Shannon v. Mississippi Coast Urology, PLLC et al
Filing
116
ORDER denying 92 Motion for Summary Judgment; denying 94 Motion for Summary Judgment Signed by Chief District Judge Louis Guirola, Jr on 12/30/2013 (Guirola, Louis)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
PAUL JASON SHANNON, M.D.
PLAINTIFF
v.
CAUSE NO. 1:12CV105-LG-RHW
MISSISSIPPI COAST UROLOGY, PLLC;
MARK S. LYELL, individually and as sole
member of Mississippi Coast Urology, PLLC;
SMS MANAGEMENT, LLC, individually
and as agent for Mississippi Coast Urology,
PLLC; DONALD S. DAVENPORT; and
JOHN AND JANE DOES D, E, F, G, H, and I
DEFENDANTS
MEMORANDUM OPINION AND ORDER DENYING
DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT
BEFORE THE COURT are the Motion for Summary Judgment [92] filed by
Mark S. Lyell and Mississippi Coast Urology, PLLC (“MCU”), and the Motion for
Summary Judgment [94] filed by Donald S. Davenport and SMS Management,
LLC. After reviewing the submissions of the parties and the applicable law, the
Court finds that the defendants’ Motions should be denied.
FACTS
In 2008, the plaintiff Dr. Paul Shannon entered into an Agreement of
Employment with MCU. The Agreement provided that Dr. Shannon would receive
a base salary of $325,000 in addition to incentive compensation based on
production. The Agreement stated:
This Agreement shall be for a period of eighteen months, commencing
on the Effective Date, with an option for an additional six months as
an employee at the same salary and incentive basis as provided for
herein. Thereafter, this [A]greement will continue automatically from
year to year, subject however, to the termination provisions
hereinafter contained in Paragraph 18 of this Agreement.
(Agreement, Ex. A to MCU Memo. at 1, ECF No. 93-1). Paragraph 18 of the
Agreement provided that the Agreement may be terminated by, among other
things, delivery of thirty days’ written notice by either party, by mutual written
agreement, or by MCU’s delivery of written notice of immediate termination for
good cause. The parties agreed, “This Agreement contains the entire agreement of
the parties and may not be changed except by an agreement in writing signed by
the party against whom the enforcement of any waiver, change, extension,
modification or discharge is sought.” (Id. at 12).
Dr. Shannon claims that the defendants breached the Agreement by
unilaterally reducing his base salary to $180,000, because no written amendment
was ever made to the Agreement. The defendants counter that Dr. Shannon
assented to this reduction in salary by failing to object to the reduction and by
continuing to work at MCU. Nevertheless, Dr. Shannon claims that he could not
terminate his employment with MCU, because he was contractually obligated to
continue to maintain his medical practice in Jackson County, Mississippi, for an
additional twelve months pursuant to a Physician Recruitment Agreement with
Singing River Hospital System that was negotiated by the defendants. Dr.
Shannon claims that he would have been required to repay Singing River over
$260,000 if he had left his position at MCU at the time when his salary was
reduced.
On December 1, 2011, Dr. Shannon gave MCU thirty-days written notice that
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he was resigning his position. (Notice, ECF No. 94-8). He admits that he had
signed an employment agreement with a New York clinic well before he provided
notice of his resignation.
Dr. Shannon filed this lawsuit against MCU and Mark S. Lyell, the sole
member of MCU. He also sued SMS Management LLC, which is an entity that
provided contracted administrative services to MCU, and SMS’s employee, Donald
S. Davenport. Dr. Shannon has asserted the following claims against all of the
defendants: breach of contract, unjust enrichment, conversion, constructive trust,
fraudulent concealment, and fraudulent inducement. He also seeks a full
accounting, because he claims that the defendants have converted and retained
funds that are owed to him.
DISCUSSION
A motion for summary judgment may be filed by any party asserting that
there is no genuine issue of material fact that the movant is entitled to prevail as a
matter of law on any claim. Fed. R. Civ. P. 56. The movant bears the initial burden
of identifying those portions of the pleadings and discovery on file, together with
any affidavits, which it believes demonstrate the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the movant
carries its burden, the burden shifts to the non-movant to show that summary
judgment should not be granted. Celotex Corp., 477 U.S. at 324-25. The nonmovant may not rest upon mere allegations or denials in its pleadings but must set
forth specific facts showing the existence of a genuine issue for trial. Anderson v.
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Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986).
I. QUASI-ESTOPPEL:
All of the defendants argue that, pursuant to the doctrine of quasi-estoppel,
Dr. Shannon is estopped from asserting a claim for breach of contract by continuing
to work for MCU after his salary was reduced. The Mississippi Supreme Court has
described the doctrine of quasi-estoppel as follows:
It is axiomatic that estoppel forbids one from both gaining a benefit
under a contract and then avoiding the obligations of that same
contract. “A party cannot claim benefits under a transaction or
instrument and at the same time repudiate its obligations.” Wood
Naval Stores Export Assn. v. Gulf Naval Stores Co., 71 So. 2d 425, 430
(Miss. 1954). This doctrine, termed “quasi-estoppel,” “precludes a
party from asserting, to another’s disadvantage, a right inconsistent
with a position [it has] previously taken,” and “applies when it would
be unconscionable to allow a person to maintain a position inconsistent
with one to which he acquiesced, or from which he accepted a benefit.”
