Sheila Manhas, M.D. v. Franciscan Hammond Clinic, LLC, Hammond Clinic, LLC, and Deepak Majmudar, M.D., Individually (mem. dec.)
45A05-1602-CT-328
| Ind. Ct. App. | Feb 24, 2017Background
- Dr. Sheila Manhas, a neurologist, signed a 2008 two-year employment agreement with Hammond Clinic; her employment ended in July 2010 after a dispute she later alleged involved pregnancy discrimination and a settled EEOC claim via a confidential Settlement Agreement.
- The Settlement Agreement required prospective employers to direct reference inquiries to FHC’s HR director, who would provide only dates of employment, last position, and salary.
- In 2013 a staffing agency (Platinum) conducted credentialing for a temporary job; Manhas signed an Authorization Form/Release permitting background checks and releasing Platinum, its affiliates, agents, and "all others involved in this background investigation" from liability.
- A Platinum coordinator sought an evaluation from Hammond Clinic; Dr. Majmudar, who had not worked with Manhas, completed the evaluation marking "Fair/Poor," stated she was "terminated" and "not eligible for rehire;" Tripler subsequently declined to hire Manhas.
- After counsel challenged the negative reference, Majmudar admitted the statements were false, retracted them, and apologized. Manhas sued for defamation (per se and per quod) and violation of Indiana’s blacklisting statute.
- The trial court granted summary judgment for the defendants, holding the Release in the Authorization Form unambiguously barred Manhas’s claims; the Court of Appeals reversed, concluding the Release did not unambiguously cover the defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Authorization Form Release bars Manhas’s claims against non-signatory former employers and physician (third-party beneficiaries) | The Release was drafted to protect Platinum and its agents, not independent former employers; the phrase "all others involved" modifies Platinum's agents and thus does not extend to defendants, creating ambiguity at minimum | The Release’s broad language (including "all others involved in this background investigation") unambiguously releases defendants from liability for information they provided to Platinum | Held for Manhas: Release is unambiguous but, when read in full grammatical context, does not encompass the defendants; summary judgment for defendants reversed and case remanded |
| Whether non-parties may enforce or be protected by a release as third-party beneficiaries | Manhas: Contract language does not evidence intent to benefit former employers; no clear purpose to impose obligations in favor of third parties | Defendants: The catch-all language was intended to protect any participant in the background investigation, including former employers and evaluators | Held: No language shows intent to make former employers third-party beneficiaries; Release does not extend to them |
| Whether Eitler controls outcome (i.e., whether prior case law supports enforcing similar releases) | Manhas: Eitler is distinguishable because that release explicitly named and released both parties involved | Defendants: Eitler is instructive and supports enforcing broad releases shielding reference providers | Held: Eitler is distinguishable; its facts (explicitly named parties) do not control here |
| Whether summary judgment was appropriate given alleged ambiguity and factual disputes | Manhas: At minimum ambiguity exists about scope of "all others involved," so material fact issue precludes summary judgment | Defendants: Language is explicit and unambiguous; no genuine factual dispute on scope | Held: Court found no ambiguity in grammar but construed the unambiguous text to exclude defendants; summary judgment improper and reversed |
Key Cases Cited
- Williams v. Tharp, 914 N.E.2d 756 (Ind. 2009) (summary judgment standard and materiality/genuineness framework)
- McSwane v. Bloomington Hosp. & Healthcare Sys., 916 N.E.2d 906 (Ind. 2009) (appellate review protects non-moving party’s right to trial)
- OEC-Diasonics, Inc. v. Major, 674 N.E.2d 1312 (Ind. 1996) (third-party beneficiary enforcement requires clear intent to benefit third party)
- Eitler v. St. Joseph Reg'l Med. Ctr. South-Bend Campus, Inc., 789 N.E.2d 497 (Ind. Ct. App. 2003) (upholding release that explicitly named and released both parties for reference-check liability)
- Stemm v. Estate of Dunlap, 717 N.E.2d 971 (Ind. Ct. App. 1999) (release interpretation governed by contract principles)
- T-3 Martinsville, LLC v. U.S. Holding, LLC, 911 N.E.2d 100 (Ind. Ct. App. 2009) (contract interpretation rules; unambiguous language construed from four corners)