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NURSES' REGISTRY AND HOME HEALTH CORPORATION v. ROBINSON-HILL, 2010-CA-001224-MR. (2012)

Court: Court of Appeals of Kentucky Number: inkyco20120427235 Visitors: 13
Filed: Apr. 27, 2012
Latest Update: Apr. 27, 2012
Summary: NOT TO BE PUBLISHED OPINION DIXON, JUDGE. Nurses' Registry and Home Health Corporation ("NR") appeals from an order of the Fayette Circuit Court granting summary judgment in favor of Alisia Robinson-Hill and David A. Price. After careful review, we reverse and remand for further proceedings. NR is a home health care corporation with offices in Lexington, Kentucky. NR employs nurses and therapists to provide a range of services to clients in their own homes. In December 2005, NR hired Price a
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NOT TO BE PUBLISHED

OPINION

DIXON, JUDGE.

Nurses' Registry and Home Health Corporation ("NR") appeals from an order of the Fayette Circuit Court granting summary judgment in favor of Alisia Robinson-Hill and David A. Price. After careful review, we reverse and remand for further proceedings.

NR is a home health care corporation with offices in Lexington, Kentucky. NR employs nurses and therapists to provide a range of services to clients in their own homes. In December 2005, NR hired Price as a Registered Nurse Case Manager, and in April 2006, NR hired Robinson-Hill as Vice President of Clinical Operations and Administration. At the time they were hired, both Appellees signed a "Non-Disclosure/Non-Compete Agreement" which states in pertinent part:

Individual further expressly covenants and agrees that he/she will not disclose or divulge, either directly or indirectly, any information about Company to anyone unless first obtaining the written consent of Company. Individual further expressly covenants and agrees that he/she will not, either directly or indirectly, compete with the business of Company for a period of one (1) year within a radius of one-hundred (100) miles.

In November 2007, both Appellees resigned their positions at NR and subsequently began employment with Richmond Health and Rehabilitation ("RHR") in Richmond, Kentucky.1 In January 2008, NR filed suit against Appellees, alleging breach of non-compete agreement, breach of fiduciary duty, and tortious interference with business advantage. NR alleged Appellees joined a competing business, solicited other NR employees for employment at RHR, and used information and skills obtained during their employment with NR to the detriment of NR's business interest.2

In November 2009, the circuit court granted summary judgment in favor of Appellees; however, in January 2010, the court vacated its order pursuant to Kentucky Rules of Civil Procedure (CR) 59.05 and granted additional time for discovery. Thereafter, in May 2010, the court again granted summary judgment in favor of Appellees, and this appeal followed.

It is well settled that "the proper function of summary judgment is to terminate litigation when, as a matter of law, it appears that it would be impossible for the [non-moving party] to produce evidence at the trial warranting a judgment in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). "[A] party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial." Id. at 482. "Because summary judgment involves only legal questions and the existence of any disputed material issues of fact, an appellate court need not defer to the trial court's decision and will review the issue de novo." Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky. App. 2001).

I. Non-Compete Agreement

NR asserts that it presented affirmative evidence indicating material questions of fact exist as to whether Appellees breached the non-compete agreement by going to work for RHR and by soliciting NR's employees and patients. NR contends that it competes with RHR to serve patients who are capable of choosing between in-home treatment and treatment at an inpatient facility. NR relies on the affidavits of Arlene Pneuman and Jeannie LeMaster to support its position. LeMaster, the Chief Compliance Officer of NR, stated that both NR and RHR offered short-term rehabilitation services and that the medical records of eight former NR patients indicated they had transferred their care to RHR although NR was capable of treating the patients' rehabilitation needs. The affidavits of Pneuman, NR's Human Resources Director, stated that Appellees contacted NR employees and extended job offers with RHR, which resulted in some NR employees resigning from employment with NR.

In contrast, Appellees assert that, because NR and RHR are not business competitors, they did not breach the non-compete agreement. Appellees point to the affidavit of Roch Carter, the Vice President and General Counsel of RHR's parent company, wherein he asserted that RHR is a "skilled nursing facility and is not in competition with any home health company[.]" Appellees further argue that the non-compete agreement did not specifically prohibit the solicitation of NR employees.

The interpretation and construction of contractual terms is a matter of law. New Life Cleaners v. Tuttle, 292 S.W.3d 318, 321 (Ky. App. 2009). Generally, a non-competition agreement will be enforced if it is valid and reasonable. Louisville Cycle & Supply Co., Inc. v. Baach, 535 S.W.2d 230, 232 (Ky. 1976). In the case at bar, neither party has asserted the terms of the agreement are ambiguous or unreasonable. At the summary judgment hearing, the trial court agreed with Appellees' contention that NR and RHR are not business competitors, rendering the non-compete agreements inapplicable.

