Surgical Inst. of S.D., P.C. v. Sorrell

• Decision Date: 20 June 2012
• Docket Number: No. 26143.,26143.
• Parties: The SURGICAL INSTITUTE OF SOUTH DAKOTA, P.C., Plaintiff and Appellant, v. Matthew J. SORRELL, M.D., Defendant and Appellee.
• Court: South Dakota Supreme Court

816 N.W.2d 133

2012 S.D. 48

The SURGICAL INSTITUTE OF SOUTH DAKOTA, P.C., Plaintiff and Appellant,

v.Matthew J. SORRELL, M.D., Defendant and Appellee.

No. 26143.

Supreme Court of South Dakota.

Argued April 18, 2012.

Decided June 20, 2012.

James E. Moore, Scott Hendricks Leuning, James A. Power of Woods Fuller Shultz & Smith P.C., Sioux Falls, SD, Attorneys for plaintiff and appellant.

Alex M. Hagen, Brett A. Lovrien, Stephen C. Landon of Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, SD, Attorneys for defendant and appellee.

GILBERTSON, Chief Justice.

[¶ 1.] A medical practice filed suit against a surgeon formerly employed at that practice, alleging breach of contract by failing to give required notice of resignation and breach of an implied contract resulting in unjust enrichment. The implied contract claim was dismissed by summary judgment, which the practice appeals. The jury subsequently found the surgeon did not breach the contract. We affirm.

FACTS

[¶ 2.] Dr. Matthew Sorrell was an employee, director, and shareholder at the Surgical Institute (the Institute) in Sioux Falls, South Dakota. Dr. Sorrell began practicing general surgery at the Institute in 2000. In 2002, he became a shareholder. Dr. Sorrell signed an Employment Agreement and Shareholders' Agreement (collectively, “the contracts”) in 2006. Neither contract addressed extended leave for additional training.

[¶ 3.] In 2007, Dr. Sorrell expressed an interest in applying for a fellowship to receive training as an intensivist, specializing in critical care. At the time, the Institute had six surgeons. Dr. Sorrell's proposed leave would burden the other five surgeons, who would have to cover trauma calls for a full year with five surgeons instead of six. The Shareholders' Agreement only permitted military leave. After meeting, the shareholders approved Dr. Sorrell's requested leave and amended the Shareholders' Agreement accordingly. The amendment allowed a doctor to have extended leave for a fellowship and to receive deferred compensation. The amendment did not address fringe financial benefits such as malpractice coverage or health insurance.

[¶ 4.] Dr. Sorrell obtained a one-year fellowship, beginning in July 2007. The fellowship included a stipend, but Dr. Sorrell also obtained a forgivable fellowship loan from Avera–McKennan Hospital. The loan would not have to be repaid so long as Dr. Sorrell returned to Sioux Falls and practiced surgery, trauma, and critical care medicine for two years. As a condition for the loan, Dr. Sorrell could not be subject to a covenant not to compete. The Institute agreed by written amendment to his Employment Agreement to suspend Dr. Sorrell's covenant not to compete until the loan was repaid.

[¶ 5.] Dr. Sorrell returned to Sioux Falls in April 2008 and attended a shareholders' meeting. There was testimony that the practice was having some internal problems and that Dr. Sorrell did not feel as though the meeting solved many of them. Dr. Sorrell was friends with another surgeon at the Institute, Dr. Don Wingert. The two men had previously discussed problems with the practice. On June 10, 2008, Dr. Sorrell called Dr. Wingert and indicated he did not intend to return to the Institute permanently. Dr. Wingert told other members at the Institute about the conversation. Dr. Sorrell did not respond to an email from the executive director asking if he was leaving. On June 13, 2008, the Institute sent Dr. Sorrell a letter confirming his voluntary termination of employment without cause. There were other subsequent communications indicating Dr. Sorrell's willingness to return for nine months, to cover weekend call, or “help out.”

[¶ 6.] The Institute sued Dr. Sorrell in September 2008, asserting two claims. First, the Institute claimed Dr. Sorrell breached his Employment Agreement by failing to give nine-month notice before leaving. Second, the Institute alleged that Dr. Sorrell breached an implied contract by receiving financial benefits from the Institute during his fellowship and then not returning, resulting in unjust enrichment. Dr. Sorrell counterclaimed, demanding payment for his stock; claiming the Institute violated a confidentiality provision and wrongfully interfered with a prospective business advantage; and that the Institute owed him compensation under his employment contract. Thereafter, Dr. Sorrell voluntarily dismissed his breach of confidentiality claim. The circuit court dismissed his counterclaim for tortious interference and dismissed the Institute's claim for breach of an implied contract resulting in unjust enrichment. The Institute then filed an amended complaint in August 2010. The Institute alleged breach of a written contract, which was the same as the original complaint, and replaced the implied contract equitable claim with breach of an oral contract, i.e., not returning to the practice even though he promised he would.¹

