Physiotherapy Associates Inc v. Deloach
Filing
93
MEMORANDUM OPINION Signed by Judge Annemarie Carney Axon on 9/17/18. (SAC )
FILED
2018 Sep-17 PM 12:11
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
EASTERN DIVISION
PHYSIOTHERAPY
ASSOCIATES, INC.,
Plaintiff,
v.
JAMES DOUG DELOACH,
Defendant.
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Case No.: 1:16-cv-02014-ACA
MEMORANDUM OPINION
In this breach of contract action, Plaintiff Physiotherapy Associates, Inc.
asserts that, while working for Physiotherapy and after he quit to work for a
competitor, Defendant James Doug DeLoach breached the terms of non-compete
and non-solicitation agreements that he had entered with Physiotherapy. (See Doc.
1).
Physiotherapy contends that Mr. DeLoach’s breach has caused it to lose
business and employees. Physiotherapy seeks monetary damages and a permanent
injunction prohibiting Mr. DeLoach from breaching his non-compete and nonsolicitation agreements.
This case is before the court on Mr. DeLoach’s motion for summary
judgment. (Doc. 75). The parties have fully briefed the motion. (Docs. 75, 82,
87). The court WILL GRANT IN PART and DENY IN PART Mr. DeLoach’s
motion.
Because Physiotherapy has not presented evidence indicating that
Mr. DeLoach breached the non-compete and non-solicitation agreements, the court
WILL GRANT SUMMARY JUDGMENT in favor of Mr. DeLoach and against
Physiotherapy on Physiotherapy’s claim seeking monetary damages. As a result,
the court finds as moot Physiotherapy’s request for injunctive relief, and WILL
DISMISS WITHOUT PREJUDICE that request. Accordingly, the court WILL
DENY AS MOOT Mr. DeLoach’s motion for summary judgment on the claim for
injunctive relief.
I.
STANDARD OF REVIEW
“The court shall grant summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). The court views the evidence in the light
most favorable to the non-moving party. Baas v. Fewless, 886 F.3d 1088, 1091
(11th Cir. 2018). “The moving party bears the initial burden of demonstrating the
absence of a genuine dispute of material fact.”
FindWhat Inv’r Grp. v.
FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986)).
II.
FACTUAL BACKGROUND
Physiotherapy owns and operates physical therapy and occupational therapy
clinics and provides sports medicine services to schools. (Doc. 79-2 at 10; Doc.
83-1 at 3). More than 90% of its business comes from physician referrals, and its
2
largest referral source in north Alabama is Andrews Sports Medicine and
Orthopaedic Center (the “Andrews Group” or “Andrews”). (Doc. 79-2 at 12-13;
Doc. 83-1 at 3).
Mr. DeLoach is a licensed occupational therapist who has practiced
occupational therapy and managed physical rehabilitation facilities in northern
Alabama since 1994. (Doc. 75-6 at 3; Doc. 79-1 at 4, 18-24). Physiotherapy
offered Mr. DeLoach a position as an Area Vice President in January 2013, and it
confirmed its offer with a letter dated January 14, 2013 (the “Offer Letter”). (Doc.
1-1; Doc. 75-6 at 4).
The Offer Letter begins by stating that Mr. DeLoach is an at will employee,
which “means that you are not employed for a set period of time, and you or the
Company may terminate your employment at any time and for any reason.” (Doc.
1-1 at 2). And although the Offer Letter states that “[t]his offer letter . . . is not
intended to create an employment contract,” it also provides that signing the Offer
Letter and accepting employment with Physiotherapy signals his agreement “to be
legally bound and obligated to comply with” the non-compete and non-solicitation
agreements. (Id. at 1, 4).
Mr. DeLoach’s non-compete agreement required that, for a period of twelve
months after termination from Physiotherapy, Mr. DeLoach would “not, directly or
indirectly, own, manage, operate, control, be employed by, perform services for,
3
consult with, solicit business for, participate in, or be connected with the
ownership, management, operation, or control of, any business which performs
outpatient rehabilitation or orthotics or prosthetic services in the Market Area.”
(Id. at 4). The agreement defined the “Market Area” as “the area that is within a
ten (10) mile radius of any of the Company’s facilities [ ] at which you provided
services during your employment . . . or for which you had . . . management or
supervisory responsibility.” (Doc. 1-1 at 4).
