applying objective standard to application for liability insurance where application required divulgence of "any known incidents or circumstances that might reasonably be expected to give rise to a claim"Summary of this case from Maxum Indem. Co. v. Nat'l Condo & Apartment Ins. Grp.
No C-03-1356 VRW.
October 28, 2004
Plaintiff and counterdefendant Federal Insurance Company (Federal) seeks to rescind a products liability and clinical trial liability insurance policy issued to defendant and counterclaimaint Curon Medical, Inc (Curon), based on Curon's failure to disclose to Federal a severe injury sustained by one of Curon's clinical trial participants. The parties have filed cross-motions for partial summary judgment essentially to determine whether Federal is entitled to rescind that policy. Because the court finds this matter suitable for determination without oral argument, the hearing scheduled for September 2, 2004, is VACATED. See Civ LR 7-1(b).
For the following reasons, the court GRANTS Federal's motion for partial summary judgment on its rescission claim (Doc #41) and DENIES Curon's motion for partial summary judgment on that claim (Doc #33). The court also GRANTS Federal's motion for summary judgment on Curon's counterclaims (Doc #35), DENIES Curon's motion for summary judgment on its breach of contract claim (Doc #33) and TERMINATES as moot the parties' cross-motions on Federal's reformation and violation of public policy claims (Doc ##33, 41).
The relevant facts in this matter are essentially undisputed. Curon develops, manufactures and markets products for the treatment of gastrointestinal disorders. In 2000, Curon entered into a clinical trial agreement with Graduate Hospital and Dr Deborah A Nagle. See Decl Alan C Milstein (Milstein Decl; Doc #34), Exh D. Part of the trial's purpose was to test an experimental medical device known as the Secca Tubular Electrode. See id, Exh E at 1. Curon had designed the device to reduce the symptoms of fecal incontinence by transmitting radio frequency energy to the anal sphincter. See id, Exh E at 2-3. Curon agreed to indemnify Graduate for losses and costs sustained in providing research subjects with medical treatment necessary for injuries sustained during the trial. Id at Exh D at 1-2.
In September 2000, Eileen Guckin participated in the trial. Guckin received and signed an informed consent form that apprised her of possible risks posed by the testing procedure. See id, Exh E. During the procedure, the device overheated and severely injured Guckin. See id, Exh F. One week after the procedure, during an office visit with Dr Nagle, Guckin reported that she had no continence, no sensation of bowel movements and was in severe pain. Dr Nagle identified several problems, including a macerated anoderm, a patulous anal canal and open wounds on the perianal skin. See Decl Queena C Ho (Ho Decl; Doc #37), Exh 2. Later in September, Dr Nagle admitted Guckin to the hospital for further treatment. Dr Nagle emailed Dr David S Utley, Curon's chief medical officer (CMO), to tell him that Guckin's anal canal was nearly gone and that Guckin's injury was "devastating." Id, Exh 3.
In early October, Dr Nagle filled out an adverse event form for the Guckin incident, noting that the injury was serious and severe. Id, Exh 4; Milstein Decl, Exh F. Later that fall, Curon filed an adverse event report with the Food and Drug Administration (FDA), attaching Dr Nagle's adverse event forms and reporting a similar experience for another trial participant who had had the procedure done on about the same date as Guckin. Ho Decl, Exh 9. The FDA and Curon continued to communicate regarding further development and improvement to the device. Id, Exhs 11-13; Milstein Decl, Exhs G-L.
In March 2001, Dr Nagle wrote to Dr Utley to inform him that she was aware that Guckin had been consulting with a lawyer. Ho Decl, Exh 6; Milstein Decl, Exh R. No one at Curon consulted with Curon's products liability attorney at that time. Milstein Decl, Exh S at 53-54. Curon officials apparently believed that the type of injury Guckin suffered was encompassed within the informed consent document she had signed before undergoing the procedure. See Milstein Decl, Exhs M N.
Dr Nagle completed another adverse event report later that month, stating that Guckin had suffered anal canal scarring and deformity as a result of the incident. Ho Decl, Exh 7; Milstein Decl, Exh Q. Some of Curon's principal executives, including its chief executive officer (CEO) and CMO were apprised of Guckin's condition. Id, Exh 8 at 82. In March 2002, Curon paid Graduate $14,733.68 in reimbursement for Guckin's follow-up care. Ho Decl, Exh 14.
