Opinion
C.A. No. 10C-06-037 RRC.
Submitted: September 20, 2010.
Decided: October 6, 2010.
On Defendant Tracy Winters, M.D.'s Motion to Dismiss. DENIED.
Sean J. Bellew, Esquire, David A. Felice, Esquire, Ballard Spahr, LLP, Wilmington, Delaware, Attorneys for Plaintiff Anesthesia Services, P.A.
Thomas E. Hanson, Jr., Esquire, Morris James, LLP, Wilmington, Delaware, Attorney for Defendant Tracy Winters, M.D.
Dear Counsel:
INTRODUCTION
Defendant's motion to dismiss is predicated on Delaware Superior Court Rule of Civil Procedure 12(b)(6) and asserts that Plaintiff has failed to state a claim for relief. This case arises from an alleged breach of a restrictive covenant in an employment contract; the terms of the covenant prohibit Defendant from practicing his specialty of anesthesiology within the Employer's Service Area, which consists of the twenty-five (25) mile radius surrounding each facility serviced by Plaintiff. Defendant resigned his employment with Plaintiff, effective at the "close of business" on June 30, 2009, and immediately commenced employment with Lewes Surgery Center ("LSC"); although Plaintiff had provided services to LSC, Plaintiff's relationship with LSC terminated on July 1, 2009.
Defendant argues that LSC was not a facility within the scope of the Agreement, and the restrictive covenant was therefore not implicated. Defendant further argues that the preceding termination of Plaintiff's relationship with LSC precludes Plaintiff from establishing a legitimate business interest as a matter of law, a necessary element for enforcement of a restrictive covenant. Finally, Defendant argues that the geographic scope of the restrictive covenant, as applied herein, is unreasonable and overly broad.
Plaintiff counters that the twenty-five (25) mile radius is reasonable vis-à-vis its legitimate business interests. Plaintiff further contends that LSC is within the scope of this service area, notwithstanding the termination of its relationship with LSC as of Defendant's commencement of employment with LSC. It is Plaintiff's position that the restrictive covenant is triggered with respect to any facility where Defendant has provided services, and is not dependent on the status of Plaintiff's relationship with LSC as of July 1, 2009. Alternatively, Plaintiff contends that factual issues exist with respect to the timing of Defendant's agreement to provide professional services for LSC. In short, Plaintiff asserts that Defendant's acceptance of the position with LSC or his participation in negotiations for the position, prior to the effectiveness of his resignation on June 30, 2009 would potentially be a breach of the Agreement. Plaintiff submits that its complaint raises factual issues which, when taken as true, would entitle it to recover, thus the facts must be explored via discovery.
Given that this is a motion to dismiss, all reasonable inferences must be viewed in the light most favorable to Plaintiff. Although the foregoing facts may be susceptible to varying interpretations, Plaintiff has established reasonable circumstances and inferences wherein it could recover, thus Plaintiff is entitled to develop these facts via discovery.
Upon review of the facts, the law, and the parties' submissions, Defendant's Motion to Dismiss is DENIED.
FACTS AND PROCEDURAL HISTORY
As fully set forth in the filings and the moving papers, this case arises from an alleged breach of an Employment Agreement ("Agreement"). On December 12, 2007, defendant Tracy Winters, M.D. entered into the Agreement with Plaintiff Anesthesia Services, to be effective as of February 4, 2008.Plaintiff's claim is based upon Defendant's alleged breach of § 24 of the Agreement, a financial damages provision. This section provides:
The parties agree that there will be no restrictive covenant prohibiting Employee from engaging in a competitive medical practice upon termination of employment with Employer. However, the parties also agree that Employer has and will spend significant amounts in order to establish and maintain Employee's practice within Employer's Service Area (as defined below) including introducing Employee to Employer's patients, professional contacts, business opportunities and referral sources, and enhancing Employee's professional reputation within Employer's Service Area. Employer's Service Area consists of the twenty-five (25) mile radius around each of the facilities or other sites of services at which Employer provides medical services in the community and includes the facilities themselves.
In order to protect Employer's legitimate interests, Employee expressly recognizes and agrees that the following conduct by Employee will cause significant financial damage to Employer:
(a) If Employee directly or indirectly engages in the Practice of Anesthesiology, as defined in sub-paragraph (c) below, other than in the course and scope of his or her employment with Employer, in Employer's Service Area during the term of this Agreement and/or for a period of twenty-four (24) months after the expiration or termination of employment under this Agreement
(b) If Employee, directly or indirectly, owns, manages, operates, controls, is employed by or is connected in any manner with the ownership, management, operation or control of any profession, trade or business engaging in the Practice of Anesthesiology, as defined in sub-paragraph (c) below, at any of the current or future facilities of the Christiana Care health System including, but not limited to Wilmington Hospital, Christiana Hospital, and the Surgery Center(s), and/or the Glasgow Medical Center, or any successor or affiliate thereof during the term of this Agreement and/or for a period of twenty-four (24) months after the expiration or termination of employment under this Agreement.
