UT Medical Group, Inc. v. Vogt

235 S.W.3d 110, 26 I.E.R. Cas. (BNA) 1177, 2007 Tenn. LEXIS 655, 2007 WL 2350088
CourtTennessee Supreme Court
DecidedAugust 20, 2007
DocketW2005-00256-SC-R11-CV
StatusPublished
Cited by43 cases

This text of 235 S.W.3d 110 (UT Medical Group, Inc. v. Vogt) is published on Counsel Stack Legal Research, covering Tennessee Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
UT Medical Group, Inc. v. Vogt, 235 S.W.3d 110, 26 I.E.R. Cas. (BNA) 1177, 2007 Tenn. LEXIS 655, 2007 WL 2350088 (Tenn. 2007).

Opinion

OPINION

CORNELIA A. CLARK, J.,

delivered the opinion of the court,

in which WILLIAM M. BARKER, C.J., and GARY R. WADE, J. and DAVID G. HAYES, SP. J. joined. JANICE M. HOLDER, J., not participating.

We granted review in this case to determine whether UT Medical Group, Inc. presented a justiciable case or controversy to the trial court when it alleged that Dr. Vogt anticipatorily breached an employment contract covenant. Because the record fails to show that Dr. Vogt committed an anticipatory repudiation of the non-competition covenant found in her employment agreement, Dr. Vogt is entitled to summary judgment. Therefore, we reverse the judgment of the Court of Appeals and remand this case to the trial court for the entry of an order dismissing the case.

*113 Factual & Procedural Background

The procedural history of this matter is complicated, but its recitation is necessary to understand our resolution of the case.

In 1997, UT Medical Group, Inc. (“UTMG”), an independent, not-for-profit organization in which faculty members of the University of Tennessee Medical School practice medicine privately, and Dr. Val Y. Vogt, M.D. (“Dr.Vogt”), a faculty member and urogynecologist, agreed to and signed a Physician Employment Agreement.

Subsequently, on March 12, 2002, a second Physician Employment Agreement (“Agreement”) was agreed to and signed by the parties. 1 As part of this Agreement, Section 22 sets forth a non-competition covenant. 2 In pertinent part, it provides:

(a) ... Physician agrees that in the event his or her employment with UTMG is terminated for any reason, voluntarily or involuntarily, with or without cause, or in the event Physician voluntarily leaves the employment of UTMG, Physician will not for a period of one (1) calendar year engage in the practice of medicine, either directly or indirectly, actively or passively, under contract or otherwise, as an employee, owner, partner, agent, stockholder, director, or otherwise in the Restricted Area.... Physician consents in such event to the granting of injunctive relief against any continuing breach, together with retrospective relief in the form of liquidated damages equal to [66 2/3%] of all fees or other income generated or obtained by Physician or through his or her efforts as a result of the breach. In the event UTMG is granted injunctive relief as provided herein, whatever portion of the one (1) year term stated in subsection (a) of this Section 22 had not expired at the time the breach first occurred shall be tolled by the breach, and shall begin to run again as of the date permanent injunctive relief is granted. Physician shall be liable to UTMG for all costs reasonably incurred by UTMG in pursuing enforcement of the provisions of this Section, including but not limited to reasonable attorneys fees and costs.
(b) As an alternative to the remedies otherwise afforded by this Section 22, Physician may elect to buy out his or her obligations under this Section 22 ... by completing each of the following steps: (i) providing proper written notice to UTMG of Physician’s termination of this Agreement; (ii) including in such written notice a statement that Physician is exercising his or her election under this Section 22, subsection (b); *114 and (iii) paying UTMG a dollar amount [equal to] ... 100% of Physician’s Annual Planned Income for the fiscal year preceding the termination of employment with UTMG.

On the Agreement’s signature page, the parties defined “Restricted Area” “[t]o include Shelby County, Tennessee and a 150 mile radius of Shelby County, Tennessee.” In order to terminate the Agreement voluntarily, the Agreement’s Section 20 provides that Dr. Vogt must give UTMG written notice of her intent to terminate the Agreement voluntarily “at least sixty (60) days prior to the effective date of termination.”

On December 15, 2003, Dr. Vogt wrote a letter to UTMG’s chief medical officer, Dr. Jeffrey R. Woodside, indicating that she planned to resign her UTMG position on March 12, 2004. Four days later, Dr. Woodside replied to Dr. Vogt’s letter, via e-mail, asking her whether she planned to engage the process outlined in the Agreement’s Section 22(b) to buy out her non-competition covenant. In his letter, Dr. Woodside stated the three options available to Dr. Vogt:

[T]otal freedom to practice medicine at any time outside the Restricted Area described in your employment agreement, or not practice medicine within the Restricted Area for one calendar year following your departure from UTMG, or buy-out your obligation for [$194,197, the agreed upon buy-out price,] and practice medicine at any time within the Restricted Area.

(emphasis added).

Before Dr. Vogt responded to Dr. Wood-side’s e-mail, on January 7, Dr. Owen P. Phillips, interim chair of the University’s Department of OB/GYN, sent Dr. Vogt an e-mail asking her to reconsider and “put [her] resignation on hold for a year.... If you elect to stay for the next year (through June 2005), I will press UTMG to adjust the non-compete clause amount. I know this has been done in other departments.” Unpersuaded by UTMG’s attempts to retain her services, on January 14, 2004, Dr. Vogt replied to Dr. Wood-side’s e-mail, stating “[t]his is a followup to my previous letter of resignation.... After much consideration I plan to engage in the practice of medicine locally.... I wish to discuss the buy-out and the possible mechanisms that address the non-competition component of my contract.”

During the weeks after Dr. Vogt’s e-mail to Dr. Woodside, the parties engaged in a period of intense maneuvering and negotiation. Dr. Vogt met with Dr. Woodside to discuss a possible reduction of the Section 22(b) buy-out option. After an exchange of several more e-mails between Dr. Vogt and Dr. Woodside, UTMG refused to reduce the buy-out amount. Instead, on February 2, 2004, UTMG’s counsel sent a letter to Dr. Vogt, which stated:

I understand [that] conversations between you and Dr. Woodside relating to the potential exercise of your buyout option concluded this morning without agreement.... We take your declaration of intent to practice “locally” to be a declaration of intent to breach your non-competition covenant. The effect of your declaration of such intent is to require us to take prompt action to secure your promise not to violate your non-competition covenant and, if we cannot do so, to initiate legal action to enjoin your anticipatory breach.

In response to this letter, on February 10, Dr. Vogt’s attorney wrote a letter to UTMG’s attorney re-confirming Dr. Vogt’s intention to practice medicine locally after her resignation from UTMG and declaring her desire “to exercise the buy-out option” as provided for in the Agreement. On the same day, UTMG’s attorney responded to *115 the letter, demanding the payment of $194,197 (or the execution of a promissory note in that amount payable on or before March 5, 2004) and threatening Dr.

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Cite This Page — Counsel Stack

Bluebook (online)
235 S.W.3d 110, 26 I.E.R. Cas. (BNA) 1177, 2007 Tenn. LEXIS 655, 2007 WL 2350088, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ut-medical-group-inc-v-vogt-tenn-2007.