NATIONAL BENEFIT BUILDERS INC v. PARAMOUNT RX, INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2613-14T2

NATIONAL BENEFIT BUILDERS,

INC.,

Plaintiff-Respondent,

v.

PARAMOUNT RX, INC.,

Defendant-Appellant.

_______________________________

December 12, 2016

Argued May 31, 2016 Decided

Before Judges Nugent and Higbee.

On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2885-13.

Anthony A. Mingione argued the cause for appellant (Blank Rome, LLP, attorneys; David C. Kistler and Mr. Mingione, of counsel and on the briefs).

Ronald A. Giller argued the cause for respondent (Gordon & Rees LLP, attorneys; Mr. Giller, of counsel and on the brief).

The opinion of the court was delivered by

HIGBEE, J.A.D.

This is a breach of contract action. In 2010, plaintiff, National Benefit Builders, Inc., and defendant, Paramount Rx, Inc., entered into an Administrative Services Agreement (ASA) under which plaintiff was to pay defendant for specified administrative services. In 2012, defendant refused to pay plaintiff $747,993.95, claiming plaintiff breached the ASA. Plaintiff brought this suit for breach of contract. Defendant filed counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing.

Defendant now appeals from two summary judgment orders: (1) an October 24, 2014 order granting plaintiff's cross-motion for partial summary judgment motion on liability and dismissing defendant's cross-motion for summary judgment; and (2) a January 12, 2015 order granting plaintiff's partial summary judgment motion on damages and denying defendant's cross-motions for, inter alia, leave to amend its answer to include new counterclaims. The court found the ASA's plain language unambiguously relieved plaintiff of its obligations under the contract and that plaintiff was not in breach. The court also concluded defendant breached the contract by retaining money rightfully owed to plaintiff. Defendant argues this result necessarily disregarded certain undisputed facts before the court and is in error. We have considered defendant's arguments in light of the record and applicable legal standards and affirm.

We discern the following facts from the motion record. Plaintiff provides discount pharmacy cards to underinsured consumers; the cards allow consumers to purchase prescription medicine at advantageous rates. In 2006, plaintiff entered into a Prescription Discount Card Services Agreement (CSA) with HealthTrans LLC. Under the CSA, plaintiff paid HealthTrans to provide pharmacy benefit administration services and, in return, HealthTrans would collect data about the use of plaintiff's discount cards. This data could be "sold" to pharmaceutical manufacturers willing to pay for this information in the form of rebate claims. In this way, HealthTrans ultimately became entitled to rebate claims flowing from consumers' use of plaintiff's discount cards.

In the CSA, HealthTrans expressly reserved the exclusive right to all rebate claims derived from services it provided plaintiff. In October 2010, however, HealthTrans and plaintiff informally modified their agreement to permit plaintiff to receive rebate claims data from HealthTrans and pursue redemption of the rebates on their own. Although not reduced to writing, the agreement resulted in plaintiff receiving rebate claims for several years with the understanding that HealthTrans could unilaterally limit or cancel plaintiff's access to the data at any time.

Around the same time, plaintiff and defendant began operating under a separate oral agreement. The ASA was executed approximately a year later in November 2011. Under the ASA, defendant agreed to provide plaintiff with rebate administration services. Essentially, after receiving rebate claims data from HealthTrans, plaintiff would in turn furnish defendant with this information on a monthly basis. Defendant would then process this data, submit pertinent information to pharmaceutical manufacturers, collect the rebate, and remit seventy percent of the amount collected to plaintiff.

Section 3.1 of the ASA provided: "[Plaintiff] shall submit these Claims as long as it is in possession of the Claims. [Plaintiff] is under no obligation to submit claims to [defendant] that is [sic] has not received or is not in possession of." Though the president of Paramount Rx initially had reservations about this provision, the parties executed the ASA on November 30, 2011. Between October 2010 and May 2012, HealthTrans provided rebate data to plaintiff, and plaintiff provided defendant with rebate claims in the manner described in the ASA.

In April 2012, HealthTrans notified plaintiff that it would no longer be providing rebate claims and ceased doing so soon after. In June 2012, plaintiff advised defendant that HealthTrans had exercised its right to revoke their access to rebate claims data, and thus, plaintiff would be unable to provide defendant with claims data to process in the future. On August 15, 2012, defendant responded by advising plaintiff it would no longer comply with the ASA and intended to retain all money it received from in-process rebates. Plaintiff terminated the ASA and commenced this action on October 29, 2013.

On May 22, 2014, defendant moved for partial summary judgment on liability. Plaintiff opposed the motion and filed a cross-motion for summary judgment. After oral argument, on October 24, 2014, the trial court denied defendant's motion. In his oral opinion, the judge explained that under the clear language of section 3.1 of the ASA, plaintiff did not breach the contract with defendant and thus defendant had no viable contract claim against plaintiff. The judge granted plaintiff's summary judgment cross-motion, similarly reasoning that defendant was liable for breach of contract by withholding money from plaintiff.

Plaintiff then moved for partial summary judgment on damages. Defendant filed cross-motions, now seeking reconsideration, extension of discovery, and leave to file an amended answer for the purpose of pursuing counterclaims against plaintiff. The court denied defendant's motions and entered judgment for plaintiff in the amount originally sought. Defendant appeals from the orders accompanying both proceedings, arguing the trial court erred in ruling on both of defendant's motions.

