Court Opinion

ID: 9657334
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:21:19.424745+00
Date Added: 2024-06-11T18:13:43.743065
License: Public Domain

JOHNSON, Circuit Judge
(concurring in part, and dissenting in part)
[¶ 38.] I concur with the majority on Issue I, but dissent on Issue II.
[¶ 39.] ASL ignored the Medical Staff Bylaws, which allow the active medical staff to vote and be heard concerning amendments to the bylaws. Instead, ASL unilaterally made a business decision to close the medical staff to new orthopedic *162surgeons, except those which ASL was recruiting.
[II40.] ASL relies almost entirely on article III, § 2(a) of the bylaws, which states: “Initial appointments and reap-pointments to the medical staff shall be made by the Governing Body. The Governing Body shall act on appointments, reap-pointments, or revocation of appointments only after there has been a recommendation from the medical staff as provided by these Bylaws.” This reliance is flawed. This case deals with a unilateral amendment to the bylaws, without the prescribed approval of the medical staff, and not an appointment or reappointment.
[¶ 41.] This Court has held that “medical staff bylaws do constitute a contract which is, by its express terms, subject to amendment when the amendment is agreed to by both the medical staff and medical center.” St. John’s Hosp. M.S. v. St. John Reg. M. C., 90 S.D. 674, 679, 245 N.W.2d 472, 475 (1976). (Holding the board of directors unilateral amendments to the medical staff bylaws null and void without the participation and approval of the medical staff as provided in the bylaws). “The principles which govern the construction of contracts also govern the construction and interpretation of corporate bylaws.” State v. Johnson, 21 Wis.2d 482, 124 N.W.2d 624, 626, 627 (1963). As such, “where the terms of a contract are plain and unambiguous, the duty of the court is to construe it as it stands, giving effect to the plain meaning of the language used.” Id.
[¶ 42.] In the case at hand, the following language in article XVI of ASL’s bylaws clearly delegates to the active medical staff the power to vote and be heard when there are proposed amendments to the bylaws: “The Bylaws, Rules and Regulations Committee shall review these Bylaws at least annually. The review shall be timed so that any proposed bylaw changes are ready for submission to the medical staff on or before the annual meeting.” Article XVI further notes:
[i]n the event that any member of the medical staff has a question or disagrees with the proposed changes in the Bylaws, ... [d]iscussion from the floor regarding the changes in the Bylaws and Rules and Regulations may be conducted by those who desire to participate, following which change, revisions, or alterations shall be balloted upon, (emphasis added).
At no time did the Board of Trustees allow the medical staff to have any input or vote on the proposed changes to the bylaws as required.
[¶ 43.] Article XVII of the bylaws sets forth that “[t]he Bylaws together with the appended Rules and Regulations shall be adopted at any regular or special meeting of the active medical staff.” This means that the amendments to bylaws cannot be adopted unilaterally; the active medical staff must be present.9
[¶ 44.] The trial court found:
[i]n reading the bylaws, as a whole, the Court concluded that the bylaws contemplate taking applications from any doctor who wishes to have staff privileges at ASL. The bylaws do not contain any restrictions as to who may apply, they only put professional and logistical qualifications on who can be accepted to the staff. These qualifications center on a physician’s competence to practice medicine and his or her availability to be at the hospital. They bylaws do not provide for restrictions of staff for any other reason. Any other interpretation would lead to a result contrary to the spirit of the bylaws taken as a whole, (emphasis in original).
*163[¶ 45.] There is no flaw in this conclusion. The staff bylaws did not contain restrictions on who may apply for staff privileges, but did place restrictions on who may be accepted to the staff. This was a benefit to the staff members, as it allowed them to recruit physicians to their clinics with the exception that the new doctors would receive staff privileges (to the only full service hospital within 90 miles of Aberdeen) if they met the professional and geographic requirements of the staff bylaws.
[¶ 46.] ASL unilaterally denied this benefit to staff members by blatantly ignoring the amendment provisions of the staff bylaws. “Every contract contains an implied covenant of good faith and fair dealing which prohibits either contracting party from preventing or injuring the other party’s right to receive the agreed benefits of the contract.” Garrett v. BankWest, 459 N.W.2d 833 (S.D.1990). ASL’s partial closure of the orthopedic staff, for strictly economic reasons, was not reasonable, not in good faith, and was a breach of contract. Either party may sue for breach of contract “even though the conduct failed to violate any of the express terms of the contract agreed to by the parties.” Id. at 841. The trial court was correct in issuing a permanent injunction requiring ASL to provide Dr. Mahan with an application for staff privileges.
[¶ 47.] Accordingly, I would affirm the circuit court on Issue II.
[¶ 48.] JOHNSON, C.J., sitting for SABERS, J., disqualified.

. Clearly under articles XVI and XVII of the bylaws the board of directors have given the active medical staff power to alter, amend or repeal the bylaws and adopt new bylaws. See SDCL 47-22-33 which provides: "The power to alter, amend or repeal the bylaws or adopt new bylaws shall be vested in the board of directors unless otherwise provided in the articles of incoiporation or the bylaws.’’ (emphasis added).