Hamlet H.M.A., LLC v. Hernandez

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-744
Filed: 16 October 2018
Richmond County, No. 14 CVS 892
HAMLET H.M.A., LLC D/B/A SANDHILLS REGIONAL MEDICAL CENTER,
Plaintiff,
v.
PEDRO HERNANDEZ, M.D., Defendant.
Appeal by defendant from judgment and order entered 9 January 2017 by
Judge Richard T. Brown in Superior Court, Richmond County. Heard in the Court of
Appeals 21 March 2018.
Thomerson Freeman & Rogers P.C., by William S. F. Freeman, for plaintiff-
appellee.
Mark L. Hayes, for defendant-appellant.
STROUD, Judge.
Defendant Pedro Hernandez, M.D. (“defendant”) appeals a judgment upon a
jury verdict finding him liable for breach of contract and an order denying his motions
for judgment notwithstanding the verdict and for a new trial. Defendant has raised
three issues on appeal regarding the judgment and order. First, defendant has failed
to demonstrate that the trial court abused its discretion in denying his motion for
new trial based upon his claim of a compromise verdict. Second, the trial court
improperly dismissed defendant’s Unfair and Deceptive Trade Practices (“UDTP”)
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Opinion of the Court
counterclaim based upon the “learned profession” exception to N.C. Gen. Stat. § 75.1-
1. Last, defendant failed to preserve his argument regarding erroneous admission of
parol evidence. We therefore reverse and remand in part and affirm in part the trial
court’s judgment.
I. Background
Defendant is a physician who moved from Maine to North Carolina to be closer
to his family. He had been practicing in Maine since 2008. In March of 2011, before
he and his wife moved, defendant used an online portal called MedHunters to look
for open medical positions in North Carolina. He sent seven hospitals an interest
email, including plaintiff Sandhills Regional Medical Center, a hospital owned and
operated by plaintiff Hamlet H.M.A. LLC.1 Plaintiff responded immediately, and on
16 March and 17 March 2011, plaintiff paid for defendant to visit the Hospital and
plaintiff. Plaintiff made an offer to defendant five days after his visit.
The original offer was for defendant to set up his own independent practice and
to be an independent contractor for plaintiff. The offer guaranteed a minimum
collection amount for the first 18 months of the 36-month contract. The income
guarantee was described in the email with the offer attached. Mr. Michael McNair,
the CEO of the Hospital at the time, testified: “the theory is, as his practice develops
over a period of time and his practice starts bringing in more money from him seeing
1 We will refer to Hamlet H.M.A., LLC as “plaintiff” and the Sandhills Regional Medical Center
operated by plaintiff as “the Hospital.”
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patients and doing surgery and those kind of things, then the amount that you get
paid [by plaintiff] gets less.”
Plaintiff also offered defendant an employment option as an addendum to the
original offer, which plaintiff could exercise at the end of the first 18 months of the
contract. The employment option section specified that the option would “at a
minimum, include the following material terms and conditions: Proposed Duration:
18 months. Proposed Compensation Methodology for Employment Agreement: Base
Salary $325,000 with a bonus based on worked RVUs.” 2
Defendant clarified in two emails dated 23 March 2011 and 24 March 2011
that he was not comfortable with this arrangement. Instead, he asked to be an
employee with a regular salary like the other doctors employed by Plaintiff. Plaintiff
sent defendant an employment offer on 25 March 2011 with a base salary of $275,000
and several other incentives. Defendant responded four hours later that he did not
think it made sense to accept less money for an employee position or status.
Defendant then sent plaintiff an email asking to extend the time period of
guaranteed income to 24 months, rather than 18 months. Plaintiff replied that it
could not extend the period but raised the monthly salary from $47,616.82 to
2 Mr. McNair testified that “RVUs” refers to “relative value units” and explained that this
portion of the agreement was “the bonus piece that’s based upon your productivity RVUs, relative
value units. That’s a fairly common term in physician contracting language.”
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$49,500.00 and also added a signing bonus of $30,000.00. After further negotiations,
the parties entered into a Physician Recruitment Agreement on 29 March 2011.
Defendant started his practice at the Hospital on 1 September 2011 and was
to work until 1 September 2014 based upon the 36-month contract requirement. The
practice was not successful, and at the end of the first 18-month period, defendant
timely notified plaintiff of his desire to exercise the employment option in his
contract. But plaintiff did not give defendant an employment contract at the end of
the 18-months. The Physician Recruitment Agreement defendant signed required
plaintiff to offer defendant an employment contract on one of plaintiff’s standard
template forms at the end of the first 18 months, should defendant exercise the
option. Plaintiff believed the Physician Recruitment Agreement itself to be the
employment contract, since it was on a standard template form and stated the
amount his salary would be as an employee, so plaintiff did not send defendant an
employee contract.
Defendant closed his practice in April 2013, so defendant did not practice for
the full 36-month period. Plaintiff informed defendant that whether defendant
became an employee of Plaintiff or not, he was still required to practice for the 36
month period. When defendant did not receive an 18-month employment contract
from plaintiff, he began looking for other work. Plaintiff made several requests to
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defendant demanding repayment of its loans made during defendant’s first 18 months
of practice, but defendant did not repay them.
