United States District Court, N.D. Alabama, Northeastern Division
HARWELL G. DAVIS, III UNITED STATES MAGISTRATE JUDGE.
matter is before the undersigned U.S. Magistrate Judge based
upon the consent of the parties pursuant to 28 U.S.C. §
636(c) and Fed.R.Civ.P. 73. Plaintiff, Oncology Specialties,
P.C., d/b/a Clearview Cancer Institute (CCI) filed suit
against defendant, McKesson Specialty Care Distribution
Corporation (MSCD) in Madison County Circuit Court.
Subsequently, the matter was removed to U.S. District Court
for the Northern District of Alabama.
complaint, CCI alleges that, for a significant period of time
prior to April 2014, MSCD supplied CCI with oral and
injectable pharmaceuticals without a written agreement.
Subsequently, MSCD desired to memorialize its supply
relationship with CCI in a written agreement. CCI alleges
that MSCD agreed to an effective date of April 1, 2014, for
this agreement. Further, it alleges that the agreement
provided for an initial term of one year, beginning on this
asserted effective date, and would automatically renew unless
either party provided written notice of non-renewal at least
90 days prior to the end of the term.
further alleges that, on or about December 31, 2014, it
drafted and sent a request for proposal for an oncology drug
distribution partnership (RFP) to distributors of oncology
medications. According to plaintiff, the RFP was notice to
MSCD that it did not intend to renew its existing agreement
to CCI, on March 31, 2015, it became entitled to a rebate in
excess of $400, 000 from MSCD, pursuant to their contract.
After learning that it failed to win CCI's business under
the RFP, MSCD sent a letter to CCI in May 2015 taking the
position that the effective date of the agreement was July 3,
2014. It further denied that it received notice of
non-renewal and that, as a result, the agreement had
automatically renewed for an additional year to end in July
2016. MSCD refused to pay the $400, 000 rebate due to CCI
under the written contract, alleging that none is owed due to
CCI's having first breached the contract.
addition, MSCD sent a letter to Cardinal Health (Cardinal),
the distributor with which CCI entered into a partnership
following what CCI asserted to be the expiration of its
agreement with MSCD. In the letter, MSCD advised Cardinal
that it had an agreement with CCI that ran until July 2016
and demanded that it cease and desist all activities with
CCI. CCI alleges that MSCD fraudulently represented to
Cardinal that MCSD's agreement with CCI had an effective
date of July 3, 2014 and had renewed through July 2016.
Count I of the complaint, CCI requests a declaratory judgment
declaring that the effective date of the parties'
agreement is April 1, 2014, and finding that CCI provided
adequate written notice of its non-renewal of the agreement.
II alleges fraud by MSCD in that it is alleged to have
represented that its agreement with CCI would have an
effective date of April 1, 2014, and that CCI would be
entitled to a rebate calculated as a percentage of CCI's
net purchases from MSCD under the agreement. CCI further
alleges that MSCD fraudulently represented to CCI and
Cardinal Health that the agreement had an effective date of
July 3, 2014, and that CCI failed to timely provide written
notice of non-renewal, resulting in a renewal effective until
July 2016. It also alleged that MSCD fraudulently represented
that it would pay CCI a rebate equal to a percentage of its
net purchases of its products, calculated by CCI to be $400,
Count III, CCI alleges fraudulent inducement by MSCD,
asserting that it was fraudulently induced to enter into a
contract with MSCD based on the latter's representation
that the effective date of the contract would be April 1,
IV alleges breach of contract based on MSCD's failure to
pay the $400, 000 rebate supposedly due at the end of the
one-year term ending March 31, 2015.
to plaintiff's complaint, MSCD filed a counterclaim
asserting a breach of contract by CCI for its failure to
provide written notice of its non-renewal of the contract.
to the issues currently before the Court, CCI filed a motion
for summary judgment with regard to the counterclaim filed by
MSCD. (Doc. 47). CCI alleges that the alleged contract that
forms the basis of MSCD's counterclaim is unenforceable
due to the parties' failure to reach a meeting of the
minds on an essential term of the contract. Alternately, CCI
alleges that it is due to be granted summary judgment because
it provided timely notice of non-renewal and, therefore, did
not breach the contract. In addition, CCI alleges that, in
the event an enforceable contract exists, MSCD materially
breached it prior to any alleged breach by CCI by failing to
timely pay the rebate due under the contract.
MSCD filed a motion for summary judgment with regard to
CCI's claims and in its favor with regard to its
counterclaim against CCI. (Doc. 49). MSCD claims that the
evidence shows that there was a valid contract effective in
July 2014, rather than April 2014, and that CCI breached the
contract when it failed to give proper notice of termination
90 days prior to the end of the term.
reflects that in or around January 2014, Bennett Holtzman,
the National Vice President of Sales and Account Management
for MSCD, approached Gary Walton, the CEO of CCI, and began
to try to negotiate a written contract between CCI and MSCD.
(Holtzman Depo. at 25, 32-33). Holtzman met with Walton and
Dr. John Waples of CCI on numerous occasions to discuss a
possible agreement. (Id. at 33).
April 21, 2014, Holtzman sent Walton an email which stated as
As promised, here's the loyalty agreement that rewards
you for staying with McKesson for 1 additional year.
We are projecting you at approximately $85M ...