U.S. Neurosurgical, Inc. v. Midwest Division-RMC, LLC, No. WD 70122 (Mo. App. 3/2/2010)
| Decision Date | 02 March 2010 |
| Docket Number | No. WD 70122.,WD 70122. |
| Parties | U.S. NEUROSURGICAL, INC., Respondent, v. MIDWEST DIVISION-RMC, LLC, Appellant. |
| Court | Missouri Court of Appeals |
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v.
MIDWEST DIVISION-RMC, LLC, Appellant.
Appeal from the Circuit Court of Jackson County, Missouri, The Honorable Jay A. Daugherty, Judge.
Before Court En Banc: Thomas H. Newton, Chief Judge, Presiding, Joseph M. Ellis, Judge, Victor C. Howard, Judge, Lisa White Hardwick, Judge, James E. Welsh, Judge, Alok Ahuja, Judge, Mark D. Pfeiffer, Judge, Karen King Mitchell, Judge and William E. Turnage, Senior Judge.
VICTOR C. HOWARD, JUDGE.
Midwest Division — RMC, LLC (RMC) appeals the trial court's judgment upon a jury verdict finding for U.S. Neurosurgical, Inc. (USN) and awarding $1,919,124.49 in damages to USN on its breach of contract claim. On appeal, RMC claims that the trial court erred in denying RMC's motions for directed verdict and judgment notwithstanding the verdict because USN failed to make a submissible case for breach of contract. The judgment is reversed and remanded in part and affirmed in part.
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In 1993, after extensive negotiations, Research Medical Center (Research) and USN entered into a contract.1 USN agreed to construct a neuroradiosurgery facility on property leased from Research, to install and maintain a "Gamma Knife neuroradiosurgery unit" for the use of Research's patients, and to staff the unit with a physicist and other technical personnel. The Gamma Knife is used to perform neurosurgery on the brain without incision. Research agreed to install magnetic resonance imaging equipment in the facility, provide nursing and clerical personnel, and maintain responsibility for all doctors performing services in the facility.
The contract also provided Research with the sole entitlement to bill and collect for Gamma Knife procedures. A provision of the contract stated that USN was to receive eighty percent of the "actual cash collected" by Research for the Gamma Knife's use, but the provision also referred to another section of the contract which required "Hospital and [USN] concurrence for performance of any procedure which is reimbursed at a rate less than $12,500." The agreement further set forth a detailed schedule for monthly settlement of the collections. Approximately 1,500 Gamma Knife procedures were performed from 1994 through August 2007. In 2002 the contract was assigned from Research to the Cancer Institute; it was then assigned to RMC in the summer of 2004.
In December of 2005, USN began complaining to RMC about not receiving a "minimum reimbursement" for each procedure. It contended that under the terms of the contract, the parties had originally agreed USN would be paid a minimum of $10,000 per procedure. USN claimed a "shortfall" in such minimum payments and sent RMC an invoice for $2,139,008.40. RMC continued to pay according to its existing accounting methods. In 2007, USN brought suit against RMC for breach of contract.
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RMC moved in limine to prevent USN from presenting evidence of a "minimum payment" term in the original contract, contending that the contract was unambiguous as to its payment terms and that the parol evidence rule precluded the introduction of such evidence. RMC's motion was denied.
A jury trial was held. USN presented the testimony of its CEO, Alan Gold, and provided several different spreadsheets calculating the amounts it maintained it was due under a contractual minimum reimbursement requirement. The company's final submission calculated damages for each Gamma Knife procedure performed from the summer of 2004 onwards. The spreadsheet then credited USN with the difference for the procedures performed at less than the minimum payment, and added nine percent interest for total damages of $1,919,124.49.2 RMC objected to the spreadsheets as based on false assumptions and contradicting the explicit terms of the contract. At the close of USN's case and at the close of evidence, RMC moved for a directed verdict, contending that USN had failed to present a submissible case because there was no minimum payment requirement in the contract and USN had shown no damages because it had received eighty percent of actual cash collected by RMC. Its motions were denied.
The jury was given a verdict director for USN that was patterned after MAI 26.06, "which is the verdict director applicable to situations where both the terms of the contract and the breach are at issue," Chrysler Fin. Co. v. Flynn, 88 S.W.3d 142, 154 (Mo. App. S.D. 2002).3 The jury found for USN and awarded the amount in USN's final spreadsheet, $1,919,124.49.
