Setliff v. Akins, No. 21023

• Court: Supreme Court of South Dakota
• Citation: 616 N.W.2d 878,2000 SD 124
• Docket Number: No. 21023, No. 21041.
• Parties: Reuben C. SETLIFF, III, M.D., P.C., Plaintiff and Appellant, v. Robert AKINS, M.D. and Great Plains Sinus Care, P.C., and Randall L. Stewart, Defendants and Appellees, and Reuben C. Setliff, M.D. and Micki Schmidt, Additional Defendants.
• Decision Date: 06 September 2000

616 N.W.2d 878
2000 SD 124

Reuben C. SETLIFF, III, M.D., P.C., Plaintiff and Appellant,
v.
Robert AKINS, M.D. and Great Plains Sinus Care, P.C., and Randall L. Stewart, Defendants and Appellees, and
Reuben C. Setliff, M.D. and Micki Schmidt, Additional Defendants

Nos. 21023, 21041.

Supreme Court of South Dakota.

Argued January 12, 2000.

Decided September 6, 2000.

616 N.W.2d 882

Mark E. Salter and Kent R. Cutler of Cutler, Donahoe & Mickelson, Sioux Falls, for plaintiff and appellant

Steven W. Sanford, Karen A. Leonard, and Michael A. Henderson of Cadwell, Sanford, Deibert & Garry, Sioux Falls, for defendants and appellees Great Plains Sinus Care.

Mark V. Meierhenry and Clint L. Sargent of Danforth, Meierhenry & Meierhenry, Sioux Falls, for defendant and appellee Randall Stewart.

SABERS, Justice.

[¶ 1.] In Issue 1, Dr. Reuben Setliff (Setliff) appeals the trial court's granting of summary judgment to Dr. Robert Akins (Akins) and Great Plains Sinus Care (Great Plains) on his claims for breach of contract, breach of duty of loyalty, unfair

616 N.W.2d 883

competition, conspiracy, and enforcement of a loan obligation. Setliff also appeals the granting of summary judgment in favor of Randall Stewart (Stewart) on the claims of interference with business expectancy and conspiracy. In Issue 2, Setliff appeals the denial of summary judgment on Akins' counterclaim for libel. In Issue 3, Akins appeals the granting of summary judgment on his breach of contract claim against Setliff. We affirm Issue 2 and reverse and remand Issues 1 and 3

FACTS

[¶ 2.] In early 1997, Akins, a practicing board-certified otolarynologist¹ in Salt Lake City, Utah, met Setliff at a continuing medical education course in Twin Falls, Idaho. Akins informed Setliff that he was anxious to leave his current practice and join another. Setliff discussed with Akins that he had his own practice in Sioux Falls, South Dakota. In addition, Setliff indicated the prospect of Akins moving to Sioux Falls to join Setliff's clinic (Clinic).

[¶ 3.] Akins traveled to Sioux Falls in February of 1997. On February 16, Akins and Setliff discussed several issues relating to Akins' potential employment with Setliff. Akins orally agreed to begin working with Setliff on April 21, 1997. During the negotiations between Akins and Setliff, Setliff made promises in twenty-seven different areas. Setliff wrote down in his notes all twenty-seven topics which were discussed with Akins. Prior to moving to Sioux Falls, Akins had intended to live in a home owned by Setliff, but the home sold just prior to Akins' move. Akins had found a home to purchase, but did not have enough money for the down payment. Stewart, a consultant for Clinic, approached Setliff about Atkins' situation and Setliff agreed to provide Akins with $7,000 to be applied to his house down payment.

[¶ 4.] Stewart contacted Jean Bender (Bender), an attorney at the firm of Davenport, Evans, Hurwitz & Smith in Sioux Falls, South Dakota, to have a draft of Akins' employment contract prepared. The employment contract had not been finalized when Akins began work at Clinic on April 21. Stewart ultimately left his position as consultant for Clinic in May 1997 without ever finalizing a written employment agreement for Akins.

[¶ 5.] Within one to two months after joining Clinic, Akins became dissatisfied and began contemplating leaving Clinic to start his own practice. Akins continued working with Setliff for approximately nine months without a written contract ever being finalized. Finally, on January 13, 1998, approximately nine months after Akins received the first draft of his employment contract, he received the second draft. Craig Bosdorf, a consultant hired by Clinic, sent Akins the second draft which contained terms substantially different from those terms discussed in February of 1997. Akins refused to sign the second draft due to its drastic differences from the oral agreement in February 1997.

[¶ 6.] Akins' dissatisfaction at Clinic continued and he again contemplated leaving to start his own practice. He had never received a production bonus,² no written employment contract had been signed, and the tension level in the office was extremely high due to the constant conflict between Setliff and his paramour/clinic coordinator, Micki Schmidt (Schmidt). Akins was also informed by Stewart that Schmidt had been circulating false rumors that Akins was having an affair with a medical assistant.

