Hulse v. Orthodontic Educ., Case No. 3:05-cv-594-J-32TEM
| Decision Date | 05 January 2011 |
| Docket Number | Case No. 3:05-cv-594-J-32TEM |
| Parties | D.D.S. CAMERON HULSE, Plaintiff, v. ORTHODONTIC EDUCATION, LTD, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
Plaintiff, orthodontist Cameron Hulse (Hulse), and Defendant, Orthodontic Education, LTD (OEC), entered into an agreement whereby OEC was to pay for Hulse's orthodontic education; in exchange, Hulse would practice under the auspices of OEC, which would profit from the arrangement. The parties had a falling out, leading to this lawsuit.
This case dates from 2005 and was litigated with appropriate vigor by both parties until 2007 when, due to medical problems, Hulse was unable to participate and the case was administratively closed. (Docs. 65, 73). The Court reopened the case in July 2010 and it is now before the Court on cross-motions for summary judgment and partial summary judgment. (Docs. 86, 87, 92). By briefing and at a status conference on June 28, 2010 and oral argument on October 20, 2010, the transcripts of which are incorporated by reference, the parties have requested that the Court direct its consideration to certain contract issues, representing that resolution of these issues would aid them in resolving the case. (Docs. 95, 96). Thus, the only issues currently before the Court are questions of contract interpretation.
The contracts at issue are contained in the exhibits to the depositions of Hulse and OEC's Vice President of Business Development, Ernest Bono. (Docs. 49, 50).
When Hulse first came in contact with Bono in 2002, OEC was in the early stages of launching a business. The business model of OEC was essentially as follows: Because of the high average age of orthodontists and the ever increasing demand for orthodontic services, there was likely to soon be a considerable need for new orthodontist offices. (Doc. 49, Ex. 1 at 1-4). By standardizing care and unifying management for many practices, greater economies could be realized than in a normal solo practice. Id. at 4-6. OEC designed a program to get dental school graduates into a select group of orthodontistry schools, provide them with a full scholarship and stipend, set up an office for them in the locality of their choice following graduation, and provide business management for the resultant practices. (Doc. 87 at 3). These orthodontists were to benefit by receiving a free orthodontic education and a $35,000 stipend for each of their two years at school, and being set up in a practice without needing to invest any capital of their own. Id. at 4; (Doc. 50, Ex. 32). The benefit to OEC was that each orthodontist was required to work for the OEC managed practice for a minimum of seven (7) years, during which time OEC would profit through management fees and profit sharing. (Doc. 87 at 3, 13). In short, the up-front cost to OEC was very considerable and the profitability of the venture rested on the ability of OEC to retain orthodontists post-graduation and receive substantial revenues from the practices OEC set up.
When Hulse met Bono in 2002 and Bono described OEC's proposition, Hulse was interested. (Doc. 50, Ex. 2). He and OEC ultimately executed an "Orthodontist Graduate Program and Placement Agreement" (Graduate Agreement) in February 2003. (Doc. 50, Ex. 5, 7). The Graduate Agreement fully deals with the education-related requirements for both parties. It sets out both the obligations of OEC to provide Hulse with a free education and stipend and the obligation of Hulse to apply for and diligently participate in the orthodontics program at Jacksonville University (JU) with the ultimate object of obtaining certification in orthodontics. (Doc. 50, Ex. 7 at B, 1.1-1.2, 2.1-2.3).
The Graduate Agreement also contemplates the obligations of OEC and Hulse with respect to setting up a practice for Hulse after graduation. Specifically, OEC promised to set Hulse up with a practice in an area of his choice according to one of two general models attached as exhibits to the Graduate Agreement. Id. at 3.1-3.4.1, Ex. A, B. Hulse agreed to sign a practice agreement which would detail the specifics of the practice "so long as that agreement include[d] terms substantially the same" as those set out in the "Managed Practice Model" or "Practice Acquisition Model." Id. at 3.4.1. The deadline for signing a practice agreement was set at the end of Hulse's first year in the JU program and the Graduate Agreement provides that time was of the essence. Id. at 3.4.1, 7.6.
