Opinion
C. A. 29674
07-28-2023
CHARLES W. OBERER Appellant v. SPECIALTY MEDICINE CARE LLC, ET AL. Appellee
KONRAD KUCZAK, Attorney for Appellant MARC L. FLEISCHAUER, Attorney for Appellee
Civil Appeal from Common Pleas Court No. 2020 CV 00869
KONRAD KUCZAK, Attorney for Appellant
MARC L. FLEISCHAUER, Attorney for Appellee
OPINION
TUCKER, J.
{¶ 1} Plaintiff-appellant Charles W. Oberer appeals from a judgment of the Montgomery County Court of Common Pleas awarding damages against him following a finding that he breached the terms of his contract with his employer. For the reasons set forth below, we affirm.
I. Facts and Procedural History
{¶ 2} Oberer, a gastroenterologist, was recruited by Specialty Medicine Care, L.L.C. ("SMC") and Sycamore Medical Center ("Sycamore") to work for SMC at Sycamore, a hospital owned by Kettering Health Network ("KHN"). A Physician Recruitment Agreement ("PRA") was executed by SMC, Oberer and Sycamore/KHN in April 2017. Thereafter, Oberer and SMC executed an Employment Agreement ("EA").
{¶ 3} Under the terms of the EA, SMC agreed to pay Oberer a base salary of $350,000 per year, and Oberer agreed to work for SMC for a period of three years. The EA provided that, in the event Oberer's gross receipts were less than his base compensation and expenses, SMC could cover the difference by drawing on a line of credit provided by Sycamore/KHN under the terms of the PRA.
{¶ 4} The PRA provided for a line of credit to be utilized by SMC in the event Oberer's salary and expenses exceeded his gross receipts. According to the record, this is a type of federal government loan arrangement and is used when a non-profit hospital needs to attract medical providers to practice in the hospital's geographic area. The line of credit protects employers like SMC from the risk that the new provider will not be able to generate enough gross receipts to cover his salary and expenses when starting a medical practice. The PRA provided that any debt owed by Oberer on the line of credit would be forgiven if he continued to practice in the geographic area served by KHN and maintained privileges at Sycamore for a period of three years from the date the PRA was executed. The PRA provided that SMC could, at its sole discretion, terminate the line of credit. Oberer executed a promissory note in the amount of $1,050,000 payable to reimburse KHN for any payments made to SMC on the line of credit.
The president of SMC testified it was normal practice to terminate this type of line of credit when a new provider began to meet his salary and expenses because the PRA required any net revenue above the provider's base compensation to be applied, on a monthly basis, toward any balance on the line of credit.
{¶ 5} The EA further provided that SMC could cover any deficit between Oberer's receipts and expenses by extending him transitional funding. According to the record, this type of funding would reduce any end-of-year bonus awarded to SMC partners. The EA also contained a provision stating that Oberer had a duty to repay any transitional funding balance generated during the term of his employment.
{¶ 6} In May 2018, Oberer began generating net revenues which exceeded his base compensation. In anticipation that he would continue to do so, SMC terminated the line of credit with Sycamore/KHN.
{¶ 7} According to the record, shortly after the line of credit was terminated, Oberer's net revenue dropped because Oberer cut his patient appointments and stopped working on Mondays. Thus, SMC began to cover the shortfall between his revenue and his base compensation/expenses with transitional funding.
{¶ 8} In 2019, Oberer decided to leave SMC. The EA expressly stated that Oberer was required to provide SMC with written notice of his decision to end his employment 90 days prior to the termination date. The EA also prohibited Oberer from working for another medical practice during his tenure with SMC. However, Oberer began to work as a physician for another medical group known as Weatherby Locums on May 20, 2019. At that time, he remained an employee of SMC.
{¶ 9} Oberer's written notice of resignation was provided to SMC on May 14, 2019. The notice indicated Ober's effective date of resignation would be June 14, 2019. Thereafter, SMC demanded Oberer repay $149,738 in accumulated transitional funding. The EA required Oberer to arrange a repayment plan within 30 days of resignation; otherwise, the full amount would be due 180 days thereafter.
{¶ 10} SMC offered Oberer several options for making the payments, but Oberer declined to make payments. At some point, SMC discovered Oberer had worked for Weatherby Locums and, per the EA, it demanded that he pay SMC the $29,610 in compensation he received from Weatherby Locums.
{¶ 11} Oberer filed an action seeking a declaratory judgment and money damages for breach of contract and fraud. SMC filed an answer and a counterclaim alleging that Oberer had breached the terms of the EA. A three-day bench trial was conducted. At the close of Oberer's case, SMC moved for a directed verdict on the fraud claim. Oberer did not object, and the trial court dismissed the fraud claim. Following the trial, the court found that Oberer had failed to prove his claim for breach of contract. Conversely, the trial court concluded that SMC had established that Oberer had breached the terms of the EA and that he owed SMC $211,297 in unpaid transitional funding and $29,610 in compensation earned while working for Weatherby Locums.