On May 15, 2002, Curon's CFO submitted an application to plaintiff Federal for a "claims made" insurance policy to cover products liability and clinical trials. Application (Ho Decl, Exh 16; Milstein Decl, Exh T). The application included the following questions and answers:
Average annual expenditure for medical treatments for side effects sustained by clinical $10K trial participants over the last 3 years?
Describe all incurred losses of [no response] $10,000 or more:
Any known incidents or No circumstances that might reasonably be expected to give rise to a claim? (If yes, provide details)
Any claims not reported? (If No yes provide details)
Total number of completed human 7 clinical trials applicant sponsored in last 3 years:
Total number of human test 864 subjects enrolled in the last 3 years:
Subsequently, Federal underwriter Everett Shockley reviewed Curon's application. Decl Everett Shockley (Shockley Decl; Doc #40) at 2 ¶¶ 3, 41; Depo Everett Shockley (Shockley Depo; Ho Decl, Exh 18; Milstein Decl, Exh A) at 48-49. Shockley also submitted follow-up questions to Curon's insurance broker regarding Curon's website disclaimer, medical product sales procedures and product recalls. Shockley Depo at 49. Shockley did not request further information regarding any adverse events during the seven reported clinical trials or the expenditures on trial participants' side effects. Id at 29-32. After Shockley's review, Federal issued to Curon an insurance policy covering products liability and clinical trial liability. Milstein Decl, Exh B at 4; Ho Decl, Exh 19.
Meanwhile, Guckin and her husband retained an attorney and filed a lawsuit against Curon on June 11, 2002, in the Court of Common Pleas for Philadelphia County, Pennsylvania. The lawsuit asserted causes of action for, inter alia, negligence, assault and battery, intentional and negligent infliction of emotional distress, intentional misrepresentation and strict liability. The lawsuit was premised in part on allegations that the informed consent document was deficient and misleading. Milstein Decl, Exhs Z, AA; Ho Decl, Exh 20. Curon's present attorney, who represented the Guckins in the Pennsylvania lawsuit, asserts that the informed consent form argument had rarely been used before. Milstein Decl, Exh Y.
On June 27, 2002, Curon tendered the lawsuit to Federal for coverage and defense. On August 9, 2002, Federal informed Curon that it would provide a defense for the lawsuit subject to full reservation of rights, including the right to deny coverage and/or seek rescission of the policy based on Curon's failure to report the Guckin incident. Ho Decl, Exh 21. On March 1, 2004, Curon and the Guckins entered into an agreement to which Federal did not consent. In that agreement: (1) Curon agreed to pay the Guckins $1.25 million; (2) the Guckins agreed to withdraw the Pennsylvania suit without prejudice; (3) the Guckins' attorney agreed to represent Curon against Federal with respect to the coverage dispute; and (4) Curon consented to a reinstitution of the Guckin suit, should Curon prevail against Federal on the coverage issue. Milstein Decl, Exh CC; Ho Decl, Exh 22.
Basing federal jurisdiction on diversity, Federal filed the instant lawsuit against Curon on March 28, 2003. Doc #1. In its most recent amended complaint, Federal advances five claims under California law: (1) rescission and restitution; (2) reformation and restitution; (3) unjust enrichment; (4) declaratory relief; (5) violating public policy through the 2004 Guckin agreement. Doc #29. On June 25, 2004, Curon filed counterclaims for: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) violation of Cal Bus Prof Code § 17200. Doc #32.
The parties have presently filed cross-motions for partial summary judgment. Doc ##33, 35, 41. Federal requests summary adjudication of: (1) its rescission and reformation claims; (2) its violation of public policy claim; and (3) all of Curon's counterclaims. Curon requests summary adjudication in its favor of: (1) Federal's rescission and reformation claims; (2) Federal's public policy claim; and (3) Curon's breach of contract counterclaim.
In reviewing a summary judgment motion, the court must determine whether genuine issues of material fact exist, resolving any doubt in favor of the party opposing the motion. "[S]ummary judgment will not lie if the dispute about a material fact is `genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, 477 US 242, 248 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. And the burden of establishing the absence of a genuine issue of material fact lies with the moving party. Celotex Corp v. Catrett, 477 US 317, 322-23 (1986). When the moving party has the burden of proof on an issue, the party's showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party. Calderone v. United States, 799 F2d 254, 258-59 (6th Cir 1986). Summary judgment is granted only if the moving party is entitled to judgment as a matter of law. FRCP 56(c).
