Title: Eie v. St. Benedict's Hospital

State: utah

Issuer: Utah Supreme Court

Document:

638 P.2d 1190 (1981) Knut EIE, Thomas Brown, and Rocky Mountain Paramedics, Plaintiffs and Appellants, v. ST. BENEDICT'S HOSPITAL and Robert K. Eisleben, Defendants and Respondents. No. 17195. Supreme Court of Utah. November 2, 1981. *1191 Stephen W. Farr, Ogden, Thomas D. Roberts, Salt Lake City, for plaintiffs and appellants. Glen Mecham, Ogden, Craig Stephens Cook, Salt Lake City, for defendants and respondents. HALL, Chief Justice: Plaintiffs appeal a judgment of the lower court which denied them alleged damages for breach of contract. Plaintiffs Eie and Brown are both paramedics, trained in California. In June, 1975, Eie approached defendant Eisleben (administrator of the St. Benedict's Hospital) about the possibility of establishing a paramedic base at the hospital. Eie pointed out to Eisleben how the hospital would benefit from such a program both in terms of public relations and additional patients. Eie represented that the charge for each paramedic call where emergency medical services were rendered would be $100. This representation was also part of plaintiffs' proposal to the Ogden City Council in September, 1975. *1192 Under plaintiffs' proposal, the hospital would be required to invest approximately $20,000 in equipment for the base station; hence, the hospital was concerned about the financial status of the paramedics and the projected profitability of the operation. One John Doramus, the hospital's director of fiscal services, was given the assignment of working with Eie in projecting income and expenses of the proposed operation. During these negotiations, it was mutually decided that the operation would be better accepted by the community and by insurance carriers if a fee schedule for specific services were developed. Eie was cautioned, however, that in order for the operation to remain fiscally viable the average charge per call must be approximately $100.[1] It was agreed that the hospital would bill for plaintiffs' services according to vouchers supplied by plaintiffs. It was also understood that in order to make the venture a profitable one for the hospital, it would keep ten percent of the total billings.[2] In October, 1975, attorneys for both sides drafted proposed agreements. The proposed agreements were substantially similar but did contain some differences. As the start-up date for the operation approached and no contract had been agreed upon, Eisleben decided that the business relationship had to be spelled out in some way. On October 29, 1975, an "interim" letter agreement was drafted and signed by Eie and Eisleben. That letter was signed on the assumption that a final agreement would be forthcoming in a few days and read, in pertinent part, as follows: Dear Mr. Eie: Several days after the "interim agreement" was signed, plaintiffs submitted a "proposed fee structure" to the hospital for its approval. A revised fee schedule was ultimately prepared and agreed upon by the hospital as of November 17, 1975. As the paramedic service got underway, it became evident that the average charge per call would not even approach $100. Consistently throughout the parties' relationship, the hospital remitted to plaintiffs not $90 per call, but 90% of the total amount billed for paramedic services. Although plaintiffs were allegedly upset about receiving less than anticipated for the services rendered, the believable evidence adduced at trial was that the checks were accepted without protest. Plaintiffs continued to operate the paramedic service in such a manner for well *1193 over one year, until February, 1977. Thereafter, demands were made upon the hospital by plaintiffs for amounts allegedly due under the $90-per-call provision. When these demands were not met, suit was filed wherein plaintiffs demanded $61,532.44 as unpaid services and $100,000 as consequential damages. Defendants filed an answer and counterclaim for malicious use of process. The matter was tried to the court and a decision was rendered on February 9, 1979. Because of various objections of the parties to the court's findings, the ultimate findings of fact and conclusions of law and judgment were not entered until June 20, 1980. The court found as follows: On appeal, plaintiffs contend that inasmuch as "reformation" and "mutual mistake" were not affirmatively pleaded, the trial court could not base its decision on those issues. As a preliminary matter, it seems clear from the findings that the lower court did not base its decision on reformation or mutual mistake;[3] rather, the basis of the court's decision was that the contract was not an integrated agreement, as discussed infra. Nevertheless, it is true that affirmative defenses must be set forth by the party so pleading.