Radiology Professional Corp. v. Trinidad Area Health Ass'n, Inc., No. C-1235

• Docket Nº: No. C-1235
• Citation: 195 Colo. 253, 577 P.2d 748
• Case Date: April 17, 1978
• Court: Supreme Court of Colorado

Page 748

577 P.2d 748 195 Colo. 253 RADIOLOGY PROFESSIONAL CORPORATION, a Colorado Corporation, Petitioner,
v.
TRINIDAD AREA HEALTH ASSOCIATION, INC., a Colorado
non-profit Corporation, Stanley H. Biber, Gloria
Skufca, Hanns Schwyzer and Guidbaldo
Jimenez, Respondents. No. C-1235. Supreme Court of Colorado, En Banc. April 17, 1978.
Rehearing Denied May 8, 1978.

[195 Colo. 254]

Page 749

Pendleton, Sabian & Landeck, P. C., Alan C. Friedberg, Denver, for petitioner.

[195 Colo. 255] Saunders, Snyder, Ross & Dickson, P. C., Wayne J. Fowler, Denver, for respondents.

ERICKSON, Justice.

Petitioner, Radiology Professional Corporation, brought this action against the respondents, the Trinidad Area Health Association and four individually named physicians, alleging breach of contract and tortious interference with contract. Trial to a jury resulted in a verdict in the petitioner's favor on both claims. The court of appeals reversed in Radiology Professional Corporation v. Trinidad Area Health Association, Colo.App., 565 P.2d 952 (1977). We affirm the result reached by the court of appeals but for different reasons.

On March 15, 1973, the petitioner and the respondent association executed a "Professional Services Agreement Radiology" (hereinafter agreement) for the petitioner to provide radiology services to a hospital owned and operated by the association. The agreement in part provided:

"3. PROFESSIONAL SERVICES. One of the licensed physicians employed by the Corporation, subject to the approval of the Hospital, shall be appointed by the Hospital as Director of the Hospital's Radiology Department. The Corporation, acting through its licensed physicians, shall furnish to the Hospital all radiology services which it may require during the term of this Agreement, such directorship and services to include the following:

(a) Administering, supervising, and operating the Radiology Department.

(b) Providing radiology services to the in or out-patients of the Hospital's Medical Staff upon request by any member of the Medical Staff.

Page 750

5. COMPENSATION. The Corporation shall receive as compensation for such services a sum equal to 40% Of the gross billings by the Hospital to patients for services rendered by the Corporation . . . ."

The contract was of a continuing nature and was terminable by either party upon 180 days' written notice.

Dr. Samo J. Dovgan, an employee of the petitioner, was appointed director of the hospital's radiology department pursuant to the agreement in April, 1973. Over the next nine months, all staff requests for radiology services were directed to and performed by the petitioner. In December, 1973, however, a dispute between two groups within the hospital resulted [195 Colo. 256] in the issuance of a standing order by the respondent physicians that two radiologists not associated with the petitioner would perform future radiology services for their patients. The hospital administrator issued a memorandum in conjunction with the physicians' order stating that the petitioner was not to receive compensation for services rendered by radiologists other than its own employees.

The number of staff requests for radiology services submitted to the petitioner, and the petitioner's income declined substantially after the new radiologists entered the hospital. In a letter dated December 19, 1973, the petitioner asserted that the agreement granted it an exclusive right to provide all hospital radiology services and demanded an assurance that the agreement would be honored. No assurance was forthcoming, and the petitioner ceased providing services to the hospital on January 4, 1974.

Three issues are presented on appeal: (1) Did the radiology service agreement establish an exclusive right in the petitioner to provide all radiology services required by the hospital and its staff? (2) Did the respondent physicians tortiously interfere with the petitioner's agreement? (3) Do the staff physicians of a hospital possess the absolute right to refer their patients to specialists of their own choice if the hospital has entered into an exclusive medical service contract for such services?

I.

The agreement in this case must be examined in the light of well-established principles of contract law. One such principle is that the intent of the parties to a contract is to be determined primarily from the language of the instrument itself. Extraneous evidence is only admissible to prove intent where there is an ambiguity in the terms of the contract. McNichols v. City and County of Denver, 120 Colo. 380, 209 P.2d 910 (1949). Written contracts which are complete, clear in their terms, and free from ambiguity are enforced because they express the intention of the parties. American Mining Co. v. Himrod-Kimball Mines Co., 124 Colo. 186, 235 P.2d 804 (1951). Where the evidence of agreement consists of documents, as in this case, the law is clear that the determination of their effect is a matter of law. Sentinel Acceptance Corp. v. Colgate, 162 Colo. 64, 424 P.2d...