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United Health Alliance, LLC v. United Medical, LLC

Court of Chancery of Delaware

November 27, 2013

UNITED HEALTH ALLIANCE, LLC, a Delaware limited liability company, Plaintiff/ Counterclaim Defendant,
v.
UNITED MEDICAL, LLC, a Delaware limited liability company, Defendant/ Counterclaim Plaintiff.

Submitted: August 21, 2013

Jeffrey M. Weiner, Esq., LAW OFFICES OF JEFFREY M. WEINER, Wilmington, Delaware; James S. Green, Sr., Esq., SEITZ, VAN OGTROP & GREEN, P.A., Wilmington, Delaware; Attorneys for Plaintiff/Counterclaim Defendant United Health Alliance, LLC.

Adam L. Balick, Esq., Melony R. Anderson, Esq., BALICK & BALICK, LLC, Wilmington, Delaware; Attorneys for Defendant/Counterclaim Plaintiff United Medical, LLC.

MEMORANDUM OPINION

PARSONS, Vice Chancellor.

This matter is before the Court on Defendant/Counterclaim Plaintiff's Motion to Enforce Settlement Agreement (the "Motion to Enforce"). The facts relevant to the Motion to Enforce are similar to those previously set out in my evidentiary ruling striking certain hearsay evidence.[1] Thus, I recite here only those facts necessary to this decision.

The parties to this action mediated their dispute and appeared to reach an oral settlement agreement. After the mediation, however, and during the parties' attempts to implement the settlement, a dispute arose regarding the breadth of the release to which they orally had agreed. Defendant contends that Plaintiff offered to provide a general release of all its claims, known or unknown, against Defendant. Plaintiff denies that it offered a general release. Rather, it suggests that the Defendant may have misinterpreted as referencing a general release Plaintiff's counsel's statements to the effect that, by agreeing to Plaintiff's settlement terms, Defendant would reduce the potential for later claims—by Plaintiff and third parties—arising from Defendant's ongoing failure to provide Plaintiff with certain services. In addition, Plaintiff argues that, even if the parties had formed an enforceable settlement agreement, it is excused from all duties and obligations under the agreement because Defendant materially breached it.

For the reasons stated in this Memorandum Opinion, Defendant has failed to prove that the parties entered into an enforceable settlement agreement. Therefore, I deny Defendant's Motion to Enforce.

I. BACKGROUND

A. The Parties

Plaintiff, United Health Alliance, LLC ("UHA"), is a Delaware limited liability company that provides administrative, management, and billing services for the medical services industry. Defendant, United Medical, LLC ("UM"), is a Delaware limited liability company and is an authorized distributor of PowerWorks Practice Management, a software application in the healthcare services industry.

B. Facts

1. The Mediation

On July 20, 2012, UHA filed a complaint in this Court, seeking, among other relief, a temporary restraining order compelling UM to provide to UHA eight days of access to UM's medical billing software system (the "Cerner System"), and an award of $48, 875 to cover UHA's damages caused by UM's alleged breach of a sublease agreement. In October 2012, the parties agreed to participate in voluntary mediation and retained former judge Vincent J. Poppiti, Esq. (the "Mediator") to mediate the claims. During the mediation on October 25, 2012 (the "Mediation"), the parties appeared to reach an oral agreement to settle the dispute. In the days following the Mediation, the parties attempted, through email communications, to implement the settlement agreement. During these communications, however, a disagreement arose concerning both the terms of the settlement and UM's insistence that the agreement be reduced to writing. In particular, the parties disagreed over the breadth of the release and the claims that the settlement would extinguish.

2. Defendant's Motion to Enforce

On December 7, 2012, UM filed its Motion to Enforce. A dispute arose, however, as to the admissibility of certain evidence proffered by UM. On May 6, 2013, after hearing brief argument, I granted UHA's motion to strike, as inadmissible hearsay, an email communication from the Mediator to counsel.[2] Then, at the parties' request, I held an evidentiary hearing on UM's Motion to Enforce on July 26 and August 21, 2013.

Although I granted UHA's motion to strike, I also held that, by introducing confidential mediation communications in support of its motion, UHA waived its right to assert the confidentiality privilege that typically attaches to mediation.[3] At the evidentiary hearing, UHA objected to UM's introduction of evidence as to what the Mediator said during the Mediation. I address UHA's objection in more detail below, but I note that my ...


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