Saint Alphonsus Diversified Care, Inc. v. MRI Associates, LLP
157 Idaho 106
| Idaho | 2014Background
- Saint Alphonsus (hospital and affiliated entity) was a general partner in MRI Associates (a partnership) that formed two limited partnerships: MRI Center (fixed on-campus MRI) and MRI Mobile (mobile MRI). Saint Alphonsus dissociated effective April 1, 2004; a contractual noncompete ran until April 1, 2005.
- Radiologists formed Intermountain Medical Imaging (IMI) and opened competing outpatient MRI facilities (downtown Boise 1999, Meridian 2002). Saint Alphonsus later became a member of IMI in 2001 and supported IMI’s Meridian and downtown operations.
- MRI Associates and the two limited partnerships (collectively, MRI Entities) sued Saint Alphonsus for breach of contract (noncompete and implied covenant), torts (intentional interference, breach of fiduciary duty, civil conspiracy), and sought disgorgement; jury awarded alternative damages totaling $52,084,513 to MRI Entities and $4.6 million to Saint Alphonsus on its claim.
- Procedural history: initial verdict vacated on earlier appeal; on remand MRI Center and MRI Mobile were joined as counterclaimants; district court found relation-back under I.R.C.P. 17(a) proper; multiple post-trial motions denied and portions of the judgment affirmed on appeal.
- Key evidentiary/damages posture: MRI Entities’ lost-profits and diminution-of-value awards relied on expert forensic accounting (Bruce Budge) estimating diverted scan volume and profits; Saint Alphonsus challenged damages methodology and temporal scope (post-2005 harms).
Issues
| Issue | Plaintiff's Argument (MRI Entities) | Defendant's Argument (Saint Alphonsus) | Held |
|---|---|---|---|
| 1. Joinder of MRI Center and MRI Mobile (relation back under Rule 17(a)) | Relation back was timely; MRI Associates as GP reasonably relied on earlier rulings and promptly sought joinder after appellate remand | Joinder was untimely and claims of limited partnerships were barred if not originally joined | Court upheld relation-back; trial court did not abuse discretion — joinder related back and statute of limitations defense failed |
| 2. Breach of noncompete liability | Saint Alphonsus breached noncompete by partnering with IMI and diverting referrals and support to IMI | Denied liability for wrongful pre-2005 conduct; sought to limit damages for post-2005 lawful competition | Jury finding of breach affirmed; evidence sufficient to support liability |
| 3. Lost-profits methodology and proof of causation | Expert testimony (scan diversion, referring physicians, profit margins) provided reasonable-certainty proof linking breach to lost profits | Expert methodology was speculative, failed Pope factors, and improperly relied on IMI financials (Trilogy) | Court upheld admissibility and sufficiency; legal standard permits reasonable certainty and jury may weigh conflicting expert opinions |
| 4. Damages for post-2005 losses caused by pre-2005 breach | If pre-2005 breaches destroyed MRI Entities’ viability, later losses can be proximately caused by earlier breach and recovered | Post-2005 lawful competition cuts off damages; expert did not model lawful-competition scenario properly | Evidence supported jury inference of continuing damages from pre-2005 breaches; JNOV denied |
| 5. Breach of fiduciary duty (and related instructions) | Breach occurred by appropriating partnership opportunities and competing with limited partnerships | Court erred instructing jury that lawful dissociation could still be breach if motivated by profit; several evidentiary rulings prejudiced defense | Court found instruction misstated law but held any error harmless because breach of noncompete independently established fiduciary breach and no prejudice shown |
| 6. Apportionment of fault and settlement credit | Settling defendants’ release reduced plaintiff’s total recovery by the settling parties’ pro rata share (as determined by fault) | Settlement language required an equal (one-half) pro rata reduction; defendant argued it was only entitled to 50% credit | Court interpreted “pro rata” by reference to statutory apportionment and jury-determined fault; rejected equal-share reading and affirmed apportionment approach |
| 7. Disgorgement / diminution-in-value and alternative awards | MRI Entities sought disgorgement of profits and diminution-of-value as alternatives to lost profits | Saint Alphonsus challenged calculations and timeliness; argued lesser awards should not be applied when larger awards exist | Court declined to reach errors in alternative (smaller) awards because larger lost-profits awards sustained judgment |
| 8. Wrongful dissociation / entitlement to withdrawing partner valuation | MRI Entities argued dissociation was wrongful or partnership had definite term/particular undertaking | Saint Alphonsus argued dissociation was rightful and partnership had indefinite term; buyout valuation from earlier judgment should stand | Court rejected MRI Entities’ new common-law theory and sustained earlier $4.6M judgment to Saint Alphonsus under law of the case |
Key Cases Cited
- Tingley v. Hampson, 125 Idaho 86, 867 P.2d 960 (Idaho 1994) (relation-back under Rule 17(a) requires reasonable time, mistake, and lack of intent to evade statute of limitations)
- Pope v. Intermountain Gas Co., 103 Idaho 217, 646 P.2d 988 (Idaho 1982) (standards for proof of lost profits in market exclusion cases)
- Trilogy Network Sys., Inc. v. Johnson, 144 Idaho 844, 172 P.3d 1119 (Idaho 2007) (measure of damages for anti-competition breach is plaintiff's loss, not defendant's gains)
- Coombs v. Curnow, 148 Idaho 129, 219 P.3d 453 (Idaho 2009) (admissibility of expert opinion depends on validity of reasoning and methodology)
- Griffith v. Clear Lakes Trout Co., Inc., 146 Idaho 613, 200 P.3d 1162 (Idaho 2009) (damages must be proved with reasonable certainty; certainty need not be mathematical)
- Mosell Equities, LLC v. Berryhill & Co., Inc., 154 Idaho 269, 297 P.3d 232 (Idaho 2013) (standard for reviewing JNOV mirrors trial court; must view evidence most favorably to nonmoving party)
- Blome v. Truska, 130 Idaho 669, 946 P.2d 631 (Idaho 1997) (apportionment and the meaning of pro rata shares tied to jury-determined fault)
- Bushi v. Sage Health Care, PLLC, 146 Idaho 764, 203 P.3d 694 (Idaho 2009) (fiduciary-duty damages available where motivation for termination improperly enhanced remaining members’ value — distinguished on facts)