Eie v. St. Benedict's Hospital, 17195

• Decision Date: 02 November 1981
• Docket Number: No. 17195,17195
• Parties: Knut EIE, Thomas Brown, and Rocky Mountain Paramedics, Plaintiffs and Appellants, v. ST. BENEDICT'S HOSPITAL and Robert K. Eisleben, Defendants and Respondents.
• Court: Utah Supreme Court

Page 1190

638 P.2d 1190

Knut EIE, Thomas Brown, and Rocky Mountain Paramedics Plaintiffs and Appellants, v. ST. BENEDICT'S HOSPITAL and Robert K. Eisleben, Defendants and Respondents.

No. 17195.

Supreme Court of Utah.

Nov. 2, 1981.

Stephen W. Farr, Ogden, Thomas D. Roberts, Salt Lake City, for plaintiffs and appellants.

Glen Mecham, Ogden, Craig Stephens Cook, Salt Lake City, for defendants and respondents.

HALL, Chief Justice:

Plaintiffs appeal a judgment of the lower court which denied them alleged damages for breach of contract.

Plaintiffs Eie and Brown are both paramedics, trained in California. In June, 1975, Eie approached defendant Eisleben (administrator of the St. Benedict's Hospital) about the possibility of establishing a paramedic base at the hospital. Eie pointed out to Eisleben how the hospital would benefit from such a program both in terms of public relations and additional patients. Eie represented that the charge for each paramedic call where emergency medical services were rendered would be $100. This representation was also part of plaintiffs' proposal to the Ogden City Council in September, 1975.

Under plaintiffs' proposal, the hospital would be required to invest approximately $20,000 in equipment for the base station; hence, the hospital was concerned about the financial status of the paramedics and the projected profitability of the operation. One John Doramus, the hospital's director of fiscal services, was given the assignment of working with Eie in projecting income and expenses of the proposed operation. During these negotiations, it was mutually decided that the operation would be better accepted by the community and by insurance carriers if a fee schedule for specific services were developed. Eie was cautioned, however, that in order for the operation to remain fiscally viable the average charge per call must be approximately $100. ¹

It was agreed that the hospital would bill for plaintiffs' services according to vouchers supplied by plaintiffs. It was also understood that in order to make the venture a profitable one for the hospital, it would keep ten percent of the total billings. ²

In October, 1975, attorneys for both sides drafted proposed agreements. The proposed agreements were substantially similar but did contain some differences. As the start-up date for the operation approached and no contract had been agreed upon, Eisleben decided that the business relationship had to be spelled out in some way. On October 29, 1975, an "interim" letter agreement was drafted and signed by Eie and Eisleben. That letter was signed on the assumption that a final agreement would be forthcoming in a few days and read, in pertinent part, as follows:

Dear Mr. Eie:

This letter will serve as an interim agreement between Rocky Mountain Paramedics and St. Benedict's pending the final agreement being prepared by our attorneys.

The hospital is now and has for an extended period of time prior to the execution of this agreement, furnished general hospital services to Ogden City and surrounding communities. The Paramedics desire to provide emergency medical services in and for Ogden City and its surrounding communities. In the providing of these emergency medical services, the Hospital and the Paramedics do hereby agree to coordinate their services for the mutual benefit of themselves and the community, and do hereby agree to the following:

4. The Hospital will remit to the Paramedics, within 15 days of the end of each month, a remittance to the Paramedics in the amount of $90.00 per call, based on the number of MICU forms submitted to the billing office of the hospital for the previous month. This being subject to negotiation at six months intervals, and may, upon the agreement of the parties, be renegotiated.

Several days after the "interim agreement" was signed, plaintiffs submitted a "proposed fee structure" to the hospital for its approval. A revised fee schedule was ultimately prepared and agreed upon by the hospital as of November 17, 1975. As the paramedic service got underway, it became evident that the average charge per call would not even approach $100. Consistently throughout the parties' relationship, the hospital remitted to plaintiffs not $90 per call, but 90% of the total amount billed for paramedic services. Although plaintiffs were allegedly upset about receiving less than anticipated for the services rendered, the believable evidence adduced at trial was that the checks were accepted without protest.

Plaintiffs continued to operate the paramedic service in such a manner for well over one year, until February, 1977. Thereafter, demands were made upon the hospital by plaintiffs for amounts allegedly due under the $90-per-call provision. When these demands were not met, suit was filed wherein plaintiffs demanded $61,532.44 as unpaid services and $100,000 as consequential damages. Defendants filed an answer and counterclaim for malicious use of process.

The matter was tried to the court and a decision was rendered on February 9, 1979. Because of various objections of the parties to the court's findings, the ultimate findings of fact and conclusions of law and judgment were not entered until June 20, 1980. The court found as follows:

1. That the parties negotiated for a contract whereby plaintiffs would perform paramedic services under the direction of physicians at defendant Hospital.

2. That the contract in the true meeting of the parties' minds was that 90% of plaintiffs' billings would be remitted to plaintiff by defendant, and defendant would retain 10% thereof to cover the costs of billing and the administration of the accounts.

3. The $90.00 amount was written into the interim contract upon the presupposition by both parties that the plaintiffs' billings would be on a $100.00 flat fee basis, and the $90.00 was intended to represent 90%.

4. There is insufficient evidence to support the defendants' counterclaim.

5. That at the close of the evidence at trial, there was not sufficient evidence upon which the Court could determine whether there were amounts due under Findings of Fact numbered 1, 2 and 3, and the Court invited the plaintiff to re-open the case for such evidence. Upon said re-opening, the parties stipulated that the amounts due plaintiff from defendant on the basis of "90% of billings" was the sum of $2,225.00.

On appeal, plaintiffs contend that inasmuch as "reformation" and "mutual mistake" were not affirmatively pleaded, the trial court could not base its decision on those issues. As a preliminary matter, it seems clear from the findings that the lower court did not base its decision on reformation or mutual mistake; ³ rather, the basis of the court's decision was that the contract was not an integrated agreement, as discussed infra. Nevertheless, it is true that affirmative defenses must be set forth by the party so pleading. ⁴ In their answer, defendants asserted the following defenses: (1) the complaint failed to state a cause of action upon which relief may be granted; (2) defendants were fraudulently induced to enter into the agreement by plaintiffs' representation that they would charge $100 per call; (3) plaintiffs accepted from defendants payments for their billings at the rate of 90%, which gives rise to the defense of estoppel; and (4) breach of the agreement on the part of plaintiffs.

We are convinced that the foregoing adequately raised the issues addressed by the court. Cheney v. Rucker ⁵ makes the following observations with respect to raising issues:

It is true, as plaintiff insists, that Rule 8(c), U.R.C.P., requires that affirmative defenses be pleaded. It is a good rule whose purpose is to have the issues to be tried clearly framed. But it is not the only rule in the book of Rules of Civil Procedure. They must all be looked to in the light of their even more fundamental purpose of liberalizing both pleading and procedure to the end that the parties are afforded the privilege of presenting whatever legitimate contentions they have pertaining to their dispute. What they are entitled to is notice of the issues raised and an opportunity to meet them. When this is accomplished, that is all that is required. Our rules provide for liberality to allow examination into and settlement of all issues bearing upon the...