Affirmed and Opinion filed
June 17, 2004. In
The Fourteenth
Court of Appeals ____________ NO. 14-00-00079-CV ____________ SHAILESH
GUPTA, M.D.,
Appellant V. EASTERN
IDAHO TUMOR INSTITUTE, INC., MUKUND SHAH, M.D.,
HESARAGHATTA SHAMASUNDER, M.D., S.R. VENKATESH, M.D., BALCHANDER RAO,
M.D., VINOD BHUCAR, M.D., and
ARVIND BHANDARI, M.D., Appellees On
Appeal from the 269th District
Court Harris County,
Texas Trial
Court Cause No. 97-54316 O P I N I
O N Shailesh
Gupta appeals the jury verdict rendered in favor of Eastern Idaho Tumor
Institute, Inc. for damages based on breach of fiduciary duty. Appellant contends the contract,
on which the damages are based, is unenforceable because (1) the contract
is illegal on its face; (2) a condition precedent was not satisfied; and
(3) the non-assignment clause contained in the contract was violated. We affirm. Factual
Background Northwest
Radiation Medical Group, Ltd. (ANorthwest@) is a
California limited partnership created in 1991 by four Texas doctors and
two California doctors for the purpose of opening a radiation oncology
clinic in the Houston area.
The six doctors purchased land, the necessary equipment, and built
a specialized building needed to house the special equipment. In order to comply with federal
law, the four Texas doctors sold their interest in Northwest to the two
California doctors, retaining only an interest in the land and the
building.[1] The clinic was open for
approximately two years, from 1992 to 1994, after which Northwest
attempted to either sell the clinic or find another doctor to operate
it.
In the
summer of 1995, appellant began negotiations with Northwest to start his
radiation oncology practice in their vacant, but furnished, building. The parties entered into a joint
venture agreement effective September 1, 1995, whereby appellant would
Aprovide,
and be solely responsible for the payment of . . . all necessary
professional, medical, and administrative staffing necessary for the
successful operation of the Joint Venture,@ and
Northwest would Acontribute
all necessary equipment, office space, and machinery required for the
successful operation of the Joint Venture.@ The parties further agreed to
divide the gross revenues of the joint venture equally. Pursuant
to the agreement, the billings, collections, and accounts payable were to
be handled by a third-party, Gamma Management, Inc. (AGamma@), unless
and until appellant provided written notice of intent to perform the
billing himself. Gamma was
controlled by Northwest, but the two companies were consolidated into
Eastern Idaho Tumor Institute, Inc. (AEITI@) in the
fall of 1995. After the
consolidation, EITI took over the billing, collections, and accounts
payable on behalf of Gamma.
Appellant prepared the billing records and then sent the applicable
information to EITI, so it could file the appropriate medical claims with
medicare, the insurance companies, and the patients. Each month, EITI would send
appellant a check for his one-half share of the gross
revenues. The
relationship between appellant and EITI began to deteriorate when
appellant stopped sending billing information to EITI. Eventually, appellant started
performing the billing for the clinic himself; however, appellant did not
split the gross revenues received with EITI for the operation of the
clinic during the remaining term of the joint venture. In September 1996, the joint
venture=s one-year
term expired and the parties began negotiating for appellant either to
enter into a long-term lease for the building and equipment or to purchase
the property. Negotiations
continued for several months, during which time, appellant did not pay any
rent for the property or equipment and did not divide any of the gross
revenues received.
Appellant
contends he agreed to open the clinic only because the four Texas doctors
promised to refer patients to the clinic. On cross-examination, appellant
admitted that no such agreement was in writing; rather, he claimed it was
implied. According to
appellant, the clinic began to decline steadily when the Texas doctors
stopped referring patients to his clinic. Two of the six doctors testified
at trialCone Texas
doctor and one California doctorCthere was
no agreement for the Texas doctors to refer patients to appellant once
appellant began operating the clinic. EITI
attempted on numerous occasions to evict appellant from the clinic, but
because appellant was continuing to treat patients, it withdrew those
attempts.[2] According to a representative of
EITI, appellant promised to stop taking new patients and that as soon as
all the treatments from his existing patients were concluded, he would
vacate the premises. This
situation continued for nearly one year before appellant voluntarily
vacated the premises in May 1998.