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RMC then moved in the alternative for judgment notwithstanding the verdict (JNOV), a new trial, or remittitur of the damages award. It contended that USN's sole theory of liability on the contract was flawed because there was no minimum payment requirement, that USN had concurred in procedures being performed for less than $12,500, and that even if it had not concurred, USN had no damages because it benefitted from each incremental use of the knife through its receipt of eighty percent of the payment for each procedure. RMC also argued in the alternative that remittitur was required because USN admitted consenting to Medicare procedures being performed for a lesser amount. The trial court denied the motion and this appeal by RMC followed.
We review the trial court's denial of motions for directed verdict and JNOV de novo to determine whether the plaintiff has made a submissible case. Rinehart v. Shelter Gen. Ins. Co., 261 S.W.3d 583, 595 (Mo. App. W.D. 2008). "To make a submissible case, a plaintiff must present `substantial evidence that tends to prove the facts essential to plaintiff's recovery.'" Ryan v. Maddox, 112 S.W.3d 476, 480 (Mo. App. W.D. 2003) (quoting Uptergrove v. Hous. Auth. of City of Lawson, 935 S.W.2d 649, 651 (Mo. App. W.D. 1996)). A submissible case in a breach of contract action requires the plaintiff to present substantial evidence to prove the following essential facts: "(1) a contract between the plaintiff and the defendant exists; (2) the plaintiff had rights and the defendant had obligations under the contract; (3) the defendant
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breached the contract; and (4) the plaintiff suffered damages." Guidry v. Charter Commc'ns, Inc., 269 S.W.3d 520, 527 (Mo. App. E.D. 2008).
In determining whether the plaintiff made a submissible case, we presume that the prevailing party's evidence is true, view the evidence and all reasonable inferences therefrom in the light most favorable to the verdict, and disregard unfavorable evidence. Id.; Ryan, 112 S.W.3d at 480. The jury's verdict "will not be overturned unless there is a complete absence of probative facts to support it." Ryan, 112 S.W.3d at 481. If reasonable minds can differ on a question before the jury, we cannot disturb the jury's verdict on appeal. Id.
RMC raises four points on appeal based on the arguments asserted in its post-trial motion. In its first point, RMC contends that the trial court erred in denying its motions for directed verdict and JNOV because USN failed to make a submissible case on its breach of contract claim in that the contract did not provide for a guaranteed minimum payment for each use of the Gamma Knife.
The dispute as to USN's compensation centers on the language in two sections of the contract. The relevant language in section 4.01 is:
As [USN]'s sole compensation . . . [RMC] agrees to pay to [USN] eighty percent (80%) of the actual cash collected by [RMC] from billing for the use of the Gamma Knife Equipment and the Neuroradiosurgery Facility. (Reference is made to Section 2.11 which requires [RMC] and [USN] concurrence for performance of any procedure which is reimbursed at a rate less than $12,500 as indexed for inflation.)
(Emphasis added.) The language referencing compensation in section 2.11 is: "If the available third party payor reimbursement for any . . . procedure is less than Twelve Thousand Five [Hundred] Dollars ($12,500), then both [RMC] and [USN] have to concur before the procedure may be performed . . . ." USN argues that the reference in section 4.01 to section 2.11 should be
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interpreted to create a minimum payment requirement pursuant to which USN is entitled to a minimum payment of $10,000 (eighty percent of $12,500) for each use of the Gamma Knife, unless it agreed to accept a lower amount. RMC contends that, based on the language of section 4.01, the contract unambiguously guarantees to USN eighty percent of the actual cash collected by RMC and nothing more. RMC further asserts that section 2.11 does not provide for a minimum payment in that it requires concurrence only for the performance of a procedure, and does not require agreement on a particular amount to be received by USN.
The jury decided that the contract provided USN a guaranteed minimum payment for the use of the Gamma Knife. The only question is whether that issue was properly submitted to the jury. The determination of whether a contract is ambiguous is a question of law subject to de novo review. City of St. Joseph v. Lake Contrary Sewer Dist., 251 S.W.3d 362, 367 (Mo. App. W.D. 2008). Disputed language is ambiguous if an average person would find it reasonably susceptible of more than one meaning. Lacey v. State Bd. of Registration for the Healing Arts, 131 S.W.3d 831, 839 (Mo. App. W.D. 2004). "[W]here an ambiguity is found, the resolution of the ambiguity is a question of fact for the jury to determine using extrinsic evidence." Teets v. Am. Family Mut. Ins. Co., 272 S.W.3d 455, 462 (Mo. App. E.D. 2008).
RMC intently focuses on its favored language in section 4.01 of the agreement and considers it the only language pertinent to the issue of compensation. However, "[i]n determining the intent of the parties to a contract, we review the terms of a contract as a whole, not in isolation." Tuttle v....
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