The nonmoving party may not simply rely on the pleadings, however, but must produce significant probative evidence supporting its claim that a genuine issue of material fact exists. TW Elec Serv v. Pacific Elec Contractors Ass'n, 809 F2d 626, 630 (9th Cir 1987). The evidence presented by the nonmoving party "is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 US at 255. "[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id at 249.
B 1The crux of the dispute between Federal and Curon is whether Curon's failure to disclose the Guckin incident allows Federal to rescind the insurance policy it issued to Curon. Despite Curon's arguments to the contrary, the court holds that Federal is entitled to do so.
Courts in the Ninth Circuit have consistently recognized that, under California law, an insurer is entitled to rescind an insurance policy on the ground of the insured's material misrepresentation. See, e.g., Taylor v. Sentry Life Ins Co, 729 F2d 652, 654 (9th Cir 1984); Ingram v. Old Line Ins Co of America, 1999 US Dist LEXIS 9346, *4 (ND Cal) (Smith, J). Generally speaking, the court looks to three factors in determining whether an insurance company has the right to rescind: (1) whether the insured made a misrepresentation in its application for insurance; (2) whether that misrepresentation was material; and (3) whether the insured knew that it had made a material misrepresentation. Casey v. Old Line Life Ins Co of America, 996 F Supp 939, 944 (ND Cal 1998) (Infante, MJ).
With respect to the first factor, Curon's failure to report the Guckin incident on Federal's insurance application constitutes a misrepresentation. "`An insurer has a right to know all that the applicant for insurance knows'" with respect to the applicant's risk history. See Freeman v. Allstate Life Ins Co, 253 F3d 533, 536 (9th Cir 2001), quoting Thompson v. Occidental Life Ins Co, 9 Cal 3d 904, 915 (1973). Curon answered "no" to Federal's question, "Any known incidents or circumstances that might reasonably be expected to give rise to a claim?" Application at 7. Given that Guckin had been severely injured and had been consulting a lawyer, the Guckin incident reasonably could have been expected to give rise to a formal claim. See Jaunich v. National Union Fire Ins Co of Pittsburgh, 647 F Supp 209, 212-14 (ND Cal 1986) (Lynch, J) (finding misrepresentation when insured failed to disclose potential claims in response to application question regarding circumstances that "might give rise to a claim under the proposed policy"). The fact that the Guckin incident ultimately ripened into a lawsuit does not establish this fact, of course. See id at 213-14 (noting that potential suits had "ripened into litigation and are in fact related to the very suits for which the plaintiffs now seek coverage under the policy"). But given the facts Curon had at hand, its failure to disclose the Guckin incident in response to the application question constitutes a misrepresentation.
Curon attempts to undermine this conclusion in several ways. First, Curon points out that Guckin's indirect complaints before Curon applied for insurance did not amount to a formal "claim." California law defines a "claim" as "the assertion of a liability of the party, demanding that the party perform some service or pay some money." Abifadel v. Cigna Ins Co, 8 Cal App 4th 145, 160 (1992). A claim is a formal demand for recompense, as opposed to mere complaints or expressions of dissatisfaction. Id; see also Williamson Vollmer Engineering, Inc v. Sequoia Ins Co, 64 Cal App 3d 261, 269 (1976) (characterizing a claim as "demand for something due or believed to be due" and as "connoting an assertion of a legal right"). In the present case, Guckin's complaints to Dr Nagle and Guckin's reported consultations with a lawyer probably did not meet this formal definition of a claim. Nevertheless, the question on Federal's insurance application was not limited to actual claims. Rather, the question called for the disclosure of incidents that might reasonably be expected to give rise to a claim — in other words, potential claims.
Curon also asserts that the court should apply the doctrine of contra proferentem to interpret the language of the application question very narrowly. Essentially, Curon asks the court to find that the application language was ambiguous and should be construed against Federal. Curon's proposed interpretation of the question would only call for disclosure if Curon subjectively understood that the incident probably would result in a claim.
