DAVID WADLEY, M.D. V. PADUCAH AREA PHYSICIANS, INC.
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RENDERED: January 8, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1997-CA-003234-MR
DAVID WADLEY, M.D.
V.
APPELLANT
APPEAL FROM McCRACKEN CIRCUIT COURT
HONORABLE JEFFREY HINES, JUDGE
ACTION NO. 97-CI-00893
PADUCAH AREA PHYSICIANS, INC.
APPELLEE
OPINION
VACATING AND REMANDING
** ** ** ** ** ** **
BEFORE:
HUDDLESTON, KNOX and SCHRODER, Judges.
HUDDLESTON, Judge.
This appeal is from a judgment dismissing,
under Ky. R. Civ. Proc. (CR) 12.02(f), Dr. David Wadley's complaint
against Paducah Area Physicians, Inc. (Physicians) for breach of
contract and misallocation of funds.
For the purpose of the reviewing the circuit court's
decision to grant Physicians' motion to dismiss, the following
facts are relevant.
On November 4, 1994, Wadley entered into an
employment contract with Physicians which became effective on
December 30, 1994.
Paragraph 4.01 of the contract provides that
its term shall be two years from the date Wadley began his
employment unless terminated upon the occurrence of certain listed
events.
Thus, the contract was to expire on December 30, 1996.
The evidence is in dispute as to whether Wayne Shelton,
Chief Executive Officer of Physicians, made statements in December
1996 to Wadley regarding the renewal of his contract.
Wadley
alleges that Shelton gave assurances that the contract was to be
renewed and that he relied on those statements in continuing his
employment with Physicians. Taking a contrary position, Physicians
contends that Shelton informed Wadley that his contract would not
be
renewed.1
Also
apparently
in
dispute
is
the
date
and
circumstances surrounding Wadley's separation from Physicians.
Wadley asserts that his employment was terminated in violation of
the
terms
of
the
employment
contract
on
August
11,
1997.
Conversely, Physicians maintains that Wadley voluntarily left its
employment on November 14, 1997.
Paragraph 2.01 of the employment contract provides the
method used to calculate Wadley's compensation.
Wadley alleges
that Physicians miscalculated his compensation from 1995 to 1996.2
Wadley contends that he did not participate in the allocation of
1
Physicians has not filed an answer or other responsive
pleading, but did file a memorandum of law setting forth its
position. The only "facts" of record are those properly pled in
Wadley's complaint.
2
Wadley alleges that he was entitled to a bonus equal to ten
percent of the net profits (gross revenue minus expenses) of the
Department of Radiology and that Physicians allocated expenses to
the Department of Radiology above and beyond those that were just,
fair and equitable.
-2-
expenses to the Department of Radiology during which certain
expenses were calculated in excess of those authorized under the
contract thereby reducing his bonus.
Physicians insists that
Wadley agreed to the amounts and accepted the payments.
Wadley sued Physicians alleging breach of contract and
misallocation of funds.
Physicians' only response thus far has
been its CR 12.02(f) motion to dismiss the complaint for failure to
state a claim upon which relief can be granted.
Physicians argues
that Wadley's employment contract expired and he had no right to
enforce the terms of the contract beyond December 30, 1996.
It
also says that because Wadley accepted his compensation he cannot
now claim any additional sum.
The trial court dismissed the
complaint in a one-sentence order that does not state the grounds
for its action nor cite the rule under which it acted.
Wadley attached the employment contract to his complaint
as an exhibit.
This inclusion of matters outside the pleadings
transformed Physicians' motion to dismiss into a motion for summary
judgment.
CR 12.03;3 McCray v. City of Lake Louisvilla, Ky., 332
S.W.2d 837, 840 (1960); Craft v. Simmons, Ky. App., 777 S.W.2d 618,
620 (1989). On appeal, we must determine whether the pleadings and
supportive document presented a genuine issue of material fact and,
3
CR 12.03 provides that "If . . . matters outside the
pleading are presented to and not excluded by the court, the motion
shall be treated as one for summary judgment and disposed of as
provided in Rule 56 . . . ."
-3-
if not, whether Physicians was "entitled to a judgment as a matter
of law."
CR 56.03.4
Physicians'
first
argument
is
that
Wadley
was
an
employee-at-will since the employment contract expired. In support
of this argument, Physicians, Inc. relies on Meyers v. BrownForeman Distillery Co., 289 Ky. 185, 158 S.W.2d 407 (1942), in
which Kentucky's highest court held that an employee who knew that
his employment contract had terminated and knew of the terms of a
new contract (which had been agreed upon, but not actually signed
and received by the employee) was bound by the terms of the new
contract.
Physicians contends that Wadley was bound by the new
contract term, thus becoming an employee-at-will following the
written contract's expiration.
This argument is confusing and
without merit.
We believe that Stewart Dry Goods Co. v. Hutchison, 177
Ky. 757, 198 S.W. 17 (1917), is on point.
There the Court said
that:
[W]here one enters the service of another for a definite
period,
and
continues
in
the
employment
after
the
expiration of that period without a new contract, it is
presumed
that
the
old
4
contract
continues;
and
this
Summary judgment is to be granted cautiously, and as long
as there is an issue of material fact summary judgment is not
proper even if the trial judge believes the party opposing the
motion will not prevail at trial. Steelvest, Inc. v. Scansteel
Service Center, Inc., Ky., 807 S.W.2d 476, 480 (1991). The trial
judge is to view the record in a light favorable to the opposing
party and must resolve all doubts in favor of the opposing party.
Id.
In deciding whether summary judgment is proper, the trial
court may not resolve issues of fact. Id.
-4-
presumption
must
prevail,
unless
overcome
by
a
new
agreement or facts sufficient to show that a different
hiring was intended by the parties.
Id. at 17.
Ky.
See also Hamilton Carhartt Overall Co. v. Short, 303
423, 197 S.W.2d 792 (1946); and see generally 17A Am. Jur 2d.
Contracts §605 (1991).
Wadley alleges in his complaint that "both
Wadley and Physicians continued to operate under the terms of the
written contract, thus extending the terms of said contract."
There are clearly genuine issues of material fact on this issue
which preclude summary judgment.
The trial court also dismissed Wadley's claim based on
Physicians' alleged misallocation of funds. Physicians argues that
Wadley’s acceptance of his bonus payment estopped him from making
a claim that the bonus was miscalculated.
argument Physicians cites Meyers, supra.
In support of its
In Meyers, a whiskey
salesman accepted commission payments in full settlement of amounts
due him under a written contract.
After accepting the payments,
the salesman brought an action against his employer arguing that
the commission should have been calculated out of gross sales and
not
on
another
basis.
The
Court
held
that
the
salesman's
participation in calculating his commission based upon the other
basis and his satisfaction with those results during his employment
estopped him from later arguing for recalculation on a gross sale
basis.
In the present case, Wadley contends that he did not
participate in the calculation of his bonus payments.
It was not
until his termination, Wadley says, that he knew of the actual
-5-
expenses
allocated
to
the
Department
of
Radiology.
These
allegations raise genuine issues of material fact which preclude
summary judgment.
For the foregoing reasons, the order dismissing Wadley's
complaint
is
vacated
and
this
case
is
remanded
for
further
proceedings.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Kenneth R. Haggard
Hopkinsville, Kentucky
Thomas L. Osborne
WHITLOW, ROBERTS,
STRAUB
Paducah, Kentucky
-6-
HOUSTON
&
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