Alloush v. Physician Cardiovascular Venture, L.L.C.

2013 Ohio 2400
CourtOhio Court of Appeals
DecidedJune 10, 2013
Docket2011-T-0112
StatusPublished
Cited by1 cases

This text of 2013 Ohio 2400 (Alloush v. Physician Cardiovascular Venture, L.L.C.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alloush v. Physician Cardiovascular Venture, L.L.C., 2013 Ohio 2400 (Ohio Ct. App. 2013).

Opinion

[Cite as Alloush v. Physician Cardiovascular Venture, L.L.C., 2013-Ohio-2400.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

TRUMBULL COUNTY, OHIO

DR. NABIL M. ALLOUSH, M.D., : OPINION

Plaintiff-Appellee, : CASE NO. 2011-T-0112 - vs - :

PHYSICIAN CARDIOVASCULAR : VENTURE, LLC, : Defendant-Appellant.

Civil Appeal from the Trumbull County Court of Common Pleas. Case No. 2009 CV 2827.

Judgment: Reversed and remanded.

David S. Swader and Daniel B. Letson, Letson & Swader Co., L.P.A., 160 East Market Street, Suite 250, Warren, OH 44481 (For Plaintiff-Appellee).

Marshall D. Buck, Comstock, Springer & Wilson, 100 Federal Plaza East, Suite 926, Youngstown, OH 44503-1811 (For Defendant-Appellant).

TIMOTHY P. CANNON, P.J.

{¶1} Appellant, Physician Cardiovascular Venture, LLC (“PCV”), appeals the

summary judgment of the Trumbull County Court of Common Pleas in favor of appellee,

Dr. Nabil M. Alloush, M.D., in the amount of $186,343.50, plus interest, for breach of

contract. For the following reasons, the judgment is reversed and remanded.

{¶2} Dr. Alloush, a cardiologist, purchased 20 membership units in PCV, the

terms of which were controlled by an operating agreement. PCV jointly owns and operates cardiac catheterization labs in Youngstown, Ohio, with Humility of Mary Health

Partners and provides numerous medical-organization services, such as administrative

and management services. Members of PCV are required to continually meet certain

membership criteria, as provided by the operating agreement. One such requirement

states that members must be in good standing, with appropriate clinical privileges, on

the medical staff of St. Elizabeth Health Center (“the Health Center”). Section 6.2(b) of

the operating agreement states:

{¶3} The Cardiologist, Qualified Interventional Radiologist, or at least a

majority of the Affiliated Physicians of the Qualified Entity, as the

case may be, must maintain membership in good standing, with

appropriate clinical privileges, in accordance with the Medical Staff

Bylaws, on the Medical Staff of St. Elizabeth Health Center, or must

obtain such membership within six (6) months after being admitted

as a Member (or, with respect to an Affiliated Physician, 6 months

after his or her Qualified Entity is admitted as a Member).

{¶4} A member may withdraw from PCV with 30 days written notice to the

company upon a “triggering event,” such as retirement. Upon successful withdrawal, a

member’s interest is paid pursuant to a formula amount. The “formula amount” is

defined as three times the member’s average, pre-tax net income for the previous two

fiscal years of the company, attributable to the member’s ownership. A fiscal year is

defined as the calendar year. Section 7.3(b) of the operating agreement states:

{¶5} A Member (or the Member’s estate or personal representative on

behalf of the Member) shall have the right to voluntarily withdraw

2 from the Company, with thirty (30) days prior written notice to the

Company, upon the death, Retirement or Permanent Disability of

such Member (each a ‘Triggering Event’). A Member (or his or her

estate or personal representative) shall provide the Governing

Board with prompt written notice of any Triggering Event affecting

the Member. If (i) the Member does not elect to withdraw from the

Company within thirty (30) days after the occurrence with respect to

such Member of one of the Triggering Events described above (or

in the event of the death of a Member, his or her estate or personal

representative does not make such an election); and (ii) such

Triggering Event results in the Member failing to continue satisfying

the Membership Criteria in §6.2, the Company shall have the right

(but not an obligation), upon written notice to the Member or his or

her estate or personal representative, to purchase all of the Units of

such Member. In the event the Company does not elect, through

vote of the Governing Board, to purchase such Units, the Member

shall be permitted to remain as a Member, despite the fact that he

or she no longer satisfies the Membership Criteria.

{¶6} Upon the withdrawal of a Member, or the Company’s election to

purchase a Member’s Units, pursuant to this subsection (b), such

Member (or his or her estate or personal representative) shall

receive, in full payment and satisfaction for any interest in the

Company, an amount equal to the greater of (x) the total Capital

3 Contributions made by the Member to the Company pursuant to

§2.1 and §2.2; or (y) the Formula Amount (as defined in §7.5),

unless such withdrawal is due to the Retirement of the Member

occurring within the first 2 years after the Member purchased Units

in the Company, in which case the Member shall receive the lesser

of (x) or (y). Subject to §7.5, such amount shall be paid in cash

within two (2) years following the date of the Triggering Event.

(Emphasis added.)

{¶7} “Retirement” is defined as a complete discontinuation of one’s practice of

medicine. Section 1.9(ff) of the operating agreement reads as follows:

{¶8} Retirement means, with respect to any Member, the Member has

completely discontinued his or her practice of medicine or, if the Member wishes

to continue a part-time office practice, the terms thereof have been agreed to in

writing by the Company Governing Board.

{¶9} “Practice of medicine” is not defined in the agreement.

{¶10} The operating agreement also allows for expulsion of a member upon the

occurrence of an event as set forth in Section 6.5. In the event of expulsion, the formula

amount is not applied; instead, the member’s interest in PCV is paid at a punitive rate of

$10 per unit. A member cannot be expelled based solely on the failure to continue

satisfying the membership criteria as a result of a triggering event. Specifically, Section

6.5 of the operating agreement states:

{¶11} Expulsion. A Member may be expelled from the Company by the

Governing Board by the affirmative vote of at least 75% of the

4 Managers for the Member’s failure to abide by this Agreement

(including, without limitation, failing to continue to satisfy the

Membership Criteria set forth in §6.2 or comply with the covenants

in §6.3), or any other rules and regulations of the Company. If a

Member is expelled from the Company pursuant to this §6.5, unless

otherwise required by applicable law, the former Member shall

receive, in full satisfaction of any interest in the Company, Ten

Dollars ($10.00) per Unit. Subject to §7.5, any amount owed to a

Member pursuant to this §6.5 shall be paid in cash within two (2)

years following the date of the Member’s expulsion.

{¶12} Notwithstanding the foregoing, a Member may not be expelled

based solely on the Member’s failure to continue satisfying the

membership criteria as a result of a Triggering Event (as defined in

§7.3(b)) or a Practice Relocation (as defined in §7.3(c)), which shall

be governed by the provisions of §7.3(b) and §7.3(c), respectively,

unless such failure involves the Member’s violation of §6.3. A

Member is not entitled to a due process hearing prior to a decision

on the Member’s expulsion; however, the Member shall have the

right to address the Members at a meeting prior to any such

decision. (Emphasis added.)

{¶13} Dr.

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2013 Ohio 2400, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alloush-v-physician-cardiovascular-venture-llc-ohioctapp-2013.