Mayor Okoloise v. William Franklin Yost

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2017-CA-01472-SCT
MAYOR OKOLOISE, M.D. AND HOPE MEDICAL
SERVICES, LLC
v.
WILLIAM FRANKLIN YOST, M.D. AND
DOCTOR’S MEDICAL CENTER OF PICAYUNE,
PLLC
DATE OF JUDGMENT: 04/25/2017
TRIAL JUDGE: HON. M. RONALD DOLEAC
TRIAL COURT ATTORNEYS: PAUL MANION ANDERSON
L. CLARK HICKS, JR.
VICK K. SMITH
SAMUEL STEVEN McHARD
COURT FROM WHICH APPEALED: PEARL RIVER COUNTY CHANCERY
COURT
ATTORNEYS FOR APPELLANTS: L. CLARK HICKS, JR.
VICK SMITH, III
WILLIAM A. WHITEHEAD, JR.
ATTORNEYS FOR APPELLEES: PAUL MANION ANDERSON
SAMUEL STEVEN McHARD
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: REVERSED AND RENDERED - 09/05/2019
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE RANDOLPH, C.J., ISHEE AND GRIFFIS, JJ.
GRIFFIS, JUSTICE, FOR THE COURT:
¶1. This appeal involves a business dispute between two physicians. The chancellor
awarded equitable damages in the amount of $188,622. We find reversible error and render
judgment.
FACTS
¶2. William Franklin Yost, M.D., owned and operated a pain-management clinic in
Slidell, Louisiana—Doctors Medical Center, LLC (DMC-Slidell).
¶3. Within six months of opening DMC-Sidell, the Louisiana State Board of Medical
Examiners (LSBME) began an investigation of Dr. Yost for illegally operating a pain-
management clinic. On April 24, 2012, Dr. Yost wrote the LSBME and stated, “effective
July 13th, 2012, I will no longer be practicing in the area of chronic pain management by the
use of narcotic therapy.” As a result, Dr. Yost and officials with the LSBME agreed that Dr.
Yost would retire and cease the practice of chronic pain management through narcotic
therapy. DMC-Slidell closed on July 13, 2012.1
¶4. Dr. Yost then opened a clinic in Picayune, Mississippi—Doctors Medical Center of
Picayune, LLC (DMC-Picayune). In the summer of 2012, Dr. Yost began seeing patients,
including his former patients from DMC-Slidell. At that time, the Mississippi State Board
of Medical Licensure (MSBML) required that all pain-management clinics be registered and
issued a certificate. Dr. Yost submitted an application for registration to the MSBML in June
2012, but the certificate was not immediately issued. Dr. Yost continued treating patients for
pain management, without a certificate, until November 2012, when he reapplied. The
MSBML then issued Dr. Yost a certificate on November 16, 2012.
1
The investigation resulted in Dr. Yost’s voluntary surrender of his Louisiana
medical license on November 19, 2012. Dr. Yost previously represented to the LSBME that
he would only provide traditional medical services after the pain clinic closed, if he practiced
medicine at all. At trial, Dr. Yost testified that he had fully intended to retire when the clinic
closed.
2
¶5. Mayor Okoloise, M.D., met with Dr. Yost in June 2012 and began a discussion about
affiliating with Dr. Yost. Dr. Yost informed Dr. Okoloise that he had a pain-management
practice and that he was looking for another physician to take over after he retired in the near
future.
¶6. As a result of these discussions, on August 1, 2012, Dr. Okoloise began practicing
medicine with Dr. Yost at DMC-Picayune. They formalized their relationship and signed a
“Personal Services Contract” on August 13, 2012. Dr. Yost signed the contract as the
member manager of DMC-Slidell and DMC-Picayune, but not in an individual capacity.
¶7. The contract provided that Dr. Okoloise agreed to provide certain physician services
to DMC-Slidell and DMC-Picayune, commencing August 1, 2012. The initial term of the
contract was for one year with automatic renewal, unless one of the parties gave the other
party notice in writing of the intention not to renew the contract. The contract provided that
the medical clinics would at all times operate in accordance with all applicable provisions
of law and that failure to operate in accordance with applicable laws, rules, regulations, or
directives would be a material breach of the contract. The contract provided that early
termination would be accepted if either party committed a material breach or lost the right
to practice medicine and if the nonbreaching party gave the breaching party sixty days’
written notice of the breach and the intent to terminate. The contract was drafted by Dr.
Okoloise’s attorney, James Hautot, from Lafayette, Louisiana, but both parties contributed
to the final contract terms.
3
¶8. At trial, Dr. Okoloise testified that, at the time he signed the agreement, he was
unaware of the LSBME’s investigation of Dr. Yost and he was unaware that Dr. Yost was
not properly credentialed in Mississippi. Dr. Yost testified that, from the time the contract
was signed until Dr. Okoloise left, Dr. Yost only practiced medicine in Mississippi. Dr. Yost
believed that because the LSBME Board had no jurisdiction in Mississippi, he was not
violating his promise not to practice pain management.