Mr. DeLoach also agreed not to solicit customers, vendors, and/or associates
of Physiotherapy for twelve months after his employment with Physiotherapy
terminated. (Doc. 1-1 at 4–5). This meant that Mr. DeLoach could not
solicit, induce, or attempt to induce any past or current Customer or
vendor of the Company to (a) cease doing business in whole or in part
with or through the Company, or (b) do business with any other
person, firm, partnership, corporation, or other entity which performs
services material similar to or competitive with those provided by the
Company.
(Id. at 4). The Offer Letter defines “Company” as “Physiotherapy Associates” and
“Customer” as “any person, division or unit of a business enterprise with whom
within a two (2) year period preceding the date of termination of your employment
with the Company, the Company . . . held a business or contractual arrangement to
perform services for Company. (Id. at 1, 4–5; Doc. 82 at 20). Mr. DeLoach is also
prohibited from “solicit[ing], interfer[ing] with, or endeavor[ing] to cause any
[Physiotherapy] Associate to leave his or her employment.” (Doc. 1-1 at 5).
4
As an area vice president for Physiotherapy, Mr. DeLoach’s job
responsibilities included providing hands-on occupational therapy to patients,
managing clinics for Physiotherapy in north Alabama, and developing business
opportunities in north Alabama. (Doc. 75-6 at ¶ 5; Doc. 79-1 at 5, 7-8; Doc. 79-2
at 22). In particular, Mr. DeLoach was responsible for developing Physiotherapy’s
relationship with the Andrews Group, and he interacted with physicians or the
CEO of Andrews at least twice a month. (Doc. 79-1 at 38; Doc. 83-1 at ¶ 18).
In early 2016, another company acquired Physiotherapy, although
Physiotherapy continued to operate under the same name.
(Doc. 76-1 at 6–7;
Doc. 79-2 at 11). The merger agreement provides that “[a]s of [January 22, 2016],
neither [Physiotherapy] nor any [Physiotherapy] Subsidiary is a party to or bound
by . . . any agreement with any employee [ ] that . . . provides for an annual
compensation opportunity . . . to exceed $100,000 . . . .”
(Id. at 27).
It is
undisputed that Mr. DeLoach’s annual compensation exceeded $100,000.
After the merger, Physiotherapy’s largest referral source, the Andrews
Group, developed concerns about the post-merger management of Physiotherapy.
(Doc. 79-5 at 10). As it happens, around that time another company—ATI—that
owns and operates physical therapy clinics was looking to expand into north
Alabama. (Doc. 79-4 at 7–9; Doc. 83-1 at 6). In August 2016, ATI’s Chief
Operations Officer, Brent Mack, contacted the Andrews Group’s CEO, Lisa
5
Warren, to arrange a meeting to discuss ATI’s business and plans for expansion.
(Doc. 79-1 at 27, 46; Doc. 79-4 at 28–29). During the meeting, Ms. Warren
expressed frustration with Physiotherapy’s new management. (Doc. 79-4 at 55).
Mr. Mack believed that an opportunity existed for ATI to expand its business by
getting referrals from the Andrews Group. (Id. at 29, 53–55).
Mr. DeLoach had no involvement in the initial contact between Mr. Mack
and Ms. Warren, (doc. 79-4 at 9, 29, 53), but around the time when they were
meeting, Mr. Mack also contacted Mr. DeLoach about interviewing for a position
with ATI. (Doc. 79-1 at 27-28). On August 18, 2016, Mr. DeLoach sent ATI a
copy of his Offer Letter containing the non-compete and non-solicitation
agreements with Physiotherapy. (Doc. 79-1 at 29-30; Doc. 84-1 at 2–8). Later that
same month, while Mr. DeLoach was still working for Physiotherapy, he sent to
ATI an action plan entitled “DeNovo and Acquisition Strategy.” (Doc. 84-7). In
the action plan, Mr. DeLoach identified potential locations for ATI clinics in
Alabama, including locations for clinics to open after the expiration of his noncompete agreement, and he gave ATI information about the market near those
locations. (Id.).
Mr. DeLoach continued working for Physiotherapy while he and ATI were
having those discussions. In early September 2016, Mr. DeLoach suggested to
Physiotherapy’s CEO, Dan Bradley, that Mr. Bradley meet with physicians at
6
Andrews to address their concerns. (Id.). Mr. DeLoach arranged a meeting on
September 7, 2016 between Mr. Bradley and Ms. Warren as well as several
physicians from Andrews. (Doc. 75-5 at ¶¶ 6-7; Doc. 79-1 at 12; Doc.79-5 at 14,
16).
