Ex parte Ramsay

• Decision Date: 08 March 2002
• Citation: 829 So.2d 146
• Parties: Ex parte Steve RAMSAY. (In re Steve Ramsay v. Clarke County Health Care Authority). Ex parte Steve Ramsay. (In re Steve Ramsay v. Grove Hill Memorial Hospital Auxiliary).
• Court: Alabama Supreme Court

829 So.2d 146

Ex parte Steve RAMSAY.

(In re Steve Ramsay v. Clarke County Health Care Authority).

Ex parte Steve Ramsay.

(In re Steve Ramsay v. Grove Hill Memorial Hospital Auxiliary).

1954.

Supreme Court of Alabama.

March 8, 2002.

Gilbert L. Fontenot of Fernandez, Ollinger, Combs & Fontenot, L.L.C., Mobile, for petitioner.

E. Watson Smith and Tracy P. Turner of Johnstone, Adams, Bailey, Gordon & Harris, L.L.C., Mobile, for respondent Clarke County Health Care Authority d/b/a Grove Hill Memorial Hospital.

Bruce N. Wilson of Wilson & Drinkard, Grove Hill, for respondent Grove Hill Memorial Hospital Auxiliary.

JOHNSTONE, Justice.

This Court has granted two petitions for certiorari review of two respective judgments of the Court of Civil Appeals affirming two respective summary judgments entered by the trial court on distinct contract claims in the same civil action. We affirm.

The parties are the "Hospital,"¹ its "Auxiliary,"² and Dr. Steve Ramsay. An important entity, not a party, is the "Clinic,"³ which supplied physicians to the Hospital. The Hospital, its Auxiliary, and the Clinic, which at all pertinent times have cooperated with each other, are located in Grove Hill.

The Auxiliary sued Dr. Ramsay in contract for repayment of "scholarship" monies it had paid him while he was a medical resident on the condition, violated by Dr. Ramsay, that he practice medicine at the Clinic for a minimum of three years. Dr. Ramsay's only defense on the merits was that the Auxiliary had breached its duty under an escape clause in the scholarship contract, which required the Auxiliary to negotiate for repayment of a lesser sum if an "unforeseen hazard" beyond Dr. Ramsay's control prevented him from completing his three-year obligation. In due course, the Auxiliary moved for a summary judgment in its own favor on its own claim against Dr. Ramsay. The trial court entered a summary judgment in favor of the Auxiliary for recovery of all of the scholarship monies plus interest, and the Court of Civil Appeals affirmed the summary judgment. Ramsay v. Grove Hill Mem'l Hosp. Auxiliary, 829 So.2d 142 (Ala.Civ.App.2000). We affirm the judgment of the Court of Civil Appeals, but on a rationale that pretermits the final rationale applied by that court.

After the Auxiliary sued Dr. Ramsay, he sued the Hospital by filing a third-party claim against it. Dr. Ramsay alleged that the Hospital had breached an oral contract (distinct from the scholarship contract between Dr. Ramsay and the Auxiliary) to repay his medical school student loans. The Hospital denied the existence of any such contract and asserted the affirmative defense of the Statute of Frauds, § 8-9-2(1) and (3), Ala.Code 1975. In due course, the Hospital moved for a summary judgment, grounded on the Statute of Frauds, on Dr. Ramsay's claim against the Hospital. The trial court entered a summary judgment, and the Court of Civil Appeals affirmed it without an opinion. Ramsay v. Clarke County Health Care Authority, 789 So.2d 254 (Ala.Civ.App. 1999) (table). We affirm the judgment of the Court of Civil Appeals.

Common Facts

Because Grove Hill needed medical doctors, the Auxiliary offered Dr. Ramsay a "scholarship" while he was still a medical resident at the University of South Alabama, in Mobile. He and the Auxiliary entered into a scholarship contract, which provides:

"THIS AGREEMENT, Made and entered into on this the 12th day of November 1991, by and between the GROVE HILL HOSPITAL AUXILIARY, party of the first part, hereinafter called the "Auxiliary", and Dr. Steve Ramsay, party of the second part, hereinafter called Ramsay, WITNESSETH:

"That for and in consideration of the mutual covenants herein contained, the parties hereto have agreed with each other as follows:

"1) The Auxiliary will provide scholarship funds to Ramsay in the amount of Fifteen Thousand ($15,000.00) Dollars, payable in three installments of $5,000.00, payable on November 1, 1991, November 1, 1992, and November 1, 1993, to enable him to obtain his Family Practice Residency at the University of South Alabama.

"2) The Auxiliary agrees that the scholarship funds herein provided are to become a grant to Ramsay after he has practiced medicine as a medical doctor in the Grove Hill Medical Clinic for a minimum of three years following his graduation from Medical School.