¶9. On September 4, 2012, Dr. Yost, his wife, and Dr. Okoloise, met with Hautot in
Lafayette, Louisiana. During this meeting, the parties discussed Hautot’s representation of
Dr. Yost before the LSBME. Both Dr. Okoloise and Dr. Yost executed a written consent to
Hautot’s representation of Dr. Yost.
¶10. The MSBML was not aware of the investigation of Dr. Yost by the LSBME. On
November 16, 2012, the MSBML approved Dr. Yost’s application practice in pain
management and issued the required certificate.
¶11. Three days later, on November 19, 2012, Dr. Yost surrendered his Louisiana medical
license.
¶12. One month later, on December 19, 2012, Dr. Okoloise resigned from DMC-Picayune.
Dr. Okoloise delivered a resignation letter to Dr. Yost. The letter stated that the resignation
was effective immediately, and it listed a number of allegations against Dr. Yost and DMC-
Picayune. Dr. Okoloise testified that the clinic was being operated illegally, and, thus he
believed the contract to have been void at its inception. Dr. Okoloise did not provide a sixty-
4
day notice of his intent to terminate the contract. Dr. Okoloise testified that he had notified
Dr. Yost on three different occasions of numerous breaches but that he did not mention his
intent to terminate the contract until December 19, 2012.
¶13. After Dr. Okoloise resigned, several other DMC-Picayune employees—Julie
Brinkman, Kimberly Marshall, and Camille Dimaggio—unexpectedly resigned. Another
employee, Joanne Myers, had resigned a few days before.
¶14. Testimony was presented that Dr. Okoloise had made plans to open another clinic
before he submitted his resignation. In fact, Dr. Okoloise opened a clinic under the name of
Hope Medical Services, LLC (Hope Medical). On November 16, 2012, Dr. Okoloise
executed a lease agreement on a space to house Hope Medical. Dr. Okoloise offered several
members of the DMC-Picayune staff an employment opportunity at Hope Medical. The
offers were made while Dr. Okoloise was employed by DMC-Picayune. In addition, Dr.
Okoloise instructed the staff to access the patient list of DMC-Picayune and to send out
letters that provided the patients with notice of Dr. Okoloise’s new address.2
2
The MSBML requires all physicians in Mississippi to notify patients of their
relocation. The Mississippi State Board of Medical Licensure Policy 3.17 (2009), which was
introduced at trial as Exhibit D-50, states as follows:
Closing a Physician’s Practice
When a physician ceases to practice, whether by relocation, retirement,
liability, or death, certain obligations are due the patients of the physician. If
relocation to another site in the same patient area, the problems are mainly
logistical in making sure the patients know about the move. If leaving a
partnership or group practice, the physicians remaining should not unduly
hinder patient inquiries as to the location of the departing physician. The
5
¶15. On January 2, 2013, Hope Medical opened in Picayune. Hope Medical employed Dr.
Okoloise, Myers, Brinkman, Marshall, and Dimaggio.
¶16. Despite the departure of Dr. Okoloise and the staff members, Dr. Yost continued to
operate DMC-Picayune. Dr. Yost employed temporary staff and decreased the number of
patients. Dr. Yost also sought a buyer for the clinic.
¶17. Dr. Yost entered negotiations with Dr. Stephanie Dyer to purchase DMC-Slidell and
DMC-Picayune. Dr. Yost and Dr. Dyer signed a memorandum of understanding for the sales
price of $1,250,000, but the sale was never finalized. Dr. Dyer backed out after a
conversation with Dr. Okoloise in which he told her that a noncompetition agreement was
in place. Dr. Okoloise denied he had made that statement.
¶18. The Drug Enforcement Agency (DEA) began an investigation of Dr. Yost and DMC-
Picayune. Following the investigation, the DEA did not file any charges against Dr. Yost.
But, on February 13, 2013, the DEA closed DMC-Picayune. That same day, Dr. Yost
voluntarily surrendered his Mississippi medical license. The licensure surrender noted that
Dr. Yost had surrendered his Louisiana medical license for a pattern and practice that
violated Louisiana’s pain-management rules and that his conduct was in violation of the
Mississippi Medical Practice Act.
patients of the departing physician should be informed of the physician’s new
address and offered the opportunity to have their medical records sent to the
departing physician at the new practice location. It is unethical to withhold
such information upon a patient’s request.
6
¶19. On January 7, 2013, Dr. Yost and DMC-Picayune commenced this action in the
Chancery Court of Pearl River County. The complaint named as defendants Dr. Okoloise,
Hope Medical, and the four former employees of DMC-Picayune. The complaint asserted
twenty claims and demanded a judgment in the amount of the fair market value of the clinic,
which was valued at $1,198,000.
¶20. After trial, the chancellor entered an opinion and final judgment that addressed each
claim. The chancellor dismissed the following claims: accounting, breach of fiduciary duty
and breach of duty of loyalty, constructive trust, unjust enrichment, embezzlement and
misappropriation, slander per se, libel, unfair competition, tortious interference with business
relationship, tortious interference with business, breach of duty of good faith and fair dealing,
fraudulent or negligent misrepresentation, civil conspiracy, intentional or negligent infliction
of emotional distress, punitive damages, indemnification, and injunctive relief. Yet the
chancellor determined that there was sufficient evidence to sustain several claims against Dr.