Because Dr. Hulse selected Phoenix, Arizona as his top choice for work location, OEC elected to use the Managed Practice Model to draft a practice agreement. (Doc. 50, Pl. Depo. Tr. at 65); (Doc. 87 at 12). The Managed Practice Model contains twelve substantive terms and one general term, the latter of which provides for the inclusion of other "usual and customary terms." . The twelve were, in brief: (1)minimum salary $150,000 per year for the first 7 years; (2) Management Company (owned by or affiliated with OEC) to provide capital; (3) profit sharing by the Doctor of 40% in excess of $150,000 for the first 7 years, 50% for the next 5 years and 60% thereafter; (4) termination bonus equal to Doctor's share of the profits for the prior 12 months beginning after year 10 and 150% after year 15; (5) Doctor to work an average of 160 hours per month; (6) Management Company to provide all management services at actual cost plus percent of profits; (7) Management Company to assist in developing and implementing a marketing plan; (8) Management Company not to place any other practice in an area that would adversely affect the profits of the practice; (9) a two year two mile non-competition provision; (10) initial term of 7 years; (11) Doctor to contribute $10,000 to JU for each year in which Doctor earns more than $250,000; and (12) software, procedures and materials to be designated by Management Company. Id. at Ex. A.
In spring of 2004, toward the end of Hulse's first year at JU, four versions of proposed practice agreements were considered by the parties. (Doc. 50, Ex 12, 14, 15, 23). All of the drafts omitted a number of the 12 provisions of the Managed Practice Model. OEC and Hulse agreed at oral argument, and this Court therefore accepts, that only one of these drafts is relevant to the question at issue: whether OEC and Hulse ever reached a practice agreement that Hulse was required to sign. That version, which included an addendum, was entitled, "Equity Owner-Dental Practice Agreement" (Practice Agreement) and was provided by OEC to Hulse on May 17, 2004. (Doc. 50, Ex. 23).
The Practice Agreement sets out the conditions for practice and includes terms relevant to the relationship between the Doctor and the practice to be. Id. at 1(f), 2, 3(a), 3(c), 10(f), 12. To flesh out the relationship between the practice and OEC, the Practice Agreement contemplates the practice entering into a separate "Business Services Agreement" (BSA) with OEC or an OEC affiliate (presumably the "Management Company" referenced in the Managed Practice Model). Id. at C. The BSA would allow the practice to obtain the benefit of "OEC's expertise, real estate services, facilities construction supervision, marketing, purchasing, operations, training, financial, bookkeeping and technical support, business and accounting systems and intellectual property in the management and operation of the business aspects of the [practice]." Id. The BSA was to be vital to the agreement between Hulse and OEC because the BSA, the Graduate Agreement, and the Practice Agreement were said to constitute the "entire agreement" between the parties. Id. at 17. It is undisputed, however, that OEC did not, at any time, provide Hulse with a copy of the BSA. Indeed, OEC admitted at oral argument that the BSA had not even been drafted in spring 2004, at the end of Hulse's first year at JU, and it did not come into being until March 2005. The only copies of that document Hulse ever obtained were given to him by his classmates, apparently without the knowledge of OEC. (Doc. 50 Pl. Depo. Tr. at 172-73); (Doc. 50, Ex. 44, 45).
Hulse declined to sign any of the draft practice agreements offered to him by OEC. Thus, the only agreement Hulse ever signed was the original Graduate Agreement. OEC maintains that the Graduate Agreement required Hulse to sign the Practice Agreement and argues that it is a breach for him to have refused.
Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "The burden of demonstrating the satisfaction of this standard lies with the movant, who must present pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any that establish the absence of any genuine, material factual dispute." Branche v. AirTran Airways, Inc., 342 F.3d 1248, 1252-53 (11th Cir. 2003) (internal quotation marks omitted). "In making this determination, the court must view all evidence and make all reasonable inferences in favor of the party opposing summary judgment." Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995).
BREACH OF CONTRACT (GENERAL PRINCIPLES)
"Contract interpretation is a question of law...." Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060, 1065 (11th Cir. 2004) . A provision of a "contract is to be construed in connection with the other provisions, so that if possible, or so far as is possible, they all may harmonize." Heryford v. Davis, 102 U.S. 235, 245 (1880). The Florida Supreme Court has "long held that under contract law principles, contract language that is unambiguous on its face must be given its plain meaning." Green v. Life & Health of Am., 704 So.2d 1386, 1391 (Fla. 1998)...
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