Bassam Assaf v. Trinity Medical Cent ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-3918
B ASSAM A SSAF, M.D.,
Plaintiff-Appellant,
v.
T RINITY M EDICAL C ENTER,
an Illinois not-for-profit corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of Illinois.
No. 10 C 4021—John A. Gorman, Magistrate Judge.
S UBMITTED M AY 30, 2012—D ECIDED A UGUST 30, 2012
Before E ASTERBROOK, Chief Judge, and B AUER and
P OSNER, Circuit Judges.
B AUER, Circuit Judge. The plaintiff-appellant, Dr. Bassam
Assaf, was fired from his job at Trinity Medical Center
and sued his former employer in Illinois state court.
The case was removed to federal court on the basis of
diversity jurisdiction. While the action was still pending,
the parties reached an out-of-court settlement agree-
ment, the terms of which provoked further dispute.
2 No. 11-3918
Trinity contended that the agreement was incomplete
and invalid. Assaf moved for summary judgment, re-
questing that the court enforce the agreement. The
district court granted Assaf’s motion, but the question
of damages was left open for trial. Ruling on several
pretrial motions, the district court made two determina-
tions that are contested on this appeal: (1) the court
ruled that Assaf cannot collect certain professional fees
lost as a result of Trinity’s failure to employ him
through 2011; and (2) the court refused to order specific
performance of Trinity’s promise to reinstate Assaf as
director of the hospital’s epilepsy clinic. These rulings,
according to the district court, obviated the need for a
trial. We reverse and remand for trial to properly
ascertain Assaf’s damages.
I. BACKGROUND
Trinity Medical Center employed Dr. Bassam Assaf, a
foreign national from Syria, as its medical director for the
epilepsy clinic from 2005 to 2009. Trinity terminated
Assaf’s employment in August of 2009. In the months
following, the parties attempted but failed to negotiate
a new employment contract. Assaf filed an action for
breach of contract in state court on February 1, 2010.
The case was improperly removed to federal court on
the basis of diversity jurisdiction (more on that later).
After bringing the suit, Assaf entered into negotiations
with Trinity’s new CEO, Tom Tibbitts, in an attempt to
settle their disagreements. Apparently without the aid
of attorneys, Assaf and Tibbitts drafted and signed a
No. 11-3918 3
settlement agreement (“the agreement”) on February 26,
2010. The agreement provided, in part, that Assaf
would receive a salary of $50,000 each year from 2009
to 2011; and that Assaf’s title would be changed in
2010, but that his employment would continue at
Trinity through the end of 2011. After that point, his
employment would automatically renew for a year
unless either party gave 90-days notice that it was ter-
minating the employment relationship. Shortly after
signing the agreement, the parties began to quibble
again; Trinity refused to honor it, raising questions
about its validity.
Assaf moved for summary judgment in the district
court on his claim for breach of the February 26 agree-
ment. The court granted the motion and decided to
enforce the agreement, at least partially. It left open for
trial the question of Assaf’s damages. During discovery,
Assaf announced in response to an interrogatory that
he would be seeking compensation for lost professional
fees; these were fees separate from his salary that he
collected for performing certain procedures as Trinity’s
epilepsy director. Assaf claimed that due to Trinity’s
breach of the agreement, the epilepsy unit suffered and
the number of patients admitted for these procedures
dropped sharply after his termination in 2009.
Trinity eventually moved to bar any evidence of
Assaf’s lost professional fees at trial. This occurred after
the close of discovery but prior to the preparation of any
pretrial order. The district court agreed with Trinity,
holding that Assaf had failed to provide adequate
evidence of any lost fees during discovery.
4 No. 11-3918
Despite the fact that Assaf’s continued employ-
ment was a part of the agreement, apparently Trinity
never re-employed him. On September 8, 2011, almost
a month after the district court granted Assaf’s request
to enforce the agreement, Trinity requested that
the district court reconsider the provision requiring
Assaf’s re-employment because “there is a policy
against ordering specific performance of a personal
services contract.” (Def.’s Motion In Limine at 6, Sept. 8,
2011). The district court ordered Trinity to honor
the provision and reinstate Assaf in an October 4 order.