The meeting did not go well. Andrews expressed concerns about three of
Physiotherapy’s new management policies, and Mr. Bradley took offense to
Andrews raising those concerns. (Doc. 79-5 at 11-12, 39). After the meeting,
Mr. Bradley questioned whether Mr. DeLoach’s loyalties lay with Physiotherapy
or the Andrews Group. (Doc. 79-5 at 13-16).
Mr. DeLoach decided to resign from Physiotherapy and accept a position
with ATI.
(Doc. 75-5 at ¶ 4). On September 12, 2016, Mr. DeLoach accepted
ATI’s offer and executed his offer letter with ATI. (Doc. 79-4 at 27). He tendered
his resignation soon after, but continued to work for Physiotherapy until October
18, 2016. (Doc. 79-1 at 32–33). On one of his last days at Physiotherapy,
Mr. DeLoach visited the Andrews Group’s office at St. Vincent’s hospital and told
Andrews that he was leaving Physiotherapy to work for ATI. (Doc. 79-1 at 34-35,
38).
Mr. DeLoach started working for ATI on October 31, 2016, and he was
ATI’s first employee in Alabama. (Doc. 79-1 at 38; Doc. 79-4 at 8). During
November and December 2016, Mr. DeLoach helped ATI prioritize areas to target
7
for clinic locations. (See Doc. 84-20 at 22; Doc. 84-33 at 23, 27, 39). As part of
his responsibilities, Mr. DeLoach arranged a meeting on November 30, 2016
between Ms. Warren (Andrews Group CEO) and Bob Leonard, a vice president
for ATI. (Doc. 79-1 at 64; Doc. 84-17 at 2; Doc. 84-18 at 2-3). The purpose of the
meeting was to ensure “the lines of communication were together” between
Mr. Leonard and Ms. Warren. (Doc. 79-1 at 64).
Mr. DeLoach also coordinated a meeting between ATI management and the
Andrews Group on December 12, 2016.
84-18 at 2–3; Doc. 84-33 at 29).
(Doc. 84-3 at 3; Doc. 84-16 at 2; Doc.
Although Mr. DeLoach did not attend the
meeting, he helped ATI prepare for it. (Doc. 79-1 at 71; Doc. 84-21; Doc. 84-22;
Doc. 84-23; Doc. 84-25; Doc. 84-33 at 30). Mr. DeLoach talked with Ms. Warren
in the week before the meeting about the Andrews Group’s “current pain points”
with Physiotherapy and about what Physiotherapy did well for Andrews.
(Doc.
84-21 at 2; Doc. 84-33 at 30). During the meeting, ATI intended to present
information about the company to the Andrews Group, including its plans to open
clinics in Alabama. (Doc. 84-20). In particular, ATI planned to tell the Andrews
Group that it “is aggressively building a pipeline of new clinics to serve the
Andrews’ patient base” and that it was targeting areas for clinics that were near
existing Physiotherapy sites. (Id. at 22–23).
8
ATI opened its first clinic in Alabama in the spring of 2017 in Lincoln,
Alabama. (Doc. 79-1 at 4; Doc. 79-4 at 42). Since ATI’s clinics have opened,
Physiotherapy has had fewer patients referred to it by the Andrews Group. (Doc.
83-1 at ¶ 24). Specifically, “[i]n July 2017, Physiotherapy experienced a decline of
approximately 34.0% in new patient counts from referrals in the North Alabama
Market from physicians at the Andrews [Group] as compared to July 2016.” (Doc.
84-32 at ¶ 5). Based on the decline in patient referrals, Physiotherapy expects to
lose more than $2.4 million in revenue. (Id.).
The term of the non-compete and non-solicitation agreements expired on
October 18, 2017, twelve months after Mr. DeLoach left Physiotherapy. (See Doc.
1-1 at 4–5; Doc. 79-1 at 33). Thus, Mr. DeLoach is no longer bound by the
agreements.
III.
