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Shelbyville Hospital Corp. v. Mosley

United States District Court, E.D. Tennessee, Winchester Division

January 29, 2018

SHELBYVILLE HOSPITAL CORPORATION, d/b/a HERITAGE MEDICAL CENTER, Plaintiff,
v.
E. WAYNE MOSLEY, M.D., Defendant.

          MEMORANDUM OPINION

          Thomas W. Phillips, United States District Judge.

         This matter is before the Court on Plaintiff's Motion for Reconsideration [doc. 235], Plaintiff's Motion for Oral Argument [doc. 236], Defendant's Response [doc. 238], and Plaintiff's Reply [doc. 239]. For the reasons herein, the Court will deny the motions.

         I. Background

         In August 2011, Shelbyville Hospital Corporation and E. Wayne Mosley, M.D. (“Dr. Mosley”) entered into a Recruitment Agreement [doc. 1-1], under which Dr. Mosley, with financial incentives from Shelbyville Hospital, agreed to establish a medical practice in Shelbyville, Tennessee, for thirty-six months. [Id. at 1-2]. The parties agreed that this thirty-six-month period would proceed in two phases: (1) the Cash Collections Guarantee Period, which would comprise the first eighteen-months of the Recruitment Agreement, [1] and (2) the Cash Collections Continuation Period, which would comprise the second eighteen months of the Recruitment Agreement.[2] [Id. at 1, 3, 12]. During the first eighteen months-the Cash Collections Guarantee Period-Shelbyville Hospital guaranteed Dr. Mosley's practice would earn at least $84, 416.66 every month. [Id. at 1, 10]. If Dr. Mosley's practice failed to realize $84, 416.66 in any month, Shelbyville Hospital would make up the difference by providing Dr. Mosley with “Guarantee Payment[s], ” but those payments could not exceed $1, 013, 000 in the aggregate. [Id.].

         During the second eighteen months-the Cash Collections Continuation Period- Shelbyville Hospital would forgive one eighteenth of the total Guarantee Payments for each month that Dr. Mosley maintained the “Full-Time Private Practice of Medicine.” [Id. ¶ D.7]. The parties agreed to these terms of forgiveness in paragraph D.7:

During the Cash Collections Continuation Period, which shall begin on the day following the last day of the Cash Collections Guarantee Period and continue for the number of months set forth as the Continuation Period on the Cover Page, Hospital agrees that it will cancel (amortize) one eighteenth (1/18th) of the Total Cash Collection Guarantee Payments made by Hospital under this Agreement for each full month Physician remains in the Full-Time Private Practice of Medicine, in Physician's Specialty, in the Community. In the event Physician fails to maintain a Full-Time Private Practice of Medicine in the Community during the Cash Collections Continuation Period, Physician shall immediately reimburse to Hospital the unamortized amount of the Total Cash Collections Guarantee Payments paid hereunder.

[Id.]. Paragraph B.1 of the Recruitment Agreement defines “Full-Time Private Practice of Medicine” as a “minimum average of forty (40) hours per week of direct patient contact hours and patient care activities directly relating to the establishment of the practice of Physician's Specialty in the Community.” The Recruitment Agreement also binds Dr. Mosley to various “Covenants of Physician, ” [id. ¶¶ B.1-B.18], one of which is the requirement that Dr. Mosley, under paragraph B.1, must maintain the Full-Time Private Practice of Medicine during the full thirty-six-month duration of the Recruitment Agreement: “Physician shall . . . during the Practice Commitment Period, engage in the ‘Full-Time Private Practice of Medicine' (as defined herein) in the Community.” [Id. ¶B.1].[3] In addition, paragraph B.4 requires Dr. Mosley to fulfill his contractual obligations “on a regular and continuous basis” during the first eighteen months specifically:

Physician shall discharge obligations hereunder on a regular and continuous basis. . . . If Physician fails to render services pursuant to this Agreement for a period of ten (10) consecutive business days during the Cash Collections Guarantee Period without Hospital and Physician's mutual agreement, Physician shall have failed to carry out Physician's covenants herein on a regular and continuous basis.