But rather than reinstating Assaf, Trinity filed a “motion
to clarify or stay,” causing further delay. On December 7,
2011, the court reversed its earlier order on the issue
of specific performance. It held that under Illinois
law, Trinity could not be ordered to reinstate Assaf in
accordance with the agreement. Shortly thereafter, the
court proceeded without trial to enter a final judg-
ment awarding Assaf his salary for the years 2009
through 2011, attorney’s fees, and compensatory dam-
ages. The court did not award any amount in lost profes-
sional fees.
II. DISCUSSION
A. Removal and Subject-Matter Jurisdiction
As we mentioned before, this case was improperly
removed to federal court on motion of the defendant,
Trinity. Assaf is a citizen of Syria, and Trinity has its
principal place of business in Rock Island, Illinois. And
the amount in controversy does exceed the statutory
No. 11-3918 5
minimum of $75,000. So the parties meet the require-
ments for diversity jurisdiction.1 See 28 U.S.C. § 1332.
But as a home-state defendant, Trinity cannot properly
request removal. The primary purpose behind removal
in diversity cases is to allow an out-of-state defendant
to avoid potential bias when appearing in the plain-
tiff’s chosen forum. As an Illinois not-for-profit, Trinity
had no reason to fear this sort of bias in Illinois state
court. If a case arises out of the diversity of the parties
and not out of a question of federal law, removal is
proper only if “none of the . . . defendants is a citizen of
the State in which such action is brought.” 28 U.S.C.
§ 1441(b); see also Samaan v. St. Joseph Hosp., 670 F.3d 21,
27 (1st Cir. 2012); Hurley v. Motor Coach Indus., Inc., 222
F.3d 377, 378 (7th Cir. 2000).
Given that he lost his forum of choice, it would have
made sense for Assaf to object to the improper removal
and request a remand to state court under 28 U.S.C.
§ 1447(c); Assaf did not object, and he waived any ability
1
We requested that the parties file supplemental briefs to
answer whether Assaf was admitted to the United States as a
permanent resident and, if so, whether he was domiciled
in Illinois. As a permanent resident domiciled in Illinois,
Assaf would count as a citizen of both Illinois and Syria
under 28 U.S.C. § 1332(a). See Intec USA, LLC v. Engle, 467
F.3d 1038, 1041-43 (7th Cir. 2006). This would in turn defeat
diversity jurisdiction, since Trinity is also a citizen of Illi-
nois. Both parties agree, however, that Assaf is not admitted to
this country as a permanent resident. As he is a citizen of Syria
only, complete diversity remains between the parties.
6 No. 11-3918
to do so after 30 days. See § 1447(c). But no matter; al-
though removal was improper in this case, it was merely
a procedural error, and we have held that such a
mistake does not spoil subject-matter jurisdiction.
Hurley, 222 F.3d at 379-80 (noting the other circuits that
have adopted the same rule). Since the removal error
was non-jurisdictional, and since the requirements for
diversity jurisdiction are met, we turn now to the merits.
B. Specific Performance
Assaf argues that under the terms of the February 26
agreement, he is entitled to reinstatement through the
year 2012. The agreement stated that Assaf’s employ-
ment would automatically renew at the end of 2011
unless either party chose to terminate the relationship
within 90 days of the end of the term. Although it had
never actually re-instated Assaf, Trinity nevertheless
notified him in the fall of 2011 that it did not intend
to continue employing him beyond that year. This met
the 90-days notice requirement of the agreement and
would seem to end any prospect of Assaf’s employment
at Trinity beyond the year 2011. But Assaf counters
that as a party in breach of the agreement, Trinity is
prohibited by Illinois law from seeking to enforce a
term of the contract in its own favor.
Apparently, the district court believed it could work
around this rule of law by holding that Trinity never
actually breached the agreement. Given that no party
was in breach, the court explained in its order from
December 7, 2011, Trinity rightfully exercised its
No. 11-3918 7
option under the agreement to terminate Assaf’s em-
ployment. But it is difficult to see how Trinity did not
breach. The terms of the agreement unambiguously
called for Assaf’s reinstatement through the end of 2011.
Both parties signed the agreement and Assaf kept his
end of the bargain by relinquishing his other pending
legal claims. The district court ruled that the agree-
ment was a valid, enforceable contract. But Trinity
never reinstated Assaf. This was a breach; but that does
not mean Assaf is entitled to reinstatement through 2012.
We apply the law of Illinois to settle a contract dispute
in a diversity case. See Erie R.R. v. Tompkins, 304 U.S.
