M.J. KELLY, P.J.
This controversy with one more ingredient could provide the grist for a season's episodes of General Hospital. Plaintiff doctor was employed by defendant hospital as a sort of independent commission merchant for x-ray services. After several terms covering 20 years, the parties fell out with a bang, not a whimper. Plaintiff enlisted a battery of attorneys, launched a preemptive strike against defendants and fired off one, two, three lawsuits. Defendants reacted with a battalion of attorneys who returned the salvo and added numerous countering missiles of their own. The resulting fray dumps a collage of claims on this Court, disposed of summarily below, the unraveling of which we assay with great trepidation and in part reverse.
Plaintiffs instituted actions in Oakland County
Plaintiff Martin Trepel is an osteopathic physician and a board-certified radiologist. On November 1, 1959, Trepel and defendant hospital entered into a contract whereby Trepel, as an independent contractor, would provide x-ray services at the hospital. The contract provided for an initial term of seven years with automatic renewal for a second term unless notice of cancellation was given by either party. Trepel's compensation was to be computed as a percentage of the gross charges of the x-ray department. In 1966, the contract was automatically extended until 1973. On March 29, 1973, Trepel and defendant hospital agreed to extend the contract for one year, with a provision for automatic one-year renewals thereafter unless notice of termination was given by either party. On September 25, 1974, defendant hospital gave notice that the contract would terminate on October 14, 1975.
After receipt of the notice of termination Trepel negotiated a new contract with defendant hospital which took effect on October 15, 1975. The contract expressly provided that it would expire on December 31, 1979. As compensation, Trepel was to receive one-third of the gross billings of the
"2. Facilities. While this agreement is in effect, the hospital will make available to Trepel as an independent contractor adequate physical facilities, as well as equipment and supplies which the hospital deems reasonably necessary for the proper operation of the department in accordance with currently approved methods and practices and in accordance with the standards of the American Osteopathic College of Radiology and agrees to provide the services of such medical technicians and non-professional personnel including, but not limited to secretarial staff, as the administration of the hospital shall deem reasonably necessary to operate the department."
The contract provided standards which Trepel was to follow in providing services:
"8. Scope and Standards. All radiological or nuclear medical examinations performed by comparable osteopathic hospitals shall, within the limitations of the facilities, equipment, supplies and services furnished by the hospital (as to which see ¶ 2) be performed by Trepel or his staff physicians at the hospital in his capacity as an independent contractor."
Finally, the departments were to be governed by additional standards:
"12. Standards. The department shall be governed by the rules and regulations of the hospital, the American Osteopathic Association, the American College of Radiology, the hospital staff, the hospital administration, and the board of directors of the hospital."
To implement the 1975 contract, Trepel entered into separate but substantially identical agreements
Trepel was awarded the 1975 contract in spite of competition from defendant David A. Kellam. Kellam was also an osteopathic physician and a board-certified radiologist. He had been employed by Trepel from 1962 to 1966 to practice osteopathic medicine and radiology at defendant hospital. Kellam continued to negotiate with defendant hospital to provide services to the radiology and nuclear medicine departments. Rasp and Green agreed to stay on at the hospital with him should Kellam receive a contract. Kellam's efforts became successful when, in August, 1979, defendant hospital notified Trepel that his contract would not be renewed after its termination on December 31, 1979.
Because of defendant hospital's rejection, Trepel allegedly followed through on threats he had made earlier and sent letters to various Michigan agencies, including the Municipal Finance Commission (MFC). The letters alleged that there were various defects in certificates of need filed by defendant hospital. The intent behind these letters was to interfere with defendant hospital's application for
On December 26, 1979, Trepel filed a three-count complaint (Case No. 79-198827-CZ), seeking equitable relief and monetary damages for breach of hospital rules and regulations, breach of contract and interference with prospective business interests. Defendants' motion for partial summary judgment as to Counts I and II was granted by order of March 25, 1980, but Trepel was granted leave to amend. On April 30, 1980, Trepel filed an amended complaint. Count I alleged breach of contract by all named defendants except Kellam. Count II alleged interference with contract and prospective advantage by all named defendants. On July 30, 1980, the action was dismissed as to Kellam for failure to serve him with process pursuant to GCR 1963, 102.5. On October 31, 1980, Trepel filled the gap with a complaint (Case No. 80-213833-NM) against Kellam only, alleging interference with contract and prospective advantage. The two cases were consolidated by order of March 13, 1981. The dismissal of Kellam in No. 79-198827-CZ was set aside on November 5, 1981.
