Parker v. Clinic

118 Wash. App. 425
CourtCourt of Appeals of Washington
DecidedSeptember 16, 2003
DocketNo. 28323-9-II
StatusPublished
Cited by3 cases

This text of 118 Wash. App. 425 (Parker v. Clinic) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Parker v. Clinic, 118 Wash. App. 425 (Wash. Ct. App. 2003).

Opinion

Armstrong, J.

Dr. Michael Parker practiced medicine with three partners. Parker and two of his medical partners also owned the Tumwater Family Practice Clinic’s (Clinic) building in a partnership. The medical partners expelled Parker under the partnership “without cause” provision even though he had notified the partners that he might be entitled to disability benefits as authorized by the partnership agreement. On the same day the medical partners expelled Parker from the medical practice, the building partnership — without consulting Parker as required by the building partnership agreement — lowered the rent it charged the practice. Parker sued. The trial court granted the defendants partial summary judgment, ruling that the medical partnership was entitled to expel Parker without cause despite his recent alleged disability. After a bench trial, the court ruled that the building partners technically breached the building partnership agreement but found that the breach caused Parker no damages. Parker appeals [428]*428all of these rulings. We hold that the trial court erred by finding no damages, and it erred by granting summary judgment on the issue of Parker’s expulsion. Accordingly, we remand for trial.

FACTS

Dr. Michael Parker was a partner in the Tumwater Family Practice Clinic along with Dr. Atteridge, Dr. Martin, and Dr. Gomez. After Dr. Gomez was expelled from the medical practice, the three remaining doctors formed an additional partnership, GAPP, to construct a new medical building for the Clinic. The partners obtained a Small Business Association (SBA) loan to finance the building.

SBA rules required the partnership interests in GAPP and the Clinic to be identical, and they prohibited GAPP from making a profit off the rent it charged the Clinic. The partners agreed in writing that the Clinic would pay GAPP a monthly rent of $13,166, and that the rent would increase over time. At this rate, GAPP did make a profit. Each of the three GAPP partners took $3,000 monthly in excess rent that GAPP received. Ultimately GAPP collected $17,909.67 per month, which was fair market rent for the building.

Dr. Peterson joined the Clinic partnership, but not GAPP. Martin and Atteridge wanted to let Peterson buy an interest in GAPP, but Parker refused unless the partners removed the "expulsion without cause” provision from the Clinic’s partnership agreement. The partners refused to do so.

On April 8, 1999, Atteridge, the managing partner of the Clinic (and GAPP), informed Parker by letter about a partnership meeting, scheduled for April 15, for the purpose of possibly expelling Parker from the Clinic partnership. After receiving the letter, Parker suffered a major depression, began seeing a psychiatrist, and did not return to work. On April 13, Parker wrote to Atteridge and the Clinic informing them that his doctor advised him not to work until further notice. He also said that he was unable to [429]*429attend the upcoming meeting and asked his partners to delay any vote on his expulsion. The Clinic’s partnership agreement allows any partner who cannot attend a meeting to request a delay in voting or to give his proxy to another partner.

The Clinic refused to delay the vote and expelled Parker from the medical partnership. Atteridge informed Parker’s patients by letter that Parker requested a leave of absence, was not expected to return, and was no longer seeing patients.

On the same day that the Clinic expelled Parker, Atteridge and Martin, acting as partners of GAPP, lowered the Clinic’s rent from $17,909 to $6,627. The GAPP partnership agreement requires that management decisions “shall be made by unanimous agreement of the partners.” Ex. 1, § 6.1.

Parker sued the Clinic and GAPP, as well as Atteridge, Martin, and Peterson individually, under a variety of theories. The trial court dismissed on summary judgment all claims based on the medical partnership agreement, ruling that the Clinic followed the correct procedures in expelling Parker and that the partnership agreement did not require the partners to delay a vote when requested by a partner.

After a bench trial on the claims related to GAPP, the court ruled that Atteridge technically breached the GAPP agreement when he and Martin decided, without Parker’s agreement, to lower the rent. But it found that this breach did not damage Parker because the rent reduction simply brought the partners into compliance with their SBA agreement. It also found that Atteridge and Martin did not breach their fiduciary duty by unilaterally lowering the rent.

[430]*430ANALYSIS

I. Findings of Fact

Parker challenges the trial court’s findings of fact 8, 9, 11, 12, and 14. We review a trial court’s findings to determine whether substantial evidence supports them. Holland v. Boeing Co., 90 Wn.2d 384, 390, 583 P.2d 621 (1978). “Substantial evidence” is evidence sufficient to persuade a “fair-minded person” that the fact is true. Holland, 90 Wn.2d at 390-91.

Finding 8 states that the partners became concerned that the “mirror image” between GAPP and the Clinic did not exist and that they violated SBA rules when they included Peterson in the Clinic but not GAPP. It also states that the partners, including Parker, discussed the problem that the rent exceeded GAPP’s obligations for mortgage payments, taxes, and maintenance and, thus, violated the SBA regulations. Minutes from the Clinic’s February partnership meeting show that this issue was discussed. And the person who took the minutes testified that this issue was also discussed at the March partnership meeting, although she did not record it. Substantial evidence supports this finding.

Finding 9 states that Parker was expelled from the Clinic in April 1999, under the partnership agreement, and that he remains a partner in GAPP. Parker challenges the way he was expelled. We discuss this issue below.

Finding 11 states that GAPP lowered the rent the Clinic paid, after Parker was expelled, to comply with SBA rules. Atteridge testified that this is why he lowered the rent. He believed that he did not need Parker’s permission to do this because the higher rent agreement broke the law and he had a duty to rectify the problem. Substantial evidence supports this finding.

Finding 12 states that GAPP’s lowering of the rent was to comply with SBA rules and was not a breach of good faith, fair dealing, or fiduciary duty. Instead, Atteridge (on behalf [431]*431of GAPP) acted out of a “legitimate and good faith concern” that GAPP comply with the SBA rules. Clerk’s Papers at 463. Atteridge’s testimony supports this finding. We need not consider this finding, as discussed below in section III (unpublished).

Finding 14 states that Parker presented insufficient evidence that he was damaged by the technical breach and that the court will not award Parker damages. This is a legal conclusion that we discuss in section II.

II. Damages

Parker argues that the trial court should have awarded him damages after it correctly found that Atteridge and Martin breached the GAPP partnership agreement by reducing the Clinic’s rent without his consent.

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Bluebook (online)
118 Wash. App. 425, Counsel Stack Legal Research, https://law.counselstack.com/opinion/parker-v-clinic-washctapp-2003.