Bott v. J.F. Shea Co., Inc., 299 F.3d 508, 512 (5th Cir. 2002).
Bailey v. Estate of Kemp, 955 So. 2d 777, 782 (¶21) (Miss. 2007). The Fifth Circuit’s
decision in Bott v. J.F. Shea Co., Inc., 299 F.3d 508 (5th Cir. 2002), which was cited
with approval by the Mississippi Supreme Court in Bailey, is instructive in the
present case. In Bott, a subcontract between a joint venture and a subcontractor
required the subcontractor to name both entities participating in the joint venture
as additional insureds on its commercial general liability policy. Id. at 510. The
joint venture did not object to a certificate of insurance that only named one of the
entities. Id. After an employee of the subcontractor was injured, the uninsured
entity sued the subcontractor for breach of contract. Id. Since both of the parties
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had negligently disregarded the terms of the contract, the Fifth Circuit held that
the doctrine of quasi-estoppel was not applicable; rather the doctrine of waiver
should be considered. Id. at 513. The court noted that the question of whether the
uninsured entity’s actions constituted waiver of the terms of the subcontract was a
question of fact that should be submitted to a jury. Id.
In the present case, it is undisputed that the Agreement provided for
automatic renewal absent certain circumstances justifying termination. No party
has asserted that circumstances warranting termination existed until Dr. Shannon
submitted his 30-day notice of resignation. Only written amendments were
permitted by the Agreement, but the defendants claim to have amended the
Agreement by either an oral agreement or their conduct. The evidence before the
Court indicates that all of the defendants, and potentially Dr. Shannon, either
negligently or intentionally disregarded these terms in the Agreement. As in the
Bott decision, the doctrine of quasi-estoppel does not apply here. The pertinent
question presented by this case is whether Dr. Shannon waived the terms of the
Agreement, and this is a question of fact that should be presented to a jury.
II. LIABILITY OF AGENTS ACTING ON BEHALF OF A DISCLOSED
PRINCIPAL
SMS Management and Davenport have filed a separate Motion for Summary
Judgment arguing that they cannot be held personally liable to Dr. Shannon,
because they were merely agents acting on behalf of a disclosed principal– MCU.
The Mississippi Supreme Court has held, “This state follows the rule that an
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authorized agent for a disclosed principal cannot be liable for the acts of the agent’s
corporate principal.” Turner v. Wilson, 620 So. 2d 545, 548 (Miss. 1993) (citing
Thames & Co. v. Eicher, 373 So. 2d 1033 (Miss. 1979)). “To be liable, the agent
must commit ‘individual wrongdoing.’ In other words, the agent incurs no personal
liability absent fraud or equivalent misconduct.” Estate of Gibson ex rel. Gibson v.
Magnolia Healthcare, Inc., 91 So. 3d 616, 624 (¶18) (Miss. 2012) (quoting Turner,
373 So. 2d at 548. In Turner, the Supreme Court explained:
The rule that directors, officers, or agents of a corporation are liable for
their torts to a person injured thereby, . . . is applicable where they are
guilty of conversion. This is true even though they act in behalf of the
corporation and although the corporation may also be liable, as where
money or property of a third person is in the hands of the corporation
and the officers in control knowingly and intentionally convert it by
refusing to give up possession, or by applying it to the uses of the
corporation . . . .
Turner, 620 So. 2d at 548 (quoting Wilson v. S. Cent. Miss. Farmers, Inc., 494 So. 2d
358, 361 (Miss. 1986)) (emphasis omitted).
Dr. Shannon argues that Davenport and SMS are personally liable since they
were co-principals with MCU and Lyell who were directly involved in the decisions
to reduce Dr. Shannon’s salary and in the withholding of funds that were owed to
Dr. Shannon.
The Court finds that Davenport and SMS have not met their initial burden of
identifying evidence that demonstrates the absence of a genuine issue of material
fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). There is insufficient
evidence in the record regarding the relationship between SMS, Davenport, and
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MCU. In fact, the contract between SMS and MCU has not been provided to the
Court. Since the Court cannot determine the amount of control that MCU exercised
over SMS from the evidence provided by these defendants, the Court cannot
determine whether SMS and Davenport were co-principals or agents of MCU. See
Fonte v. Audubon Ins. Co., 8 So. 3d 161, 166 (¶9) (Miss. 2009). It also should be
noted that, even if SMS and Davenport were agents, they have not adequately
addressed Dr. Shannon’s conversion and fraud claims. All of these issues should be
presented to the jury at trial.
CONCLUSION
For the foregoing reasons, the Court finds that the defendants’ Motions for
Summary Judgment should be denied.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion for
Summary Judgment [92] filed by Mark S. Lyell and Mississippi Coast Urology,
PLLC (“MCU”), and the Motion for Summary Judgment [94] filed by Donald S.
Davenport and SMS Management, LLC, are DENIED.
SO ORDERED AND ADJUDGED this the 30th day of December, 2013.
s/
Louis Guirola, Jr.
LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE
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