We are mindful summary judgment must be cautiously rendered, and the record must be viewed most favorably to the non-moving party, with all doubts resolved in his favor. Steelvest, 807 S.W.2d at 480. With this legal standard in mind, we cannot ignore the affidavits of LeMaster and Pneuman, offered by NR, which clearly establish that disputed material issues of fact exist as to whether Appellees were working for a competing business in violation of the non-compete agreement. Perhaps Appellant cannot succeed at trial on the basis of these affidavits, however, while "a trial court may believe the party opposing the motion may not succeed at trial, it should not render a summary judgment if there is any issue of material fact." Id. We must conclude NR presented sufficient evidence to survive summary judgment on their breach of agreement claim. Accordingly, we reverse summary judgment on that issue and remand for further proceedings.

II. Breach of Fiduciary Duty

NR asserts it presented affirmative evidence that Appellees breached a fiduciary duty to NR by going to work for RHR and soliciting NR employees and patients. NR asserts that, during their employment with NR, both Appellees were in positions of trust because they had access to confidential patient information.

Generally, a fiduciary duty is "founded on trust or confidence reposed by one person in the integrity and fidelity of another and which also necessarily involves an undertaking in which a duty is created in one person to act primarily for another's benefit in matters connected with such undertaking." Id. at 485. NR relies on Aero Drapery of Kentucky, Inc. v. Engdahl, 507 S.W.2d 166 (Ky. 1974), to support its position that Appellees owed a fiduciary duty. The Aero Drapery Court concluded a fiduciary relationship existed between the company and Engdahl, its former employee, noting:

The position of trust, the freedom of decision, and access to confidential corporate information evidence this fact. By accepting the offices of treasurer and director of Aero, Engdahl elected to manage the affairs and property of Aero for its benefit. The duties and liabilities of any agent to his principal are parallel to the nature of the particular office which the agent agrees to perform.

Id. at 168. The Court cautioned that a former employee "may not use prior fiducial confidences to profit at the expense of his former employer." Id. at 170.

In the case at bar, NR asserts that Robinson-Hill was an officer of the company as Vice President of Clinical and Operations Administration, and Price had a supervisory role as a Registered Nurse Case Manager. NR asserts that both Appellees had access to NR's "proprietary information" such as patient records and referral sources, and Appellees used that information to their advantage at RHR. Finally, the affidavits of Pneuman and LeMaster indicate that several NR employees were offered work at RHR, while some NR patients transferred their care to RHR in the months following Appellees' departure.

The fiduciary relationship exists "where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence." Steelvest, 807 S.W.2d at 485. Here, the evidence indicates Appellees had access to medical records and referrals in the course of discharging their duties at NR, and they may have used this information against the interest of NR. After careful review, we believe genuine issues of fact exist as to whether Appellees violated a fiduciary duty to NR; accordingly, summary judgment was improper.

III. Tortious Interference with Business Advantage

Finally, NR asserts summary judgment was improper because disputed issues of fact exist regarding whether Appellees tortiously interfered with the business advantage of NR by intentionally and maliciously soliciting NR's employees and patients to leave NR and transfer to RHR.

NR correctly cites Cullen v. South East Coal Co., 685 S.W.2d 187 (Ky. App. 1983), wherein a panel of this Court quoted the Restatement (Second) of Torts § 766B, delineating the elements of Intentional Interference with Prospective Contractual Relation:

One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation.

RHR points out, in National Collegiate Athletic Ass'n v. Hornung, 754 S.W.2d 855 (Ky. 1988), the Kentucky Supreme Court emphasized "that a party may not recover under the theory presented in the absence of proof that the opposing party `improperly' interfered with his prospective contractual relation." Id. at 858.

Here, NR presented the Pneuman and LeMaster affidavits indicating patients transferred their care to RHR following Appellees' resignations, and Appellees solicited other NR employees to work at RHR. The deposition testimony of Robinson-Hill also indicated that she received a monetary bonus based on patient recruitment at RHR. When viewing the record in the light most favorable to NR, material issues of fact exist as to whether Appellees tortiously interfered with NR's business advantage; consequently, summary judgment was improper.

For the reasons stated herein, the judgment of the Fayette Circuit Court is reversed and remanded for further proceedings consistent with this opinion.

VANMETER, JUDGE, CONCURS.

KELLER, JUDGE, DISSENTS AND FILES SEPARATE OPINION.

KELLER, JUDGE, DISSENTING.

I respectfully dissent. As noted by the majority, Robinson-Hill and Price signed non-disclosure/non-compete agreements. Those agreements provide that Robinson-Hill and Price cannot "disclose or divulge. . . any information about [NR] to anyone . . . . [or] either directly or indirectly, compete with the business of [NR] for a period of one (1) year within a radius of one-hundred (100) miles." The trial court found that, as a matter of law, NR and RHR are not competitive businesses. However, the majority holds that whether NR and RHR are in competition is a question of fact, not a question of law. I disagree.

