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Skolnick v. Exodus Healthcare Network, PLLC

Court of Appeals of Utah

November 8, 2018

Sara Skolnick, Appellee,
Exodus Healthcare Network, PLLC, Appellant.

          Third District Court, West Jordan Department The Honorable Bruce C. Lubeck No. 150900747

          Gary L. Johnson, Zachary E. Peterson, and Cortney Kochevar, Attorneys for Appellant

          Gary R. Guelker, Attorney for Appellee

          Judge Ryan M. Harris authored this Opinion, in which Judges Michele M. Christiansen Forster and David N. Mortensen concurred.

          HARRIS, JUDGE

         ¶1 Sara Skolnick, a physician, entered into a written employment agreement (the Employment Agreement) with Exodus Healthcare Network, PLLC (Exodus), a medical services company. Pursuant to that agreement, Skolnick agreed to work in two of Exodus's medical clinics, and Exodus agreed to pay Skolnick for her services. Near the end of Skolnick's first year of employment, Exodus stopped paying Skolnick, and Skolnick sued for breach of contract. The district court entered summary judgment in Skolnick's favor, and also ordered Exodus to pay Skolnick's attorney fees. Exodus now appeals, and we affirm the district court's entry of summary judgment on Skolnick's claim for breach of contract. We also affirm the district court's conclusion that Skolnick is entitled to recover attorney fees. But we reverse the district court's decision to award Skolnick the entire amount of fees she requested, and remand the case for entry of judgment in a lower amount, as well as for quantification of the attorney fees Skolnick incurred on the successful portion of her defense of Exodus's appeal.


         ¶2 Exodus owns and operates health care clinics in Salt Lake County, Utah, and employs physicians to provide a wide array of medical services. In November 2013, Exodus entered into the Employment Agreement with Skolnick, a licensed obstetrician and gynecologist. That agreement called for a three-year initial term of employment, starting on February 1, 2014, with a renewal provision that could potentially extend Skolnick's term of employment beyond three years. Under the agreement, Exodus was to pay Skolnick a "[m]onthly [b]ase [c]ompensation" payable in biweekly installments.

         ¶3 At about the same time, Skolnick also entered into a separate agreement (the Recruitment Agreement) with Jordan Valley Medical Center (Hospital), a local hospital. The Recruitment Agreement was intended to work in tandem with the Employment Agreement, and each incorporated the other.[1] Under the Recruitment Agreement, Skolnick promised to maintain a medical practice within Hospital's service area for three years, and in exchange Hospital agreed to "loan" Skolnick "certain benefits," including a "[g]uaranteed [m]onthly [a]mount." In the Recruiting Agreement, Skolnick acknowledged that "a portion of the benefits will be paid directly or indirectly to" Exodus. Hospital promised to forgive the loan in its entirety if Skolnick maintained a practice in the Hospital's service area for the full three-year term.

         ¶4 The Employment Agreement between Skolnick and Exodus referenced the Recruiting Agreement between Skolnick and Hospital, and noted that, pursuant to the Recruiting Agreement, Skolnick was "entitled to receive" the "[g]uaranteed [m]onthly [a]mount" from Hospital. The Employment Agreement stipulated that all payments from Hospital to Skolnick "shall be made directly to" Skolnick, but obligated Skolnick, each time she received a payment from Hospital, to "endorse over or pay to" Exodus "all such amounts received from Hospital immediately upon receipt." Skolnick and Exodus agreed that the payments Skolnick received from Hospital were to be used by Exodus to pay Skolnick's salary and benefits.

         ¶5 Skolnick began working for Exodus in early March 2014. For about nine months, the arrangement proceeded uneventfully according to the terms of the agreements-Hospital made payments to Skolnick, who passed along those payments to Exodus, who in turn paid Skolnick's salary and benefits using the funds received from Hospital.

         ¶6 On December 1, 2014, Skolnick sent Exodus a letter stating that she would be terminating her employment at the end of February 2015. After receiving word that Skolnick intended to terminate her employment with Exodus, Hospital stopped making its guaranteed monthly payments, and Exodus stopped paying Skolnick for her services.[2] However, Skolnick kept working and generating accounts receivable for Exodus until January 13, 2015, when Exodus sent Skolnick a letter terminating her employment. In the letter, Exodus stated that Hospital had informed Exodus that it would make no further payments pursuant to the Recruiting Agreement, and explained that Exodus considered these events cause to terminate Skolnick's employment. Skolnick never received any compensation for services rendered between November 22, 2014 and January 13, 2015.

         ¶7 A few weeks after her employment with Exodus ended, Skolnick filed a lawsuit against Exodus, alleging that Exodus had breached the Employment Agreement by failing to pay her.[3]After discovery, both parties moved the court for summary judgment on Skolnick's breach of contract claim. Skolnick argued that the contract required that Exodus pay her for her work, and that she had not been paid. Exodus countered that its obligation to pay Skolnick was contingent on Hospital making the guaranteed monthly payments, and because Hospital had not made any such payments after November 2014, it was not obligated to compensate Skolnick.

         ¶8 In late December 2016, after briefing and oral argument, the district court granted Skolnick's motion and denied Exodus's. The district court determined that "Skolnick performed her duties under [the Employment Agreement], [and] that Exodus did not pay the salary Skolnick earned between November 22, 2014 and January 13, 2015." The court further determined that Exodus's obligation to pay Skolnick was not contingent on payments from Hospital, stating that "[t]he basics of the agreement are that Exodus shall pay Skolnick for services rendered. The contract cannot be read, considering it as a whole, to mean that Skolnick would work for no pay if for some reason [Hospital] stopped payment under the Recruitment Agreement." The district court awarded Skolnick damages in the amount of $35, 707.92, the amount requested in Skolnick's complaint, and "attorney fees and costs under the Employment Agreement." The court then directed Skolnick's counsel "to provide an affidavit of fees," and stated that Exodus "may respond as to necessity and reasonableness."

         ¶9 On February 2, 2017, Skolnick filed a motion for attorney fees, a declaration of attorney fees, and a proposed judgment, seeking fees in the amount of $40, 894. Eleven days later, on February 13, 2017, Skolnick filed a supplemental declaration, identifying an additional $1, 805.50 in fees. On the morning of February 16, the fourteenth day after Skolnick filed her motion, the district court-having seen no opposition to Skolnick's attorney fees motion-entered a final judgment awarding Skolnick $42, 489.50 in attorney fees. Later that same day, Exodus filed a motion to set aside that judgment, as well as a memorandum in opposition to Skolnick's motion for attorney fees. Exodus asserted that the judgment had been entered before the time for Exodus to respond to Skolnick's motion had run.

         ¶10 On February 28, in response to Exodus's motion, the district court entered a ruling and order setting aside its attorney fees award, and reducing the award to $24, 300 based on its determination as to the reasonableness of the requested amount of fees. On March 2, Skolnick filed a motion asking the court to reconsider its February 28 ruling, arguing that Exodus's objections to her attorney fees motion had been untimely. On March 27, the district court vacated its February 28 ruling, after determining that rule 73 of the Utah Rules of Civil Procedure gave Exodus only ...

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