Procedural
History EITI filed
suit against appellant alleging breach of the joint venture agreement,
breach of fiduciary duty, past-due rent, and termination of the joint
venture agreement. It also
asked the court to require appellant to give an accounting to EITI and
declare the rights of the parties under the agreement. Appellant answered, filed a
counterclaim against EITI, and filed a third-party petition against the
four Texas doctors, the two California doctors, and Gamma. With respect to EITI, the jury
found appellant failed to comply with the joint venture agreement, failed
to comply with his fiduciary duties owed to EITI, and was liable for
rental damages for the equipment.
The jury awarded EITI $247,997 in damages, of which $62,497
represented damages for breach of fiduciary duty. The jury also awarded the six
doctors $67,200 for unpaid rent for the premises. The trial court rendered its final
judgment in accordance with the jury=s verdict
on September 30, 1999. Appellant
filed his first motion for new trial on October 29, 1999 and, after
obtaining new counsel, filed a second motion for new trial on November 1,
1999. The trial court
overruled appellant=s motion
for new trial on December 10, 1999.[3] Thereafter, appellant filed a
notice of appeal on December 29, 1999; the appeal, however, was stayed
pending the outcome of bankruptcy proceedings initiated by appellant. On February 19, 2003, the
bankruptcy judge granted EITI=s motion
for summary judgment, holding the debt owed by appellant to EITI for
breach of fiduciary duty in the amount of $62,497 was
non-dischargeable. Appellant
then continued his appeal before this court on that portion of the damages
awarded by the trial court for breach of fiduciary duty.[4] In three
issues, appellant challenges the judgment of the trial court. Appellant argues the joint venture agreement is
unenforceable because (1) it is based on illegal conduct, namely the
corporate practice of medicine; (2) a condition precedent was unfulfilled;
and (3) Northwest transferred its interest in the joint venture agreement
to EITI without his knowledge or approval in violation of the
agreement. Accordingly,
appellant contends EITI is prohibited from collecting any damages for
breach of fiduciary duty because the contract is void. Discussion I.
Illegality of Contract In his
first issue, appellant contends the joint venture agreement is
unenforceable because it allows the corporate practice of medicine in
violation of the Texas Medical Practice Act.[5] See Act of May 30, 1993,
73rd Leg., R.S., ch. 862, ' 17, 1993
Tex. Gen. Laws 3374, 3388 (repealed and recodified 1999) (current version
at Tex. Occ. Code Ann.
'
164.052(a)(17) (Vernon 2004)).
Appellant argues the fee-splitting provision found in the joint
venture agreement is illegal because it effectively allows a
corporationCEITI (an
Idaho corporation) as successors in interest to Northwest (a California
partnership)Cto
practice medicine in Texas, thereby violating the Medical Practice
Act.
As a
general rule, a contract to do a thing which cannot be performed without a
violation of the law is unenforceable. Phillips v. Phillips, 820
S.W.2d 785, 789 (Tex. 1991); Lewis v. Davis, 199 S.W.2d 146,
148B49 (Tex.
1947); In re Kasschau, 11 S.W.3d 305, 312 (Tex. App.CHouston
[14th Dist.] 2000, orig. proceeding). The purpose of this rule is to
benefit and protect the public, not to protect or punish either party to
the contract. Lewis,
199 S.W.2d at 151; Villaneuva v. Gonzalez, 123 S.W.3d 461, 464
(Tex. App.CSan
Antonio 2003, no pet.); Kasschau, 11 S.W.3d at 312. A contract that could have been
performed in a legal manner will not be declared void because it may have
been performed in an illegal manner.
