Elizabeth Veeneman Bates, M.D. v. Ted Ennenbach ( 2023 )

RENDERED: APRIL 7, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2022-CA-0018-MR
ELIZABETH VEENEMAN BATES,
M.D. APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE MARY M. SHAW, JUDGE
ACTION NO. 19-CI-006119
TED ENNENBACH AND HORMONE
HEALTH EXPRESS OF KENTUCKY,
P.S.C. APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, MCNEILL, AND EASTON, JUDGES.
MCNEILL, JUDGE: Elizabeth Veeneman Bates, M.D. (“Dr. Bates”) appeals from
orders of the Jefferson Circuit Court denying her motion for summary judgment
and granting summary judgment in favor of Ted Ennenbach (“Ennenbach”) and
Hormone Health Express of Kentucky, P.S.C. (“HHE”), holding the parties’
indemnification agreement does not apply to Kentucky Board of Medical
Licensure (“KBML”) proceedings relating to or arising from professional
malpractice. Finding no error, we affirm.
BACKGROUND
In 2015, Dr. Bates and Ennenbach entered a business venture to
provide hormone optimization therapy to patients. Dr. Bates would provide the
medical care while Ennenbach would provide facilities, equipment, and non-
physician personnel through his management company, Body Shapes Medical
Limited Liability Company (“management company”). The parties formed HHE,
a professional service corporation, with Dr. Bates as president and sole
shareholder. Dr. Bates then entered two contracts, an employment agreement with
HHE and management company to provide administrative and patient care
services, and an indemnification agreement with Ennenbach, management
company, and HHE, which is the focus of this appeal.
The indemnification agreement provides in relevant part:
I. INDEMNIFICATION
1.1 Shareholder, Director and Officer
Indemnification. In consideration of Dr. Bates’s services
for and on behalf of HHE, Ennenbach, HHE and
Management Company shall jointly and severally
indemnify Dr. Bates from and against any and all
damages, losses, claims, judgments, actions, proceedings,
liabilities, taxes, penalties and expenses . . . alleged
against, or incurred or suffered by, Dr. Bates by virtue of
the fact that she is or was a shareholder, director or
officer of HHE or arising from or relating to the
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transactions contemplated by that certain Management
Services Agreement between Management Company and
HHE of even date herewith. . . . Without limitation of
the foregoing, HHE, Ennenbach and Management
Company shall jointly and severally indemnify Dr. Bates
against any Claims for penalties or sanctions imposed
against Dr. Bates or revocation or suspension of Dr.
Bates’s license to practice medicine in the
Commonwealth of Kentucky . . . arising from any acts or
omissions of Management Company or HHE or their
agents or employees. The foregoing indemnification
excludes Claims arising from or relating to professional
malpractice by Dr. Bates or any matter involving Dr.
Bates’s negligence or material breach of this Agreement
or any option agreement or buy-sell agreement entered
into by the Parties.
In August 2015, the KBML began investigating Dr. Bates’ use of
Armour Thyroid to hyperstimulate the thyroid to promote weight loss in patients
with normal thyroid functioning. This resulted in KBML restricting Dr. Bates’
ability to “practice medicine in the context of hormone replacement and/or
optimization therapy” indefinitely. Throughout the investigation, Ennenbach,
HHE, and management company paid for Dr. Bates’ defense but declined to
continue doing so following her license restriction. In response, Dr. Bates filed
suit in Jefferson Circuit Court to enforce the indemnification agreement.
Later, she moved for summary judgment arguing that Ennenbach and
HHE breached the indemnification agreement by refusing to pay for her defense of
the KBML action. The trial court denied the motion, finding that the
indemnification agreement distinguished between KBML claims stemming from
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Dr. Bates’ mere affiliation with HHE, which were covered, and those directly
related to the way she practiced medicine, which were not. The court noted the
agreement specifically indemnified Dr. Bates from KBML actions “arising from
any acts or omission of Management Company or HHE or their agents or
employees.” However, the KBML action did not arise from any act or omission of
any other person or entity, but from Dr. Bates’ patient care alone. Following the
denial, Ennenbach and HHE moved for summary judgment which was granted.
This appeal followed.
STANDARD OF REVIEW
Summary judgment is proper when the trial court determines that no
genuine issues of material fact exist and the moving party is entitled to judgment as
a matter of law. Steelvest, Inc. v. Scansteel Serv. Ctr., 807 S.W.2d 476, 480 (Ky.
1991); CR1 56.03. The parties agree no genuine issues of material fact remain and
summary judgment turns on a single question of contract interpretation: whether
the agreement requires Ennenbach and HHE to indemnify Dr. Bates for the costs
associated with the KBML action. “[T]he interpretation of a contract . . . is a
question of law for the courts and is subject to de novo review.” Cantrell Supply,
Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. App. 2002).
1
Kentucky Rules of Civil Procedure.
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ANALYSIS
As an initial matter, we must first address the deficiency of Dr. Bates’
appellate brief. Her argument section fails to make “reference to the record
showing whether the issue was properly preserved for review and, if so, in what
manner” as required by RAP2 32(A)(4). We require a statement of preservation:
so that we, the reviewing Court, can be confident the
issue was properly presented to the trial court and
therefore, is appropriate for our consideration. It also has
a bearing on whether we employ the recognized standard
of review, or in the case of an unpreserved error, whether
palpable error review is being requested and may be
granted.
Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012).
