Saint Alphonsus Regional Medical Center, Inc. v. Krueger

861 P.2d 71, 124 Idaho 501, 1992 Ida. App. LEXIS 42
CourtIdaho Court of Appeals
DecidedFebruary 21, 1992
Docket19034
StatusPublished
Cited by13 cases

This text of 861 P.2d 71 (Saint Alphonsus Regional Medical Center, Inc. v. Krueger) is published on Counsel Stack Legal Research, covering Idaho Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Saint Alphonsus Regional Medical Center, Inc. v. Krueger, 861 P.2d 71, 124 Idaho 501, 1992 Ida. App. LEXIS 42 (Idaho Ct. App. 1992).

Opinion

WALTERS, Chief Judge.

This is a debt collection action which arose out of a contract to construct a building. St. Alphonsus Regional Medical Center (the Hospital) advanced $150,000 to Dr. Philip Krueger and Allyn Krueger, husband and wife, (the Kruegers) to help get the building started. Ultimately, it was not built. The parties executed an agreement terminating the contract, releasing each other from liability, and agreeing that the Kruegers would repay the $150,000. The Kruegers signed a promissory note acknowledging the debt, but did not pay. The Hospital sued to collect and after a bench trial received judgment in its favor. The Kruegers appeal. We affirm.

Facts

The facts in this dispute were well developed in the trial court’s findings of facts, which we paraphrase as follows. Dr. Krueger is an obstetrician and gynecologist practicing in the Boise area. St. Alphonsus operates one of the two major hospitals in Boise. The other hospital is St. Luke’s. Dr. Krueger held staff privileges at both hospitals. For many years St. Luke’s was the sole provider of obstetrical hospital services in Boise. In the early 1980’s St. Alphonsus opened a competing obstetrics unit, which operated below capacity because most obstetricians continued to send their patients to St. Luke’s. St. Alphonsus desired to increase its share of the market and Dr. Krueger, who performed obstetrics at St. Luke’s but much of his gynecological work at St. Alphonsus, expressed a desire to move his office closer to St. Alphonsus and develop a women’s health center nearby-

On May 1, 1985, the Hospital and the Kruegers entered into a written contract by which the Hospital would advance them $150,000 and the Kruegers would construct a medical office building on land next to the Hospital to house an obstetrics and gynecology unit and a women’s health center headed by Dr. Krueger. The contract stated that the building was required to be completed by March 31, 1986. The contract provided for a lease option of floor space for the Hospital, referral of patients from the center to the Hospital, and payment to Dr. Krueger of $50,000 at occupancy and $60,000 a year for consulting services. The contract stated in pertinent part:

8.1 Preliminary Payment. Saint Al-phonsus shall pay Krueger [$150,000] upon the execution hereof. If the building shall not be constructed as herein provided, Krueger shall refund to Saint Alphonsus the entirety of his preliminary payment.
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11. Termination. This agreement shall terminate automatically; (i) if Krueger fails to remain in good standing on the medical staff of Saint Alphonsus; or (ii) remain a Board certified obstetrician or gynecologist in good standing throughout the term hereof; or (iii) if Krueger fails to construct a suitable building as provided herein; or (iv) if Krueger otherwise breaches his obligations hereunder. Nothing herein shall prevent Saint Alphonsus from seeking any available remedy at law or equity for breach of this Agreement or any provision thereof.

Both the Hospital and Dr. Krueger were aware that the agreement would be unpopular with competing obstetricians who had staff privileges at the Hospital, therefore, the negotiation and execution of the agreement were confidential. Nevertheless, the other obstetricians found out. They and other doctors on the staff pressured the Hospital to terminate the agreement, creating serious concern for the officers and directors of the Hospital. To maintain its *505 relationship with the other obstetricians, the officers and directors soon wanted to get out of the contract and considered can-celling it unilaterally before Dr. Krueger completely performed, but recognized that the contract was binding and continued to abide by its terms and hold Dr. Krueger to them.

On August 29, 1985, several of the obstetricians at the Hospital sued Dr. Krueger to enjoin construction of the building because it violated restrictive parking covenants attached to the land. The covenants had been placed there by the obstetricians when they sold the land to Dr. Krueger’s predecessor-in-interest. Dr. Krueger bought the land knowing of the covenants and therefore knew of them when he entered into the contract with the Hospital. The trial judge in that case refused to enjoin Dr. Krueger. Over four years later, however, the decision was reversed by the Idaho Supreme Court, which directed the court to enjoin Dr. Krueger. See St. Clair v. Krueger, 115 Idaho 702, 769 P.2d 579 (1989). An injunction was issued on January 26, 1990, long after the events in dispute in the instant case. On the advice of his attorney, however, Dr. Krueger did not attempt to develop the land while the matter was before the trial court.

In September, 1985, Dr. Krueger informed the Hospital of the lawsuit. The parties discussed termination of their contract, but ultimately insisted on complete performance. Although the Hospital wanted out of the contract, it decided to wait and see whether Dr. Krueger would perform, notwithstanding the lawsuit and a letter the Hospital received from six obstetricians demanding that it withdraw its support of Dr. Krueger or the obstetricians would “boycott” the Hospital and take their business elsewhere. The Hospital did not tell Dr. Krueger about the letter. The parties negotiated another termination, but it was not executed. The medical community continued to pressure the Hospital to stop supporting Dr. Krueger and to withdraw from the contract. At the March 31, 1986, construction deadline the Kruegers had not broken ground for the building. Thereafter, the Kruegers and the Hospital executed an agreement terminating the contract and stating in relevant part:

1. Termination and Indemnity. The Agreement is hereby unconditionally terminated and declared to be null and void and of no further force and effect. Krueger and Saint Alphonsus hereby mutually release and relieve each other ... from all obligations, liabilities, claims, causes of action, damages, costs, losses and/or expenses of any kind or nature whatsoever, in law and/or equity, whether known or unknown, arising out of or in any way associated or connected with the Agreement, tortuous [sic] interference with respect to the Agreement and/or termination of the Agreement.
2. Repayment. The parties hereby acknowledge that Saint Alphonsus made the payment to Krueger, which is specified in paragraph 8.1 of the Agreement. Krueger hereby agrees to repay the said payment to Saint Alphonsus by executing and delivering to Saint Alphonsus on the date hereof a promissory note....

The Kruegers paid no part of the promissory note and the Hospital sued. At trial, the Kruegers appeared pro se, agreed that they had paid nothing toward the note, and raised affirmative defenses of economic duress, fraud, impossibility, and breach of an implied covenant of good faith and fair dealing. The court entered judgment in favor of the Hospital for $283,075.20 which included the full amount of the promissory note, interest and attorney fees.

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Cite This Page — Counsel Stack

Bluebook (online)
861 P.2d 71, 124 Idaho 501, 1992 Ida. App. LEXIS 42, Counsel Stack Legal Research, https://law.counselstack.com/opinion/saint-alphonsus-regional-medical-center-inc-v-krueger-idahoctapp-1992.