Here is the story of one man, his company, and a rather unscrupulous claims adjuster. Kevin Miles, the sole owner and manager of Nebo Ventures, LLC, made his living helping various companies obtain and fulfill contracts with both state and local governments. In 2003, he was contracted by a larger company (formerly known as NovaPro, L.P.) to help sell administrative services to potential clients.
Lo, many years ago, the written contract between Nebo and NovaPro stated that Miles’ contractual fees would be calculated in a separate schedule for each potential customer; furthermore, NovaPro asserted that they would not take any actions that might prohibit the payment of said fees to Nebo. In a later addendum to the contract, the City of Atlanta was identified as a “potential customer,” meaning that NovaPro was responsible for the agreed payment of “5% of the adjusted gross revenues” for the entirety of its contract with the City of Atlanta.
Initially, the contract with Atlanta was crafted to last 2 years, with the option of one two-year renewal. At the end of the contracted period, the City of Atlanta opened up the floor and issued an RFP seeking bidders for a new contract—one which included the provisions of workers’ compensation, medical, healthcare and claims management services. Undeterred, NovaPro threw their hat into the ring, and won. The new contract, beginning July 1, 2009, was for 3 years of service.
Unaware of the private negotiations between the City of Atlanta and NovaPro, Kevin Miles learned that the city was going to end its initial contract with NovaPro, and contacted the CEO, Russ Whitmarsh, about the possibility of extending their agreement for three more years—but only if the City of Atlanta agreed to take on NovaPro again. (Of course, that agreement had already been made.) After several emails, Whitmarsh agreed to Miles’ proposal, saying that he would commit to the extension of the agreement if NovaPro was granted the renewal. (They were.) Whitmarsh also noted that he would put their new agreement in writing. (He didn’t.)
In June 2011, NovaPro sold the entirety of its assets to another company, which included the rights to the renewed contract with the City of Atlanta. As a result, Nebo Ventures, LLC never saw a dime of 2009 contract’s “adjusted gross revenues,” despite the email exchange promising to “extend the current agreement if [we] get the renewal.”
Now, let’s take a step back. According to the Nebo and NovaPro’s first contract, these “adjusted gross revenues” included the possibility of a yearly bonus. The City of Atlanta had generously agreed to grant NovaPro a performance bonus, and, of course, Nebo Ventures, LLC would receive a 5% share. Somehow—despite the fact that the City of Atlanta renewed their contract with NovaPro—Nebo’s checking account did not reflect the 5% share of any performance bonuses. What’s more, the CEO of NovaPro insisted that the company had not received any such payment from the city.
As you might have guessed, NovaPro did indeed earn performance bonuses; in the second quarter of 2005, they received a lump sum of $814,501, and in the second quarter of 2006, they received a bonus of $348, 972. In response to this new piece of information, Miles sued NovaPro to recover damages for breach of contract, and more importantly, fraud.
As of November 19, 2013, Miles’ attempt to recover his alleged losses was summarily denied a trial by jury. The court ruled that Nebo’s reliance on NovaPro’s representation of the situation was unjustifiable, and that neglecting to perform an audit constituted a failure to exercise due diligence. Similarly, the lack of a hard contract renewing the “current agreement,” as promised via email, left Miles with very little ground to stand on.
If the case of Nebo Ventures, LLC v. NovaPro Risk Solutions, L.P. teaches us anything, it is that we should be wary of promises and guarantees that only appear in our inbox.
Contact Atlanta workers’ compensation attorney Michael Moebes at (404) 354-5432 for legal questions or concerns.