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Baptist Mem. Hospital-Miss. County, Inc. v. Kalyan

Court of Appeals of Arkansas, Division II

December 10, 2014

BAPTIST MEMORIAL HOSPITAL-MISSISSIPPI COUNTY, INC. D/B/A BAPTIST MEMORIAL HOSPITAL-BLYTHEVILLE AND D/B/A BAPTIST MEMORIAL HOSPITAL-OSCEOLA, APPELLANTS
v.
MADHU KALYAN, M.D., APPELLEE

APPEAL FROM THE MISSISSIPPI COUNTY CIRCUIT COURT, CHICKASAWBA DISTRICT. NO. CV-2003-380. HONORABLE RANDY F. PHILHOURS, JUDGE.

REVERSED AND REMANDED.

Philip Hicky, II, Ltd., by: Philip Hicky II and Jessica J. Trail, for appellant.

Bearden Law Firm, by: Mike Bearden, for appellee.

RITA W. GRUBER, Judge. WYNNE and BROWN, JJ., agree.

OPINION

RITA W. GRUBER, Judge

This is a breach-of-contract case. The sole issue on appeal is whether substantial evidence supports the jury's award of damages. We hold that substantial evidence does not support the jury's award, and, accordingly, we reverse the trial court's denial of appellant's motion for judgment notwithstanding the verdict (JNOV) and remand with instructions to the trial court to enter judgment consistent with this opinion.

Appellant, Baptist Memorial Hospital-Mississippi County, Inc., d/b/a Baptist Memorial Hospital-Blytheville, and d/b/a Baptist Memorial Hospital-Osceola (BMH), recruited Dr. Madhu Kalyan, M.D., appellee, in the spring of 2002 to come to Mississippi County, Arkansas, to practice medicine. In connection with this,

Page 682

the parties entered into several agreements in May 2002, including a Physician Agreement, Promissory Note and Security Agreement, Lease Agreement for Medical Office Building, and Lease Agreement for Use of Shared Physician Office Space. Pursuant to these agreements, BMH guaranteed Dr. Kalyan monthly draws for income assistance and practice expenses in exchange for Dr. Kalyan's agreement to practice medicine full-time in Mississippi County. The draws were guaranteed for two years, at which point Dr. Kalyan would be obligated to repay the total amount advanced to him. If Dr. Kalyan continued practicing medicine in Mississippi County longer than two years, the debt would be forgiven at a rate of twenty-five percent per year. In July 2002, Dr. Kalyan moved with his family from the Chicago area to Mississippi County and began practicing medicine.

On May 16, 2003, Dr. Kalyan's attorney wrote a letter to BMH terminating the Physician Agreement. Thereafter, Dr. Kalyan left Mississippi County and began practicing in Fayetteville, Arkansas. BMH filed a complaint against Dr. Kalyan, alleging breach of contract and seeking damages. Dr. Kalyan filed an amended answer and counterclaim. He admitted in his answer that he had agreed in the Physician Agreement to repay the amount of all advances, loans, and draws but denied that he was obligated to repay the amounts to BMH, pleading set-off as an affirmative defense. His amended answer included the additional affirmative defense of estoppel, pursuant to which he contended that he relied to his detriment on BMH's representations that there was a need for his services as a pulmonologist when BMH knew or should have known that there was not adequate demand for his specialty. He alleged two counts in his counterclaim: (1) BMH negligently recruited him, and (2) BMH misrepresented material facts while recruiting him.

The case was tried before a jury on October 24-26, 2011. The parties agreed to a stipulation of facts, which the judge read to the jury before trial began, stating that the jury should consider these facts to be admitted. Included in the stipulation was Dr. Kalyan's acknowledgment that he had received the sum of $228,350.74 from BMH under the Physician Agreement and Promissory Note and that he had not repaid any of this amount. The parties also stipulated to certain exhibits, including all four agreements between the parties and a statement reflecting all amounts advanced by BMH to Dr. Kalyan, the amounts repaid by Dr. Kalyan, and the monthly rent due, which totaled $228,350.74.

BMH presented the testimony of four witnesses, three of whom were involved in recruiting Dr. Kalyan, who testified that, while Dr. Kalyan was recruited to practice as a pulmonologist, they all knew that there was not sufficient need at the time for a full-time pulmonologist in Mississippi County and, thus, they all told Dr. Kalyan that he would need to supplement his practice with general internal medicine. The fourth witness, Debbie Lassiter, worked for BMH as manager of planning and research. She testified that she prepared the community-needs assessment for the area for pulmonology. The results of her analysis indicated the need at .86 (1.0 means the need is for one full-time doctor). She testified that the need for internal medicine in the area at the time of the assessment was 3.68.

Dr. Kalyan presented the testimony of Dr. Joe Jones, who had lived and practiced internal medicine in Mississippi County since his graduation from medical school in 1979. He testified that he gave his opinion to BMH that specialists ...


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