Fumo v. Medical Group of Michigan City, Inc.

• Citation: 590 N.E.2d 1103
• Decision Date: 27 April 1992
• Docket Number: No. 46A04-9104-CV-124,46A04-9104-CV-124
• Parties: David FUMO, M.D., Appellant-Defendant Below, v. MEDICAL GROUP OF MICHIGAN CITY, INC., Appellee-Plaintiff Below. 1
• Court: Indiana Appellate Court

Page 1103

590 N.E.2d 1103

David FUMO, M.D., Appellant-Defendant Below, v. MEDICAL GROUP OF MICHIGAN CITY, INC., Appellee-Plaintiff Below.

No. 46A04-9104-CV-124. ¹

Court of Appeals of Indiana,

Third District.

April 27, 1992.

Rehearing Denied June 23, 1992.

Frederick Wm. LaCava and Robert G. Zeigler, LaCava, Zeigler & Carter, Indianapolis, for appellant-defendant.

Kathryn D. Schmidt and George W. Carberry, Burke, Murphy, Costanza & Cuppy, Merrillville, for appellee-plaintiff.

STATON, Judge.

David Fumo, M.D. appeals the grant of a preliminary injunction enforcing the anti-competition provisions of a contract between Fumo and the Medical Group of Michigan City, Inc. ("Medical Group"). Fumo presents for our review the sole (restated) issue of whether the trial court erroneously issued and modified the preliminary injunction. ²

We order the preliminary injunction dissolved.

On January 2, 1987, Fumo and Medical Group executed a Physician's Contract which included an anti-competition covenant. Fumo was prohibited from the practice of medicine within a 25 mile radius of Michigan City, Indiana for a period of two years following termination of his association with Medical Group. Fumo resigned his employment with Medical Group effective January 31, 1991 and sought a declaratory judgment regarding the enforceability of the covenant.

On March 19, 1991, Medical Group filed a complaint for preliminary and permanent injunctions restraining Fumo from the practice of medicine within the protected area. On March 26, 1991, hearing was held concerning the request for preliminary injunctive relief. ³ On April 2, 1991, the trial court granted Medical Group's request for a preliminary injunction, issuing findings of fact and conclusions of law in support thereof:

FINDINGS OF FACT

Based upon the foregoing testimony and document, the Court finds:

1. The Medical Group of Michigan City, P.C. is a professional corporation incorporated under the laws of the State of Indiana engaged in the business of providing medical services and has its principal office at 1225 E. Coolspring Avenue, Michigan City, Indiana.

2. That Dr. David Fumo is a Gastroenterologist who has lived and practiced medicine in Michigan City since 1987.

3. On March 17, 1986, Dr. David Fumo submitted to the Medical Group of Michigan City, P.C. a letter of intent expressing interest in his employment at the Medical Group of Michigan City on or about July 1, 1987.

4. That following Dr. Fumo's letter of intent discussions and negotiations were had between Dr. Fumo and members of the Medical Group of Michigan City concerning the terms and conditions upon which Dr. Fumo might become associated with or join the Group.

5. That on the 2nd day of January, 1987, Dr. Fumo executed a Physician's Contract which is Plaintiff's Exhibit A. That Dr. Fumo was to become affiliated with the Medical Group Corporation beginning on the 1st day of August, 1987 and continuing to and including the first day of July, 1989 and thereafter until either party terminated the agreement by 180 days written notice. That before execution of the Physician's Contract, Dr. Fumo had the contract reviewed by an attorney.

6. That for the year, August 1, 1987 to January 31, 1991 the Medical Group of Michigan City, P.C. provided substantial medical services to patients throughout a geographic area of a 25 mile radius of the location of the Medical Group in the city of Michigan City, Indiana which is situated on East Coolspring Avenue. That the Group had patients from southwestern Michigan and Indiana.

7. That from August 1, 1987 when Dr. Fumo joined the Medical Group to July 31, 1988, Dr. Fumo's gross production or billings at the Medical Group was $522,603. That from September 1, 1988 to July 31, 1989, Dr. Fumo's gross production or billings at the Group was $553,385. That from August 1, 1989 to July 31, 1990 Dr. Fumo's gross production or billings at the Group was $764,580, and from August 1, 1990 to January 31, 1991, when Dr. Fumo withdrew from the Group his gross production or billings for the Medical Group was $315,831.

8. That from August 1, 1987 to July 31, 1988, Dr. Fumo received a distribution and allocation of the net income from the 9. That from August 1, 1987 to January 31, 1991, while an employee of the Medical Group, Dr. Fumo engaged in the practice of medicine specializing in gastroenterology.

