National Pharmaceutical Services, Inc. v. Harrison Community Hospital

• Decision Date: 10 February 1976
• Docket Number: Docket No. 22573
• Parties: NATIONAL PHARMACEUTICAL SERVICES, INC., Plaintiff-Appellee, v. HARRISON COMMUNITY HOSPITAL, a Michigan Non-Profit Corporation, et al., Defendants-Appellants. 67 Mich.App. 286, 241 N.W.2d 76
• Court: Court of Appeal of Michigan — District of US

Page 76

241 N.W.2d 76

NATIONAL PHARMACEUTICAL SERVICES, INC., Plaintiff-Appellee, v. HARRISON COMMUNITY HOSPITAL, a Michigan Non-Profit

Corporation, et al., Defendants-Appellants.

Docket No. 22573.

67 Mich.App. 286, 241 N.W.2d 76

Court of Appeals of Michigan.

Feb. 10, 1976.

Released for Publication April 22, 1976.

Rehearing Denied March 23, 1975.

[67 MICHAPP 288] Hyman & Rice, by Abba I. Friedman and Laurence B. Deitch, Southfield, for defendants-appellants.

Lampert & Fried, by Charles E. Lampert, Southfield, for plaintiff-appellee.

Before J. H. GILLIS, P.J., and ALLEN and KELLY, JJ.

J. H. GILLIS, Presiding Judge.

This lawsuit and appeal arose out of a contractual agreement between plaintiff, National Pharmaceutical Services, Inc. (hereinafter referred to as NPS) and defendant, Harrison Community Hospital. Plaintiff sued defendant hospital for breach of contract and sued defendants, Integrated Medical Services (hereinafter referred to as IMS), Raymond Stoller, and A. W. Lapeikis for tortions interference with a contractual relationship and for trespass. The jury found for NPS on all counts, and defendants now appeal as of right.

Plaintiff, NPS, is a Michigan corporation engaged in the wholesale and retail selling of pharmaceuticals to doctors, drug stores and hospitals. Sometime in 1969, Mr. Blustein, a corporate officer of NPS, was approached by defendant Stoller. Stoller indicated that he and some other men were interested in reopening a hospital which had gone out of business. The feasibility of this project was discussed; Blustein told Stoller that the idea appeared to be a good one. In June, 1969, Harrison Community Hospital was organized as a nonprofit corporation. This corporation leased hospital equipment, the hospital building and surrounding [67 MICHAPP 289] land from four individuals, one of whom was defendant Stoller. The rent was $300,000 per year.

At approximately the same time that defendant hospital was incorporated, defendant IMS was also organized as a profitmaking corporation. IMS was designed to furnish administrative expertise to hospitals and other medical institutions on a contractual basis. In July, 1969, IMS entered into a contract with defendant hospital, IMS agreeing to handle the hospital's administration. IMS was to receive either $60,000 a year or 5% Of the hospital's annual gross receipts, whichever sum was greater. At the time of this agreement, defendant Stoller was chairman of the board of IMS as well as majority stockholder (70%). Defendant hospital was IMS's only client.

Immediately after the incorporation of IMS and the hospital, the hospital entered into a contract with plaintiff NPS. Under the terms of this agreement, the hospital was required to provide space in its building for NPS. NPS was to have the sole right to distribute pharmaceuticals and related goods within hospital premises. NPS was to pay the hospital 5% Of its gross receipts. The contract was for five years, with NPS to have an option to renew for another five years.

In the normal course of operation at defendant hospital, prescriptions were brought to the plaintiff pharmacy, filled, and then dispensed to the patients. As these pharmaceuticals were dispensed by plaintiff, a billing was prepared and sent to the business office of the hospital. The hospital added its own markup to the pharmacy charges, then forwarded these bills to the patient, insurance company or governmental agency that was to pay the patient's hospital bill. Plaintiff also prepared a monthly summary of its charges for the hospital [67 MICHAPP 290] billing office. It was to receive payment for these charges as they were submitted. In as much as the hospital was a new facility, plaintiff NPS allowed the hospital a 60-day grace period to meet its obligations.

Defendant hospital began defaulting on its obligations to NPS almost immediately. Mr. Blustein, on behalf of NPS, spoke frequently with Dr. Stoller and IMS head administrator, Mr. Lapeikis, in an attempt to rectify the situation. Blustein testified that Lapeikis told him that NPS was no longer needed in the hospital, and that he (Lapeikis) did not approve of NPS. Lapeikis refused Blustein's request that the hospital pay NPS, stating that the hospital had no money. He did admit, however, that the hospital had managed to pay all of its rent to defendant Stoller and his three partners.

When the hospital's debts to NPS reached $50,000, the hospital was put on a C.O.D. basis. Finally, in June of 1970, plaintiff's employees were locked out of the hospital, and the hospital began running its own pharmacy. In August of 1970, Mr. Lapeikis and the hospital maintenance personnel removed all of NPS merchandise from the hospital, and refused to allow any of plaintiff's employees to reenter the hospital. At the time of the eviction, the hospital owed NPS approximately $47,000.

NPS sued the hospital for breach of contract, seeking the $47,000 owed and also future profits lost because of the breach. IMS was sued for tortious interference with a contractual right. Prior to trial, a consent judgment was entered, allowing plaintiff to recover the $47,000 owed it by the hospital. The parties also agreed that IMS would assume responsibility in the event that [67 MICHAPP 291] defendants Lapeikis and Stoller were found personally liable.

After hearing the evidence, the jury assessed $350,000 damages against defendant hospital for lost profits suffered by NPS; they assessed $150,000 damages against defendants Lapeikis and Stoller for lost profits suffered by NPS. All defendants appeal as of right.

On appeal, defendants first contend that the jury verdicts were inconsistent. They argue that plaintiffs sought only compensation for loss of future profits, that there was only one contract breached, that there was no basis for apportioning damages, and that the jury was therefore required to return the same damages award against all defendants. We disagree.

A jury verdict which is logically and legally inconsistent cannot be allowed to stand. Booth v. Bond, 354 Mich. 561, 93 N.W.2d 161 (1958); Sadlowski v. Meeron, 240 Mich. 306, 215 N.W. 422 (1927); People v. Willie Johnson, 58 Mich.App. 165, 227 N.W.2d 272 (1975). In the instant case, however, plaintiff sued different defendants under different legal theories. Defendant hospital was sued for breach of contract, defendants Lapeikis and Stoller were sued for trespass and tortious interference with a contractual relationship. The defendants were not joint wrongdoers. Their liability need not be equal. See, Virgilio v. Hartfield, 4 Mich.App. 582, 145 N.W.2d 367 (1966). The jury heard evidence which showed that defendants Lapeikis and Stoller were no longer associated with defendant hospital at the time of trial. Their influence over the hospital had arguably ceased. The hospital, however, was in continuous breach of a five-year contract. The jury could have logically found that the wrongful conduct of defendants Lapeikis and...