Silverstone v. Connecticut Eye Surgery Center South, LLC

• Decision Date: 23 October 2018
• Docket Number: NNHCV186080472S
• Court: Superior Court of Connecticut
• Parties: David E. Silverstone, M.D. v. Connecticut Eye Surgery Center South, LLC et al.

David E. Silverstone, M.D. v. No. NNHCV186080472S

Superior Court of Connecticut

October 23, 2018

UNPUBLISHED OPINION

Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Pierson, W. Glen, J.

MEMORANDUM OF DECISION RE MOTION TO COMPEL ARBITRATION (NO. 102)

PIERSON, J.

FACTUAL AND PROCEDURAL BACKGROUND

This action involves the termination of the plaintiff’s interest in a limited liability company. According to his operative complaint, the plaintiff, David E. Silverstone, is a doctor of medicine specializing in ophthalmology. He claims that he is an owner and member of the defendant, Connecticut Eye Surgery Center South, LLC (LLC),^[1] which is a Tennessee limited liability company having a place of business at 60 Wellington Road, Milford, Connecticut. The plaintiff further claims that the LLC is engaged in the practice of medicine and in particular, the specialty of ophthalmology.

Further according to the complaint, the defendant, Amsurg Holdings, Inc. (AmSurg),^[2] is a Tennessee corporation doing business in Connecticut. The defendant, Connecticut Eye Anesthesia, LLC (CEA), is also a Tennessee corporation "which may be wholly owned by [the LLC]." The plaintiff goes on to allege that he is a party to certain operating agreements, one with the LLC and AmSurg, and the other with AmSurg (collectively, the operating agreements). The plaintiff claims that AmSurg is a fifty-one percent member in the LLC and that it serves as its managing member. The plaintiff does not attach copies of either alleged operating agreement to his complaint.

Although not attached to plaintiff’s operative complaint, the defendants append to their memorandum in support of motion to compel arbitration (Docket Entry No. 103) a copy of a document entitled, "Amended and Restated Operating Agreement of Connecticut Eye Surgery Center South, LLC," which reflects that it was "made and entered into as of the 12th day of May 2014." (amended operating agreement). The introductory paragraph of the amended operating agreement defines AmSurg as "AmSurg Holdings, Inc., a Tennessee corporation." The parties to the amended operating agreement are AmSurg, "and each of the other persons listed on the signature page to this Agreement (’Owners’) (each of AmSurg and Owners, together with the other persons who may become members under the terms of this Agreement, a ‘Member’ and collectively, the ‘Members’)."

In an affidavit filed by the plaintiff dated June 28, 2018 (Docket Entry. No. 114), the plaintiff avers that "[h]e was one of the original physicians who signed the Amended Operating Agreement with Amsurg Holdings, Inc." Pl.’s Aff., ¶2. The plaintiff’s signature appears on a certificate, which is numbered page 21 of the amended operating agreement. Exhibit A, Memo. Sup. Mot. Compel Arbitration, 21. The second paragraph of the amended operating agreement provides, in relevant part: "AmSurg and Owners desire to set forth their mutual rights and obligations in this Agreement as the sole operating agreement of the LLC, in full substitution and replacement for any prior operating agreements of the LLC."

Section 1 of the amended operating agreement, entitled, "DEFINITIONS," contains the following definitions of relevance to the defendants’ motion: § 1.1 (" ‘Act’ means the Tennessee Revised Limited Liability Company Act, being Sections 48-249-101 et seq. of the Tennessee Code Annotated, as amended from time to time, and any corresponding provisions of any successor legislation"); § 1.2 (" ‘Affiliate,’ with respect to any individual or Entity, means any individual or other Entity directly or indirectly controlling, controlled by or under common control with such individual or Entity"); § 1.3 (" ‘Affiliated Physician’ means any individual physician who directly or indirectly through another entity has an ownership interest in the LLC, is an immediate family member of any individual who directly or indirectly through another entity has an ownership interest in the LLC, or is a grantor, trustee or beneficiary of any trust that is a Member"); § 1.5 (" ‘Agreement’ means this Amended and Restated Operating Agreement, as amended from time to time"); § 1.6 (" ‘AmSurg’ has the meaning set forth in the introductory paragraph hereof"); § 1.10 (" ‘Board’ means the Board of Directors of the LLC"); § 1.13 (" ‘Center’ means the ambulatory surgery center operated by the LLC and located in Milford, Connecticut ..."); § 1.17 (" ‘Entity’ means any corporation, partnership, trust, limited liability company or other entity"); § 1.23 (" ‘LLC’ means Connecticut Eye Surgery Center South, LLC, a Tennessee limited liability company"). § 1.32 (" ‘Owners’ has the meaning set forth in the introductory paragraph hereof"); § 1.25 (" ‘Market Area’ has the meaning given to such term in Section 8.2 hereof"); § 1.27 (" ‘Members’ has the meaning set forth in the introductory paragraph hereof"); and § 1.28 (" ‘Membership Interest’ means a Member’s interest in the LLC, which when expressed as a percentage of all Membership Interests in the LLC shall be equal to such Member’s Membership Percentage. The Membership Interest shall consist of (a) the Member’s Financial Rights, (b) the Member’s right to assign Financial Rights to the extent permitted under this Agreement, and (c) the Member’s Governance Rights").

