Northwest Oral Surgeons, P.C. v. Joseph Lovasko, D.D.S. (mem. dec.)
45A03-1604-PL-734
| Ind. Ct. App. | Sep 29, 2016Background
- Dr. Joseph Lovasko (an equal-shareholder dentist) and Northwest Oral Surgeons, P.C. were parties to a 2002 Severance Agreement providing an 80% severance benefit based on the average annual compensation of an “Equal Shareholder Employee” over the eight quarters preceding the qualifying event (death, permanent disability, or voluntary separation).
- In May 2011 Lovasko stopped working due to back injuries and announced retirement in September 2011; a dispute followed over whether he qualified for a disability severance and how to calculate the benefit.
- Lovasko sued Northwest for breach of the Severance Agreement; Northwest counterclaimed for unpaid loan and deficits from advances paid to Lovasko.
- After a bench trial the court found Northwest breached the Severance Agreement, calculated a severance award using (1) an eight-quarter look-back beginning at the inception of Lovasko’s disability in May 2011, (2) the average “Net Income Available to Physicians” for all three equal-shareholder dentists, and (3) annualized the resulting quarterly number; the court also offset Northwest’s award by sums Lovasko owed.
- The trial court entered a net judgment for Lovasko (including prejudgment interest) and set a five-year payment schedule; Northwest appealed only the trial court’s construction/calculation of damages.
Issues
| Issue | Lovasko's Argument | Northwest's Argument | Held |
|---|---|---|---|
| 1. When does the eight-quarter look-back period start for calculating a disability severance? | Look-back begins at inception of disability (May 2011) — Section 2’s one-year language only defines when disability becomes “permanent,” not the look-back start. | Look-back should begin one year after disability onset (May 2012) because Section 2 requires the condition to ‘‘continue for a period of one (1) year’’ before permanent disability and settlement. | Court of Appeals: Affirmed trial court — look-back begins at inception of disability; the one-year period only establishes permanence, not the look-back start. |
| 2. Whose compensation is used to compute the severance benefit? (Individual vs. group average) | The Agreement’s phrase "annual compensation paid to an Equal Shareholder Employee" contemplates compensation available to Equal Shareholder Employees generally; parties intended to consider all Equal Shareholder Employees. | Calculation should be based solely on Lovasko’s personal compensation. | Court: Affirmed trial court — calculation may use the average compensation available to all Equal Shareholder Employees (so using three-shareholder aggregate was permissible). |
| 3. Whether the trial court erred in annualizing the quarterly figure (magnitude of award) | Trial court’s initial quarterly calculation should be annualized to produce the full annual severance amount; motion to correct error was appropriate. | Northwest objected to the magnitude based on different look-back and compensation base assumptions. | Court: Affirmed trial court — annualization was correct given the court’s adopted methodology; Northwest’s alternative assumptions rejected. |
| 4. Offsets for advances/loan and prejudgment interest | Court properly offset severance by amounts Lovasko owed; Lovasko sought prejudgment interest on net award. | Northwest argued additional accounting adjustments should reduce severance further. | Court: Affirmed offsets for advances/loan; awarded prejudgment interest on the net judgment. |
Key Cases Cited
- Corn v. Corn, 24 N.E.3d 987 (Ind. Ct. App.) (standard for abuse of discretion review on motion to correct error)
- Huber v. Hamilton, 33 N.E.3d 1116 (Ind. Ct. App.) (two-tier review when Trial Rule 52 findings requested)
- Fraternal Order of Police, Evansville Lodge No. 73, Inc. v. City of Evansville, 940 N.E.2d 314 (Ind. Ct. App.) (principles of contract construction)
- Whitaker v. Brunner, 814 N.E.2d 288 (Ind. Ct. App.) (interpreting unambiguous contract language; give effect to whole instrument)
- Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494 (Ind. Ct. App.) (court may not rewrite contract terms)
- Oil Supply Co. v. Hires Parts Serv., Inc., 726 N.E.2d 246 (Ind.) (burden to show trial court's findings clearly erroneous)
- Wright v. Elston, 701 N.E.2d 1227 (Ind. Ct. App.) (appellate court will not sift record to find error)