[¶ 7.] At trial, the primary issues were the Institute's claim for breach of contract for failure to give required notice and Dr. Sorrell's counterclaim for the value of his shares and unpaid wages. The jury found by special interrogatory verdict form that Dr. Sorrell did not terminate his employment without giving the required notice. Dr. Sorrell was awarded a sum of money for his shares and deferred compensation. The Institute appeals. We address the following issues:

1. Whether the Institute is entitled to a new trial.

2. Whether the circuit court erred in granting summary judgment on the equitable claim for breach of an implied contract resulting in unjust enrichment.

ANALYSIS

[¶ 8.] 1. Whether the Institute is entitled to a new trial.

a. Whether the circuit court abused its discretion in denying the Institute's motion for a new trial based on insufficient evidence.

[¶ 9.] “ ‘The decision to grant a new trial is left in the sound judicial discretionof the trial court’ and the ‘decision will not be disturbed absent a clear showing of abuse of discretion.’ ” Onnen v. Sioux Falls Indep. Sch. Dist. No. 49–5, 2011 S.D. 45, ¶ 18, 801 N.W.2d 752, 757 (quoting Sherburn v. Patterson Farms, Inc., 1999 S.D. 47, ¶ 8, 593 N.W.2d 414, 416). “All inferences are indulged in favor of the nonmoving party; if competent evidence exists to support the verdict, it will be upheld.” Baddou v. Hall, 2008 S.D. 90, ¶ 33, 756 N.W.2d 554, 562 (citations omitted).

[¶ 10.] The special verdict form to the jury asked: “Did [Dr. Sorrell] fail to provide [the Institute] with nine months' notice of the termination of his employment?” The jury answered no. The Institute made a motion for a new trial under SDCL 15–6–59(a)(6), insufficient evidence to justify the verdict, which the circuit court denied. As grounds for its motion, the Institute asserted that “the fact of breach was undisputed.” After a hearing, the circuit court denied the motion by order. The transcript from the hearing was not included as part of the record and the court's order does not explain why the motion was denied.²

[¶ 11.] The Institute asserts that on June 10 Dr. Sorrell indicated to Dr. Wingert that “he would not return as a full-time employee after the fellowship ended.” On June 13, less than three days after this conversation, the Institute sent Dr. Sorrell a letter confirming his voluntary termination of employment without cause. The Institute argues that this evidence is undisputed, and therefore, there was insufficient evidence to support the jury's verdict that Dr. Sorrell did not commit a breach. A review of the record, however, reflects that the evidence regarding a breach was disputed. Contrary to the Institute's argument, there is some evidence that during the June 10 call, Dr. Sorrell told Dr. Wingert that he did not intend to stay with the Institute long-term, but that he intended to continue working for nine months and that he therefore did not breach. There is also some evidence supporting the theory that the Institute prevented Dr. Sorrell from giving notice due to the June 13 letter.

[¶ 12.] Dr. Sorrell presented the theory at trial that his June 10 conversation with Dr. Wingert was not a resignation effective immediately. ³ The jury could have believed the testimony that his June 10 call was part of “a series of discussions that we had been having that began in April where it was in earnest that now I felt I will probably have to leave this practice ... and it ended up being the last [discussion] because of what transpired after.” Dr. Sorrell testified that on June 10, as part of this on-going discussion, he told Dr. Wingert that he “didn't want to come back to the practice as it was ... and I wanted to take up his offer that I felt was given to me to work outside of the group and stay in town.” He also testified that coming back to the Institute was not “a long-term, viable option.” From this testimony, the jury could have inferred that Dr. Sorrell intended to fulfill his nine-month obligation, only not intending to stay with the Institute long-term.

[¶ 13.] The Institute argues that agreeing to cover call is not necessarily agreeing to return for nine months. However, Dr. Sorrell testified that he “offered to stay as long as the group needed me to stay to cover call and help out.” (Emphasis added.) There is other testimony from Dr. Sorrell indicating he was willing to work with the Institute after returning. The jury could have concluded that Dr. Sorrell was resigning in the long-term, but was planning to return after his fellowship to fulfill his commitments.

[¶ 14.] There was also evidentiary support for the jury to find that the Institute prevented Dr. Sorrell from giving notice. First, Dr. Sorrell testified that he did not get the opportunity to give his notice because of the Institute's June 13 letter. He further testified that the letter did not reflect the substance of the phone conversation with Dr. Wingert. Dr. Sorrell specifically disputed that he had voluntarily resigned in the call....