Propath Services, L.L.P. v. Quest Diagnostics Clinical Labs., Inc. (Summary)

Propath Services, L.L.P. v. Quest Diagnostics Clinical Labs., Inc., No. CIV.3:00-CV-2391-H (N.D. Tex. Apr. 9, 2002)

The U.S. District Court for the Northern District of Texas held that a laboratory that contracted with a pathology group to provide technical support for anatomic pathology testing was required to follow the “winding down” provisions of the contract which should have gone into effect when the group notified the lab that it was terminating the contract. The laboratory claimed that the pathology group’s claims were moot because a provision in the contract which acted to automatically terminate the contract if the lab permanently discontinued all operations had actually been triggered several years previously when the lab moved to a new location. The court rejected the laboratory’s claims, finding that the terms of the contract were unambiguous, that the lab’s move to a new location was not a “cessation” of operations, and that the lab was required to transfer certain aspects of the support services in accordance with the winding down provisions of the contract.