Robert H. Edwards v. Urosite Partners

03/30/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
February 21, 2017 Session
ROBERT H. EDWARDS V. UROSITE PARTNERS
Appeal from the Chancery Court for Davidson County
No. 15-946-BC Ellen Hobbs Lyle, Chancellor
No. M2016-01161-COA-R3-CV
Plaintiff was a partner of a physician practice and a limited partner in a real estate
investment limited partnership. Continuing employment with the physician practice was
a condition of remaining a limited partner. Following the termination of Plaintiff’s
employment with the physician group, Plaintiff, the physician group, and the limited
partnership entered into a Separation Agreement. The limited partnership agreed not to
redeem Plaintiff’s interest in the limited partnership if he did not expand his practice
outside Giles and Hickman Counties. Plaintiff began practicing outside these counties,
and the limited partnership redeemed Plaintiff’s interest. Plaintiff objected and filed a
complaint seeking declaratory relief. The trial court granted the limited partnership’s
motions to dismiss and for judgment on the pleadings. Plaintiff appealed, and we affirm
the trial court’s judgments.
Tenn. R. App. P. 3 Appeal as of Right; Judgments of the Chancery Court Affirmed
and Remanded
ANDY D. BENNETT, J., delivered the opinion of the court, in which FRANK G. CLEMENT,
JR., P.J., M.S., and RICHARD H. DINKINS, J., joined.
Stephen C. Knight and Nader Baydoun, Brentwood, Tennessee, for the appellant, Robert
H. Edwards.
James N. Bowen and Elizabeth O. Gonser, Nashville, Tennessee, for the appellee, Urosite
Partners.
OPINION
I. FACTUAL AND PROCEDURAL BACKGROUND
Robert H. Edwards, M.D., was a urologist and partner of Urology Associates, P.C.
(“UA”). In 2000, Dr. Edwards and twenty-one other physicians/shareholders of UA
formed Urosite, L.P. (“Urosite” or “the Partnership”) for the purpose of purchasing,
owning, managing, and operating the real and personal property located at UA’s primary
office location. When they formed Urosite, Dr. Edwards and the other limited partners
entered into an Agreement of Limited Partnership (the “Agreement”). The Agreement
provided that partnership in Urosite was conditioned on continuing employment with
UA.
The redemption provisions of the Agreement provide that the Partnership has the
right to purchase a limited partner’s units in the Partnership “upon the termination of a
Limited Partner’s employment agreement with [UA] for any reason other than death,
disability or retirement from the practice of medicine.” Dr. Edwards worked pursuant to
an employment agreement with UA from July 1, 2004, through June 30, 2011. After this
date, Dr. Edwards continued working for UA as an employee at will until the end of
December 2013.
On January 10, 2014, Dr. Edwards, Urosite, and UA entered into a Separation
Agreement and Mutual Release (“Separation Agreement”). Paragraph 2 of the
Separation Agreement provides that if Dr. Edwards practices outside Hickman or Giles
Counties, the Partnership could exercise its right to redeem Dr. Edwards’ interest in
Urosite pursuant to the terms of the Agreement.
In the spring of 2014, the Veterans Administration asked Dr. Edwards to help it
provide medical care to veterans in Rutherford and Davidson Counties. Dr. Edwards
agreed and began providing medical services to veterans in those counties. On or about
March 31, 2015, Urosite informed Dr. Edwards that it was exercising its right to redeem
Dr. Edwards’ limited partnership interest for a price equal to the value of his capital
account, in accordance with the terms of the Agreement.
Dr. Edwards objected to Urosite’s redemption of his interest in the Partnership,
and he filed a complaint in August 2015 seeking declaratory relief and damages for
breach of contract. Dr. Edwards sought the following declaratory relief:
Dr. Edwards seeks a declaratory judgment that he remains a limited partner
in Urosite, and that Urosite does not have a right to acquire his partnership
interest. The legal bases for this claim include, but are not limited to: (1)
under the circumstances, the Urosite Agreement does not provide Urosite
the right to acquire Dr. Edwards’ ownership interest; (2) Urosite did not
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timely exercise any right it may have had under the Urosite Agreement; (3)
Dr. Edwards’ work for the Veterans’ Administration was not a material
breach of the Separation Agreement; and (4) the restrictions on Dr.
Edwards’ practice of medicine in the Separation Agreement are not
enforceable and violate public policy.