We review a trial court's grant or denial of summary judgment de novo, "employing the same standard used by the trial court." Tarabokia v. Structure Tone, 429 N.J. Super. 103, 106 (App. Div. 2012), certif. denied, 213 N.J. 534 (2013). We must first "decide whether there was a genuine issue of material fact, and if none exists, then decide whether the trial court's ruling on the law was correct." Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998)). As such, this court "consider[s] whether the undisputed material facts, viewed in the light most favorable to the non-moving party, entitle[s] the moving party to judgment as a matter of law." Tarabokia, supra, 429 N.J. Super. at 106 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)).

Defendant's primary contention on appeal is that the trial judge improperly made factual determinations that ran counter to the undisputed material facts of the case. In their Rule 4:46 statements of undisputed facts, both parties indicate the 2010 oral modification of the CSA, which allowed plaintiff to receive rebate claims from HealthTrans, was enforceable. At oral argument, however, the trial court concluded the modification between plaintiff and a third-party was never enforceable.

While this appears to run counter to the undisputed facts agreed to by the parties in their Rule 4:46 statements, the legal status of the 2010 agreement between plaintiff and HealthTrans is ultimately immaterial to the breach of contract claims the trial court resolved on summary judgment. Defendant's argument misses the mark because the status of the contractual relationship between plaintiff and HealthTrans is not determinative to the breach of contract claims. Even if the judge had accepted that the 2010 oral modification to the CSA was enforceable, the conclusion that defendant breached the ASA, while plaintiff did not, would not change.

Defendant's argument overlooks the fact that section 3.1 of the ASA plainly states that plaintiff's only responsibility was to provide defendant with the rebate claims data it was in possession of or had a right to. While we need not decide the issue, we note the record suggests plaintiff never had a contractual right to rebate data from HealthTrans. The record is clear, however, that HealthTrans opted to furnish the data to plaintiff for several years absent any contractual obligation. During this period, plaintiff provided defendant with the data per the ASA. When HealthTrans decided to cease providing plaintiff with this data, plaintiff no longer was in possession of any rebate claims data. At this point, plaintiff stopped providing defendant with the data and defendant withheld money it should have remitted to plaintiff.

For these reasons, we conclude plaintiff was not in breach of the ASA when it failed to provide rebate claims data to defendant in June 2012. It was not error to deny defendant's motion for summary judgment. Defendant, therefore, had no right to stop performance and defendant's decision to withhold approximately $747,993.95 constituted a breach of the ASA. Summary judgment was properly granted for plaintiff in this amount.1

Defendant next argues the trial court erred when it declined to grant defendant leave to file an amended answer nearly six months after its initial filing. Once ninety days after service of a responsive pleading elapse, a pleading may be amended "only by written consent of the adverse party or by leave of court which shall be freely given in the interest of justice." R. 4:9-1. Still, these decisions are firmly within the discretion of the trial court and should not be disturbed on appeal unless there has been a "clear abuse of discretion." Franklin Med. Assocs. v. Newark Pub. Sch., 362 N.J. Super. 494, 506 (App. Div. 2003) (citing Salitan v. Magnus, 28 N.J. 20, 26 (1958)). The court's discretion must be guided by the facts surrounding the motion to amend, Bonczek v. Carter-Wallace, Inc., 304 N.J. Super. 593, 602 (App. Div. 1997), certif. denied, 153 N.J. 51 (1998), including the reason for the late filing. Verni ex rel. Burstein v. Harry M. Stevens, Inc., 387 N.J. Super. 160, 196 (App. Div. 2006), certif. denied, 189 N.J. 429 (2007). Furthermore, this discretion is typically sustained when the motion is brought at a late stage in the litigation. See Bldg. Materials Corp. of Am. v. Allstate Ins. Co., 424 N.J. Super. 448, 484 (App. Div.), certif. denied, 212 N.J. 198 (2012).

Here, after partial summary judgment was granted against it, defendant sought leave to amend its answer to raise new counterclaims premised on theories of fraud in the inducement and negligent misrepresentation. These causes of action flow from the trial court's ancillary suggestion that the modification to the agreement between plaintiff and HealthTrans was unenforceable as it was not supported by adequate consideration.2 That the trial judge made a reference to a lack of consideration an argument neither party raised previously that apparently inspired defendant to develop additional counterclaims does not compel leave to amend. Beyond its own inadvertence, defendant offers no compelling explanation for delaying this request until after the court had substantively ruled on the parties' cross-motions for summary judgment. As such, we find no abuse of discretion in the trial court's denial of defendant's motion. Accordingly, the trial court's denial of the related motion to allow for additional discovery into the above causes of action is also affirmed.

We have considered the remaining arguments raised by defendant and have determined they lack sufficient merit to address in this written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 Defendant argues the damages awarded should be reduced by approximately $9,203.76, an amount allegedly representing certain rebate claims that were ultimately not eligible for payment. This argument was raised for the first time during defendant's motion for reconsideration. The trial court rejected this argument as untimely because no evidence was produced on this point during discovery. We agree with the trial judge and find no reason to reduce plaintiff's award.

2 The entirety of the trial judge's remarks on consideration follows

That agreement specifically provided that HealthTrans retain the right to these rebates. In October 2010, although it's described . . . loosely as an oral agreement . . . reading the full affidavit[,] it obviously doesn't mean agreement in a legal sense. What occurred was HealthTrans said that [plaintiff] could receive the rebates, [which was] a readjustment of the agreement without consideration and, therefore, not an enforceable promise.