Kimball v. Anesthesia Specialists

• Decision Date: 28 September 2001
• Docket Number: No. 2000 CA 1954.,2000 CA 1954.
• Citation: 809 So.2d 405
• Parties: Baylen G. KIMBALL, M.D. v. ANESTHESIA SPECIALISTS OF BATON ROUGE, INC. (A Professional Medical Corporation); Fahimeh H. Tahvildari, M.D.; Mark M. Walker, M.D.; Ali Zarbalian, M.D.; and Mary E. Corry, M.D.
• Court: Court of Appeal of Louisiana — District of US

809 So.2d 405

Baylen G. KIMBALL, M.D. v. ANESTHESIA SPECIALISTS OF BATON ROUGE, INC. (A Professional Medical Corporation); Fahimeh H. Tahvildari, M.D.; Mark M. Walker, M.D.; Ali Zarbalian, M.D.; and Mary E. Corry, M.D.

No. 2000 CA 1954.

Court of Appeal of Louisiana, First Circuit.

September 28, 2001.

Writs Denied March 8, 2002.

Phillip W. Preis, Baton Rouge, Counsel for Plaintiff/Appellant/Appellee Baylen G. Kimball, M.D. Stewart E. Niles, Jr., New Orleans, Counsel for Defendants/Appellees/Appellants Anesthesia Specialists of Baton Rouge, Inc. (A Professional Medical Corporation); Fahimeh H. Tahvildari, M.D.; Mark M. Walker, M.D.; Ali Zarbalian, M.D.; and Mary E. Corry, M.D.

Before: FOGG, PARRO, and WEIMER, JJ.

WEIMER, Judge.

Dr. Baylen Kimball, an anesthesiologist who was a former employee and also a shareholder of Anesthesia Specialists of Baton Rouge, Inc. (A Professional Medical Corporation) (ASBRI), filed suit against the corporation and the individual doctors/shareholders of the corporation following his termination from employment. Both sides appeal various judgments rendered during the course of these proceedings.

BACKGROUND

Dr. Kimball was one of the founding members of ASBRI when it was incorporated in August of 1986. The corporation successfully negotiated a contract with Woman's Hospital in Baton Rouge to provide anesthesia services at the hospital beginning in 1986. The contract proved to be an extremely valuable corporate asset allowing ASBRI to achieve a high degree of profitability with the individual doctors/shareholders receiving substantial compensation.

On March 1, 1991, Dr. Kimball along with the other doctors/shareholders of the corporation executed a new employment agreement with ASBRI for a period of one year, renewable automatically for successive one-year-periods unless and until terminated as provided in the contract. This contract governed the actions and responsibilities of the doctors as employees of the corporation. The employment agreement included provisions dealing with purpose and employment; performance and duties; compensation; benefits; working facilities and expenses; sickness, disability and death benefits; term and termination of the agreement; a covenant not to compete; and miscellaneous provisions. The relevant portions of the employment agreement as it relates to this case involve the terms of employment, the termination of the agreement, and the covenant not to compete.

At the time Dr. Kimball and ASBRI executed the employment agreement, ASBRI and the doctors/shareholders also executed an "Amended and Restated Agreement to Purchase and Sell Stock" (stock buy/sell agreement). This contract governed the relationship between the doctors as shareholders of the corporation and the corporation. Among other matters, the stock buy/sell agreement listed the procedure or the transfer of ASBRI stock and the methodology for calculating the value of the stock if a doctor/shareholder's employment with ASBRI was terminated.

At the time the original agreement to purchase and sell stock was executed on April 30, 1987, corporate ownership was shared by seven doctors. At the time the amended stock buy/sell agreement was executed, corporate ownership was shared by six doctors, five of whom had executed the original agreement. Dr. Kimball executed both the original and amended agreement.¹

The record reflects that on August 5, 1991, ASBRI executed an agreement with Woman's Hospital Foundation for operation of a section of anesthesiology. The agreement was for a term of three years, renewable for additional terms of one year each following the initial term. Either party had the right to terminate the agreement, with or without cause, upon giving the other party six months written notice.

On November 7, 1991, Dr. Kimball was terminated as an employee of the corporation. Following the termination, Dr. Kimball continued to work at Woman's Hospital in spite of the covenant not to compete included in the employment agreement. The transfer of stock pursuant to the stock buy/sell agreement did not take place as provided in the agreement.