In support of his breach of contract claim, Dr. Edwards alleged Urosite failed to meet its
contractual obligations to him, “including its obligation to pay [him] his share of
distributions from the partnership and its obligation to account to [him].”
II. TRIAL COURT PROCEEDINGS
Urosite filed a motion to dismiss pursuant to Tenn. R. Civ. P. 12.02(6) in
September 2015 and sought an award of its attorneys’ fees as provided in paragraph
thirteen of the Separation Agreement. The trial court filed a Memorandum and Order on
February 2, 2016, dismissing the majority of Dr. Edwards’ claims. The court wrote:
[T]he Court concludes as a matter of law, based upon the plain,
unambiguous wording of the Partnership Agreement, and the operation and
incentives of the [Agreement], that the Defendant’s exercise of its section
9.2(b) right to repurchase the Plaintiff’s interest for the value of his Capital
Account within 45 months of the termination of Plaintiff’s employment was
not untimely and, therefore, was not an invalid exercise of the right of
redemption.
....
The Court concludes that the disincentives at work in paragraph 2 of
the SA are too remote and attenuated from the Plaintiff’s practice of his
profession to come within the prohibitions of Spiegel, Murfreesboro, or
Tennessee Code Annotated section 63-1-148. Accordingly, the Court
grants that part of Defendant’s Motion to Dismiss asserting that paragraph
2 of the Separation Agreement does not violate Tennessee law or public
policy.
Urosite filed an answer with regard to the remaining issues, which were (a)
whether Dr. Edwards remained a limited partner of Urosite and (b) whether Dr. Edwards
committed a material breach of the contract when he decided to work for the VA in
Rutherford and Davidson Counties. Urosite then filed a motion for judgment on the
pleadings in March, and the court filed a Memorandum and Order granting Urosite’s
motion on May 3, 2016. The court wrote:
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1. The Court adopts the Defendants’ analysis that the “if and when Dr.
Edwards expands his practice of urology beyond Hickman County,
Tennessee and Giles County, Tennessee” of paragraph 2 of the SA is, under
Tennessee law, a condition and not a promise/contract obligation of the
Petitioner. In concluding this phrase is a condition, the Court relies upon
the plain wording of the phrase and that “if and when” wording is typically
used to express conditions . . . .
2. In enforcing the consequences of fulfilled conditions, a court does
not consider materiality unless there are extraordinary circumstances of
unfairness or injustice which demand equitable relief. . . .
3. The circumstances alleged by the Plaintiff in the complaint are not
extraordinary so as to require a materiality analysis of the condition and to
provide equitable relief.
4. Paragraph 2 of the SA is unambiguous. Its meaning is clear on its
face and, therefore, the Court is not authorized to take into account
allegations of the pleadings concerning motivation or design to construe the
SA. . . .
The court filed a Final Memorandum and Order on July 6, 2016, denying Dr. Edwards’
motion to revise and awarding Urosite its attorneys’ fees in the requested amount of
$103,792.50.
On appeal, Dr. Edwards contends the trial court erred in ruling that (1) Urosite
exercised its option to redeem his interest in the limited partnership within a reasonable
time; (2) his work for the Veterans Administration in Davidson and Rutherford Counties
satisfied the condition set forth in the Settlement Agreement permitting Urosite to
exercise its option; (3) the condition set forth in paragraph 2 of the Settlement Agreement
was not void as an unlawful restriction on competition; and (4) Urosite, rather than he,
was entitled to recover attorneys’ fees. Urosite requests an award of its attorneys’ fees
and costs incurred on appeal.
III. ANALYSIS
A. Standard of Review
A motion to dismiss filed pursuant to Tenn. R. Civ. P. 12.02(6) challenges “the
legal sufficiency of the complaint, not the strength of the plaintiff’s proof or evidence.”
Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 426 (Tenn. 2011).
The defendant admits the truth of the relevant and material allegations set forth in the
complaint for purposes of the motion and contends that the allegations fail to establish a
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viable cause of action entitling the plaintiff to relief. Id. (citing Brown v. Tenn. Title
Loans, Inc., 328 S.W.3d 850, 854 (Tenn. 2010)).
Courts resolve motions to dismiss for failure to state a claim by considering the
pleadings alone. Id. (citing Leggett v. Duke Energy Corp., 308 S.W.3d 843, 851 (Tenn.