Oberer also set forth claims for breach of fiduciary duty and breach of implied covenant of good faith and fair dealing. Both of those claims were disposed of via SMC's motion for summary judgment, and they are not part of this appeal.
Oberer did not appeal from the trial court's order dismissing his fraud claim or its ruling on his breach of contract claim.
II. Account Argument
{¶ 13} Oberer's first assignment of error states:
THE TRIAL COURT COMMITTED PREJUDICIAL ERROR BY GRANTING JUDGMENT FOR SPECIALTY MEDICINE CARE, LLC, WHICH NEITHER PLEAD NOR PROVED ITS ACCOUNT WITH CHARLES W. OBERER, III, M.D.
{¶ 14} In this assignment of error, Oberer argues that SMC failed to allege or prove a claim on an account and that, on this basis, the trial court erred by granting a judgment in SMC's favor regarding the transitional funding balance. SMC responds that its complaint was based upon an alleged breach of contract by Oberer and did not allege an action on account.
{¶ 15} "An action on an account is 'founded upon contract' and constitutes a breach of contract claim." Benchmark Contrs., Inc. v. Southgate Mgt, LLC, 10th Dist. Franklin No. 13AP-390, 2014-Ohio-1254, ¶ 38, quoting Oxford Sys. Integration, Inc. v. Smith-Boughan Mechanical Servs., 159 Ohio App.3d 533, 2005-Ohio-210, 824 N.E.2d 586, ¶ 16 (2d Dist.). An action on an account does not constitute a separate claim; rather, it is "a pleading device 'used to consolidate several claims which one party has against another.'" Kwikcolor Sand v. Fairmount Minerals Ltd., 8th Dist. Cuyahoga No. 96717, 2011-Ohio-6646, ¶ 13, quoting AMF, Inc. v. Mravec, 2 Ohio App.3d 29, 440 N.E.2d 600 (8th Dist. 1981), paragraph one of the syllabus. It is a rule of pleading rather than a rule of evidence. Am. Sec. Serv., Inc. v. Baumann, 32 Ohio App.2d 237, 243, 289 N.E.2d 373 (10th Dist.1972). An action on account "simplifies pleadings by allowing a party to advance, as one claim, claims for separate breaches of contract based on a series of transactions by providing a summary of accounting for the transactions." Kwikcolor Sand at ¶ 13. "The purpose of an action on an account is to avoid the multiplicity of suits necessary if each transaction between the parties (or item on the account) would be construed as constituting a separate cause of action." (Internal quotations omitted.) Citibank, N.A. v. Hyslop, 10th Dist. Franklin No. 12AP-885, 2014-Ohio-844, ¶ 9, quoting Citibank (South Dakota), N.A. v. Lesnick, 11th Dist. Lake No. 2005-L-013, 2006-Ohio-1448, ¶ 8.
{¶ 16} Here, SMC raised allegations of breach of contract based upon Oberer's early termination of his employment, his failure to provide 90-days written notice, and for Oberer's period of work with Weatherby Locums. The damages for these breaches included, but were not limited to, the amount of transitional funding paid to Oberer and the amount of monies paid to him by Weatherby Locums. As noted below, SMC provided competent, credible evidence of its damages for those breaches of the EA. Oberer does not cite, and we cannot find, any authority that SMC was required to plead an action on account rather than pleading a breach of contract cause of action.
{¶ 17} We find no merit in this argument. Accordingly, the first assignment of error is overruled.
III. Transitional Funding
{¶ 18} The second assignment of error asserted by Oberer states:
THE TRIAL COURT COMMITTED PREJUDICIAL ERROR BY ENTERING JUDGMENT WHEN SPECIALTY MEDICINE CARE, LLC, HAD FAILED TO PROVE ITS CASE TO A REASONABLE CERTAINTY.
{¶ 19} Oberer contends the transitional funding damages amount was not supported by the evidence.
{¶ 20} Generally, "a party seeking damages for breach of contract must present sufficient evidence to show entitlement to damages in an amount ascertainable with reasonable certainty." Natl. Contracting Group, Ltd. v. P&S Hotel Group, Ltd., 2021-Ohio-2940, 177 N.E.3d 308, ¶ 24 (10th Dist.), citing Father's House Internatl., Inc. v. Kurguz, 2016-Ohio-5945, 71 N.E.3d 711, ¶ 39 (10th Dist.). Accord McNelly v. Conde, 2021-Ohio-146, 166 N.E.3d 697, ¶ 44 (2d Dist.).
{¶ 21} As noted above, after the line of credit with Sycamore/KHN was terminated, Oberer's revenues began to fall. Thereafter, SMC began to provide transitional funding because Oberer's gross receipts were less than his total expenses.
{¶ 22} At trial, SMC presented the testimony of its certified public accountant, Debra Jacobs. Jacobs testified that she provided accounting services to SMC, including preparation of financial statements, payroll services, and tax compliance. She indicated that the amount of damages to which she testified was calculated to a reasonable degree of accounting certainty.