On 29 August 2014, plaintiff filed a complaint against defendant alleging
breach of contract and demanding repayment of the entire amount paid to defendant,
a total of 21 payments amounting to $902,259.66. Defendant filed an answer with
counterclaims for breach of contract, fraud, unfair or deceptive trade practices, and
unjust enrichment. A jury trial was held in Superior Court in Richmond County at
the end of August and beginning of September 2016. The jury returned a verdict for
plaintiff for $334,341.14. Defendant filed a Motion for Judgment Notwithstanding
the Verdict and a Motion for New Trial on 8 September 2016. On 9 January 2017,
the trial court entered judgment on the jury verdict and issued an order denying both
of defendant’s post-trial motions. Defendant timely appealed to this Court from both
the order denying the motions and the judgment.
II. Compromise Verdict
Defendant contends that the jury reached an impermissible compromise
verdict when it found that defendant owed $334,341.14, instead of $902,259.66.
a. Standard of Review
We review an appeal from denial of a motion for new trial based upon an
alleged compromise verdict for abuse of discretion. See Smith v. White, 213 N.C. App.
189, 195, 712 S.E.2d 717, 721 (2011) (“An appeal from a trial court’s denial of a motion
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for new trial because of an alleged compromise verdict is reviewed for an abuse of
discretion.”). The party seeking to show an abuse of discretion has the burden of
demonstrating that the verdict was a compromise. Id. Our Supreme Court has
stressed that we should not review this discretionary ruling except in “rare cases”:
It has been long settled in our jurisdiction that an appellate
court’s review of a trial judge’s discretionary ruling either
granting or denying a motion to set aside a verdict and
order a new trial is strictly limited to the determination of
whether the record affirmatively demonstrates a manifest
abuse of discretion by the judge. The legislative enactment
of the Rules of Civil Procedure in 1967 did not diminish the
inherent and traditional authority of the trial judges of our
state to set aside the verdict whenever in their sound
discretion they believe it necessary to attain justice for all
concerned, and the adoption of those Rules did not enlarge
the scope of appellate review of a trial judge’s exercise of
that power. The principle that appellate review is
restricted in these circumstances is so well established that
it should not require elaboration or explanation here.
Nevertheless, we feel compelled by the Court of Appeals’
disposition of the case before us to restate and reaffirm
today the basic tenets of our law which would permit only
circumscribed appellate review of a trial judge’s
discretionary order upon a Rule 59 motion for a new trial.
Those tenets have been competently set forth in
innumerable prior opinions of this Court, and, for
instructive purposes, we provide the following sampling
therefrom.
In Settee v. Electric Ry., 170 N.C. 365, 367, 86 S.E.
1050, 1051 (1915), the Court evinced a positive hesitancy
to review such discretionary rulings by the trial court
except in rare cases: While the necessity for exercising this
discretion, in any given case, is not to be determined by the
mere inclination of the judge, but by a sound and
enlightened judgment in an effort to attain the end of all
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law, namely, the doing of even and exact justice, we will yet
not supervise it, except, perhaps, in extreme
circumstances, not at all likely to arise; and it is therefore
practically unlimited.
Worthington v. Bynum, 305 N.C. 478, 482, 290 S.E.2d 599, 602-03 (1982) (citations
and quotation marks omitted).
b. Analysis
Defendant contends the jury’s verdict is a compromise verdict so it must be set
aside. “A compromise verdict is one in which the jury answers the issues without
regard to the pleadings, evidence, contentions of the parties or instructions of the
court. The dollar amount of the verdict alone is insufficient to set aside the verdict
as being an unlawful compromise.” Smith, 213 N.C. App. at 195, 712 S.E.2d at 721
(citations and quotation marks omitted).
Where it appears that the verdict was the result of a
compromise, such error taints the entire verdict and
requires a new trial as to all of the issues in the case. If the
award of damages to the plaintiff is grossly inadequate, so
as to indicate that the jury was actuated by bias or
prejudice, or that the verdict was a compromise, the court
must set aside the verdict in its entirety and award a new
trial on all issues.
Robertson v. Stanley, 285 N.C. 561, 569, 206 S.E.2d 190, 195-96 (1974) (citation and
quotation marks omitted).
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Defendant argues that the verdict here is a compromise verdict much like an
example noted in Bartholomew v. Parrish, 186 N.C. 81, 118 S.E.2d 889 (1923). The
Court in that case set forth this example:
[I]f a suit were brought upon a promissory note, which
purported to be given for $100, and the only defense was
that the defendant did not execute the note, and the jury
should return a verdict for $50 only, it would not be allowed
to stand; for it would neither conform to the plaintiff’s
evidence, nor to that of the defendant. It would be a verdict
without evidence to support it; and it is not to be tolerated
that the jury should thus assume in disregard of the law
and evidence, to arbitrate the differences of parties, or to
decide according to some supposed natural equity, which in
reality is merely their own whim.
Id. at 84, 118 S.E.2d at 900; see also Smith, 213 N.C. App. at 195, 712 S.E.2d at 721
(“A compromise verdict is one in which the jury answers the issues without regard to
the pleadings, evidence, contentions of the parties or instructions of the court.”).
