Cardiac Anesthesia Servs., PLLC v. Jones
| Decision Date | 30 March 2012 |
| Docket Number | No. M2011-01715-COA-R3-CV,M2011-01715-COA-R3-CV |
| Parties | CARDIAC ANESTHESIA SERVICES, PLLC v. JON JONES |
| Court | Tennessee Court of Appeals |
March 6, 2012 Session
Direct Appeal from the Circuit Court for Putnam County
No. 10J0294 Larry B. Stanley, Jr., Judge
This case involves the application of the statute of limitations to a legal malpractice action. Appellee attorney drafted a contract for Appellant medical provider; the contract contained a fee-split clause in contravention of Tennessee Code Annotated Section 63-6-225. When the other party to the contract, a hospital, allegedly breached the contract and sued the medical provider, the medical provider counterclaimed for breach of contract. The hospital answered the complaint and filed a motion for summary judgment, asserting that the contract was illegal and unenforceable. The trial court ruled that Tennessee Code Annotated Section 63-6-225 did not apply to the contract at issue. A jury returned a verdict in favor of the medical provider for more than one million dollars. The Court of Appeals reversed, holding that Tennessee Code Annotated Section 63-6-225 invalidated the contract, and remanded the case for dismissal. Within one year of the Court of Appeals opinion, the medical provider filed this legal malpractice case against the drafting attorney. The trial court dismissed the case as beyond the one-year legal malpractice statute of limitations. We affirm.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Circuit Court Affirmed
C. J. Gideon, Jr., J. Blake Carter, and Brian P. Manookian, Nashville, Tennessee, for the appellant, Cardiac Anesthesia Services.
Daniel H. Rader, III and Daniel H. Rader, IV, Cookeville, Tennessee, for the appellee, Jon Jones.
Plaintiff/Appellant Cardiac Anesthesia Services, P.L.L.C. ("CAS") entered into a contract with Cookeville Regional Medical Center Authority ("Cookeville"); the contract was negotiated and drafted by CAS' attorney Defendant/Appellee Jon Jones. The contract provided a fee-split for services performed by CAS. The fee-split arrangement was suggested by Cookeville and was integrated into the contract by Mr. Jones. However, Tennessee law provides that a physician may not agree to divide any fee received without the knowledge and consent of the individual paying the fee.1
After the term of the first contract expired, CAS and Cookeville entered into another contract, which was essentially identical to the previous one. The new contract contained the same fee-splitting agreement, as well as an indemnification clause that was designed to survive the termination of the agreement; the indemnification clause provided that, in the event of litigation, the losing party would pay the other party's legal fees. According to CAS, Cookeville breached the contract, and then filed suit against CAS on February 1, 2006. Cookeville then filed an amended complaint on June 27, 2006, alleging that the contract between CAS and Cookeville was illegal due to the fee-splitting arrangement. On July 31, 2006, CAS filed an answer and counter-complaint against Cookeville, alleging that Cookeville breached the contract and asserting that the contract was enforceable. Shortly thereafter, CAS hired an expert who opined that the fee-splitting arrangement was appropriate. According to later testimony from a CAS representative, CAS expended more than $120,000.00 in legal and expert witness fees in the trial court to defend the contract negotiated by Mr. Jones. However, according to a witness for CAS, the fees expended werepaid by unpaid funds owed to Cookeville under the contract, rather than from any funds owned by CAS.
CAS moved for summary judgment on the issue of whether it had breached the contract. By order of October 6, 2006, the trial court granted summary judgment in favor of CAS, ruling that CAS had not breached the contract. Cookeville moved for summary judgment on the fee-splitting issue on November 22, 2006. After a hearing on January 9, 2007, the trial court ruled that the arrangement was not illegal. Cookeville requested permission to file an interlocutory appeal, which was denied by the trial court.
On October 9, 2007, a jury trial was held on the issue of Cookeville's alleged breach of contract. At the close of evidence, the trial court granted a directed verdict in favor of CAS. The jury then awarded CAS $1,396,730.00 in damages. Cookeville appealed, arguing that the underlying contract was unenforceable due to the fee-splitting arrangement. This Court agreed in Cookeville Regional Medical Center Authority v. Cardiac Anesthesia Services, P.L.L.C., No. M2007-02561-COA-R3-CV, 2009 WL 4113586 (Tenn. Ct. App. Nov. 24, 2009). Therein, we held that the fee-splitting arrangement was illegal and remanded the case for dismissal. Id. CAS' application for permission to appeal to the Tennessee Supreme Court was denied on May 20, 2010.
On October 27, 2010, CAS filed a separate complaint against Mr. Jones for his alleged legal malpractice arising from the negotiation and drafting of the illegal contract. CAS propounded written discovery against Mr. Jones, to which he never responded. Instead, on January 4, 2011, Mr. Jones filed a "Rule 12 Motion to Dismiss/Rule 56 Motion for Summary Judgment." In his motion, he argued that the statute of limitations on the legal malpractice claim had expired and that the suit should be dismissed. Attached to the motion, Mr. Jones filed a Statement of Undisputed Facts, stating:
CAS did not file a response to Mr. Jones' statement of undisputed facts. Mr. Jones also filed a motion to stay discovery and for a protective order excusing him from responding to CAS' discovery requests. CAS subsequently filed a motion to compel Mr. Jones' discovery responses.
On July 1, 2011, the court heard the motion for summary judgment, the motion to stay discovery and for a protective order and the motion to compel. The attorney for Mr. Jones requested that the motion for summary judgment be heard first, noting that, if the motion was granted, the court would not be required to consider any discovery issues. The trial courtasked the attorney for CAS if that would be acceptable, and he agreed, though he emphasized that Mr. Jones had failed to respond to any discovery requests. Mr. Jones responded that, because the summary judgment motion was based entirely on the record of what occurred in Cookeville, discovery was not necessary to defend the motion. The trial court then asked the attorney for CAS, "Do you feel that there are other issues that need to be discovered before you can defend that motion [for summary judgment based on the statute of limitations]?" The attorney for CAS responded:
No, I can argue this morning based on what they've relied upon, but what I disagree with is [Mr. Jones' attorney's] suggestion that because defense counsel has decided that the only thing that is important is the technical record that precludes [CAS] from conducting any discovery at all. I don't agree with that and I don't think that's consistent with the law.
The trial court ruled that the statute of limitations began running on either June 27, 2006, when the amended complaint was filed asserting the unenforceability of the contract, or on January 9, 2007, when the motion for summary judgment on the issue of enforceability was argued. Accordingly, the trial court found that the case was time-barred. By order of July 11, 2011, the trial court granted summary judgment in favor of Mr. Jones and dismissed the case, holding that the expiration of the statute of limitations barred the claim. Because of the dismissal, the court did not consider CAS' motion to compel discovery. CAS timely appealed.
CAS raises the following issues, which are taken from its brief:
To continue reading
Request your trial