{¶ 23} Jacobs presented SMC's Exhibit M, which she testified was a statement of revenues and expenses for Oberer from the date of his hire to his final date of employment. Jacobs testified that she prepared the exhibit in the ordinary course of business and that the data included therein was based on financial records kept for SMC. According to Jacobs' testimony, Exhibit M demonstrated that Oberer's expenses exceeded his revenues by $149,737.88.
{¶ 24} Jacobs further testified that she, by oversight, had not included a six-percent management fee set forth in the EA. She testified that the fee constituted an expense that should have been included in the transitional funding damage calculation set forth in Exhibit M. Jacobs presented SMC's Exhibit BBBB, which showed how the six percent management fee was calculated. The document showed that Oberer had generated revenues of $892,729 and that he had received $133,245 in monies from the SMC/KHN line of credit. Jacobs testified that, by combining these two streams of income, she determined that the total revenue attributable to Oberer was $1,025,974. Jacobs testified that she used this sum to calculate the six-percent fee of $61,558.44.
{¶ 25} In either a civil or criminal trial, the weight to be given the evidence and the credibility of the witnesses are primarily for the trier of fact. State v. DeHass, 10 Ohio St.2d 230, 231, 227 N.E.2d 212 (1967). The underlying rationale for giving deference to the findings of the trial court rests with the knowledge that the trial judge is best able to view the witnesses and observe their demeanor, gestures, and voice inflections, and to then use these observations in weighing the credibility of the proffered testimony. Id. Accordingly, a trial court may believe all, part, or none of the testimony of any witness who appears before it. Rogers v. Hill, 124 Ohio App.3d 468, 706 N.E.2d 438 (4th Dist.1998). In this case, the trial court specifically stated that it found Jacobs to be credible in all material respects.
{¶ 26} We have reviewed the entire record and find no basis for disagreeing with the trial court's award of damages of $149,738 related to transitional funding and an additional $61,558 as the management fee. Jacobs provided competent, credible evidence of the amount of transitional funding, including the management fee that Oberer, under the EA, owed SMC.
{¶ 27} Because SMC presented sufficient evidence to support the damages awarded by the trial court and those damages were not otherwise against the manifest weight of the evidence, we find Oberer's argument without merit. Accordingly, the second assignment of error is overruled.
IV. Outside Employment
{¶ 28} Oberer's third assignment of error states:
THE TRIAL COURT COMMITTED PREJUDICIAL ERROR BY MISCONSTRUING THE EMPLOYMENT AGREEMENT TO PROVIDE THAT EARNINGS OF CHARLES W. OBERER, M.D., III, FROM COLLATERAL EMPLOYMENT WERE ORDERED FORFEITED TO SPECIALTY MEDICINE CARE, LLC.
{¶ 29} Oberer asserts the trial court erred by awarding SMC the income he earned while working for Weatherby Locums. He argues that the Weatherby Locums income should have been used to offset the transitional funding deficit.
{¶ 30} Oberer does not dispute that the EA prohibited him from practicing medicine for any other entity while employed by SMC. He also does not contest the finding that he worked for Weatherby Locums from May 20 to June 14, 2019, while still employed by SMC, and that he earned income of $29,610 from this employment.
{¶ 31} The EA provided that "all fees received for professional services rendered by [Oberer]" while working for another employer "shall promptly be delivered or paid to [SMC] by [Oberer]." The contract provision regarding transitional funding and the outside employment provision were separate and distinct. Neither provision referenced to the other. Further, the EA made no reference to using fees generated from outside employment as an offset to any transitional funding deficit.
{¶ 32} Simply put, the EA stated that no employee shall work for another employer during his tenure at SMC. Oberer breached this term. The EA required Oberer to remit the monies to SMC, and it did not require SMC to use the monies to offset any other damages caused by reason of a separate breach of the EA. Oberer did not present any competent, credible evidence to support his claim that outside employment fees had to be used to offset any transitional funding amount due under the terms of the EA. Indeed, to reach such a conclusion, we would necessarily have to read a non-existent term into the contract.
{¶ 33} "Contract interpretation is a matter of law * * * subject to de novo review on appeal." PNC Bank, N.A. v. Springboro Med. Arts, Inc., 2015-Ohio-3386, 41 N.E.3d 145, ¶ 15 (2d Dist.), quoting St. Marys v. Auglaize Cty. Bd. of Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, 875 N.E.2d 561, ¶ 38. We agree with the trial court's decision to award the amount of fees earned by Oberer while working for Weatherby Locums as a separate item of damages rather than using it as an offset against the transitional funding deficit. Accordingly, the third assignment of error is overruled.
V. Conclusion
{¶ 34} All of Oberer's assignments of error being overruled, the judgment of the trial court is affirmed.
EPLEY, J. and HUFFMAN, J., concur.