REUBEN C. SETLIFF, III, MD v. Stewart

• Decision Date: 23 March 2005
• Docket Number: No. 22937.,22937.
• Citation: 694 N.W.2d 859,2005 SD 40
• Parties: REUBEN C. SETLIFF, III, M.D., P.C., Plaintiff and Appellee, v. Randall L. STEWART, Defendant and Appellant.
• Court: South Dakota Supreme Court

694 N.W.2d 859

2005 SD 40

REUBEN C. SETLIFF, III, M.D., P.C., Plaintiff and Appellee, v. Randall L. STEWART, Defendant and Appellant.

No. 22937.

Supreme Court of South Dakota.

Argued June 2, 2004.

Decided March 23, 2005.

Kent R. Cutler, Mark E. Salter and Kimberly R. Wassink of Cutler & Donohoe, Sioux Falls, South Dakota, Attorneys for plaintiff and appellee.

Mark V. Meierhenry and Clint L. Sargent of Danforth, Meierhenry & Meierhenry, Sioux Falls, South Dakota, Attorneys for defendant and appellant.

KERN, Circuit Judge.

[¶ 1.] Dr. Reuben Setliff (Setliff) brought claims for breach of employment contract, breach of a duty of loyalty, and conspiracy against Dr. Robert Akins (Akins) upon his departure from Setliff Medical Clinic (Clinic). Setliff also brought claims against consultant Randall Stewart (Stewart) for wrongful interference with business relations and conspiracy. Akins counterclaimed for breach of employment contract and libel. The trial court granted summary judgment to Akins and Stewart on all of Setliff's claims and partial summary judgment to Setliff on Akins' claim of breach of employment contract. The trial court denied Setliff's motion for summary judgment on Akins' libel claim. All parties appealed and, in Setliff v. Akins, 2000 SD 124, 616 N.W.2d 878, we affirmed the trial court's denial of Setliff's motion for summary judgment on the libel claim, but reversed the grant of summary judgment on all other claims and remanded the entire case for trial. At trial, Setliff pursued his claims that Stewart conspired with Akins to breach Akins' duty of loyalty to the Clinic and that Stewart wrongfully interfered with the business relationship between Akins and the Clinic. The day prior to trial, Akins settled with Setliff for $50,000. The jury awarded Setliff a verdict of $260,000 against Stewart and the trial court calculated prejudgment interest on the entire amount in the sum of $90,462.10.

[¶ 2.] Stewart appeals alleging the trial court should have directed a verdict for him on both counts. Further, he alleges the trial court miscalculated prejudgment interest and abused its discretion in denying his motion to dismiss for failure to timely prosecute the case.

[¶ 3.] We affirm in part, reverse in part and remand.

FACTS

[¶ 4.] This case was previously before this Court in Setliff v. Akins, 2000 SD 124, 616 N.W.2d 878 (Setliff I). Many of the facts are detailed more particularly in Setliff I. This action was initially commenced by the Clinic against Akins in 1998 after Akins left his employment with the Clinic two months prior to the completion of a one-year employment contract. Within weeks after leaving the Clinic, Akins opened a new competing medical practice known as Great Plains Sinus Care, P.C. (Great Plains). During the course of discovery, Setliff uncovered the complicity of Stewart in Akins' departure from the Clinic and Stewart was added as a defendant in the lawsuit.

[¶ 5.] At trial, upon the remand, the evidence established that Setliff is a board-certified otolarynologist specializing in rhinology, which involves the care and treatment of sinus disorders. Setliff operates a clinic in Sioux Falls, South Dakota, with branch offices in Omaha, Rapid City and Dakota Dunes.

[¶ 6.] Setliff originally hired Akins in April 1997 as he needed help with his expanding practice. The terms of Akins' employment agreement were discussed in an informal setting with five pages of notes being prepared to memorialize the terms.

[¶ 7.] Setliff trained Akins in his techniques and procedures, even ordering a cadaveric specimen which he dissected with Akins one-on-one. During the early months, Akins shadowed Setliff to learn the practice. Setliff reviewed videotapes of several of Akins' surgeries to provide him with helpful suggestions.

[¶ 8.] When Akins began working at the Clinic, Stewart was also working for Setliff, having been hired as an independent consultant on February 15, 1997. Stewart had access to the Clinic's financial records and other confidential information. As one of his primary duties, Stewart was charged with memorializing the details of Akins' employment agreement in a written contract. Setliff testified that this was Stewart's main responsibility and was number one on his to do list. Stewart hired the law firm of Davenport, Evans, Hurwitz and Smith (Davenport Evans) to prepare a draft contract from the written notes of the verbal agreement. In early April 1997 Stewart mailed a draft of the contract to Akins' home in Utah. Akins did not sign the contract but did move to Sioux Falls and began to work for Setliff. Stewart presented Akins with a second draft on May 20, 1997. Ultimately, Stewart was unable to obtain Akins' approval of a written employment contract prior to his own departure from the Clinic on May 31, 1997.

