Roeder v. Ferrell-Duncan Clinic, Inc.

• Decision Date: 23 December 2004
• Docket Number: No. 25845.,25845.
• Citation: 155 S.W.3d 76
• Parties: Edwin ROEDER, M.D., Plaintiff-Respondent, v. FERRELL-DUNCAN CLINIC, INC., Defendant-Appellant.
• Court: Missouri Court of Appeals

155 S.W.3d 76

Edwin ROEDER, M.D., Plaintiff-Respondent, v. FERRELL-DUNCAN CLINIC, INC., Defendant-Appellant.

No. 25845.

Missouri Court of Appeals, Southern District, Division Two.

December 23, 2004.

Application for Transfer to Supreme Court Denied January 14, 2005.

Application for Transfer Denied March 1, 2005.

Michael J. Cordonnier and Rick E. Temple, Springfield, MO, for Appellant.

Mathew W. Placzek and Angela Desanctis Myers, Springfield, MO, for Respondent.

JEFFREY W. BATES, Chief Judge.

Ferrell-Duncan Clinic, Inc. ("FDC") appeals from a judgment refusing to enforce a non-compete clause in FDC's contract of employment with Dr. Edwin Roeder ("Dr. Roeder"). The trial court found the non-compete clause unenforceable because FDC breached the employment contract by assigning the right to control Dr. Roeder's professional services to Lester E. Cox Medical Centers ("Cox") without Dr. Roeder's consent.

FDC presents two issues on appeal. First, FDC contends the trial court erred in finding that Dr. Roeder's contract to perform professional medical services could not be assigned to Cox without his consent. Second, FDC contends the trial court erred in concluding that the assignment to Cox constituted a material breach of contract because this conclusion is not supported by the evidence and is based on a misapplication of the law. Finding no merit in either point, we affirm.

I. Standard of Review

In this court-tried case, our review is governed by Rule 84.13(d).¹ We must affirm the trial court's judgment unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976); Ridgway v. TTnT Development Corp., 126 S.W.3d 807, 812 (Mo.App.2004).² A judgment is presumed correct, and the appellant has the burden of proving it erroneous. Wingate v. Griffin, 610 S.W.2d 417, 419 (Mo.App.1980). We review the evidence and all reasonable inferences in the light most favorable to the judgment and disregard all contrary evidence and inferences. Arndt v. Beardsley, 102 S.W.3d 572, 574 (Mo.App.2003). Credibility of the witnesses and the weight to be given to their testimony is for the trial court, which is free to believe none, part, or all of the testimony of any witness. Keller v. Friendly Ford, Inc., 782 S.W.2d 170, 173 (Mo.App.1990). We defer to the trial judge's superior opportunity to assess the witnesses' credibility. Harris v. Lynch, 940 S.W.2d 42, 45 (Mo.App.1997). No such deference is afforded the trial court, however, when we review its conclusions of law. We independently evaluate whether the trial court properly declared or applied the law to the facts presented. Schubert v. Trailmobile Trailer, L.L.C., 111 S.W.3d 897, 899 (Mo.App.2003); Rathbun v. CATO Corp., 93 S.W.3d 771, 777 (Mo.App.2002). Our summary of the evidence presented at trial, which is set forth below, has been prepared in accordance with these principles.

II. Facts and Procedural History

Dr. Roeder is a physician specializing in orthopedic surgery. He completed his residency in that specialty in 1997. In 1996, approximately one year before the conclusion of his Texas residency program, he began looking for a job. He made two trips to Springfield, Missouri, that year to interview with FDC, which is a multi-specialty medical clinic employing a large number of physicians. After the interviews were finished, FDC offered Dr. Roeder a position in orthopedics beginning in August 1997.

Dr. Roeder received by mail a proposed contract of employment. The contract, which had been drafted by FDC, was an individual agreement between the clinic and Dr. Roeder. The agreement generically referred to FDC as the "Corporation" and Dr. Roeder as "Doctor." This nine page, single-spaced document contained a number of provisions pertinent to the issues here:

1. The first "WHEREAS" clause of the contract stated that FDC was "a Missouri corporation organized to provide professional services through employment of qualified and duly licensed physicians...."

2. The second "WHEREAS" clause of the contract stated, in pertinent part, that "the parties desire to initiate an employment relationship upon the terms and conditions hereinafter set forth...."

