Okoloise v. Yost

• Decision Date: 05 September 2019
• Docket Number: NO. 2017-CA-01472-SCT,2017-CA-01472-SCT
• Parties: Mayor OKOLOISE, M.D. and Hope Medical Services, LLC v. William Franklin YOST, M.D. and Doctor's Medical Center of Picayune, PLLC
• Court: Mississippi Supreme Court

283 So.3d 49

Mayor OKOLOISE, M.D. and Hope Medical Services, LLC

v.William Franklin YOST, M.D. and Doctor's Medical Center of Picayune, PLLC

NO. 2017-CA-01472-SCT

Supreme Court of Mississippi.

September 5, 2019

ATTORNEYS FOR APPELLANTS: L. CLARK HICKS, JR., HATTIESBURG, VICK SMITH, III, WILLIAM A. WHITEHEAD, JR., HATTIESBURG

ATTORNEYS FOR APPELLEES: PAUL MANION ANDERSON, HATTIESBURG, SAMUEL STEVEN McHARD

BEFORE RANDOLPH, C.J., ISHEE AND GRIFFIS, JJ.

GRIFFIS, JUSTICE, FOR THE COURT:

¶1. This appeal involves a business dispute between two physicians. The chancellor awarded equitable damages in the amount of $188,622. We find reversible error and render judgment.

FACTS

¶2. William Franklin Yost, M.D., owned and operated a pain-management clinic in Slidell, Louisiana—Doctors Medical Center, LLC (DMC-Slidell).

¶3. Within six months of opening DMC-Sidell, the Louisiana State Board of Medical Examiners (LSBME) began an investigation of Dr. Yost for illegally operating a pain-management clinic. On April 24, 2012, Dr. Yost wrote the LSBME and stated, "effective July 13th, 2012, I will no longer be practicing in the area of chronic pain management by the use of narcotic therapy." As a result, Dr. Yost and officials with the LSBME agreed that Dr. Yost would retire and cease the practice of chronic pain management through narcotic therapy. DMC-Slidell closed on July 13, 2012.¹

¶4. Dr. Yost then opened a clinic in Picayune, Mississippi—Doctors Medical Center of Picayune, LLC (DMC-Picayune). In the summer of 2012, Dr. Yost began seeing patients, including his former patients from DMC-Slidell. At that time, the Mississippi State Board of Medical Licensure (MSBML) required that all pain-management clinics be registered and issued a certificate. Dr. Yost submitted an application for registration to the MSBML in June 2012, but the certificate was not immediately issued. Dr. Yost continued treating patients for pain management, without a certificate, until November 2012, when he reapplied. The MSBML then issued Dr. Yost a certificate on November 16, 2012.

¶5. Mayor Okoloise, M.D., met with Dr. Yost in June 2012 and began a discussion about affiliating with Dr. Yost. Dr. Yost informed Dr. Okoloise that he had a pain-management practice and that he was looking for another physician to take over after he retired in the near future.

¶6. As a result of these discussions, on August 1, 2012, Dr. Okoloise began practicing medicine with Dr. Yost at DMC-Picayune. They formalized their relationship and signed a "Personal Services Contract" on August 13, 2012. Dr. Yost signed the contract as the member manager of DMC-Slidell and DMC-Picayune, but not in an individual capacity.

¶7. The contract provided that Dr. Okoloise agreed to provide certain physician services to DMC-Slidell and DMC-Picayune, commencing August 1, 2012. The initial term of the contract was for one year with automatic renewal, unless one of the parties gave the other party notice in writing of the intention not to renew the contract. The contract provided that the medical clinics would at all times operate in accordance with all applicable provisions of law and that failure to operate in accordance with applicable laws, rules, regulations, or directives would be a material breach of the contract. The contract provided that early termination would be accepted if either party committed a material breach or lost the right to practice medicine and if the nonbreaching party gave the breaching party sixty days' written notice of the breach and the intent to terminate. The contract was drafted by Dr. Okoloise's attorney, James Hautot, from Lafayette, Louisiana, but both parties contributed to the final contract terms.

¶8. At trial, Dr. Okoloise testified that, at the time he signed the agreement, he was unaware of the LSBME's investigation of Dr. Yost and he was unaware that Dr. Yost was not properly credentialed in Mississippi. Dr. Yost testified that, from the time the contract was signed until Dr. Okoloise left, Dr. Yost only practiced medicine in Mississippi. Dr. Yost believed that because the LSBME Board had no jurisdiction in Mississippi, he was not violating his promise not to practice pain management.

¶9. On September 4, 2012, Dr. Yost, his wife, and Dr. Okoloise, met with Hautot in Lafayette, Louisiana. During this meeting, the parties discussed Hautot's representation of Dr. Yost before the LSBME. Both Dr. Okoloise and Dr. Yost executed a written consent to Hautot's representation of Dr. Yost.

¶10. The MSBML was not aware of the investigation of Dr. Yost by the LSBME. On November 16, 2012, the MSBML approved Dr. Yost's application practice in pain management and issued the required certificate.

