Frederick v. Heim, 20467

• Decision Date: 16 April 1997
• Docket Number: No. 20467,20467
• Citation: 943 S.W.2d 343
• Court: Missouri Court of Appeals
• Parties: Keith J. FREDERICK, D.O., and Osage Bone & Joint Clinic, Inc., Plaintiffs-Appellants, v. J. Marcus HEIM, D.O., and Christopher J. Leslie, D.O., Defendants-Respondents.

Page 343

943 S.W.2d 343

Keith J. FREDERICK, D.O., and Osage Bone & Joint Clinic, Inc., Plaintiffs-Appellants, v. J. Marcus HEIM, D.O., and Christopher J. Leslie, D.O.,

Defendants-Respondents.

No. 20467.

Missouri Court of Appeals,

Southern District,

Division Two.

April 16, 1997.

James A. Burt, Strong & Associates, Springfield, for plaintiffs-appellants.

W. Gary Drover, Camdenton, Dale C. Doerhoff, Ronald K. Medin, Cook, Vetter, Doerhoff & Landwehr, Jefferson City, for defendants-respondents.

HOUGH, Judge.

The issue here presented is whether an agreement between physicians to provide "coverage" for each other is sufficiently definite and certain to give rise to an enforceable contract. The trial court found, under the circumstances presented, in the affirmative. We agree.

Drs. Frederick, Heim and Leslie are orthopedic surgeons who, prior to October 7, 1994, practiced together in Osage Beach and Lebanon, Missouri as shareholders in the Osage Bone and Joint Clinic, each owning a one-third share of the business corporation originally founded by Dr. Frederick (Appellant). ¹

Drs. Heim and Leslie (Respondents) signed various agreements as a condition of purchase of their interest in the corporation including stock repurchase agreements and non-competition agreements in favor of Appellant.

During the summer of 1994 the parties began to have differences on business matters and on September 12, 1994, Respondents called a special meeting and voted to remove Appellant as president of the corporation and to withdraw Appellant's authority to sign checks or conduct any banking business on behalf of the corporation. The banks were so notified and additionally the postmaster at Osage Beach was directed not to deliver mail to the corporation.

On the same day Appellant exercised his options of repurchase of the stock of Respondents. Thus, after September 12, 1994, both factions claimed to control Osage Bone and Joint Clinic.

On October 7, 1994, Respondents filed suit against Appellant (and others) seeking declaratory and injunctive and other relief, and on October 12, 1994, Appellant filed suit against Respondents seeking similar relief. The actions were consolidated and a corporate receiver was appointed by the trial court.

On December 21, 1994, pending motions were scheduled for hearing in the consolidated cases. The parties announced to the court that settlement of all issues had been reached. The transcript reveals the following:

"Q. The Court: During the course of the afternoon, the parties have advised the Court that there has been a settlement of the case reached. Who intends to state what the terms of that settlement are?"

"A. Mr. Burt: Yes. I have 18 terms listed here. So I'll try to be concise...."

Mr. Burt, Appellant's attorney, thereafter stated the agreed terms of the settlement into the record of the court. Reciting the detail of the monetary agreements would serve no useful purpose here, and suffice it to say that substantial funds were involved in bank accounts, uncollected insurance billings, and in mailings which remained unopened and "on hold" in the Osage Beach post office, and unpaid salaries of the parties who were corporate employees. It was agreed that mutual releases would be exchanged including release of the covenants not to compete, and that Respondents would retain the Lebanon office and Appellant the Osage Beach office and full ownership of all the stock in the corporation.

The portion of the agreement involving "coverage" was stated to the court by Appellant's attorney as follows:

"All of the doctors have agreed to cooperate with the call schedule at the hospital and to arrange coverage for one another for weekends, days off, et cetera."

All attorneys represented to the court that their respective clients had authorized the making of the agreement. Appellant's attorney agreed to "take the first crack" at reducing the agreed settlement to writing. The court noted the stipulation on the record, discharged the receiver, directed the stipulation to be reduced to writing and the case to be then dismissed.

Counsel for Appellant submitted a draft proposal of the settlement agreement which included a definition of "coverage" which was basically the schedule of rotation the physicians had followed while practicing together as shareholders-partners. The Appellant's draft proposal was not acceptable to Respondents. Instead, Dr. Leslie's attorney drafted and submitted a proposed agreement in which he attempted to use the exact language of the settlement as it was dictated into the record. To accomplish this, he requested and obtained a transcript of the agreement that was spread on the record. In this draft, the "coverage" provision was identical to that dictated on the record. By March 1, 1995, Appellant had not signed Respondents' proposed agreement; consequently, on that date Respondents filed their motion to compel settlement. Their motion sought to compel the settlement on the basis of what had been dictated on the record on December 21, 1994.

After Respondents filed their motion, Dr. Leslie's lawyer wrote to Appellant's counsel on March 8, 1995. The letter renewed Respondents' demand that Appellant sign the settlement contract drafted by Dr. Leslie's attorney. As to Respondent's view on the coverage question, the letter recited that the party requesting coverage should give reasonable notice of any request for coverage, should give the specifics of the request and make arrangements for compensation. When Appellant never acceded to Respondents' views about coverage and when other disputes about the settlement contract persisted, Respondents proceeded with their efforts to enforce settlement.

On August 9, 1995, the motion to compel settlement was heard by the trial court. Testimony was presented of performance of the agreement of December 21, 1994 by the parties and the extent thereof; that Respondents had caused the release of corporate mail to Appellant containing approximately $130,000.00; released the corporate bank account to Appellant containing approximately $70,000.00; signed insurance forms allowing Appellant to collect approximately $135,000.00; provided computer data for accounts receivable from the office in Lebanon, Missouri, and released assets from the Lebanon office. Appellant released to Respondents the operation of the Lebanon office; paid a portion of the accounts receivable due to them; divided up the call schedule at the Lake of the Ozarks Hospital; and released patients' files and records to them as requested by the patients, all as anticipated in the agreements dictated into the record. Additionally, that Respondents had provided "coverage" for Appellant over Christmas, 1994, and as requested in January, February and April, 1995 without compensation.

The Appellant's contention was that the entire settlement agreement was void and unenforceable because the agreement to provide "coverage" was vague and ambiguous.

From the evidence presented the trial court could find that the term "coverage" is commonly used and understood in the medical community as caring for a physician's patients in his absence; that "coverage" can mean a broad scope of things from answering patient telephone calls during the day and after hours to taking care of patients in the emergency room, as well as providing rounds for those patients in the hospital and even include operative services for surgical patients. Additionally, that services of this nature are provided by private groups of physicians and that such a group is located in Jefferson City, Missouri. Appellant does not dispute the foregoing but contends he anticipated "coverage" by Respondents on the same basis as when they were practicing together as a medical group, specifically, he did not anticipate Respondents' expectation of compensation for their services after the dissolution of their former business relationship.

At the conclusion of the hearing on the motion to compel settlement on August 9, 1995, the transcript reveals the trial court stated:

"Coverage has to mean what the industry says it means. These doctors are now in a competitive situation, And the industry of the trade is going to dictate what the definition of coverage means. And that term, as it's used in this settlement agreement, is not so vague, so broad, as to make this agreement unenforceable."...