Florida Cardiology, P.A. v. Al-Suleiman (In re Al-Suleiman)
Florida Cardiology, P.A. v. Al-Suleiman (In re Al-Suleiman)
Opinion of the Court
MEMORANDUM OPINION GRANTING DEFENDANT’S MOTION FOR FINAL SUMMARY JUDGMENT AND DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Both parties move for summary judgment in this adversary proceeding asserting that a judgment for attorney fees is not dischargeable. Defendant’s Motion for Final Summary Judgment
Plaintiff, a cardiology group, employed defendant pursuant to a written employment agreement. The agreement contained a covenant restricting defendant from competing against plaintiff by practicing cardiology within a fifty-mile radius of plaintiffs offices for a period of two years after his employment with plaintiff ended.
In March 2008, defendant left plaintiffs employ under circumstances that are disputed but irrelevant. Shortly thereafter, defendant established his own medical practice within the restricted geographic area and treated cardiology patients, including some patients who had been patients of plaintiffs practice.
In May 2008, plaintiff sued defendant in Florida state court (“the State Court Action”).
The state court conducted an evidentiary hearing on plaintiffs request for a temporary injunction against defendant. In the
(i) Defendant opened a cardiology practice “within 3 to 5 miles of Florida Cardiology’s office;”
(ii) Defendant did not dispute “that he was competing in business with Florida Cardiology;”
(iii) “When he left [plaintiffs employ], Dr. Al-Suleiman requested the patient list from Florida Cardiology, but his request was denied. He sought and obtained a list of patient names and addresses from South Lake Hospital. Dr. Al-Suleiman had his office assistant contact his former Florida Cardiology patients to advise them that he left the practice. For those they could not contact by telephone, he sent a letter;”
(iv) Defendant violated the restrictive covenant in his employment agreement;
(v) The restrictive covenant was reasonably necessary to protect Florida Cardiology’s legitimate business interests;
(vi) Defendant did not rebut the presumption his violation of the restrictive covenant caused irreparable injury to Florida Cardiology;
(vii) Defendant did not present any legitimate defenses to enforcement of the restrictive covenant; and
(viii) The geographic restriction in the employment agreement (fifty miles from any of plaintiffs offices) was overbroad.5
The state court then entered a temporary injunction barring defendant from practicing cardiology within a twenty-five mile radius of plaintiffs offices for two years.
In March 2010, the parties finally settled the State Court Action, and the state court entered a consensual Stipulated Final Judgment and Permanent Injunction.
Plaintiff made a Motion for Attorneys’ Fees and Costs in the State Court Action. Defendant did not dispute plaintiffs entitlement to a fee award,
In this adversary proceeding, plaintiff seeks a determination that the Fee Judgment is nondisehargeable pursuant to 11 U.S.C. §§ 523(a)(4) and (6) of the Bankruptcy Code.
Defendant moves for summary judgment on both counts of the complaint, arguing the undisputed facts demonstrate the judgment debt is not “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny,” as required by § 523(a)(4), nor is it “for willful and malicious injury by the debtor to another entity or to the property of another entity,” as required by § 523(a)(6). Instead, defendant contends the debt is for attorneys’ fees and costs incurred by plaintiff in pursuing its contract claims against plaintiff in the State Court Action.
Plaintiff opposes defendant’s motion. Plaintiff also seeks a cross-motion for summary judgment on both counts of the complaint, asserting the state court’s findings establish defendant committed larceny and willfully and maliciously harmed plaintiffs business and, therefore, the debt is nondis-chargeable pursuant to §§ 523(a)(4) and (a)(6).
Under Federal Rule of Civil Procedure 56, made applicable by Federal Rule of Bankruptcy Procedure 7056, a court may grant summary judgment where “there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.”
Section 523(a) enumerates debts an individual Chapter 7 debtor cannot discharge. Subsection (4) lists debts “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”
Plaintiff also relies on § 523(a)(6), which states debts “for willful and malicious injury by the debtor to another entity or to the property of another entity” are not dischargeable.
The record does not support plaintiffs arguments that the state court’s findings establish defendant’s larceny and willful and malicious injury to plaintiffs business. The state court’s orders and judgment establish that defendant breached the restrictive covenant in his employment agreement and owes plaintiff $227,284.69 for attorneys’ fees and costs plaintiff incurred in obtaining the Stipulated Final Judgment and Permanent Injunction. They do not contain factual findings sufficient to establish defendant committed larceny or any tort against plaintiff.
Even if plaintiff could prove defendant committed larceny or an intentional tort, defendant still is entitled to summary judgment. Plaintiffs complaint is fatally flawed because the statutes under which plaintiff seeks a nondischargeability determination simply do not apply to the debt plaintiff identifies. The $227,284.69 state court judgment is not “for” larceny (debts described in subsection (a)(4)) or “for” willful and malicious injury to plaintiff or plaintiffs property (debts described in subsection (a)(6)).