¶11. Three days later, on November 19, 2012, Dr. Yost surrendered his Louisiana medical license.

¶12. One month later, on December 19, 2012, Dr. Okoloise resigned from DMC-Picayune. Dr. Okoloise delivered a resignation letter to Dr. Yost. The letter stated that the resignation was effective immediately, and it listed a number of allegations against Dr. Yost and DMC-Picayune. Dr. Okoloise testified that the clinic was being operated illegally, and, thus he believed the contract to have been void at its inception. Dr. Okoloise did not provide a sixty-day notice of his intent to terminate the contract. Dr. Okoloise testified that he had notified Dr. Yost on three different occasions of numerous breaches but that he did not mention his intent to terminate the contract until December 19, 2012.

¶13. After Dr. Okoloise resigned, several other DMC-Picayune employees—Julie Brinkman, Kimberly Marshall, and Camille Dimaggio—unexpectedly resigned. Another employee, Joanne Myers, had resigned a few days before.

¶14. Testimony was presented that Dr. Okoloise had made plans to open another clinic before he submitted his resignation. In fact, Dr. Okoloise opened a clinic under the name of Hope Medical Services, LLC (Hope Medical). On November 16, 2012, Dr. Okoloise executed a lease agreement on a space to house Hope Medical. Dr. Okoloise offered several members of the DMC-Picayune staff an employment opportunity at Hope Medical. The offers were made while Dr. Okoloise was employed by DMC-Picayune. In addition, Dr. Okoloise instructed the staff to access the patient list of DMC-Picayune and to send out letters that provided the patients with notice of Dr. Okoloise's new address.²

¶15. On January 2, 2013, Hope Medical opened in Picayune. Hope Medical employed Dr. Okoloise, Myers, Brinkman, Marshall, and Dimaggio.

¶16. Despite the departure of Dr. Okoloise and the staff members, Dr. Yost continued to operate DMC-Picayune. Dr. Yost employed temporary staff and decreased the number of patients. Dr. Yost also sought a buyer for the clinic.

¶17. Dr. Yost entered negotiations with Dr. Stephanie Dyer to purchase DMC-Slidell and DMC-Picayune. Dr. Yost and Dr. Dyer signed a memorandum of understanding for the sales price of $1,250,000, but the sale was never finalized. Dr. Dyer backed out after a conversation with Dr. Okoloise in which he told her that a noncompetition agreement was in place. Dr. Okoloise denied he had made that statement.

¶18. The Drug Enforcement Agency (DEA) began an investigation of Dr. Yost and DMC-Picayune. Following the investigation, the DEA did not file any charges against Dr. Yost. But, on February 13, 2013, the DEA closed DMC-Picayune. That same day, Dr. Yost voluntarily surrendered his Mississippi medical license. The licensure surrender noted that Dr. Yost had surrendered his Louisiana medical license for a pattern and practice that violated Louisiana's pain-management rules and that his conduct was in violation of the Mississippi Medical Practice Act.

¶19. On January 7, 2013, Dr. Yost and DMC-Picayune commenced this action in the Chancery Court of Pearl River County. The complaint named as defendants Dr. Okoloise, Hope Medical, and the four former employees of DMC-Picayune. The complaint asserted twenty claims and demanded a judgment in the amount of the fair market value of the clinic, which was valued at $1,198,000.

¶20. After trial, the chancellor entered an opinion and final judgment that addressed each claim. The chancellor dismissed the following claims: accounting, breach of fiduciary duty and breach of duty of loyalty, constructive trust, unjust enrichment, embezzlement and misappropriation, slander per se, libel, unfair competition, tortious interference with business relationship, tortious interference with business, breach of duty of good faith and fair dealing, fraudulent or negligent misrepresentation, civil conspiracy, intentional or negligent infliction of emotional distress, punitive damages, indemnification, and injunctive relief. Yet the chancellor determined that there was sufficient evidence to sustain several claims against Dr. Okoloise and Hope Medical: trover/conversion, defamation, breach of contract, breach of duty of good faith, and misappropriation of trade secrets.

¶21. The chancellor found that "[Dr. Yost and DMC-Picayune] should be equitably compensated for the damages they incurred for these claims and losses." He awarded a judgment against Dr. Okoloise and Hope Medical in the amount of $188,622. The chancellor later modified the order and final judgment on post-trial motions.

STANDARD OF REVIEW

¶22. "This Court will not disturb the findings of a chancellor unless the chancellor was manifestly wrong, clearly erroneous or an erroneous legal standard was applied." White v. White , 26 So. 3d 342, 346 (Miss. 2010) (internal quotation marks omitted) (quoting R.K. v. J.K. , 946 So. 2d 764, 772 (Miss. 2007) ). Further, we will not reverse a chancellor's findings "where there is substantial evidence supporting those findings." Madden v. Rhodes , 626 So. 2d 608, 616 (Miss. 1993) (citing Cooper v. Crabb , 587 So. 2d 236, 239 (Miss. 1991) ). We recognize that "the chancellor, being the only one to hear the testimony of witnesses and observe their demeanor, is to judge...