"The interpretation and construction of contractual terms is a matter of law." New Life Cleaners v. Tuttle, 292 S.W.3d 318, 321 (Ky. App. 2009). "Compete with the business of [NR]" is a contractual term and its interpretation therefore is a question of law, not fact. Thus, although the majority correctly notes that the affidavits of LeMasters, Pneuman, and Roch Carter are factually different regarding the competitive nature of NR's and RHR's businesses, those factual differences are irrelevant. Interpretation of the term "compete with the business of [NR]" is a task for the court, not the finder of fact.

In making that interpretation, I believe the trial court correctly assigned the ordinary meaning to the terms "compete" and "business of [NR]." See Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 105-06 (Ky. 2003). A home health care agency, such as NR, is a business that provides a wide range of health care services to patients in their own homes. A nursing home, such as RHR, is a business that provides a wide range of health care services to patients on an inpatient basis at its facility. In other words, NR's patients are able to receive its services in their own homes, while RHR's patients are not. Thus, while the two businesses may both provide some of the same health care services to patients, they do so to two different pools of patients. Therefore, I would hold, as did the trial court, that these businesses are not in competition and that Robinson-Hill and Price did not, as a matter of law, violate the non-compete provisions of the agreement.3

I note that NR lists twenty-three medical services that both it and RHR provide as proof that the two are competitive businesses. NR implies that the provision of any of these services by Robinson-Hill or Price would be a violation of the non-compete provisions of the agreement. If this Court were to construe the agreement as broadly as NR urges, Robinson-Hill and Price would be foreclosed from practicing as nurses not only in a nursing home but in a hospital, physician's office, or for any other medical care service provider. Such an interpretation would be unenforceable as unconscionable.

Furthermore, if NR wanted to so severely limit Robinson-Hill's and Price's ability to practice their profession, it should have specifically spelled out what services it deemed to be competitive. As the drafter of the document, NR had the ability to more clearly define the terms "compete" and "business of [NR]" and it cannot now complain that the court interpreted the term in a manner it dislikes. See B. Perini & Sons v. Southern Ry. Co., 239 S.W.2d 964, 965-66 (Ky. 1951) (concluding that ambiguities in a contract should be construed against the drafter.)

I also disagree with the majority's holdings regarding NR's breach of fiduciary duty and tortious interference claims. NR argues that Robinson-Hill and Price solicited eight of its patients and five of NR's employees, thus breaching their fiduciary duty and tortiously interfering with NR's contractual relations. While the record does support NR's contention that Robinson-Hill and Price solicited some of its employees, the record does not support any such solicitation of patients. NR's only proof of patient solicitation is the fact that some of its patients, after being hospitalized, received post-release rehabilitation at RHR's facility rather than in their homes through NR. There is no evidence that Robinson-Hill, Price, or anyone from RHR contacted those patients or their family members. Furthermore, there is no evidence that in-home care would have been appropriate for those patients. Therefore, any allegations of patient solicitation are unsupported by the evidence and cannot support either of NR's breach of fiduciary duty or tortious interference claims.

As to the solicitation of employees, the Court in Aero Drapery held that an employee's duty is to refrain from using "fiducial confidences to profit at the expense of his former employer." 507 S.W.2d at 170. There is no evidence that Robinson-Hill or Price used any confidential information when they contacted NR's employees or that they profited from the move by any employees from NR to RHR. Furthermore, since NR and RHR are not in competition, any profit would not have been "at the expense of" NR.

As to NR's tortious interference claim, the majority cites to the Restatement (Second) of Torts § 766B for the elements of this tort and holds that there is evidence that Robinson-Hill and Price improperly interfered with NR's prospective contractual relations by soliciting employees and patients. As I previously noted, there is no evidence, other than coincidence, that Robinson-Hill or Price solicited NR's patients. Therefore, they could not have tortiously interfered with any relationship NR had with those patients.

As to the solicitation of employees, there is no evidence that NR had any "prospective contractual relation" or any contractual relation with those employees. Therefore, there was no contract with which Robinson-Hill or Price could have interfered.

For the foregoing reasons, I would affirm the trial court.

FootNotes


1. Robinson-Hill was hired as the Director of Nursing, and Price was hired as the Assistant Director of Nursing.
2. In September 2008, NR filed an amended complaint alleging Appellees had also solicited NR clients to transfer their treatment services to RHR.
3. I note that NR cites Louisville & Nashville Railroad Co. v. Commonwealth, 104 Ky. 226, 46 S.W. 707 (1898), for the proposition that whether two businesses are in competition is a question of fact. However, that case involved the interpretation of a statute regulating the fees railroads could charge for hauling goods between various cities. It did not involve the interpretation of contractual terms. Therefore, it has no relevance to this matter.
Source:  Leagle

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