Nilavar v. Osborn, 99-CA-53.

• Citation: 738 NE 2d 1271,137 Ohio App.3d 469
• Decision Date: 07 April 2000
• Docket Number: No. 99-CA-53.,99-CA-53.
• Parties: NILAVAR, Appellant and Cross-Appellee, v. OSBORN et al., Appellees and Cross-Appellants.
• Court: United States Court of Appeals (Ohio)

137 Ohio App.3d 469

738 NE 2d 1271

NILAVAR, Appellant and Cross-Appellee, v. OSBORN et al., Appellees and Cross-Appellants.¹

No. 99-CA-53.

Court of Appeals of Ohio, Second District, Clark County.

Decided April 7, 2000.

David M. Rickert and Christine M. Haaker, for appellant and cross-appellee.

J. Kevin Cogan, Shawn J. Organ and Brian G. Selden, for appellee and cross-appellant.

FAIN, Judge.

Plaintiff-appellant, Sundar V. Nilavar, M.D., appeals from a judgment awarding him $100,000 on his breach of contract claim against defendants-appellees, Robin E. Osborn, D.O., and Diagnostic Imaging Associates of Ohio, Inc. ("DIA"). Nilavar contends that the trial court erred by (1) denying his motions to compel discovery of financial information from Osborn and DIA, (2) instructing the jury that it had to find that Nilavar had established the elements of a joint venture in order to find in Nilavar's favor with respect to his breach of fiduciary duty claim, and (3) directing a verdict in favor of Osborn and DIA on Nilavar's claims for punitive damages, attorney fees, and emotional injury.

Cross-appellants Osborn and DIA appeal from the same judgment, arguing that the trial court erred by (1) overruling their motion for a directed verdict with respect to Nilavar's breach of contract claim, because Nilavar failed to present evidence that a "meeting of the minds" or an exchange of consideration occurred between Osborn and Nilavar, (2) instructing the jury that a contract may be formed by a party's "failure to act," standing alone, and (3) permitting Nilavar's expert witness to testify about Nilavar's alleged lost profits, and instructing the jury that it could award as damages Nilavar's "anticipated income." Osborn and DIA further argue that the jury's verdict in favor of Nilavar on his breach of contract claim is against the manifest weight of the evidence because Nilavar failed to present evidence that a meeting of the minds or an exchange of consideration occurred between Osborn and Nilavar. In the alternative, Osborn and DIA argue that the jury's award of $100,000 to Nilavar on his breach of contract claim is against the manifest weight of the evidence, generally.

Regarding the issues raised in Osborn's cross-appeal, we conclude that the trial court did not err by overruling Osborn's motion for a directed verdict with respect to Nilavar's breach of contract claim, nor was the jury's verdict awarding Nilavar $100,000 on that claim against the manifest weight of the evidence. We also conclude that the trial court did not err by instructing the jury that assent may be manifested by, among other things, a party's failure to act. We further conclude that the trial court did not err in instructing the jury that it could award Nilavar his "anticipated income," as damages stemming from Osborn's breach of contract.

Regarding the issues raised in Nilavar's appeal, we conclude that the trial court did not err in directing a verdict against Nilavar with respect to his claim for punitive damages, since his claim for breach of fiduciary duty has not been recognized as an independent tort in this state. We also conclude, however, that the trial court did abuse its discretion by overruling Nilavar's motion to compel production of financial records from Osborn and DIA. Accordingly, the judgment of the trial court is affirmed in part and reversed in part, and this cause is remanded for a new trial, limited to the issue of the proper amount of damages that Nilavar should be awarded as a result of Osborn's breach of contract.

I

Springfield Radiologists, Inc. ("SRI") was a close corporation in which the shareholders were physicians providing radiology services to several hospitals in Clark County, to wit, Mercy Medical Center and Mercy Memorial Hospital in Springfield and Urbana, respectively, and Community Hospital in Springfield.

Nilavar became an employee of SRI in 1976, and a shareholder in the corporation in 1980. Osborn became an employee of SRI in 1991 and a shareholder in 1993. Upon becoming a shareholder, Osborn, like all other shareholders at SRI, signed an employment agreement containing a noncompetition clause.

Prior to 1991, SRI radiologists had practiced at the Mercy hospitals without a contract. In January 1991, SRI's founder and president, Dr. Stanley Nedelman, entered into negotiations with Mercy toward the end of making SRI the exclusive provider of radiology services for the Mercy hospitals. Some time after he had become a shareholder in SRI, Osborn was selected by SRI's other shareholders to join Nedelman in conducting the negotiations with Mercy. In 1994, Nedelman and Osborn reached a tentative agreement with Mercy. However, when they submitted the agreement to SRI's shareholders for their approval, the shareholders rejected it, and submitted a counterproposal. Mercy, in turn, rejected the counterproposal. Consequently, the negotiations between the parties broke down.