[Id. ¶ B.4]. The parties also contemplate consequences for Dr. Mosley's failure to fulfill his contractual obligations. Under paragraph D.6, they agreed that Dr. Mosley would be liable for damages if he failed to maintain the Full-Time Private Practice of Medicine during the first eighteen months:

Should the Physician fail to maintain a Full-Time Private Practice of Medicine in the Community during the Cash Collections Guarantee Period, Physician shall immediately reimburse to Hospital the total sum of the Total Cash Collections Guarantee Payments and/or any other payments made by Hospital under this Agreement to Physician to date.

[Id. ¶ D.6].

         During the thirty-six-month lifespan of the Recruitment Agreement, Shelbyville Hospital sued Dr. Mosley, alleging breach of contract after Dr. Mosley was absent from his practice for twenty-four consecutive business days while participating in an African mission trip in 2012. [Compl., doc. 1, at 8; Mem. Op., doc. 173, at 5, 13]. Shelbyville Hospital eventually moved for summary judgment on its claim, contending that Dr. Mosley, while in Africa, breached the Recruitment Agreement during the first eighteen months by violating paragraph B.4's “10-day limit.” [Pl.'s Br., doc. 142, at 23]. As recompense, it requested $1, 013, 000 in Guarantee Payments under paragraph D.6, interest, and attorney's fees. [Id. at 24-25].

         The Court concluded that Dr. Mosley breached paragraph B.4 because he “missed more than ten consecutive days of work in late 2012, ” and it awarded summary judgment to Shelbyville Hospital on the issue of liability only. [Mem. Op. at 30]. It did not make legal conclusions or factual findings concerning the issue of damages. Instead, it reserved ruling on damages and scheduled a hearing in which it intended to allow the parties to present evidence and make arguments. [Id. at 30-31]. It also ordered Shelbyville Hospital to submit proof of its damages. [Id.].

         Leading up to the hearing, Dr. Mosley argued that he is entitled to a setoff or reduction in damages because, after he completed his mission trip in 2012, he returned to the Full-Time Private Practice of Medicine in Shelbyville and “continued to treat his patients and perform surgeries as he had before.” [Def.'s Resp., doc. 180, at 4]. He requested the opportunity “to put on proof” at the hearing to show that he returned to his practice and is therefore entitled to receive a setoff “based upon partial continued performance.” [Id. at 2, 7, 15]. As to the exact amount of the setoff, Dr. Mosley proposed that “[a]ny amount of compensatory damages . . . should be reduced proportionally based upon the work [he] did provide under the contract.” [Id. at 7].

         The Court held the evidentiary hearing and heard evidence and arguments from the parties. After the hearing, the Court determined that Dr. Mosley was not entitled to pursue a setoff. The Court concluded that his request for a setoff was contractual in nature, invoked paragraph D.7, and did not satisfy paragraph's D.7 requirements. [Mem. Op. Denying Summ. J., doc. 233, at 28-30]. The Court rejected Shelbyville Hospital's request for summary judgment as well, determining that it did not meet its burden as the movant for damages under paragraph D.6. [Id. at 17-27]. Specifically, the Court ruled that Shelbyville Hospital failed to establish, beyond any genuine issue of material fact, that Dr. Mosley did not maintain the Full-Time Private Practice of Medicine during the initial eighteen months. [Id.]. Under Federal Rule of Civil Procedure 54(b), Shelbyville Hospital now moves for reconsideration of the Court's decision and for clarification of three additional issues.

         II. Legal Standard

         Under Rule 54(b), “any order or other decision . . . that adjudicates fewer than all the claims . . . may be revised at any time before the entry of a judgment adjudicating all the claims.” Fed.R.Civ.P. 54(b). In short, Rule 54(b) authorizes courts to reconsider interlocutory orders before an entry of final judgment. A movant, to justify reconsideration under Rule 54(b), must show “(1) an intervening change of controlling law; (2) new evidence [is] available; or (3) a need to correct a clear error or prevent manifest injustice.” Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App'x 949, 959 (6th Cir. 2004). “A motion under Rule 54(b), however, may not ‘serve as a vehicle to identify facts or raise legal arguments which could have been, but were not, raised or adduced during the pendency of the motion of which reconsideration was sought.'” Madden v. City of Chattanooga, No. 108-cv-160, 2010 WL 670107, at *2 (E.D. Tenn. Feb. 19, 2010) (quotation omitted). When considering a motion under Rule 54(b), a district court “must . . . temper[]” its ability ...


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