Court Opinion

ID: 803511
Source: CourtListenerOpinion
Date Created: 2012-07-02 18:48:48+00
Date Added: 2024-06-11T18:00:08.517427
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 11-1889

PROTHERAPY ASSOCIATES, LLC,

                Plaintiff - Appellee,

           v.

AFS OF BASTIAN, INCORPORATED, d/b/a Bland County Nursing and
Rehab Center; AFS OF FINCASTLE, INCORPORATED, d/b/a Brian
Center Nursing Care of Fincastle; AFS OF LOW MOOR,
INCORPORATED,   d/b/a   Brian   Center   Nursing   Center   of
Alleghany; CANE ISLAND CARE CENTER, L.P.; AMITY FELLOWSERVE
OF   HONDO,   INCORPORATED,   d/b/a   Hondo   Healthcare   and
Rehabilitation; AFS OF LEBANON, INCORPORATED, d/b/a Maple
Grove Rehabilitation and Health Care Center; AFS OF YUMA,
INCORPORATED, d/b/a Palm View Rehabilitation and Care
Center; AMITY FELLOWSERVE, INCORPORATED, d/b/a Kissito
Healthcare;   AFS   OF  HOT   SPRINGS,   INCORPORATED;   AMITY
FELLOWSERVE OF KATY, INCORPORATED,

                Defendants - Appellants.

Appeal from the United States District Court for the Western
District of Virginia, at Lynchburg.     Norman K. Moon, Senior
District Judge. (6:10-cv-00017-NKM-BWC)

Argued:   May 16, 2012                      Decided:   July 2, 2012

Before NIEMEYER and KEENAN, Circuit Judges, and Margaret B.
SEYMOUR, Chief United States District Judge for the District of
South Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.
ARGUED:   Wyatt B. Durrette, Jr., DURRETTECRUMP PLC, Richmond,
Virginia, for Appellants.    Benjamin C. Fultz, FULTZ, MADDOX,
HOVIOUS & DICKENS, PLC, Louisville, Kentucky, for Appellee. ON
BRIEF:   J. Buckley Warden, IV, DURRETTECRUMP PLC, Richmond,
Virginia, for Appellants.    Everett S. Nelson, FULTZ, MADDOX,
HOVIOUS & DICKENS, PLC, Louisville, Kentucky, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

      ProTherapy Associates, LLC, a provider of trained personnel

for skilled nursing facilities such as nursing homes, commenced

this breach-of-contract action against nine nursing homes, each

of   which   had     contracted        to   purchase      ProTherapy’s    services.

Specifically, ProTherapy seeks to enforce a provision in its

contracts with the nursing homes that prohibited the nursing

homes   from    “directly         or    indirectly”       soliciting     or   hiring

ProTherapy’s employees, as follows:

      Non-Solicitation.   During the term of this Agreement
      and for one year thereafter, [the nursing home] shall
      not, directly or indirectly, for [the nursing home] or
      on behalf of any other person or business entity for
      the benefit of [the nursing home]: (a) solicit,
      recruit, entice or persuade any Therapists or other
      employees or contractors of [ProTherapy] who had
      contact with [the nursing home] pursuant to this
      Agreement to become employees or contractors of [the
      nursing home] responsible for providing services to
      Patients like the Services hereunder; or (b) employ or
      use as an independent contractor any individual who
      was   employed   or   utilized  as  a   contractor   by
      [ProTherapy] for the provision of Services at any time
      during the twelve (12) months prior to such proposed
      employment   or    contracting.     Recognizing    that
      compensatory monetary damages resulting from a breach
      of this section would be difficult to prove, [the
      nursing home] agrees that such breach will render it
      liable to [ProTherapy] for liquidated damages in the
      amount of ten thousands dollars ($10,000) for each
      such individual.

      Beginning      in     May    2008,        ProTherapy    entered    into    its

contracts     with    the    nursing        homes    to    train,   provide,     and

supervise licensed therapy personnel.                     When the nursing homes

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requested a rate reduction in August 2009, ProTherapy agreed to

enter into new contracts with them.                  Each contract contained the

nonsolicitation provision and a provision authorizing each party

to terminate the contract by giving 90-days’ advance notice.

