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Rao v. Parvathaneni

OPINION FILED MAY 14, 1979.

C.R. MOHAN RAO, M.D., S.C., PLAINTIFF-APPELLANT,

v.

KRISHNA RAO A.V. PARVATHANENI, M.D., DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND K. BERG, Judge, presiding.

MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

Plaintiff, a medical services corporation, employed defendant, Krishna Rao A.V. Parvathaneni, M.D. (Dr. Parvathaneni), pursuant to a written employment agreement which contained a restrictive covenant. In a three-count amended complaint plaintiff alleged that defendant breached that restrictive covenant and sought both injunctive relief and money damages. Defendant filed a second-amended counterclaim and a motion for summary judgment on the complaint. Pursuant to that motion, the trial court entered summary judgment in defendant's favor on all three counts of the amended complaint. Subsequent to the entry of the summary judgment order, the defendant voluntarily dismissed the second amended counterclaim. Plaintiff now appeals from the order of the trial court granting summary judgment.

At issue in this appeal is the meaning of paragraph 12 of the employment agreement which contains the restrictive covenant and which is quoted en toto later in this opinion. Plaintiff argues first in this appeal that the restrictive covenant is valid and enforceable and, second, that the covenant is applicable regardless of whether the plaintiff terminated the defendant's employment or whether the defendant quit of his own accord. In the alternative, plaintiff argues that even if the restrictive covenant applies only if defendant voluntarily resigned from his employment, a genuine question of fact existed as to the circumstances surrounding defendant's termination and that summary judgment was thus improperly entered.

We affirm.

In the autumn of 1974, C.R. Mohan Rao, M.D. (Dr. Rao), the president and sole shareholder of the plaintiff corporation, and Dr. Parvathaneni commenced negotiations which culminated in an employment agreement between plaintiff and Dr. Parvathaneni. Paragraph 11 of the agreement provided that the term of employment was for one year which was automatically renewable for successive one-year terms unless either party gave 60 days prior written notice of its intention to terminate the agreement.

Paragraph 12 of the agreement defined the parameters of the restrictive covenant as follows:

"Employee agrees that for a period of one (1) year after the date of termination of his employment, he will not practice medicine as a member of the staff of Holy Cross Hospital, Christ Community Hospital and Palos Community Hospital. It is the intention of Employer and Employee that Employer will attempt to get Employee on the staff of the aforesaid hospitals as well as St. Francis Hospital (Blue Island), Central Community Hospital, Mt. Sinai Hospital and Roseland Community Hospital prior to or during Employee's term of employment. Employee will be free to continue to practice on the staff of St. Francis Hospital, Central Community Hospital, Mt. Sinai Hospital and Roseland Community Hospital after termination of his employment. This agreement not to compete shall be effective only if Employee terminates his employment within ten (10) years of the effective date of this agreement."

In accordance with paragraph 11, the agreement was renewed for a second year. Toward the end of the second year, problems developed between Dr. Rao and Dr. Parvathaneni which resulted in the termination of Dr. Parvathaneni's employment and the filing of plaintiff's amended complaint consisting of three counts. Count I alleged that on or about May 14, 1976, Dr. Parvathaneni terminated his employment with defendant and that in violation of paragraph 12 of the employment agreement Dr. Parvathaneni continued to practice medicine at Holy Cross Hospital and had applied for membership on the staffs of Christ Community Hospital and Palos Community Hospital. Count I prayed for a temporary and permanent injunction enjoining defendant from practicing at the above hospitals. Count II of the complaint realleged the allegations of count I and sought money damages. Count III alleged Dr. Parvathaneni was holding money due plaintiff and sought an accounting. Defendant's answer to the amended complaint denied the material allegations of all three counts of the amended complaint. The defendant also filed a second amended counterclaim which, in pertinent part, alleged that the defendant did not voluntarily terminate his employment but was instead fired on or about May 13, 1976.

After additional motions and objections thereto were filed, defendant filed a motion for summary judgment on the amended complaint. In that motion, defendant, citing the last sentence of paragraph 12 of the employment agreement, alleged that the agreement not to compete became effective only if defendant terminated his employment and that defendant never terminated his employment but was instead fired. Attached to the motion was a copy of a letter dated May 28, 1976, purportedly written by Dr. Rao and addressed to Dr. Parvathaneni. The letter, in pertinent part, stated:

"You are further notified that pursuant to Page 3, Section 4, Sub-Section (e), that your employment with the corporation will terminate at the expiration of that 60 days, you will continue to perform services for the corporation pursuant to your Employment Agreement signed by you."

Also accompanying the motion was the affidavit of Steven Storch. The affidavit stated, in part, that Mr. Storch was the attorney for Dr. Parvathaneni and that on May 28, 1976, Dr. Rao sent the attached letter to Dr. Parvathaneni terminating Dr. Parvathaneni's employment.

Plaintiff filed a response to defendant's motion for summary judgment and argued that paragraph 12 of the agreement provided that the restrictive covenant was effective regardless of the circumstances under which defendant's employment was terminated; that, assuming arguendo, that the final sentence of the agreement was susceptible to defendant's interpretation the agreement was then ambiguous and a factual dispute existed as to the intention of the parties; and that even if defendant's interpretation of paragraph 12 is correct there existed a disputed question of fact as to whether defendant voluntarily resigned or was terminated. In support of the latter argument, plaintiff cites an earlier discovery deposition of Dr. Rao. This deposition, however, was not filed together with plaintiff's response to the motion for summary judgment. No affidavits, depositions or exhibits of any sort accompanied that response.

In the morning of December 1, 1977, a hearing was held pursuant to defendant's motion for summary judgment. At the conclusion of the hearing, the trial court indicated that he was granting summary judgment in defendant's favor. In the afternoon of December 1, 1977, the parties again appeared before the trial court and defendant presented the trial court with a draft of a summary judgment order. Plaintiff requested leave to file the depositions of the defendant and Dr. Rao. After the trial court granted leave to file the depositions, he signed the order granting summary judgment.

In his deposition, Dr. Rao testified that in April or May of 1976 Dr. Parvathaneni threatened to leave the corporation and told third parties that he was practicing on his own. In that deposition, Dr. Rao also testified that in the last week of May 1976 he decided he no longer wanted Dr. Parvathaneni to work for him and that he wrote Dr. ...


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