Joseph v. Parish of St. Mary
| Decision Date | 03 August 2005 |
| Docket Number | No. 2004 CA 0781.,2004 CA 0781. |
| Citation | 923 So.2d 27 |
| Parties | Dr. Willie John JOSEPH, III, Dr. Michelle T. Brumfield, and St. Mary Anesthesia Associates, Inc. v. HOSPITAL SERVICE DISTRICT NO. 2 OF the PARISH OF ST. MARY, State of Louisiana, Our Lady of the Lake Hospital, Inc., Melvin Bourgeois, M.D., James Broussard, John Guarisco, Sharon Howell, Y. George Ramirez, Clifford M. Broussard, National Union Fire Insurance Company of Louisiana, and Louisiana Hospital Association Malpractice and General Liability Trust |
| Court | Court of Appeal of Louisiana — District of US |
James B. Supple, Franklin, Counsel for Plaintiffs/Appellants Dr. Willie John Joseph, III, Dr. Michelle T. Brumfield and St. Mary Anesthesia Associates, Inc.
Christine Lipsey, Scott N. Hensgens, Lauren S. Coenen, Baton Rouge, Counsel for Defendants/Appellees Our Lady of the Lake Hospital, Inc., and Clifford M. Broussard.
George D. Fagan, Peirce A. Hammond, II, New Orleans, Counsel for Defendant/Appellee National Union Fire Insurance Company of Louisiana.
Nicholas F. LaRocca, Morgan City, Counsel for Defendants/Appellees Hospital Service District No. 2 of the Parish of St. Mary, State of Louisiana, Melvin Bourgeois, M.D., James Broussard, John Guarisco, Sharon Howell, and Y. George Ramirez.
Before: CARTER, C.J., PETTIGREW and MCDONALD, JJ.
Defendants1 filed peremptory exceptions raising the objection of no right of action against plaintiffs, Willie J. Joseph, M.D. and Michelle Brumfield, M.D., that were granted by the trial court, dismissing their claims with prejudice. This suspensive appeal was timely perfected. For the following reasons, the judgment of the trial court is reversed.
On December 13, 1990, Hospital Service District No. 2 of the Parish of St. Mary (which operated Lakewood Medical Center, hereinafter, Hospital) entered into a contract with St. Mary Anesthesia Associates, Inc. (hereinafter, St. Mary) for the purpose of obtaining general anesthesia services for Lakewood Hospital's patients.2 The contract was signed by the chief operating officer of Lakewood Hospital, Raymond J. Rowell, and the president of St. Mary, Willie J. Joseph, III. The contract provided for automatic annual renewal unless terminated by the Hospital for cause as defined in the contract, or by St. Mary by giving the Hospital no less than sixty (60) days notice prior to the end of the original term or any renewal period.
Dr. Willie J. Joseph, III, Dr. Michelle T. Brumfield, and St. Mary filed suit in 2003, alleging that in November 2000, the Hospital's chief executive officer, Clifford M. Broussard, wrote them a letter advising that the contract was being terminated effective thirty days from the date of the letter. According to the petition, the contract was being terminated because Mr. Broussard deemed that the contract was not in the Hospital's best interest, not for cause as set forth in the contract.
Exceptions raising the objection of no right of action were filed on behalf of the defendants3 against the claims asserted on behalf of Dr. Joseph and Dr. Brumfield (hereinafter Doctors). Defendants asserted that an action can only be brought by a person having a real and actual interest; that only St. Mary was a party to the contract that was the basis for the Doctors' action for breach of contract; and that a corporate creditor or shareholder does not have an individual right to sue for a corporate loss. The Doctors maintain that they do have a right of action because as their petition asserted, the contract expressed the intent of the parties to stipulate a benefit in favor of the Doctors, and this benefit formed a material consideration of the contract.
At the hearing on the exceptions, the contract at issue was introduced, following which the defendants argued that since the contract is clear and unambiguous, parol evidence was not admissible under La. C.C. art. 1848. Defendants further maintained that the contract was clear and unambiguous and therefore, they would object to any testimonial evidence. Plaintiffs agreed that the contract was unambiguous and contended that it clearly contemplates third party beneficiaries. After reading the contract and finding it clear and without any ambiguity as to each party's obligations, the court ordered the parties to proceed and would not allow the introduction of any evidence on the issue of the intent of the parties.
The court ruled that the contract was between the Hospital and St. Mary and did not contain a stipulation pour autrui on behalf of the Doctors. Because it was the opinion of the court that the contract did not create a benefit in favor of the Doctors, the Doctors proffered evidence of the contracting parties' intent. A judgment was subsequently signed granting the peremptory exceptions raising the objection of no right of action filed on behalf of defendants, dismissing the Doctors' claims with prejudice, and casting them with all costs of the proceeding.