"3) If for any reason Ramsay discontinues his medical training before graduation, or does not work in the Grove Hill Medical Clinic for the full term of three years following the completion of this training, the funds advanced will be considered a loan, and Ramsay agrees to pay back the amount received, with interest from date of receipt at the rate of 7% per annum, over a one-year period following: a) his discontinuance of training, b) the completion of his training, or c) the date of discontinuance of his work in the Grove Hill Medical Clinic if Ramsay discontinues work before the end of three years.

"4) Should unforeseen health or other hazards beyond the control of Ramsay prevent completion of his medical training, or prevent completion of his three-year obligation to serve as a medical doctor in the Grove Hill Medical Clinic, the amount to be repaid by Ramsay to the Auxiliary shall be negotiated between the Auxiliary and Ramsay."

(C.R.3-4.) (Emphasis added.) The Auxiliary timely paid Dr. Ramsay all three $5,000 annual installments. Dr. Ramsay contends that, before and during this same three-year period, the Hospital promised him that "if Ramsay would come and practice medicine in Grove Hill, Alabama, [the Hospital] would see to the repayment of Ramsay's various student loans he had incurred for medical school" (Ramsay's brief, p. 4), or, in other words by Dr. Ramsay, "would repay his medical school student loans," (Ramsay's brief, p. 6).

The Hospital denies making such a promise. The explanation by the Hospital is:

"Clarke County Health Care Authority [(the Hospital) ] agreed to work with Dr. Ramsay to secure a governmental forgiveness to his medical school loans. This program required Dr. Ramsay to commit to serve a three year period in the rural Grove Hill area. However, Dr. Ramsay failed to execute the necessary application to participate in the federal program. At no time did the Clarke County Heath Care Authority ever present to Dr. Ramsay that it or Grove Hill Memorial Hospital would directly pay or repay any of his student loan indebtedness. While the loan forgiveness application was pending with Dr. Ramsay, two payments were made to him, which ostensibly were for him to pay his student loans. However, once he refused to execute the application for the loan forgiveness program, no other payments in any form were ever made for this purpose.

"Check No. 006699 in the amount of $601.00, dated September 7, 1994, and Check No. 006958 in the amount of 386.13, dated October 21, 1994, ... were forwarded to Dr. Ramsay as payment for use to pay his student loans in the interim period while he was executing the Federal Loan Forgiveness Program Application. However, once Dr. Ramsay flatly refused to execute the Loan Forgiveness Program Application, which was the only method ever put forward to him by any representative of the Authority or GHMH[⁴] as how he could have his student loans paid or forgiven, no further payments of any kind were made which could in any way be classified as for his use to pay his student loans."

About two months after the Auxiliary paid Dr. Ramsay the third and last $5,000 installment due under the scholarship contract, he began practicing medicine at the Clinic in Grove Hill. He practiced there part-time for about six months. Then he relocated his family to Grove Hill and began full-time practice at the Clinic. He practiced full-time there for only 18 months. Thus, the total duration of his practice there, part-time and full-time, was only about two years.

A couple of months after Dr. Ramsay relocated his family to Grove Hill and began his full-time practice at the Clinic, the Hospital paid $601 toward Dr. Ramsay's $27,000 student loan debt. The next month, the Hospital paid another $386.13 toward the debt. During the next 16 months of Dr. Ramsay's full-time practice at the Clinic, the Hospital paid no more toward his student loans, even though he delivered his student loan coupon books to the Hospital and urged it to make the payments. The Hospital offered only to assist Dr. Ramsay in obtaining a federal grant to pay the loans. Dr. Ramsay refused this offer because he did not trust the federal government.

Dr. Ramsay assigns the failure or refusal of the Hospital to pay the balance of his student loans as the reason for his quitting his practice at the Clinic before he completed his three-year obligation there under his scholarship contract with the Auxiliary. After he quit, he initiated negotiations with the Auxiliary to repay it less than the full principal of and interest on the $15,000 in scholarship payments, but the Auxiliary rebuffed his effort to negotiate.

The Auxiliary v. Ramsay

(case no. 1000454)

This refusal by the Auxiliary to negotiate is Dr. Ramsay's only defense on the merits of the claim by the Auxiliary for the repayment of the scholarship monies. Dr. Ramsay does not blame the Auxiliary for the failure or refusal by the Hospital to pay his student loans, and Dr. Ramsay does not claim any failure of consideration for his obligation to the Auxiliary.

Dr. Ramsay contends that the Auxiliary was relegated to negotiation for partial repayment by the escape clause in the scholarship contract:

"Should unforeseen ... hazards beyond the control of Ramsay ... prevent completion of his three-year obligation to serve as a medical doctor in the Grove Hill Medical Clinic, the amount to be repaid by Ramsay to the Auxiliary shall be negotiated between the Auxiliary and Ramsay."

Dr. Ramsay contends that the breach by the Auxiliary of its obligation to negotiate bars it from enforcing his

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