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STATE OF MICHIGAN COURT OF APPEALS

MICHAEL M. JADALI, D.O., Plaintiff-Appellee, v MICHIGAN NEUROLOGY ASSOCIATES, P.C., and MICHIGAN NEUROLOGY ASSOCIATES PROFIT SHARING PLAN, Defendants-Appellants.

UNPUBLISHED December 29, 2011

No. 297975 Macomb Circuit Court LC No. 2007-004188-CK

Before: SHAPIRO, P.J., and WHITBECK and GLEICHER, JJ. PER CURIAM. This case arises from a dispute regarding an employment agreement. Defendants Michigan Neurology Associates, P.C. and Michigan Neurology Associates Profit Sharing Plan appeal as of right a judgment in favor of plaintiff Michael M. Jadali, D.O., following a jury trial. On appeal, defendants argue that the trial court erred in denying their motions for directed verdict and judgment notwithstanding the verdict (JNOV) because (1) the parties' employment agreement unambiguously denied Dr. Jadali a right to recover for receipts collected after his employment ended, (2) the employment agreement unambiguously permitted Michigan Neurology Associates to deduct its pension payment for Dr. Jadali from his compensation, and (3) the employment agreement and the Family and Medical Leave Act (FMLA)1 did not entitle Dr. Jadali to take off more time than allowed by contract while retaining the full measure of his contractual compensation. We affirm. I. FACTS A. OVERVIEW OF COMPENSATION Dr. Jadali, a physiatrist specializing in physical medicine and rehabilitation, began working for Michigan Neurology Associates on August 1, 2003. Dr. Jadali signed a standard written employment contract provided by Dr. Thomas Giancarlo, the 90 percent owner and

1

29 USC 2601 et seq.

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senior managing partner of Michigan Neurology Associates. Attorneys working on behalf of Michigan Neurology Associates wrote the contract. The initial employment agreement was for two years, and Michigan Neurology Associates later exercised its option under the contract to extend Dr. Jadali's employment for a third year. Under the employment agreement, Dr. Jadali's compensation consisted of 50 percent of his collected receipts, minus a regular draw on his commission advanced under normal payroll procedures for salaried employees. In particular, the contract stated: 3. Compensation: Doctor's compensation for services rendered during the Employment Period shall be determined in accordance with the following: (a) Doctor shall receive a draw in the amount of $130,000 annually ("base compensation") to be advanced in accordance with the Company's normal payroll procedure for salaried employees. On a quarterly basis, the Company shall perform the following calculations: (i) Doctor's gross collected receipts as of the last day of the month immediately preceding the date that this calculation is made; (ii) That portion of the Doctor's draw as set forth in section 3(a) above that has been advanced to Doctor as of the date of this calculation plus direct Doctor benefits; (iii) The amount calculated in section 3(a)(i) minus 50% (the estimated office overhead factor); and (iv) The difference between section 3(a)(ii) and 3(a)(iii). It is further agreed that in the event the amount in section 3(a)(iv) exceeds $1.00, the Doctor shall be required to repay said difference to the Company within sixty (60) days of said calculation being computed. The company will attempt to accomplish this through pay roll [sic] adjustments. It is further agreed that the Company will make necessary incremental adjustments to section 3(a)(ii) any time after the third quarter to allow for section 3(a)(ii) to equal section 3(a)(iii) cumulatively by the eighth quarter of the two year employment period. EXAMPLE CALCULATION: @ end of 2nd quarter Doctor has received $65,000 Collected receipts = $100,000 Direct Doctor benefits = $10,000 Doctor costs = $65,000 + $10,000 = $75,000

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Collection minus 50% overhead = $50,000 Overpaid amount = $75,000 - $50,000 = $25,000 Company would adjust income over next 60 days or longer or will charge Doctor directly. Dr. Giancarlo added the sample calculation to Michigan Neurology Associates' standard contract because Dr. Jadali had a lot of questions regarding how he would be paid. At trial, Dr. Jadali explained his understanding of how he was paid: A draw, to my understanding was basically I'm working on commission that is calculated on a quarterly basis. Meanwhile I get to take my quote, end quote, salary that would be deducted from the money that comes in at the end of the quarter and Dr. [Giancarlo] will calculate it and give me 50 percent of the money collected, minus the draw that he already paid me. So I'm working on 50 percent commission. During his employment at Michigan Neurology Associates, Dr. Jadali always produced more than his draw, and he was one of the most productive doctors at Michigan Neurology Associates. Michigan Neurology Associates paid him $165,000 in 2004, and $293,000 in 2005. He was on track to make approximately $350,000 in his final year. The employment agreement also contained a provision regarding participation in Michigan Neurology Associates' pension plan. That provision stated: 6. Profit Sharing Plan: The Doctor may be eligible to participate in the Michigan Neurology Associates, P.C.'s Pension Plan (the `Plan') pursuant to the eligibility provisions and other terms and conditions contained therein, provided the Company shall have the right to amend or terminate the Plan at any time in its sole discretion. Although Dr. Jadali and Michigan Neurology Associates discussed extending Dr. Jadali's employment beyond his third year, they were unable to reach an agreement, and Dr. Jadali's final day of work at Michigan Neurology Associates was scheduled for July 31, 2006. Dr. Jadali received his last draw check on July 14, 2006, for the pay period ending July 10, 2006. Dr. Jadali continued to work through July 31, 2006, as required by his contract, but he did not believe that he was working for free. Dr. Jadali then moved to California and started his own practice beginning in September 2006. B. PAYMENT FOR COLLECTIONS RECEIVED AFTER LAST DATE OF EMPLOYMENT After Dr. Jadali left Michigan Neurology Associates, a dispute arose regarding whether he was entitled to 50 percent of receipts that were generated by his services during the employment period but that Michigan Neurology Associates collected after his last date of employment on July 31, 2006. Shortly before trial, Michigan Neurology Associates paid Dr. Jadali $10,367 for his remaining share of receipts collected through July 31, 2006, but it did not pay him for receipts collected after that date. Dr. Jadali explained that he believed he was -3-

