Regional Urology, L.L.C. v. Price

• Decision Date: 26 September 2007
• Docket Number: No. 42,789-CA.,42,789-CA.
• Citation: 966 So.2d 1087
• Parties: REGIONAL UROLOGY, L.L.C., et al., Plaintiffs-Appellees v. David T. PRICE, M.D. and David T. Price, M.D., A Professional Medical Corporation, Defendants-Appellants.
• Court: Court of Appeal of Louisiana — District of US

966 So.2d 1087

REGIONAL UROLOGY, L.L.C., et al., Plaintiffs-Appellees v. David T. PRICE, M.D. and David T. Price, M.D., A Professional Medical Corporation, Defendants-Appellants.

No. 42,789-CA.

Court of Appeal of Louisiana, Second Circuit.

September 26, 2007.

Rehearing Denied October 18, 2007.

Breazeale, Sachse & Wilson, L.L.P. by Claude F. Reynaud, Jr., Jude C. Bursavich, Jeanne C. Comeaux, Baton Rouge, for Appellants.

Cook, Yancey, King & Galloway, by Sidney E. Cook, Jr., Shreveport, for Appellees.

Before BROWN, STEWART and DREW, JJ.

STEWART, J.

Defendants, David T. Price, M.D., and David T. Price, M.D., A Professional Medical Corporation, appeal a judgment in favor of plaintiffs, Regional Urology, L.L.C., et al., enforcing a noncompetition and non-solicitation agreement against Dr. Price, individually. Finding that the agreement meets statutory requirements and is binding on Dr. Price, individually, we affirm.

FACTS

Dr. Price began practicing with Regional Urology on September 11, 2001, by entering into a Service Agreement purporting to be between Regional Urology, L.L.C., and David T. Price, M.D., A Professional Medical Corporation. Under the Service Agreement, Dr. Price's corporation was an independent contractor, and all services were to be performed by Dr. Price.

On June 1, 2005, Dr. Price and the other thirteen physicians who had Service Agreements with Regional Urology signed the following amendment:

AMENDMENT TO SERVICE AGREEMENT

WHEREAS, the Members of Regional Urology, L.L.C., have decided to amend the Service Agreement for each of its Members, listed hereinbelow; and

WHEREAS, this Amendment is to be signed by each entity which is a Member.

NOW, THEREFORE, BE IT AGREED:

A new paragraph 6 F is hereby added to each Service Agreement:

F. In the event of termination of this Agreement for any reason, neither Physician, Physician Corporation, nor Physician Company shall perform any duties as a urologist or perform any urological procedures, either individually or as the employee, owner, or equity interest holder of any entity within the Parishes of Caddo and Bossier, Louisiana, for a period of two (2) years following such termination. Further, in the event of termination of this Agreement for any reason, Physician, Physician Corporation, and Physician Company shall not solicit any patients of the Company, either individually or as the employee, owner, or equity interest holder, of any entity within the Parishes of Caddo and Bossier, Louisiana, for a period of two (2) years following such termination. Physician, Physician Corporation, and Physician Company agree that in the event of a breach or threatened breach of any portion of this paragraph, irreparable harm and damage will be done to the Company. Accordingly, Physician, Physician Corporation, and Physician Company agree that, in such event, the Company shall be entitled to seek an injunction or restraining order to restrain and enjoin such breach or threatened breach by Physician and/or Physician Corporation and/or Physician Company. The Company shall also be entitled to recover monetary damages a (sic) result of the breach of this paragraph by Physician and/or Physician Corporation and/or Physician Company.

(2) The second and third sentence of Paragraph 7 of each Service Agreement is hereby deleted.

(3) These changes shall apply to any physician who is a Member, any corporation which is a Member or any physician's L.L.C. which is a Member of Regional Urology, L.L.C.

As is shown by the signature pages to this amendment, the fourteen Members of Regional Urology were all either professional corporations or L.L.C.'s. Each physician, including Dr. Price, signed on behalf of his business entity.

The relationship between Regional Urology and Dr. Price ended on June 1, 2007. On June 2, 2007, Dr. Price filed articles of incorporation for a new entity, David Price, M.D., L.L.C., domiciled in Claiborne Parish.

Two days later, Regional Urology filed suit to enforce the non-compete and non-solicitation clauses in the Amendment to the Service Agreement.¹ The petition alleged that Dr. Price was performing urological procedures in Caddo and/or Bossier Parish and soliciting patients of Regional Urology in violation of the Amendment to the Service Agreement. Injunctive relief was sought to prohibit Dr. Price from engaging in these activities in the parishes of Caddo and Bossier for a period of two years.