Section 3.1 of the amended operating agreement, entitled "Purposes," reads as follows: "The purposes of the LLC shall be to own and operate the Center and to carry on any and all activities necessary, proper, convenient or advisable in connection therewith."

Section 8.2 of the amended operating agreement, entitled, "Ownership and Investment Restrictions," defines "Market Area," as being "within a twenty-five-mile radius of the Center ..."

Section 8.2 of the amended operating agreement also provides, in part, at subsection 8.2.2, as follows: "No Owner or Affiliated Physician, nor any Affiliate of any Owner or Affiliated Physician shall: without the prior written consent of the Board after a review of all pertinent contractual documents, become an employee of a hospital or an Affiliate of a hospital that is located within the Market Area, or enter into any contract or other arrangement (whether as a result of his or employment or otherwise) that requires or incentivizes him or her to perform procedures at any hospital or facility affiliated with a hospital in the Market Area, in each case described in Sections 8.2.1 and 8.2.2 until the later of (i) five (5) years from the date of this Agreement, or (ii) two (2) years after such Owner (or with respect to an Affiliated Physician, the Owner with whom such Affiliated Physician is affiliated) ceases to be a Member of the LLC ..."

Section 12.4 of the amended operating agreement, entitled, "Termination of a Membership Interest," provides that "[n]otwithstanding any provisions to the contrary contained in the Act, a Member’s Membership Interest shall be terminated only on the application of the LLC or another Member as described in Section 48-249-503(a)(6) of the Act."

Section 14.3 of the amended operating agreement, entitled, "Applicable Law," provides that "[t]his Agreement and the rights of the Members shall be governed by and enforced in accordance with the laws of the State of Tennessee."

Section 14.11 of the amended operating agreement, entitled, "Arbitration," reads in relevant part as follows: "All disputes arising under this Agreement shall be resolved by binding arbitration pursuant to the rules of the American Health Lawyers Association Dispute Resolution Service (’AHLA’) then pertaining. The arbitration proceedings shall be held in Boston, Massachusetts. The procedures for conducting discovery in connection with any such arbitration proceeding shall be determined by the mutual agreement of the Members party to the arbitration proceeding or, if the Members cannot agree, by the arbitrators. The arbitrators shall apply the substantive laws of the State of Tennessee and the United States ..."

Section 14.14 of the amended operating agreement, entitled "Integrated Agreement," provides as follows: "This Agreement constitutes the entire understanding and agreement between the Members with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, representations or warranties among the Members other than those set forth herein or herein provided for. The Members acknowledge that they have independently negotiated the provisions of this Agreement, that they have relied on their own counsel as to matters of law and application and that no Member has relied on any other Member with respect to such matters. The Members expressly agree that there shall be no presumption created as a result of any Member having prepared in whole or in part any provision of this Agreement."

In his complaint, the plaintiff alleges that in May 2017, he became employed with the Yale School of Medicine. The plaintiff further alleges that the defendants have since informed him that the plaintiff’s employment with the Yale School of Medicine is a violation of the operating agreements alleged by the plaintiff, as- in the defendants’ view- the Yale School of Medicine is an affiliate of Yale-New Haven Hospital as defined by the operating agreements. The plaintiff disputes the defendants’ position, asserting that the Yale School of Medicine is not an affiliate of Yale-New Haven Hospital as defined by the operating agreements. The plaintiff claims that he has not become an employee of a hospital or hospital affiliate within the Market Area, and has not entered into any contract or other arrangement that requires or incentivizes him to perform procedures at any hospital or facility affiliated with a hospital in the Market...