2010)). In considering the motion, a court is to ‘“construe the complaint liberally,
presuming all factual allegations to be true and giving the plaintiff the benefit of all
reasonable inferences.”’ Id. (quoting Tigg v. Pirelli Tire Corp., 232 S.W.3d 28, 31
(Tenn. 2007)). Courts should not grant a motion to dismiss unless the plaintiff is unable
to prove any set of facts that would entitle him or her to relief on the claims asserted. Id.
(citing Crews v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 857 (Tenn. 2002)). On
appeal, we review a trial court’s ruling on a motion to dismiss de novo, affording the trial
court’s determination no presumption of correctness. TENN. R. CIV. P. 13(d); Webb, 346
S.W.3d at 426.
A motion for judgment on the pleadings is filed pursuant to Tenn. R. Civ. P. 12.03
and is similar to a motion to dismiss for failure to state a claim except that it is made after
an answer is filed rather than before. TENN. R. CIV. P. 12.03; Young v. Barrow, 130
S.W.3d 59, 63 (Tenn. Ct. App. 2003). As with a motion to dismiss, the courts “accept as
true ‘all well-pleaded facts and all reasonable inferences drawn therefrom’” that a
plaintiff asserts in his or her complaint. Cherokee Country Club, Inc. v. City of Knoxville,
152 S.W.3d 466, 470 (Tenn. 2004) (quoting McClenahan v. Cooley, 806 S.W.2d 767,
769 (Tenn. 1991)). Courts interpret the complaint liberally in favor of the plaintiff and
accept all factual allegations asserted in the complaint as true. Young, 130 S.W.3d at 63.
The Court of Appeals reviews a trial court’s grant of a motion for judgment on the
pleadings de novo and will affirm the trial court’s decision only if it determines that the
plaintiff is unable to prove any set of facts in support of any of his or her cause(s) of
action that would entitle him or her to relief. TENN. R. APP. P. 13(d); Young, 130 S.W.3d
at 63.
This case involves the interpretation of the parties’ contracts.1 Contract
interpretation is a matter of law, which means we conduct a de novo review with no
presumption of correctness awarded to the trial court’s interpretation. TENN. R. APP. P.
13(d); West v. Shelby Cnty. Healthcare Corp., 459 S.W.3d 33, 42 (Tenn. 2014); Allmand
v. Pavletic, 292 S.W.3d 618, 624-25 (Tenn. 2009); Allstate Ins. Co. v. Watson, 195
S.W.3d 609, 611 (Tenn. 2006).
1
Urosite attached a copy of the Agreement and the Separation Agreement to its complaint, rendering them
a part of the pleadings and appropriate for consideration by a court ruling on a motion to dismiss or
judgment on the pleadings. See McGhee v. Shelby Cnty., Gov’t, W2012-00185-COA-R3-CV, 2012 WL
2087188, at *1 n.2 (Tenn. Ct. App. June 11, 2012); Brewer v. Piggee, W2006-01788-COA-R3-CV, 2007
WL 1946632, at *6 (Tenn. Ct. App. July 3, 2007).
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B. Timeliness of Exercise
Dr. Edwards first argues that Urosite did not exercise its option to repurchase his
limited partnership interest in a timely manner. The documents concerning Urosite’s
redemption of Dr. Edwards’ interest in the Partnership include the Agreement, and the
Separation Agreement. Article 9 of the Agreement has the heading “Transfer of
Partnership Interests,” and section 9.2 is titled “Call Rights of the Partnership.” Section
9.2(a) addresses the situation when a limited partner dies, is declared incompetent,
declares bankruptcy, becomes insolvent, or ceases to exist. Section 9.2(b) addresses the
situation when a limited partner’s employment agreement with UA terminates, as here. It
provides as follows:
Upon the termination of a Limited Partner’s employment agreement with
the General Partner for any reason other than death, disability or retirement
from the practice of medicine, the Partnership shall have the right to
purchase all of such Limited Partner’s Units for a price equal to the value of
such Limited Partner’s Capital Account. The value of such Limited
Partner’s Capital Account shall be paid to the Limited Partner, his estate,
heirs or other designees over a three year term with interest at the prime
rate as quoted by The Wall Street Journal as of the closing date of the
Partnership’s purchase of the Units.
The Separation Agreement begins with “whereas” clauses stating, inter alia, (1)
that Dr. Edwards’ employment agreement expired by its terms on June 30, 2011; (2) that
Dr. Edwards’ employment with UA terminated on December 31, 2013; and (3) that Dr.
