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HomeMy WebLinkAbout2005-2499 Civil DR. JAMES A. SHAER, M.D., PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. ORTHOPAEDIC SURGEONS OF CENTRAL PENNSYLVANIA, L TD, DEFENDANT 05-2499 CIVIL TERM IN RE: MOTION OF PLAINTIFF FOR SUMMARY JUDGMENT ON LIABILITY BEFORE BAYLEY. J. AND GUIDO. J. OPINION AND ORDER OF COURT Bayley, J., June 2, 2006:-- Pursuant to a written contract dated January 1, 2004, plaintiff, James A. Shaer, M.D., was employed as an orthopedic surgeon by defendant Orthopaedic Surgeons of Central Pennsylvania, L TD, for a period between January 1,2004, and December 31, 2004. As the end of 2004 approached, defendant offered plaintiff a partnership to stay with the corporation. The parties were unable to come to an agreement for a partnership; therefore, they began negotiating a new employment contract. A written draft prepared by defendant was circulated to plaintiff on December 6, 2004. It was not acceptable to plaintiff so the parties continued to negotiate. They entered into a written agreement dated January 1, 2005, extending plaintiff's employment through January 31,2005. This extension agreement provided: . . . the Employee agrees to provide final notice to the Corporation of his intent to sign the then-current draft of the new employment agreement submitted by the Corporation by January 17, 2005. In the 05-2499 CIVIL TERM event the Employee doe(sic) not meet this deadline, the Corporation shall immediately withdraw its new employment agreement and shall notify its patients of the Employee's departure from the Corporation. (Emphasis added.) On January 14, 2005, defendant presented a final written amended and restated employment agreement to plaintiff. On January 17, 2005, plaintiff signed the agreement without change and delivered it to defendant. The agreement "amends, restates and supercedes the Employment and Non-Competition Agreement dated January 1, 2004," for the period between January 1, 2005 and December 31.2005, unless sooner terminated as provided in Section 16, that states: This Agreement may be terminated by either party without cause by providing at least ninety (90) days prior written notice (the "Notice Period") of the party's intent to terminate. If plaintiff is terminated under this section, he is entitled to receive his salary and benefits during the ninety day period. On January 18, 2005, defendant, through its president, Craig W. Fultz, M.D., sent plaintiff a letter which included: As you know, your previous employment agreement with Orthopaedic Surgeons of Central Pennsylvania L TD ("OSCP") dated January 1, 2004 expired on its own terms on December 31,2004. We first forwarded you a new draft agreement for your review in December of 2004. Since we collectively were not able to agree on a new agreement by December 31, 2004, and in order to allow additional time for the negotiation of that new agreement andlor to notify patients of your departure, you and OSCP entered into an amendment dated January 1, 2005. This amendment extended the term of your expired employment agreement an additional month, to expire on January 31,2005. Although OSCP has tried in good faith to negotiate a new agreement with you, we have not been able to come to an agreement, which is acceptable to both parties. There has been a sustained impasse between the parties regarding the new agreement, most recently illustrated in your -2- 05-2499 CIVIL TERM conversation with Kim Deiter of OSCP when you indicated that you were signing the new employment agreement; however, you stated that you would likely terminate that agreement by providing ninety (90) days notice to OSCP shortly thereafter. This arrangement certainly does not constitute a meeting of the minds and was not OSCP's intent in offering you the new contract. Accordingly, OSCP has decided that it no longer wishes to pursue negotiations on a new employment agreement with you and your employment with OSCP will expire as of January 31, 2005. (Emphasis added.) On May 13, 2005, plaintiff filed a complaint alleging (1) breach of contract in not providing him a full ninety days of salary and benefits upon termination and (2) a claim for damages under the Pennsylvania Wage Payment and Collection Law. 43 P.S. S 260.1 et seq. Plaintiff filed a motion for summary judgment on liability which was briefed and argued on May 17, 2006. In Washington v. Baxter, 719 A.2d 733 (Pa. 1998), the Supreme Court of Pennsylvania stated the standard for deciding a motion for summary judgment. A court: . . . must view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party, Pennsylvania State University v. County of Centre, 532 Pa. 142, 143-145, 615 A.2d 303, 304 (1992). In order to withstand a motion for summary judgment, a non- moving party "must adduce sufficient evidence on an issue essential to his case and on which he bears the burden of proof such that a jury could return a verdict in his favor. Failure to adduce this evidence establishes that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Ertrel v. Patriot-News Co., 544 Pa. 93,101-102,674 A.2d 1038,1042 (1996). In opposition to the motion for summary judgment, defendant maintains that there is no contract which plaintiff claims it breached. Defendant argues that there is evidence from which a trier of fact could conclude that plaintiff "rejected its offer in the -3- 05-2499 CIVIL TERM restated employment agreement; first by counteroffer, then by express rejection, which was accompanied with verbal notice by plaintiff of his intent to resign his employment with defendant entirely." In Yarnall v. Almy, 703 A.2d 535 (Pa. Super. 