The Doctors filed the instant appeal alleging two assignments of error. First, they allege that the trial court erred in refusing to consider evidence on the basis that the contract is clear and unambiguous in not conferring third party beneficiary status to the Doctors. Second, the Doctors allege that the trial court erred in determining they were not third party beneficiaries to the contract.
As noted above, the trial court did not allow parol evidence regarding the parties' intentions based on the finding that the contract was not ambiguous. The law on the admissibility of parol evidence to vary written contracts is clear. These principles were set forth in Spohrer v. Spohrer, 610 So.2d 849, 851-852, (La.App. 1st Cir.1992), and cited by the third circuit in Guidry v. Hedburg, 98-228 p. 5 (La. App. 3rd Cir.11/4/98), 722 So.2d 1036, 1038-1039, which dealt with the same two legal issues that are before us:
Legal agreements have the effect of law upon the parties, and, as they bind themselves, they shall be held to a full performance of the obligations flowing there from. Courts are bound to give legal effect to all contracts, according to the true intent of the parties, and the intent is to be determined by the words in the contract when they are clear and explicit and lead to no absurd consequences. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. The rules of interpretation establish that when a clause in a contract is clear and unambiguous, the letter of the clause should not be disregarded under the pretext of pursuing its spirit.
As a general rule, parol evidence is inadmissible to vary, modify, explain, or contradict a writing. [Citations omitted.]
In this case, both the Doctors and Defendants argue that the contract is clear and not ambiguous. However, the Doctors argue that the contract clearly reflects the intent of the parties to confer third party beneficiary status upon them, whereas the defendants contend that the agreement confers no direct advantage or benefit on either of the Doctors. We recognize, as did defendants, that the Doctors are in the unenviable position of having to argue mutually exclusive positions — that the contract is clear and unambiguous AND that the introduction of parol evidence was necessary. However, we find this no more of an anomaly than both parties arguing that the contract is clear, but with mutually exclusive results. Considering that this matter has been litigated for five years, has been in the appeal courts twice prior to this appeal, and we are still not reaching the merits of the dispute between the parties, the entire case is an anomaly.
The trial court, after reading the contract at the hearing, stated, We agree that the contractual obligations of the parties are clear and unambiguous. However, whether the contract clearly manifested an intention to stipulate a benefit for a third person is the issue on which the correctness of the trial court's decision ultimately depends. Therefore, we will consider whether the contract clearly and unambiguously created a stipulation pour autrui in favor of the Doctors in connection with our discussion of whether the trial court erred in finding that the Doctors are not third party beneficiaries to the contract.
The concept of contracts that benefit non-contracting parties or stipulations pour autrui is found in La C.C. art. 1978, which states as follows:
A contracting party may stipulate a benefit for a third person called a third party beneficiary.
Once the third party has manifested his intention to avail himself of the benefit, the parties may not dissolve the contract by mutual consent without the beneficiary's agreement.
A long line of jurisprudence has established principles and rules for determining whether a contract benefits a third party. Unfortunately, this line is not straight or clear, prompting the Hospital to assert that the jurisprudence overwhelmingly and uniformly requires that the stipulation pour autrui be in writing. The following examination of the jurisprudence leads us to the conclusion that the Hospital's contention is erroneous.
We begin, not in the beginning, but in the middle of the jurisprudence because it seems that the case of Fontenot v. Marquette Casualty Co., 258 La. 671, 247 So.2d 572 (1971) is the point at which the rules became murky. The...
To continue reading
Request your trial
-
Joseph v. Hospital Service District No. 2 of the Parish of St. Mary, No. 2004 CA 2761 (La. App. 10/25/2006)
...Hospital District intended Dr. Joseph and Dr. Brumfield to be third-party beneficiaries. Joseph v. Hospital Service Dist. No. 2 of Parish of St. Mary, 2004-0781 (La. App. 1 Cir. 8/3/05), 923 So.2d 27, rev'd, 2005-2364 (La. 10/17/06), ___ So.2d During this time, the Hospital District and the......
-
Joseph v. Hospital Service District No. 2
...benefit Dr. Brumfield. The court of appeal reversed the judgment of the trial court. Joseph v. Hospital Service District No. 2 of the Parish of St. Mary, 04-0781 (La. App. 1 Cir. 8/3/05), 923 So.2d 27. The court of appeal agreed that the contractual obligations of the parties are clear and ......