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Johnson Regional Medical Center v. Halterman

United States District Court, W.D. Arkansas, Fort Smith Division

July 24, 2015



P.K. HOLMES, III, Chief District Judge.

Currently before the Court are cross motions for summary judgment as to Count 1 (Docs. 12 and 16), and Defendant's motion for summary judgment as to Count 2 (Doc. 12). Also before the Court are the parties' responsive filings, and various exhibits in support. Having reviewed the filings, the Court finds that Plaintiff's motion for summary judgment as to Count 1 should be granted, and Defendant's motion for summary judgment as to both counts should be denied.

I. Legal Standards

In determining whether summary judgment is appropriate, the burden is on the moving party to establish both the absence of a genuine dispute of material fact and that it is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Nat'l Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th Cir. 1999). The same standard applies where, as here, the parties file cross-motions for summary judgment on an issue. Each motion should be reviewed in its own right, with each side, respectively, "entitled to the benefit of all inferences favorable to them which might reasonably be drawn from the record." Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983); see also Canada v. Union Elec. Co., 135 F.3d 1211, 1212-13 (8th Cir. 1998). In order for there to be a genuine issue of material fact, the evidence must be "such that a reasonable jury could return a verdict for the nonmoving party." Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

II. Background

Plaintiff Johnson Regional Medical Center ("JRMC") filed suit against Defendant Dr. Robert Halterman in Johnson County Circuit Court on June 17, 2014. JRMC removed the case to this Court on August 13, 2014. JRMC brings two claims for breach of contract against Halterman. In Count 1 of the complaint, JRMC alleges that Halterman breached a recruitment agreement ("the Recruitment Agreement") and seeks damages for Halterman's failure to pay the balance on an attached promissory note ("the Note") to JRMC. In Count 2, JRMC alleges that Halterman breached an employment agreement ("the Employment Agreement").

Dr. Robert Halterman received a degree in Doctor of Osteopathy in 1988. Halterman subsequently focused his practice in obstetrics and gynecology ("OB/GYN"). In early 2013, JRMC sought to recruit Halterman to work in its facilities as a full time OB/GYN practitioner. On March 20, 2013, Halterman executed a promissory note in favor of JRMC, in which he agreed to make monthly payments to JRMC in exchange for JRMC's issuance of a loan to him in the original principal sum of $50, 000. (Doc. 16-1). In conjunction with the promissory note, Halterman also executed the Recruitment Agreement, which provided in part that JRMC would forgive Halterman's payments on the promissory note as they came due provided certain conditions were met. (Doc. 16-2). On the same day, Halterman also executed the Employment Agreement, setting out the terms of Halterman's employment with JRMC.

Halterman subsequently began working for JRMC full-time in July 2013. It is undisputed that just four months later, on November 6, 2013, Halterman accidentally slipped on some liquid in the stairwell next to his office at JRMC's facilities. It is also undisputed that Halterman injured his shoulder as a result of the slip and fall and that he was not immediately able to perform certain medical procedures. However, the extent to which the shoulder injury prevented Halterman from returning to work at JRMC and from fulfilling any employment obligations is in dispute. Halterman states that he resigned from JRMC due to the fact that his shoulder injury made him "unable to perform many of the types of medicine he had been hired to do by [JRMC]." (Doc. 13, ¶ 6, 9). JRMC disputes that Halterman's injury made it impossible or impracticable for him to return to work for JRMC and disputes that Halterman's injury was ultimately the reason for his resignation. (Doc. 20, ¶ 6, 9).

Halterman resigned his employment with JRMC effective December 23, 2013, by letter sent to JRMC Administrator Larry Morse. (Doc. 16-4). On January 17, 2014, JRMC sent Halterman a letter informing Halterman that it had exercised its option to terminate the Recruitment Agreement, stating "[p]ursuant to Sections 5.1(b)(i) and 1.1 of the Recruitment Agreement, this Letter serves as written notice to you that the Recruitment Agreement is terminated, effective as of December 23, 2013." (Doc. 16-5, p. 1). The letter further informed Halterman that, due to the termination, JRMC's monthly forgiveness of payments due on the Note would cease, and JRMC demanded payment of the remaining balance of $37, 894.00 by February 28, 2014. Id. Halterman has since failed to make any payment on the Note to JRMC.