Okoloise and Hope Medical: trover/conversion, defamation, breach of contract, breach of
duty of good faith, and misappropriation of trade secrets.
¶21. The chancellor found that “[Dr. Yost and DMC-Picayune] should be equitably
compensated for the damages they incurred for these claims and losses.” He awarded a
judgment against Dr. Okoloise and Hope Medical in the amount of $188,622. The chancellor
later modified the order and final judgment on post-trial motions.
STANDARD OF REVIEW
7
¶22. “This Court will not disturb the findings of a chancellor unless the chancellor was
manifestly wrong, clearly erroneous or an erroneous legal standard was applied.” White v.
White, 26 So. 3d 342, 346 (Miss. 2010) (internal quotation marks omitted) (quoting R.K. v.
J.K., 946 So. 2d 764, 772 (Miss. 2007)). Further, we will not reverse a chancellor’s findings
“where there is substantial evidence supporting those findings.” Madden v. Rhodes, 626 So.
2d 608, 616 (Miss. 1993) (citing Cooper v. Crabb, 587 So. 2d 236, 239 (Miss. 1991)). We
recognize that “the chancellor, being the only one to hear the testimony of witnesses and
observe their demeanor, is to judge their credibility. He is best able to determine the veracity
of their testimony, and this Court will not undermine the chancellor’s authority by replacing
his judgment with its own.” Id. (citing Mullins v. Ratliff, 515 So. 2d 1183, 1189 (Miss.
1987)). “For questions of law, we employ a de novo standard of review and will only reverse
for an erroneous interpretation or application of the law.” Boyd v. Tishomingo Cty.
Democratic Exec. Comm., 912 So. 2d 124, 128 (Miss. 2005) (citing In re Mun. Boundaries
of Southaven, 864 So. 2d 912, 917 (Miss. 2003)).
DISCUSSION
¶23. Dr. Okoloise and Hope Medical raise four issues on appeal:
I. Whether the chancellor correctly found that Dr. Yost proved every
element of slander, including special harm caused by the alleged
slander.
II. Whether the chancellor correctly held that a physician’s regulatory
obligation to notify patients of a relocation of his practice necessarily
constitutes conversion of confidential customer information.
8
III. Whether the chancellor correctly held that Dr. Okoloise breached his
personal services contract with Dr. Yost and DMC-Picayune.
IV. Whether the chancellor utilized and calculated a proper measure of
damages for business losses.
Because this Court has determined that the issue on damages is dispositive, the remaining
issues will not be addressed.
¶24. Here, we must review a chancellor’s award of monetary damages. The award of
monetary damages is a legal remedy, which is typically brought in circuit court. Chancery
courts are courts of equity. Miss. Const. art. 6, § 159(a). Mississippi has determined that the
line between courts of law and courts of equity should be preserved. See Cotton States Life
Ins. Co. v. Cunningham, 141 Miss. 474, 106 So. 766, 767 (1926) (“We must remember that
our Constitution has established a well-defined line of demarcation between the courts of law
and the equity courts . . . .”). The award of monetary damages is a legal remedy properly
brought in circuit court.
¶25. In Derr Plantation, Inc. v. Swarek, this Court noted,
As long as the chancery court’s equity jurisdiction has attached, the chancery
court has discretion to award legal and punitive damages.
Conversely, if the complaint seeks legal relief, even in combination with
equitable relief, the circuit court can have proper subject matter jurisdiction.
In fact, if there is some doubt as to whether a case is within the jurisdiction of
the chancery court, the case is better tried in circuit court because it is more
appropriate for a circuit court to hear equity claims than it is for a chancery
court to hear actions at law since circuit courts have general jurisdiction but
chancery courts enjoy only limited jurisdiction.
Derr Plantation, Inc. v. Swarek, 14 So. 3d 711, 716 (Miss. 2009) (internal quotation marks
9
omitted) (citations omitted). Therefore, a chancellor certainly may enter a judgment that
awards monetary damages. Further, we note that there was no challenge to the chancery
court’s jurisdiction.
¶26. After four days of trial, the chancellor issued a detailed, well-written decision. We
must review the chancellor’s findings to determine whether the chancellor’s conclusions
were manifestly wrong, clearly erroneous, or applied an erroneous legal standard.
¶27. We start with the chancellor’s Opinion and Final Judgment. The chancellor ruled,
The Court having sustained the Plaintiffs claims under Count V (Trover/
Conversion), Count VIII (Defamation), Count X (Willful, Tortious Breach of
Contract/Breach of Contract), and Count XIV (Conversion/ Misappropriation
of Trade Secrets), the Court finds that the Plaintiffs should be equitably
compensated for the damages they incurred for these claims and losses.
Actual damages must be shown in order for a Plaintiff to recover more than
mere nominal damages. Chevron Oil Co. v. Snellgrove, 253 Miss. 356, 364,
175 So. 2d 471, 474 (Miss. 1965).
The Court heard testimony from Michele Avery, CPA, expert witness for the
Plaintiffs, and Nancy Clinton, CPA, expert witness for the Defendants, as to
the value and other financial aspects of Doctor’s Medical Center. Ms. Avery
opined that the business had a value of $1,198,000 as of December 19, 2012.
