Robert W. Clark, M.D., Inc. v. Mt. Carmel Health

Decision Date20 November 1997
Docket NumberNo. 97APE10-1345,97APE10-1345
PartiesROBERT W. CLARK, M.D., INC. et al., Appellees, v. MOUNT CARMEL HEALTH, Appellant.
CourtOhio Court of Appeals

Gary W. Hammond and David Wm. T. Carroll, Columbus, for appellees.

Arter & Hadden, Danny L. Cvetanovich, and Nancy Manougian, Columbus, for appellant.

PETREE, Judge.

Defendant, Mount Carmel Health ("Mount Carmel"), 1 appeals from a judgment of the Franklin County Court of Common Pleas, which granted the motion for summary judgment of plaintiffs, Robert W. Clark, M.D., Inc. and Robert W. Clark, M.D., and enjoined Mount Carmel from operating a sleep disorders center in Franklin County or any contiguous county for a period of two years commencing November 21, 1997. Mount Carmel advances the following assignments of error:

"[I]. The trial court erred in failing to consider the factors that the Ohio Supreme Court and this court have mandated must be considered when deciding whether to enforce a covenant not to compete: whether enforcement of the covenant is necessary to protect any 'legitimate interest' of the party seeking enforcement; whether enforcement of the covenant would impose an undue hardship on the party seeking to compete; and whether enforcement of the covenant would injure the public.

"[II]. The trial court erred in failing to consider the factors that the Ohio Supreme Court and this court have mandated must be considered when deciding whether to grant injunctive relief: whether the party seeking injunctive relief has proven 'irreparable harm' by clear and convincing evidence and whether the grant of injunctive relief would harm other parties and the public.

"[III]. The trial court erred in granting Clark's motion for summary judgment despite the existence of numerous genuine issues of material fact, including whether enforcement of the covenant not to compete is necessary to protect any 'legitimate interest' of Clark; whether the closure of Mount Carmel's sleep-disorders center would impose an undue hardship on Mount Carmel; whether the closure of the center would injure the public; and whether Clark would sustain 'irreparable harm' if Mount Carmel continued to operate its sleep-disorders center."

Plaintiff, Robert W. Clark, M.D., Inc. ("Clark Corporation"), is an Ohio professional corporation engaged in the practice of sleep medicine. Plaintiff Robert W. Clark, M.D. is a board-certified neurologist with twenty years' experience in sleep medicine and is engaged in the practice of sleep medicine through the Clark Corporation. Dr. Clark is the medical director of Mount Carmel's Regional Sleep Disorders Center.

Dr. Clark was one of the first physicians to be credentialed in the field of sleep medicine and is a well-known lecturer on the subject both in this country and abroad. In the early 1980s, Dr. Clark established and directed a successful sleep disorders center at Saint Anthony Hospital ("Saint Anthony") in Columbus, Ohio. Toward the end of the 1980s, Dr. Clark decided to leave Saint Anthony due to fiscal difficulties suffered by that hospital. Accordingly, Dr. Clark initiated discussions with several area health care facilities, including Mount Carmel, regarding relocating his sleep medicine practice to another facility. It was Dr. Clark's desire to relocate his practice to a health care facility that did not have an existing sleep disorders center. At that time, Mount Carmel did not operate a sleep disorders center.

From May through November 1989, Dr. Clark and Mount Carmel engaged in extensive negotiations directed at relocating Dr. Clark's sleep medicine practice to Mount Carmel. Negotiation of the agreement was conducted by the parties' attorneys. The negotiations progressed through several drafts of a letter of intent to a final written agreement. On November 20, 1989, the parties entered into an agreement whereby Dr. Clark would relocate his sleep medicine practice from Saint Anthony to the Mount Carmel East Hospital ("Mount Carmel East") campus 2 and establish and direct a new sleep disorders center at Mount Carmel East.

Under the agreement, Dr. Clark acts as an independent contractor practicing medicine with a specialty in neurology and a subspecialty in sleep medicine and epilepsy. In addition, Dr. Clark, as medical director of the center, performs extensive administrative responsibilities in addition to providing medical services. Dr. Clark brought with him from Saint Anthony several qualified and trained sleep technologists. Mount Carmel, at its own expense, maintains space, equipment, supplies, utilities, and nonphysician personnel required for operation of the sleep disorders center. Over the life of the contract, Mount Carmel spent in excess of $1.75 million establishing, equipping, and renovating the center.