The court rejects this interpretation of the question regarding potential claims for several reasons. Curon offers no recent authority from the Ninth Circuit or from California in which the doctrine of contra proferentem was applied in the context of rescission for material misrepresentation. The sole such case that Curon cites is a 1960 Ninth Circuit decision that involved an insurance application question calling for disclosure ofclaims, not potential claims. See American Mutual Liability Ins Co v. Goff, 281 F2d 689, 692 (9th Cir 1960).
Even assuming that contra proferentem applies under California law in the present context, that doctrine would not be applicable here. In the context of insurance contracts, the court must adopt the clear and ordinary meaning of the provision's language. The provision should be interpreted against the insurer only if unresolvable ambiguities exist in that provision. SeeAIU Ins Co v. Santa Clara Cty Superior Ct, 51 Cal 3d 807, 822 (1990). As Federal argues, contra proferentum is a rule of last resort and should not be used to distort the meaning of clear language.
Curon attempts to introduce ambiguity into the Federal application question by asserting that the language does not delineate between potential or probable claims or between frivolous or meritorious claims. The court is unpersuaded by this argument. The question calls for disclosure of events that "might reasonably be expected to give rise to a claim." Federal courts have generally found similar language to be unambiguous. SeeWestport Ins Corp v. Lilley, 292 F Supp 2d 165, 171 (D Mass 2003) (Kravcuk, MJ) (collecting cases from federal district courts in the Third, Fifth, Ninth and Eleventh Circuits). TheJaunich court in this district found such language to be clear enough to require disclosure of potential lawsuits, and the court agrees that such a finding is appropriate in this case as well. See Jaunich, 647 F Supp at 213-14. The question in Federal's insurance application unambiguously calls for disclosure of incidents that reasonbly could be expected to give rise to a claim. Given the extent of Guckin's injury and the fact that she had consulted a lawyer, there was ample reason to believe that she would bring a formal claim against Curon. The court thus concludes that failure to disclose the Guckin incident constituted a misrepresentation.
As for the second factor — materiality — the court has little doubt that the Guckin incident misrepresentation was material. Under California law, the insurer is "entitled to determine for itself whether [the insured] was insurable." Taylor, 729 F2d at 655; see also Merced Cty Mutual Fire Ins Co v. California, 233 Cal App 3d 765, 772-73 (1991). Materiality is primarily determined by looking to "`the probable and reasonable effect that truthful disclosure would have had on the insurer in determining the advantages of the proposed contract.'" Casey, 996 F Supp at 948, quoting Merced, 233 Cal App 3d at 772. In other words, if the insurer would not have issued the insurance policy but for the insured's misrepresentation, that misrepresentation should be considered material. Casey, 996 F Supp at 948. Further, "`the fact that the insurer has demanded answers to specific questions in an application for insurance is in itself usually sufficient to establish materiality as a matter of law.'" Id, quoting Merced, 233 Cal App 3d at 772.
In the case at bar, the failure to disclose the Guckin incident qualifies as material for several reasons. First, Federal presents the affidavit of its underwriter, Everett Shockley, in which Shockley avers that had he known about the Guckin incident, he would not have authorized the issuance of the policy or would have issued a policy with different terms and at a different premium. Shockley Decl at 2 ¶ 6. While this is obviously self-serving on Federal's part, Curon does not appear to offer evidence to the contrary. This establishes that Federal would not have issued the policy in question but for the misrepresentation. See Casey, 996 F Supp at 948. Second, Federal's insurance application called for Curon to disclose incidents that might reasonably be expected to give rise to a claim. As noted above, the question on the application is enough by itself to demonstrate materiality. See id; Merced, 233 Cal App 3d at 772.
The third factor, Curon's knowledge, also supports rescission. An insurer need not demonstrate that the insured made the material misrepresentation with actual intent to deceive.Freeman, 253 F3d at 536 (citing Thompson, 9 Cal 3d at 915);Casey, 996 F Supp at 944 (same). Nevertheless, the insured's knowledge must be considered. There is no breach of duty to disclose if the insured is ignorant of the relevant information.Freeman, 789 F2d at 1339 (citations omitted); Casey, 996 F Supp at 949. Nor is there a breach if the insured, acting in good faith, does not understand the significance of the information it fails to disclose. Freeman, 789 F2d at 1339 (citations omitted); Casey, 996 F Supp at 949. Neither of these two exceptions to rescission, however, support Curon's position.