Lewis, 199 S.W.2d at 149. Where two constructions of a
contract are possible, courts give preference to the construction that
does not violate the law.
Montgomery v. Browder, 930 S.W.2d 772, 781 (Tex.
App.CAmarillo
1996, writ denied); Cross v. Dallas County Flood Control Dist. No.
1, 773 S.W.2d 49, 53 (Tex. App.CDallas
1989, no writ). Additionally,
we presume the contracting parties are knowledgeable of the law and
contract accordingly; thus, Awhere the
illegality does not appear on the face of the contract, it will not be
held void unless the facts showing its illegality are before the
court.@ Lewis, 199 S.W.2d at 149;
see Kasschau, 11 S.W.3d at 312. The
Medical Practice Act prohibits a physician from Aaiding or
abetting, directly or indirectly, the practice of medicine by a person,
partnership, association, or corporation not duly licensed to practice
medicine by the board.@ Act of May 30, 1993, 73rd Leg.,
R.S., ch. 862, ' 17, 1993
Tex. Gen. Laws 3374, 3388 (repealed and recodified 1999). A person Apractices
medicine@ under the
Medical Practice Act when that person (A) . . . publicly
profess[es] to be a physician or surgeon and . . . diagnose[s], treat[s],
or offer[s] to treat any disease or disorder, mental or physical, or any
physical deformity or injury by any system or method or to effect cures
thereof; or (B). . .
diagnose[s], treat[s], or offer[s] to treat any disease or disorder,
mental or physical, or any physical deformity or injury by any system or
method and to effect cures thereof and charge therefor, directly or
indirectly, money or other compensation.
Act of
July 24, 1981, 67th Leg., 1st C.S., ch. 1, '1, 1981
Tex. Gen. Laws 1, 3 (repealed and recodified 1999) (current version at
Tex. Occ. Code Ann.
151.002(a)(13) (Vernon 2004)). Under the Medical Practice Act,
when a corporation comprised of lay persons employs licensed physicians to
treat patients and the corporation receives the fee, the corporation is
unlawfully engaged in the practice of medicine. Flynn Bros., Inc. v. First Med.
Assocs., 715 S.W.2d 782, 785 (Tex. App.CDallas
1986, writ ref=d n.r.e.);
Watt v. Tex. State Bd. of Med. Exam=rs, 303
S.W.2d 884, 887 (Tex. Civ. App.CDallas
1957, writ ref=d);
Rockett v. Tex. State Bd. of Med. Exam=rs, 287
S.W.2d 190, 191B92 (Tex.
Civ. App.CSan
Antonio 1956, writ ref=d
n.r.e.); see Guerrero-Ramirez v. Tex. State Bd. of Med.
Exam=rs, 867
S.W.2d 911, 920B21 (Tex.
App.CAustin
1993, no writ). The purpose
of this act is to preserve the vitally important doctor-patient
relationship and prevent possible abuses resulting from lay control of
corporations employing licensed physicians to practice medicine. Flynn Bros. Inc., 715
S.W.2d at 785; Garcia v. Tex. State Bd. of Med. Exam=rs, 384 F.
Supp. 434, 438B39 (W.D.
Tex. 1974).
The joint
venture agreement, effective September 1, 1995, between Northwest and
appellant provides that the name of the joint venture shall be
ANorthloop
Radiation Therapy Center,@ formed
for the specific purpose of providing radiation therapy to cancer
patients. Other relevant
portions of the agreement include: 5.
Capital and Functions of Each Joint Venturer. Neither party hereto is
contributing any initial capital in the formation of this Joint
Venture. Rather, the roles
and functions of each Joint Venture[r] is delineated herein as follows,
with such role and function only to be modified in writing upon unanimous
agreement of each party hereto: a) Gupta
shall provide, and be solely responsible for the payment of (including all
payroll taxes), all necessary professional, medical, and administrative
staffing necessary for the successful operation of the Joint Venture; . .
. c)
Northwest shall contribute all necessary equipment, office space,
and machinery required for the successful operation of the Joint Venture;
. . . 6.
