Thomas v. Capital Medical Management Associates, LLC (Ct. of Special Appeals)

Date: December 7, 2009
Opinion by Judge Alexander Wright, Jr.

Held:

Because the defendants, a doctor and a medical practice, failed to raise negative averments in their answer concerning their capacity to be sued, they were precluded from disputing their status as parties to the contract. Further, because terms in the agreement were found to be ambiguous, parol evidence was admissible to prove that the defendants had additional duties to facilitate the plaintiff billing company's collection efforts. The plaintiff was entitled to recover lost profit for work yet to be performed because it was able to prove the losses with reasonable certainty. Finally, because the indemnification clause in the agreement did not expressly provide for recovery of attorney fees in a first-party enforcement claim, the plaintiff was precluded from recovering attorney fees and costs.

Facts:

The defendant doctor and medical practice retained the plaintiff billing company to process its bills. The billing company terminated the contract after 16 months and sued, alleging that the defendants failed to provide the billing company with timely information, failed to compensate the billing company, and failed to take steps necessary to ensure that the bills processed by the billing company would be paid.

The trial court ruled in favor of the billing company and awarded it contract damages, including lost profit for work not yet performed. The trial court also awarded attorneys' fees and costs.

The defendants appealed, arguing four issues: (1) The defendants were not proper parties to the lawsuit; (2) The defendants had no contractual duty to provide the information and assistance at issue; (3) The plaintiff was not entitled to damages for work yet to be performed; and (4) The plaintiff was not entitled to attorneys' fees pursuant to the contract's indemnification clause.

Analysis:

(1) The defendants were parties to the agreement

The defendants argued that neither was actually a party to the contract. The Court rejected the argument. The Court noted that the defendants failed to raise negative averments concerning their capacity in the answer as required by Maryland Rule 2-323(f). Instead, the defendants admitted that there was an agreement between the parties and averred that it spoke for itself. Accordingly, the Court held that a written contract was properly executed between the parties and the defendants were bound by it.

(2) Parol evidence established that the defendants had duties to facilitate the plaintiff's billing work

The trial court accepted the plaintiff's theory that the defendants had a duty to provide demographic information and to perform certain credentialing so that the plaintiff could process the defendants' bills. On appeal, the defendants argued that there was no such duty written into the contract. The Court found the terms of the contract ambiguous. Reviewing the parol evidence, the Court concluded that the trial court properly held that the defendants had such a duty.

3. The plaintiff was properly awarded damages for lost profits

The defendants argued that the award of damages for lost profit on future work was entirely speculative. The Court stated that a claimant may recover for lost profit if the loss is reasonably foreseeable and can be proven with reasonable certainty. Damages can be proven by reference to some fairly definite standard, such as market value, established experience, or direct inference from known circumstances.

At trial, the plaintiff proved its lost profit by means of testimony from its billing manager. She had experience in medical billing and was acquainted with the plaintiff's transactions. After considering the records of prior collections, she calculated an estimate of the lost expected profit on the work yet to be performed. The Court approved of the method and affirmed the award.

4. The plaintiff was not entitled to recover for attorneys' fees

An indemnification clause in the contract was the only clause that provided for recovery of attorneys' fees. The Court noted that a party may recover attorneys' fees pursuant to contract only if the contract expressly provides for it. Here, the indemnification clause did not expressly provide for attorney's fees for enforcement in a first-party breach of contract action. Accordingly, the Court held that the plaintiff was not entitled to recover its fees from the defendants.

The full opinion is available in PDF.