WILLIAM G STAHL III V U P DIGESTIVE DISEASE ASSOC PC
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
WILLIAM G. STAHL, III,
UNPUBLISHED
March 24, 2009
Plaintiff/CounterdefendantAppellee,
v
No. 276882
Marquette Circuit Court
LC No. 06-043329-CK
U. P. DIGESTIVE DISEASE ASSOCIATES,
P.C.,
Defendant/CounterplaintiffAppellant.
Before: Markey, P.J., and Whitbeck and Gleicher, JJ.
PER CURIAM.
In this dispute regarding a covenant not to compete, defendant U. P. Digestive Disease
Associates, P.C. (UPDDA), appeals as of right the circuit court’s order granting plaintiff William
G. Stahl, III, summary disposition, and denying summary disposition to defendant. We agree
with the circuit court that the covenant does not bind plaintiff, and affirm.
I. Facts and Proceedings
Plaintiff is a board-certified specialist in internal medicine and gastroenterology.
Defendant is a professional corporation that employs gastroenterologists. In 2003, plaintiff
accepted an offer to practice gastroenterology as an associate in defendant’s practice. Plaintiff
signed a contract providing for a two-year term of employment, commencing on plaintiff’s first
date of service in January 2004.
Shortly before the two-year contract term expired, defendant notified plaintiff that it
would not offer him a partnership. Instead, defendant proposed that plaintiff remain in
defendant’s employ as an associate. Plaintiff rejected this option. On December 29, 2005,
defendant’s partners informed plaintiff that because he had declined their employment offer, “It
is therefore clear that your employment with UPDDA ends on 12/31/05.”
On January 6, 2006, defendant’s attorneys notified plaintiff that defendant intended to
enforce the “non-competition covenant” contained in plaintiff’s employment contract, which
provided:
-1-
Covenant Not to Compete. PHYSICIAN pledges active and industrious
performance of duties in the CORPORATION’S best interests. To that end, if
PHYSICIAN separates from employment service with the CORPORATION,
PHYSICIAN shall not compete with CORPORATION within 150 miles of the
City of Marquette for a period of two (2) years after such separation, unless the
terms of such competition have been agreed to in writing by the Board of
Directors of the CORPORATION, acting by the remaining Stockholders.
Later in January 2006, plaintiff filed suit against defendant seeking a declaration that the
covenant was “null and void and unenforceable[.]”1 In March 2006, plaintiff signed a contract of
employment with Marquette General Health System to work as a “hospitalist.”2 Subsequently,
defendant filed a countercomplaint for breach of the noncompete covenant, and also sought
damages for plaintiff’s failure to repay the costs of supplemental malpractice insurance (also
called “tail” coverage), which defendant purchased after plaintiff left its employ.
The parties filed cross motions for summary disposition pursuant to MCR 2.116(C)(10)
regarding the covenant and insurance reimbursement dispute.3 The circuit court determined that
“the covenant not to compete is triggered by separation from employment,” and because the
contract simply expired plaintiff did not separate from his employment with defendant. The
circuit court reasoned as follows:
In this case, the Court finds and concludes the relationship between the
plaintiff and the defendant did not end with discharge, termination or separation.
It ended with expiration of the contract, period. Neither one of these parties had
any obligation to do anything in relation to the employment relationship at the end
of the term. In this Court’s judgment, the covenant not to compete is triggered by
a separation from employment during the term of the contract and not expiration
of the contract. The contract ended on December 31, 2005, and it ended by its
terms and the limitations of the contract. And at the end of that contract period,
the plaintiff was no longer an employee of the defendant, and the defendant was
no longer plaintiff’s employee (sic).
1
Plaintiff’s complaint also alleged breach of contract arising from defendant’s refusal to offer
him a partnership. The circuit court granted defendant summary disposition of this claim, and
plaintiff elected not to challenge this ruling on appeal.
2
A Marquette General Hospital document contained in the circuit court record describes a
“hospitalist” as a specialist “in caring for patients in the hospital setting. Hospitalists work with
the patient’s primary care physician to provide a personalized medical plan of care to help make
the transition in and out of the hospital as seamless as possible.”
3
Both parties also sought injunctive relief: defendant to preclude plaintiff from working within
150 miles of its location, and plaintiff to preclude defendant from enforcing the covenant not to
compete. The circuit court denied both motions.
-2-
Based on the same analysis, the circuit court also denied defendant’s motion seeking
reimbursement for the malpractice tail insurance. Defendant now appeals.
II. Analysis
This Court reviews de novo a circuit court’s summary disposition ruling. Walsh v Taylor,
263 Mich App 618, 621; 689 NW2d 506 (2004). “Summary disposition is appropriate under
MCR 2.116(C)(10) if there is no genuine issue regarding any material fact and the moving party
is entitled to judgment as a matter of law.” West v Gen Motors Corp, 469 Mich 177, 183; 665
NW2d 468 (2003). When reviewing a motion invoking subrule (C)(10), this Court considers the
pleadings, admissions, affidavits, and other relevant record evidence in the light most favorable
to the nonmoving party to determine whether any genuine issue of material fact exists to warrant
a trial. Walsh, supra at 621. “A genuine issue of material fact exists when the record, giving the
benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable
minds might differ.” West, supra at 183.