Income and Loss. The
gross revenue of the Joint Venture shall be divided equally to one half
for each party hereto. In
this regard, the parties agree that all billings, collections and accounts
payable shall be handled by Gamma Management, Inc. from its offices
located at 867 West Lancaster Blvd[.], Lancaster California. Gamma shall open a bank account
for the Joint Venture at a bank mutually agreed upon by the parties. Distributions of revenue, if any,
under this Paragraph shall occur on the last day of the month in which
collections are received. [If a]fter ninety (90) days from the date of
this Agreement, Gupta desires to perform the billing himself for the Joint
Venture, he may notify Northwest in writing at least thirty days prior to
the commencement of such activity of his intent to perform same. All billing function[s] performed
by Gupta hereunder, if any, shall be at the direction and supervision of
Northwest and/or Gamma Management, Inc. Appellant
relies on Flynn Brothers, to support his contention that the
contract provision was illegal.
In Flynn, the appellants entered into a partnership with a
doctor whereby the appellants acted as the doctor=s
exclusive management agent with the rights to (1) collect 66.67% of the
profits, (2) trade and commercialize on the doctor=s license,
and (3) select the medical staff to work in the hospitals under
contract. 715 S.W.2d at 783,
785. The partnership
arrangement was created in an effort to meet the requirements of the
Medical Practice Act and avoid the practice of medicine by a
non-doctor. Id. at
783. Although the parties
were technically partners, the amount of control the appellants exercised
over the doctor=s practice
rendered their relationship more of an employer/employee
relationship. Id. at
785. The effect of their
arrangement was to allow the appellants to use the doctor=s license
to get contracts to provide emergency medical care and to hire staff for
the hospital emergency rooms, and, in exchange, the appellants received
the majority of profits made through the doctor=s practice
of medicine. Id. The court concluded that
A[t]he
design, effect, and purpose of the management agreement contravene[d] the
Medical Practices Act@ and
therefore was unenforceable.
Id. Appellant
argues that, like the parties in Flynn, he and Northwest,
EITI=s
predecessor, entered into an
illegal contract, which allowed a partnership, composed of doctors not
licensed to practice in this state, to receive one-half of the gross
revenues from appellant=s
radiation oncology practice.
Appellant also argues the joint venture structure does not disguise
the effect of the agreement, which is an attempt to indirectly commit the
unlawful corporate or unlicenced practice of medicine. Thus, appellant concludes the
joint venture agreement is unenforceable because it violates the Medical
Practice Act. Flynn, however,
is distinguishable because EITI=s
relationship with appellant did not rise to the level of control present
in Flynn. Here, EITI
was not permitted to trade or commercialize on appellant=s
license. Here, appellant had
the authority to hire and fire his medical staff as he saw fit. Indeed, appellant complained EITI
failed to provide additional staff to help prepare the billing. EITI=s
representatives testified their frustrations with appellant stemmed from
the manner in which he chose to run his practice, further demonstrating
appellant was given full control over his practice. Specifically, EITI=s initial
function under the contract was to collect the billing receipts from
medicare, insurance agencies, and individuals. EITI preferred and requested that
appellant provide billing records on a daily basis, so that the stream of
income would be constant and the strict billing requirements of the
government and insurance agencies would be followed. Appellant, however, preferred to
complete the billing records at the end of the treatment cycle, which
occurred after six to eight weeks of treatment. EITI complied with
appellant=s wishes
and collected the billing receipts on appellant=s
terms. The joint
venture agreement also provided that each party had the right to engage in
other business opportunities, regardless of whether the other
opportunities were in direct competition with the joint venture. The parties were not required to
offer the opportunity to the joint venture and were not required to share
any profits, which further demonstrates the parties= agreement
and intentions that appellant would have full control over his practice,
sharing only in the profits associated with the joint venture. In Watt
v. Texas State Board of Medical Examiners, 303 S.W.2d 884 (Tex. Civ.