* * *
(d) In the event that Employee engages in conduct described in Subparagraphs (a) or (b) above, the parties agree that the exact amount of financial damage that Employer will suffer would be impossible to ascertain with certainty. Therefore, as liquidated damages (and expressly not as a penalty), the parties have agreed that in the event Employee engages in conduct described in Subparagraphs (a) or (b) above, Employee shall pay Employer as liquidated damages an amount equal to the total compensation (defined as all taxable compensation payable to Employee, including his base salary and all bonuses) which was received by Employee in the twelve (12) months immediately preceding the expiration or termination of employment under this Agreement. For purposes of this Section, "Employer" shall be defined to include Cardiac Anesthesia Services, P.A.
Defendant tendered his resignation to Plaintiff on March 8, 2009, to be effective at the "end of business" on June 30, 2009. Plaintiff alleges that that Defendant breached the Agreement by commencing employment with LSC on July 1, 2009. Plaintiff terminated its contract with LSC on July 1, 2009.
Compl. Ex. B.
Compl. ¶ 8.
On May 14, 2010, Plaintiff commenced a related but distinct action against LSC for allegedly breaching a non-solicitation agreement between Plaintiff and LSC by employing instant defendant, Tracy Winters, M.D., within two years of the termination of that agreement. Plaintiff, Anesthesia Services, P.A.'s Complaint, Anesthesia Svcs., P.A. v. ENGM, LLC d/b/a Lewes Surgery Center, No. 10C-05-118 (May 14, 2010). According to Plaintiff's complaint therein, Plaintiff provided LSC with notice of its intent to terminate their contractual relationship on December 8, 2008, to be effective on June 30, 2009. Id. ¶ 5. That case is scheduled for trial on October 24, 2011. Trial Scheduling Order ¶ 1, Anesthesia Svcs., No. 10C-05-118 (Sept. 14, 2010).
STANDARD OF REVIEW
When deciding a motion to dismiss pursuant to Delaware Superior Court Rule of Civil Procedure 12(b)(6), "the complaint generally defines the universe of facts that the trial court may consider. . . ." All well-pled allegations must be accepted as true. A plaintiff's complaint may only be dismissed if "it appears to a certainty that the plaintiff could not recover under any reasonably conceivable set of circumstances susceptible of proof." Discovery may "flesh out [the] facts, but the plaintiffs are entitled to the benefit of all reasonable inferences from the complaint." Factual issues cannot be resolved at the motion to dismiss stage; it "cannot be assumed at the pleading stage that the defendant will carry the burden [of establishing a defense to the plaintiff's claim.]"DISCUSSION
The facts of this case, as set forth in Plaintiff's complaint, may be susceptible to varying interpretations. However, taking all of Plaintiff's allegations as true for purposes of a motion to dismiss, Plaintiff has established reasonable circumstances and inferences wherein it could recover, thus Plaintiff is entitled to develop the facts via discovery.As noted above, Plaintiff's complaint alleges that Defendant violated § 24 of the Agreement, specifically by being employed with LSC since July 1, 2009, but a broader allegation of breaching § 24 in general, inclusive of any alleged engagement in prohibited conduct prior to July 1, 2009, can be ascertained from the language of Plaintiff's Complaint. While the issue of whether Defendant's undisputed employment with LSC subsequent to the effectiveness of his resignation was a breach of the Agreement turns on the interpretation of the contract's definition of "Service Area," and is thus a question of law, the question of Defendant's breach, vel non, prior to July 1, 2009 turns on the Defendant's conduct at that time and is thus inherently factual.
Although Plaintiff could have pled more specific allegations with respect to Defendant's conduct prior to the effectiveness of his resignation, on balance, this Court nonetheless finds the Complaint to be sufficiently well pled at this juncture for purposes of Superior Court Civil Rule 12(b)(6). Accordingly, Plaintiff's allegations, including any allegations of breach prior to the effectiveness of Defendant's resignation, are taken as true.
See, e.g. Precision Air, Inc. v. Standard Chlorine of Del. Inc., 654 A.2d 403, 406 (Del. 1995) ("An allegation, though vague or lacking in detail, is nevertheless `well-pleaded' if it puts the opposing party on notice of the claim being brought against it.") (citation omitted.); Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998) ("To survive a motion to dismiss, the complaint need only give general notice of the claim asserted.")
As set forth above, the language of § 24(b) provides that Defendant's liability to pay Plaintiff liquidated damages is triggered if the Defendant "directly or indirectly, owns, manages, operates, controls, is employed by or is connected in any manner with the ownership, management, operation or control of any profession, trade or business engaging in the Practice of Anesthesiology." Given that there has been no discovery to determine the extent to which, if any, Defendant engaged in conduct prohibited by § 24 prior to the effectiveness of his resignation, at this time it cannot be said to a certainty that Plaintiff could not recover under any reasonably conceivable set of circumstances. These operative facts cannot be resolved at this stage, but must instead be "flesh[ed] out" during discovery.
Krasner, 826 A.2d at 284.
Accordingly, for all the reasons stated above, Defendant's motion to dismiss is DENIED.