ANALYSIS
Mr. DeLoach asks the court to enter summary judgment in his favor on
Physiotherapy’s breach of contract claim. (Doc. 75). He contends that he is
entitled to summary judgment because (1) the Offer Letter containing the noncompete agreement is not a binding contract between the parties; (2) Physiotherapy
disclaimed its contract with him; (3) he did not solicit any Physiotherapy employee
or customer on behalf of ATI; (4) he did not violate the non-compete agreement
9
and the agreement is unenforceable under Alabama law; and (5) Physiotherapy’s
damages are speculative.
The construction and interpretation of the contract is governed by the laws
of the Commonwealth of Pennsylvania. (Doc. 1-1 at 5 ¶ 4). Under Pennsylvania
law, a party must establish three elements to prove a breach of contract: (1) the
existence of a contract, including its essential terms; (2) a breach of a duty imposed
by the contract; and (3) resultant damages. Ware v. Rodale Press, Inc., 322 F.3d
218, 225 (3d Cir. 2003) (quoting CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053,
1058 (Pa. Super. Ct. 1999)). In interpreting the language of a contract, a court
attempts to ascertain and give effect to the intent of the parties. Crawford Central
Sch. Dist. v. Commonwealth, 888 A.2d 616, 623 (2005). When the words of an
agreement are clear and unambiguous, the court must glean the intent of the parties
from “the express language of the agreement.” Steuart v. McChesney, 444 A.2d
659, 661 (Pa. 1982). Because “[c]ourts do not assume that a contract’s language
was chosen carelessly,” Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d
418, 429 (Pa. 2001), “a meaning cannot be given to it other than that expressed,”
Steuart, 444 A.2d at 661.
A.
The existence of a binding contract between the parties
Mr. DeLoach argues that the Offer Letter containing the non-compete and
non-solicitation agreements is not a binding contract between the parties because it
10
expressly states that it is not an employment contract. (Doc. 75 at 32). The court
is not persuaded by that argument.
To determine if Mr. DeLoach is bound by the terms of the Offer Letter’s
non-compete and non-solicitation agreements, the court looks to the language of
the letter. When examining the intent of the parties all provisions in the agreement
will be construed together and each will be given effect. See Murphy, 777 A.2d at
429. The Offer Letter, read as a whole, shows that the parties intended the noncompete and non-solicitation agreements to be a binding contract between the
parties.
The first section of the Offer Letter states: “This offer letter confirms the
terms of your employment . . . . It is not intended to create an employment contract
and the terms/conditions of your employment may be changed at [Physiotherapy’s]
discretion. Employment with [Physiotherapy] is on an at-will basis.” (Doc. 1-1 at
2). But the section of the Offer Letter containing the non-compete and nonsolicitation agreements states: “By signing this offer letter and accepting
employment with [Physiotherapy] you are agreeing to be legally bound and
obligated to comply with the following covenants,” including the non-compete and
non-solicitation agreements. (Id. at 4–5).
The statement in the Offer Letter that the letter “is not intended to create an
employment contract” informs the person signing the letter that he or she will be
11
an at-will employee. (Doc. 1-1). The statement does not alter or conflict with the
express language stating that an employee who signs the Offer Letter is “legally
bound and obligated to comply with” the non-compete and non-solicitation
agreements because those agreements are not an employment contract. (Id. at 4–
5).
As a result, Mr. DeLoach is not entitled to summary judgment on the
grounds that the Offer Letter is not a binding contract between the parties.
B.
Physiotherapy’s alleged disclaimer of the agreement between the
parties
Mr. DeLoach also argues that Physiotherapy cannot enforce the noncompete and non-solicitation agreements against him because it expressly
disclaimed its contract with him when it was acquired by another company. (Doc.
75 at 32). The agreement and plan of merger states that “neither [Physiotherapy]
nor any [Physiotherapy] Subsidiary is a party to or bound by . . . any agreement
with any employee or independent contractor that . . . provides for an annual
compensation opportunity . . . that exceeds . . . $100,000.” (Doc. 76-1 at 27).
Mr. DeLoach relies on that language to assert that Physiotherapy is not a party to
the Offer Letter and, therefore, cannot enforce the non-compete and nonsolicitation agreements against him as a matter of law. (Doc. 75 at 32–33). The
court does not agree.
12
Undisputed evidence establishes that Physiotherapy continued to employ
and pay Mr. DeLoach after the merger in 2016.
(Doc. 79-1 at 26).