3. Paragraph 2 stated, in pertinent part, that Dr. Roeder "is hereby employed by the Corporation to serve as a practicing physician in connection with the professional practice conducted by the Corporation. The Doctor agrees that all acts and procedures pertaining to the practice of medicine performed during the term of his employment by the Corporation ... shall be for the sole and exclusive benefit of the Corporation which shall be authorized and entitled to receive and collect the said fees and compensation for the services rendered by the Doctor. It is agreed that the Corporation is authorized to assign its obligation to collect said fees and compensation for the services rendered by the Doctor...."

4. Paragraph 13 states, in pertinent part, that "[t]he relationship between the Corporation and the Doctor is that of employer and employee. As an employee the Doctor shall be entitled to participate in any health and disability benefit plans, group life insurance plans, pension and profit sharing plans, or any other benefits offered employees...."

5. Paragraph 16 contained an agreement not!to compete which imposed "restrictions on the Doctor's right to practice medicine in competition with the Corporation" for 24 months. This provision had a territorial scope of 10 air miles from FDC's buildings in Springfield, Missouri, and Branson, Missouri.

6. Paragraph 18 stated, in pertinent part: "APPLICABLE LAW. This contract is drawn to be effective in, and shall be construed in accordance with, the laws of the State of Missouri. No amendments or variations of the terms of this Contract shall be valid unless made in writing and signed by the Doctor and a duly authorized representative of the Corporation.... This Contract shall be binding upon and inure to the benefit of the parties hereto, their successors, heirs, beneficiaries, assigns and personal representatives."

Because the contract's compensation provision was a production-based model, Dr. Roeder had some concerns which he discussed by telephone with FDC's executive director, Charles McCracken. With McCracken's consent, Dr. Roeder added the following hand-written notations in the margin of the contract before signing it and returning it to FDC: (1) "Physician compensation percentage equal for all orthopedic surgeons"; and (2) "Decision to change compensation percentage will be made by general membership[.]" In December 1996, Dr. Roeder signed the contract and mailed it back to FDC. McCracken initialed the changes to show his approval and then had the contract signed by FDC's president. In August 1997, Dr. Roeder moved to Springfield and began working for FDC.

All of the doctors employed by FDC become eligible to purchase one share of stock in the corporation after one year of employment. Only physicians may purchase stock. Dr. Roeder became a shareholder of FDC on January 1, 1999. As a shareholder, he was entitled to vote on matters FDC's Board of Directors submitted for consideration by the general membership.

In early 2000, FDC was negotiating with Cox over finance matters. At the same time, FDC was reviewing its internal compensation model. At a meeting of the general membership in April 2000, a majority of doctors voted to shift from compensation based on production to compensation based on collections. Dr. Roeder voted against the proposal to change the compensation model. The new model became effective in September 2000.

The next events relevant to the issues presented on appeal occurred in 2002. In prior years, FDC had provided professional liability insurance for its physician-employees through an "occurrence" type liability insurance policy. Early in 2002, FDC was notified by its insurer, Intermed, that it would no longer write an occurrence-based policy and would be converting over to selling only claims-made type policies of professional liability insurance.³ Coverage under the existing Intermed policy expired on July 5, 2002. FDC obtained three price quotations for other coverage: one for coverage through Cox's self-insurance trust fund; one for claims-made coverage through Intermed; and one for an occurrence-based policy from Medical Protective. These three proposals were presented to FDC's general membership at a meeting on May 28, 2002. The members voted to purchase insurance from Medical Protective.

On July 3, 2002, however, FDC was notified by Medical Protective that it was withdrawing certain discounts included in its original quotation. This raised the price of Medical Protective's policy by $800,000 to $900,000. FDC obtained a 14-day extension on the existing Intermed policy and scheduled an emergency meeting of the general membership to discuss the professional liability insurance issue on July 16, 2002.

At the July 16th meeting, there were further presentations to the doctors about the proposals by Cox, Intermed and Medical Protective. Cox's chief executive officer, Larry Wallis, was at the meeting. He told the doctors that, in order to be covered by Cox's self-insurance plan, there would have to be a joint employment agreement that made them Cox's employees "for insurance purposes only." A majority of FDC's physician-shareholders voted at this meeting to obtain professional liability insurance through Cox. Dr. Roeder was present at this meeting and, along with a small number of other doctors, voted against this proposal because he did not want to become an employee of Cox.

On July 20, 2002, FDC and Cox executed a document entitled "Joint Employment Agreement." This agreement contained the following provisions pertinent to the issues presented in this appeal:

1) Term and Termination. This agreement shall begin on the...