She used an income approach with discount as to her valuation positing that
the medical practice was being transferred from Slidell to Picayune as opposed
to a shut down and a fresh start up. She noted that revenue for DMC went up
with the Mississippi clinic operation. She assumed both licenses for Dr. Yost
were in place on her date of valuation and Ms. Carillo [Special Projects
Officer for MSBML] testified to such. When asked about the impact of Dr.
Yost surrendering his Louisiana license with a tender date of November 19,
2012, and an acceptance date of December 3, 2012, Ms. Avery testified that
the elements of the practice for DMC Picayune were still in place on
December 19, 2012. Those elements for valuation purposes are (1) a patient
list, (2) a work force in place including a physician other than Dr. Yost, (3) a
clinic location, and (4) telephone numbers and contact information for patients.
Her DMC valuation was based on the last date these factors were in place for
10
Plaintiffs and prior to the late afternoon walkout by Dr. Okoloise and the entire
DMC staff on the same date.
Ms. Clinton, on the other hand, evaluated Ms. Avery’s valuation and felt that
the business had no value on that date. The Court finds neither of these
extremes to be reasonable nor equitable under the totality of the circumstances
supported by the credible evidence at trial. Certainly, the business had some
value. However, Ms. Avery’s valuation is problematic because of certain
assumptions she made, the first being the assumption of an ongoing similar
patient volume (the Court is not convinced that such was certain given the
circumstances even before Dr. Okoloise left the clinic) and the second being
that the clinic and its physicians were properly licensed to own and operate a
pain management clinic (much of her financial analysis was based on the
period of time prior to Dr. Yost receiving the pain management certificate
dated November 16, 2012).
Given the numerous Plaintiffs’ claims that the Court has denied, the Court is,
based upon the preponderant and credible facts from trial, of the opinion and
finding that the value of the entire business as urged by Plaintiffs is not an
equitable measure of recovery against the Defendants in this matter.
Included in Ms. Avery’s valuation [Exhibit P-15] is an estimated annual
income statement, which indicates an annual net income of $323,352.00 for
the clinic, or $26,946.00 per month on average. Dr. Okoloise and the DMC
staff left on December 19, 2012, with approximately 7 months left in Dr.
Okoloise’s first year long contract. The Court finds that an appropriate award
of damages for compensation of the claims sustained and damages suffered
amounts to $188,622.00 (or $26,946.00 x 7 months). The Court notes that
DMC had an income/profit stream for December 2012 and January and
February 2013 prior to its closing. However, as a matter of equity, the Court
deems the above damages as reasonable and proper, without discount, and
equitably supported by the credible evidence at trial.
Plaintiffs shall have judgment in the amount of $188,622.00 from the
Defendants, jointly and severally, and which judgment amount shall bear
interest at 4% per annum from this date until paid in full. Plaintiffs are
afforded all lawful judgment execution and collection procedures for recovery
of the judgment with interest.
(Emphasis added.)
11
¶28. After consideration of the post-trial motions, the chancellor entered an Order on Post-
Trial Motions that corrected the Opinion and Final Judgment as follows:
V.
Defendants assert that the Court should have applied a before and after rule as
to profits; that Plaintiffs offered no such evidence; and that the Court’s
reliance on Exhibit P-15 (Ms. Avery’s Valuation of Doctors Medical Center
of Picayune, LLC, as of December 19, 2012) is misplaced. Defendants argue
that equity is not a basis for lost profit damages which are not attributable to
the actions of Dr. Okoloise. Defendants posit that the DEA closure of DMC
Picayune on or about February 13, 2013, was an independent, intervening, or
superceding [sic] cause for which they have no liability. Plaintiffs counter that
Defendants pled no such affirmative defense
....
Damages Awarded By The Court
VI.
In reviewing the Answer And Affirmative Defenses filed by Defendants, the
Court finds no such affirmative defense of independent, intervening, or
superceding [sic] cause was pled. Thus, the Court will not consider that post
trial argument or position. Moreover, the Court’s ruling and damage award
is based upon the overall course of conduct and dealing between the parties
as set forth in the Opinion and Final Judgment as to the Amended Complaint
Counts (4 of 20 pled) sustained by the Court from the evidence at trial.
....
Ruling On Defendants’ Motions
VIII.
The Court utilized the credible evidence before it at trial. The Court dismissed
with prejudice numerous counts pled by Plaintiffs and granted a general
verdict on Counts V, VIII, X, and XIV for general compensatory damages.
There is no finding nor adjudication in the Opinion and Final Judgment by the
Court that the damages awarded are for lost profits. The law does not require
that a perfect measure of damages be proven by Plaintiffs.