[¶ 9.] Stewart befriended Akins immediately upon his arrival in Sioux Falls. Stewart even made a personal loan to Akins for $10,000. The two shared an interest in religion, had breakfast and lunch together from time to time and lived a few blocks from each other. They socialized outside of the office on many occasions. Akins and Stewart continued their personal relationship after Stewart's business relationship with the Clinic ended.

[¶ 10.] Within several weeks after Akins started at the Clinic, Akins and Stewart began discussing the possibility of Akins leaving the Clinic and the feasibility of opening a competing practice in Sioux Falls. As early as July or August 1997, Clinic employee Micki Schmidt recalled Akins mentioning that Stewart had proposed setting him up in a competing practice in Sioux Falls. Stewart would call the Clinic for Akins and the two continued to meet for lunch. Schmidt noticed that Akins' demeanor toward the Clinic was different. [¶ 11.] In the fall of 1997, Setliff employee Mike Hurley recalled Akins coming to him to obtain numbers regarding his production at the Clinic. Akins told Hurley that Stewart had approached him about starting up his own practice. Akins testified that, not long after he began at the Clinic, Stewart suggested to him that he should leave to open a new practice.

[¶ 12.] Akins' and Stewart's efforts to establish a competing clinic were well underway by January 1998. The two arranged for office space in downtown Sioux Falls. Stewart directed Akins to office space that he owned. Akins initially objected to using the space owned by Stewart, but Stewart eventually persuaded him to select it for his new office. Stewart began construction to retrofit the space for Akins' new practice and purchased furniture and equipment for the new office. Both Stewart and Akins attended meetings with attorneys from Davenport Evans to incorporate the new business. Stewart planned to be a partner and intended to receive a percentage of the revenue generated.

[¶ 13.] Akins recalled consulting with Stewart regarding his decision to leave the Clinic. Stewart eventually told Akins that he should just leave the Clinic. Akins understood this to mean he should leave without giving Setliff any courtesy notice period before he left.

[¶ 14.] On, February 17, 1998, Akins abruptly resigned after delivering a resignation letter to the Clinic. Akins' resignation was effective immediately, leaving Akins' patients sitting in the waiting room at the Clinic. In the resignation letter, Akins offered to stay an additional thirty days if Setliff would agree to pay him according to a schedule that would provide him with compensation in addition to his salary. However, Akins made no other effort to discuss transitioning out of the practice. In fact, Akins did not even speak with Setliff concerning his departure. Akins testified that Stewart influenced him to leave the Clinic at the time and in the manner that he did.

[¶ 15.] Setliff did not respond to Akins' letter and Akins never returned to the Clinic. Less than a month later, on March 10, 1998, Akins opened Great Plains in Dakota Dunes and then opened his Sioux Falls office three days later.

[¶ 16.] The trial commenced on May 19, 2003. The day before trial, Setliff and Akins settled their claims and counterclaims for $50,000, payable to Setliff. The trial against Stewart ensued and the Minnehaha County jury rendered its verdict on May 21, 2003. The jury found that Stewart did unlawfully conspire with Akins to breach his duty of loyalty to Setliff. It also found Stewart intentionally and unjustifiably interfered with the business relationship between Akins and Setliff. The jury awarded the Clinic damages in the amount of $260,000 and the trial court calculated prejudgment interest on the damages awarded in the amount of $90,462.10.

[¶ 17.] Stewart argues that the trial court erred by failing to direct a verdict in his favor on the issues of civil conspiracy and tortious interference with business relations. Further, he alleges the court miscalculated prejudgment interest and abused its discretion in denying his motion to dismiss for failure to prosecute.

STANDARDS OF REVIEW

DIRECTED VERDICT—ISSUES ONE AND TWO

[¶ 18.] The standard of review of a trial court's ruling on a motion for a directed verdict is well-settled:

A motion for a directed verdict under SDCL 15-6-50(a) questions the legal sufficiency of the evidence to sustain a verdict against the moving party. Upon such a motion, the trial court must determine whether there is any substantial evidence to sustain the action. The evidence must be accepted which is most favorable to the nonmoving party and the trial court must indulge all legitimate inferences therefrom in his favor. If sufficient evidence exists so that reasonable minds could differ, a directed verdict is not appropriate. The trial court's decisions and rulings on such motions are presumed correct and this Court will not seek reasons to reverse.

Boxa v. Vaughn, 2003 SD 154, ¶ 7, 674 N.W.2d 306, 309 (quoting Veeder v. Kennedy, 1999 SD 23, ¶ 25, 589 N.W.2d 610, 617 (quoting ...