Pennsylvania Record

Sunday, January 26, 2020

Pa. appeals court sides with hospital in contractual dispute with physician

By Jon Campisi | Jan 17, 2014

Pennsylvania superior court judge jack a. panella

A three-judge state appellate court panel has affirmed a Berks County

judge’s ruling in favor of a local hospital that was sued by a physician over a contractual dispute.

The Superior Court panel, in its Jan. 15 non-precedential decision, sided with the trial court in its awarding judgment to The Reading Hospital Surgi-Center at Spring Ridge following a non-jury trial early last year.

According to the court record, Dr. Moiz Carim became a member of the hospital back in 2004, at which time he executed a subscription agreement and delivered a $25,000 check to the medical facility.

Carim ended up acquiring property in Berks County the following year to accommodate the relocation of his medical practice, as well as for a future surgical facility dubbed the Carim Surgery Center.

In early April 2006, records show, Carim notified the hospital of his intent to withdraw from the facility, which the defendant accepted effective June 1 of that year.

The record shows that the Carim Surgery Center opened in the summer of 2008 and was prepared and staffed to begin medical procedures at that time.

The hospital then informed Carim that its board of managers decided he had forfeited his initial investment of $25,000.

Carim sued in November 2011 seeking the return of his investment dollars.

Berks County Common Pleas Court Judge Jeffrey K. Sprecher ultimately ruled in the hospital’s favor following the bench trial.

On appeal, Carim did not challenge Sprecher’s conclusion that the Carim Surgery Center was located within a geographical zone covered by a non-compete clause the plaintiff had signed with the defendant.

Carim did, however, argue on appeal that Sprecher erred in failing to construe the terms of the contract against the hospital as the drafter of the contract, that the trial court erred in determining that the terms of one paragraph in the operating agreement are unambiguous but interpreting the agreement outside the plain meaning of the document, and that the lower court erred in failing to interpret the term “renders services” in the contract as modifying the terms “establishment, development, ownership, operation, or management of another ambulatory surgery center or comparable facility or service” so as to narrowly construe the restrictive covenant.

All three of the appeals issues challenged the trial judge’s interpretation of the non-compete provision in the operating agreement.

In this case, the non-compete clause of the agreement prohibits hospital members from directly or indirectly establishing or developing a surgery center to compete with the hospital for two years after a member withdraws from the hospital, records show.

The Superior Court panel disagreed with the plaintiff’s argument that the non-compete provision is ambiguous, determining instead that a typographical error was at play.

The trial judge had come to the same conclusion.

“We are not to ascribe a meaning to the Operating Agreement that would be contrary to the clear intent of the parties,” the appeals judges wrote. “The parties clearly intended that the non-compete provision use the forfeiture of the $25,000 investment as its enforcement mechanism. We therefore conclude that Dr. Carim’s first issue on appeal merits no relief.”

Shooting down the plaintiff’s second issue on appeal, the Superior Court panel wrote that despite Carim’s argument, the trial court did not find ambiguity in the agreement; “it determined that the contract contained a typographical error, and that the parties’ intent was clear.”

The appeals panel also disagreed with Carim’s contention that the trial court erred in failing to construe the term “renders services” as a limitation on the conduct prohibited by the non-compete provision.

“The parties did not intend the term ‘renders services’ to require that competing surgery center actually render services during during [sic] the prohibition period,” the ruling states. “Rather, such language was included to limit the applicability of the non-compete clause to surgery centers which provided services ‘which are the same as or similar to the services rendered by [the Hospital.]”

The judges wrote that if they were to accept Carim’s interpretation of the agreement, the prohibition on establishing or developing a surgery center “would be meaningless.”

Those participating in the appeal were Judges Jack Panella, Sallie Updyke Mundy and William H. Platt.

Panella penned the decision.

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