Defendant argues that but for the numbers, this case is almost identical to the
example in Bartholomew, 186 N.C. at 84, 118 S.E.2d at 900. At trial, the parties
entered into a stipulation that plaintiff loaned defendant $902,259.66. Defendant
disputed only that he had a legal obligation to repay plaintiff any of the payments.
He argued he had no obligation to pay plaintiff at all because plaintiff breached the
contract first by not fulfilling its obligation to give him an employment contract at
the end of the first 18 months. The employment contract was an optional provision,
but defendant had notified plaintiff of his intention to exercise the option in a timely
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fashion. Defendant argues that based upon the issues and the stipulation of the
amount of potential damages plaintiff may recover, the jury could return a verdict for
$902,259.66 or for nothing at all. See also Wiles v. Mullinax, 275 N.C. 473, 485-86,
168 S.E.2d 366, 375-76 (1969) (determining that because the damages were
stipulated at trial, they were not of issue and would not be reconsidered in a new
trial). Because the verdict was $334,341.14, defendant contends the jury apparently
came to a compromise by including the amounts on some of the checks in evidence at
the trial but excluding others.
Plaintiff contends that defendant has not demonstrated a compromise verdict
simply by the amount of damages so the trial court did not abuse its discretion by
denying his motion for new trial.3 Although the parties had stipulated that the total
sum paid to defendant was $902,259.66, the 21 payments plaintiff paid to defendant
were also in evidence, and the parties presented much testimony and other evidence
regarding the various obligations and amounts related to each. The Physician
Recruitment Agreement included payments and financial obligations of several
different types, and the checks included amounts based upon different portions of the
Agreement. For example, plaintiff notes that it “agreed to provide several categories
of financial assistance to [defendant] under the terms of the Recruitment Agreement,
3Plaintiff’s brief notes that plaintiff did not cross-appeal from the judgment, despite the fact
that the jury did not award the total $902,259.66, and it is difficult to see how defendant is an
“aggrieved party” since the verdict was far less than it should have been based upon defendant’s
argument regarding the compromise verdict.
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including: (i) reimbursement of relocation expenses, up to $15,000; (ii)
reimbursement of expenses incurred to market the new practice, up to $10,000; (iii)
reimbursement of start-up expenses incurred with setting up a new practice, up to
$10,000; (iv) a sign-on bonus of $30,000; and (v) for the first eighteen (18) months of
the thirty-six (36) month period, a monthly income guarantee of $49,500 against cash
collections.” In addition, defendant had agreed to be on emergency call at the
Hospital and to accept calls for unassigned patients. The parties presented extensive
evidence over nine days regarding the various obligations and payments. The verdict
sheet had 12 separate issues, and the jury’s answers to all of the issues were
internally consistent. The jury never indicated any confusion about the issues under
consideration.
Plaintiff also notes that this case is not at all like Bartholomew, the case with
the example quoted above and noted by defendant. In Bartholomew, the jury’s
compromise was obvious both from the number and the notation on the verdict sheet:
“In answer to the issue, the jury rendered a verdict in word and figures as follows:
‘Compromise, $283.25.’” Bartholomew, 186 N.C. at 83, 118 S.E. at 900 (emphasis
added). In addition to labeling the verdict as a “[c]ompromise,” the way the jury had
calculated the compromise was obvious: “[T]he sum of $283.25 is arrived at by taking
one-half of the $366.51 and adding to it $100, the sum admitted by the defendant to
be due to the plaintiffs.” Id. at 84, 118 S.E. at 900.
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Here, the only evidence defendant can offer of a compromise is the amount of
the damages, and given the complex evidence and issues presented, the amount alone
does not convince us that the jury reached a compromise verdict. See Piedmont Triad
Reg’l Water Auth. v. Lamb, 150 N.C. App. 594, 598, 564 S.E.2d 71, 74 (2002) (“The
dollar amount of the verdict alone is insufficient to set aside the verdict as being
either an unlawful compromise or a quotient verdict.”). The cases cited by plaintiff
in which the amount of damages could show a compromise verdict involved simple
single-issue verdicts. In addition, had the trial court granted defendant’s motion, it
would logically have granted a new trial on damages only and not on defendant’s
liability. See, e.g., Handex of Carolinas, Inc. v. County of Haywood, 168 N.C. App. 1,
20, 607 S.E.2d 25, 36-37 (2005) (“A new trial as to damages only should be ordered if
the damage issue is separate and distinct from the other issues and the new trial can
be had without danger of complication with other matters in the case. It must be
clear that the error in assessing damages did not affect the entire verdict.” (Citations
omitted)). Defendant argues that new trial should have been granted on all issues
because of how “interconnected” the issues were, but it is this very
“interconnectedness” that also makes it impossible to determine a compromise verdict
simply from the amount of the verdict. The jury’s answers as to liability were clear,
and defendant does not challenge those issues on appeal, other than as noted in the
parol evidence argument, so there would have been no need for a new trial on all
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issues. See generally id. The trial court may have considered a new trial on damages
only to be unfair to defendant, considering the complexity of the evidence. This is not
one of those rare cases in which we can say that the trial court abused its discretion
by denying defendant’s motion. See Smith, 213 N.C. App. at 195, 712 S.E.2d at 721.
