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Masterson-Carr v. Anesthesia Services, P.A.

Superior Court of Delaware, New Castle

September 25, 2014


Submitted: June 18, 2014.

Michele D. Allen, Esq., Law Offices of Michele D. Allen, LLC, Attorney for Plaintiff.

Laurence V. Cronin, Esq., Smith, Katzenstein & Jenkins LLP, Attorney for Defendant.


M. JANE BRADY, Superior Court Judge.

I. Introduction

Eileen Masterson-Carr ("Plaintiff") filed the instant case against Anesthesia Services P.A. ("ASPA"), Mark Schneider M.D. ("Schneider"), and Ken Silverstein M.D. ("Silverstein") (collectively "Defendants") on November 13, 2012, alleging the following claims: (1) ASPA breached her Employment Contract; (2) ASPA breached the implied covenant of good faith and fair dealing; (3) Plaintiff was defamed by members of ASPA, including Silverstein and Schneider; (4) ASPA violated the Delaware Wage Payment and Collection Act by failing to pay Plaintiff her 6.5% bonus for time worked in 2012; (5) Silverstein and Schneider tortuously interfered with Plaintiff's Employment Contract; and (6) ASPA acted in a way justifying promissory estoppel. On March 21, 2013, upon Defendant's motion, the Court dismissed Plaintiff's promissory estoppel claim. Subsequently, on March 18, 2014, Plaintiff stipulated to the dismissal of her claim for breach of the implied covenant of good faith and fair dealing. Plaintiff also agreed to withdraw her request for punitive damages.

The parties elected to have a bench trial.[1] Trial began on April 3, 2014 and ended on April 7, 2014. Following closing arguments, the Court ruled that Plaintiff was entitled to her 6.5% bonus for time worked in 2012 but reserved decision regarding the specific amount to which Plaintiff is entitled. The trial transcript was produced on May 20, 2014.[2] Post-trial submissions were received and the matter was submitted to the Court for decision on June 18, 2014.

As explained at the conclusion of trial, the Court will now issue a ruling on the issues of whether Plaintiff was terminated or resigned and Plaintiff's entitlement to her 6.5% bonus.[3]The Court finds that Plaintiff was not terminated. As a result, Plaintiff's claim for Breach of Contract based on ASPA's alleged failure to follow proper termination protocol is MOOT.

At trial, Plaintiff suggested that even if the Court were to find that Plaintiff technically resigned, Plaintiff could still be found to have been "constructive[ly] discharged."[4] The Court reserved judgment on the constructive discharge issue until after the Court's finding of fact on the issue of whether Plaintiff was discharged or resigned.[5] As the Court now finds that Plaintiff resigned, the Court will allow the parties additional briefing on the issue of constructive termination. Because the Court finds that the issue of Plaintiff's alleged constructive termination is intertwined with the remaining claims for tortious interference and defamation, the Court will also reserve decision on those issues until the parties have submitted additional briefing.

II. Background

A. Parties

ASPA is a professional services corporation, organized under the laws of Delaware, that is involved in the practice of medicine.[6] ASPA is comprised of approximately thirty-one physicians, some of whom are shareholders, as well as other medical personnel, including nurses. The company's Board of Directors ("Board") is composed of shareholder-members of ASPA.[7] ASPA's governance structure initially included a Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), and Chief Clinical Officer ("CCO").[8] However, in approximately 2011, ASPA modified its governance structure, changing the executive positions.[9] The CEO became the Chairman of the Board ("Chairman"), the CCO remained, the CFO became the Treasurer, and ASPA created a new position, the Chief People Officer ("CPO").[10] Like under the former structure, all executive members were elected by the Board. [11]

ASPA's corporate structure also includes an Executive Committee.[12] The Executive Committee has the responsibility, on behalf of the Board, "for managing the business and affairs of [ASPA] between meetings of the Board in order to provide an efficient, expeditiously assembled forum to investigate, discuss, analyze, oversee and make decisions regarding day-to-day operations of the Corporation."[13] Additionally, a critical part of the Executive Committee's function is to "make recommendations to the Board with respect to corporate policies and practices and on all matters requiring Board action."[14] At all times relevant to the instant matter, the Executive Committee was comprised of the Chairman, CCO, CPO, Treasurer, two at-large members, who were elected by the Board, and the Executive Director, who, as discussed below, was responsible for overseeing ASPA's administration.[15]

Dr. Schneider joined ASPA in 1988 and has served as a Board member since 1989.[16]Schneider became CEO (later titled Chairman) in 2010 and was integral to managing ASPA.[17] Dr. Silverstein currently serves as ASPA's CCO and, like Schneider, is a shareholder-Board member.[18] Because he is the CCO, Silverstein also sits on the Executive Committee.