Thus,
Physiotherapy continued to perform any obligations it had to Mr. DeLoach under
the Offer Letter, which creates a question of fact regarding whether Physiotherapy
actually disclaimed its agreement with Mr. DeLoach. As a result, Mr. DeLoach is
not entitled to summary judgment on the grounds that Physiotherapy is not a party
to the non-compete and non-solicitation agreements.
C.
Breach of non-solicitation agreement
Mr. DeLoach’s next argument is that Physiotherapy did not produce any
evidence that he breached the non-solicitation agreement, either by soliciting any
of Physiotherapy’s employees or by soliciting any of its customers. (Doc. 75 at
26–30).
Physiotherapy responds that Mr. DeLoach solicited a Physiotherapy
employee by providing ATI with a Physiotherapy employee’s contact information,
and that he solicited a Physiotherapy customer by developing ATI’s relationship
with Andrews Group. (Doc. 82 at 24–26, 29).
1.
Solicitation of Physiotherapy employees
Mr. DeLoach’s contract with Physiotherapy prohibits him from “solicit[ing],
interfer[ing] with, or endeavor[ing] to cause any [Physiotherapy] Associate to
leave his or her employment.” (Doc. 1-1 at 5). Physiotherapy contends that
Mr. DeLoach violated that provision by providing contact information about its
13
former outreach coordinator, Alex Wolf, to ATI, after which Mr. Wolf left
Physiotherapy to work for ATI. (Doc. 82 at 29). It points to evidence that
Mr. DeLoach exchanged text messages with Mr. Wolf and, at ATI’s request, gave
ATI information about Mr. Wolf, including Mr. Wolf’s phone number. (Doc. 82 at
9, 75-76; see also Doc. 79-1 at 75–76). However, Physiotherapy did not introduce
evidence regarding the content or timing of the text messages, and Mr. Wolf attests
that Mr. DeLoach did not solicit him to work for ATI, discuss ATI with him, or
have any involvement in his decision to work for ATI. (Doc. 75-15 at 2). Finally,
Physiotherapy’s current regional vice president testified that providing a person
with a phone number of one its employees upon request would not violate the nonsolicitation agreement. (Doc. 79-2 at 27).
Viewing all of this evidence in the light most favorable to Physiotherapy, it
is not sufficient to create a question of fact regarding whether Mr. DeLoach
breached the non-solicitation agreement by soliciting Mr. Wolf on behalf of ATI.
As a result, Mr. DeLoach is entitled to summary judgment on Physiotherapy’s
breach of contract claim to the extent the claim is based upon his alleged
solicitation of Physiotherapy’s employees.
2.
Solicitation of Physiotherapy customers
Mr. DeLoach’s contract with Physiotherapy also prohibits “solicit[ing],
induc[ing], or attempt[ing] to induce any past or current Customer or vendor of the
14
Company to (a) cease doing business in whole or in part with or through the
Company, or (b) do business with any other person, firm, partnership, corporation,
or other entity which performs services material similar to or competitive with
those provided by the Company.” (Doc. 1-1 at 4). Physiotherapy contends that
Mr. DeLoach breached this provision by soliciting the Andrews Group to provide
referrals for ATI. (Doc. 82 at 21–22). To prevail on that argument, Physiotherapy
must establish that Andrews Group is a customer under the terms of the nonsolicitation agreement.
The Offer Letter defines the “Company” as Physiotherapy Associates. (Doc.
101 at 1). It defines “Customer” as “any person, division or unit of a business
enterprise with whom within a two [ ] year period preceding the date of
termination of your employment with the Company, the Company had received
services from Company or held a business or contractual arrangement to perform
services for Company.” (Doc. 1-1 at 4–5; see also Doc. 82 at 20).
In
Physiotherapy’s brief in opposition to the motion for summary judgment, it
represents that the definition is, instead, “any person, division or unit of a business
enterprise with whom within a two (2) year period preceding the date of
termination of [Defendant’s] employment with the Company . . . Company held a
business or contractual arrangement to perform services for[.]” (Doc. 82 at 20
(alterations in original)).
15
Physiotherapy’s representation about the definition of “Customer” is an
attempt to redraft the poorly drafted definition through omissions and alterations of
the actual contract language.
It made that attempt because the definition of
customer in the Offer Letter does not make sense; it defines a customer of
Physiotherapy as Physiotherapy itself. The Offer Letter states that a customer is
someone “with whom . . . the Company had received services from Company or
held a business or contractual arrangement to perform services for Company.”
