Schwartz v. Family Dental Group, P.C.

• Decision Date: 08 April 2008
• Docket Number: No. 27880.,27880.
• Parties: Steven SCHWARTZ v. FAMILY DENTAL GROUP, P.C., et al.
• Court: Connecticut Court of Appeals

943 A.2d 1122

106 Conn.App. 765

Steven SCHWARTZ v. FAMILY DENTAL GROUP, P.C., et al.

No. 27880.

Appellate Court of Connecticut.

Argued January 22, 2008.

Decided April 8, 2008.

Barbara M. Schellenberg, with whom was Stuart M. Katz, Bridgeport, for the appellants (defendants).

Edward Maum Sheehy, with whom, on the brief, was Suzannah K. Nigro, Trumbull, for the appellee (plaintiff).

DiPENTIMA, McLACHLAN and STOUGHTON, Js.

McLACHLAN, J.

The defendants, Family Dental Group, P.C., Peter Munk and Family Dental Group-Clinton Associates, appeal from the judgment of the trial court granting the application by the plaintiff, Steven Schwartz, for injunctive relief to restore his partnership status. The dispositive issues on appeal are whether § 12(a)(i) in the partnership agreement is enforceable, and, if so, whether such provision permits termination of one of the partner's association with the partnership "without cause," as long as ninety days notice is given. We conclude that the provision is enforceable and that the language of the parties' contract is unambiguous and permits termination "without cause." Accordingly, we reverse the judgment of the trial court.

The following facts as found by the court are not disputed. On July 31, 1991, the plaintiff, Ken Epstein, Munk and Epstein's father, Gerald Epstein,¹ entered into a partnership agreement. All four were dentists by profession. Under the partnership agreement, they formed Family Dental Group-Clinton Associates, located at 468 Clinton Avenue in Bridgeport.

In its memorandum of decision, the court made the following factual findings. "Neither of the Epsteins practiced at this location at any time subsequent to the formation of the partnership. Initially the Epsteins held a 50 percent interest in the practice, while [the plaintiff] and Munk each held a 25 percent interest. Upon Gerald Epstein's death or retirement in 1995 or 1996, [the plaintiff] approached Munk about securing additional shares of the practice. An agreement was reached whereby the ownership interest was changed to one third each for Munk, [the plaintiff] and Ken Epstein.

"The final draft of the agreement contained the following pertinent terms: The partnership was to continue until the year 2051, unless the partners agreed to an early dissolution. The partners were looking to form an entity which would survive upon their death. The partners were to devote full professional time and attention to the partnership during the first five years of its inception. The two practicing partners, [the plaintiff] and Munk, were to receive 35 percent of their collections. Additionally, any profit beyond expenses would be put into a profit pool of which the first 20 percent would be divided equally between all three partners and the remaining, if any, would be divided equally between [the plaintiff] and Munk.

"From its formation until the present, the partnership has been successful, with increasing profits every year except in the year 2005. During the first five years, [the plaintiff] and Munk both maintained a full-time schedule. . . . In 1997, [the plaintiff] decided to reduce his workload, decreasing his hours on Wednesdays and Thursdays, and eliminating Fridays." Since the formation of the partnership, Munk maintained a consistent, full-time work schedule.

"Around 1997, when Munk became aware of [the plaintiff's] change in schedule, he became upset and ceased communicating with [the plaintiff]. According to Munk's testimony, [the plaintiff] was also to blame for their breakdown in communication. Munk was dissatisfied with [the plaintiff's] management style, the way he conducted his practice, his refusal to accept [health maintenance organizations], take emergencies and work on Saturdays.

He was also unhappy with [the plaintiff's] appearance, the condition of his work space, and the amount of vacation time he took. He expressed his dissatisfaction to Ken Epstein through letters he wrote to him over the course of several years; however, he did not approach [the plaintiff] directly with his concerns. Despite Munk's unhappiness with him, [the plaintiff] was able to function normally in the office and interact appropriately with the remaining staff. Ken Epstein often acted as the mediator between Munk and [the plaintiff].

