Hagen v. Siouxland Obstetrics & Gynecology, P.C., C 11-4047-MWB

• Decision Date: 20 March 2013
• Docket Number: No. C 11-4047-MWB,C 11-4047-MWB
• Parties: EDWARD P. HAGEN, D.O., Plaintiff, v. SIOUXLAND OBSTETRICS & GYNECOLOGY, P.C., an IOWA CORPORATION, PAUL J. EASTMAN, M.D., TAUHNI T. HUNT, M.D., ANGELA J. ALDRICH, M.D., and KIMBERLY A. LIEF, Defendants.
• Court: U.S. District Court — Northern District of Iowa

EDWARD P. HAGEN, D.O., Plaintiff,
v.
SIOUXLAND OBSTETRICS & GYNECOLOGY, P.C., an IOWA
CORPORATION, PAUL J. EASTMAN, M.D., TAUHNI T. HUNT, M.D.,
ANGELA J. ALDRICH, M.D., and KIMBERLY A. LIEF, Defendants.

No. C 11-4047-MWB

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA WESTERN DIVISION

DATED: March 20, 2013

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT AND MOTION TO STRIKE
TABLE OF CONTENTS

I. INTRODUCTION . . . . . . . . . . . 3

A. Factual Background . . . . . . . . . . . 3

1. Siouxland . . . . . . . . . . . 4

2. Expansion of Siouxland . . . . . . . . . . . 5

a. South Dakota . . . . . . . . . . . 5
b. Minnesota . . . . . . . . . . . 6

3. Hagen's behavior . . . . . . . . . . . 7

a. Prior behavior concerns . . . . . . . . . . . 7
b. Hagen's behavior at Siouxland and St. Luke's . . . . . . . . . . . 8

4. Applications for medical licensure . . . . . . . . . . . 9

a. Wisconsin application . . . . . . . . . . . 11
b. Minnesota application . . . . . . . . . . . 12

5. Hospital Incident on November 5, 2009 . . . . . . . . . . . 15
6. Termination . . . . . . . . . . . 17

B. Procedural Background . . . . . . . . . . . 22

II. MOTION TO STRIKE . . . . . . . . . . . 23

A. Standards For Motion To Strike . . . . . . . . . . . 23

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B. Analysis . . . . . . . . . . . 25

III. MOTION FOR PARTIAL SUMMARY JUDGMENT . . . . . . . . . . . 26

A. Summary Judgment Standards . . . . . . . . . . . 26

B. The Licensure Application Claims . . . . . . . . . . . 28

1. Whether Siouxland, Eastman, Hunt, and Aldrich ratified Lief's actions in completing Hagen's licensure applications . . . . . . . . . . . 28

a. Arguments of the parties . . . . . . . . . . . 28
b. Analysis . . . . . . . . . . . 29

2. Fraudulent misrepresentation . . . . . . . . . . . 30

a. Arguments of the parties . . . . . . . . . . . 30
b. Analysis . . . . . . . . . . . 30

3. Conspiracy to defraud . . . . . . . . . . . 32

a. Arguments of the parties . . . . . . . . . . . 32
b. Analysis . . . . . . . . . . . 32

4. Forgery . . . . . . . . . . . 33

a. Arguments of the parties . . . . . . . . . . . 33
b. Analysis . . . . . . . . . . . 34

5. Promissory estoppel . . . . . . . . . . . 34

a. Arguments of the parties . . . . . . . . . . . 35
b. Analysis . . . . . . . . . . . 35

6. Tortious interference with prospective business advantage . . . . . . . . . . . 36

a. Arguments of the parties . . . . . . . . . . . 36
b. Analysis . . . . . . . . . . . 37

C. The Termination Claims . . . . . . . . . . . 38

1. Retaliatory discharge . . . . . . . . . . . 39

a. Arguments of the parties . . . . . . . . . . . 39
b. Analysis . . . . . . . . . . . 41

2. Fiduciary duty . . . . . . . . . . . 42

a. Arguments of the parties . . . . . . . . . . . 42
b. Analysis . . . . . . . . . . . 42

3. Breach of contract . . . . . . . . . . . 43

a. Arguments of the parties . . . . . . . . . . . 43
b. Analysis . . . . . . . . . . . 44

4. Tortious interference with business relationships . . . . . . . . . . . 44

a. Arguments of the parties . . . . . . . . . . . 45
b. Analysis . . . . . . . . . . . 45

D. Punitive Damages . . . . . . . . . . . 46

IV. CONCLUSION . . . . . . . . . . . 47

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I. INTRODUCTION

This case, a dispute regarding employment termination between plaintiff Edward P. Hagen, D.O. ("Hagen") and defendants Siouxland Obstetrics & Gynecology, P.C. ("Siouxland"), Paul J. Eastman, M.D. ("Eastman"), Tauhni T. Hunt, M.D. ("Hunt"), Angela J. Aldrich, M.D. ("Aldrich"), and Kimberly A. Lief ("Lief"), (collectively "defendants"), is before me on Defendants' Siouxland Obstetrics & Gynecology, P.C., Paul J. Eastman, M.D., Tauhni T. Hunt, M.D., Angela J. Aldrich, M.D., And Kimberly Lief's Memorandum Of Law In Support Of Their Motion For Summary Partial Judgment (docket no. 27) ("Motion For Partial Summary Judgment") and Defendants' Motion To Strike Certain Portions Of Plaintiff's Statement Of Additional Facts In Support Of Resistance To Defendants' Motion For Partial Summary Judgment And Portions Of Plaintiff's Appendix (docket no. 59) ("Motion To Strike"). I must determine whether a genuine issue of material fact exists regarding Hagen's claims.