III. Unfair and Deceptive Trade Practices (“UDTP”) Claim
Defendant argues the trial court erred by granting entry of directed verdict
dismissing his UDTP counterclaim “based on a misapplication of the ‘learned
profession’ exclusion.” (Original in all caps).
a. Standard of Review
The standard of review of directed verdict is whether
the evidence, taken in the light most favorable to the non-
moving party, is sufficient as a matter of law to be
submitted to the jury. On appeal the standard of review
for a JNOV is the same as that for a directed verdict, that
is whether the evidence was sufficient to go to the jury. A
motion for directed verdict or JNOV should be denied
unless the evidence, taken as true and viewed in the light
most favorable to the plaintiff, establishes an affirmative
defense as a matter of law. Our review is de novo.
King v. Brooks, 224 N.C. App. 315, 317-18, 736 S.E.2d 788, 791 (2012) (citations and
quotation marks omitted).
b. The Learned Profession Exception
The trial court granted the motion for a directed verdict based upon the learned
professional exception to a claim for Unfair and Deceptive Trade Practices. Chapter
75 of the North Carolina General Statutes states:
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(a) Unfair methods of competition in or affecting commerce,
and unfair or deceptive acts or practices in or affecting
commerce, are declared unlawful.
(b) For purposes of this section, “commerce” includes all
business activities, however denominated, but does not
include professional services rendered by a member of a
learned profession.
N.C. Gen. Stat. § 75-1.1(a), (b) (2017) (emphasis added).
In Reid v. Ayers, this Court noted a two-part test to determine when the
learned profession exception applies: “In order for the learned profession exemption
to apply, a two-part test must be satisfied. First, the person or entity performing the
alleged act must be a member of a learned profession. Second, the conduct in question
must be a rendering of professional services.” 138 N.C. App. 261, 266, 531 S.E.2d
231, 235 (2000) (citations omitted).
There is no dispute that doctors and hospitals are members of a learned
profession. See Wheeless v. Maria Parham Med. Ctr., Inc., 237 N.C. App. 584, 589
768 S.E.2d 119, 123 (2014); see also Burgess v. Busby, 142 N.C. App. 393, 407, 544
S.E.2d 4, 11-12 (2001); Gaunt v. Pittaway, 139 N.C. App. 778, 784, 534 S.E.2d 660,
664 (2000); Abram v. Charter Medical Corp. of Raleigh, 100 N.C. App. 718, 722-23,
398 S.E.2d 331, 334 (1990). The first prong of the learned profession exception is
satisfied, since both parties are members of a learned profession. See generally Reid,
138 N.C. App. at 266, 531 S.E.2d at 235.
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The second prong of the test is less clear. None of the cases cited by the parties
which address the learned profession exception deal with a dispute arising from a
contractual arrangement like this one among members of a learned profession. Since
the claims must arise out of “professional services rendered” by a physician, see N.C.
Gen. Stat. § 75-1.1 (b), where a claim does not arise directly from rendition of
professional services, defendant argues that one member of a learned profession may
bring a UDTP claim against another member of a learned profession regarding a
business dispute unrelated to rendition of medical services.
The pertinent parts of N.C. Gen. Stat. § 75-1.1 provide:
(a) Unfair methods of competition in or affecting commerce,
and unfair or deceptive acts or practices in or affecting
commerce, are declared unlawful.
(b) For purposes of this section, “commerce” includes all
business activities, however denominated, but does not
include professional services rendered by a member of a
learned profession.
N.C. Gen. Stat. § 75-1.1(a)-(b) (emphasis added).
The issue of first impression presented by this appeal is whether the “learned
profession” exception set forth in N.C. Gen. Stat. § 75-1.1(b) applies to a dispute
between a physician and a hospital relating to alleged false claims made by the
hospital to induce the physician to enter into an employment contract such as the one
at issue in this litigation. The gravamen of defendant’s UDTP counterclaim is that
plaintiff made certain false representations to him prior to his entering into the
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contract at issue and that those false representations constituted a violation of N.C.
Gen. Stat. § 75.
Although no case has addressed a situation exactly like this one, other cases
have interpreted the learned profession exception in some medical contexts. In
Wheeless, the plaintiff physician brought a claim against the hospital based upon the
hospital’s complaint to the Medical Board about care provided by the plaintiff
physician, but this Court held making a complaint to the Medical Board is integral
to the hospital’s role in providing medical care and thus falls within the exception:
It is well-settled by our Courts that a matter affecting the
professional services rendered by members of a learned
profession therefore falls within the exception in N.C.G.S.
§ 75-1.1(b). Indeed, our Court has made clear that unfair
and deceptive acts committed by medical professionals are
not included within the prohibition of N.C.G.S. § 75-1.1(a).
This exception for medical professionals has been broadly
interpreted by this Court, and includes hospitals under the
definition of “medical professionals.” In this case,
defendants’ alleged conduct in making a complaint to the
Medical Board is integral to their role in ensuring the
provision of adequate medical care. Accordingly, plaintiff’s
argument is without merit.
Wheeless, 237 N.C. App. at 590-91, 768 S.E.2d at 123-24 (citations, quotation marks,
ellipses, and brackets omitted).