Edwards intended to continue practicing urology in Hickman County and Giles County,
Tennessee. Section 1 has the heading “Redemption of Dr. Edwards’s Interests,” and
subsection 1(f) states:
As discussed further in Section 2 below, the Partnership agrees based on
certain representations by Dr. Edwards that it will not exercise any right to
demand that Dr. Edwards redeem his interest in Urosite, L.P. consistent
with the terms of Section 2 below.
Section 2 provides as follows:
Urosite, L.P. Consistent with Section 1f above, the Partnership agrees that
it will not exercise any right to demand that Dr. Edwards redeem his
interest in Urosite, L.P. as of, or after, the date of his departure from the
Practice in consideration for and based on Dr. Edwards’s representation
that his ongoing practice in the field of urology will be limited to Hickman
County, Tennessee and Giles County, Tennessee. The Partnership reserves
any right to call Dr. Edwards’s interest in Urosite, L.P. pursuant to the
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Agreement of Limited Partnership if and when Dr. Edwards expands his
practice of urology beyond Hickman County, Tennessee and Giles County,
Tennessee.
“A cardinal rule of contractual interpretation is to ascertain and give effect to the
intent of the parties.” Allmand, 292 S.W.3d at 630; see also West, 459 S.W.3d at 41-42;
Allstate Ins. Co., 195 S.W.3d at 611. The parties’ intent is determined by considering the
“plain meaning of the words” used in the contract. Allmand, 292 S.W.3d at 630; Allstate
Ins. Co., 195 S.W.3d at 611. If the words used are clear, unambiguous, and not
susceptible to more than one reasonable interpretation, courts are to rely on the literal
language used in the contract to determine the parties’ intent. Allmand, 292 S.W.3d at
630; Allstate Ins. Co., 195 S.W.3d at 611; see also Planters Gin Co. v. Fed. Compress &
Warehouse Co., Inc., 78 S.W.3d 885, 889-90 (Tenn. 2002) (explaining parties’ intent is
based on usual, natural, and ordinary meaning of words used in contract). A court will
not look beyond the four corners of the document to determine the parties’ intent when
the contract is unambiguous. Williams v. Larry Stovesand Lincoln Mercury, Inc., No.
M2014-00004-COA-R3-CV, 2014 WL 5308634, at *4 (Tenn. Ct. App. Oct. 15, 2014);
West, 459 S.W.3d at 42. A contract is not ambiguous if its meaning is clear and it is not
subject to more than one interpretation. Allstate Ins. Co., 195 S.W.3d at 611.
Section 9.2(b) of the Agreement specifies when the Partnership first acquires the
right to purchase Dr. Edwards’ Units (upon the termination of his employment agreement
with UA), but it neither specifies an end date for this right nor indicates that this right
expires if not exercised within a particular period. It is noteworthy that the Agreement
does not provide a limited partner whose employment agreement has terminated the right
to require Urosite to purchase his interest in the Partnership. However, section 9.3 of the
Agreement gives such right to those (or their heirs/representatives) who are no longer
limited partners due to retirement, death, incompetence, bankruptcy, or insolvency.
Section 9.3 is titled “Put Rights of the Limited Partners,” and it provides:
Upon the retirement, death, adjudication of incompetence, dissolution or
cessation of existence of a Limited Partner, such Limited Partner or his
legal representative shall have the right to require the Partnership to
Purchase all of such Limited Partner’s Units for the Purchase Price, as such
term is defined in Section 9.2. . . .
When a contract contains different sections, a court is not to read the sections in
isolation; it is to read the sections together to determine the meaning of the document as a
whole. Maggart v. Almany Realtors, Inc., 259 S.W.3d 700, 705 (Tenn. 2008); S. Trust
Ins. Co. v. Phillips, 474 S.W.3d 660, 668 (Tenn. Ct. App. 2015). ‘“All provisions of a
contract should be construed as in harmony with each other, if such construction can be
reasonably made, so as to avoid repugnancy between the several provisions of a single
contract.”’ Wager v. Life Care Ctrs. of Am., Inc., No. E2006-01054-COA-R3-CV, 2007
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WL 4224723, at *10 (Tenn. Ct. App. Nov. 30, 2007) (quoting Rainey v. Stansell, 836
S.W.2d 117, 119 (Tenn. Ct. App. 1992)). Moreover, “[w]here an executed agreement
refers to the other documents, all of the documents must be construed together as the
contract of the parties.” Williams, 2014 WL 5308634, at *5; see also Real Estate Mgmt.
v. Giles, 293 S.W.2d 596, 599 (Tenn. Ct. App. 1956) (stating where several documents
are executed as part of the same agreement, the court reads them together and interprets
them with reference to one other).