Defendant first asserts that the circuit court erroneously interpreted the noncompete
covenant by distinguishing between separation from employment and other methods of
terminating an employment relationship. According to defendant, “[t]he plain meaning of
separation from employment includes termination, discharge and the expiration or non-renewal
of the contract.” The “logical interpretation” of this language, defendant argues, is that the
contract prohibited plaintiff from “immediately competing with UPDDA when the contract
ended.”
“[A]n employment contract is just a contract.” Thomas v John Deere Corp, 205 Mich
App 91, 93; 517 NW2d 265 (1994). The primary goal of contractual interpretation is to
determine and enforce the parties’ intent. Rasheed v Chrysler Corp, 445 Mich 109, 127 n 28;
517 NW2d 19 (1994). In so doing, this Court reads the contract as a whole and attempts to
ascertain and apply its ordinary and plain meaning. Michigan Twp Participating Plan v
Pavolich, 232 Mich App 378, 383; 591 NW2d 325 (1998). In Laevin v St Vincent De Paul
Society of Grand Rapids, 323 Mich 607, 609-610; 36 NW2d 163 (1949), our Supreme Court
adopted two cardinal principles of contract interpretation:
. . . [A] contract is to be construed as a whole; … all its parts are to be harmonized
so far as reasonably possible; that every word in it is to be given effect, if
possible; and that no part is to be taken as eliminated or stricken by some other
part unless such a result is fairly inescapable.
***
Every word in the agreement must be taken to have been used for a
purpose, and no word should be rejected as mere surplusage if the court can
discover any reasonable purpose thereof which can be gathered from the whole
instrument. [Internal quotation omitted.]
With these rules in mind, we turn to the language of the noncompete covenant at issue.
The covenant commences with the following language: “PHYSICIAN pledges active and
industrious performance of duties in the CORPORATION’S best interests. To that end, if
-3-
PHYSICIAN separates from employment service with the CORPORATION, PHYSICIAN shall
not compete with CORPORATION . . . .” These terms clearly and unambiguously contemplate
that the noncompete covenant would become effective only if plaintiff separated from
employment during the term of the contract. We agree with the circuit court’s conclusion that
plaintiff did not separate from his employment; rather, his employment ended when the
contract’s term expired on December 31, 2005. This interpretation of the contractual language
logically flows from the prefatory words of the covenant, which required plaintiff to perform his
duties to benefit the interests of his employer while plaintiff worked for UPDDA. The
covenant’s next sentence begins, “To that end, if PHYSICIAN separates from employment
service . . . .” [Emphasis supplied.] This phrase clearly references and modifies the preceding
sentence, addressing plaintiff’s responsibilities incident to active employment. Interpreted in its
contractual context, the term “separates” implies an action on the physician’s part to leave or
withdraw from employment.
Because plaintiff never “separated” from defendant’s
gastroenterology practice, the noncompete covenant never took effect. Consequently, the circuit
court properly granted plaintiff summary disposition on this ground pursuant to MCR
2.116(C)(10).
Defendant next contends that the employment contract’s terms required that plaintiff
reimburse defendant for the cost of malpractice tail insurance. The applicable contractual
language provides that “[i]n the event of PHYSICIAN’S termination of employment with the
CORPORATION for any reason, PHYSICIAN shall be responsible for the premium payment of
a malpractice ‘tail’ policy.” The employment contract elsewhere contains a separate provision
entitled “Termination,” which sets forth, “Notwithstanding anything herein contained to the
contrary, this contract may be terminated by any party hereto upon thirty (30) days [sic] written
notice. CORPORATION may restrict PHYSICIAN’S employment activities during such notice
period, whether termination is by action of the CORPORATION or PHYSICIAN.”
We again agree with the circuit court that the contract between the parties did not
“terminate,” but simply expired. During the contract’s two-year term, neither party undertook to
avoid or nullify their contractual obligations, or to provide 30 days’ written notice of an intent to
bring the contract to an early end. The malpractice insurance provision became effective only if
either party terminated plaintiff’s employment, and neither did so. Instead, plaintiff elected not
to accept the terms of a proposed new employment agreement and the existing contract simply
lapsed. Reading the contract as a whole and endeavoring to harmonize its parts, we conclude
that plaintiff lacked any obligation to reimburse defendant for tail coverage. The trial court thus
correctly granted plaintiff summary disposition of this claim under MCR 2.116(C)(10), as well.
Affirmed.
/s/ Jane E. Markey
/s/ William C. Whitbeck
/s/ Elizabeth L. Gleicher
-4-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