A. Count 1: Breach of Recruitment Agreement/Promissory Note

As to Count 1, JRMC alleges that Halterman breached his obligation to repay $50, 000 advanced to him by JRMC pursuant to the Note executed in conjuction with the Recruitment Agreement. JRMC argues that the promissory note is a stand-alone agreement requiring Halterman to make monthly payments to JRMC over a twenty-four month period beginning on or about July 1, 2013. Halterman argues that the promissory note cannot be viewed in isolation and, instead, must be considered together with both the Recruitment Agreement and the Employment Agreement and that, if his performance of his obligations under one Agreement is excused, so too should his obligation to repay the amount owed under the Note be excused. This dispute as to how the Agreements should be construed is a purely legal dispute that may be resolved by the Court as a threshold matter. By virtue of the fact that this is a diversity action and by virtue of the fact that the Agreements at issue have choice-of-law provisions stating that Arkansas law will apply to any disputes (Doc. 12-3, ¶ 15; Doc. 12-4, § 5.3), the Court will apply Arkansas law to the substantive issues in this action.

Halterman cites to Arkansas Model Jury Instruction 2420 for the proposition that "[i]f the parties' contract is contained in more than one document, all of the documents must be considered together." The commentary to that instructions cites Stokes v. Roberts, 289 Ark. 319 (1986). In Stokes, the Supreme Court of Arkansas set forth the standard for when separate contractual documents should be considered together:

When two instruments are executed contemporaneously, by the same parties in the course of the same transaction, they should be considered as one contract for purposes of interpretation, in the absence of a contrary intention. To arrive at the intention of the parties to a contract, courts may acquaint themselves with the persons and circumstances and place themselves in the same situation as the parties who made the contract. We may also consider the construction the parties themselves place on the contract.

289 Ark. at 322-23. Here, while the Employment and Recruitment Agreements were executed contemporaneously by the same parties, it is clear from their terms that they are separate agreements intended to be construed separately. Looking to the agreements themselves, both contain independent merger clauses (Doc. 12-3, ¶ 23; Doc. 12-4, § 5.14). The merger clause in the Employment Agreement states unambiguously that "[t]his Agreement... contains the entire agreement between the parties concerning the subject matter hereof..." (Doc. 12-3, ¶ 23). The Recruitment Agreement likewise states that "[t]his Agreements and all Exhibits hereto as well as the agreements and other documents referred to in this Agreement constitute the entire agreement between the parties with regard to the subject matter hereof and thereof." (Doc. 12-4, § 5.14). The Court has not found any reference to the Employment Agreement in the Recruitment Agreement, and a section in the Recruitment Agreement with the heading "PRACTICE OBLIGATIONS" was purposefully omitted. Id. at p. 2. The Employment Agreement sets forth the terms of Halterman's employment with JRMC-Halterman's duties and responsibilities, insurance requirements, billing arrangements, non-compete and non-solicitation prohibitions, etc. The Recruitment Agreement specifically addresses the $50, 000 advance paid to Halterman and the terms of repayment and loan forgiveness. Each Agreement has differing obligations for each party as well as different occurrences that might trigger termination of the Agreement, indicating that the Agreements were separately negotiated and intended to set forth independent contractual obligations. Furthermore, each Agreement contains independent sections addressing choice of law (Doc. 12-3, ¶ 15; Doc. 12-4, § 5.3), assignment ( id. at ¶ 16 and § 5.5), severability ( id. at ¶ 12 and § 5.6), notices ( id. at ¶ 21 and § 5.4), waiver ( id. at ¶ 22 and § 5.8), and general interpretation and ambiguities ( id. at § 25 and § 5.21). It is not likely ...

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