Dr. Kimball filed suit against the corporation and the individual doctors/shareholders on January 8, 1992, seeking damages and a declaratory judgment against ASBRI and four doctors individually. The numerous causes of action which Dr. Kimball alleged following his termination as an employee were further complicated by the fact that he was also a shareholder of the corporation.²

Defendants answered and filed a reconventional demand alleging that Dr. Kimball had violated provisions of the employment agreement, specifically the provisions of Article II regarding the performance of his duties as an employee of ASBRI (failure to perform duties exclusively for the corporation, including the prohibition of performing professional services for or on behalf of himself or another party without the express written consent of ASBRI) and Article VIII regarding the non-compete agreement effective upon termination of the employment agreement for any reason. Defendants sought attorney fees and costs associated with the litigation, specific performance of Section 8.02 (the forfeiture clause), and all damages and attorney fees for groundless and bad faith claims under the Unfair Trade Practices and Consumer Protection Act.³

Since the time of the filing of the original petition and reconventional demand, there have been innumerable motions, exceptions, reconventional demands and counter claims. There were motions for summary judgment and cross motions for summary judgment. Some were certified as final judgments and appealed to this court.⁴

The matter was tried before a jury on January 24-28, 31, and February 1-4, 7-11, 14-15, 2000. A unanimous jury rendered a verdict in favor of the defendants against Dr. Kimball ordering that the employment agreement be reformed to read that termination from employment could be "with or without cause"; the claims and causes of action by Dr. Kimball against the corporation be dismissed; Dr. Kimball tender his shares of stock in ASBRI to the corporation and ASBRI pay Dr. Kimball the sum of 834,724.56 for the stock; and Dr. Kimball pay to ASBRI the sum of $16,923.82 plus judicial interest for damages due pursuant to the reconventional demand for breach of the employment contract. Judgment in accordance with the jury verdict was signed on March 6, 2000.⁵

Dr. Kimball filed a motion for judgment notwithstanding the verdict and, in the alternative, a motion for a new trial which were heard on March 27, 2000. Those motions were denied with prejudice in a judgment signed on April 6, 2000. Dr. Kimball filed a motion and order for a suspensive appeal of the March 6, 2000 judgment rendered pursuant to the jury verdict and the judgment signed on April 6, 2000, denying with prejudice the motion for a judgment notwithstanding the verdict and, alternatively, a motion for a new trial. Dr. Kimball complains about a plethora of issues, listing some sixteen assignments of error.⁶

The case was complicated and confusing to try because of the numerous causes of action, some of which overlapped, and because of numerous rulings that the trial court was called upon to make throughout the course of the litigation.

Also before this court is a devolutive appeal filed by plaintiffs-in-reconvention, ASBRI and the individual doctors/shareholders, contesting a judgment dated March 17, 2000, which granted the motion for directed verdict by Dr. Kimball and dismissed all claims and causes of actions against Dr. Kimball except those set forth or included in the judgment rendered by the court on March 6, 2000.

VALIDITY OF COVENANT NOT TO COMPETE⁷

Defendants have appealed a grant of a motion for summary judgment based on a conclusion by the trial court that the non-compete clause in the employment agreement was unenforceable because the clause failed to include "a specified parish or parishes, municipality or municipalities, or parts thereof" as required by LSA-R.S. 23:921(C).⁸ The defendants contend the clause was enforceable because the evidence established that the medical facilities referenced in the non-compete clause were identifiable and within East Baton Rouge Parish.

As stated in the recent case of SWAT 24 Shreveport Bossier, Inc. v. Bond, 00-1695, pp. 4-6 (La.6/29/01), 808 So.2d 294, 296-297:

Louisiana has long had a strong public policy disfavoring noncompetition agreements between employers and employees. Louisiana Smoked Products, Inc. v. Savoie's Sausage & Food Products, 96-1716, p. 11 (La.7/1/97), 696 So.2d 1373, 1379. Thus, the longstanding public policy of Louisiana has been to prohibit or severely restrict such agreements. Id. This public policy is expressed in La. R.S. 23:921(A)(1), which provides:

Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void.

Louisiana's strong public policy restricting these types of agreements is based upon an underlying state desire to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden. See McAlpine v. McAlpine, 94-1594, p. 11 (La.9/5/96), 679 So.2d 85, 91. Because such covenants are in derogation of common right, they must be strictly construed against the party seeking their enforcement. Hirsh v. Miller, 249 La. 489, 187 So.2d 709, 714 (1966); Turner Professional Services, Ltd. v. Broussard, 99-2838, p. 3 (La. App. 1 Cir. 5/12/00), 762 So.2d 184, 185[, writ denied, 00-1717 (9/29/00), 770 So.2d 356].

The exceptions to this provision are specifically enumerated by the statute and provide for employer/employee relationships, corporation/shareholder relationships, partnership/partner relationships and franchise/franchisee relationships. The statute defines the limited...