616 N.W.2d 884

[¶ 7.] In January 1998, Akins discussed with Stewart the possibility of leaving Clinic. After these discussions, Akins decided to leave and start his own practice. Akins began meeting with prospective lenders to discuss financing his new business. Stewart assisted Akins in the formation of his new clinic. Akins incorporated his new clinic, Great Plains, on February 11, 1998. On February 17, Akins delivered copies of his resignation letter to Setliff and several administrative employees of Clinic.³

[¶ 8.] Following Akins' resignation from Clinic, patients contacted Clinic asking why Akins was no longer working there. In March 1998, Setliff drafted and mailed a letter explaining Akins' departure from Clinic to patients in Sioux Falls and Dakota Dunes, South Dakota. Dr. Peter Doble of Twin Falls, Idaho, and Dr. Jim Denninghoff of Columbia, Missouri, also swore by affidavit that they had received copies of the letters sent from Setliff to his patients; however, how or from whom they received the letter was not disclosed.

[¶ 9.] On April 7, 1998, Setliff brought suit against Akins and Great Plains claiming breach of employment contract, breach of fiduciary and loyalty duties, unfair competition, interference with business relations, conversion, and conspiracy. Setliff also brought action against Stewart for wrongful interference with business relations, wrongful interference with a contract and civil conspiracy. Akins and Great Plains brought counterclaims against Setliff and Schmidt, alleging breach of employment contract and libel. All parties moved for summary judgment or partial summary judgment. After a hearing, the trial court granted summary judgment to Akins, Great Plains, and Stewart on all of Setliff's claims. In addition, the court granted partial summary judgment to Setliff on Akins' breach of contract claim and his third-party claim alleging vicarious liability for defamatory statements made by Schmidt. Setliff appeals, raising the following issues:

1. Did the trial court err in granting summary judgment against Setliff on all of his claims.

2. Did the trial court err in denying Setliff's motion for summary judgment on Akins' libel claim.

Akins also appeals raising the following issue:

3. Did the trial court err in granting summary judgment to Setliff on Akins' counterclaim for breach of employment contract.

STANDARD OF REVIEW

[¶ 10.] Our standard of review for summary judgment is settled and briefly is "`whether a genuine issue of material fact exists and whether the law was correctly applied.'" Manuel v. Wilka, 2000 SD 61, ¶ 17, 610 N.W.2d 458, 462 (quoting Parmely v. Hildebrand, 1999 SD 157, ¶ 7, 603 N.W.2d 713, 715-16 (citations omitted)).

[¶ 11.] 1. WHETHER THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT AGAINST SETLIFF ON HIS CLAIMS AGAINST AKINS AND STEWART.

A. Breach of Employment Contract

[¶ 12.] The trial court held that no employment contract existed between

616 N.W.2d 885

Setliff and Akins, and therefore no breach could have occurred. This was error. SDCL 53-1-3 provides that "[a] contract is either express or implied. An express contract is one, the terms of which are stated in words. An implied contract is one, the existence and terms of which are manifested by conduct." We defined an implied contract in Weller v. Spring Creek Resort, Inc., 477 N.W.2d 839, 841 (S.D. 1991)

`A contract is implied in fact where the intention as to it is not manifested by direct or explicit words by the parties, but is to be gathered by implication or proper deduction from the conduct of the parties, language used, or acts done by them, or other pertinent circumstances attending the transaction.'

(quoting Mahan v. Mahan, 80 S.D. 211, 215, 121 N.W.2d 367, 369 (1963)).

[¶ 13.] In determining whether an implied contract exists, this court held that "[t]he pertinent inquiry is whether the facts and circumstances properly evaluated permit an inference that services were rendered in expectance by one of receiving and the other of making compensation." Mahan, 80 S.D. at 215, 121 N.W.2d at 369. Clearly, this is the situation here. Furthermore, the "`facts are viewed objectively and if a party voluntarily indulges in conduct reasonably indicating assent he may be bound even though his conduct does not truly express the state of his mind.'" Weller, 477 N.W.2d at 841 (quoting Federal Land Bank of Omaha v. Houck, 68 S.D. 449, 463, 4 N.W.2d 213, 219-20 (1942)). Therefore, we must closely examine the course of conduct between the parties. The "`[c]onduct' can be both acts and words. By its very nature, an implicit agreement is not as detailed as a written agreement formally negotiated." In re Estate of Regennitter, 1999 SD 26, ¶ 12, 589 N.W.2d 920, 924 (quoting Jurrens v. Lorenz Mfg. Co., 1998 SD 49, ¶ 9, 578 N.W.2d 151, 154 (quoting Mathews v. Twin City Const. Co., Inc., 357 N.W.2d 500, 507 (S.D.1984))). "We look to the totality of the parties' conduct to learn whether an implied contract can be found." Id. (citations omitted). See also Lien v. McGladrey & Pullen, 509 N.W.2d 421, 423-24 (S.D.1993) (providing that an implied contract is inferred from the conduct of the parties).

[¶ 14.] Here, the totality of the parties' conduct reasonably indicates assent that the parties intended to be bound by the terms of an implied contract. Akins began working at the Setliff Clinic on April 21, 1997 and delivered a copy of his resignation letter to Setliff on February 17, 1998. During those ten...