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Spencer Convenient Healthcare, L.L.C. v. McGregor

Court of Appeals of Iowa

January 10, 2018

SPENCER CONVENIENT HEALTHCARE, L.L.C., Plaintiff-Appellant,
v.
ANGELA McGREGOR, Defendant-Appellee.

         Appeal from the Iowa District Court for Dickinson County, David A. Lester, Judge.

         Spencer Convenient Healthcare, L.L.C. appeals a district court ruling denying its petition for an injunction and damages and awarding Angela McGregor damages on her counterclaim for breach of contract.

          Jill M. Davis of Montgomery, Barry, Bovee, Steffen & Davis, Spencer, for appellant.

          Matthew T. E. Early of Fitzgibbons Law Firm, L.L.C., Estherville, for appellee.

          Considered by Danilson, C.J., and Doyle and Mullins, JJ.

          MULLINS, JUDGE.

         Spencer Convenient Healthcare, L.L.C. (SCH) appeals a district court ruling denying its petition for an injunction and awarding Angela McGregor damages on her counterclaim for breach of contract. SCH contends the district court erred in (1) concluding it breached the employment contract in terminating McGregor's employment rather than finding McGregor breached the contract; (2) interpreting the student loan repayment provision of the employment contract; and (3) awarding damages that were not foreseeable. McGregor requests an award of appellate attorney fees.

         I. Background Facts and Proceedings

         Based upon the evidence we find credible, we make the following findings of fact. SCH is an urgent-care medical clinic located in Spencer, Iowa that is owned and operated by John and Carol Lewallen. Carol is an advanced registered nurse practitioner. John and Carol opened SCH in November 2012. The business was successful from the onset and drew patients from approximately a fifty-mile radius. As a result of this success, the Lewallens decided to open a second clinic. They leased and remodeled a building in Spirit Lake and hired another nurse practitioner to be the medical provider at that location. In July 2013, the Lewallens officially opened Lakes Convenient Healthcare (LCH) in Spirit Lake. Over the next year, the Lewallens hired other nurse practitioners to serve as medical providers in both locations, but the turnover for those positions was rather high.

         In the summer of 2014, the Lewallens advertised for an opening for a provider. McGregor initiated communications with the Lewallens, but after a few weeks, she accepted a position with a different employer in southeast Iowa. Shortly after that, the Lewallens reopened negotiations with McGregor. On November 17, 2014, the parties executed an employment contract memorializing the terms of McGregor's employment with SCH-the contract was prepared by the Lewallens without the assistance of legal counsel. The contract included a termination provision requiring both parties to provide ninety days written notice of any desire to terminate the employment relationship. The contract also included a non-compete clause which, upon termination, prohibited McGregor from working in another clinic within a sixty-mile radius of either SCH or LCH for two years. The contract also provided that SCH "agree[d] to take over the student loan repayment obligation that [McGregor] allegedly owe[d] to her [then] employer." McGregor officially began her employment with SCH in December. During her employment, she primarily worked at the LCH location.

         Beginning in 2014, the Lewallens directed at least one of the nurses they employed, Tara Mixon, on more than one occasion to use outdated medical supplies before using newer supplies. Mixon advised Carol that this practice caused her concern, but Carol responded the outdated supplies needed to be used because supplies are expensive. In January 2015, as a result of her concern for the continuing practice, Mixon filed a complaint with the Iowa Board of Nursing (Board). Also in January, Mixon approached McGregor, a fairly new employee at the time, and advised her of the informal outdated-supplies policy. Mixon showed McGregor some of the outdated supplies, upon which McGregor observed notations to "use these products first." McGregor advised Mixon they could not use the outdated supplies. Mixon agreed but noted she was getting in trouble for not using them. McGregor made several attempts to discuss this practice with the Lewallens, but she was largely ignored. McGregor confronted John about the practice at one point, but he simply replied, "It's my clinic. When you have your clinic, you can do what you want. And this stuff is expensive, you know."

         Because McGregor believed that some of her reference books had previously been stolen from her office at LCH, on February 9, she removed the remainder of her books from her office. However, she left personal effects and medical equipment in her office. On this date, McGregor also advised the office manager that she had some issues she needed to discuss with the Lewallens. The office manager relayed this message to John, but he did not want to talk to McGregor. Concerned, McGregor contacted the Board and CLIA[1] on February 12. Both bodies advised McGregor she should file an official report outlining her concerns. On February 13, McGregor filed a complaint with the Board alleging, among other things, lab supplies are expired and medications are outdated.[2] A complaint was also filed with CLIA.[3]

         February 14 was McGregor's scheduled day off, but she worked on February 15. On February 16, SCH and LCH staff met at a local grocery store to discuss health-insurance options. McGregor attended this meeting. After the meeting, McGregor returned to the clinic in Spencer and worked for an hour but then went home sick. McGregor called in sick on February 17 as well. That evening, McGregor reported she would be at work on February 18, but John directed her to take another day off if she was not at one-hundred percent. Prior to this, John had no problem with McGregor working while she was ill. The next two days, February 19 and 20, were McGregor's scheduled days off.

         On February 18, John called the office manager and advised her he recently heard one of the staff members turned SCH in to the State for using expired supplies. In a separate phone call later that day, John advised the office manager that he planned to ask McGregor if she was the one who filed a complaint, that if she responded in the affirmative, "he doesn't want her back, " and, if she responded in the negative, he "knows she is lying." The office manager relayed this information to McGregor. McGregor testified that, upon receiving this information, she realized she may have to start exploring other employment opportunities.

         On February 20, the Lewallens called an impromptu staff meeting regarding McGregor's continued employment with SCH. It does not appear that McGregor was invited to or otherwise aware of this meeting. After the meeting, John called McGregor and left a voicemail directing her to turn in her keys because he and Carol had not had any communication with her in sixteen days.[4]McGregor responded with a text message that evening, advising she would turn her keys in when she received her final paycheck. Shortly after the separation, ...


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