1997), the Superior Court of Pennsylvania stated: In order to form a contract, there must be an offer, acceptance, and consideration or mutual meeting of the minds. Jenkins v. County of Schuylkill, 441 Pa.Super. 642, 648, 656 A.2d 380, 383, allocatur denied, 542 Pa. 647, 666 A.2d 1056 (1995). An alleged acceptance of an offer is not unconditional and, therefore, is not an "acceptance" if it materially alters the terms of the offer. Thomas A. Armbruster, Inc. v. Barron, 341 Pa.Super. 409, 419, 491 A.2d 882, 887(1985) (citing 1 A. Corbin, Corbin on Contracts S 82 (1963)). As such, a reply which purports to accept an offer, but instead changes the terms of the offer, is not an acceptance, but, rather, is a counter-offer, which has the effect of terminating the original offer. First Home Sav. Bank, FSB v. Nernberg, 436 Pa.Super. 377, 389, 648 A.2d 9, 15 (1994), allocatur denied, 540 Pa. 620, 657 A.2d 491 (1995). Further, it is well established that the acceptance of any offer or counter-offer must be "unconditional and absolute." O'Brien v. Nationwide Mut. Ins. Co., 455 Pa.Super. 568, 577, 689 A.2d 254,258 (1997). Plaintiff dealt with Kim Deiter, the practice administrator of defendant, regarding the new contract. Defendant sets forth the following deposition testimony of Dieter in support of its position that summary judgment on liability must be denied: Q Going back to Deiter Exhibit 1, which is the answer to interrogatory, page 8, looking about the middle of the first paragraph, after you had handed the document to Dr. Shaer, I think it's then stated plaintiff attempted to return the contract to you and stated that the defendant's rejections of these issues was not acceptable. From your previous testimony, I understand you drive over to the Union Deposit office, you hand the document to him, and you go through a course of explaining what was added, what was not addressed. I think you brought specific attention to the salary. A Correct. -4- 05-2499 CIVIL TERM Q How soon after he was handed the document did he try to hand it back to you? A I would say within ten minutes. He did not even look at it. Q Was there something you said - what was the impetus for him to hand that back so rapidly? A My observation would be that he did not like what I was saying, that we did not agree to all of his changes, therefore, he just returned it. *** Q It then says that you refused to accept the document back from Dr. Shaer? A Yes. Q January 14th, was it a Friday? A Yes, I do believe so. Q You asked him to review it over the weekend, and confirm his final decision to you on Monday, January 1 th, 2005. So I take it that Dr. Shaer did eventually keep the document? A Yes. I felt that he was giving me a knee-jerk reaction, which he had an occasion to do, which we all do. I handed it back to him saying, you know, I need something according to the agreement in writing; and I wanted him to confirm what he told me, he was rejecting the contract, in writing. -5- 05-2499 CIVIL TERM Q You wanted that from him? A On Monday. Q On Monday? A Correct. Q After he had a chance to sit with the contract over the weekend? A Yes. Q I think next there's a reference that he called you later in the afternoon, on the 14th? A Correct. Q Can you tell me about that conversation? A He said that he reviewed the contract. He wanted three changes, and then he would sign the contract. He wanted the $18,000 salary per month guaranteed. The revisions to the prepaid section, and he wanted mutually agreement on his adjustment to salary, that everybody had to agree to that. I told him that I would present his counteroffer to the board of directors and get back to him. *** Q Again, referring you back to the Exhibit Number 1, the interrogatory responses, it then reads on January 1 th, plaintiff telephoned Kim Deiter and stated that he would not sign the January 14 employment contract, even if defendant approved his three revisions he had raised late in the afternoon of January 14, 2005. Do you remember the time of day Dr. Shaer telephoned you? A I believe it was late morning before he started office hours, but I'm not absolutely sure. Q Can you tell me about the conversation? A Only that he