No. 89-150 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

COMPHEALTH, INC., 

Plaintiff and Appellant, 

-VSHIGHLAND VIEW OUTPATIENT SURGICAL 

CENTER, a Montana corporation, 

Defendant and Respondent. 

APPEAL FROM: ~istrict Court of the Second Judicial ~istrict, 

In and for the County of Silver Bow, 

The Honorable Arnold Olsen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Larry Jent, Bozeman, Montana 

For Respondent: 

Leonard J. Haxby, Butte, Montana 

r- Filed: m 

Submitted on ~riefs: Aug. 10, 1989 

Decided: December 22, 1989 
Justice William E. Hunt, Sr., delivered the Opinion of the 

Court. 

plaintiff and appellant, Comphealth, Inc., brought this 

breach of contract action against defendant, Highland vie67 

Outpatient Surgical Center. Following a bench trial, the 

District Court of the Second Judicial District, Silver Bow 

County, found in favor of the defendant. From this judgment, 

plaintiff appeals. We affirm. 

The following issue is dispositive of the appeal: 

Did defendant breach the contract between the parties by 

giving oral notice of its intent to cancel when the agreement 

required 30 days written notice of termination? 

Defendant, a Montana corporation, is a freestanding 

outpatient surgical center located in Butte. In late June, 

1984, it entered into a contract with plaintiff, a Utah 

corporation, in which plaintiff agreed to provide a locum 

tenens (substitute) physician acceptable to defendant at a 

rate of $2,950 per week for a period from July 30, 1984 to 

August 27, 1984. The contract included a cancellation 

clause, which granted defendant the right to terminate the 

agreement by giving 30 days written notice. The clause 

provided that failure to give the required notice would 

result in liquidated damages. 

At the time the parties entered into the contract, 

defendant was in the process of constructing the surgical 

center building. Defendant anticipated that the center would 

open on July 30, 1984. Thus, the parties agreed that the 

contract would commence on that date. However, on July 10, 

1984, defendant notified plaintiff that the center's opening 

would be delayed due to a plumbers' strike in the Butte area. 

plaintiff consented to postpone the commencement of the 

contract. A new contractual period was never agreed upon by 

the parties. 
On the day after it learned of the plumbers' strike, 

plaintiff mailed to defendant the curricula vitae of two 

anesthesiologists. One, Dr. Tilby, was available for the 

anticipated term of the contract. The other, Dr. Plon, was 

unavailable for the initial contractual period. Plaintiff 

submitted Dr. Plon's statistics, however, in the event the 

assignment extended longer than anticipated or in case Dr. 

Plon would fit defendant's needs better than Dr. Tilby. 

The parties dispute whether defendant ever accepted Dr. 

Tilby. plaintiff's agent, Sharon Thompson, testified that 

Dr. St. John, the president of defendant corporation, had 

indicated that Dr. ~ilby would be acceptable and that 

plaintiff should plan to send him to work when the center was 

completed. Dr. Tilby also testified that plaintiff had 

informed him that he was to fill the temporary position. 

Dr. St. John, on the other hand, testified that he had 

never accepted Dr. ~ilby because ~ilby's file did not 

satisfactorily explain why his hospital privileges had been 

temporarily suspended in 1981. The ~istrict Court found that 

defendant had never accepted the physician. 

In late July or early August, 1984, Dr. St. John 

notified plaintiff by telephone that the defendant would no 

longer need plaintiff 's services because it had hired a 

permanent anesthesiologist. Defendant did not follow up this 

phone conversation with written notice of cancellation. 

On November 28, 1984, plaintiff filed this action, 

alleging that defendant had breached the contract by failing 

to give adequate notice of cancellation and failing to pay 

liquidated damages as provided in the contract. On December 

1, 1988, trial was held before the ~istrict Court, sitting 

without a jury. The court heard the testimony of Dr. St. 

John and accepted the depositions of Ms. Thompson and Dr. 

Tilby. On December 29, 1988, the ~istrict Court issued 
findings fact and conclusions law. The court found 

that defendant had not breached the contract but had 

terminated the agreement in an appropriate and timely 

fashion. The court further found that plaintiff had not 

suffered any damages. Plaintiff appealed to this Court. 

On appeal, plaintiff raises several issues, including 

whether the ~istrict Court applied the correct law in 

determining the enforceability of liquidated damages, whether 

the District Court correctly determined the nature of the 

contract, and whether defendant had actually accepted the 

physician offered by plaintiff. We need not answer these 

questions, however, because our conclusion that the defendant 

adequately complied with the cancellation provisions in the 

contract effectively disposes of the appeal. 

Plaintiff argues that defendant's method of cancelling 

the contract was both untimely and procedurally improper and, 

therefore, triggered the agreement's liquidated damages 

clause. We do not agree. 

Substantial credible evidence supports the District 

Court ' s finding that defendant gave adeq.uate, timely notice 

of cancellation. The District Court found: 

6. [Tlhere was a thirty-day cancellation of the 

contract and based upon the testimony of Dr. Tilby 

and Dr. St. John, the Plaintiff was advised in late 

July or the first week in August, that Defendant 

was no longer in need of the services of the 

Plaintiff, that since they had not found a suitable 

physician, that the Defendant had found a physician 

of its own and had no further need for the services 

of the Plaintiff. Since the surgery center did not 

open until September 14, 1984, the notice was given 

more than thirty days in advance of any need for a 

physician. Although this notice was not in 

writing, the overwhelming testimony reveals that no 

further search was made by the plaintiff after that 

date. The contract was in fact cancelled in late 

July or the first week of August, 1984, in 

substantial compliance with the agreement. 
In addition, we note that, due to the uncertainty 

created by the plumbers' strike, the intitial contractual 

period had been postponed and a new commencement date for the 

performance of the contract had not been agreed upon by the 

parties. Under the particular facts of this case, where at 

the time of cancellation a specific performance period had 

not been agreed upon by the parties and where notice was 

actually given more than 30 days prior to any possible 

performance date, defendant gave timely notice of termination 

of the contract. 

Furthermore, even though defendant gave oral rather than 

written notice of cancellation, the notice was procedurally 

adequate. plaintiff does not now contest, nor has it ever 

contested, that it did not receive oral notice of 

cancellation. Plaintiff accepted the notice and took no 

further action in reliance upon the contract. In fact, 

shortly after defendant's telephone call, plaintiff notified 

Dr. Tilby that he would not be filling the anesthesiologist 

position. 

The present case can be distinguished from our earlier 

decision, Tomsheck v. Doran (1953), 126 Mont. 598, 256 P.2d 

538, where we stated that exact compliance with contractual 

terms regarding notice of cancellation is an essential 

prerequisite to cancellation. Unlike the present case, the 

plaintiff in Tomsheck did not substantially comply with the 

terms of the cancellation provision. Although the Tomsheck 

contract required a one-year notice of cancellation, the 

plaintiff instituted a suit for rescission of the contract. 

only one day after he delivered the termination notice to 

defendant. Moreover, in Tomsheck substantial prejudice to 

the non-cancelling defendant in the form of forfeiture of 

land would have resulted had we failed to hold plaintiff 

strictly to the terms of the contract. 
In the present case, defendant substantially complied 

with the terms governing notice of cancellation. Therefore, 

the District Court did not err in finding that defendant did 

not breach the contract and in refusing to award liquidated 

damages. 

~f firmed. 

b7e concur: 4 ,/4 

Chlef 

.c4-7 

Justice