Another case which provides guidance into our determination of whether the
defendant’s claim relates to the rendition of professional services is Cameron v. New
Hanover Memorial Hospital, 58 N.C. App. 414, 293 S.E.2d 901 (1982). This case was
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decided under a prior version of N.C. Gen. Stat. § 75-1.1, and this Court held that
plaintiffs could not maintain a UDTP claim against the defendant. See generally
Cameron, 58 N.C. App. at 445-46, 293 S.E.2d at 920-21. The holding was based upon
the wording of N.C. Gen. Stat. § 75-1.1 at that time, which referred to a “seller.” See
N.C. Gen. Stat. § 75-1.1 (1975 Replacement). But since Chapter 75 had been amended
just before Cameron, this Court noted, in dicta, that the result would have been the
same under the amended version of the statute, which is the version in effect now.
Cameron, 58 N.C. App. at 446, 293 S.E.2d at 920.
In Cameron, the plaintiffs were podiatrists who brought twelve different
claims against the defendant hospital arising out of the hospital’s denial of hospital
staff privileges. Id. at 416, 293 S.E.2d at 904. The claims included allegations based
upon the hospital’s bylaws and application process, civil conspiracy, interference with
contractual rights, “unfair methods of competition and unfair practices” in violation
of G.S. 75-1.1, slander, and libel. Id. The Court noted that under the newly amended
UDTP Act, the podiatrists’ UDTP claims against the hospital would be barred by the
learned profession exemption:
We are constrained to add that our conclusion would not be
different had we retroactively applied the current version
of G.S. 75-1.1(a) & (b) in this case. Plaintiffs contend that
the so-called “learned profession” exception in the current
G.S. 75-1.1(b) does not exclude defendants’ alleged
“anticompetitive” conduct because that conduct involves
“commercial” activity, not the rendering of “professional
services.” We do not agree for the following reasons.
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At most, plaintiffs’ evidence tends to show that
Dineen and Thomas have individual, like personal opinions
regarding the provision of hospital staff privileges to
plaintiffs. Dineen’s testimony indicates that his objection
to plaintiffs is grounded in their qualifications to practice
podiatry in a hospital. Further, upon plaintiffs’ final
request for an amendment to the New Hanover medical
staff bylaws to include hospital staff privileges for
podiatrists, the 13 November 1978 minutes of the
Executive Committee state that the Credentials
Committee recommended that staff privileges for
podiatrists “be granted depending upon individual
qualifications.” Williams’ testimony also shows that the
New Hanover Board of Trustees considered qualifications
as a paramount issue: “As to who has to make the choice,
the Board has to determine with what information comes
to it, all the information it can determine, whether they feel
that those asking privileges have the qualifications that
the hospital has set as standard.”
This evidence indicates that defendants were acting in
large measure pursuant to an “important quality control
component” in the administration of the hospital. As one
court described it, the hospital’s obligation is to exact
professional competence and the ethical spirit of
Hippocrates as conditions precedent to staff privileges. We
conclude that the nature of this consideration of whom to
grant hospital staff privileges is a necessary assurance of
good health care; certainly, this is the rendering of
“professional services” which is now excluded from the
aegis of G.S. 75-1.1.13. In this respect, the current version
of G.S. 75-1.1 is not a substantive change from our prior
law. Defendants’ motions for a directed verdict upon this
issue also were properly granted.
Id. at 446-47, 293 S.E.2d at 920–21 (citations, quotation marks, brackets and footnote
omitted).
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Cameron dealt with staff privileges at the hospital, and, similar to Wheeless,
this Court held the case fell within the learned profession exception because the
hospital’s process of evaluating the professional qualifications of physicians to
determine whether a physician should have staff privileges at the hospital was
necessary to assure “good health care” at the hospital. Id.
These cases addressing UDTP claims in a medical context do not suggest that
negotiations regarding a business arrangement, even between a physician and a
hospital, are “professional services rendered by a member of a learned profession.”
N.C. Gen. Stat. § 75-1.1(a) (emphasis added). In Wheeless, the Court found that
certain medical professionals making a complaint to the North Carolina Medical
Board alleging that Dr. Wheeless had engaged in inappropriate and disruptive
behavior fell within the learned profession exception because complaining to the
medical board was “integral to their role in ensuring the provision of adequate
medical care.” 237 N.C. App. at 591, 768 S.E.2d at 124. In Cameron, the issue related
to whether the plaintiff podiatrists should be granted staff privileges. The Court
found that because the “consideration of whom to grant staff privileges is a necessary
assurance of good health care[,] certainly, this is the rendering of ‘professional
services’ which is . . . excluded from the aegis of [N.C. Gen. Stat. §] 75-1.1.” 58 N.C.
App. at 447, 293 S.E.2d at 921.
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This case involves a business deal, not rendition of professional medical
services. Defendant alleged that the hospital made false representations to induce
him to enter into a contract; the fact that he is a physician does not change the nature
of the negotiation of a business contract. Plaintiff declined to enter into an
employment contract with defendant; if defendant had been an employee of plaintiff,
this situation may be somewhat more similar to Wheeless and Cameron, but plaintiff
wanted defendant to be an independent contractor with an independent practice. If
we were to interpret the learned profession exception as broadly as plaintiffs suggest
we should, any business arrangement between medical professionals would be
exempted from UDTP claims. The learned profession exception does not cover claims
simply because the participants in the contract are medical professionals. For
example, if a physician entered into a lease agreement for space in a medical office
building owned by a group of physicians or hospital and then seeks to bring a UDTP
claim based upon a dispute over the lease, it should be treated no differently than a
similar lease arrangement for parties in any other business. The fact that medical
services will be provided in the building does not mean that the lease arrangement
arises from rendition of professional services and has no effect on the quality of the
medical care provided.
