Welch v. Montgomery Eye Physicians, PC
| Decision Date | 23 April 2004 |
| Parties | Donna WELCH, individually and as administratrix of the estate of David Welch v. MONTGOMERY EYE PHYSICIANS, P.C., et al. |
| Court | Alabama Supreme Court |
L. Landis Sexton of Hamilton, Morgan, Sexton & Berry, L.L.C., Montgomery, for appellant.
David E. Allred of Hill, Hill, Carter, Franco, Cole & Black, P.C., Montgomery, for appellees.
Donna Welch, individually and as administratrix of the estate of David Welch, appeals from the Montgomery Circuit Court's summary judgment for Montgomery Eye Physicians. We affirm.
Montgomery Eye Physicians, P.C. ("MEP"), is a professional corporation organized and existing under the corporate laws of Alabama. All of the shareholders of MEP are medical doctors authorized to practice medicine in the State of Alabama. Dr. David Welch, Donna Welch's husband, was licensed under Alabama law to practice optometry; Dr. Welch was not a physician or a medical doctor. Under Alabama law, all shareholders of a professional corporation organized for the purpose of rendering medical services must be medical doctors.
Before his association with MEP, Dr. Welch had practiced optometry for approximately 15 years, building a substantial patient base. In 1994, Dr. Welch, who was operating as Welch Associates, P.C., approached the principals of MEP to discuss the possibility of adding Dr. Welch's optometry practice to the ophthalmology practice of MEP. Prescription Eyewear, Inc., is a corporation organized under the laws of Alabama; the principals of MEP were also the shareholders in Prescription Eyewear. On May 18, 1994, Welch Associates, P.C., and Prescription Eyewear, Inc., entered into a lease agreement pursuant to which Dr. Welch would lease from MEP the premises MEP had dedicated to Prescription Eyewear. When this arrangement proved to be mutually beneficial, Dr. Welch suggested that MEP and Dr. Welch enter into a formal employment contract.
On June 14, 1995, Dr. Welch entered into an employment contract with MEP; the contract named Dr. Welch as the optometrist and department coordinator for the contact lens clinic, a division of Prescription Eyewear, and Prescription Eyewear. This contract extended from June 1, 1995, through September 30, 1996, and provided a salary for Dr. Welch of $178,600 per year. The employment contract also provided that Dr. Welch would be paid a bonus based on the net profits of the contact lens clinic and Prescription Eyewear. The contract further provided that if Dr. Welch's employment was terminated for any reason, Dr. Welch could not remove any patient files or records from MEP's premises and could not solicit any patients from MEP without the permission of MEP. This 1995-1996 contract also stated that if Dr. Welch's employment was terminated, MEP would provide Dr. Welch with a list of the contact lens patients with whom he had established a professional relationship before his association with MEP and whom he would not be prohibited from contacting.
In conjunction with the execution of the employment contract, MEP purchased nearly all of the furniture, fixtures, and equipment Dr. Welch had used in his solo optometry practice. MEP paid Dr. Welch $71,848.63 for those items, which was the agreed upon fair market value.
On October 16, 1996, Dr. Welch and MEP entered into a second employment agreement for the period beginning October 1, 1996, through September 30, 1997. Under the terms of that contract, Dr. Welch was to receive a salary equal to 68 percent of the net profits of the contact lens clinic, along with other specified benefits. Like the first employment contract, this contract provided that if the employment relationship between MEP and Dr. Welch was terminated for any reason, Dr. Welch could not remove any of the patient files or records from the premises of MEP and could not solicit any patients from MEP, except for those patients with whom he had developed a relationship before his association with MEP.
A third and final employment contract was entered into on October 29, 1997, for the period of October 1, 1997, through September 30, 2002. Under this agreement, Dr. Welch would continue to receive a salary of 68 percent of the net profits of the contact lens clinic. The contract also contained the same restrictions included in the two previous employment contracts regarding the removal of patient records and the solicitation of patients from MEP. The third contract further provided for the possibility of disability or illness:
"In the event because of illness or injury disabling Employee and preventing Employee from carrying out his duties under this contract, Employer agrees to pay Employee's salary and bonus for a period not to exceed six (6) months, but in no event beyond the date of termination of this Contract, less the salary including matching and withholding contributions and benefits required to be paid by Employer to hire a professionally competent and qualified optometrist as a replacement."
