Krajacich v. Great Falls Clinic, LLP

Decision Date17 April 2012
Docket NumberNo. DA 11–0621.,DA 11–0621.
Citation2012 MT 82,364 Mont. 455,276 P.3d 922
PartiesThomas J. KRAJACICH, Ph.D., Mark H. Johnson, Ph.D. and Rennae I. Johnson, Ph.D., Plaintiffs and Appellants, v. GREAT FALLS CLINIC, LLP, Defendant and Appellee.
CourtMontana Supreme Court

OPINION TEXT STARTS HERE

For Appellants: Alexander (Zander) Blewett, III; Hoyt & Blewett PLLC; Great Falls, Montana.

For Appellee: Jon J. Kudrna; Jardine, Stephenson, Blewett & Weaver, P.C.; Great Falls, Montana.

Justice JIM RICE delivered the Opinion of the Court.

[364 Mont. 456]¶ 1 The Eighth Judicial District Court, Cascade County, granted summary judgment to the Appellee, Great Falls Clinic, LLP (Clinic), and denied summary judgment for Appellants (Appellants or “psychologists”). We affirm and address the following issues:

¶ 2 I. Did the District Court err by holding that the Appellants engage in the “practice of medicine” as used in the parties' partnership agreement?

¶ 3 II. Did the District Court err by concluding there were no issues of material fact in determining the parties' intention regarding the term “practice of medicine?”

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 The Clinic is a Montana general limited liability partnership comprised of medical professionals. Appellants Thomas J. Krajacich, Mark Johnson, and Rennae Johnson are three licensed clinical psychologists who were former partners in the Clinic.

[364 Mont. 457]¶ 5 The Clinic has been operating in Great Falls since 1916, and its partners have worked under various partnership agreements. In August 2004, the Clinic partners, including Appellants, signed a “Restated Partnership Agreement” (Agreement), effective August 25, 2004. Central to this dispute are Articles 6.1 and 6.2(b) of the Agreement. Article 6.1 provides that a partner who separates from the partnership in compliance with the Agreement's terms will receive his or her “Partnership Interest,” inclusive of operational profits and capital contributions. However, this payment is subject to a reduction pursuant to Article 6.2(b), which provides:

6.2 Exceptions for Certain Separations. For Separations and circumstances described below, the payment made to a Partner for the Partner's Partnership Interest will not include payment for the Partner's interest in the Montana Care, Great Falls Surgery Center, and Accounts Receivable accounts and the Partner forfeits and waives any interest in these accounts:

...

(b) Competing After Withdrawal or Retirement. If a Partner's Separation is pursuant to an Event of Separation ... and at anytime during the period of three years following his or her Separation the Partner enters into or engages in the practice of medicine in the county in which he or she primarily practiced while a Partner or in any contiguous county thereof, ... the separating Partner shall forfeit all interest whatsoever in the Montana Care, Great Falls Surgery Center, and Accounts Receivable accounts and shall receive no payment whatsoever for his or her interests in said accounts. [Emphasis added.] 1

¶ 6 The psychologists separated from the Clinic in August 2010 and thereafter filed a declaratory judgment action when the Clinic refused to pay them their full partnership interest payments. They filed a motion for summary judgment which admitted they were “practicing psychologists in Cascade County,” but argued that Article 6.2 of the Agreement places no restriction on any partners practicing psychology anywhere after they separate from the Clinic, but only places a restriction on partners who engage in the ‘practice of medicine.’ The Clinic answered and likewise moved for summary judgment, arguing the psychologists were “practicing in Cascade County the specialty practiced while partners” and that Article 6.2(b) of the Agreement applied to them.2

¶ 7 After a hearing, the District Court granted the Clinic's cross-motion for summary judgment, concluding that Article 6.2(b) of the Agreement, which reduced their partnership interest payment, was applicable to the psychologists. The psychologists appeal.

STANDARD OF REVIEW

¶ 8 We review a district court's rulings on summary judgment de novo, applying the same criteria as the district court under M.R. Civ. P. 56.” Mungas v. Great Falls Clinic, LLP, 2009 MT 426, ¶ 19, 354 Mont. 50, 221 P.3d 1230 (citing Paull v. Park Co., 2009 MT 321, ¶ 17, 352 Mont. 465, 218 P.3d 1198). “Summary judgment is appropriate only when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law.” Town & Country Foods, Inc. v. City of Bozeman, 2009 MT 72, ¶ 12, 349 Mont. 453, 203 P.3d 1283 (citations omitted). A material fact is one that concerns the elements of the cause of action or defenses at issue to an extent that requires resolution of the issue by a trier of fact. Corporate Air v. Edwards Jet Ctr., Mont., Inc., 2008 MT 283, ¶ 24, 345 Mont. 336, 190 P.3d 1111 (citation omitted). “The district court's conclusion that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law is a conclusion of law which we review for correctness.” Hinderman v. Krivor, 2010 MT 230, ¶ 13, 358 Mont. 111, 244 P.3d 306 (citation omitted).

