. v. OptumInsight, Inc., No.

1:13-CV-1578 (BKS/CFH), 2017 WL 3669558, at *14 (N.D.N.Y. Aug. 24, 2017).

Finding OptumInsight’s breach was the direct and proximate cause of damages

suffered by MVP, the district court awarded MVP the price MVP had paid for

OptumInsight’s    services   in   2013,   $332,981.44.   While   acknowledging    that

OptumInsight’s breach caused MVP to lose revenues, the court ruled that the lost

revenues constituted consequential damages that MVP could not recover. MVP

appeals that ruling, along with the dismissal of its tort claims. OptumInsight has

filed what it styles as a conditional cross-appeal and asks us to decide that appeal if

we are reversing the district court’s judgment. We assume the parties’ familiarity

with the underlying facts, the procedural history, and the arguments presented on

appeal, which we describe further only as necessary to explain our decision to affirm.

      A. MVP’s Tort Claims

      We review de novo a district court’s dismissal of claims under Rule 12(b)(6).

Caro v. Weintraub, 618 F.3d 94, 97 (2d Cir. 2010). In doing so here, we conclude that

the court did not err in dismissing MVP’s claims for negligence, gross negligence, and

negligent misrepresentation. Under New York law, “a simple breach of contract is

not to be considered a tort unless a legal duty independent of the contract itself has

been violated.” Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 389,

521 N.Y.S.2d 653, 656 (1987).      The independent legal duty “must spring from

circumstances extraneous to, and not constituting elements of, the contract, although

it may be connected with and dependent upon the contract.” Id. at 389. Nevertheless,

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“[m]erely charging a breach of a ‘duty of due care’, employing language familiar to

tort law, does not, without more, transform a simple breach of contract into a tort

claim.” Id. at 390.

      MVP asserts the district court erred in dismissing its tort claims by (1) holding

that tort claims can survive alongside a contract claim only if the defendant was

subject to malpractice liability or the nature of the harm implicates the public

interest; (2) concluding that actuaries are subject to professional malpractice liability

in New York; and (3) overlooking that New York law permits negligent

misrepresentation claims where the parties are in privity with one another.

      We agree with the district court’s well-reasoned analysis in its decision of

October 29, 2014 concluding that MVP’s tort claims are duplicative of its breach of

contract claim. In short, OptumInsight did not have an independent legal duty to

MVP that was extraneous to the agreement, either “by law as an incident to the

parties’ relationship” or in light of the “nature of the injury, the manner in which [it]

occurred and the resulting harm.” Sommer v. Fed. Signal Corp., 79 N.Y.2d 540, 551–

52, 583 N.Y.S.2d 957, 961 (1993). Indeed, as the district court observed under New

York law, “an actuary is not a ‘professional’ for purposes of a malpractice cause of

action.” Health Acquisition Corp. v. Program Risk Mgmt., Inc., 105 A.D.3d 1001, 1004,

964 N.Y.S.2d 554, 557 (2d Dep’t 2013). Moreover, there is no suggestion that the

breach here involved “catastrophic consequences”; resulted from “abrupt, cataclysmic

occurrence”; or implicated a “significant public interest”—circumstances that might

otherwise give rise to an independent legal duty under New York law. Sommer v. Fed.

                                           4
 
Signal Corp., 79 N.Y.2d at 552–53, 583 N.Y.S.2d at 962. Rather, MVP’s tort claims

merely assert violations of duties indivisible from the contractual obligations

allegedly breached by OptumInsight precluding maintenance of MVP’s tort claims.

See id.; Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d at 390, 521 N.Y.S.2d

at 657. Therefore, the district court did not err in dismissing MVP’s tort claims on

that basis.

      B. MVP’s Lost Revenues

      In reviewing a judgment of the district court following a bench trial, we review

the court’s factual findings for clear error and its legal conclusions de novo. See

Process Am., Inc. v. Cynergy Holdings, LLC, 839 F.3d 125, 141 (2d Cir. 2016).

Whether the court applied the correct method in calculating damages is a question of

law reviewed de novo. See Tractebel Energy Mktg. v. AEP Power Mktg., 487 F.3d 89,

109 (2d Cir. 2007). “Under New York law, damages for breach of contract should put

the plaintiff in the same economic position he would have occupied had the breaching

party performed the contract.” Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186,

196 (2d Cir. 2003). “General damages are the natural and probable consequence of”

a breach of contract. Biotronik v. Conor Medsystems, 22 N.Y.3d 799, 805, 988 N.Y.S.2d
527, 530–31 (2014) (quoting American List Corp. v. U.S. News & World Report, 75
N.Y.2d 38, 43, 550 N.Y.S.2d 590, 593 (1989)).

      MVP argues that the district court erred when it ruled that MVP’s lost

revenues were not general damages because that lost income “was a step removed

from Optum’s promised performance”—which was limited to providing MVP with

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accurate actuarial calculations and analysis.          MVP Health Plan, Inc. v.

OptumInsight, Inc., 2017 WL 3669558, at *16. According to MVP, New York law

allows one party to recover lost revenue as general damages when that party is

entirely dependent on the other party to generate revenue. We disagree.

      MVP’s lost revenues are not general damages because the losses claimed do

not flow naturally from OptumInsight’s breach, but, rather, flow from MVP’s

contracts with its insured members. See Tractebel Energy Mktg. v. AEP Power Mktg.,
487 F.3d at 109 (“Lost profits are consequential damages when, as a result of the

breach, the non-breaching party suffers loss of profits on collateral business

arrangements.”).

      MVP also asserts that the district court erred in holding that because “Optum

did not agree to act as an insurer for MVP’s health plans or to otherwise accept

liability for losses on third-party contracts,” MVP could not recover its lost revenues

as consequential damages. MVP Health Plan, Inc. v. OptumInsight, Inc., 2017 WL
3669558, at *17. We are not persuaded.

      To recover lost revenues as consequential damages a plaintiff must show: “[1]

with certainty that the damages have been caused by the breach, (2) the extent of the

loss [can be proven] with reasonable certainty, and (3) it is established that the

damages were fairly within the contemplation of the parties.” Tractebel Energy Mktg.,

Inc., 487 F.3d at 109. We need not address the first two elements because on the

third factor, at least, MVP falls short. “To determine whether consequential damages

were reasonably contemplated by the parties, courts must look to the nature, purpose

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and particular circumstances of the contract known by the parties . . . as well as what

liability the defendant fairly may be supposed to have assumed consciously, or to have

warranted the plaintiff reasonably to suppose that it assumed, when the contract was

made.” Bio-Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187, 193,

856 N.Y.S.2d 505, 508 (2008) (quoting Kenford Co., Inc. v. Cty. of Erie, 73 N.Y.2d 312,

319, 540 N.Y.S.2d 1 (1989)). Here, the circumstances of the contract do not suggest

the parties contemplated that OptumInsight would be liable for MVP’s lost revenues

if OptumInsight failed to perform its obligations under the contract, nor is there any

evidence to warrant the conclusion that OptumInsight otherwise assumed liability

for such damages.

         We have considered MVP’s remaining arguments and find them to be without

merit.

         The judgment of the district court is AFFIRMED. Given our decision, the

cross-appeal is moot and is hereby DISMISSED.

                                        FOR THE COURT:
                                        Catherine O’Hagan Wolfe, Clerk of Court

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