Both the Agreement and the Separation Agreement reference the Partnership’s
right to purchase Dr. Edwards’ interest in the Partnership. Dr. Edwards does not deny
that Urosite’s right to purchase his interest in the Partnership first ripened when his
employment agreement with UA terminated on June 30, 2011. When he and Urosite
entered into the Separation Agreement two and a half years later, in January 2014, the
language of the Separation Agreement reveals that both Dr. Edwards and Urosite
believed the Partnership’s option to purchase Dr. Edwards’ interest in Urosite was still
viable. Subsection 1(f) and section 2 clearly and unambiguously identify the
circumstances under which Urosite could exercise its option. As section 2 states, “The
Partnership reserves any right to call Dr. Edwards’s interest in Urosite, L.P. pursuant to
the Agreement of Limited Partnership if and when Dr. Edwards expands his practice of
urology beyond Hickman County, Tennessee and Giles County, Tennessee.” The parties’
intent is clear that Urosite was to have the right to exercise its option to purchase Dr.
Edwards’ interest in the Partnership if and when Dr. Edwards practiced urology outside
of Hickman or Giles Counties.
In his complaint, Dr. Edwards asserts that the Veterans Administration asked him
in the spring of 2014 to provide urology services in Rutherford and Davidson Counties
and that he began to provide these services as requested. Dr. Edwards further asserts that
the Partnership exercised its option to redeem his shares in Urosite the following March
2015. The Separation Agreement does not limit the time within which Urosite must act
to purchase Dr. Edwards’ shares once he begins practicing urology outside Hickman or
Giles Counties. However, the inclusion of paragraph 9.3 in the Agreement, giving a
limited partner the right to require the Partnership to purchase his shares in certain
circumstances (¶9.2(a) of the Agreement), without a corresponding provision for limited
partners whose employment agreements with UA terminate (¶9.2(b) of the Agreement),
evidences the parties’ intent that Urosite was to have the sole discretion about when, or if,
it redeemed the interest held by a limited partner whose employment agreement with UA
terminated. Likewise, in the absence of a provision in the Separation Agreement limiting
the period within which Urosite must act to redeem Dr. Edwards’ shares in the event he
practices urology outside Hickman or Giles Counties, we conclude there is no firm period
within which Urosite was required to redeem Dr. Edwards’ shares following the
expansion of his practice outside these counties.
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Dr. Edwards relies primarily on cases involving real estate to support his argument
that Urosite’s exercise of its right to purchase his interest in the Partnership forty-five
months after his employment agreement terminated was too long and not reasonable
under the circumstances. In Norton v. McCaskill, 12 S.W.3d 789 (Tenn. 2000), for
example, the lease agreement provided that the lessee could renew its lease “at the end of
10 years” but did not specify a time period within which the lessee was required to
exercise the option. Norton, 12 S.W.3d at 792. The Supreme Court in Norton stated that
when a lease does not include a specific time designation, an option to renew “remains
effective only during the term of the lease.” Id. at 793-94. The Court found that
exercising the option ten days after the lease expired was too late. Id. at 794. However,
the Norton Court expressly limited its holding to “those leases that require renewal ‘at the
end of’ or ‘at the termination of’ the lease or that contain similar language conveying the
same requirement.” Id. Because the facts here do not involve a lease and because the
Agreement does not contain language similar to that in the Norton case, the holding in
Norton does not control here.
By arguing that Urosite did not act in a timely fashion to redeem his interest in the
Partnership, Dr. Edwards essentially asks us to insert a term into the agreements where no
term currently exists to limit the period within which Urosite was required to exercise its
option. Tennessee courts, however, “must interpret contracts as they are written,” Tenn.