By way of clarification, the Court finds that the Opinion And Final Judgment
should be, and hereby is, amended by striking the following on page 44:
12
“Included in Ms. Avery’s valuation [Exhibit P-15] is an estimated annual
income statement. which indicates an annual net income of $323,352.00 for
the clinic, or $26.946.00 per month on average.” (emphasis added). In the
sentence following, the Opinion and Final Judgment should be, and hereby is,
amended by striking (or $26,946 x 7 months) with the period for that sentence
coming after $188,622.00. (emphasis added).
Thus, the paragraph at pages 44 and 45 is amended to read: “Dr. Okoloise and
the DMC staff left on December 19, 2012. with approximately 7 months left
in Dr. Okoloise’s first year long contract. The Court finds that an appropriate
award of damages for compensation of the claims sustained and damages
suffered amounts to $188,622.00. The Court notes that DMC had an
income/profit stream for December 2012 and January and February 2013 prior
to its closing. However, as a matter of equity, the Court deems the above
damages as reasonable and proper, without discount, and equitably supported
by the credible evidence at trial.”
(Italicized emphasis added.)
¶29. Our review begins with the assessment of damages. In the Opinion and Final
Judgment, the chancellor found that Dr. Yost and DMC-Picayune were entitled to monetary
damages of seven months (the period remaining in the contract) of DMC’s estimated profits.
However, in the Order on Post-Trial Motions, the chancellor struck this rationale and granted
damages “as a matter of equity . . . and equitably supported by the credible evidence at trial.”
¶30. No such legal principle permits equitable damages. It is fundamental that monetary
damages are a legal remedy. Although equitable remedies are available, such does not
include the award of monetary damages. Thus, we find no legal authority to support the
chancellor’s finding that “the Plaintiffs should be equitably compensated for the damages
they incurred for these claims and losses,” nor his finding that “as a matter of equity, . . . the
above damages [were] reasonable and proper, without discount, and equitably [were]
13
supported by the credible evidence at trial.”
¶31. Instead, the law of damages requires that, for each claim on which the plaintiffs
prevail, there is a clear methodology to determine and award damages. Equity is not a proper
methodology for determining losses. Warren Mills v. New Orleans Seed Co., 65 Miss. 391,
394, 4 So. 298, 298 (1888) (when damages are an adequate remedy, equity will not interfere).
We must consider whether the chancellor used the proper method of calculation of damages
for each claim.
A. Damage Methodology for Trover and Conversion Claim
¶32. A leading treatise states the following about the proof of damages to prevail on a
claim for trover or conversion:
An action in trover is a special action of trespass on the case for recovery of
damages for the wrongful conversion of personal property. Conversion results
form the intentional exercise of control or dominion over goods inconsistent
with the true owner’s right. To support an action in trover for conversion, the
plaintiff must have a special or general title to the property or immediate right
of possession, and the defendant must have wrongfully exerted some act of
dominion over the property inconsistent with and destructive of the plaintiff’s
title, possession or right to possession. . . .
The burden of proof as to damages arising from conversion is on the party
claiming such damages. The general measure of damages is the value of the
property at the time of the conversion, plus interest. There are instances in
which unusual and extraordinary losses such as action and consequential
damages, including lost profits, can be recovered in an action for conversion.
Such losses are generally recoverable if, under the circumstances of the case,
it can be said that the parties to the litigation, at the time of the conversion,
contemplated these consequences as a probable result. Elements of damages
other than fair market value, in order to be recoverable, must also not be
uncertain, unnatural, remote as to cause, or speculative or conjectural in
effect.
14
Johnny C. Parker, Mississippi Law of Damages § 35:28 (3d ed.), Westlaw (database updated
Sept. 2018) (footnote omitted) (emphasis added).
¶33. Here, neither the Opinion and Final Judgment nor the Order on Post-Trial Motions
refers to any evidence presented, and there is no finding by the chancellor as to the value of
the property converted. Further, while this case may have presented an instance in which
unusual and extraordinary losses occurred that could have entitled Dr. Yost or DMC-
Picayune to recover lost profits from conversion, there was no evidence presented and no
finding by the chancellor as to how the conversion caused damage and what amount of
profits were lost as a result of the conversion. Further, the chancellor clearly stated that his
award of damages was equitable in nature and was not based on lost profits. As a result, we
find that the chancellor was manifestly wrong and clearly erroneous to enter an award for
damages based on the Plaintiffs’ claims for trover or conversion.
B. Damage Methodology for Trade-Secrets Claim
¶34. The Mississippi Uniform Trade Secrets Act provides that damages for
misappropriation must be the “actual loss caused by misappropriation” or “the unjust
enrichment caused by misappropriation.” Miss. Code Ann. § 75-26-7 (Rev. 2016). This
Court has ruled that the loss of net profits is appropriate for recovery in a conversion and
trade-secret misappropriation action. Fred’s Stores of Miss., Inc. v. M & H Drugs, Inc.,
725 So. 2d 902, 915 (Miss. 1998). In Fred’s, a pharmacy brought an action against a former
employee and competitor for trade-secret misappropriation and other claims. Id. at 907.
15
This Court found that the pharmacy’s presentation of only gross-profit figures was
inadequate to entitle the pharmacy to damages for loss of profits for the competitor’s use of
the pharmacy’s customer list. Id. at 915.