Taking the evidence in the light most favorable to defendant, as we must in
reviewing a directed verdict, the trial court should have submitted defendant’s UDTP
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claim to the jury. The trial court therefore erred by granting directed verdict as to
defendant’s UDTP counterclaim.
IV. Parol Evidence
Defendant argues that “the jury’s verdict as to [defendant’s] alleged breach of
contract was unsupported by the plain terms of the agreement and the
uncontroverted evidence. The jury was only able to reach its verdict by the
impermissible use of parole [sic] evidence.” (Original in all caps).
Defendant argues that the trial court should have granted his Rule 59 motion
because of the improper parol evidence.
The standard of review for denial of a Rule 59 motion is
well-settled: According to Rule 59, a new trial may be
granted for the reasons enumerated in the Rule. By using
the word may, Rule 59 expressly grants the trial court the
discretion to determine whether a new trial should be
granted. Generally, therefore, the trial court’s decision on
a motion for a new trial under Rule 59 will not be disturbed
on appeal, absent abuse of discretion. This Court
recognizes a narrow exception to the general rule, applying
a de novo standard of review to a motion for a new trial
pursuant to Rule 59(a)(8), which is an error in law
occurring at the trial and objected to by the party making
the motion.
Kor Xiong v. Marks, 193 N.C. App. 644, 654, 668 S.E.2d 594, 601 (2008) (citation,
quotation marks, and brackets omitted).
In this case, defendant contends that the typical abuse of discretion standard
applies, and defendant’s argument presents two discrete issues. Defendant argues
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Opinion of the Court
that without the admission of improper parol evidence regarding the parties’ contract
negotiations, the evidence would have been insufficient to support the verdict. The
first issue is whether the trial court abused its discretion in admitting the alleged
improper parol evidence. See generally id. If so, the second issue is whether the
remaining evidence could support the verdict. If the trial court did not abuse its
discretion in admission of the alleged parol evidence, then we need not consider the
remainder of this argument, since there would be sufficient evidence to support the
jury verdict. See generally Nguyen v. Burgerbusters, Inc., 182 N.C. App. 447, 454, 642
S.E.2d 502, 508 (2007) (“[A] review of the record evidence before this Court shows
that while defendant presented evidence in support of its position, plaintiff’s evidence
was sufficient to support the jury verdict. The jury verdict is not contrary to the
greater weight of the evidence nor contrary to law, and defendant has not shown that
the trial court abused its discretion in denying defendant’s motion for new trial.”
(Citation omitted)).
Since the first portion of this argument deals with the admission of evidence,
we must first consider whether the defendant preserved his objection to the particular
evidence. As to preservation, defendant argues that
After the jury returned its verdict, [defendant] filed a
motion for a new trial based on the following argument:
“The jury was improperly allowed to consider matters and
things which were barred by the parole [sic] evidence rule,
and as a result the verdict was based on improper evidence,
and must be set aside.” [Defendant] had already
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Opinion of the Court
established his concern about the improper use of parole
[sic] evidence as the jury considered the breach of contract
claims, lodging a standing objection to [plaintiff’s] parole
[sic] evidence exhibits and questions. Counsel for
[defendant] referenced these objections in its argument on
the Rule 59 motion.
Our first difficulty with defendant’s argument is that we are unable to identify
exactly what evidence he contends was improperly admitted. At the beginning of the
trial, before presentation of any evidence, defendant did “establish[ ] his concern”
about potential parol evidence issues and counsel for both parties discussed this
concern with the trial court.4 Defendant noted that he would object to some of the
evidence of emails and other negotiations plaintiff may seek to present as improper
parol evidence. But since defendant brought counterclaims other than breach of
contract, such as the fraud and UDTP claims, defendant also planned to introduce
some of the emails and communications prior to the Physician Recruitment
Agreement. Defendant contended plaintiff committed fraud in the inducement to get
defendant to enter into the Physician Recruitment Agreement, not fraud after the
signing of the agreement. Defendant would seek to show that plaintiff fraudulently
induced him to enter into the contract and planned to use some of the communications
in support of this theory. Plaintiff contended that if defendant wanted to introduce
some of the communications leading up to the entry of the Physician Recruitment
4 Defendant did not file a motion in limine seeking to exclude any evidence.
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Opinion of the Court
Agreement, all must be admitted so that the jury could understand the context of the
discussion: “[I]f he sends an e-mail but not the reply - I think it all comes in, or none
of it comes in.” The issue was not resolved at the time, and the trial court noted that
it would need to address the evidence as it was presented.
Defendant’s brief directs us to only two places in the transcript of nine days of
trial where he noted his objections to evidence he contends was improper parol
evidence. The first objection came in response to plaintiff’s introduction of an email
identified as “Plaintiff’s Exhibit 12,” which was a response from the plaintiff to an
email from defendant. The objection was: “Your Honor, just with our objection about
the parol evidence.” Defendant’s second, and final, objection was just after the
testimony about Exhibit 12:
MR. BUCKNER: If Your Honor please. I guess if that was
a question, we would object. And ask if we might have a
renewed continuing objection to all of the communications
before the merged agreement under the parol evidence
rule, and also relevance.
