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Association Benefit Services, Inc. v. AdvancePCS Holding Corp.

September 23, 2005

ASSOCIATION BENEFIT SERVICES, INC., PLAINTIFF,
v.
ADVANCEPCS HOLDING CORP.; ADVANCEPCS MAIL SERVICES OF BIRMINGHAM, INC.; CAREMARK RX, INC.; AND CAREMARKPCS, DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Association Benefit Services, Inc. ("ABS") has sued AdvancePCS, now known as CaremarkPCS ("AdvancePCS"), and Caremark Rx, Inc., alleging that defendants fraudulently induced ABS to foster a relationship between AdvancePCS and the American Automobile Association ("AAA") by promising to pay ABS certain future commissions with no intention of fulfilling that promise. Alternatively, ABS contends that defendants breached its contract to provide commissions to ABS. In the event that the Court determines that a contract did not exist, ABS asks the Court to impose a constructive trust on defendants, arguing that they have been unjustly enriched by their fraudulent actions. This diversity action is before the Court on AdvancePCS and Caremark Rx's motions for summary judgment with respect to each of the three claims. For the reasons stated below, the Court grants defendants' motions.

Facts

ABS arranges contracts between companies and prescription benefit managers to administer prescription benefit plans. In return, ABS earns commissions based on the number of prescriptions filled. Jerome Coppage, former president of ABS, first contacted Chris Lee of AdvancePCS in January 2003 regarding an opportunity to act as a prescription benefit manager for a discount prescription drug card program available to AAA members. At the time, Lee was vice president of sales for AdvancePCS, a prescription benefit management firm. ABS did not have a contract with AAA. Rather, ABS acted as a consultant to organizations looking for a prescription benefit manager. The parties dispute whether a consultant in this business is typically paid by the client, in this case AAA, or the prescription benefit manager.

From January to May of 2003, Lee and ABS engaged in negotiations. Eventually, ABS arranged a meeting between Lee and AAA representatives that was scheduled for May 19, 2003. Before Lee met with AAA, he met with Coppage and Jack Bestrom, who was also affiliated with ABS, at a hotel near AAA headquarters in Florida. According to Lee, Bestrom told him that he needed a letter acknowledging that AdvancePCS was willing to pay ABS commissions of $0.25 per prescription filled at retail and $1.50 per prescription by mail. He made it clear that Lee would not be allowed to meet with ABS's client, AAA, until he furnished ABS with the letter outlining the commissions. Lee testified that he was willing to provide ABS with a letter confirming that AdvancePCS would pay fees to ABS if AdvancePCS was able to secure a contract with AAA, but that he was under the impression that ABS was AAA's consultant and that ABS's fees were included in any fees to be requested by AAA. Lee had obtained authorization from AdvancePCS's underwriting department to make such an offer.

Lee prepared the letter on his laptop computer by modifying a letter he had sent to Coppage on May 13, 2003 to include a statement regarding commissions. He printed one copy of the letter, which contained his signature, and gave it to Bestrom. The letter begins by thanking Coppage for partnering with AdvancePCS and expressing excitement about working with ABS toward delivering consumer card services with AAA. See Defs' Ex. 5C. It then states, "For the length of time AdvancePCS delivers benefits to AAA, I want to confirm that we will be paying commissions to Association Benefits Services of $0.25 per retail claim and $1.50 per mail order claim." Id. This paragraph was added by Lee on May 19. ABS claims that from May through August 2003, in reliance on this promise, it provided AdvancePCS with information necessary to adjust its prescription management proposal to meet AAA's needs. ABS also alleges that in reliance on AdvancePCS's promise, it refrained from working with competitor prescription benefits managers, including Merck and Caremark, during that time period.

It is undisputed that Coppage did not sign this letter on May 19, 2003. In fact, AdvancePCS never received a version of the letter that Coppage had signed. But in its fourth amended complaint in this case, ABS attached a copy of the letter that contained Coppage's signature, along with the language "Accepted and agreed this 19th day of May, 2003 by: Association Benefit Services, Inc." See Defs' Ex. 5D; Defs' 56.1 Stmt. ¶ 109. Coppage testified that he signed the letter at home a few days after the May 19 meeting. Pl's 56.1 Resp. ¶ 115-16. ABS maintains that this letter constitutes an operative contract between ABS and AdvancePCS, though it asserts that Coppage's signature was unnecessary to form a contract. ABS also acknowledges that it would be paid under the May 19, 2003 letter only if AdvancePCS and AAA entered into a contract. Id. ¶ 127.

After providing ABS with the letter, Lee met with AAA and, according to Lee, was informed for the first time that the revenue sharing fee requested by AAA did not include any fees for ABS. After his May 19, 2004 meeting with AAA, Lee claims he began negotiations with AAA and ABS regarding all aspects of the AAA program. AdvancePCS contends that during Lee's subsequent discussions with Robert Blixt, CEO of ABS, and other ABS officers, ABS agreed to make adjustments to its fees to ensure that a deal was completed between AdvancePCS and AAA. Among these communications was an e-mail from Lee to Blixt on June 17, 2003. The e-mail states:

At long last, attached is the revised offer. Changes to note: Retail Brand dispensing fee has been the sore subject: with you and us kicking in, we've been able to get to $3.75. Commissions on retail brand: $.15 to ABS. All else remains constant. Contract will be released shortly reflecting this.

Def's Ex. 5J. ABS denies that it ever agreed to lower the commissions stated in the May 19, 2003 letter.

Around the third week of June, AdvancePCS claims, Lee learned from AAA that ABS was not AAA's consultant and that ABS had no contractual relationship with AAA. Lee sent an e-mail to Blixt and Bestrom on June 23, 2003 confirming this information. See Def's Ex. 5L. Shortly after, in a June 26, 2003 e-mail to Blixt, Bestrom, and Coppage, Lee wrote,

I was reading through my old files this week and need to re-tract the letter dated May 19th to Jerry re: AAA. In that letter I offered that we would pay ABS $0.25 per claim while we managed the AAA account. This doesn't make any sense any more in light of our on-going negotiations. I just want to point out that this is not in effect as we don't have any negotiated agreement with AAA or ABS. . . . The contract that we sign with y'all and with AAA will reflect all the accurate financials and obligations.

Def's Ex. 5L. Neither party has produced a response to this e-mail.

AdvancePCS maintains that Lee eventually verbally offered Blixt and Bestrom a $.025 commission per prescription if AdvancePCS was awarded the AAA contract. It asserts that ABS verbally accepted this offer. Again, ABS denies this allegation. On September 1, 2003, AdvancePCS tendered a seven-page written contract to ABS that included the $.025 commission, but ABS rejected the proposed contract. ...


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