“Our options when an appellate advocate fails to abide by the rules
are: (1) to ignore the deficiency and proceed with the review; (2) to strike the brief
or its offending portions, [RAP 31(H)(1)]; or (3) to review the issues raised in the
brief for manifest injustice only[.]” Hallis v. Hallis, 328 S.W.3d 694, 696 (Ky.
App. 2010) (citing Elwell v. Stone, 799 S.W.2d 46, 47 (Ky. App. 1990)). Because
the record is small, and we have been able to determine her arguments were
properly preserved, we will ignore the deficiency and proceed with the review.
The primary objective in construing a contract is to effectuate the
intentions of the parties. Cantrell Supply, Inc., 94 S.W.3d at 384 (citations
2
Kentucky Rules of Appellate Procedure.
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omitted). A contract must be construed as a whole, giving effect to all parts and
every word if possible. Id. at 384-85 (citation omitted). “[I]n the absence of
ambiguity a written instrument will be enforced strictly according to its terms, and
a court will interpret the contract’s terms by assigning language its ordinary
meaning and without resort to extrinsic evidence.” Frear v. P.T.A. Industries, Inc.,
103 S.W.3d 99, 106 (Ky. 2003) (internal quotation marks and citations omitted).
The parties agree the indemnification agreement is unambiguous; thus, we turn to
its four corners and consider the ordinary meaning of its terms.
As correctly determined by the trial court, the agreement provides for
blanket indemnification for all claims against Dr. Bates that arise from or relate to
(1) her capacity as a shareholder, director, or officer of HHE and (2) “transactions
contemplated by that certain Management Services Agreement between
Management Company and HHE of even date herewith[.]” It also provides for
indemnification for “any Claims in connection with establishing or enforcing a
right to indemnification” under the agreement. None of these provisions applies to
the KBML action. The KBML action concerns Dr. Bates’ conduct as a medical
provider, not a shareholder, director, or officer of HHE, and the management
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services agreement referenced in the indemnification agreement is not a part of the
record.3
The only relevant section of the indemnification agreement, as
admitted by Dr. Bates, is as follows:
Without limitation of the foregoing, HHE, Ennenbach
and Management Company shall jointly and severally
indemnify Dr. Bates against any Claims for penalties or
sanctions imposed against Dr. Bates or revocation or
suspension of Dr. Bates’s license to practice medicine in
the Commonwealth of Kentucky . . . arising from any
acts or omissions of Management Company or HHE or
their agents or employees. The foregoing
indemnification excludes Claims arising from or relating
to professional malpractice by Dr. Bates or any matter
involving Dr. Bates’s negligence or material breach of
this Agreement or any option agreement or buy-sell
agreement entered into by the Parties.
(Emphasis added.)
Under the plain language of this section, Dr. Bates is indemnified
against any claims concerning her license to practice medicine, which includes
KBML actions, “arising from any acts or omissions of Management Company or
HHE or their agents or employees.” However, the KBML action in this instance
arose solely from Dr. Bates’ practice of medicine, not from any act or omission of
3
A management services agreement dated June 17, 2015 is, however, in the record. Even
assuming this agreement is the one referenced in the indemnification agreement, the KBML
action did not “arise from or relat[e] to the transactions contemplated” by the management
services agreement. The management services agreement is between HHE and management
company and concerns administrative matters, not patient care.
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anyone else. While Dr. Bates is an employee of HHE, when read in the context of
the indemnification agreement as a whole, “employee,” as used in this section
refers to other employees of HHE and management company, not Dr. Bates. This
interpretation is bolstered by the very next sentence which states: “The foregoing
indemnification excludes Claims arising from or relating to professional
malpractice by Dr. Bates or any matter involving Dr. Bates’s negligence . . . .”
Thus, Dr. Bates is only indemnified against licensure actions arising from acts or
omissions of others, not her own. This indemnification does not apply to licensure
actions concerning Dr. Bates’ negligence or professional malpractice, which is the
basis for the KBML action in this instance.
Dr. Bates argues this interpretation renders the clause concerning
licensure actions meaningless, because any KBML action would necessarily arise
from her practice of medicine. We disagree. Just as one example, pursuant to
KRS4 311.595(10), the KBML may discipline a physician for making “a false
statement in any document executed in connection with the practice of his
profession[.]” If management company made a false statement in connection with
advertising HHE’s services, pursuant to the indemnification agreement, Dr. Bates
would be indemnified against any KBML action because such action arose from
acts or omissions of others.
4
Kentucky Revised Statutes.
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Finally, Dr. Bates contends the trial court made impermissible fact
determinations in ruling on the motion for summary judgment. Again, we
disagree. While the trial court recited, and even interpreted, the facts in its order
granting summary judgment, these facts were irrelevant to its conclusion that the
agreement did not require Ennenbach and HHE to indemnify Dr. Bates against the
KBML action, which was purely a legal question.
In sum, because the indemnification agreement does not apply to
licensure actions arising from or relating to professional malpractice by Dr. Bates,
she cannot prove a breach of the agreement and the trial court did not err in
denying her motion for summary judgment and granting summary judgment in
favor of Ennenbach and HHE.
CONCLUSION
Accordingly, the orders of the Jefferson Circuit Court are affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEES:
Laura E. Landenwich John D. Cox
Abigail V. Lewis Scott D. Spiegel
Louisville, Kentucky Peterson S. Thomas
Louisville, Kentucky
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