On February 13, 1981, defendants (except Kellam) in Case No. 79-198827-CZ counterclaimed against Trepel and joined Berrien C. Eaton and John Morris, Trepel's attorneys in the contract negotiations, as counterdefendants. Defendants twice amended their counterclaim. The first of four counts was for interference with defendant hospital's business relations and prospective advantage based on Trepel's alleged interference with the approval of the pending bond issue before the MFC.
Following a hearing on February 8, 1982, the trial court on March 17, 1982, entered an order granting partial summary judgment pursuant to GCR 1963, 117.2(1). Count I of Trepel's amended complaint in Case No. 79-198827-CZ was dismissed to the extent the purported breaches did not violate the standards of the American Osteopathic College of Radiology. Count II of the amended complaint was dismissed with prejudice for failure to allege improper conduct. Counts I, III and IV of the second amended counterclaim were dismissed with prejudice.
Trepel appeals as of right the dismissal of the amended complaint in Case No. 79-198827-CZ and the complaint against Kellam in Case No. 80-213833-NM. MTL appeals as of right the dismissal of Counts II and III of its amended complaint in Case No. 80-199333-CK. Defendants have not cross appealed from the denial of their motion to dismiss Count I. Defendant hospital cross appeals as of right the dismissal of Count I of the second amended counterclaim in Case No. 79-198827-CZ.
Did the trial court err in dismissing with prejudice Count I of the amended complaint in Case No. 79-198827-CZ alleging breach of contract, for failure to state a claim upon which relief can be granted?
We believe the court did err in this regard. Defendants filed their motion for summary judgment pursuant to GCR 1963, 117.2(1) for failure to
"Defendants' motion is denied to the extent that the purported breaches set forth in the amended complaint violate `the standards of the American Osteopathic College of Radiology.' The motion is granted to the extent the purported breaches alleged in the amended complaint do not violate such standards."
Defendants were permitted to renew their motion in order to show that the AOCR standards were not violated. Defendants did so and their motion was granted with the express determination that it should be appealable as a final order.
Plaintiff does not argue that the trial court erroneously determined that the breaches were not in violation of the AOCR standards. Plaintiff claims there are additional standards which the court ignored, namely, "currently approved methods and practices" as excerpted from ¶ 2 of the contract. The court found that designation "very ambiguous". The court held that the complaint stated a claim inasmuch as it alleged a breach of the agreement and, zeroing in on ¶ 2 the court noted an objective standard — the AOCR standards — and a subjective standard: "reasonably necessary in accordance with currently approved methods and practicies". The court held that plaintiff had stated a legally sufficient claim as to the AOCR standards, but not as to the "reasonably necessary" standard.
Furthermore, in one area the trial court found the "currently approved methods" standard ambiguous, and in the next colloquy it lumped the standard in with the "reasonably necessary" language. We find that the court was in actuality interpreting provisions of the contract which is
Plaintiff's argument — that the trial court's reliance on the merger clause of the agreement to reject any implied duties effectively relieved defendants of the duty of good-faith performance — adds nothing to the analysis. The question of good faith arises where defendants have discretion to determine what is reasonably necessary under ¶ 2 of the agreement. See Attorney General v Michigan National Bank, 110 Mich.App. 106, 124-125; 312 N.W.2d 405 (1981), rev'd on other grounds, 414 Mich. 948; 325 N.W.2d 777 (1982). Because the trial court erred in ignoring the "reasonably necessary" language, it did not reach the question of good faith.
Did the trial court err in dismissing with prejudice plaintiffs' claims for tortious interference with contract and prospective advantage contained in all three lawsuits?
Plaintiffs have alleged two separate tort actions in the various counts
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"`The basic elements which establish a prima facie tortious interference with a business relationship are the existence of a valid business relation (not necessarily evidenced by an enforceable contract) or expectancy; knowledge of the relationship or expectancy on the part of the interferer; an intentional interference inducing or causing a breach or termination of the relationship or expectancy; and resultant damage to the party whose relationship or expectancy has been disrupted.'" Quoting 45 Am Jur 2d, Interference, § 50, p 322.
In Weitting v McFeeters, 104 Mich.App. 188, 197; 304 N.W.2d 525 (1981), a panel of this Court, relying on 4 Restatement Torts, 2d, § 766B, stated that the interference with a business relationship must be improper in addition to being intentional. Improper means "illegal, unethical, or fraudulent". 104 Mich.App. 198. See also Northern Plumbing, supra, pp 99-101 (DANHOF, C.J., dissenting), Meyering v Russell, 53 Mich.App. 695, 709-713; 220 N.W.2d 121 (1974), reversed 393 Mich. 770; 224 N.W.2d 280 (1974), adopting the dissenting opinion of O'HARA, J.
