Prairie Eye Center, Ltd. v. Butler

• Decision Date: 16 April 2002
• Docket Number: No. 4-01-0005.,4-01-0005.
• Citation: 768 N.E.2d 414,263 Ill.Dec. 654,329 Ill. App.3d 293
• Parties: PRAIRIE EYE CENTER, LTD., a Professional Service Corporation, f/k/a Centrum Eye Center, Ltd., Plaintiff-Appellee, v. Patrick J. BUTLER, M.D., Defendant-Appellant.
• Court: United States Appellate Court of Illinois

768 N.E.2d 414

329 Ill. App.3d 293

263 Ill.Dec. 654

PRAIRIE EYE CENTER, LTD., a Professional Service Corporation, f/k/a Centrum Eye Center, Ltd., Plaintiff-Appellee, v. Patrick J. BUTLER, M.D., Defendant-Appellant.

No. 4-01-0005.

Appellate Court of Illinois, Fourth District.

April 16, 2002.

Rehearing Denied May 17, 2002.

James P. Baker (argued), of Law Offices of James P. Baker, of Springfield, and Karen L. Kendall, of Heyl, Royster, Voelker & Allen, of Peoria, for appellant.

Robert E. Gillespie, William P. Hardy (argued), and Andrew M. Ramage, all of Hinshaw & Culbertson, of Springfield, for appellee

Justice KNECHT delivered the opinion of the court:

Defendant, Patrick Butler, M.D., appeals a judgment order finding a noncompetition agreement in his contract with plaintiff, Prairie Eye Center, Ltd. (Prairie), was valid and enforceable. He also appeals from the entry of a permanent injunction prohibiting him from competing with plaintiff, $1,654,700 damages award to plaintiff, and $164,432.34 attorney-fees award due to his intentional and repeated violations of the covenant not to compete. Defendant argues (1) a covenant not to compete among physicians is unenforceable on public policy grounds; (2) Prairie did not have a sufficient protectible interest in the patients Butler brought with him from his practice prior to being employed by Prairie to justify enforcing the noncompetition agreement as to those patients; (3) lost profits awarded to Prairie were inherently speculative and predicated upon assumptions not supported by sufficient evidence; and (4) Prairie was improperly provided with both monetary damages and injunctive relief. We affirm.

I. BACKGROUND

Butler is an ophthalmologist who specializes in the treatment of glaucoma. Prairie is a professional service corporation made up of ophthalmologists and optometrists practicing in Springfield and in surrounding communities. Butler came to Springfield in 1994 and began a clinical practice at the Southern Illinois University School of Medicine (SIU). While at SIU, Butler practiced with other physicians, including Dr. Robert Posegate and optometrist Larry Williams. Posegate became a personal as well as professional friend of Butler.

In February 1997, Butler entered an employment agreement with Centrum Eye Center, Ltd., which was solely owned by Dr. Sandra Yeh. Later that year, Centrum Eye Center changed its name to Prairie Eye Center and the parties executed a second identical agreement. Butler began his employment with Prairie in July 1997. The employment agreement between Butler and Prairie contains the following covenant not to compete:

"Upon the expiration or termination of this Agreement, employee covenants that he will not, for a period of two (2) years after expiration or termination, engage in, be associated with or have a financial interest in any medical practice or ophthalmology practice, either directly or indirectly, as employer, employee, principal agent, independent contractor, consultant, partner, stockholder, creditor in an other capacity, at any location(s) within Sangamon County, Illinois[,] or within ten (10) miles of Hillsboro, Illinois[,] and ten (10) miles of any branch office of Employer. Employee agrees that upon his breach or violation of the foregoing provisions of this paragraph, employer shall be entitled, as a matter of right, to obtain relief in any court of competent jurisdiction enjoining such breach or violations, and recover from Employee all its attorneys' fees in addition to all other remedies provided at law, in equity or under this Agreement. Employee acknowledges that employer has a valid, protectible interest in its medical and ophthalmology practice, and that the duration and geographic scope of this covenant are reasonable to protect that interest * * *. In the event any violation hereunder is determined, the period of noncompetition shall be extended by a period of time equal to that period beginning when such violation commenced and ending when the activities constituting such violation shall have terminated."On December 1, 1998, Yeh heard Posegate, who was leaving SIU to establish a private medical practice in Springfield with Williams, had been telling others in the Springfield medical community that Butler would be joining his practice in the near future. The next day, December 2, Yeh held a meeting with Butler to discuss his performance evaluation and his contractually provided for buy-in to Prairie. Butler told her he had no plans to leave Prairie. Yeh told Butler she would have her attorney draw up a confidentiality agreement and have a valuation of the practice prepared.