In 2008, Plaintiff, who was then employed with Blue Cross Blue Shield, was contacted by ASPA because ASPA was seeking to hire a new Executive Director.[19] Plaintiff was interviewed by ASPA and ultimately selected to be the Executive Director.[20] As the Executive Director, Plaintiff was responsible for overseeing the corporation's business operation.[21] Under her employment contract, Plaintiff's primary duties included "overseeing billing and collection by [ASPA's] third party billing company, assisting with billing compliance issues, negotiating managed care contracts, monitoring the performance of vendors providing services to [ASPA], overseeing [ASPA's] malpractice and other insurance carriers, and addressing health and benefit plan administration."[22]

B. Plaintiff's Employment Contract with ASPA

Because Plaintiff was leaving a position at Blue Cross that she enjoyed and also was considering competing offers, she negotiated certain aspects of her Employment Contract with ASPA.[23] Specifically, Plaintiff testified that she negotiated provisions of her Employment Contract concerning (1) base salary, (2) annual increases to base salary, (3) bonuses, (4) pension contributions, and (5) paid time off ("PTO"), which could be used for vacation or for sick days.[24] Plaintiff executed an Employment Contract with ASPA effective September 29, 2008.[25] Certain provisions of Plaintiff's Employment Contract are central to the instant case, including provisions relating to Plaintiff's entitlement to a bonus, the parties' ability to terminate the Agreement, and Plaintiff's entitlement to severance.

i. Bonus

Section 4(c) of Plaintiff's Employment Contract states that Plaintiff "shall be eligible for a bonus in an amount equal to six and one-half percent (6 1/2%) of total Compensation . . . paid to Senior Board Member Anesthesiologists employed by [ASPA] on a full time basis."[26]Section 4(c) provides that the "[b]onus shall be prorated for any partial calendar year at the termination of this Agreement upon Compensation paid for such calendar year, unless such termination is for cause by [ASPA]."[27]

On September 28, 2011, Schneider, in his capacity as ASPA's Chief Executive Officer, agreed to give Plaintiff a "[b]onus increase from 6.5% to 8% with the additional 1.5% [being] tied to [Plaintiff's] 2011 Goals."[28] The parties agree that the additional 1.5% was intended to be discretionary.[29] The dispute is over whether the original 6.5% was discretionary or not. According to testimony by Schneider, Plaintiff received her 6.5% bonus in 2009 and 2010, as well as her bonus in 2011, which presumably included both the 6.5% and the additional 1.5%.[30] All parties questioned testified that no goals, whether in 2011 or otherwise, were ever created pursuant to which Plaintiff's performance was evaluated for either bonus.

ii. Termination

Terms relating to termination of Plaintiff's Employment Contract are within Section 3 of the contract. Section 3(d) permits either party to terminate the Employment Contract "without stated cause by giving the other party at least ninety (90) days' advance written notice of intent to terminate."[31] Additionally, pursuant to subsection (b) of Section 3, either party is permitted to terminate the Employment Contract "for cause."[32] The Agreement defines "for cause" as including, inter alia, "(i) Breach by a party of any material term of th[e] Employment Agreement . . .; [and] (ii) [Plaintiff's] failure to adhere to any of [ASPA's] policies or written directive or instruction . . ."[33]

iii. Severance

Pursuant to Section 11(a) of her Employment Contract, Plaintiff "shall also be eligible to receive severance compensation" in the event of termination of the Employment Contract "(i) by [ASPA] without cause . . .; or (ii) by [Plaintiff] with cause (but only if [Plaintiff] has properly fulfilled all other contractual obligations)."[34]

Section 11(b) explains that, after the first year of Plaintiff's employment with ASPA, "a sum equal to ninety (90) days salary shall be payable to [Plaintiff] as severance."[35] All parties agree that, pursuant to Section 11, Plaintiff would not be entitled to severance if she (i) was ...

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