DISCUSSION

¶ 9 I. Did the District Court err by holding that the Appellants engage in the “practice of medicine” as used in the parties' partnership agreement?

¶ 10 The District Court determined that the language of the subject provision was not ambiguous and there was no indication the parties intended the term “practice of medicine” to have any meaning other than its common and ordinary usage, which includes the practice of psychology. Alternatively, the court reasoned that even if the term “practice of medicine” was considered under a technical, statutory definition, the term nonetheless included non-physician psychologists.

¶ 11 Appellants argue that the District Court erred because they are not engaged in the “practice of medicine.” They argue that “practice of medicine” is a technical term and offer a lengthy statutory analysis to establish that the term applies only to licensed physicians. However, we conclude that the intention of the Agreement is clear by its own terms, which does not incorporate statutory definitions, and that reference to statute is unnecessary.

¶ 12 A partnership agreement is “an agreement, written or oral, among the partners concerning the partnership.” Section 35–10–102(6), MCA. “Montana law provides that when a partnership agreement exists, it controls the rights and duties of partners.” In re Estate of Bolinger, 1998 MT 303, ¶ 50, 292 Mont. 97, 971 P.2d 767;accord§ 35–10–106(1), MCA (except for limitations not applicable here, “a partnership agreement governs relations among the partners and between the partners and the partnership”). “A partnership agreement is essentially a contract between the partners and, therefore, is to be interpreted and applied in accordance with principles of contract law.” Bolinger, ¶ 54 (citations omitted).

¶ 13 The interpretation and construction of a contract is a question of law. Corporate Air, ¶ 30 (citation omitted). ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ Corporate Air, ¶ 30 (quoting § 28–3–301, MCA). When a contract is in writing, the parties' intentions are to be determined from the writing alone, if possible. Corporate Air, ¶ 30 (citing § 28–3–303, MCA); State ex rel. Mont. Dept. of Transp. v. Asbeck, 2003 MT 337, ¶ 18, 318 Mont. 431, 80 P.3d 1272 (citation omitted) (“in interpreting a written contract, the intention of the parties is ascertained ‘first and foremost’ from the writing alone”). ‘The whole of a contract is to be taken together so as to give effect to every part if reasonably practicable, each clause helping to interpret the other.’ Richards v. JTL Group, Inc., 2009 MT 173, ¶ 14, 350 Mont. 516, 212 P.3d 264 (quoting § 28–3–202, MCA). “It is [a] well-established principle of contractual construction that in interpreting a written instrument, the court will not isolate certain phrases of the instrument to garner the intent of the parties, but will grasp the instrument by its four corners and in the light of the entire instrument, ascertain the paramount and guiding intent of the parties. Mere isolated tracts, clauses and words will not be allowed to prevail over the general language utilized in the instrument.” Rumph v. Dale Edwards, Inc., 183 Mont. 359, 368, 600 P.2d 163, 168 (1979) (citations omitted); accord Sandtana, Inc. v. Wallin Ranch Co., 2003 MT 329, ¶ 26, 318 Mont. 369, 80 P.3d 1224 (citations omitted). “Particular clauses of a contract are subordinate to its general intent.” Section 28–3–307, MCA. Moreover, contract terms that are inconsistent with the general nature of the contract or the primary intention of the parties are to be rejected. Section 28–3–503, MCA; Rumph, 183 Mont. at 369, 600 P.2d at 169.

¶ 14 Article 1.4 of the Agreement states that [t]he business of the Partnership will be to (i) provide professional medical services and services ancillary thereto; (ii) conduct all business and financial activities related or incidental to the foregoing; and (iii) conduct any other legal business or financial activities approved by the Partnership.” (Emphasis added.) Article 1.7 defines “Partner” as “a person who has been admitted as a partner in the Partnership as provided in this Agreement, who has agreed in writing to be bound by this Agreement, and with respect to whom an Event of Separation has not occurred.” Thus, “partner” is defined as a person, not a physician, and notably, “practice of medicine” is not defined.

¶ 15 Article 5.5 states that [a]ll fees or funds resulting from or received by a Partner as payment for the performance of professional services or professional activities by such Partner shall...

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