App.CDallas
1957, writ ref=d) and
Rockett v. Texas State Board of Medical Examiners, 287 S.W.2d 190
(Tex. Civ. App.CSan
Antonio 1956, writ ref=d n.r.e.),
the courts determined the doctors were permitting or allowing non-doctors
to use their licenses to practice medicine. Watt, 303 S.W.2d at 887;
Rockett, 287 S.W.2d at 191.
In each of these cases, the doctor worked for a clinic owned by
non-doctors and was paid a set salary for rendering his services. Watt, 303 S.W.2d at 887;
Rockett, 287 S.W.2d at 191. The clinics charged and collected all
the fees on behalf of the doctors, and the clinics had the right to fire
the doctors as they saw fit.
Watt, 303 S.W.2d at 887; Rockett, 287 S.W.2d at 191.
Additionally, in Watt, the clinic was placing advertisements on
behalf of the doctor.
Watt, 303 S.W.2d at 886. In each case, the court determined
the doctor=s actions
permitted or allowed another to use the doctor=s license
or certificate to practice medicine for the purpose of treating or
offering to treat, sick, injured, or afflicted human beings, in
contravention of the Medical Practice Act.[6] Watt, 303 S.W.2d at 887;
Rockett, 287 S.W.2d at 191. This case
is more closely aligned with Woodson v. Scott & White Hospital,
186 S.W.2d 720 (Tex. Civ. App.CAustin
1945, writ ref=d
w.o.m.). In Woodson,
Dr. J. M. Woodson entered into a contract with Temple Sanitarium
(ATemple@), in
which Temple agreed to convey a piece of property to Dr. Woodson and Dr.
Woodson agreed to erect, at his expense, a building to be known as
AThe
Woodson Eye, Ear, Nose and Throat Hospital.@ Id. at 721. Pursuant to the contract, Dr.
Woodson would occupy one portion of the building and Temple would occupy
the remaining portion.
Id. Temple
agreed to refer all patients needing specialized treatment to Dr. Woodson
and to reimburse Dr. Woodson twenty-five percent of the cost of the land
and the cost to construct the building. Id. The parties further agreed Temple
would be entitled to twenty-five percent of the net income from Dr.
Woodson=s
practice. Id. The contract allowed Temple to
exercise an option to purchase Dr. Woodson=s interest
in The Woodson Eye, Ear, Nose and Throat Hospital when the contract
expired. Id. Temple thereafter changed its
corporate name to Scott & White Hospital (AHospital@). Id. However, because the cost of
construction was greater than anticipated, the parties amended the
contract to give the Hospital a one-third interest in Dr.
Woodson=s
practice. Id. During the
term of the contract, Dr. Woodson passed away, but his sons and
associates, Drs. W. B. and B. P. Woodson, succeeded to his interest, and
the Hospital continued the contract with Dr. Woodson=s
sons. Id. Nearly ten years later, the
Hospital gave Drs. W. B. and B. P. Woodson written notice of its intent to
purchase their interest under the terms of the contract; however, W.B.
Woodson refused to comply.
Id. W.B.
Woodson filed a lawsuit to partition his interest from the Hospital, and
the Hospital counterclaimed for specific performance of the contract. Id. W.B. Woodson contended the
contract the Hospital sought to enforce was illegal and void because it
allowed the Hospital, a private corporation, to engage in the practice of
medicine. Id. at 724.
The
Woodson court held the contract was enforceable because the
doctors=
relationship with the Hospital was more in the nature of an independent
contractor and not an agent or employee. Id. at 725. The court held the splitting of
gross revenues was merely payment of rent and compensation for the
Hospital=s referral
services. Id. Important to the court=s decision
was the fact that: the Woodsons were entirely
independent of the Hospital as to diagnosis, treatment of patients, and
operations to be performed, using their own independent judgment in all
such matters. They fixed and
collected their own fees from their patients, kept their own books,
accepted full responsibility to their patients for the nature and
character of their services to them . . . Under such circumstances we
think it is clear that they did not act as agents or employees of the
corporation; that their acts were not the acts of the corporation; and
that the corporation as such was not engaged, in so far as said contract
is concerned, in practicing medicine through them as its agents. Id. at
725. Unlike
Flynn, Watt, and Rockett, EITI did not exercise the level of
control over appellant that made their relationship, in effect, one of
employer/employee. EITI did
not have the exclusive management rights over appellant=s license
and did not enter into contracts with third parties for appellant to
provide his medical services.
