Then the trial court looked into Ms G’s claims seeking to expel Ms B from the agreement. Although the contract had language specifying what would happen if a party became legally disqualified to practice, and the contract specified that the person leaving the partnership would be bought out by the remaining partner, the trial court declined to enforce this. Instead, the court held that “neither the buyout nor the liquidation option provides a logical and just resolution,” and that because Ms B had breached the contract first, she should not be m, which supported substance abuse recovery by health professionals. However, as weeks passed by without Ms entitled to recover anything.
Ms G breathed a sigh of relief and planned how to keep the clinic going. Ms B appealed the trial court’s decision.
On appeal, Ms B argued that she was entitled to compensation for her share of HealthWise based on the operating agreement. The appeals court agreed. “Our primary goal in interpreting a contract is to honor the intent of the parties by enforcing the plain and unambiguous language of the agreement,” wrote the court. “Clear and unambiguous language will be enforced as written.”
The court noted that the plain language of the HealthWise agreement indicated that the parties had contemplated this exact situation—a dispute over whether a member was legally disqualified from practicing—and had provided a contractual remedy—forced withdrawal with one of two options: the remaining member buying out the withdrawing member’s share, or liquidating the company. “Here, the parties contractually established that the remedy for a breach of the withdrawal-for-disqualification clause was to permit HealthWise to enforce the required withdrawal through legal action and to elect the form of compensation to be paid to the withdrawing member,” wrote the court in its decision. “We see no reason to apply an equitable remedy when a contractual remedy is available.”
Ms G was ultimately forced to buy Ms B out, despite Ms B’s bad actions. Fair? Equitable? No—but a contract existed, and the contract specified exactly what would happen in this particular situation. Courts always seek to honor the original intent of a contract and the language when interpreting it.
If you are contemplating a partnership, or any contract, be sure to read it carefully and understand all the eventualities. If something happens, courts will always look to the language of the contract. Make sure that you have language that is fair and is what you would want. Speak to your lawyer. Try to work through the various possibilities and have contractual solutions.
In this case, Ms G would have been better off if her contract had specified that if a member becomes legally disqualified from practicing based on her own illegal actions, she must withdraw from the company without compensation. That scenario is far different from one partner deciding to leave and the other buying her out.
Language is powerful. Whether it is the language you write in a patient’s chart, or language in your employment contract, or in your partnership agreement, be sure that you understand what it says and that it is an accurate reflection of your intentions.
Ms Latner, a former criminal defense attorney, is a freelance medical writer in Port Washington, NY.