revisited the contract and he indicated that the three items he no longer wanted that on the table, and that he wasn't going to sign the contract, and that he planned on resigning. I asked him if he was sure that's what he wanted to do. He said yes. Then he proceeded with asking for a 60-day extension to his amendment, because he was concerned about his patients and wanted to give them enough notification for him leaving the practice, due to the fact that he had surgeries scheduled throughout the month of January. I told him that I needed his resignation in writing, and that I needed to go back to the board and tell them of his resignation but ask them if they would extend his amendment for 60 days based on his concerns. Q Did he actually use the words I'm leaving the practice? -6- 05-2499 CIVIL TERM A Yes, he did. Q Did he use the word resignation? A Yes. I'm positive he used the word resignation. Q He said I'm resigning from the practice, period? A Yes. * * * Deiter testified that she took plaintiff's request for an additional 60-day extension of the Extension Agreement to OSCP's Board, which voted "no." Following that: Q When did you tell Dr. Shaer that the 60-day notice had been rejected? A I left a message for him. He called me back at 2 o'clock that afternoon. I told him that the board stated that they could not extend his amendment for another 60 days. Q What was Dr. Shaer's reaction? A He told me that, okay, he would sign the contract, but he wanted the prepayment clause still out of it and that he was resigning. He was going to give us a 60-day notice. And at that point in time, I told him that his contract, the amendment to the original 2004 contract led me to believe that he had to give a 90-day notice - I'm sorry. The new contract, exhibit - I don't know what that one is. MR. GRUBB: The January 14 contract? MR. COLLINS: Exhibit C, I believe, to the Complaint. A He claimed he was signing that if we took the prepayment clause out of it, and he was giving us a 60-day notice. I told him that if he signed that, that the term was 90 days. He said fine. At that time, he was upset. But I told him at that point in time, that there was no contract and, therefore, I didn't think that we had to accept him reinstating the contract and then terminating, because there was no meeting of the minds between the two groups. So based on my non-legal understanding, the contract was off the table because of the fact that he had verbally told me that he was resigning. *** Q Let me ask you a more direct question. If we go to Deiter Exhibit 3, the bottom paragraph there on the first page, I guess the second sentence, it indicates that Dr. Shaer stated, okay, I will sign the contract -7- 05-2499 CIVIL TERM but want the prepaid clause taken out, and I will give you a 60-day notice. Is that - A Correct. Q Dr. Shaer raised the issue of prepaid expense with you? A Correct. The contract that we gave him he wanted to change to taking the prepaid clause out and then again resigning. Q It looks like that discussion took place, to the best your recollection, around 2 p.m., in the afternoon on the 1th, correct? A Correct. Q At any time during that conversation with Dr. Shaer, did he say that or indicate to you in any manner that he would execute the document which is attached as Exhibit C in its then current form? A No. Q Would it be fair to say that he indicated to you during that conversation at approximately 2 p.m. on January 1 th, 2005, that he wanted the language withdrawn regarding the prepaid expenses? A Correct. Q Did you then convey that to the board of the partnership? A No, I did not. Q Staying with Deiter 3, if we go to the second page, it looks like, I believe you've testified to this, you had a second conversation with Dr. Shaer in the afternoon of the 1 th at roughly 2:45 p. m.; is that correct? A Correct. Q Did you address the issue of the prepaid expense with Dr. Shaer at that point in time? A Yes. I told him that we would not sign the contract he's providing to us with a prepaid expense taken out, and that we had no agreement and, therefore, we weren't signing anything. Q To your knowledge, did Dr. Shaer sign the contract at the point in time? A It's my understanding after that conversation, he signed it, yes. Q Just to be clear, though, when you are having the discussion with him at 2:45 p.m., was it your understanding that he had not yet signed the contract. A Correct. Q How did you have that understanding? A Because he told me he was proceeding with signing it and asked me to pick it up. Determining if there is a new employment agreement that defendant breached -8- 05-2499 CIVIL TERM requires an examination of the terms of the extension agreement dated January 1, 2005. Those terms are not ambiguous. The extension agreement required that defendant offer plaintiff employment, and plaintiff had until January 17, 2005, to provide final notice to defendant of his