Appellant and his chosen staff provided the medical services as he
desired, appellant prepared the billing in the manner he chose, and then
appellant provided the billing records to EITI for collection pursuant to
his timetables. Appellant,
however, eventually took over the billing aspect as well. EITI provided appellant with
one-half the gross revenues received, but when appellant began collecting
billing receipts, he did not provide gross revenue splitting as EITI had
done. Appellant
was completely independent of EITI as to diagnosis, treatment, and
operation of the clinic, using his own judgment in all such matters. Appellant fixed his own fees, kept
his own books, and was fully responsible to his patients for the nature
and character of his services rendered to them. Under these circumstances, the
parties=
relationship is more that of an independent contractor and not that of an
employer/employee. We hold
EITI was not engaged in the corporate practice of medicine, and therefore,
the joint venture agreement was valid. Accordingly, we overrule
appellant=s first
issue. II.
Breach of Contract In his
second and third issues, appellant contends the joint venture agreement is
unenforceable because EITI breached the contract by (1) failing to fulfill
a condition precedent and (2) receiving its interest in the joint venture
agreement by assignment in violation of the agreement=s
non-assignability provision.
Appellant=s argument
is based on the following two provisions contained in the joint venture
agreement: $
This document becomes valid
only if the attached amendment is also signed by both parties and the sum
of $18,000 is delivered to Shailesh Gupta as noted per terms of the
promissory note. $
Assignment. Because of the personal
relationship between the parties hereto, each is specifically prohibited
from selling, assigning, transferring, or hypothecating his/its interest
in the Joint Venture, or the Joint Venture=s assets to any person, firm
or corporation, other than the other parties hereto, nor may the interest
of any of the parties in the Joint Venture or the Joint
Venture=s assets be transferred by
operation of law, except upon the death of Gupta. If a
contract is unambiguous, the court must interpret the contract and
determine whether a party has breached the contract as a matter of
law. Meek v. Bishop
Peterson & Sharp, P.C., 919 S.W.2d 805, 808 (Tex. App.CHouston
[14th Dist.] 1996, writ denied); Garza v. Southland Corp., 836
S.W.2d 214, 219 (Tex. App.CHouston
[14th Dist.] 1992, no writ).
A trial court should not submit a pure question of law to the jury,
but it may submit a question that asks the jury to resolve a factual
dispute regarding a party=s failure
to perform according to the
terms of the contract.
Meek, 919 S.W.2d at 808; Lindgren v. Delta Invs., 936
S.W.2d 422, 427 (Tex. App.CAustin
1996, writ denied). When the
evidence is undisputed or the evidence conclusively proves performance or
non-performance of the contract terms, the trial court should not submit
the issue to the jury.
Bank One, Tex., N.A. v. Stewart, 967 S.W.2d 419, 432 (Tex.
App.CHouston
[14th Dist.] 1998, pet. denied).
Generally,
when one party to a contract commits a material breach of that contract,
the other party is discharged or excused from further performance. Mustang Pipeline Co., Inc. v.
Driver Pipeline Co., Inc., No. 02-0290, 2004 WL 877536, at *1 (Tex.
April 23, 2004). The
non-breaching party must elect between two courses of action, either
continuing performance or ceasing performance. Chilton Ins. Co. v. Pate &
Pate Enters., Inc., 930 S.W.2d 877, 887B88 (Tex.
App.CSan
Antonio 1996, writ denied).