     Several      days   after     executing          the   revised     contracts      in

August    2009,    the   nursing      homes’      parent      corporation      notified

ProTherapy that it intended to exercise its right to terminate

the contracts within 90 days.                   During this same period, the

nursing homes had entered into a separate agreement with Reliant

Pro Rehab, LLC, to provide therapy services similar to those

offered    by     ProTherapy,     but   at       a    lower    cost.       While      the

ProTherapy      contracts   with      the       nursing     homes   were      still   in

effect, Reliant began to meet with ProTherapy therapists and to

recruit them to provide services to the nursing homes under the

contract between Reliant and the nursing homes.                          The nursing

homes assisted Reliant in recruiting ProTherapy’s employees by

giving it a list of all the ProTherapy personnel working at each

location   and     assisting     in   making         them   available    to    Reliant.

Through these efforts, Reliant was able to hire 64 ProTherapy

therapists to work for Reliant, beginning when the 90-day notice

period expired.

     In its complaint, ProTherapy contends that the conduct of

the nursing homes in terminating their contracts with it and

simultaneously entering into the contract with Reliant, with the

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purpose     of      hiring        ProTherapy’s         employees,               violated     the

nonsolicitation         provision      in    ProTherapy’s            contracts       with    the

nursing homes.          ProTherapy demanded that the nursing homes pay

it $10,000 in liquidated damages for each ProTherapy employee

hired by Reliant to work at the nursing homes.

     After completing discovery, the parties filed cross-motions

for summary judgment.             In its motion, ProTherapy contended that

the nursing homes had breached the nonsoliciation provision by

using     Reliant      to     indirectly      solicit          and    employ        ProTherapy

therapists.       The nursing homes contended that their actions did

not breach the nonsolicitation agreements because Reliant, not

the nursing homes, was responsible for recruiting and ultimately

employing the 64 therapists who continued to work at the nursing

homes after termination of the agreements between the nursing

homes     and     ProTherapy.            Alternatively,              the        nursing    homes

contended       that    under     controlling      principles              of    Florida    law,

which   the     parties       agree    was    applicable,            the    nonsolicitation

provision of the contracts was unenforceable because it imposed

a   restraint          on     commerce       without       a     legitimate           business

justification.              The   nursing     homes    also          contended       that    the

liquidated       damages      clause     imposed      an   unconscionable             penalty,

rather than valid compensatory damages.

     The district court entered judgment in favor of ProTherapy,

awarding it $640,000 in liquidated damages, plus attorneys fees.

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The    district        court           found      that      the      nursing          homes     hired

ProTherapy’s         therapists         indirectly,         within        the    prohibited         12-

month period, by using Reliant to provide therapy services.                                         It

also    found       that    the        nonsolicitation          agreement         was    valid      as

“reasonably          necessary          to     protect       [ProTherapy’s]             legitimate

business        interests.”                   The       court      concluded            that        the

discontinuance of ProTherapy’s business was not a defense under

Florida    Statutes             § 542.335(1)(g)            because     it       found    that       the

discontinuance         was       directly         connected       to      the    nursing       homes’

violation       of    the       restrictive         covenant.             Finally,      the    court

concluded that the liquidated damages provision was enforceable

in lieu of compensatory damages and that the $10,000 amount was

a   “modest     sum”       in    light       of   ProTherapy’s         greater        expenses       in

training      the    therapists          and      its    losses      of    income       from    them.

From the district court’s orders, dated May 3, 2011; May 25,

2011; July 21, 2011; and July 27, 2011, the nursing homes filed

this appeal.

       After     considering             the        nursing       homes’         arguments,          as

contained in their briefs and as presented at oral argument, and

reviewing the record de novo, taking the facts and reasonable

inferences to be drawn from them in the light most favorable to

the    nursing       homes,       we    affirm       for    the    reasons        given       by    the

district      court.            See     ProTherapy         Associates,          LLC     v.    AFS   of

Bastian, Inc., et al., Civil Action No. 6:10-cv-17 (W.D. Va. May

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3, 2011); id. (May 25, 2011); id. (July 21, 2011); id. (July 27,

2011).

                                                        AFFIRMED

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