entitled to 50 percent of the receipts collected after his departure because it was understood that patients did not usually pay in full at the time services were rendered; it took time for the payments to be processed through the applicable insurance company, and then payment would mailed "two weeks to months" later. Also, a memo from Michigan Neurology Associates' office manager indicated that many of Dr. Jadali's patients were from automobile accident and worker's compensation cases, often causing a delay in payment. Dr. Giancarlo did not dispute that approximately $81,000 in receipts were collected after Dr. Jadali left that were generated by Dr. Jadali's services during the employment period. Dr. Giancarlo opined, however, that Michigan Neurology Associates was entitled to keep all of the post-termination collections rather than pay 50 percent to Dr. Jadali. Dr. Giancarlo explained that when a doctor first joins Michigan Neurology Associates, it is the least productive year of his or her career. Michigan Neurology Associates incurs start-up costs when a doctor is hired, including recruiter fees, attorney fees, accountant fees, licensing fees, and hospital application fees. According to Dr. Giancarlo, Michigan Neurology Associates was willing to incur these start-up costs because "when the doctor leaves, that cash flow still follows into the practice to compensate for all those initial costs, that we incurred, before he was, in fact, a productive member of the team." Dr. Giancarlo asserted that such a contractual arrangement is standard in the medical industry with non-partner employees. C. DEDUCTION OF MICHIGAN NEUROLOGY ASSOCIATES' PAYMENT INTO PENSION PLAN Another area of dispute concerned whether Michigan Neurology Associates' payment into a pension plan on Dr. Jadali's behalf was properly deducted from his compensation. The employment agreement provided for a deduction of "that portion of the Doctor's draw as set forth in section 3(a) above that has been advanced to Doctor as of the date of this calculation plus direct Doctor benefits." According to Dr. Jadali, Dr. Giancarlo never explained to him that Michigan Neurology Associates' contribution to the pension plan on his behalf would be deducted from his compensation as a direct doctor benefit. Dr. Jadali explained why he opposed deduction of Michigan Neurology Associates' contribution from his pay: Q. And at some point in time do you understand that Michigan Neurology was making contributions on your behalf to the profit sharing plan? A. Yes. Q. And were the contributions that Michigan Neurology made, were those being deducted dollar for dollar from your pay? A. Yes. Q. Did you have an issue with that? A. If it's my contribution and the money belongs to me. Q. What if it's the employer contributions? -4-

A. Then that becomes an issue for me because if that's the employer's plan and the employer needs to contribute, that needs to come from the employer, not from me. So if it's an employer plan that they deducted from me, no. Q. Now, are you trying to change the rules of vesting? A. Absolutely not. Q. Do you understand that if the plan has a vesting provision that--and if the employer made the contributions that it might not all be vested? A. I don't know any of the details of vesting or non vesting [sic] but that's my impression on it. Q. So why are you seeking reimbursement for the amount of the employer contributions that were deducted from your pay? A. Because the money came from me but it is supposed to be the employer contribution and I don't have access to all that. Michigan Neurology Associates' total employer contribution on Dr. Jadali's behalf was $10,500, and it deducted the entire amount from Dr. Jadali's pay. Dr. Jadali's vested amount was $8,039. Under the pension plan, the employer was to make these contributions. Dr. Giancarlo testified that his understanding of the employer contribution requirement in the pension plan was "that the employer has to write that check." He explained that Michigan Neurology Associates wrote the check for the $10,500 contribution on Dr. Jadali's behalf. He understood that an employee contribution cannot be subject to vesting because it is the employee's money. Dr. Giancarlo acknowledged that the $10,500 employer contribution was included in the calculation of Dr. Jadali's pay such that he received $10,500 less because of the contribution. He also understood that the contribution was subject to vesting under federal regulations. The money was deducted from Dr. Jadali's pay before it was contributed to the pension plan. Michigan Neurology Associates' retirement plan administrator testified that the employer contributions have to come directly from the employer and that the money here was paid into the plan through Michigan Neurology Associates, qualifying it for tax deferred status. D. DEDUCTIONS FOR MISSED WORK The final relevant dispute concerned deductions from Dr. Jadali's pay for 13 or 14 days that he missed work. In 2006, Dr. Jadali missed about 10 days of work as a result of his wife's miscarriage. Dr. Jadali missed three or four additional days of work in 2006 because he suffered an acute appendicitis, requiring surgery. Dr. Jadali did not request to be paid for the missed days but contested Dr. Giancarlo's deduction of $11,753 from his pay for the missed days. Dr. Giancarlo acknowledged that even if he had not deducted the $11,753, Dr. Jadali would still have been unpaid for the missed days.