(Doc. 1-1 at 4–5). In other words, it defines a customer as someone with whom
Physiotherapy received services from Physiotherapy, or someone with whom
Physiotherapy held a business or contractual arrangement to perform services for
Physiotherapy. But, contrary to Physiotherapy’s representation to this court, the
Offer Letter does not define a customer as someone “with whom . . . Company
held a business or contractual arrangement to perform services for[.]” (Doc. 82 at
20 (second alteration in original)).
The court rejects Physiotherapy’s attempt to redraft the contract in its own
favor. It drafted the Offer Letter, and it is bound by the language that it chose.
That language, while poorly drafted and confusing, essentially provides that
Physiotherapy is its own customer. Accordingly, there is no genuine dispute of
material fact about whether Andrews Group is a customer of Physiotherapy or
whether Mr. DeLoach breached the anti-solicitation agreement he entered with
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Physiotherapy.
Even assuming that Mr. DeLoach “solicit[ed], induce[d], or
attempt[ed] to induce” Andrews Group to cease doing business with
Physiotherapy, (see Doc. 1-1 at 4), that would not be a breach of the agreement
because Andrews Group was not Physiotherapy’s customer as defined in the
contract.
In any event, even if the court accepted Physiotherapy’s attempt to redraft
the contract in its own favor, the court would still find that Physiotherapy has not
created a genuine dispute of material fact about whether Andrews Group was a
customer as defined by the contract. Physiotherapy says that its customers are
people or entities “with whom . . . [it] held a business or contractual arrangement
to perform services for.” (Doc. 82 at 21 (one alteration omitted; other alterations
and emphasis added)). The Offer Letter does not define the term “services.” (See
Doc. 1-1). Accordingly, the court will give the term its “‘natural, plain, and
ordinary meaning.” Cordero v. Potomac Ins. Co. of Illinois, 794 A.2d 897, 900
(Pa. Super. Ct. 2002). “Services” is defined as “useful labor that does not produce
a tangible commodity.” Services, Merriam Webster’s Collegiate Dictionary (10th
ed. 1996). Black’s Law Dictionary defines a “service” as “[t]he act of doing
something useful for a person or company, usu[ally] for a fee.” Service, Black’s
Law Dictionary (9th ed. 2009).
17
Jason Chambers, Physiotherapy’s current regional vice president, testified
that he is not aware of any services that Physiotherapy provides directly to
physicians at the Andrews Group. (Doc. 79-2 at 17). And, for its part, Andrews
says it is not Physiotherapy’s customer.
(Doc. 75-16 at 2).
Physiotherapy,
however, contends that it provides indirect services to Andrews because it provides
services to Andrews’ patients.
(Doc. 82 at 20–21). The court declines the
invitation to stretch the definition of services that far.
“Courts do not assume that a contract’s language was chosen carelessly, nor
do they assume that the parties were ignorant of the meaning of the language they
employed.” Murphy, 777 A.2d at 429. Under Physiotherapy’s redrafted language,
a customer is a person or entity whom Physiotherapy “held a business or
contractual arrangement to perform services for.”
(Doc. 82 at 20 (emphasis
added)). To be a customer of Physiotherapy, Physiotherapy must have had an
arrangement to perform services for that customer. But Physiotherapy performs
services for Andrews’ patients. (Doc. 75-16 at ¶ 3). The fact that Andrews and
Physiotherapy communicate regarding their mutual patients in order to provide the
best result for the patient does not constitute a “service” to Andrews. Indeed,
Andrews is nothing more than a referral source for Physiotherapy. (Doc 82 at 26
(Mr. DeLoach’s “most important role” was establishing Andrews as “a referral
base of physicians” in order to ensure company success in the Market Area); Doc
18
83-1 (“Physiotherapy relies on physicians and physician groups as referral sources
to develop its business and increase its patient base”)). Because Andrews Group is
not a customer of Physiotherapy, Mr. DeLoach did not breach the anti-solicitation
agreement even if he solicited Andrews Group.
D.
Breach of non-compete agreement
The Offer Letter’s non-compete agreement provides that, during his
employment with Physiotherapy and for a period of twelve months after he left the
company, Mr. DeLoach could not “be employed by, perform services for, consult
with, solicit business for, [or] participate in . . . any business which performs
outpatient rehabilitation [ ] services . . . . within a ten (10) mile radius of any of
[Physiotherapy’s] facilities . . . at which [Mr. DeLoach] provided services . . . or
for which [Mr. DeLoach] had . . . management or supervisory responsibility.”