On December 9, Butler's attorney hand-delivered a letter to Yeh informing her Butler was terminating his employment with Prairie effective February 12, 1999.

On January 6, 1999, Posegate and Williams opened an office in Springfield approximately two miles from Prairie. They called their practice Sangamon Eye Associates (Sangamon). On January 12, Butler started telling his patients at Prairie he would be leaving and they should call Sangamon to make follow-up appointments with him. Butler also had business cards printed by that time indicating he would have office space at the same address as Sangamon and including his telephone number, also the same as that of Sangamon.

On January 12, Prairie filed the instant complaint in the circuit court seeking declaratory relief, permanent injunctive relief, and preliminary injunctive relief.

Two days later, the trial court entered an order granting a preliminary injunction in favor of Prairie except as to patients who had a preexisting professional relationship with defendant, i.e., had been his patients at SIU. The trial court relied on Dowd & Dowd, Ltd. v. Gleason, 181 Ill.2d 460, 481, 230 Ill.Dec. 229, 693 N.E.2d 358, 369 (1998), in which the Supreme Court of Illinois held a covenant not to compete unenforceable between a law firm and two departing attorneys. In February, after additional briefing and affidavits from both parties, the trial court reaffirmed its January order. Prairie appealed and this court reversed with directions to the trial court to enter a preliminary injunction enforcing the covenant in its entirety. Prairie Eye Center, Ltd. v. Butler, 305 Ill.App.3d 442, 239 Ill.Dec. 79, 713 N.E.2d 610 (1999), appeal denied, 185 Ill.2d 665, 242 Ill.Dec. 150, 720 N.E.2d 1105 (1999) (hereinafter Prairie). On June 11, 1999, the mandate of this court issued.

The trial court then issued a modified preliminary injunction on July 14 enjoining Butler from:

"engaging in:

1) the practice of medicine and/or ophthalmology at any location within Sangamon county or within ten miles of [Prairie's] branch offices in Springfield, Hillsboro, Girard, Rushville, Beardstown, Lincoln[,] and Decatur, Illinois;

2) engaging in, associating with, or having a financial interest in any medical practice or ophthalmological practice, either directly or indirectly, as employer, employee, principal, agent, independent contractor, consultant, partner, stockholder, creditor, or in any other capacity at any location within Sangamon County, Illinois[,] or within 10 miles of [Prairie's] branch offices in Springfield, Hillsboro, Girard, Rushville, Beardstown, Lincoln[,] and Decatur, Illinois;

3) this preliminary injunction shall be in effect until further order of this [c]ourt."

On June 16, 1999, five days after the decision in Prairie, Butler filed an answer, affirmative defenses, and a counterclaim against Prairie. He alleged Prairie breached the employment agreement and he was entitled to rescission. While the original preliminary injunction was being appealed, Butler was found in contempt of court for soliciting patients of Prairie with whom he had had no prior contact, i.e., not former SIU patients. On March 16, 2000, Prairie filed another motion to find Butler in contempt and for sanctions. The trial court, after granting Prairie's motion to show cause, combined the hearing with the trial set for October 10, 2000.

The trial of this matter was lengthy and included the following evidence.

Following the entry of the original preliminary injunction, Butler began practicing at the offices of Sangamon in Springfield as well as at the offices of Dr. Bourn in Jacksonville and at the offices of Family Eye Care in Litchfield. After the entry of the modified preliminary injunction order, Butler stopped practicing at the offices of Sangamon and opened an office in Athens. To open this office, Butler borrowed money from Sangamon without signing a note or setting up any agreed-upon method of repayment. He was also able to obtain the use of extra ophthalmologic equipment from Sangamon and referred his patients to the facilities of Sangamon for tests for which he did not possess the necessary equipment.

Shortly after Sangamon opened its office in January 1999, it erected a sign in front of its building with the name Sangamon and below it a listing of the practitioners practicing within and a telephone number for the office. The list began with Butler's name. Nothing differentiated Butler from the others practicing in the offices of Sangamon. The names on the door also included Butler under the heading of Sangamon with nothing to indicate he was just sharing space with them and not associated with the enterprise. Butler's ad in the Yellow Pages of the Springfield telephone directory was placed directly above that of Sangamon and was identical in design and included the telephone number of Sangamon as the number to call for appointments with Butler. When Butler opened his office in Athens, he included Sangamon's telephone number on the window to call for appointments with him. These signs remained the same throughout the dates of trial in this case in October and November 2000.

Prior to and immediately upon leaving Prairie's employ, Butler erected large signs on the property adjoining Prairie's offices detailing...