In his defense, Dr. Price alleged that, because he had not signed in his individual capacity, the Amendment to the Service Agreement could not be enforced against him individually, or against his new L.L.C. He also alleged that the Agreement was overly broad and lacked the required geographical limitation. Finally, he asserted that enforcement of the Amendment would violate public policy.

The parties filed competing affidavits in support of their positions. The trial court granted Dr. Price's motion in limine to exclude parol evidence regarding the intent of the parties. Regional Urology filed its own motion in limine to exclude evidence pertaining to Dr. Price's public policy argument. The trial court denied this motion, but declined to address policy considerations, which it considered a legislative matter. Regional Urology also filed a motion to strike the affidavit of Sara Burroughs, which was offered by Dr. Price in support of his argument regarding the lack of geographical limitation. Burroughs' affidavit was stricken as untimely.

By agreement of the parties, the hearing on June 29, 2007, addressed the merits of permanent injunctive relief. The trial court ruled in favor of Regional Urology upon finding the Amendment to the Service Agreement to be clear, in compliance with statutory requirements, and binding on Dr. Price individually.

A judgment was signed on July 6, 2007, enjoining David T. Price, M.D., A Professional Medical Corporation and David T. Price, M.D., "either individually or as the employee, owner, or equity interest holder of any entity," from soliciting patients of Regional Urology and from performing urological procedures or duties as a urologist in the parishes of Caddo and Bossier for a period of two (2) years from June 1, 2007, through May 31, 2009. A separate judgment set forth the trial court's rulings on the evidentiary motions. This appeal followed.

DISCUSSION

Historically, Louisiana's public policy has disfavored noncompetition agreements. SWAT 24 Shreveport Bossier, Inc. v. Bond, 2000-1695, p. 4-5 (La.App.2d Cir.6/29/01), 808 So.2d 294, 298. This policy is reflected in La. R.S. 23:921(A)(1), which provides that contracts or agreements restraining anyone from exercising a lawful profession, trade, or business shall be null and void. However, there are statutory exceptions which allow for noncompetition agreements.

La. R.S. 23:921 C provides the exception relevant to this matter:

C. Any person, including a corporation and the individual shareholders of such corporation, who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment. An independent contractor, whose work is performed pursuant to a written contract, may enter into an agreement to refrain from carrying on or engaging in a business similar to the business of the person with whom the independent contractor has contracted, on the same basis as if the independent contractor were an employee, for a period not to exceed two years from the date of the last work performed under the written contract.

Under this provision, an independent contractor may enter agreements not to compete and not to solicit customers within a specified geographical area for a period of no more than two years. The exceptions set forth in La. R.S. 23:921 C must be strictly construed, and agreements confected pursuant to this provision must strictly comply with its requirements. SWAT 24, supra; Kimball v. Anesthesia Specialists of Baton Rouge, Inc., 2000-1954, p. 7 (La.App. 1st Cir.9/28/01), 809 So.2d 405, 411, writs denied, 2001-3316 (La.3/8/02), 811 So.2d 883 and 2001-3355 (La.3/8/02), 811 So.2d 886; Francois Chiropractic Center v. Fidele, 630 So.2d 923, 926 (La.App. 4th Cir.1993).

A noncompetition agreement is a contract between the parties who enter it, and it is to be construed according to the general rules of contract interpretation. SWAT 24, supra. The common intent of the parties is used to interpret a contract. La. C.C. art. 2045. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. C.C. art. 2046. Both parties state that the terms of the Amendment are clear and unambiguous.

When a contract may be interpreted from the four corners of the agreement, without consideration of extrinsic evidence, the interpretation is a matter of law. ScenicLand Construction Co., L.L.C. v. St. Francis Medical Center, Inc., 41,147 (La.App.2d Cir.7/26/06), 936 So.2d 251; NAB Natural Resources, L.L.C. v. Willamette Industries, Inc., 28,555 (La.App.2d Cir.8/21/96), 679 So.2d 477. In such cases, appellate review considers whether the trial court was legally correct or legally incorrect. Lawrence v. Terral Seed, Inc., 35,019 (La.App.2d Cir.9/26/01), 796 So.2d 115, writ denied, 2001-3134 (La.2/1/02), 808 So.2d 341.

Dr. Price argues that the noncompetition and nonsolicitation provisions may not be asserted against him individually, because only "Members" of Regional Urology were required to sign the Amendment and because the Amendment language states that the changes to the Service Agreement apply only to physicians,...