"Munk was also dissatisfied with both his compensation and [the plaintiff's] refusal to expand the facilities. Munk wanted to change the agreement to alter his compensation or alternatively terminate [the plaintiff] as a partner. At a meeting held in 1999, a proposal was made to allocate the 20 percent of profit in proportion to the collections of the practicing partners. Alternatively, Munk suggested that he should receive a management fee for his managerial duties. [The plaintiff] did not accept either proposal and insisted that the parties submit to mediation pursuant to the agreement. The mediation resulted in an award of a management fee for Munk in the amount of two thirds of 1 percent of the gross revenue.

"On October 28, 2002, Epstein and Munk offered to buy out [the plaintiff's] shares of the practice, or alternatively, to keep him as a graduated partner while eliminating his management responsibilities and his share of the profits. Epstein and Munk sent [the plaintiff] an offer letter for a buyout, which [the plaintiff] refused. . . .

"On February 26, 2003, a special meeting of the partners was held. At the meeting, Ken Epstein and Munk voted to terminate [the plaintiff] from the practice." Munk and Epstein terminated the plaintiff's association with the partnership "without cause" and provided him with ninety days notice pursuant to § 12(a)(i) in the partnership agreement. As a result of the termination, the plaintiff filed a ten count complaint against the defendants. At trial, the plaintiff pursued only the first count of the complaint, in which he sought equitable relief pursuant to General Statutes §§ 34-339² and 34-362(b)³ and restoration of his partnership status.⁴

The court granted the plaintiff's request for injunctive relief and enjoined the defendants from terminating his association with the partnership. The court found that "the partnership's termination date implie[d] that a reduction in workload was contemplated. Under § 1 of the agreement, the partnership will terminate on December 31, 2051, unless the parties agree to an extension in writing, or agree to terminate at an earlier time." The court concluded, stating that "this term in the contract implie[d] that there naturally would be a reduction in the number of hours a partner would devote to the practice over the years." The court did not find persuasive "the defendants' argument that § 12(a)(i) of the agreement provides for termination without cause, as long as a ninety day notice is provided. . . ." Instead, the court found that "the provision, standing alone, is unenforceable. The court conclude[d] that no reasonable, educated person would sign an agreement whereby they could be stripped of their equitable interest in a business without a reasonable basis." The court also found that "§ 12(a)(i) of the agreement does not clearly state a majority of the partners can terminate another partner without any reasonable basis. Therefore, it is the court's opinion that a reasonable basis for [the plaintiff's] termination must be provided." The court concluded that because the defendants did not provide a reasonable basis for the plaintiff's termination and the reasons provided by the defendants were not sufficient to strip him of his equitable interest in the practice, the plaintiff was entitled to injunctive relief. This appeal followed.

On appeal, the defendants claim that the court improperly found in favor of the plaintiff. Specifically, the defendants claim that the court improperly concluded that § 12(a)(i) of the parties' partnership agreement (1) is unenforceable and (2) does not provide that a majority of the parties can terminate another partner without cause.

"Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual communications is a question of law . . . . subject to plenary review by this court." (Citations omitted; internal quotation marks omitted.) Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 495, 746 A.2d 1277 (2000). "In giving meaning to the terms of a contract, the court should construe the agreement as a whole, and its relevant provisions are to be considered together. . . . The contract must be construed to give effect to the intent of the contracting parties. . . . This intent must be determined from the language of the instrument and not from any intention either of the parties may have secretly entertained. . . . [I]ntent . . . is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract." (Internal quotation marks omitted.) Phillips v. Phillips, 101 Conn. App. 65, 74, 922 A.2d 1100 (2007). "[Where] . . . there is clear and definitive contract language, the scope and meaning of that language is not a question of fact but a question of law. . . . In such a situation our scope of review is plenary, and is not limited by the clearly erroneous standard." (Internal quotation marks omitted.) Wolosoff v. Wolosoff, 91 Conn.App. 374, 381, 880 A.2d 977 (2005). Whether a contract is ambiguous is a question of law subject to plenary review. See Enviro Express, Inc. v. AIU Ins. Co., 279 Conn. 194, 200, 901 A.2d 666 (2006). Therefore, our review is plenary.

I

The defendants first claim that the court improperly concluded that § 12(a)(i) of the parties' partnership agreement is...