THE COURT: Your objection is noted. The objection is
overruled. Thank you.
MR. BUCKNER: Then a continuing objection?
THE COURT: Your exception is noted. Yes, sir.
MR. BUCKNER: I don't want to keep interrupting, but --
THE COURT: The Court will note a continuing objection
by the defense to questions related to this series of
e-mails.
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Opinion of the Court
As a general rule, a party must make a contemporaneous objection to evidence
to preserve the issue for appellate review. See State v. Gray, 137 N.C. App. 345, 348,
528 S.E.2d 46, 48 (2000) (“Based on the established law of this State, because
defendant failed to object to the admission of the evidence at the time it was offered,
he has failed to preserve this issue for our review.”). But even if we were to assume
that defendant’s “continuing objection” here was a valid objection, defendant’s brief
has not noted which particular exhibits or testimony he contends would have been
covered by this “continuing objection.” This trial lasted nine days, and there was
extensive testimony and evidence of the emails and other communications between
the parties leading up to the entry of the Physician Recruitment Agreement, and
certainly some of this evidence defendant used to further his counterclaims of fraud
in the inducement and UDTP. We are simply unable to sort out which bits of
testimony and which exhibits might fall under defendant’s continuing objection to
improper parol evidence and which bits are evidence defendant sought to use for his
own purposes of showing fraud in the inducement. And since defendant’s brief did
not clearly identify which evidence it claims was erroneously admitted, plaintiff also
did not have the opportunity to respond as to any specific exhibit or testimony but
could only argue in broad terms the various reasons the communications prior to the
Physician Recruitment Agreement would be admissible. Defendant did not make
contemporaneous objections to the alleged parol evidence and did not sufficiently
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Opinion of the Court
identify the evidence he claims was admitted in error, so he has not preserved this
argument for appeal. See, e.g., id. Since defendant’s argument regarding his Rule
59 motion and sufficiency of the evidence is based upon the jury’s consideration of
parol evidence, which should not have been admitted, and we have determined that
all of the evidence was properly before the jury, we need not address the remainder
of defendant’s argument. This issue is without merit.
V. Conclusion
For the reasons stated above, we affirm in part and reverse and remand the
granting of directed verdict as to defendant’s UDTP counterclaim.
AFFIRM IN PART; REVERSE AND REMAND IN PART.
Judge ARROWOOD concurs.
Judge DAVIS dissents in part with separate opinion.
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No. COA17-744 – Hamlet H.M.A, LLC v. Hernandez
DAVIS, Judge, dissenting in part.
While I concur in the majority’s well-reasoned opinion on the remaining issues
in this case, I respectfully dissent from Section III of its opinion as I believe the trial
court properly granted a directed verdict as to Defendant’s counterclaim for unfair
and deceptive trade practices under Chapter 75 of the North Carolina General
Statutes (“UDTP Claim”).
The trial court granted the motion for a directed verdict based upon the
“learned profession” exception to UDTP claims. N.C. Gen. Stat. § 75-1.1 states, in
pertinent part, as follows:
(a) Unfair methods of competition in or affecting commerce,
and unfair or deceptive acts or practices in or affecting
commerce, are declared unlawful.
(b) For purposes of this section, “commerce” includes all
business activities, however denominated, but does not
include professional services rendered by a member of a
learned profession.
N.C. Gen. Stat. § 75-1.1(a), (b) (2017) (emphasis added).
In Reid v. Ayers, 138 N.C. App. 261, 531 S.E.2d 231 (2000), this Court
articulated the following test to determine when the learned profession exception
applies: “In order for the learned profession exemption to apply, a two-part test must
be satisfied. First, the person or entity performing the alleged act must be a member
of a learned profession. Second, the conduct in question must be a rendering of
professional services.” Id. at 266, 531 S.E.2d at 235 (citations omitted).
HAMLET H.M.A., LLC V. HERNANDEZ
DAVIS, J., dissenting in part
There is no dispute that doctors and hospitals are members of a learned
profession. See Wheeless v. Maria Parham Med. Ctr., Inc., 237 N.C. App. 584, 590,
768 S.E.2d 119, 123-24 (2014), disc. review denied, 368 N.C. 247, 771 S.E.2d 284
(2015); see also Burgess v. Busby, 142 N.C. App. 393, 407, 544 S.E.2d 4, 11-12, reh’g
denied, 355 N.C. 224, 559 S.E.2d 554 (2001); Gaunt v. Pittaway, 139 N.C. App. 778,
784, 534 S.E.2d 660, 664 (2000), cert. denied, 353 N.C. 371, 547 S.E.2d 810 (2001),
cert. denied, 534 U.S. 950, 151 L. Ed. 2d 261 (2001); Abram v. Charter Med. Corp. of
Raleigh, 100 N.C. App. 718, 722, 398 S.E.2d 331, 334 (1990), disc. review denied, 328
N.C. 328, 402 S.E.2d 828 (1991). Here, the first prong of the test is clearly satisfied
as both Plaintiff and Defendant are members of a learned profession.