Div. of United Daughters of the Confederacy v. Vanderbilt Univ., 174 S.W.3d 98, 118
(Tenn. Ct. App. 2005), and they “are ‘not at liberty to make a new contract for parties
who have spoken for themselves,”’ Ellis v. Pauline S. Sprouse Residuary Trust, 280
S.W.3d 806, 814 (Tenn. 2009) (quoting Smithart v. John Hancock Mut. Life Ins. Co., 71
S.W.2d 1059, 1063 (Tenn. 1934)). Courts do not consider whether a party was wise or
foolish to enter into a particular contract, and they will not rewrite a party’s contract just
because it later becomes “burdensome or unwise.” Vanderbilt Univ., 174 S.W.3d at 118;
see also Ellis, 280 S.W.3d at 814.
A consideration of the two agreements in their totality along with the parties’
relationship with one another leads us to conclude that the parties did not intend to place
an outside limit on the period within which Urosite could redeem Dr. Edwards’ shares in
Urosite. We conclude Urosite acted in a timely fashion when it made the decision to
redeem Dr. Edwards’ shares in the Partnership in March 2015. See Int’l Flight Ctr. v.
City of Murfreesboro, 45 S.W.3d 565, 570 (Tenn. Ct. App. 2000) (explaining that court
may consider parties’ situation, business to which contracts relate, and circumstances
surrounding transaction in ascertaining parties’ intent). Urosite exercised its option
approximately one year following the time Dr. Edwards began practicing outside Giles
and Hickman Counties, a time period which, we conclude, was reasonable under the
circumstances.
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C. Condition Triggering Redemption
Dr. Edwards next argues that he substantially complied with the practice
restriction contained in the Separation Agreement and that the trial court erred in finding
that he satisfied the condition triggering Urosite’s option to redeem his interest in the
Partnership. According to Dr. Edwards, the work he did for the Veterans Administration
in Davidson and Rutherford Counties was not “material” to Urosite because the Veterans
Administration did not compete with UA for urology patients.
We find Dr. Edwards’ argument unavailing. As we discussed earlier, “courts must
interpret contracts as they are written, and will not make a new contract for parties who
have spoken for themselves.” Vanderbilt Univ., 174 S.W.3d at 118 (internal citations
omitted). The Separation Agreement does not qualify the type of practice Dr. Edwards
must engage in or for/with whom he must work to satisfy the condition of expanding his
urology practice outside of Giles and Hickman Counties. Rather, the Separation
Agreement simply provides that the Partnership “reserves any right” to call Dr. Edwards’
interest in Urosite “if and when Dr. Edwards expands his practice of urology beyond
Hickman County, Tennessee and Giles County, Tennessee.” Contrary to Dr. Edwards’
suggestion otherwise, there is no requirement that Dr. Edwards work in competition with
UA to satisfy the condition of the agreement.
The case of Saeedpour v. Virtual Medical Solutions, LLC, No. M2012-00994-
COA-R3-CV, 2013 WL 1400616 (Tenn. Ct. App. Apr. 5, 2013), is instructive. The
plaintiff in that case was a physician who purchased an allergy relief system from the
defendant. Saeedpour, 2013 WL 1400616, at *1. The parties entered into a conditional
money back guarantee whereby the defendant agreed to refund a portion of the purchase
price to the plaintiff if the plaintiff satisfied certain conditions, one of which was
conducting a particular survey of all of his patients. Id. The plaintiff admitted that he did
not ask all of his patients to fill out the particular survey the defendant provided him. Id.
at *4. However, the plaintiff claimed he substantially performed the survey requirement
by collecting information similar to the information the defendant sought in its survey.
Id. The Court of Appeals disagreed with the plaintiff’s argument, stating: “Where
parties . . . have committed themselves to contractual obligations through negotiation and
agreement, we are not free to release the parties from those obligations.” Id. at *5. The
Court rejected the plaintiff’s assertion that the survey he conducted, which was similar to
the one the defendant provided him, was sufficient to satisfy the condition precedent
because it was not the agreement the parties made. Id. Because the plaintiff failed to
satisfy a condition of his contract with the defendant, the Court of Appeals granted the
defendant’s motion for summary judgment on the plaintiff’s breach of contract claim. Id.