Medical Group in the amount of $175,360. From September 1, 1988 to July 31, 1989 Dr. Fumo received a distribution and allocation of net income from the Medical Group in the sum of $209,456. That from August 1, 1989 to July 31, 1990, Dr. Fumo received a distribution and allocation of net income from the Medical Group in the sum of $261,369. From August 1, 1990 to January 31, 1991, Dr. Fumo received a distribution and allocation of net income from the Medical Group of $171,464.

10. That from August 1, 1987 to January 31, 1991, members of the Medical Group of Michigan City, Inc. were likewise engaged in the practice of medicine. In addition, there are other gastroenterologists within the 25 mile radius including Dr. Serritella, Dr. Agrawal, Dr. Gupta, Dr. Hall, Dr. Paul, and Dr. Dalal.

11. That on July 31, 1990, Dr. Fumo tendered his resignation to the Medical Group and in accordance with his agreement, his resignation would be effective 180 days from the date of July 31, 1990, to-wit: January 31, 1991.

12. That following Dr. Fumo's withdrawal from the Medical Group of Michigan City, P.C. he has engaged in the practice of medicine within a radius of 25 miles of the corporate limits of Michigan City, Indiana and continues to practice medicine within such a radius at the present time.

13. That it was the custom and practice of the doctors of the Medical Group of Michigan City during the years 1987, 1988, 1989 and 1990 to refer patients to other doctors in the Medical Group of Michigan City practicing the various medical specialties practiced in the Group as the patient's medical needs required.

14. That upon the execution of the employment agreement entered into by the Medical Group of Michigan City, in regards to the services to be rendered by Dr. Fumo, the Medical Group of Michigan City promised to furnish Dr. Fumo with all necessary and reasonable medical supplies in order to enable Dr. Fumo to adequately carry on the practice of his profession. The Medical Group purchased the equipment for the Gastroenterology Department prior to Dr. Fumo arriving. The equipment included items for his consultation room and office, regular examining rooms and equipment for G-I testing lab. The total costs to the Medical Group creating the G-I testing lab and Dr. Fumo's facilities was $52,948.00.

15. That under the terms of the Physician's Contract executed by Dr. Fumo, he agreed to be bound by all of the terms of the contract (Plaintiff's Exhibit 2). Under the terms of the contract, it is provided that in the event the agreement is terminated for any reason by either the Medical Group of Michigan City or Dr. Fumo prior to its expiration or expires by its terms then and in either event Dr. Fumo shall not engage in the practice of medicine within a radius of 25 miles of the corporate limits of Michigan City, Indiana, for a period of two years after such termination or expiration. Dr. Fumo acknowledges that the Medical Group of Michigan City may not have an adequate remedy at law for the violation of this paragraph and in the event of this paragraph being violated by Dr. Fumo, the Medical Group may obtain injunctive relief in a court of competent jurisdiction so as to enjoin such violation together with attorney's fees and costs.

16. That for the years 1987, 1988, 1989 and 1991 [sic] the Medical Group, of which Dr. Fumo was an employee rendered substantial medical service to patients throughout an area contained within a 25 mile radius and more from the building occupied by the Medical Group of Michigan City. That said contract contained in the Physician's Contract provided that any physician of the Medical Group who shall withdraw from the Group shall not practice medicine for a period of two years within a radius of 25 miles of the corporate limits of Michigan 17. That during the year 1987 from August 1 until the effective date of his withdrawal from the Medical Group, Dr. Fumo produced at the Medical Group gross production and billings in the amount of $2,156,399.

City, Indiana and it is reasonably necessary to protect the interest of the Medical Group of Michigan City, Inc. and not unreasonably restrictive as to Dr. Fumo.

18. That the restrictive covenant contained in the physician's contract is valid and enforceable as to Dr. Fumo and that the Medical Group of Michigan City, P.C. is entitled to a preliminary injunction in its favor on the validity and enforceability of said restrictive covenant provision of the Physician's Contract.

CONCLUSIONS OF LAW

From the foregoing findings of fact, the Court makes the following conclusions of law:

1. That the defendant, David Fumo, M.D. entered into an agreement with the plaintiff under which he agreed not to engage in the practice of medicine within a radius of 25 miles of the corporate limits of Michigan City, Indiana for a period of two years after the agreement is terminated for any reason;

2. That on January 31, 1991 the defendant, David Fumo, M.D. did terminate his physician's contract with the Medical Group of Michigan City, P.C.

3. A preliminary injunction should issue to prevent irreparable injury loss or damage to the Medical Group of Michigan City, P.C. and to preserve the status quo during the pendency of this cause of action until it is finally determined on the merits.

PRELIMINARY INJUNCTION

WHEREFORE, IT IS ORDERED, ADJUDGED AND DECREED BY THE COURT as follows:

1. The defendant, David Fumo, M.D., be and he is hereby restrained and enjoined, pending the determination of this action on its merits from practicing medicine within a 25 mile radius of the...