On October 30, 1998, Dr. Welch was diagnosed with terminal cancer. After he was diagnosed, Dr. Welch began to receive disability-insurance benefits, and he made arrangements for Dr. Fred Setzer, an optometrist practicing in Birmingham, to begin working for MEP in its contact lens/optometry division in January 1999. Dr. Setzer was to serve as the replacement optometrist pursuant to the third employment contract.
Because of Dr. Welch's failing health, the third and final employment contract between MEP and Dr. Welch was terminated, and the parties orally agreed to a consulting arrangement between Dr. Welch and MEP. The oral agreement provided that Dr. Welch was to be paid a monthly fee for consultations with MEP. The exact amount of the monthly fee is unclear from the record, but it appears to have been between $1,000 and $2,500 a month.
In December 1998, Dr. Welch prepared and mailed a letter to all of the patients he had treated while he was associated with MEP, informing them that he was taking a medical leave of absence and urging them to continue to visit MEP for their eyecare. Furthermore, after his diagnosis, Dr. Welch approached MEP about MEP's purchasing his optometry practice, which had not been done during his association with MEP. After he approached MEP about purchasing his practice and before any documents were executed, Dr. Welch died. MEP contends that it never agreed to purchase Dr. Welch's practice. No purchase agreement exists; only an unsigned noncompetition agreement in which Dr. Welch agreed not to compete with MEP for certain patients has been located. MEP argues that the unsigned noncompetition agreement does not prove the existence of an agreement to purchase Dr. Welch's practice. Donna Welch asserts that even though the noncompetition agreement was never signed, MEP had agreed to purchase Dr. Welch's practice. Brian Welch, Donna and Dr. Welch's son, testified that his father specifically told him that an agreement to purchase his practice existed; Donna's testimony indicates that Dr. Welch told her that MEP had agreed to all Dr. Welch's terms except a proposal that MEP pay Donna's health insurance. After Dr. Welch died, Donna approached MEP and asked MEP to pay her the purchase price she says MEP had agreed to pay for Dr. Welch's practice. MEP refused to pay any money to Donna Welch for Dr. Welch's practice.
Subsequently, Donna sued MEP and the following individual physicians: Dr. Sanders Beckwith, Dr. Tom Mitchell, Dr. Jim Glassner,1 and Dr. John Swan. In her complaint, she alleged breach of contract, a third-party-beneficiary claim, conversion, unjust enrichment, and conspiracy, and she sought injunctive relief.
On May 30, 2003, MEP and the individual physicians filed a motion for a summary judgment. They made additional filings on June 10, 2003, to supplement their motion for a summary judgment. Donna filed Brian Welch's affidavit on June 4, 2003; the defendants responded with a motion to strike the affidavit, and the trial court granted that motion.
The trial court heard oral argument on the defendants' motion for a summary judgment, at which time Donna voluntarily dismissed the individual defendants and all of her tort claims. The trial court granted the defendants' motion for a summary judgment and on July 25, 2003, dismissed the breach-of-contract, unjust-enrichment, and third-party-beneficiary claims and the claim seeking injunctive relief. Donna appealed.
"The standard of review applicable to a summary judgment is the same as the standard for granting the motion, that is, we must determine whether there was a genuine issue of material fact and, if not, whether the movant was entitled to a judgment as a matter of law." Brewer v. Woodall, 608 So.2d 370, 372 (Ala.1992). Furthermore, our review is "subject to the caveat that this Court must review the record in the light most favorable to the nonmovant and resolve all reasonable doubts against the movant." Id.
Donna Welch claims that genuine issues of material fact exist as to the breach-of-contract claim and that, therefore, the trial court erred by entering a summary judgment for MEP on that claim. Specifically, she contends that the trial court erred by excluding her testimony and Brian's testimony regarding the alleged agreement between Dr. Welch and MEP for the purchase of Dr. Welch's optometry practice. Donna asserts that their testimony should not have been excluded because, she says, it falls under Rule 803, Ala.R.Evid., which states:
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