[4] In their answer, defendants asserted the following defenses: (1) the complaint failed to state a cause of action upon which relief may be granted; (2) defendants were fraudulently induced to enter into the agreement by plaintiffs' representation that they would charge $100 per call; (3) plaintiffs accepted from defendants payments for their billings at the rate of 90%, which gives rise to the defense of estoppel; and (4) breach of the agreement on the part of plaintiffs. We are convinced that the foregoing adequately raised the issues addressed by the court. Cheney v. Rucker[5] makes the following observations with respect to raising issues: The court's decision is entirely consistent with the issues raised by the pleadings and there can be no surprise claimed by either party.[6] Plaintiffs next contend that the trial court erred in admitting parol evidence as to the circumstances surrounding the interim agreement. The general rule is that in the absence of fraud, an apparently complete and certain agreement which the parties have reduced to writing will be conclusively presumed to contain the whole agreement; and that parol evidence of contemporaneous conversations, representations or statements will not be received for the purpose of varying or adding to the terms of the written agreement.[7] The foregoing general rule applies only to integrated contracts. Whether parol evidence is admissible therefore depends upon whether we are dealing with an integrated writing. The following language from the case of Bullfrog Marina, Inc. v. Lentz[8] is most enlightening: Section 228, Restatement, Contracts, states: Clearly, the parties did not intend the letter of October 29 to be the final agreement between them. By its very terms, it is "an interim agreement ... pending the final agreement being prepared by our attorneys." The believable evidence adduced at trial supports the claim that the letter was intended to be only a tentative agreement. The court therefore properly considered parol evidence. Defendants contend that there is no substantial evidence to support the finding that the plaintiffs were to be paid 90% of *1195 the billings and that $90 was written into the contract on the presupposition of a $100 flat fee to be charged by the plaintiffs. Contrary to this contention, there is substantial evidence to support the court's findings. Exhibits admitted at trial include pro forma income statements prepared by plaintiffs which contemplated a hospital billing fee of ten percent. Also, the draft of a contract to provide billing service stated that the billing would be done for a fee of ten percent per call, and that the remittance to plaintiffs would be computed at $90 per call. Obviously, these two paragraphs would have been inconsistent were it not considered that $100 would be charged per call. At the time of the October 29 letter, plaintiffs had not submitted any schedule of their proposed fee structure. It was not until November 4 that a proposed fee structure was submitted. The finalized fee structure did not appear until November 17. At the time the interim agreement was drafted, it was therefore not unreasonable for the hospital to assume that the charges would average $100 per call as had been discussed. Doramus testified that Eie told him that even under the later-proposed fee structure, the average charge would be about $100. Doramus told Eie to insure fiscal stability by setting the fee schedule high enough so that billings would average $100 per call. Finally, the course of dealing of the parties gives some indication of their intentions. Throughout the entire time the agreement was in force, the hospital reimbursed to plaintiffs 90% of the bill. At no time did it pay a flat $90 fee. Furthermore, plaintiffs made no protest until after the contractual relationship was terminated in February, 1977. Though arguably clear on its face, where the parties demonstrate by their actions that to them the contract meant something quite different, the intent of the parties will be enforced.[9] The findings and judgment of the trial court are adequately supported by the record and we therefore do not disturb them. Affirmed. Costs to defendants. STEWART, HOWE and OAKS, JJ., concur. MAUGHAN, J., heard the arguments, but died before the opinion was filed. [1] This was based on statistical information supplied by Eie that plaintiffs would average six calls per day. [2] Plaintiffs do not concede this point; however, the record does contain testimony to this effect. This Court must review the evidence in the light most favorable to the lower court's findings. Hove v. McMaster, Utah, 621 P.2d 694 (1980); Berkeley Bank for Coops. v. Meibos, Utah, 607 P.2d 798 (1980). [3] Because we do not view the case as involving mutual mistake, we do not address plaintiffs' claim that "reformation of the contract is not justified because of any mutual mistake of the parties." [4] Rule 8(c), U.R.C.P. [5] 14 Utah 2d 205, 381 P.2d 86 (1963). [6] Plaintiffs themselves filed with the court prior to trial a memorandum of authorities which addressed such issues as subsequent modification, waiver and estoppel. [7] B.T. Moran, Inc. v. First Security Corp., 82 Utah 316, 24 P.2d 384 (1933). [8] 28 Utah 2d 261, 501 P.2d 266 (1972). [9] Bullfrog Marina v. Lentz, id., citing Bullough v. Sims, 16 Utah 2d 304, 400 P.2d 20 (1965).