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CLEVELAND HAIR CLINIC, INC. v. PUIG

November 20, 1996

CLEVELAND HAIR CLINIC, INC., Plaintiff,
v.
CARLOS J. PUIG, et al., Defendants.



The opinion of the court was delivered by: SHADUR

 Cleveland Hair Clinic, Inc. ("Cleveland Hair") has moved for partial summary judgment under Fed. R. Civ. P. ("Rule") 56 in this action as to Count I of its Amended Complaint: Cleveland Hair's claim that Puig Medical Group, S.C. ("Puig Group") breached the October 1, 1993 agreement between the parties ("Agreement") by Puig Group's notice of termination served on May 24, 1996 *fn1" to become effective 30 days later ("Notice"), and Cleveland Hair's related claim that Dr. Carlos Puig ("Puig") had breached his duties as its then Medical Director. At this point the Cleveland Hair motion is fully briefed and ready for decision. In that respect, because this war by litigation (a term used advisedly) was being waged on several fronts simultaneously, the issuance of this Court's October 22, 1996 memorandum opinion and order dealing with sanctions ("Sanctions Opinion") has also impacted materially on the motion.

 When Cleveland Hair filed its motion it relied in principal part on two uncontroverted facts:

 
1. Puig Group's Notice had stated as its sole ground for termination of the Agreement the fact that the parties had not reached an understanding on certain matters relating to malpractice liability insurance, for which purpose the Notice pointed to a reserved right of termination contained in an October 1, 1993 letter agreement between the parties ("Letter") executed contemporaneously with the Agreement and stating in relevant part (emphasis added):
 
It is hereby agreed that for a period of six (6) months from the date of this letter, CHC and PMG shall act in good faith to negotiate an agreement with respect to the payment of a tail insurance policy for the benefit of Carlos J. Puig, D.O., upon the expiration or termination of the Agreement under certain circumstances.
 
This side letter of agreement represents the entire agreement and understanding between CHC and PMG with respect to the payment of a tail insurance policy, and supersedes all prior discussions and understandings with respect thereto. This side letter of agreement may not be modified or amended except in a writing signed by CHC and PMG. *fn2"
 
2. But when Puig was deposed on the subject of the Notice, here is what he said (Dep. 80):
 
Q: So I take it during this time period from when you began the deliberative process *fn3" until the time of your notice, you had no discussions with any of the people associated with Cleveland Hair Clinic regarding malpractice tail insurance, did you?
 
A: No.
 
Q: And malpractice tail insurance really didn't have anything to do with the reason why you were leaving, did it?
 
A: Well, no.
 
And Puig Dep. 129-31 confirmed that the malpractice insurance issue was not at all a continuing point of contention between Cleveland Hair and Puig, but that it had instead been placed on the shelf quite some time earlier as an inactive unresolved matter--one on which the parties had never reached an impasse--while the parties went about the more important business of carrying on their business activity of providing hair transplant services.

 Hence Cleveland Hair takes the position that the Notice did not comply with the express terms of the Letter, because it was not really "based upon a failure to reach an agreement with respect to the payment of the tail insurance policy"--and that Puig himself had unequivocally confirmed that to be so. Cleveland Hair further invokes the "mend the hold" doctrine of Illinois law *fn4" to foreclose Puig Group from shifting the ground that it had staked out in the Notice to some other or additional ground that would justify termination as a matter of law, even though such other or additional ground would not conform to the express limitation contained in the Letter (nor would it conform, then, to what was actually said in the Notice).

 In response to the Cleveland Hair Rule 56 motion, Puig Group filed its required General Rule ("GR") 12(N) statement *fn5" that set out two purported responses relevant to Cleveland Hair's contention:

 
1. Puig Group GR 12(N) P11 admitted the indisputably limited content of the Notice. But it went on to say that Cleveland Hair's purported "engagement in improper fee-splitting arrangements was an additional ground for termination," citing some record references in proposed support of that characterization.
 
2. Puig Group GR 12(N) P14 "denied" the Cleveland Hair GR 12(M) P14 statement that:
 
Puig's [Cleveland Hair's GR 12(M) statement used that name to denote Puig Group] termination was not based on the parties' failure to reach agreement on malpractice liability insurance.

 But it is a truism that only evidence is to be considered as the basis for the granting or denial of a summary judgment motion (Rule 56(c) and (e)), and the function of GR 12(M) and (N) statements is not to provide evidence in and of themselves, but rather to identify the record evidence that demonstrates the existence of nonexistence of genuine issues of material fact. And the only evidence that Puig Group cites for its claimed "denial" of the Cleveland Hair GR 12(M) P14 statement (which was itself grounded in Puig's unequivocal admission) is a reference to Puig Dep. 98. Yet here is all that Puig's testimony reflects at that point (Dep. 98 line 3 to 99 line 9):

 
Q: And at the time you made that decision--strike that.
 
As of the time the notice was made, you obviously had knowledge about all of the things that you said led to your decision?
 
A: That's right.
 
Q: This--
 
A: Let me point something out here, if I may.
 
Q: Sure.
 
A: I know this is not good ...

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