Submitted: September 16, 2019
Plaintiff/Counterclaim Defendant Jose Saez's Motion to
Defendant/Counterclaim Plaintiffs Motion for Partial Judgment
on the Pleadings as to Counts I and II of the Counterclaim.
C. Herr, Esquire, Law Office of Daniel C. Herr, Wilmington,
Delaware, Attorney for Plaintiff Jose Saez.
D. Albert, Esquire, O'Hagan Meyer PLLC, Wilmington,
Delaware, Attorney for Defendant Nephrology Associates, P.A..
Richard R. Cooch, R.J.
this Court is the Motion to Dismiss of Plaintiff/Counterclaim
Defendant Jose Saez ("Dr. Saez") as well as the
Motion for Partial Judgment on the Pleadings as to Count I
and Count II of the Counterclaim of Defendant/Counterclaim
Plaintiff Nephrology Associations, P.A. ("NAPA").
These motions arise from Dr. Saez's separation from
NAPA's medical practice and Dr. Saez's subsequent
filing in this Court for declaratory judgment against NAPA.
Saez contends that, by NAPA placing him on so-called
"Garden Leave, ""[NAPA] has materially breached the
[Employment] Agreement and, as a result, [Dr. Saez] is
therefore excused from owing the non-competition liquidated
damages contemplated in the Agreement."
asserts that, pursuant to the Employment Agreement signed by
Dr. Saez, "the board of NAPA has 'complete
discretion to direct, control, and supervise the duties to be
performed by [NAPA] for the Corporation' and that
[NAPA's] exercise of that discretion to relieve [Dr.
Saez] of patient care responsibilities during the terminal
months of his contractual employment is entirely within
[NAPA's] rights under the Employment Agreement[, ]"
after Dr. Saez informed NAPA in August 2018 that in six
months he would be leaving NAPA.
issue before this Court is whether the placement of Dr. Saez
on so-called "Garden Leave" constitutes a material
breach of the Employment Agreement, thus relieving Dr. Saez
of non-competition liquidation damages.
Court now finds for NAPA and agrees with NAPA that "the
plain words of the agreement make clear that [Dr. Saez]
agreed that the practice group had sole and complete
discretion to [...] direct, control and supervise the
services [Dr. Saez] was to perform." In this
Court's view, this includes the elimination of patient
care responsibilities, although he was paid, during the
terminal months of Dr. Saez's employment.
THE "JOINT STIPULATION OF THE
plaintiff, Dr. Saez, a newly-trained nephrologist, entered
into a written employment agreement (the "Employment
Agreement" or "Agmt.") dated July 1, 2003,
with defendant NAPA, Delaware's largest specialty
nephrology practice. Cmplt. ¶ 4 (pleading Agreement)
& Ex. A (executed Agreement); NAPA Ans. ¶ 4
(admitting Agreement); NAPA Countercl. ¶ 6 (pleading
Agreement); Saez Mot. to Dismiss ¶ 2 (pleading entry
into Agreement) (the lattermost pleading is hereinafter cited
as "Saez MTD").
Employment Agreement is a fully integrated agreement,
constituting, by its own terms, "the entire agreement
between the parties" and "superseding] any prior
employment or other agreement between the parties,"
Agmt. at 1 (recitals) and § 14. The Employment Agreement
may be amended only by a "subsequent written amendment
signed by both parties," id. § 14.
Pursuant to the Employment Agreement, Dr. Saez agreed to be
employed by NAPA "to practice medicine" and
"to perform certain other duties as may be determined
from time to time by [NAPA]," id. at 1 (recitals). Dr.
Saez, by executing the Employment Agreement, accepted
employment "on the terms and conditions set forth"
in the Agreement, id. at 1 (recitals). Prior to the events of
October, 2018, that are a subject of this action, Dr. Saez
generally saw patients on a daily basis.
Pursuant to the Employment Agreement, "the Board [of
NAPA] shall have complete discretion to direct, control and
supervise the duties performed by [Dr. Saez] for
[NAPA]," subject only to the limitation that NAPA's
Board "shall not require [Dr. Saez] to infringe upon the
ethics of the profession of medicine or violate any law or
regulation," id. § 3.
Agreement contains, in § 9(a), a noncompetition
provision (the "Noncompetition Covenant") by and
through which Dr. Saez agreed that he "will refrain from
the practice of nephrology ... in any manner whatsoever,
including, but not limited to, as a sole practitioner,
partner, employee of another corporation, consultant or
medical director of any hemodialysis center without the
express written permission of the Board" of NAPA, for a
"period of one (1) year" following termination of
his employment with NAPA, within a specified geographic area
(the "Defined Noncompetition Area"). Agmt. §
9(a); NAPA Countercl. ¶¶ 27-28 (pleading Covenant);
Saez Ans. to Countercl. ¶¶ 27-28 (Covenant
"speaks for itself).