64 (1938). It is true that Illinois forbids a party in material
breach of a contract from taking advantage of terms in
that contract benefitting him. See, e.g., McBride v. Pennant
Supply Corp., 623 N.E.2d 1047, 1051 (Ill. App. Ct. 1993);
Goldstein v. Lustig, 507 N.E.2d 164, 168 (Ill. App. Ct.
1987); see also Kosuga v. Kelly, 257 F.2d 48, 56 (7th Cir. 1958).
But that rule does not apply in this case; Assaf misses
the point. Trinity was simply terminating the agree-
ment according to its own terms, not taking unfair ad-
vantage of a particular provision. The simple rationale
behind the Illinois rule, a classic rule of contract law, is
that a party should be prevented from benefitting
from its own breach. See, e.g., 23 SAMUEL W ILLISTON &
R ICHARD A. L ORD , W ILLISTON ON C ONTRACTS § 63:8 (4th
ed. 2009); Market Street Assocs. Ltd. P’ship v. Frey, 941
F.2d 588, 592 (7th Cir. 1991). Assaf’s rights under the
agreement were not unfairly impaired by Trinity
exercising the non-renewal option. After all, Assaf is not
only receiving the salary he should have received as
8 No. 11-3918
epilepsy director for the years 2009 through 2011, he is
also entitled (as we will soon explain) to seek lost profes-
sional fees from those years. Since the rationale for
the rule is not implicated in this case, it simply does
not apply.
Since there was nothing wrong with Trinity re-termi-
nating Assaf in the fall of 2011, we need not decide
whether Illinois law allows specific performance in a
settlement agreement like this one. The employment
relationship was properly terminated when Trinity gave
notice, and any issue about specific performance for
reinstatement in past years is now moot. So we turn
to Assaf’s damages.
C. Loss of Professional Fees
We have already determined that Trinity breached the
agreement; the only remaining question for the district
court is, what is the proper computation of damages?
We believe that Assaf is entitled to seek the lost fees
he incurred as a result of Trinity’s failure to re-employ
him from the time of his termination in 2009 until the
end of 2011.
The district court held that Assaf was not entitled
to these lost fees because he failed to provide an adequate
estimate of the loss during discovery. Assaf initially
notified Trinity that he would seek the fees in his
response to Trinity’s interrogatories. He did not include
a calculation of the total amount lost at that time. The
district court noted that Assaf was required to disclose
No. 11-3918 9
a computation of his damages under Federal Rule of
Civil Procedure 26(a). Rule 26(a)(3) further requires
that such pretrial disclosures be made at least 30 days
prior to the trial; Assaf complied with this by submitting
a full computation with supporting evidence on
September 13, 2011. But the district court ruled that
Rule 37(c) prevented Assaf from using that computa-
tion because he disclosed the information after dis-
covery had ended, prejudicing Trinity by not al-
lowing it ample time to challenge his evidence. The
court then held that the remaining issues could be
resolved without a trial, and it entered an award for
Assaf that did not include his lost professional fees.
We review a decision to bar the admission of evidence
at trial for an abuse of discretion. Hotaling v. Chubb Sover-
eign Life Ins. Co., 241 F.3d 572, 578 (7th Cir. 2001).
The bottom line here is that Assaf did provide a com-
putation of his damages before the preparation of any
pretrial order, and although this came after the close
of discovery, we have held that litigation is not limited
to information obtained through discovery only. See
Krolnik v. Prudential Insurance Co., 570 F.3d 841, 843 (7th
Cir. 2009). Trinity was aware well before the discovery
deadline of May 20, 2011, that Assaf would be seeking
some amount in lost professional fees. Assaf not
only included this information in response to an inter-
rogatory, he was deposed on the subject on April 8,
2011. At that time, he explained how he planned to go
about calculating the lost fees. The district court believed
that Trinity would be prejudiced by the “late” (post-
10 No. 11-3918
discovery) disclosure of Assaf’s full computation
provided on September 13, but this is difficult to under-
stand; the trial was still at least a month away, and
Trinity had access to the information relating to proce-
dures and fees from the epilepsy clinic all along. There
is no need for Assaf to reveal to Trinity, through dis-
covery, knowledge already in the hospital’s own files.
We therefore find that the district court abused its
discretion in barring Assaf’s evidence of lost professional
fees.
III. CONCLUSION
For the aforementioned reasons, we R EVERSE the dis-
trict court’s order barring evidence of lost professional
fees and R EMAND for trial to properly ascertain Assaf’s
damages.
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