Opinion ID: 1677980
Heading Depth: 1
Heading Rank: 2

Heading: The Facts as Viewed Most Favorably to Shelby[1]

Text: The dispute in this case began after Diagnostic purchased AMI from CAME, in October 1995. At that time, Shelby had in its employ three radiologists, namely, Drs. H. Peter Jander, Daniel W. Thompson, and Michael Mead. It was regularly servicing three diagnostic facilities, namely, Shelby Medical Center, Shelby Outpatient Diagnostic Center, and AMI, and the workload had become too demanding for these three radiologists. Therefore, the three doctors began considering possible solutions. Under one option, Shelby would simply discontinue providing its service to AMI. Under a second option, Shelby would hire a fourth radiologist and continue to service all three facilities. The doctors concluded, however, that the second option would be viable only if Shelby could secure from Diagnostic a contract that would be noncancelable for three years. Dr. Jander first discussed these options by telephone with Dr. Robert Burke, president of Diagnostic. Then, on November 13, 1995, he addressed a letter to Dr. Burke, which stated in part: Please find enclosed our proposal for a service agreement between U.S. Diagnostic Laboratories, Inc. and Shelby Radiology, P.C. . . . . It is our intention to add a radiologist to our group in order to be able to cover our meeting times and vacation `inhouse.' We will start the recruitment process as soon as the agreement is signed but our selection criteria are stringent and it may take until July 1996 before we can fill the position. Included with the letter was a five-page document entitled Radiology Services Agreement (RSA). The RSA purported to be an exclusive, three-year, noncancelable contract, within the context of the parties' preceding telephone discussion. The contractual period was to begin on January 1, 1996, and end on December 31, 1998. On January 9, 1996, Dr. Jander addressed another letter to Dr. Burke. The letter stated in part: I have discussed our position with respect to the imaging center with my partners.... We would appreciate an expedicious [sic] answer since we plan to add a fourth radiologist if our proposal is agreeable to you.  [2] (Emphasis added.) Dr. Jander met Dr. Burke at a conference in Montgomery on February 13, 1996, and the two discussed the RSA further. At that meeting, Dr. Burke told Dr. Jander that he had misplaced the RSA and he requested another copy. Consequently, on February 20, 1996, Dr. Jander transmitted by telefax a second copy of the January 9, 1996, letter and the RSA. In March 1996, Shelby began negotiating with Dr. John Lindsey for his possible employment as the fourth radiologist. For Dr. Lindsey, who was informed during these negotiations of the RSA, the three-year provision was a primary consideration. As a result, Dr. Jander again telephoned Dr. Burke. Regarding this conversation, Dr. Jander testified: Q. [By counsel for Shelby] As a result of Dr. Lindsey requiring knowledge about the 3-year contract, did you contact Dr. Burke again? A. [By Dr. Jander] Well, after I had sent him this last fax and I hadn't heard from him in a while and it [had come] time to make a decision for Dr. Lindsey and for us, I called Dr. Burke, and I said: `Look, we are at the end of our rope. We need to know whether our contract is acceptable to you, because if it is, we will hire Dr. Lindsey, and we will continue the services. If it's not, tell me now, and we just [w]on't hire Dr. Lindsey, and we [will] all go our merry ways.' Q. What was Dr. Burke's response? A. He said he had looked at the [RSA], he found it acceptable, and he told me specifically to go ahead and hire Dr. Lindsey. Q. From that point on, Dr. Jander, did you have any question in your mind as to what contract you were operating under? A. He had agreed to this new contract so that was the contract we were working under. Q. As a result of those representations, what did you do in reliance on it? A. Well, I called Dr. Lindsey, and I told him that I had just been off the phone with Dr. Burke, and Dr. Burke had told me he had accepted the contract. Dr. Burke had also told me that there might be some minor changes, that the contract is still in the hands of the lawyers, but we shouldn't worry about it. I told Dr. Lindsey: `I am confident we have this contract, Dr. Burke gave me his word, so I have no doubt that we will have that contract.' (Reporter's Transcript, at 231-33.) During that conversation, Dr. Burke allegedly told Dr. Jander that he had accepted this... 3 year contract with no termination clause; to go ahead and hire Dr. Lindsey; and that there might be minor, inconsequential modifications that might come up when it [went] through his legal department. (Reporter's Transcript, at 309.) (Emphasis added.) Dr. Jander then told Dr. Lindsey: I am confident we have this contract, Dr. Burke gave me his word, so I have no doubt that we will have that contract. Id. at 233. Shelby signed a contract with Dr. Lindsey on March 21, 1996. Also, Shelby increased its insurance coverage from $1 million to $3 million to comply with a requirement of AMI, and it continued to service AMI. July 1996 passed, however, without Shelby's receiving a signed contract from Diagnostic. Consequently, Dr. Jander telephoned Dr. Burke again. Dr. Burke informed Dr. Jander that he was no longer president of Diagnostic and that Jander should contact his successor, Joseph Paul. Dr. Jander tried a number of times to reach Mr. Paul by telephone, but without success. Therefore, on November 13, 1996, he addressed a letter to Paul, which stated in part: At the beginning of this year, Robert Burke and I had started formalizing the contractual relations of Shelby Radiology, P.C. with [Diagnostic]. At that time I sent Rob a contract draft.... Rob informed me recently that he was no longer in a position to formalize our agreement and that I should contact you. Since we have added a fourth radiologist to our group based on Dr. Burke's assurances and to be in a better position to handle the workload here at [AMI], we would very much like to bring this contract to a conclusion. Shelby did not receive a response from Paul. Instead, it received a letter dated November 19, 1996, from Timothy C. Watkins, the administrator of AMI, complaining of Shelby's performance. Subsequently, Shelby received a letter from Watkins dated January 16, 1997, purporting to terminate the relationship between Shelby and Diagnostic within 30 days. On June 26, 1997, Shelby sued Diagnostic and AMI. Through its complaint and a subsequent amended complaint, Shelby claimed damages based on allegations of fraud and breach of contract. The defendants moved for a judgment as a matter of law (JML) at the close of the plaintiff's case and again at the close of all the evidence. The trial court submitted the case to a jury on claims of breach of contract, promissory fraud, ordinary fraud, and fraudulent suppression. The jury returned a verdict in favor of the defendants on the breach-of-contract claim. [3] However, it found in favor of Shelby on the fraud and suppression claims, awarding compensatory damages of $1,134,013. The trial court denied the defendants' postjudgment motions, and the defendants appealed from the judgment based on that verdict. The defendants contend that the trial court erred in denying their postjudgment motions for a JML. [4] More specifically, they first contend that if Shelby has a fraud claim, it is only a claim of promissory fraud. For reasons that shall be discussed, we disagree with that contention. They also argue that Shelby failed to present substantial evidence of each element of its fraud and suppression claims. We first address the arguments as they relate to the promissory-fraud claim.