Pursuant to the terms of the Employment Agreement, after six
years of service, Dr. Saez was offered the opportunity to
become a shareholder of NAPA, and accepted that offer,
becoming a full shareholder. Countercl. ¶¶ 12-13;
Saez Ans. to Countercl. ¶¶ 12-13 (Agreement speaks
for itself, "believes" allegations are admitted).
Saez voluntarily resigned his employment by NAPA by means of
an E-mail communication sent to NAPA's leadership on or
about August 25, 2018, designating March 1, 2019 as his
"termination date." Cmplt. ¶ 6; NAPA Ans.
¶ 6; NAPA Countercl. ¶ 21; Saez MTD ¶ 5.
Section 8(a) of the Employment Agreement, addressing
voluntary termination of employment, provides that written
notice of voluntary termination of employment is to be given
"not less than one hundred eighty (180) days in advance
of the termination date;" Dr. Saez's March 1, 2019
Termination Date, falling 187 days after delivery of his
written notice, is consistent with this requirement. Agmt.
§ 8(a); Cmplt. ¶ 6; NAPA Ans. ¶ 6; Countercl.
¶ 21; Saez Ans. to Countercl. ¶ 21, second sent,
early October 2018, NAPA advised Dr. Saez that he was being
relieved of patient care responsibilities for the balance of
his six-month notice period and would not be assigned any
more patient encounters during that period, although he would
continue to be paid his full compensation. NAPA advised Dr.
Saez that he should henceforth avoid being present in patient
care areas of the practice. Dr. Saez abided by NAPA's
prohibition. As a result, during the final months of his
six-month notice period (early-October 2018 through March 1,
2019), Dr. Saez did not see patients.
Saez was paid his salary through his termination date of
March 1, 2019. Dr. Saez also remained a NAPA shareholder
through March 1, 2019.
Since the termination of his employment with NAPA on March 1.
2019, Dr. Saez has been practicing, and is currently
practicing, nephrology within southern Delaware, which is
part of the Defined Noncompetition Area. Agmt. ¶ 9(a)
(southern Delaware part of defined area); Saez MTD ¶ 8
("Saez opened his own nephrology practice in southern
Noncompetition Covenant provides that, if the noncompetition
obligation is not enforceable, Dr. Saez is obliged to pay
liquidated damages for each end-stage renal disease
("ESRD") patient of NAPA that becomes a patient of
any competing practice he operates during the noncompetition
period. Agmt. § 9(b)); Cmplt. ¶ 19 (acknowledging
Agmt. § 9(b) and NAPA assertion of its rights pursuant
to it); NAPA Ans. ¶ 19 (admitting it considers Dr. Saez
bound by Agmt § 9(b); Saez MTD ¶ 2 (acknowledging
liquidated damages provisions). The Agreement recites that
the Liquidated Damages Provisions are not a penalty but
rather are an estimate of damages that would arise from
competition, and recites the basis upon which the liquidated
damages have been computed. Id.
statute, 6 Del. Code § 2707,  renders the Noncompetition
Covenant unenforceable as a matter of law, inasmuch as the
Covenant would prevent Dr. Saez, a physician, from practicing
within a specified geographic area for a defined period of
time. Section 2707, however, expressly permits the
enforcement of liquidated damages provisions in lieu of
injunctive enforcement of a physician noncompetition
Saez contends that he is not obligated to pay liquidated
damages pursuant to Liquidated Damages Provisions, Cmplt.
¶¶ 20-29 (seeking declaration that he is not bound
by Liquidated Damages Provisions); Saez MTD ¶ 2 (seeking
dismissal of NAPA effort to obtain declaration that Dr. Saez
is bound by Liquidated Damages Provisions and dismissal of
breach of contract claim relating to same), and through his
Complaint and Motion to Dismiss requests the Court to enter a
declaratory judgment affirming his position.
Saez's rationale for seeking declaratory relief
invalidating the noncompetition provisions of the Agreement,
and for denying any obligation to pay liquidated damages for
competing with NAPA, is his allegation that NAPA first
breached the Agreement in October, 2018, by relieving him of
patient care responsibilities for the balance of his
six-month notice period ending March 1, 2019, determining not
to assign him any more patient encounters during that period,
and instructing ...