Opinion ID: 1248059
Heading Depth: 2
Heading Rank: 3

Heading: Are the BSAs illegal?

Text: Under Texas law, a contract is illegal, and thus void, if the contract obligates the parties to perform an action that is forbidden by the law of the place where the action is to occur. Miller v. Long-Bell Lumber Co., 148 Tex. 160, 222 S.W.2d 244, 246 (1949). Contracts are presumptively legal, so the party challenging the contract carries the burden of proving illegality. Franklin v. Jackson, 847 S.W.2d 306, 310 (Tex.App.El Paso 1992, writ denied). When two constructions of a contract are possible, preference will be given to that which does not result in violation of law. Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146, 149 (1947). The bankruptcy court, relying on decisions from various federal district courts for the Northern, Eastern, and Western districts of Texas interpreting similar BSAs, granted partial summary judgment in favor of the Orthodontists and held that the BSAs were illegal under Texas Occupation Code § 251.003(a)(4) because, as written, they allowed OCA to practice dentistry without a license by owning, maintaining, or operating a place of business in which OCA engaged someone else in the practice of dentistry. See Penny v. Orthalliance, Inc., 255 F.Supp.2d 579, 581-83 (N.D.Tex.2003); Becka v. Orthodontic Ctrs. of Am., Inc., No. 4:03-CV-80, slip op. at 6-11 (E.D.Tex. Mar. 31, 2005); Buck v. OrthAlliance, Inc., No. 3:05-CV-1485-N, slip op. at 4 (N.D.Tex. Nov. 20, 2006); Turner v. OCA, Inc., No. MO-05-CV-091, slip op. at 14 (W.D.Tex. Dec. 5, 2006). [11] OCA or its subsidiaries were the defendants in each of those cases, and OCA has not argued that the BSAs at issue in this case are materially different from those at issue in Penny, Becka, or Turner. A review of the record confirms that their terms are substantially similar. OCA does not directly dispute that the terms of the BSAs enable it to practice dentistry under section 251.003(a)(4). Instead, it argues that the BSAs do not run afoul of various regulations promulgated by the Texas State Board of Dental Examiners. This argument, however, is irrelevant, because the regulations cited by OCA were promulgated to define whether a person was practicing dentistry under section 251.003(a)(9), not section 251.003(a)(4), of the Code. See Tex. Occ. Code § 254.0011. [12] By failing to argue why it believes that the bankruptcy court's holding that the BSAs violated section 251.003(a)(4) was erroneous, OCA has failed to raise an issue that would merit reversing the bankruptcy court's judgment. Furthermore, given the pervasiveness of the involvement in the practice of dentistry that the BSAs require OCA to engage in, the fact that every district court that has considered whether similar BSAs violate Texas law has held that they were void for illegality, and the longstanding tradition in Texas preventing unlicensed individuals or corporations (other than professional corporations in the relevant profession) from in substance owning a controlling equity interest in the practice of a licensed learned health professional, see, e.g., Garcia v. Texas State Board of Medical Examiners, 384 F.Supp. 434, 437-40 (W.D.Tex.1974); Flynn Bros. Inc. v. First Medical Associates, 715 S.W.2d 782, 784-85 (Tex.App.-Dallas 1986, writ ref'd n.r.e.), we hold that the bankruptcy court did not err.