The Court of Appeals reached a similar conclusion in Tennessee Division of
United Daughters of the Confederacy v. Vanderbilt University. In that case, the plaintiffs
donated $50,000 in 1933 to a predecessor of Vanderbilt University to be used for the
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construction of a women’s dormitory, and the gift was conditioned on the university’s
placing on the building an inscription naming it “Confederate Memorial.” Vanderbilt
Univ., 174 S.W.3d at 104-05. Approximately fifty years after the dormitory was built,
some of the university’s students, faculty, and staff objected to the use of the word
“Confederate” as part of the dormitory’s inscription. Id. at 106-07. In response to the
objections, the university decided to remove the word “Confederate” from the pediment,
to rename the building “Memorial Hall,” and to place a plaque by the entrance to the
building explaining the contributions of the donors and the reasons behind the name that
was initially inscribed on the building. Id. at 117.
The donors filed a complaint seeking to enjoin the university from removing the
word “Confederate” from the building, alleging this would be a breach of the condition
underlying the monetary gift when it was made and accepted. Id. Vanderbilt asserted
that its placement of the plaque by the entrance to the building constituted substantial
performance of the condition. Id. The Court of Appeals rejected Vanderbilt’s argument,
reiterating the long-standing rules of law that contracts must be interpreted “as they are
written,” and that courts “are not at liberty to relieve parties from contractual obligations
simply because these obligations later prove to be burdensome or unwise.”2 Id. at 118
(citations omitted).
Dr. Edwards’ reliance on Big Fork Mining Company, Inc. v. Kentucky Central
Insurance Company, 888 S.W.2d 434 (Tenn. Ct. App. 1994), is misplaced. The plaintiff
in that case was seeking to collect $50,000 that was paid to the defendant insurance
company to guarantee the insurance company against loss in exchange for the insurance
company’s agreement to sign the plaintiff’s reclamation bond. Big Fork Mining Co., 888
S.W.2d at 435. The parties’ contract anticipated that the plaintiff would obtain a larger
bond to replace the bond signed by the insurance company and that the insurance
company would return the $50,000 at that time, but this was not feasible as a result of
unforeseen circumstances. Id. The plaintiff ended up performing reclamation work that
satisfied the plaintiff and the insurance company’s obligations on the reclamation bond
that the insurance company signed, thus extinguishing the insurance company’s liability
on the bond. Id. When the plaintiff sought to collect the $50,000 from the insurance
company, the insurance company refused, asserting that the plaintiff had failed to satisfy
the condition precedent, which was obtaining a substitute bond to replace and release its
obligations under the bond it signed. Id. at 436.
The Big Fork Mining plaintiff filed a complaint against the insurance company,
arguing that the underlying purpose of the condition was to release the defendant
insurance company from liability under the bond and that this was accomplished when
the plaintiff performed the reclamation work. Id. The trial court found that the plaintiff
2
The Vanderbilt University Court concluded that if the university insisted on removing the “Confederate” name
from the dormitory’s pediment, the university would be required to return the $50,000 gift in the amount of its
present value. Vanderbilt Univ., 174 S.W.3d at 120.
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was entitled to the $50,000, and the Court of Appeals agreed, noting that the insurance
company would receive a windfall of $50,000 if it were not required to pay it over to the
plaintiff. Id. The Court of Appeals explained that a third party to the agreement was
responsible for the reclamation, but this third party became bankrupt, which led the
plaintiff to perform the reclamation work that was necessary in the circumstances. Id. If
the third party had reclaimed the land, the insurance company would have been obligated
under the contract to refund the $50,000 to the third party, and the plaintiff would not
have had to perform the reclamation work. Id. Under these circumstances, the Court of
Appeals held that the plaintiff, who performed the third party’s job, should be equitably
subrogated to the third party’s right to collect the $50,000. Id. The Court explained that
the insurance company had “received all of the benefits of the performance of the
condition precedent, at heavy expense to the plaintiff” and that “justice and equity”
demanded that the insurance company pay the $50,000 to the plaintiff under the
circumstances of that case. Id. at 437.
The facts here do not include the extraordinary equitable considerations that were
at issue in the Big Fork Mining case. Dr. Edwards agreed that the repurchase price of a
limited partner’s interest in the Partnership would be the value of the limited partner’s
capital account if the circumstances set forth in section 9.2(b) of the Agreement came to
pass. Dr. Edwards and the Partnership expressly referenced the Agreement when they
executed the Separation Agreement over thirteen years later, in 2014. The parties had the
opportunity to change the terms of the buyout of Dr. Edwards’ interest at that time, but
they did not do this. There is no “windfall” to Urosite if the terms of the contracts are
carried out as the parties agreed.
