DePasquale v. Chamberlain

Citations: 282 S.W.3d 47; 2008 Tenn. App. LEXIS 403; 2008 WL 2743705Docket: E2007-02015-COA-R3-CV

Court: Court of Appeals of Tennessee; July 15, 2008; Tennessee; State Appellate Court

Original Court Document: View Document

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Stephen E. DePasquale, M.D. was employed by Chattanooga Gyn-Oncology, LLC, and his employment was terminated in August 2006. Following his termination, DePasquale and Donald H. Chamberlain, M.D., entered into a negotiated settlement agreement (the "Agreement") that stipulated DePasquale would receive $49,500 in severance pay, contingent upon his compliance with the Agreement's terms. The Agreement included a provision that allowed the non-defaulting party to recover attorney fees if enforcement actions were necessary. After DePasquale did not receive the severance payment, he filed suit to enforce the Agreement, seeking the severance amount along with interest and attorney fees. The Defendants contended that DePasquale breached the Agreement and sought attorney fees. 

At trial, the court found that DePasquale had indeed breached the Agreement and denied him severance pay, but also ruled that the Defendants were not entitled to attorney fees. The Defendants appealed, asserting that the trial court erred by not awarding them attorney fees. Simultaneously, DePasquale challenged the court's determination that he breached the Agreement. The appellate court reversed the trial court's judgment against DePasquale, remanding the case for the entry of a judgment in his favor for $49,500, plus attorney fees to be determined. The case emphasizes the contractual obligations stemming from the Agreement and the implications of alleged breaches by either party.

All patient records and practice information are owned by Chattanooga Gyn-Oncology, LLC. Dr. DePasquale will receive a list of all patients and the first progress notes of active patients in Word format at no charge. He will also be given copies of the cover sheet and the last progress note, along with a letter to patients regarding his departure. A list of patients scheduled for Dr. DePasquale will be provided by August 24, 2006, and staff will be instructed to inform patients inquiring about him using a specified protocol.

If either party fails to perform any terms of the agreement, the non-defaulting party can enforce the agreement and recover reasonable attorney fees. Notification of Dr. DePasquale's departure will be sent to all patients, offering them continued care to prevent disruption. He will receive payment through August 24 and a severance of at least $49,500 on October 31, 2006, provided he complies with the agreement.

After the plaintiff filed a lawsuit for breach of contract, claiming compliance with the agreement and seeking the severance payment plus interest and attorney fees, the defendants denied liability and counterclaimed, alleging the plaintiff breached the agreement. Following a nonjury trial, the trial court concluded that the plaintiff had indeed breached the agreement and was not entitled to any relief, nor were the defendants entitled to attorney fees.

The trial court's memorandum opinion noted several issues, including the plaintiff's removal of items not permitted by the agreement and allegations of unprofessional conduct. Testimony indicated that the plaintiff attempted to change referral patterns and improperly billed for surgeries conducted after his termination, later admitting this billing was a mistake. The plaintiff also faced accusations of encouraging reports against Dr. Chamberlain and failing to pay for a cellphone used during and after his employment.

Plaintiff removed furniture from outside his office and did not return it. He testified that a clock matched his office furniture and that a plant had previously been in his office; other items were not specified. Plaintiff printed and distributed handbills at Erlanger Medical Center announcing his separation from Dr. Chamberlain, which was intended to inform surgeons of a new option for their gyn-oncology patients. He used his cellphone associated with CGO until December 6, 2006, without paying the bill, totaling $329.84 as of February 23, 2007. Plaintiff desired to keep his cellphone number but failed to establish a new account with Sprint due to its requirements and did not reimburse Dr. Chamberlain for the charges.

Laurie Higdon, a former circulating nurse, testified that Dr. Chamberlain became angry with her over a surgical incision and threw a sponge at her. She filed an occurrence report and consulted Plaintiff about the chain of command to address the issue, but he did not encourage her to take further action, including filing a police report, contrary to what another nurse claimed. 

The court concluded that Plaintiff did not fulfill the terms of the Settlement Agreement, as he failed to return the office items, announced his separation via handbills, and did not pay for his cellphone. Consequently, he is not entitled to two months' salary or $49,500, nor to attorney’s fees or interest. Dr. Chamberlain and CGO sought to recover attorney’s fees, but the court ruled they could not, as the defendants did not enforce the Settlement Agreement and it was too late to do so. Additionally, Dr. Chamberlain's actions were deemed unprofessional, and CGO could not recover attorney fees as it was not a party to the Settlement Agreement.

Defendants appeal on three grounds: (1) the Trial Court incorrectly concluded they were not enforcing the Agreement, thus denying them attorney fees; (2) the Trial Court's finding that Dr. Chamberlain engaged in unprofessional conduct also led to a denial of attorney fees; and (3) the Trial Court improperly admitted and considered portions of Laurie Higdon's deposition. Plaintiff contends the Trial Court erred in finding he breached the Agreement, which resulted in the denial of his claim for $49,500 in severance pay and other relief. He seeks a judgment for the severance pay and attorney fees for both the trial and the appeal.