While the term "improper" would apply also to interference with an existing contract, it is not apparent that the same definition should apply. Chief Judge DANHOF, dissenting in Northern Plumbing, supra, p 100, stated:
The trial court, however, interpreted the requirement that interference with a contract be without justification to be identical to the requirement of "improper" conduct interfering with prospective advantage. The trial court held that plaintiffs had failed to plead "improper" conduct by any of the defendants in any of the various counts.
A. Count II in lower court #S 79-198827-CZ and 80-213833-NM.
Trepel has alleged that defendants made efforts to eliminate him from defendant hospital, terminate his agreement, and replace him with Kellam. Trepel characterized this as unlawful and intentional interference. Trepel also alleged that defendant hospital refused "to renegotiate [his] contract in good faith" and refused "to deal". It is apparent that these allegations do not plead "illegal, unethical or fraudulent conduct". Trepel concedes as much by focusing his appeal on the "potentially meritorious" grounds raised in the July 12, 1982, hearing which he argues justify a grant of leave to amend. Those "grounds" allege interference with Trepel's contracts with Rasp and Green. Trepel's theory is that, since Rasp and Green were the only available radiologists to staff the department at defendant hospital and since they had contracts with him, he had a valid business expectancy in remaining at defendant hospital. Trepel claims that defendant hospital could not replace him due to the shortage of radiologists and that defendants' inducement of Rasp and Green to breach their contracts and remain at defendant hospital under Kellam's supervision satisfied the "improper" conduct
Trepel's argument posits some expansion on the authorities cited in his brief. Defendants' interference with Rasp's and Green's contracts, while perhaps subjecting them to liability for that interference, should not make defendants liable on their own contracts with Trepel. While the breach of Rasp's and Green's contracts may be a condition of defendants' alleged breach, it is not causally related. Furthermore, under Weitting, Trepel must show illegal, unethical, or fraudulent conduct in addition to intentional interference. Trepel's proposed amendment does not allege more than mere knowing and intentional interference. We endorse the Weitting panel's interpretation and find it futile to give Trepel further opportunity to amend his complaint; the trial court's grant of defendants' motion for summary judgment is affirmed. Meyer v Hubbell, 117 Mich.App. 699, 705-706; 324 N.W.2d 139 (1982), lv den 417 Mich. 993 (1983).
B. Counts II and III of No. 80-199333-CK.
In these abbreviated counts MTL has made the conclusory allegation of unlawful and intentional interference. In its brief, MTL argues that Rasp and Green tortiously interfered with MTL's prospective advantage in obtaining further continuity at defendant hospital by violating their covenants not to compete and by agreeing to work for Kellam while Trepel was still involved in negotiations with defendant hospital. Kellam allegedly interfered by inducing Rasp's and Green's violations of their covenants not to compete.
MTL insists that intentional inducement to breach a contract is all that is required to show unlawful interference, citing the Restatement and
With regard to defendant hospital's counterclaims did the trial court err in granting summary judgment on the claim for tortious interference with prospective advantage on the ground that Count I of the counterclaim failed to allege an issue as to any material fact which could establish the existence of a valid business expectancy?
Count I of defendant hospital's second amended counterclaim alleges tortious interference with prospective advantage. Unlike plaintiffs' claims, the counterclaim clearly alleges unethical conduct — sending letters knowing them to contain false allegations. However, the trial court held that defendant hospital did not adequately plead another element — the existence of a valid business expectancy. The expectancy must be a reasonable likelihood or probability, not mere wishful thinking. Schipani v Ford Motor Co, 102 Mich.App. 606, 622; 302 N.W.2d 307 (1981), Behrend v Bell Telephone Co, 242 Pa.Super. 47, 62; 363 A.2d 1152 (1976), vacated, 473 Pa. 320; 374 A.2d 536 (1977). Defendant hospital alleged that, having obtained approval from the Michigan State Hospital Finance Authority on August 23, 1979, it expected approval by the MFC on or about September 11, 1979. Consideration by the MFC was impeded and
The proposed bond issue by the Michigan State Hospital Finance Authority was governed by the Hospital Finance Authority Act, MCL 331.31 et seq.; MSA 14.1220(1) et seq. The authority has the power to make loans to hospitals for the purpose of refinancing outstanding debts if it determines that the refinancing is necessary to realize the objectives and purposes of the act. MCL 331.42; MSA 14.1220(12). The determination is conclusive except with respect to the approval of the MFC. Id. In this context, the MFC does not exercise its powers and discretion under the Municipal Finance Act, MCL 131.1 et seq.; MSA 5.3118(1) et seq. Rather, the MFC is specifically limited by MCL 331.76; MSA 14.1220(46), which states in part:
"Before approving the issuance of the bonds or notes the municipal finance commission shall determine that the amount of the proposed issue is sufficient but not excessive, that the revenue and properties pledged for the payment thereof are sufficient and that the bonds or notes and the proceedings authorizing the same comply with this act and other applicable law."