¶35. Here, neither the Opinion and Final Judgment nor the Order on Post-Trial Motions
refers to any evidence presented and there is no finding by the chancellor as to the actual loss
caused by misappropriation or the unjust enrichment caused by misappropriation. Further,
the chancellor clearly stated that his award of damages was equitable in nature and was not
based on lost profits. As a result, we find that the chancellor was manifestly wrong and
clearly erroneous to enter an award for damages based on the Plaintiffs’ claims for trover,
conversion, or misappropriation of trade secrets.
C. Damage Methodology for Defamation Claim
¶36. To support the defamation claim, Dr. Yost relies on the testimony of former patient
Joanne Brennan. Brennan testified about one visit with Dr. Okoloise in 2012. According
to Brennan, during the visit, Dr. Okoloise advised that “[Dr.] Yost did not have a license to
be treating [her].” When asked if Dr. Okoloise made any further comments, Brennan
responded, “that was pretty much the extent of it.”
¶37. A claim for defamation requires the plaintiff to prove: “(1) a false and defamatory
statement concerning the plaintiff; (2) an unprivileged publication to a third party; (3) fault
amounting at least to negligence on the part of the publisher; and (4) actionability of the
statement irrespective of special harm or the existence of special harm caused by the
16
publication.” Blake v. Gannett Co., Inc., 529 So. 2d 595, 602 (Miss. 1988) (citing Chatham
v. Gulf Pub. Co., Inc., 502 So. 2d 647, 649 (Miss. 1987)). The chancellor found that Dr.
Okoloise’s statement to Brennan was sufficient evidence of slander.3 The chancellor further
found that as a result of the statement, Dr. Yost and DMC-Picayune suffered financial harm.
¶38. In Speed v. Scott, 787 So. 2d 626, 632 (Miss. 2001), this Court stated,
Slander is an unusual tort, where mere spoken words become actionable.
Everyday life contains risks of sharp words and wounded feelings, but also
worse. Brought forward from common law origins is a balancing of the
competing interests of one person to speak and another to be free from harm.
Part of the balance struck is to require concrete harm before spoken words are
actionable.
Here, there was no evidence that Dr. Okoloise’s statement to Brennan caused harm, much
less “concrete harm.” The chancellor did not identify any financial harm caused by the
conversation between Dr. Okoloise and Brennan. Instead, the chancellor awarded $188,622
in equitable damages, an award derived from the estimated net income of DMC-Picayune by
Dr. Yost’s expert’s business valuation. We find that the chancellor’s award of damages for
defamation lacks evidentiary support and that it was manifestly wrong or clearly erroneous.
D. Damage Methodology for Breach-of-Contract Claim
¶39. The purpose of awarding damages is to compensate an injured party for the injury
sustained, whether the damages arise by reason of a tort or the breach of a contract. Parker,
supra, at § 2:1. The plaintiffs have the burden to present evidence of loss from the alleged
3
Dr. Yost’s slander per se claim was dismissed.
17
injury. Cenac v. Murry, 609 So. 2d 1257, 1274 (Miss. 1992). “[A] plaintiff seeking
monetary damages for breach of contract must put into evidence, with ‘as much accuracy as’
possible, proof of the damages being sought.” Bus. Commc’ns, Inc. v. Banks, 90 So. 3d
1221, 1225 (Miss. 2012) (quoting Thomas v. Global Boat Builders & Repairmen, Inc., 482
So. 2d 1112, 1116 (Miss. 1986)). “Without proof of actual monetary damages, a plaintiff
cannot recover compensatory damages under a breach-of-contract action.” Id. (emphasis
omitted).
¶40. To recover, Dr. Yost and DMC-Picayune had to prove economic damages proximately
caused by Dr. Okoloise and Hope Medical. As evidence of his loss, Dr. Yost presented a
business valuation of DMC-Picayune that estimated the value on the date Dr. Okoloise
resigned. Michele Avery, Dr. Yost’s expert witness, opined that the business had a value of
$1,198,000 as of December 19, 2012. She used an income approach, with discount, in her
valuation, positing that the medical practice was being transferred from Slidell to Picayune,
instead of its being shut down and freshly restarted. She estimated an annual net income of
$323,352 for the clinic, or $26,946 per month, on average. At trial, she opined that the
business had no value following Dr. Okoloise’s departure.
¶41. It appeared that the chancellor, in the Opinion and Final Judgment, awarded economic
damages based on the loss of income. Initially, the chancellor determined that seven months
remained on the contract. The chancellor relied on Dr. Yost’s business valuation, as outlined
by Avery, and calculated seven months of average monthly income for DMC-Picayune using
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a worksheet from an appraisal of the market value of DMC-Picayune (7 x $26,946 =
$188,622). This appears to be the chancellor’s determination that Dr. Okoloise breached the
contract and that Dr. Yost incurred lost profits for seven months.
¶42. However, in the Order on Post-Trial Motions, the chancellor amended the findings to
exclude any reliance on Dr. Yost’s business valuation and the evidence presented on lost-
profits calculations. Nevertheless, the final judgment that is before us awards damages in
the sum of $188,622, without any explanation but that it is an “equitable” award of damages.