With regard to the second prong, none of the cases cited by the parties concern
a dispute arising from a contractual arrangement between members of a learned
profession similar to the one at issue in the present case. This Court has made clear,
however, that the learned profession exception is to be construed broadly.
It is well-settled by our Courts that a matter affecting the
professional services rendered by members of a learned
profession therefore falls within the exception in N.C.G.S.
§ 75-1.1(b). Indeed, our Court has made clear that unfair
and deceptive acts committed by medical professionals are
not included within the prohibition of N.C.G.S. § 75-1.1(a).
This exception for medical professionals has been broadly
interpreted by this Court, and includes hospitals under the
definition of “medical professionals.” In this case,
defendants’ alleged conduct in making a complaint to the
Medical Board is integral to their role in ensuring the
provision of adequate medical care. Accordingly, plaintiff’s
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DAVIS, J., dissenting in part
argument is without merit.
Wheeless, 237 N.C. App. at 590-91, 768 S.E.2d at 123-24 (citations, quotation marks,
ellipses, and brackets omitted).
Another case that provides guidance on this issue is Cameron v. New Hanover
Mem’l Hosp., 58 N.C. App. 414, 293 S.E.2d 901 (1982), disc. review denied, 307 N.C.
127, 297 S.E.2d 399 (1982). Cameron was decided under a prior version of N.C. Gen.
Stat. § 75-1.1, and this Court held that the plaintiffs could not maintain a UDTP
claim against the defendant. Id. at 446, 293 S.E.2d at 920. We noted, albeit in dicta,
that the result would have been the same under the amended version of the statute
(which is the version currently in effect). Id.
In Cameron, the plaintiffs were podiatrists who brought a number of claims
against the defendant hospital arising out of the hospital’s denial of the plaintiffs’
request for staff privileges, including a UDTP claim. Id. at 446, 293 S.E.2d at 920.
This Court noted that even under the newly amended UDTP Act, the podiatrists’
UDTP claim against the hospital would be barred by the learned profession exception.
We are constrained to add that our conclusion would not be
different had we retroactively applied the current version
of G.S. 75-1.1(a) & (b) in this case. Plaintiffs contend that
the so-called “learned profession” exception in the current
G.S. 75-1.1(b) does not exclude defendants’ alleged
“anticompetitive” conduct because that conduct involves
“commercial” activity, not the rendering of “professional
services.” We do not agree for the following reasons.
At most, plaintiffs’ evidence tends to show that Dineen and
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DAVIS, J., dissenting in part
Thomas have individual, like personal opinions regarding
the provision of hospital staff privileges to plaintiffs.
Dineen’s testimony indicates that his objection to plaintiffs
is grounded in their qualifications to practice podiatry in a
hospital. Further, upon plaintiffs’ final request for an
amendment to the New Hanover medical staff bylaws to
include hospital staff privileges for podiatrists, the 13
November 1978 minutes of the Executive Committee state
that the Credentials Committee recommended that staff
privileges for podiatrists “be granted depending upon
individual qualifications.” Williams’ testimony also shows
that the New Hanover Board of Trustees considered
qualifications as a paramount issue: “As to who has to
make the choice, the Board has to determine with what
information comes to it, all the information it can
determine, whether they feel that those asking privileges
have the qualifications that the hospital has set as
standard.”
This evidence indicates that defendants were acting in
large measure pursuant to an “important quality control
component” in the administration of the hospital. As one
court described it, the hospital’s obligation is to exact
professional competence and the ethical spirit of
Hippocrates as conditions precedent to staff privileges. We
conclude that the nature of this consideration of whom to
grant hospital staff privileges is a necessary assurance of
good health care; certainly, this is the rendering of
“professional services” which is now excluded from the
aegis of G.S. 75-1.1. In this respect, the current version of
G.S. 75-1.1 is not a substantive change from our prior law.
Defendants’ motions for a directed verdict upon this issue
also were properly granted.
Cameron, 58 N.C. App. at 446-47, 293 S.E.2d at 920-21 (citations, quotation marks,
brackets and footnote omitted).
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DAVIS, J., dissenting in part
Cameron is analogous to the present case as it involved a dispute between
medical professionals and a hospital — both members of a learned profession — and
the plaintiffs’ claims were based upon their attempt to provide medical care as
podiatrists at the defendant hospital. Although the claims did not involve breach of
contract or a proposed employment arrangement, the effect is essentially the same:
the hospital was making arrangements for medical professionals to provide care to
patients served at its facilities.
Here, Plaintiff and Defendant were seeking to do the same thing. Plaintiff was
making arrangements, or attempting to make arrangements, for Defendant to
provide medical care to patients served at its facilities. In this sense, the negotiations
and contractual arrangement between Plaintiff and Defendant were “integral to their
role in ensuring the provision of adequate medical care.” Wheeless, 237 N.C. App. at
591, 768 S.E.2d at 124. The agreement even included specific requirements for
Defendant to be on emergency call at the Hospital and to accept unassigned patients.
Thus, these provisions of the agreement address the rendition of professional services
by both the Plaintiff and Defendant and fall within the learned profession exception.
For these reasons, I believe the trial court did not err by granting a directed
verdict dismissing Defendant’s UDTP claim against Plaintiff. Accordingly, I
respectfully dissent.
5