The Care Group Heart Hospital v. Roderick J. Sawyer, M.D.
2017 Ind. App. LEXIS 270
| Ind. Ct. App. | 2017Background
- Dr. Roderick J. Sawyer was a cardiologist, part-owner of The Care Group and a member of The Care Group Heart Hospital (the Hospital); St. Vincent Medical Group, Inc. (SVMG) purchased TCG assets and employed Sawyer beginning July 1, 2010.
- Employment Agreement (10-year term), a Joinder Agreement (mandating redemption of Sawyer’s Hospital membership upon termination of employment), and the Hospital’s Operating Agreement (governing redemption formula and corporate governance) governed the parties’ rights.
- SVMG terminated Sawyer’s employment July 22, 2011 for cause; the Hospital promptly redeemed his ten-unit membership and paid $196,787 based on the Operating Agreement formula roughly eight months after termination.
- Sawyer sued SVMG and the Hospital for breach of contract (Joinder Agreement and Operating Agreement), breach of duty of good faith and fair dealing, and tortious interference; jury awarded Sawyer $1,112,152 against SVMG and $470,000 against the Hospital.
- The Hospital moved to dismiss and later for summary judgment on portions of Sawyer’s claims; trial court denied dismissal, granted partial summary judgment in the Hospital’s favor as to the Operating Agreement, but denied summary judgment as to the Joinder Agreement; after discovery disputes the court found defendants in contempt and later awarded Sawyer $27,233.19 in attorney fees—an award the Court of Appeals found inadequate and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court erred denying Hospital's T.R. 12(B)(6) motion re: Joinder breach | Sawyer: Joinder and Employment Agreements are integrated; wrongful termination by SVMG made the Hospital’s redemption premature and breached the Joinder Agreement entitling him to consequential damages (loss of expected investment income). | Hospital: It followed the Joinder and Operating Agreements; termination triggers involuntary withdrawal for any reason and Operating Agreement controls valuation, so no breach. | Court: Affirmed denial. Joinder requires termination "under the Employment Agreement" to trigger mandatory redemption; wrongful termination can give rise to consequential damages for breach. |
| Whether Operating Agreement claim should survive (partial summary judgment) | Sawyer: Operating Agreement must be read with Joinder/Employment Agreements; premature redemption and untimely payment breached Operating Agreement and entitles him to damages and attorneys’ fees under §8.8. | Hospital: Operating Agreement is a corporate governance document; it prescribes the formula used and was followed; no breach occurred. | Court: Affirmed partial summary judgment for Hospital as to Operating Agreement; valuation formula was followed and Operating Agreement did not protect the bargain at issue. |
| Whether judgment on the evidence / correction of error was proper (directed verdict renewed) | Sawyer: Evidence supported breach of Joinder and resultant damages. | Hospital: No evidence Hospital breached where it paid the calculated amount; at most statutory interest for delay. | Court: Affirmed denial of Hospital’s T.R. 50 motions and denial of motion to correct error; jury verdict for Sawyer against Hospital stands. |
| Whether trial court abused discretion in awarding discovery-related attorney fees | Sawyer: Defendants (including the Hospital) engaged in prolonged discovery delay and contempt; trial court’s orders entitled him to fees pre- and post-order; award of $27,233.19 is insufficient. Requests remand for fuller award or hearing. | Hospital: Award should be limited; it never failed to produce identified discovery; $27,233.19 reflects uncontested fees and Trial Rule 37 limits recovery; appellee waived some arguments. | Court: Reversed the June 30, 2016 entry awarding $27,233.19 as it improperly adopted defendants’ calculation exclusively. Remanded for the trial court to review Sawyer’s submitted fee list, apportion sanctions appropriately, and award reasonable fees consistent with prior discovery orders. |
Key Cases Cited
- McQueen v. Fayette Cnty. Sch. Corp., 711 N.E.2d 62 (Ind. Ct. App. 1999) (standard for T.R. 12(B)(6) dismissal).
- Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005) (contract interpretation is a question of law reviewed de novo; unambiguous terms given ordinary meaning).
- Beam v. Wausau Ins. Co., 765 N.E.2d 524 (Ind. 2002) (contract ambiguous only if reasonable persons would differ on meaning).
- McDivitt v. McDivitt, 42 N.E.3d 115 (Ind. Ct. App. 2015) (extrinsic evidence for ambiguous contracts; construction for fact‑finder if ambiguous).
- Ryan v. Lawyers Title Ins. Corp., 959 N.E.2d 870 (Ind. Ct. App. 2011) (specific contract provisions control over general ones).
- L.H. Controls, Inc. v. Custom Conveyor, Inc., 974 N.E.2d 1031 (Ind. Ct. App. 2012) (consequential damages, including lost profits, recoverable when flow naturally from breach and were contemplated).
- Cavens v. Zaberdac, 849 N.E.2d 526 (Ind. 2006) (T.R. 50 standard; legal issues based on undisputed facts reviewed de novo).
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (summary judgment standard).
- Manley v. Sherer, 992 N.E.2d 670 (Ind. 2013) (movant’s burden on summary judgment; nonmovant’s burden to show genuine issue).
- International Business Machines Corp. v. ACS Human Servs., LLC, 999 N.E.2d 880 (Ind. Ct. App. 2013) (trial court’s broad discretion on discovery sanctions and Trial Rule 37 framework).
- Huber v. Montgomery Cnty. Sheriff, 940 N.E.2d 1182 (Ind. Ct. App. 2010) (purposes of discovery and enforcement under T.R. 37).
- Vernon v. Kroger Co., 712 N.E.2d 976 (Ind. 1999) (trial courts’ broad discretion in discovery rulings).
- Whitaker v. Becker, 960 N.E.2d 111 (Ind. 2012) (discovery rules promote liberal disclosure and minimal court involvement).