intent to sign the then current draft, i.e., a written document, of a new employment agreement. Pursuant to the terms of the extension agreement, defendant, on January 14, 2005, submitted to plaintiff its final draft of a new employment agreement. Nothing in the extension agreement prohibited plaintiff from posturing (even to the point of resigning) in order to try to obtain a better offer. When plaintiff was unable to do so, then, under the terms of the extension agreement, he signed then current draft of a new employment agreement on January 17, 2005, and delivered it to defendant without change. Accordingly, the offer of employment in that draft was accepted in the manner provided for in the extension agreement. Interestingly, Dr. Fultz's letter of January 18, 2005, to plaintiff refers to "the new employment agreement." Yet, Fultz states that plaintiff's employment would terminate as of January 31,2005. However, under the new written employment agreement offered by defendant on January 14, 2005, and accepted by plaintiff on January 17, 2005, termination by defendant required ninety days notice during which plaintiff was entitled to salary and benefits. Since defendant offered and plaintiff accepted then current draft of the new employment agreement pursuant to the terms of the extension agreement, the extrinsic oral evidence offered by defendant is not relevant because the contract principles defendant relies on were not applicable under the terms of the -9- 05-2499 CIVIL TERM extension agreement.1 Therefore, the motion of plaintiff on his breach of contract claim for summary judgment on liability will be granted. The Wage Payment and Collection Law provides at 43 P.S. Section 260.5(a): Separated Employes. Whenever an employer separates an employe from the payroll, or whenever an employe quits or resigns his employment, the wages or compensation earned shall become due and payable not later than the next regular payday of his employer on which such wages would otherwise be due and payable. If requested by the employe, such payment shall be made by certified mail. (Emphasis added. ) Section 260.9a(f) provides for attorneys' fees and costs, see Oberneder v. Link Computer Corp., 696 A.2d 148 (Pa. 1997), and Section 260.10 provides for liquidated damages under certain circumstances. See Hartman v. Baker, 766 A.2d 347 (Pa. Super. 2000). In Weingrad v. Fischer & Porter Co., 47 Pa. D.&C.2d 244 (Bucks Co. 1968), a former employee brought a claim under the Wage Payment and Collection Law against a former employer for future wages resulting from an alleged breach of an employment contract. The Court of Common Pleas of Bucks County concluded that the words "due" and "earned" in Section 260.5(a) mean due and earned in exchange for labor or services preformed. The court entered a demurrer on the claim. In Allende v. Winter Fruit Distributors, Inc., 709 F.Supp. 597 (ED. Pa. 1989), plaintiff brought a claim under the Wage Payment and Collection Law for wages and compensation following termination of employment. The United States District Court concluded that 1 Kim Deiter's "non-legal understanding [that] the contract was off the table" was incorrect because she did not take into consideration the binding terms of the extension -10- 05-2499 CIVIL TERM "[t]he plain words of the statute, then, indicate that it applies to wages or compensation . . . that have already been earned by the separated employee." The court dismissed that portion of the former employee's claim for wages "not yet earned and or relating to periods after his termination." The reasoning in Weingrad and Allende is sound, and we will apply it to the claim under the Wage Payment and Collection Law in the present case. Therefore, we will not grant plaintiff's motion for summary judgment on liability on that claim. ORDER OF COURT AND NOW, this day of June, 2006, IT IS ORDERED: (1) The motion of plaintiff on his breach of contract claim for summary judgment on liability, IS GRANTED. agreement. -11- 05-2499 CIVIL TERM (2) The motion of plaintiff for summary judgment on his claim under the Wage Payment and Collection Law, IS DENIED. By the Court, Edgar B. Bayley, J. Steven E. Grubb, Esquire For Plaintiff Thomas G. Collins, Esquire F or Defendant :sal -12- DR. JAMES A. SHAER, M.D., PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. ORTHOPAEDIC SURGEONS OF CENTRAL PENNSYLVANIA, L TD, DEFENDANT 05-2499 CIVIL TERM IN RE: MOTION OF PLAINTIFF FOR SUMMARY JUDGMENT ON LIABILITY BEFORE BAYLEY. J. AND GUIDO. J. ORDER OF COURT AND NOW, this day of June, 2006, IT IS ORDERED: (1) The motion of plaintiff on his breach of contract claim for summary judgment on liability, IS GRANTED. (2) The motion of plaintiff for summary judgment on his claim under the Wage Payment and Collection Law, IS DENIED. By the Court, Edgar B. Bayley, J. Steven E. Grubb, Esquire For Plaintiff Thomas G. Collins, Esquire F or Defendant :sal