¶43. The chancellor’s findings and calculations are misleading because they do not take
into consideration DMC-Picayune’s income from Dr. Yost’s continued treatment of patients
after Dr. Okoloise’s resignation, as well as the diminished overhead costs. Also, there were
no adjusted numbers for the loss of salary overhead and related expenses following Dr.
Okoloise’s and his staff’s departures. There was no evidence about the financial impact of
the closure of DMC-Slidell after Dr. Yost’s surrender of his license and the opening of
DMC-Picayune as a separate and new medical clinic.
¶44. Additionally, there was no evidence of actual net profit before and after Dr. Okoloise
left. Dr. Yost and DMC-Picayune did not pursue an accounting of any profits achieved by
Hope Medical that were lost by DMC-Picayune. The chancellor acknowledged the absence
of lost-profit data and determined that lost profits need not be proved, because the law does
not require a perfect measure of damages.
¶45. Moreover, despite the chancellor’s removal in the opinion of his reliance on Dr.
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Yost’s business valuation, it appears that the chancellor still relied on Dr. Yost’s business
valuation in his calculation of damages. Indeed, he awarded the same amount of damages
initially calculated under the business-valuation analysis, $188,622. “Business valuation
analyses . . . have been utilized for the purposes of determining a party’s interest in a business
for purposes of divorce and eminent domain.” Lane v. Lampkin, 175 So. 3d 1222, 1229
(Miss. 2015) (citing Gutierrez v. Gutierrez, 153 So. 3d 703 (Miss. 2014) (divorce); Singley
v. Singley, 846 So. 2d 1004 (Miss. 2002) (divorce); Dedeaux Utility Co., Inc. v. Gulfport,
63 So. 3d 514 (Miss. 2011) (eminent domain)). “Likewise, valuations have been used in
cases of shareholder dissension to corporate merger.” Id. (citing Richton Bank & Trust v.
Bowen, 798 So. 2d 1268 (Miss. 2001)). But such analyses are not appropriate for breach-of-
contract cases. Id.
¶46. There must be sufficient evidence from which the chancellor can, with reasonable
certainty, assess a proper measure of economic loss proximately caused by a breach of
contract. See Warren v. Derivaux, 996 So. 2d 729, 737 (Miss. 2008) (“A party seeking
recovery for lost profits must establish the claim with reasonable certainty, not based on mere
speculation and conjecture.” (citing Lovett v. E.L. Garner, Inc., 511 So. 2d 1346, 1353
(Miss. 1987))). An award of economic damages must be based on proper economic data, not
equity. Here, the record lacks sufficient evidence to support the chancellor’s award of
equitable damages for Dr. Yost and DMC-Picayune’s breach-of-contract claim.
CONCLUSION
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¶47. The chancellor’s findings were based on equitable measures, with no legal basis, and
are therefore manifestly wrong. The record evidence is insufficient to show losses
attributable to Dr. Okoloise or Hope Medical. The judgment is manifestly wrong, clearly
erroneous, and not supported by credible evidence. We reverse and render.
¶48. REVERSED AND RENDERED.
RANDOLPH, C.J., COLEMAN, MAXWELL, BEAM, CHAMBERLIN AND
ISHEE, JJ., CONCUR. KITCHENS, P.J., CONCURS IN RESULT ONLY WITH
SEPARATE WRITTEN OPINION JOINED BY KING, P.J.
KITCHENS, PRESIDING JUSTICE, CONCURRING IN RESULT ONLY:
¶49. I agree with the majority’s decision to reverse and render the judgment in favor of Dr.
Yost and DMC-Picayune, but for different reasons. According to findings by the United
States Drug Enforcement Administration (DEA), “prescription drug abuse continues to be
the nation’s fastest growing drug problem,” with opioid pain relievers most often implicated
in overdose incidents. Drug Enf’t Admin., DEA-NWW-DIR-017-13, 2013 National Drug
Threat Assessment Summary 2-3 (2013). And these drugs are acquired easily through
“numerous rogue pain management clinics,” commonly known as “pill mills,” in which
patients are given brisk, casual examinations for which they pay cash in exchange for opioid
prescriptions. Id. at 4. “Pill mill operators continually devise methods to subvert regulations
and investigations while attracting patients.” Id.
¶50. The subject matter of the contract between Dr. Yost and Dr. Okoloise was the
operation of an illegal pain management clinic—a pill mill. Its operation unquestionably was
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illegal. Dr. Yost opened the clinic in Picayune, Mississippi, after his Slidell, Louisiana, pain
management clinic was closed. The closure occurred after Dr. Yost had been investigated by
the Louisiana State Board of Medical Examiners (LSBME) for operating a pain management
clinic illegally. As part of the resolution of that investigation, Dr. Yost agreed to retire and
cease the practice of treating chronic pain with narcotic drugs. But instead of abiding by that
agreement, Dr. Yost immediately opened an identical clinic in Mississippi, treating the same
patients, and engaging in the same business he had promised Louisiana officials he would
forego forever. When the LSBME discovered these nefarious actions, it instigated
proceedings that resulted in Dr. Yost’s surrender of his Louisiana medical license.
