Contract Law

Brian Daniel Rogers, Esquire

A “no oral modifications” clause does not preclude subsequent oral modification of a contract when the parties engage in modification by valid contractual formalities. Jennings v. SSM Health Care St. Louis, No. 96364 (Mo. App. E.D., December 20, 2011), Richter, J.

Plaintiff Dr. Anthony Jennings (“Jennings”), the Medical director of emergency services at St. Joseph’s Hospital West, an affiliate of SSM Health Care St. Louis (“SSM”), brought suit against SSM claiming severance as a result of the termination of Jennings’s employment by the hospital. The termination was the result of the hospital’s decision to out-source all the emergency services physician positions to a third-party vendor. Jennings alleged that SSM had orally promised severance to the terminated physicians in return for their continued service during the transition period. The trial court dismissed Jennings’s suit for failure to state a claim.

Held: Affirmed in part and reversed in part.
The appeals court affirmed dismissal of two of Jennings’s breach of contracts claims. The court held that SSM’s general severance policy was not incorporated by reference into Jennings’s written employment agreement, which contained an integration clause. Furthermore, SSM’s publishing of a severance policy, along with Jennings’s continued employment, did not constitute a unilateral contract providing for severance.

Jennings’s argument that a unilateral contract was formed by SSM’s alleged oral promise of severance for continued employment during the transition period was more persuasive to the appeals court, however. Missouri law is well-established that a “no oral modification” clause does not have a preclusive effect when the parties engage in modification by valid contractual formalities. In addition, such clauses are ineffective to invalidate subsequent oral agreements to the contrary. The appeals court thus reversed dismissal of Jennings’s claim of breach of a unilateral contract. The court also reversed the trial court’s dismissal of Jennings’s claims of promissory estoppel, unjust enrichment, and negligent misrepresentation, but affirmed its dismissal of Jennings’s fraudulent misrepresentation claim.

The existence of nominal damages is sufficient to preclude summary judgment. Glenn v. Healthlink HMO, Inc., No. 96233 (Mo. App. E.D., January 3, 2012), Odenwald, C.J.

Dr. Byron Glenn (“Glenn”) brought breach of contract claims against HealthLink HMO and HealthLink PPO (“HealthLink) alleging breach of an HMO Agreement and a PPO Agreement. The Circuit Court of Cape Girardeau County granted summary judgment in favor of HealthLink.

Held: Affirmed in part and reversed in part.
Although Healthlink’s removal of Glenn’s name from online provider directories before the expiration of the HMO agreement might only have caused nominal damages, the existence of nominal damages is sufficient to preclude summary judgment. In addition, a genuine issue of material fact with respect to whether Glenn was properly paid contract rates under both the HMO agreement and the PPO agreement precluded summary judgment. The appeals court reversed the trial court’s grant of summary judgment on those two issues but affirmed on the remaining points.

Conspiring to breach a non-compete provision contained in a teaming agreement in reckless disregard for the rights and interest of the agreement’s counter-party was sufficient to support punitive damages. J M Neil & Associates, Inc. v. Alexander Robert William, Inc. No. 73488 (Mo. App. W.D., January 10, 2012), Ellis, J.

Alexander Robert William, Inc. (“ARW”) and J M Neil & Associates, Inc. (“JMN”) entered into a teaming agreement in hopes of being awarded a veteran set-aside General Services Administration contract. A few years later ARW terminated the teaming agreement. Needing a certain JMN employee to continue performing services under the GSA contract, ARW arranged to have the employee hired by a staffing agency owned by the mother of ARW’s owner as a way to circumvent a non-compete provision contained in the teaming agreement. JMN filed suit claiming breach of contract, tortious interference, and conspiracy to breach and interfere with a contract. A jury found for JMN on all counts, awarding compensatory and punitive damages. The defendants filed a motion for judgment notwithstanding the verdict, and the trial court granted the motion with respect to the punitive damages award.

Held: Reversed.
The appeals court reversed the lower court, holding that JMN presented clear and convincing proof that the defendants acted with reckless disregard for JMN’s rights and interests and thereby possessed the requisite motive for purposes of punitive damages. Despite the teaming agreement’s prohibition on hiring or influencing JMN personnel to remain with ARW and a warning from ARW’s former vice president and contracts manager with respect to the non-compete, the owner of ARW arranged to have the employee hired by a staffing agency owned by his Mother.
Motion for rehearing/transfer to Supreme Court denied on February 28, 2012.

Harm is held not to be capable of ascertainment under the statute of limitation with respect to a fraud action until a judgment is entered. Carson v. Dixon Cemetery, No. 31128 (Mo. App. S.D., January 25, 2012), Barney, J.

Plaintiff Carol Carson was one of the purchasers of a cemetery plot that was sold to multiple purchasers. She brought suit against Dixon Cemetery claiming fraudulent and negligent misrepresentation and negligence per se. The trial court granted the cemetery’s motion for summary judgment on the grounds that the suit was barred by § 516.120, RSMo.

Held: Reversed.
Although the plaintiff had constructive knowledge of the claims of others to the cemetery plot she had purchased, it was not until a judgment was entered in a prior suit declaring her not to be the record owner that she could ascertain that she was damaged. Only then did the five-year statute of limitations begin to run.