First, it is undisputed that officials at Curon were aware of the Guckin incident. Dr Nagle communicated continuously with Curon's CMO, Dr Utley, regarding the severity of Guckin's condition. See Ho Decl, Exhs 3, 6; Milstein Decl, Exh R. Dr Nagle also informed Dr Utley that Guckin had sought out a lawyer. Ho Decl, Exh 6; Milstein Decl, Exh R. Alistair McLaren, who was Curon's chief financial officer (CFO) and filled out the insurance application, apparently did not know at that time that Guckin had consulted with a lawyer. Depo Alistair McLaren (McLaren Depo; Ho Decl, Exh 15) at 127. This fact, however, does not undercut a finding of actual knowledge. The court should charge a corporation with the cumulative knowledge that its officers have gained in the course of their employments. SeeNordstrom, Inc v. Chubb Son, Inc, 54 F3d 1424, 1434 (9th Cir 1995) (noting this rule in the context of Rule 10b-5 liability);Hadady Corp v. Dean Witter Reynolds, Inc, 739 F Supp 1392, 1399-1400 (CD Cal 1990) (Bonner, J) (finding this rule applicable in the equitable estoppel context). Because he was one of Curon's senior officers, Dr Utley's knowledge regarding the attorney is sufficient to charge Curon with actual knowledge.
Second, Curon argues that Curon failed to appreciate the significance of the Guckin incident because no one at Curon expected that the Guckin incident would give rise to a claim. Curon bases this argument on the fact that Guckin had not yet made a formal claim for money damages at the time Curon submitted the insurance application and on its contention that clinical trial lawsuits are relatively rare and involve a novel and developing area of the law. Essentially, Curon argues that it believed that the Guckin incident was too insubstantial to report. This argument is not convincing for several reasons. InFreeman, the insured argued that because her physical condition was controlled by medication, it was not significant enough to report on her application for health insurance. The Ninth Circuit rejected this argument, noting that "[w]here an insured is aware of her condition, symptoms, or treatment, she is obliged to disclose them upon request." Freeman, 253 F3d at 536-37; see also Casey, 996 F Supp at 949. Similarly, in the case at bar, Curon officials were aware of the severity of the Guckin incident and that Guckin had consulted a lawyer. Whether Curon officials believed Guckin might have a substantial chance ultimately to succeed on a claim against Curon is irrelevant. This is not a situation in which the information available to Curon failed to put it on notice that a claim might be filed. Compare Miller v. Republic Nat'l LIfe Ins Co, 789 F2d 1336, 1339-40 (9th Cir 1986) (finding that health insurance applicant was not required to disclose several incidents of "strange thoughts" because he failed to understand that those thoughts were symptoms of a brain tumor). Curon had more than enough information to recognize that Guckin was contemplating filing a lawsuit against Curon for her injuries.
Furthermore, the testimony of Curon's CFO undermines the argument that Curon failed to appreciate the significance of the Guckin incident. Federal points the court to McLaren's deposition testimony, in which he admitted that had he been aware that Guckin had consulted a lawyer, he probably would have disclosed that information to Federal. McLaren Depo at 127-28. This testimony indicates that Curon subjectively appreciated the significance of the information about Guckin, regardless whether Guckin had lodged a formal claim or whether her theory of liability was novel.
Curon raises one further issue in an attempt to avoid rescission of the insurance policy. Curon argues that had Shockley or other Federal officials made follow-up inquiries with Curon, Federal could have discovered the Guckin incident on its own. But under California law, it has long been established that "[o]ne who is induced to enter into a contract by positive representations of fact is under no duty to inquire as to the truth of the representations unless he is made aware of facts [that] bring them under suspicion and [that] would induce a prudent man to make inquiry." Mirich v. Underwriters at Lloyd's London, 64 Cal App 2d 522, 531 (1944). An insurer does not waive its right to receive withheld information unless that information is distinctly implied in other disclosed facts and the insurer fails to make further inquiries. Casey, 996 F Supp at 950; Anaheim Builders Supply, Inc v. Lincoln Nat'l Life Ins Co, 233 Cal App 2d 400, 410-11 (1965).