The only debt defendant owes plaintiff is “for” attorneys’ fees and costs plaintiff incurred in enforcing its contractual rights against defendant in the State Court Action. Each of the four counts of the state court complaint allege defendant’s breach of the restrictive covenant and seek a remedy for such breach. The consent judgment merely requires the defendant to observe the covenant not to compete for a narrower geographic area. Plaintiff has “abandoned all claims for damages other than attorneys’ fees” in the consent judgment. The order on Plaintiffs Motion for Attorneys’ Fees and Costs moreover awards fees and costs “both for trial and appellate work” of plaintiffs attorney in the State Court Action, which again as
The distinction between debts “for” breach of contract and debts “for” larceny and intentional torts is critical. Plaintiff acknowledges the general rule that most debts for breach of contract damages are dischargeable in bankruptcy but cites to In re Dowdell,
Unlike Dowdell, in this ease, there is no ambiguity in the Fee Judgment. The entire judgment is for attorneys’ fees and costs plaintiff incurred pursuing its breach of contract lawsuit. Plaintiff specifically abandoned all claims for any other damages.
Plaintiff is correct that a debt for attorneys’ fees and costs is not necessarily dischargeable. Some attorneys’ fees awards may be nondischargeable pursuant to § 523.
Defendant’s motion for final summary judgment is granted. Plaintiffs cross-motion for summary judgment is denied. A separate final judgment consistent with this ruling shall be entered.
DONE AND ORDERED.
. Doc. No. 12.
. Doc. No. 19.
. Doc. No. 1, Exhibit A at 7-9.
. Doc. No. 12, Exhibit B.
. Doc. No. 12, Exhibit E.
. Id.
. Al-Suleiman v. Florida Cardiology, P.A., 18 So.3d 543 (Fla. 5th DCA 2009).
. Doc. No. 12, Exhibit F.
. Id.
. The employment agreement contains an attorneys’ fees provision: "In the event of a dispute arising under this Agreement, the prevailing party will recover from the non-prevailing party, in addition to remedies provided under law, all court costs and reasonable attorneys' fees (including charges attributable to law clerks and paralegals) incurred in the enforcement of its/his rights hereunder[.]” (Doc. No. 1, Exhibit A, at 10.)
.Doc. No. 12, Exhibit G.
. All references to the Bankruptcy Code are to Chapter 11 of the United States Code.
. Doc. No. 1.
. Fed.R.Civ.P. 56.
. Fitzpatrick v. Schiltz (In re Schiltz), 97 B.R. 671, 672 (Bankr.N.D.Ga. 1986).
. Evers v. General Motors Corp. 770 F.2d 984, 986 (11th Cir. 1985).
. Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 1776, 167 L.Ed.2d 686 (2007).
. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).
. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
. 11 U.S.C. § 523(a)(4).
. 11 U.S.C. § 523(a)(6).
. In re Nofziger, 361 B.R. 236, 243 (Bankr.M.D.Fla. 2006) ("The established law is clear that a debtor must commit some type of intentional tort directed against the claimant or his property in order for a court to find that the resulting damages are nondischargeable.”) (emphasis added); see also In re Vermilio, 457 B.R. 854, 861-62 (Bankr.M.D.Fla. 2011) (plaintiff title insurer’s payment on claim resulting from debtor’s fraud constituted damages resulting from willful and malicious injury to plaintiff).
. In re Huggins, 252 B.R. 567, 569 (Bankr.M.D.Fla. 2000).
.Plaintiff repeatedly asserts the state court held defendant improperly obtained plaintiff’s confidential patient list. It did not. The state court’s factual findings regarding the patient list are:
Florida Cardiology maintains a patient list. The patient list is confidential and constitutes a valuable asset of the practice. When he left, Dr. Al-Suleiman requested the patient list for Florida Cardiology, but his request was denied. He sought and obtained a list of patient names and addresses from South Lake Hospital.
(Doc. No. 12, Exhibit E, ¶ M.) These findings do not establish defendant committed larceny or an intentional tort against plaintiff. Indeed, they do not establish defendant's actions were wrongful under any legal standard.
. 406 B.R. 106 (Bankr.M.D.Fla. 2009).
. Doc. No. 19 at 17.
. Dowdell, 406 B.R. at 114-15 ("The amount ultimately found to be attributable to the breach of contract ... shall be discharged.”)
. See e.g. Mills v. Ellerbee (In re Ellerbee), 177 B.R. 731 (Bankr.N.D.Ga. 1995) (entire state court judgment, including attorneys’ fees, was nondischargeable debt for willful and malicious injury).
. Id. at 747.
Reference
- Full Case Name
- In re Osama F. AL-SULEIMAN, Debtor. Florida Cardiology, P.A. v. Osama F. Al-Suleiman
- Status
- Published