Factual findings by the Trial Court are presumed correct and can only be overturned if evidence strongly contradicts them. Legal issues are reviewed de novo without deference to lower court conclusions. The court's role in contract disputes is to determine the parties' intent based on the contract's language, following principles established in Tennessee case law. A breach must be material to relieve the non-breaching party from contractual obligations. The court will assess whether the Plaintiff’s actions, including improper billing for two surgeries and taking minor items after termination, constituted a material breach. It was found that the improper billing did not affect the Defendants since they received the insurance payment, and any breach was effectively remedied. The items taken by the Plaintiff were of minimal value.

Dr. Chamberlain's testimony confirmed that the Plaintiff could keep a clock, removing it from contention. The shelves and plant were deemed to have minimal value, and there was no evidence that their removal deprived Dr. Chamberlain of the contract's benefits. Notably, after Dr. Chamberlain declined to pay severance, a letter to Plaintiff’s attorney did not reference any missing items. Dr. Chamberlain also admitted at trial he never sought their return. Consequently, the Plaintiff's actions regarding these items did not constitute a material breach of the contract.

The Agreement's stipulation for professional conduct does not extend to the non-payment of a $329.84 cell phone bill. Although the Plaintiff erroneously believed the bill had been paid, this amount does not significantly impact the contractual benefits. Even if it were a breach, it was trivial and easily compensated, thus not justifying withholding the $49,500 severance payment.

Following the termination of employment, the Plaintiff distributed fliers about his new practice, which is permissible under the Agreement, as it contains no non-compete clause. The fliers indicated a new choice for patients, which was evident and not disparaging to the Defendants. The court found no basis for characterizing the announcement as unprofessional and reversed the lower court’s ruling on this matter.

Regarding Nurse Laurie Higdon, the Defendants objected to the Plaintiff's alleged encouragement for her to file a criminal complaint about an incident involving Dr. Chamberlain. Both the Plaintiff and Nurse Higdon denied this, but even assuming it occurred, there is no prohibition against a physician discussing options with a nurse in such circumstances.

Professionalism, the Agreement, and the peer review process do not require a physician to remain silent in specific situations. At trial, there was conflicting testimony regarding whether the Plaintiff initiated contact with Nurse Higdon or if she approached him. Nurse Higdon testified she approached the Plaintiff. Kimberly Wright, when questioned, indicated that the Plaintiff appeared to encourage Nurse Higdon to report an incident from an operating room, and although there was a mention of criminal charges, it was unclear if the Plaintiff suggested this. The Trial Court did not find that the Plaintiff initiated the contact, and the evidence suggested otherwise, leading to the conclusion that the Plaintiff's response to Nurse Higdon was not unprofessional or a breach of the Agreement. Consequently, the Trial Court's finding of a material breach by the Plaintiff was reversed.

Additionally, the Defendants contested the admissibility of Nurse Higdon's deposition, arguing she was not 'unavailable' since she lived within 100 miles of Chattanooga at the time her deposition was taken. However, the Plaintiff contended that unavailability should be assessed based on the witness's distance from the trial location at the time of trial, not when the deposition was conducted. This issue is addressed through Tenn. R. Civ. P. 32.01 and Tenn. R. Evid. 804(a), which state that a deposition can be used if the witness is deemed 'unavailable' as defined by the relevant rules.

Tenn. R. Evid. 804 defines unavailability of a witness, including situations where the witness is absent and cannot be procured for attendance, or, specifically for depositions in civil actions, is located more than 100 miles from the trial venue. The evidentiary determination made by the trial court is reviewed under an abuse of discretion standard. The court upheld the trial court's finding that Nurse Higdon was unavailable based on precedents stating a deposed witness residing over 100 miles away meets the unavailability criteria. 

The defendants contested the admissibility of parts of Nurse Higdon's deposition, arguing the trial court improperly relied on her testimony regarding Dr. Chamberlain's alleged unprofessional conduct, which influenced the court’s decision against awarding attorney fees to him. Ultimately, the court found the plaintiff entitled to enforce the Agreement, negating the defendants' claims and rendering the issue of Dr. Chamberlain's conduct moot. 

The court concluded that the plaintiff did not materially breach the Agreement, and all other issues were moot. Consequently, the plaintiff is awarded attorney fees at both trial and appellate levels, with the trial court directed to determine the reasonable amount. The judgment against Dr. Chamberlain for $49,500 is reversed and remanded for the adjustment of the cell phone bill of $329.84 before finalizing the judgment. Costs of the appeal are taxed to the defendants. The plaintiff's request for prejudgment interest was denied due to lack of argument in the initial brief, limiting the defendants' opportunity to respond.