Ingber v. Ross
| Decision Date | 20 June 1984 |
| Docket Number | No. 82-1329.,No. 82-1345.,82-1329.,82-1345. |
| Citation | 479 A.2d 1256 |
| Parties | Kenneth A. INGBER, et al., Appellants-Cross Appellees, v. Stuart ROSS, Appellee-Cross Appellant. |
| Court | D.C. Court of Appeals |
Before FERREN and TERRY, Associate Judges, and KERN,* Associate Judge, Retired.
These are cross-appeals by the parties, Dr. Ross and Dr. Ingber and his professional corporation, from the trial court's judgment entered after an eight-day trial without a jury. In essence the judgment ordered (1) the rescission of certain agreements concerning the practice of dentistry into which the parties had entered for the reason that Dr. Ingber had committed a material breach, and (2) the payment by Dr. Ingber of some $70,000 to Dr. Ross for the consequent damages he suffered from various wrongful actions by Dr. Ingber and his corporation. Dr. Ross complains on appeal that the trial court erroneously failed to award all the damages he incurred as a result of such wrongful actions; Dr. Ingber, in response, urges that the trial court's award of damages was erroneous. We affirm the trial court in all respects.
Without describing all the efforts by the parties, both practicing dentists, to combine their practices and without detailing all the actions by the parties in the dispute that arose between them, we set forth the facts sufficiently to put in context the legal contentions they make on appeal.1
Dr. Ingber commenced the practice of dentistry in 1971 and incorporated his practice in 1975 pursuant to the District of Columbia Professional Corporation statute. Dr. Ross, who commenced practicing dentistry in 1975, worked for at least a year in Dr. Ingber's office, conducting both his own practice as well as performing specified dental work for patients referred to him by Dr. Ingber.
In 1979 Dr. Ingber proposed that Dr. Ross buy into his dental practice, which Dr. Ingber valued at $200,000, and offered to sell him 50 per cent of his professional corporation's stock. The parties then agreed to value Dr. Ross' own practice at $20,000, which he would merge with Dr. Ingber's professional corporation. Consequently, they agreed to adjust the valuation of the stock of Dr. Ingber's professional corporation downward to $180,000 in recognition of the amount of Dr. Ross' contribution to their joint enterprise. In November 1979 the parties executed a stock purchase agreement and an employment agreement.2
Dr. Ross, in addition to contributing his own dental practice (valued at $20,000) to the corporation, paid Dr. Ingber about $26,000 in cash, thereby obtaining 14.5 per cent of the stock of the corporation. It was contemplated then that Dr. Ross would be enabled in due time to purchase the balance of the 50 per cent share of the stock to which he was entitled under the parties' agreement from the fees he would earn practicing dentistry with Dr. Ingber. Although the parties had agreed at the time of execution in November 1979 that Dr. Ingber was to transfer 14.5 per cent of the shares of stock to Dr. Ross in exchange for his cash payment, Dr. Ross did not receive any stock until after the parties commenced litigation in the trial court almost two years later.3
As it turned out, Dr. Ingber did not confer upon Dr. Ross what had been promised him: a "full-voice" in the management and conduct of the professional practice. Specifically, the trial court found that Dr. Ingber continued to control the distribution of patients and to decide the course of treatment of such patients;4 and consequently, Dr. Ross' opportunity to obtain income from the professional services he rendered was lessened. In 1980, at the annual meeting of the corporation, Dr. Ingber announced that his salary would be increased and he continually insisted on the right, by himself, to decide the salaries of employees of the practicing corporation and also to make all other personnel decisions.
In August of 1980, the corporation purchased the practice of a retiring dentist, Dr. Schertz. The presence of Dr. Ross was a major factor in the decision by the retiring dentist to sell his practice to the corporation. Up to March 31, 1981, the practice of Dr. Schertz had produced for the corporation some $42,000 in fees and through April of 1982 it generated about $63,600 in fees.
Dr. Ross was by the terms of the employment agreement entitled to a share of the corporation's annual net profits based upon the average amount of stock he owned during the preceding year, but he never received any share of such profits. The trial court found the net profits were about $11,000 in 1980 and some $20,000 in 1981, so that based upon Dr. Ross' holding of 14.5 per cent of the corporation's stock he would have been entitled to some $1600 in 1980 and $2900 in 1981.