A. Factual Background

I set forth here only those facts, disputed and undisputed, sufficient to put in context the parties' arguments concerning the defendants' Motion For Partial Summary Judgment and Motion To Strike. Unless otherwise indicated, the facts recited here are undisputed, at least for purposes of summary judgment.

This case arises from two distinct sets of events that occurred in 2009. First, in July 2009, Hagen alleges that he requested that the defendants, including Siouxland office manager Lief, complete his applications for medical licensure in the states of Minnesota and Wisconsin. Second, in November 2009, Hagen was terminated from his employment at Siouxland by Eastman, Hunt, and Aldrich.

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1. Siouxland

Siouxland, an Iowa professional corporation, is located in Sioux City, Iowa and provides obstetric and gynecologic services to patients. Siouxland expanded into the area of cosmetic surgery and related services, including the development of The Rejuvenation Centre, which provided client services such as Botox treatment, Juviderm treatment, hair removal, liposuction, massage therapy, and weight loss consultation.

Siouxland was formed and organized by three physicians, including Hagen's father, in 1975. At the time of Hagen's termination, in November 2009, the doctors with an interest in Siouxland were Hagen, Eastman, Hunt, and Aldrich.

Hagen is a doctor of obstetrics and gynecology, presently licensed to practice medicine in the states of Iowa, South Dakota, and Wisconsin. On January 1, 1993, Hagen entered into an employment agreement with Siouxland. Hagen has been an equity owner, president, and director at Siouxland. At the time of his termination, Hagen was the president of Siouxland. Hagen believed he was the decision maker for Siouxland because Eastman and Aldrich did not want to make decisions that angered people.

Hagen was actively involved in hiring Eastman, Hunt, and Aldrich. Eastman became an equity owner of Siouxland on or about July 27, 1994, and he has been an equity owner, officer, and director since. Hunt became an equity owner on or about July 29, 1997, and she has been an equity owner, officer, and director of Siouxland since. Hunt was the first female doctor of obstetrics and gynecology in Sioux City. Hagen believed that hiring a female would be good for the practice because it would bring in more patients who prefer seeing a female physician. After Hunt joined Siouxland, she became busier while and Hagen and Eastman saw fewer patients. According to Eastman, Hunt and Aldridge had more patients because female patients generally prefer female doctors of obstetrics and gynecology. Yet, Hagen's workload

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increased when Hunt was hired because he had to train and assist her in surgeries. Aldrich became an equity owner of Siouxland on or about August 2000, and has been an equity owner, officer, and director of Siouxland since.

When the doctors joined Siouxland, they agreed not to "engage in the practice of medicine except as an employee of the CORPORATION unless otherwise authorized by the Board of Directors." Article III(a). App. 71. The employment agreement states all income generated "for services as a doctor and all activities relating thereto, such as lecturing, writing articles and consulting work, shall belong to the CORPORATION . . . ." Article IV. App. 72. A doctor could be terminated by delivering a written notice of cancellation at least 90 days prior to the effective date of cancellation or "discharged by the CORPORATION in the event of embezzlement or other theft; willful contravention of professional ethics; substantial and willful violation of any other terms or conditions of this employment agreement, all subject to determination by the Board of Directors of the CORPORATION." Article XI(a)(5)-(6). App. 75.

2. Expansion of Siouxland

Revenue generation became an increasing source of dispute between Hagen and the other Siouxland doctors, particularly regarding profits derived from non-Siouxland activities. Hagen and Eastman, Hunt, and Aldrich disagreed on whether they should participate in the profits of the Dakota Dunes Surgery Center and the Pierce Street Surgery Center. Also, Hagen sought opportunities to expand Siouxland to Sioux Falls, South Dakota and the Twin Cities area, which defendants opposed.

a. South Dakota

Hagen engaged in efforts to expand Siouxland to Sioux Falls, South Dakota, yet defendants were unwilling to expand Siouxland's business there. Defendants allege that when Hagen proposed the idea of expanding Siouxland business efforts outside the state of Iowa, they informed Hagen such expansion would violate his contract. Defendants

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allege that despite their unwillingness to assist in developing Siouxland in Sioux Falls, Eastman, Hunt, and Aldrich were not opposed if Hagen was willing to share with them the profits derived from Hagen's efforts. Defendants allege that when Hagen saw patients in Sioux Falls, his activities generated revenue of approximately $1,800 and he kept the money. Hagen denies defendants' recollection of these events, including the discussion of Hagen's contract, his refusal to share profits, and whether he kept the money earned from his single visit with Sioux Falls patients.

b. Minnesota

After Hagen purchased a vacation home in Wisconsin and began spending increasing amounts of time in Wisconsin and the Twin Cities area, he considered starting a weight loss clinic in Minnesota. He discussed it with his fiancé, Denise Watson ("Watson"), over the Fourth of July in 2009. Watson worked as a dental hygienist and was interested in changing careers. In July 2009, Hagen announced to Eastman, Hunt, and Aldrich his aspirations to open a diet clinic in Minnesota called Vivify HCG Weight Loss ("Vivify"). At this time when Hagen started planning for Vivify in Minnesota, he did not look at the...