If the non-breaching party elects to treat the contract as
continuing and insists the party in default continue performance, the
previous breach constitutes no excuse for nonperformance on the part of
the party not in default and the contract continues in force for the
benefit of both parties.
Id. at 887.
Thus, A[t]reating
a contract as continuing, after a breach, deprives the non-breaching party
of any excuse for terminating their own performance.@[7] Id at
888. Here,
appellant is attempting to avoid enforcement of the joint venture
agreement by claiming EITI=s two
prior breaches excuse him from any further obligation. First, appellant claims EITI
breached the contract because it did not satisfy the condition precedent
of loaning appellant $18,000.
The agreement provided the $18,000 loan was a prerequisite to the
contract=s validity
and was to become effective September 1, 1995. Appellant argues the undisputed
evidence proves he did not receive the full $18,000; thus, according to
appellant, the joint venture agreement never became effective. Second,
appellant argues EITI breached the joint venture agreement because its
predecessor, Northwest, transferred its interest in the joint venture to
EITI in violation of the non-assignability clause. The transfer of interest from
Northwest to EITI began in the early fall of 1995 and was officially
consummated by the board of directors for each entity by the end of the
year. EITI, however, began
fulfilling the obligations of Northwest under the joint venture agreement
in the fall of 1995. Because
each alleged breach occurred no later than January 1996, we will look at
appellant=s conduct
from that point forward to determine whether appellant treated the
agreement as continuing after the alleged breaches had occurred. Appellant
testified at trial he sent a letter in May 1996 to EITI=s
representatives informing them he was taking over the billing pursuant to
the terms of the agreement.
Appellant also demanded payment for one-half of the salary for the
physicist, as provided by the agreement, and, according to appellant, was
paid in March 1996 pursuant to those demands. EITI continued to receive billing
information from appellant until approximately April of 1996 so EITI could
collect the billings pursuant to the agreement. Additionally, appellant
counterclaimed against EITI for breach of third-party contract, claiming
EITI failed to pay rent obligations, and therefore did not fulfill its
obligations under the agreement.
Appellant also testified, however, that he did not believe an
agreement ever existed because EITI failed to loan appellant $18,000. Despite appellant=s claim at
trial that no agreement existed, he nevertheless testified that he
continued to demand EITI=s
performance under the agreement.
We conclude appellant elected to continue performance of the
contract despite believing EITI breached the
agreement. Even were
we to assume both allegations constitute material breaches of the joint
venture agreement, both occurred at the beginning of the agreement, and
the evidence demonstrates
appellant elected to treat the contract as continuing after the
alleged breaches and considered the agreement in full force and
effect. Because appellant
continued to demand performance, he too was fully obligated to perform
under the agreement.
Therefore, the evidence establishes as a matter of law
appellant=s failure
to comply with the joint venture
agreement was not excused.
See Chilton Ins. Co., 930 S.W.2d at 887B88. Appellant
also argues the evidence is legally and factually insufficient to support
the jury=s verdict
that appellee did not fail to comply with the joint venture agreement.[8] Appellant, however, failed to
challenge the legal or factual sufficiency of the evidence to support the
jury=s verdict
in a motion for instructed verdict, a motion for judgment notwithstanding
the verdict, an objection to the submission of the issue to the jury, a
motion to disregard the jury=s answer,
or a motion for new trial.
Therefore, appellant has waived any complaints as to the
sufficiency of the evidence to support the jury=s
finding. Tex. R. Civ. P. 324(b); Cecil
v. Smith, 804 S.W.2d 509, 510B11 (Tex.
1991). Because we
hold appellant=s failure
to comply with the joint venture agreement was not excused, we overrule
appellant=s second
and third issues.
Conclusion Having overruled
appellant=s three issues on appeal, we
affirm the judgment of the trial court. /s/ John S.