None of the information that Curon provided to Federal is sufficient to put Federal on notice of the Guckin claim. Curon points to its disclosures regarding the number of clinical trials and its disclosures regarding average expenditures on the treatment of trial participants' side effects. This information does not distinctly imply that any of the trial participants experienced a severe injury or might be contemplating a lawsuit. When the insured's disclosures reveal only minor problems or inconclusive information, the insurer should not be charged with notice or a duty to inquire further. See Ingram, 1999 US Dist LEXIS 9346 at *7-*9 (rejecting waiver because the information disclosed revealed only minor or unrelated problems and failed distinctly to imply that insured had materially misrepresented his physical condition); Casey, 996 F Supp at 950 (rejecting waiver because insured's disclosure of medical test revealed only inconclusive information and did not put insurer on notice of insured's alcoholism or drug abuse). As Federal points out, Curon had disclosed that more than 800 human subjects had participated in its clinical trials. It is reasonable to believe that some of those subjects would experience minor side effects from experimental medical procedures and that some follow-up treatment would be required. Certainly the expenditure information presents no clear indication that a million-dollar lawsuit was likely to result. "Information that, in retrospect, might make one wonder, is not `actual knowledge' that `distinctly implies' that [the insured's] answers were false." Ingram, 1999 US Dist LEXIS 9346 at *9. The information disclosed in Curon's application was insufficient to put Federal on notice that further investigation was necessary to determine whether claims of liability might be forthcoming. See id at *7-*9;Casey, 996 F Supp at 950.
The court thus finds that Federal is entitled to rescind the insurance policy it issued to Curon. Accordingly, the court GRANTS Federal's motion for partial summary judgment (Doc #41) on that rescission claim and DENIES Curon's motion for summary judgment (Doc #33) on that claim.
The parties request summary adjudication of several other claims and counterclaims, including: (1) Federal's reformation claim; (2) Federal's claim that Curon's agreement with Guckin violates public policy; (3) Curon's counterclaim for breach of contract; (4) Curon's counterclaim for bad faith; and (5) Curon's counterclaim for violation of Cal Bus Prof Code § 17200. Federal contends that, should the court grant its motion for summary judgment on the rescission issue, the rest of these claims become moot or must be decided in Federal's favor. The court agrees.
First, Federal's two claims for reformation and for violation for public policy are mooted by the court's rescission ruling. Reformation is unnecessary in light of Federal's right to rescind. And there is no need to make any decision regarding Curon's 2004 agreement with the Guckins, because Federal is no longer obligated to provide coverage to Curon.
Second, all of Curon's counterclaims must be denied on the basis of the rescission. "[U]pon a rescission of a policy of insurance, based upon a material concealment or misrepresentation, all rights of the insured thereunder (except the right to recover any consideration paid in the purchase of the policy) are extinguished * * *." Imperial Casualty Indemnity Co v. Sogomonian, 198 Cal App 3d 169, 184 (1988). Federal cannot be liable for breach of contract after the court allows it to rescind that contract. See Casey, 996 F Supp at 950. Curon claims that a trial is required on its bad faith claim because the parties dispute the nature of Federal's conduct in denying coverage and in investigating Curon's claim. This argument is without merit. If the insurer has a right to rescind the policy due to material misrepresentation, then there can be no bad faith in denying benefits. Freeman, 253 F3d at 537;Casey, 996 F Supp at 950. This principle is equally applicable to Curon's § 17200 claim for unfair business practices.
Accordingly, the court GRANTS Federal's motion for summary judgment on Curon's three counterclaims (Doc #35), DENIES Curon's motion for summary judgment on its breach of contract claim (Doc #33) and TERMINATES as moot the parties' motions for summary judgment on the reformation and violation of public policy claims (Doc ##33, 41).
The court finds that Federal is entitled to rescind the insurance policy it issued to Curon. Accordingly, the court: (1) GRANTS Federal's motion for summary judgment on the rescission claim (Doc #41); (2) GRANTS Federal's motion for summary judgment on Curon's three counterclaims (Doc #35); (3) DENIES Curon's motion for summary judgment on Federal's rescission claim and on its breach of contract claim (Doc #33); and (4) TERMINATES as moot the parties' cross-motions for summary judgment on Federal's reformation and violation of public policy claims (Doc ##33, 41). The court VACATES the September 2, 2004, hearing date.
In view of the foregoing, the court also VACATES the pretrial conference scheduled for October 19, 2004, and instead converts that conference into a further case management conference on Tuesday, April 20, 2005, at 9:00 am. At that conference, the court requests that the parties advise the court with respect to what remains to be resolved, as well as their efforts to resolve the litigation short of trial.
IT IS SO ORDERED.