Interpreting the Agreement and the Separation Agreement as written, we hold that
Dr. Edwards satisfied the condition precedent when he began practicing urology in
Rutherford and Davidson Counties in the spring of 2014, thereby triggering Urosite’s
right to repurchase Dr. Edwards’ interest in the Partnership according to the terms set
forth in the Agreement.
D. Restraint on Competition
Dr. Edwards’ final argument is that enforcing paragraph 2 of the Separation
Agreement violates Tennessee public policy by restricting his ability to practice medicine
because paragraph 2 creates a financial disincentive to practice. In support of his
argument, Dr. Edwards relies on Spiegel v. Thomas, Mann & Smith, P.C., 811 S.W.2d
528 (Tenn. 1991). That case involved an employment and deferred compensation
agreement among lawyers who were shareholders of an incorporated law firm. Spiegel,
811 S.W.2d at 528. The agreement provided that an employee who withdrew from the
firm but continued to practice law was not entitled to deferred compensation. Id. at 529.
The plaintiff left the firm and went to work elsewhere as in-house counsel. Id. When the
firm denied his request for payment of his deferred compensation, the plaintiff sued the
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firm, arguing that the agreement constituted an unenforceable non-competition
agreement. Id. The Supreme Court agreed with the plaintiff’s argument and concluded
that the agreement violated a provision of Tennessee’s Code of Professional
Responsibility that prohibited agreements restricting an attorney’s right to practice law.
Id. at 530-31. Because the agreement violated the Code of Professional Responsibility,
the Court found the agreement violated the public policy of Tennessee. Id. at 531.
Although Dr. Edwards does not mention Murfreesboro Medical Clinic, P.A. v.
Udom, 166 S.W.3d 674 (Tenn. 2005), that case is more analogous to the facts here
because it involved a non-competition agreement applicable to physicians. Udom, 166
S.W.3d at 676-77. In that case, Dr. Udom’s employment agreement provided that upon
termination of his employment with the clinic, Dr. Udom would not practice medicine
within a twenty-five mile radius of the public square in Murfreesboro for a period of
eighteen months. Id. at 676. The Supreme Court held that the non-competition provision
of Dr. Udom’s employment agreement was unenforceable because it violated
Tennessee’s public interest of allowing patients to exercise their fundamental right of
selecting the physician they believe is best able to treat them. Id. at 683.
Unlike the situation in Spiegel and Udom, Urosite is a real estate investment
limited partnership, not an employer. The Supreme Court in Udom expressed concern
about decreasing the public’s access to healthcare, decreasing competition for patients,
and interfering with patients’ relationships with their physicians. Udom, 166 S.W.3d at
679-82; see Tenn. Code Ann. § 63-1-148 (imposing restrictions on agreements limiting
healthcare provider’s practice when one party is “the employing or contracting entity”).
The Separation Agreement does not limit Dr. Edwards’ ability to work as the agreement
in Udom limited Dr. Udom. It simply provides Urosite the opportunity to redeem Dr.
Edwards’ interest in the Partnership if he elects to practice outside Giles or Hickman
Counties.
Moreover, unlike the case in Udom, Dr. Edwards provided no services to Urosite
in exchange for compensation. Unlike the case in Spiegel, Dr. Edwards is not being
denied any compensation that he may have earned as a result of his partnership in UA.
Instead, he is simply precluded from continuing to be an investor in a real estate
partnership. It is unclear how much money, if any, Dr. Edwards would receive if he
continued as a limited partner in Urosite because a real estate venture is, by its nature,
speculative. We find unpersuasive Dr. Edwards’ argument that paragraph 2 of the
Separation Agreement constitutes a violation of public policy.
Dr. Edwards acknowledges that the Separation Agreement entitles the prevailing
party to an award of reasonable attorneys’ fees and costs incurred. Dr. Edwards’
argument that he is entitled to attorneys’ fees is pretermitted by our affirmance of the trial
court’s judgments dismissing his claims. We remand this case to the trial court for a
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determination of Urosite’s reasonable attorneys’ fees and costs incurred on appeal, and
the trial court shall issue an order awarding that amount to Urosite.
IV. CONCLUSION
For the reasons stated above, we affirm the trial court’s judgments in all respects
and remand the case for a determination of the reasonable attorneys’ fees and costs
Urosite incurred on appeal. Costs of this appeal shall be taxed against the appellant,
Robert H. Edwards, M.D., for which execution may issue if necessary.
________________________________
ANDY D. BENNETT, JUDGE
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