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Supreme Court reverses breach judgment against heart hospital

March 26, 2018

A longstanding dispute between a cardiologist and his former employer has ended with the Indiana Supreme Court overturning a $470,000 judgment against a heart hospital. The justices also had harsh words for the doctor’s counsel, cautioning him against filing additional motions after transfer briefing is closed.

As a cardiologist for St. Vincent Medical Group, Inc., Dr. Roderick Sawyer was also a member-owner of The Care Group Heart Hospital, LLC. A joinder agreement between the three parties specified that if there were “any termination” of Sawyer’s employment, the hospital was to pay out his ownership interest within 90 days.

Sawyer’s employment was terminated in 2011, but he did not receive his $196,787 payout for nearly eight months. Thus, Sawyer sued St. Vincent and the hospital, alleging, among other things, a breach of contract claim specifically against the hospital.

A jury eventually returned a $470,000 against the hospital for breach of the joinder agreement, while the Marion Superior Court ordered both St. Vincent and the hospital to pay a $27,233.19 sanction to Sawyer. However, the trial court granted summary judgment to the hospital as to an operating agreement between it and Sawyer.

In a June opinion, the Indiana Court of Appeals affirmed partial summary judgment for the hospital and the $470,000 judgment but reversed the sanctions and remanded for re-evaluation and re-apportionment. After granting transfer to The Care Group Heart Hospital, LLC v. Roderick J. Sawyer, M.D., 49S05-1710-PL-671, the Indiana Supreme Court also affirmed and reversed in part in a unanimous opinion.

The court first found in its Friday opinion that the hospital breached the joinder agreement only by delaying the payout to Sawyer, not by the payout itself. Specifically, Chief Justice Loretta Rush wrote the plain language of the joinder agreement referencing “any termination” meant the hospital was required to payout Sawyer’s interest for “any termination, for any reason,” not just termination permitted by the separate employment agreement between Sawyer and St. Vincent.

“The Medical Group’s termination of Dr. Sawyer’s employment – authorized by the employment agreement or not – thus triggered the joinder agreement’s mandatory redemption provision,” Rush wrote. “The Hospital accordingly did not breach the agreement by discontinuing and paying out Dr. Sawyer’s ownership interest.”

However, because the hospital did breach the agreement by delaying the payout of the interest, the justices determined Sawyer is entitled to $6,559.60 in interest. The court also upheld the award of sanctions to Sawyer, finding any error in the trial court’s failure to hold a hearing was harmless.

Finally, the court upheld the $27,233.19 sanction award, finding Sawyer failed to overcome the presumption of the award’s correctness, thus defeating his argument that it was too low. The case was remanded to enter judgment against the hospital in the correct amount.

Then, in a separate order also handed down on Friday, the court “disapprove(d) of repeated attempts by (Sawyer’s) attorneys to submit unauthorized supplemental merits briefs under the pretext of motions practice.”

“Such submission are not effective advocacy and do not advance the orderly disposition of an appeal; they only increase burdens on the Court and opposing counsel,” the court wrote. “In sum, such unhelpful tactics generate only heat, not light – and we sternly caution against their future use.”

The court specifically referenced a 200-page “Motion for Oral Argument,” which was actually a surreply to the appellant’s transfer briefs. Though that motion was struck, Sawyer’s counsel subsequently filed “Verified Corrections of Misrepresentations During Rebuttal at Oral Argument” that took issue with three statements made by opposing counsel.

Sawyer’s counsel also filed a “Motion for Remand to Trial Court for Consideration of Motion for Relief Based on Defendants’ Fraud on the Court,” which alleged that St. Vincent and the hospital’s discovery violations constituted “fraud” and asked the Supreme Court to consider those allegations as part of the previous sanction orders. He later filed a verified motion for remand, and a motion for leave to reply to the appellants’ responses.

“Like the ‘Motion for Oral Argument,’ the substance of the verified and unverified ‘Motions for Remand’ is little more than a more-strident continuation of arguments in Appellee’s transfer briefing and a new effort to expand the Record on Appeal outside Rule 32’s parameters – and we reject it for the same reasons,” the court wrote. “…In conclusion, we amplify (Reed v. Reid, 969 N.E.2d 589 9(Ind. 2012)’s) admonition: After transfer briefing is closed, further arguments on the merits — by any name — may be filed only be leave of this Court or in the limited form Rule 48 authorizes for notices of additional authority.”

But, noting in a footnote that the appellant’s “objections” to Sawyer’s corrections constitute a cross-motion to strike, the court granted Sawyer’s motion to accept and file his response to the opposing parties’ objections.

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