¶51. According to the testimony of Francis Carillo with the Mississippi State Board of
Medical Licensure (MSBML), “if a doctor has his license suspended, revoked, or
surrendered by another state agency or medical board, that is grounds for the Mississippi
state board to take . . . similar action.” At the time Dr. Yost opened the Picayune clinic, he
was in breach of his agreement with LSBME not to practice the treatment of pain
management with narcotic drugs. Thus, although MSBML was unaware of the LSBME’s
agreement with Dr. Yost, his actions would have been grounds for disciplinary action in
Mississippi.
¶52. In addition to these licensure problems, Dr. Yost opened the Picayune clinic and
engaged in a pain management practice for months without first securing a certificate of
operation. Carillo testified that Mississippi law prohibits a physician from operating a pain
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management clinic without such a certificate. Yet Dr. Yost ran the clinic without a
certificate, in violation of Mississippi law, for almost six months. On August 13, 2012, when
Dr. Yost and Dr. Okoloise executed the contract for Dr. Okoloise to join the practice, the
clinic was dispensing large quantities of narcotic drugs to its patients without a pain
management certificate in blatant violation of the law. The chancellor found that Dr.
Okoloise had been aware of Dr. Yost’s problems with the LSBME.
¶53. Any doubt about the illegal nature of the Picayune clinic does not withstand the fact
that the DEA raided the clinic and closed it on February 13, 2013. In conjunction with the
clinic’s closure, Dr. Yost lost his license to practice medicine in Mississippi. Other evidence
exposes the clinic as an illegal pill mill. The clinic accepted only cash payments. Clinic
employees testified that Dr. Yost wrote opioid prescriptions for several patients whose arms
exhibited “track marks” indicative of drug abuse. Others testified that Dr. Yost prescribed
opioids in exchange for the patients’ performance of odd jobs, such as working on Dr. Yost’s
car.
¶54. I would find that Dr. Yost’s lawsuit against Dr. Okoloise is barred by the doctrine that
“the law . . . will not aid either party to an illegal agreement . . . .” Lowenburg v. Klein, 125
Miss. 284, 87 So. 653, 654 (1921). “This Court has long recognized the maxim, from the
words of Lord Mansfield, in Holman v. Johnson, 1 Cowper. 341, decided in 1775, ‘ex dolo
malo non oritur actio,’ which means that ‘[n]o Court will lend its aid to a man who founds
his cause of action upon an immoral or an illegal act.’” Price v. Purdue Pharma Co., 920
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So. 2d 479, 484 (Miss. 2006) (quoting Morrissey v. Bologna, 240 Miss. 284, 123 So. 2d 537,
545 (1960) (Gillespie, J., dissenting)). We have said that “[n]o principle of law is better
settled than that a party to an illegal contract cannot come into a court of law and ask to have
his illegal objects carried out; nor can he set up a case in which he must necessarily disclose
an illegal purpose as the groundwork of his claim.” Lowenburg, 87 So. at 654. “The object
is to punish the active agent in the violation of a law by withholding from him the anticipated
fruits of his illegal act, and thus, by deterring all persons from violating its mandates, to give
sanctity to the law and security to the public.” Id. at 655. During statewide prohibition, this
Court applied this doctrine to affirm the dismissal of a suit on a fidelity bond issued to a
liquor business because the business was illegal and against public policy, Smith v.
Maryland Cas. Co., 252 Miss. 81, 85, 172 So. 2d 574, 575 (1965), and to prohibit the use
of courts to collect debts associated with the sale of intoxicating liquor, J. & S. Goodman
v. Swett, 108 Miss. 224, 66 So. 535, 536 (1914). Our law likewise bars an action founded on
a contract concerning the operation of an illegal pain management clinic.
¶55. In addition to the rule that courts will not enforce an illegal contract, Dr. Yost’s
operation of an illegal pill mill means that he presented himself before the chancery court
with unclean hands. The doctrine of unclean hands dictates that “[h]e who comes into equity
must come with clean hands.” Thigpen v. Kennedy, 238 So. 2d 744, 746 (Miss. 1970). The
doctrine means that “no person as a complaining party can have the aid of a court of equity
when his conduct with respect to the transaction in question has been characterized by wilful
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inequity . . . .” O’Neill v. O’Neill, 551 So. 2d 228, 233 (Miss.1989).
¶56. Dr. Okoloise raised the illegality of the contract’s subject matter and the doctrine of
unclean hands as defenses to Dr. Yost’s lawsuit. Given the surfeit of evidence that Dr. Yost
sought the aid of the chancery court to recover for losses incurred in the operation of an
illegal pain management clinic, the chancery court should have applied those doctrines to bar
any relief to Dr. Yost. Mississippi’s judicial system should not function as an instrument for
the resolution of disagreements between unethical persons operating pill mills in subversion
of drug enforcement laws. Therefore, I believe that this case must be reversed and rendered,
although for vastly different reasons than those articulated by the majority.
KING, P.J., JOINS THIS OPINION.
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