In December 1980, Dr. Ross advised Dr. Ingber that he was considering buying the balance of the 50 per cent of the shares of the corporation's stock which they had agreed he might purchase. Dr. Ingber wrote Dr. Ross that "your employment agreement and buy in agreement with this professional corporation have been `frozen'." In January 1981, Dr. Ross informed Dr. Ingber that he was terminating his employment with the corporation in light of (1) Dr. Ingber's action of "freezing" the stock purchase agreement and (2) the various breaches by Dr. Ingber of the employment contract. The attorney for the corporation then wrote Dr. Ross that they deemed Dr. Ross' action of terminating employment with the Corporation to constitute a voluntary withdrawal from the corporation. In March 1981, Dr. Ross was locked out of the corporate offices and various pieces of equipment and some patient's records he had brought to the corporation were retained by Dr. Ingber. In April 1981, a special meeting of the corporation's stockholders was held and Dr. Ingber, the sole stockholder, voted to remove Dr. Ross as a director.
After Dr. Ross left the corporation's practice he received payment from patients he had previously treated on behalf of the corporation. Dr. Ross placed such payments in an escrow account, ultimately paying over to the corporation all but $1300 of this fund.
After Dr. Ross' departure, Dr. Ingber told a patient, Ms. McCullough, who had been prepared to have Dr. Ross perform her dental work, that Dr. Ross was not a good dentist, had worked for the corporation only as a hygienist, and did not handle complex cases. The office manager for the corporation made the same statement to this patient concerning Dr. Ross. Dr. Ingber also told another patient, Ms. Gardner, that she "would be sorry" if she continued Dr. Ross as her dentist and that Dr. Ross had acted unprofessionally while practicing with Dr. Ingber. The patient McCullough subsequently repeated to the patient Gardner what Dr. Ingber and the office manager had told her about Dr. Ross' lack of professional ability and his being a hygienist rather than a dentist.
The parties then commenced litigation in the trial court. Dr. Ross by amended complaint brought action against Dr. Ingber and his professional corporation alleging that: they had breached the stock purchase and employment agreements and had received unjust enrichments; Dr. Ingber had individually slandered him; and, they had wrongfully converted to their own use his medical equipment and patient charts. Dr. Ingber and his corporation counterclaimed for damages they allegedly incurred as a result of Dr. Ross' allegedly unlawful departure from the corporation; his asserted slander of Dr. Ingber; and, Dr. Ross' solicitation of patients of the corporation and his retention of payments by such patients.
The trial court, after hearing testimony and argument by counsel, concluded that Dr. Ingber and his corporation materially breached their agreement with Dr. Ross to assure him "a full voice in the management and conduct of the Corporation's business" by refusing to share with him the management of the dental practice and by depriving Dr. Ross of his right under the Stock Purchase Agreement to buy the balance of the 50 per cent of the corporation's stock. Accordingly, the trial court ordered the agreements between the parties rescinded and Dr. Ingber to repay to Dr. Ross the $26,000 he had paid for the corporation's stock. Also, the court determined that the income accruing to Dr. Ingber from the purchase of the practice of Dr. Schertz, the retiring dentist, constituted unjust enrichment and awarded $15,000 in damages to Dr. Ross.
The court also awarded to Dr. Ross, 14.5 per cent of the corporation's profits in 1980 and 1981, respectively. However, the court refused to award punitive damages to Dr. Ross, expressly finding "there was not malice enough" and that "[t]he cause of the problems was more due to the emotional temperament of the parties."
As to the alleged slander of Dr. Ross, the trial court refused to allow him to obtain damages from the corporation for this claim because "the Amended Complaint does not include this count and because the defendant corporation may not have had sufficient time to prepare for this claim." However, the court specifically concluded that Dr. Ingber's statements to the patient, Ms. McCullough, that "Dr. Ross only worked as a hygienist" and "could not handle complex cases" was slander per se and not privileged. The court awarded $25,000 in compensatory damages to Dr. Ross. As to the asserted slander of Dr. Ross by Dr. Ingber's comments to the patient, Ms. Gardner, that she "would be sorry" should she go to Dr. Ross, the court concluded that these statements "were not slander per se."
As to the counterclaims presented by Dr. Ingber and his corporation, the court declined to conclude that the...
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