Anderson Justice Judgment
rendered and Opinion filed June 17, 2004. Panel
consists of Justices Anderson, Seymore, and Murphy.[9] [1] 42
U.S.C.A. ' 1395nn, entitled Limitation on Certain Physician
Referrals, prohibits a doctor from referring a patient to an entity for
treatment if the doctor retains an ownership interest in that entity.
(West 2003). Thus, in order
to comply, the Texas doctors, all of whom practice in Houston, sold their
interest in the partnership to ensure they could continue to send patients
to the clinic.
[2] The
typical patient received radiation treatments five days a week over a six
to eight week period. Appellant would not provide the patients= names to EITI; therefore, EITI withdrew its
attempts to evict appellant so that it did not interfere with
appellant=s use of the premises and ensured continuity in
the patient=s treatment.
[3] The
trial court generally denied appellant=s motion for new trial without specifically
referring to either motion.
[4]
Appellant has named as parties to this appeal EITI and the six doctors involved in the joint venture
agreement. Appellant,
however, only challenges the trial court=s judgment relating to breach of fiduciary
duty. EITI is the only party to whom the jury determined
appellant breached a fiduciary duty and is the only party that was awarded
damages for such breach.
Accordingly, appellant and EITI are the only proper parties to this
appeal, and the only parties affected by our
decision. [5]
EITI
contends we do not need to
decide the issue of illegality because (1) appellant waived the defense of
illegality by not pleading it at trial, and (2) there was evidence of the
existence of a fiduciary relationship separate and apart from the joint
venture agreement. With
regard to waiver, we have reviewed the record and determine the issue of
illegality was tried by consent because the evidence at trial was
developed under circumstances indicating both parties understood that
legality of the joint venture agreement was at issue. Tex. R. Civ. P. 67; see
Johnston v. McKinney Am., Inc., 9 S.W.3d 271, 281 (Tex.
App.CHouston [14th Dist.] 1999,
pet. denied). Additionally,
because we hold the joint venture agreement is valid, we do not need to
determine whether evidence supports the existence of a fiduciary
relationship separate and apart from the agreement. [6] The
provision found in the predecessor statute to the Medical Practice Act, on
which Watt and Rockett rely, is substantially the same. Compare Act of May 30, 1993, 73rd
Leg., R.S., ch. 862, ' 17, 1993 Tex. Gen. Laws
3374, 3388 (repealed and recodified 1999) with Watt, 303 S.W.2d at 885
(quoting the Texas Medical Practice Act which prohibited A[t]he impersonation of a licensed practitioner, or
permitting, or allowing another to use his license, or certificate to
practice medicine in this State, for the purpose of treating, or offering
to treat, sick, injured, or afflicted human beings@).
[7]
Although the non-breaching party must elect between continuing or
ceasing performance, the election does not affect whether the
non-breaching party can sue for a former or future breach. Cal-Tex Lumber Co., Inc. v.
Owens Handle Co., Inc., 989 S.W.2d 802, 812 (Tex. App.CTyler 1999, no pet.); see Chilton Ins. Co.,
930 S.W.2d at 877B88; Bd. of Regents of Univ. of Tex. v. S &
G Constr. Co., 529 S.W.2d 90, 97 (Tex. Civ. App.CAustin 1975, writ ref=d n.r.e.).
The election affects only whether the non-breaching party itself is
then required to perform fully.
See Chilton Ins. Co., 930 S.W.2d at 887B88; S & G Constr. Co., 529 S.W.2d at
97. If the party continues performance, it obligates itself to fully
perform. See Chilton Ins.
Co., 930 S.W.2d at 887B88; S & G Constr. Co., 529 S.W.2d at
97.
[8]
Appellant did not raise an issue specifically challenging the
jury=s finding; however, such an attack is reasonably
inferred from appellant=s second and third issues and his conclusion in
which he requests this court either to reverse and render judgment, or to
reverse and remand the case to the trial court. See Tex. R. App. P. 38.1(e)
(providing Aan issue will be treated as covering every
subsidiary question that is fairly included.@) [9]
Senior Chief Justice Paul C. Murphy sitting by
assignment. |