(Doc. 1-1 at 4). Among other arguments, Mr. DeLoach contends that he is entitled
to summary judgment on the claim that he breached the non-compete agreement
for the following reasons: (1) nothing he did before May 2017 breached the
agreement because ATI did not “perform” outpatient rehabilitation services within
the Market Area until then; and (2) nothing he did after May 2017 breached the
agreement because he has not been involved in any of the ATI clinics within the
Market Area since then. (Doc. 75 at 28–29).
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Physiotherapy responds that Mr. DeLoach nevertheless violated the terms of
his non-compete by “play[ing] a critical role in preparing ATI to compete in . . .
the Market Area.” (Doc. 82 at 25). It may be true that Mr. DeLoach helped ATI
prepare to compete in the Market Area, but the non-compete agreement does not
prohibit Mr. DeLoach from working with a competitor who is preparing to
perform outpatient rehabilitation or orthotics or prosthetic services; it prohibits
Mr. DeLoach from working with a competitor who “is performing” these services.
(Doc. 1-1 at 4 (emphasis added)). Nevertheless, Physiotherapy urges the Court to
find that the scope of the non-compete includes preparation to compete, citing to a
decision by the Alabama Court of Civil Appeals, which held that the term
“‘engaging in business’ . . . involves not only the servicing or soliciting of
customers but also means setting up an office or place of business for soliciting or
servicing customers.” (Doc 82 at 25 (citing Dixon v. Royal Cup, Inc., 386 So. 2d
481,483 (Ala. Civ. App. 1980)).
Physiotherapy’s reliance on Dixon is misplaced. The agreement is governed
by Pennsylvania law, not Alabama law. (Doc. 1-1 at 5). Physiotherapy has not
pointed to, and the court cannot find, a Pennsylvania case with a similar holding.
And, even if Dixon were controlling precedent, Physiotherapy’s agreement does
not include a prohibition against a general “engaging” in business. In drafting the
agreement, Physiotherapy chose to identify specific acts that constitute prohibited
20
competition. As the drafter, Physiotherapy could have easily included language
that prohibited preparing, establishing, and/or developing a business that performs
the same services as Physiotherapy. See e.g., Carim v. Reading Hosp. Surgi-Ctr.
at Spring Ridge, LLC, 2014 WL 10987056 at 2 (Pa. Super. Ct. Jan. 15, 2014)
(hospital unambiguously “prohibited members from directly or indirectly
establishing or developing” a competing surgical center). Physiotherapy is bound
by its decision to use the specific language “performs outpatient rehabilitation [ ]
services.” In re Estate of Hall, 535 A.2d 47, 56 n.7 (Pa. 1987) (“[C]ourts are not
generally available to rewrite agreements or make up special provisions for parties
who fail to anticipate foreseeable problems.”).
Physiotherapy has not presented evidence creating a genuine dispute of
material fact about whether Mr. DeLoach breached his non-compete agreement or
his non-solicitation agreement.
As a result, the court WILL GRANT
Mr. DeLoach’s motion for summary judgment as to Physiotherapy’s claim for
monetary damages. And because the court will grant that motion, Physiotherapy’s
request for injunctive relief is moot. Accordingly, the court WILL DENY AS
MOOT the motion for summary judgment as to Physiotherapy’s claim for
injunctive relief, and WILL DISMISS AS MOOT that claim.
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IV.
CONCLUSION
The court WILL GRANT IN PART and DENY IN PART Mr. DeLoach’s
motion for summary judgment.
The court WILL DISMISS AS MOOT
Physiotherapy’s claim for injunctive relief, and WILL DENY AS MOOT
Mr. DeLoach’s motion for summary judgment as to the claim for injunctive relief.
The court WILL GRANT Mr. DeLoach’s motion for summary judgment on
Physiotherapy’s breach of contract claim, and WILL ENTER SUMMARY
JUDGMENT in favor of Mr. DeLoach and against Physiotherapy as to that claim.
The court will enter a separate order consistent with this opinion.
DONE and ORDERED this September 17, 2018.
_________________________________
ANNEMARIE CARNEY AXON
UNITED STATES DISTRICT JUDGE
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