We find that the discretion of the MFC is not so broad as to deprive defendant hospital of a reasonable expectation that the bond issue would be approved. No Michigan cases have been found relating to interference with discretionary governmental action. The cases cited by the parties are not directly on point but are helpful.
Pedersen v United States, 191 F.Supp. 95 (D Guam, 1961), also involved an ultimately unsuccessful bidder but in the context, as here, of a motion to dismiss for failure to state a claim. Plaintiff alleged that he had submitted the high bid for the purchase of certain obsolete ammunitions. A lower bidder, in concert with certain United States Air Force officers, maliciously submitted
Somewhat different from the above two cases in Carr v Brown, 395 A.2d 79 (DC App, 1978). Plaintiff had applied to the City Council Transportation Committee for permission to close and relocate a portion of an alley. The committee was to make a decision only after hearing interested parties. Opposition to any such application was invited so that an informed and prudent decision, after consideration of all viewpoints, could be rendered. The court held that plaintiff's expectancy of approval within a specified time period was simply too remote. Also, to attempt to determine the reason for the delay would lead to futile speculation. The court emphasized that it was not dealing with a case involving alleged interference with business due to malicious official refusal to issue necessary permits nor with a claim by the plaintiff that he had an expectancy of doing business with a governmental body which expectancy was unjustifiably interfered with by the defendant. Id., p 84.
In the instant case, the discretion to be exercised by the MFC appears to be somewhat greater than that attributed to the governmental bodies in Lewis and Pedersen, supra, but significantly less than that in Carr. We perceive that Carr is a gloss on the general rule. It applies to situations where too many factors are in play to be able to reasonably infer that, but for defendant's allegedly wrongful action, plaintiff likely would have obtained the desired advantage. In this case, the MFC's grant of approval must be preceded by the
However, where the MFC approval is only delayed, as alleged here, the problem becomes more difficult. The MFC is required to make findings of fact before granting approval. Obviously, that task takes a certain amount of time to accomplish. However, the procedure involved is not a notice and comment type hearing, as in Carr, designed to let interested parties express their opposition. Defendant hospital should have the opportunity to prove its allegation that approval was "scheduled" for September 11, 1979.
In Lewis, supra, pp 20-21, and Carr, supra, p 84, reference is made to the prior history of the governmental entity in granting approval. Defendant hospital has sought to introduce evidence by way of affidavit of the MFC's perfect record in approving bond issues already approved by the Michigan State Hospital Finance Authority. We believe such evidence if otherwise admissible could persuade a trier of fact at a contested trial.
Counterdefendants argue an alternative theory for dismissing the second amended counterclaim, which the trial court did not reach, namely that
Counterdefendants Eaton's and Morris's argument that they are privileged as attorneys working on behalf of their client is unpersuasive. It is true that attorneys owe no duty of care to parties opposing their client and may not therefore be sued in negligence by the opposing party for attorney representation of a client. Friedman v Dozorc, 412 Mich. 1; 312 N.W.2d 585 (1981). However the same rationale does not apply in non-negligence actions, where elements other than duty of care are required. In Sovereign v Hart, 363 Mich. 32, 36; 108 N.W.2d 758 (1961), for example, the Supreme Court held that while an attorney does not become liable to an opposing party for deceit merely by filing a complaint containing untrue allegations, a
In this case, defendant hospital alleges that Eaton and Morris had personal knowledge of the hospital's business expectancy and that they personally and intentionally interfered with that expectancy with illegal, unethical, or fraudulent intent. We find that the trial court erred in dismissing the hospital's counterclaim against these counterdefendants.
We affirm in part and reverse in part.
The trial court's grant of defendants' motion for summary judgment as to Count I of the amended complaint in the first action is reversed.
We affirm the dismissal of plaintiff's claims for interference with contract and with prospective advantage in all three lawsuits. We affirm the trial court's denial of leave to amend as plaintiffs failed to allege illegal, unethical, or fraudulent conduct.
We reverse the dismissal of defendant hospital's counterclaim against Trepel and his attorneys and order the same reinstated.
No costs, no party having fully prevailed.