In April 1995, Mercy issued a request for proposals, permitting any provider of radiology services to submit an offer to provide services at the Mercy hospitals. Mercy made clear in its request for proposals that it wanted its provider to furnish services exclusively at Mercy—not to Community Hospital, which it considered to be a competitor—and that it wanted its provider to have a "strong medical director." The latter requirement came in response to Mercy's belief that SRI had been "too democratic,"² thereby disabling it from reaching a consensus on key issues. The request for proposals set June 16, 1995, as the deadline for receiving all bids.

Around the time Mercy issued the request for proposals, Osborn began to organize DIA, a corporation in which Osborn was the sole shareholder. Osborn intended for DIA to submit a proposal to Mercy to be its radiology services provider. Osborn contacted two other SRI shareholders, Drs. Bruce MacLean and Jerald Brinley, who agreed to work for DIA if Mercy accepted its bid. All three doctors agreed not to discuss their plans with the other SRI shareholders.

After receiving a copy of the request for proposals, Nedelman called an emergency board meeting of SRI, which took place on May 18, 1995. This May 18 meeting became the pivotal event in the current controversy.

At the time of the May 18 meeting, SRI was comprised of eleven physicians. In addition to Nedelman, Nilavar, Osborn, MacLean, and Brinley, SRI included Drs. David Lawrence, David Davis, Rick Kukulka, Barney Willens, Martin Morin, and Salvador Trinidad. All but Davis were shareholders in the corporation. Six of the eleven physicians, Nilavar, Osborn, MacLean, Brinley, Lawrence, and Davis, worked primarily at the Mercy hospitals, while the remaining five worked primarily at Community Hospital. All eleven physicians testified at Nilavar's subsequent lawsuit against Osborn, either in person or by deposition. Although each of the eleven accounts differs to a varying extent, with the exception of Osborn's, Brinley's, and MacLean's testimony, they generally corroborate Nilavar's version of events.

According to Nilavar and his witnesses, Nedelman began the May 18 meeting by stating that it had become apparent to him that SRI, as it was presently constituted, was not going to be able to submit an acceptable bid in response to Mercy's request for proposals, and that, therefore, "in order to preserve the eleven jobs," SRI should be dissolved, and two new groups created. Nedelman proposed that Osborn would lead the group of six physicians who practiced primarily at the Mercy hospitals, and that Kukulka would lead the remainder, who practiced primarily at Community Hospital. According to Nilavar and some, but not all of his witnesses, Osborn nodded in affirmation when Nedelman proposed that he lead the Mercy group of physicians in submitting a proposal acceptable to Mercy. Nedelman then permitted each of the remaining physicians to express their opinion on his proposal to dissolve SRI and form two new groups. All persons who were present at the meeting and who were not connected with DIA testified that no one expressed any opposition to Nedelman's proposal, and that support for the proposal was unanimous.

At the close of the meeting, MacLean made a motion to dissolve SRI, Willens seconded it, and the motion was adopted unanimously. Several of Nilavar's witnesses, including Lawrence, Davis, Morins, Willens, and Trinidad, viewed the vote on the motion to dissolve SRI as implicitly including a vote on Nedelman's proposal to form two new groups.

Osborn countered the testimony of Nilavar and his witnesses by asserting that Nedelman's statement was nothing more than a "laundry list of wishes," which was never presented as a formal plan or proposal. Osborn denied that Nedelman tasked him with leading the "Mercy group" of radiologists, and insisted that the motion made by MacLean was a motion to dissolve SRI and nothing more. Osborn also denied having ever nodded "yes" to Nedelman's alleged proposal, insisting that he "is not a `wink and nod' type of guy." Osborn's testimony was corroborated by Brinley, and to some extent by MacLean, who admitted that, aside from the discussion concerning the vote to dissolve SRI, he "tuned out" much of the remaining discussion at the meeting.

The minutes of the May 18th meeting were recorded by Willens, the corporate secretary of SRI. Those minutes stated as follows:

"[Nedelman] described the current environment around SRI and [Mercy]. His summary was thought to be accurate by all. [Nedelman's] opinion is that the best way for us to maintain eleven jobs in Springfield may be to dissolve SRI and to restructure as two separate radiology groups. This would make a proposal [Osborn] submits to [Mercy] on par with out-of-town proposals vis-a-vis [Mercy] having control of its `own' Radiology Department. All Radiologists were given an opportunity to speak their piece about this.

"[MacLean] moved to dissolve SRI as an Ohio...