The agreement was for an initial term of seven years, automatically renewable for additional one-year terms, unless either party gave the other written notice of intention not to renew at least three hundred sixty days before the end of the term. After the initial term, Mount Carmel, citing changes occurring in the health care environment since 1989, attempted to negotiate a new agreement with Dr. Clark. The negotiations proved unsuccessful, however, and on November 19, 1996, Mount Carmel gave Dr. Clark written notice of its intention not to renew the agreement at the end of the next term. The agreement expires on November 20, 1997. After the expiration of the agreement, Dr. Clark will open a sleep disorders center at Columbus Community Hospital. Mount Carmel intends to continue the operation of its sleep disorders center with a new medical director.

The parties do not dispute the terms of the agreement. Among the terms of the agreement are reciprocal restrictive covenants regarding the provision of sleep disorder services both during the term of the agreement and upon termination or nonrenewal of the agreement without cause. The restrictive covenant at issue provides:

"7.1-1 Termination or Failure to Renew Without Just Cause by Hospital. In the event the Hospital elects, in the absence of just cause as defined in paragraph 6.2-1, to terminate or fails to renew the Agreement, Hospital agrees not to operate or be involved in the operation of a similar sleep disorder center in Franklin County or any of the contiguous counties for a period of two (2) years following the Agreement termination date. Hospital also agrees that it will not relocate the Center's personnel and/or equipment to Mount Carmel Medical Center for a period of two (2) years following the Agreement termination date. Hospital further agrees that upon its breach or violation of the foregoing provisions of this paragraph, the Corporation and/or Physician shall be entitled as a matter of right to obtain relief in any court of competent jurisdiction enjoining such a breach or violation, in addition to all other remedies provided to Corporation and/or Physician at law, in equity or under the Agreement. If the period of time or the area herein specified should be judged unreasonable in any court proceeding, then the period of time shall be reduced by such number of months or the area reduced by such distance, so that the foregoing covenant not to compete may be enforced in such area and during such period of time as are judged to be reasonable. Upon the occurrence of a breach of this provision the time period herein specified 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."

In reciprocal fashion, paragraph 7.1-2 forbids Dr. Clark to "operate or be involved in the operation of a similar sleep disorder center in Franklin County or any of the contiguous counties" for two years if he terminates or fails to renew the agreement without just cause.

Plaintiffs filed a complaint in the trial court on December 17, 1996, against Mount Carmel 3 seeking to enforce the restrictive covenant and enjoin Mount Carmel from operating its sleep disorders center.

Plaintiffs filed a motion for summary judgment on July 17, 1997, and Mount Carmel opposed the motion. The trial court filed its decision and judgment entry on October 2, 1997. On October 10, 1997, the trial court entered a nunc pro tunc order to correct a misstated date in its original decision and entry. The trial court granted plaintiffs' motion for summary judgment and issued an injunction ordering Mount Carmel to close its existing sleep disorders center on November 21, 1997, and prohibiting Mount Carmel from operating that or any similar sleep disorders center in Franklin County or any contiguous county for a period of two years commencing November 21, 1997. Mount Carmel has filed this timely appeal. 4

Pursuant to Civ.R. 56(C), summary judgment is appropriate if (1) there is no genuine issue as to any material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence construed most strongly in its favor. State ex rel. Zimmerman v. Tompkins (1996), 75 Ohio St.3d 447, 448, 663 N.E.2d 639, 640-641.

The burden of establishing the appropriateness of summary judgment is on the moving party. Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115, 526 N.E.2d 798, 801-802. The court must view the evidence most strongly in favor of the nonmoving party and decide whether there are genuine issues of material fact that remain to be litigated. Id. If the evidence is such that reasonable minds could come to but one conclusion and that conclusion is adverse to the nonmoving party, then the moving party is entitled to judgment as a matter of law. Temple v. Wean United,...

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