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E. DR. JADALI'S COMPLAINT In light of these disputes regarding Dr. Jadali's compensation, Dr. Jadali filed this action alleging claims for breach of contract, promissory estoppel, unjust enrichment, violation of the Employee Retirement Income Security Act (ERISA),2 and violation of the FMLA. F. TRIAL AND MOTION FOR DIRECTED VERDICT The case proceeded to trial on Dr. Jadali's claims. After Dr. Jadali rested, defendants orally moved for a directed verdict, arguing that Dr. Jadali had failed to present sufficient evidence in support of his claims. The trial court denied defendants' motion because "[t]here's enough to go to the jury to decide the case." The parties agreed to instructions submitting the interpretation of the employment agreement to the jury. The jury found that Michigan Neurology Associates breached its contract with Dr. Jadali by failing to pay him compensation for services performed on or before July 31, 2006, but collected after that date. Dr. Jadali's damages resulting from Michigan Neurology Associates' failure to pay him this compensation amounted to $40,874. In light of its resolution of the contractual issue, the jury did not decide whether Dr. Jadali was entitled to prevail on an unjust enrichment theory. The jury also found that Michigan Neurology Associates breached the contract by deducting employer pension contributions from Dr. Jadali's compensation, entitling Dr. Jadali to $10,500 in damages for that claim.3 Finally, the jury found that Michigan Neurology Associates breached its contract with Dr. Jadali and violated the FMLA by making a deduction from his compensation for days off. The amount that Michigan Neurology Associates improperly deducted for days off was $11,753. G. FEES, COSTS, SANCTIONS, AND ENTRY OF JUDGMENT Dr. Jadali filed a petition for attorneys' fees and costs and moved for case evaluation sanctions and for entry of judgment. The trial court ordered Michigan Neurology Associates to pay Dr. Jadali case evaluation sanctions of $25,250, liquidated damages under the FMLA of $11,753, attorney fees and costs under the FMLA of $6,737, the jury verdict of $63,127, and statutory prejudgment interest. On March 9, 2010, the trial court entered a judgment awarding a total amount of $118,675, and interest at the rate set forth in MCL 600.6013(8) from February 19, 2010, until the date of satisfaction of the judgment.

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29 USC 1101 et seq.

Dr. Jadali's ERISA claim was not submitted to the jury because it was a matter for the trial court to decide. After trial, Dr. Jadali indicated that the trial court did not need to decide the ERISA claim given the jury's finding under the breach of contract theory that it was improper to deduct employer pension contributions from Dr. Jadali's compensation.

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H. DEFENDANTS' MOTION FOR JNOV OR A NEW TRIAL Defendants moved for JNOV or, alternatively, for a new trial. Defendants argued that (1) the contractual language was unambiguous and did not require interpretation by the jury; (2) Michigan Neurology Associates did not breach the contract by failing to pay Dr. Jadali for receivables collected after he left; (3) Michigan Neurology Associates did not breach the contract by deducting money from Dr. Jadali's pay for time off and the FMLA does not require paid time off; (4) Michigan Neurology Associates did not breach the contract by deducting employer pension contributions from Dr. Jadali's compensation; (5) testimony regarding the miscarriage by Dr. Jadali's wife was prejudicial to defendants; and (6) the jury's award of the amount deducted for the pension contribution constituted a double payment to Dr. Jadali because the amount deducted was available to Dr. Jadali upon vesting. In response, Dr. Jadali argued that (1) the meaning of an ambiguous contract is a question of fact for the jury, and the parties stipulated to the jury instructions and the verdict form submitting the interpretation of the contract to the jury; (2) the evidence supported the jury's finding that Dr. Jadali was entitled to compensation for services performed on or before July 31, 2006, and for which receivables were collected after that date; (3) the jury properly found that Dr. Jadali was entitled to reimbursement for amounts that Michigan Neurology Associates deducted from his pay for time off due to medical purposes; (4) the jury correctly found that Michigan Neurology Associates had improperly deducted employer pension contributions from Dr. Jadali's compensation; and (5) description of the medical condition of Dr. Jadali's wife was necessary to establish that he missed work due to the serious health condition of a family member. The trial court denied defendants' motion for JNOV or a new trial without explaining its reasoning. Defendants now appeal the judgment in favor of Dr. Jadali. II. WAIVER OF ISSUES A. LEGAL STANDARDS Generally, an issue must have been raised before, and addressed and decided by, the trial court to be preserved for appellate review.4 Moreover, "[a] party who waives a right is precluded from seeking appellate review based on a denial of that right because waiver eliminates any error."5 A waiver is a voluntary and intentional relinquishment or abandonment of a known right.6 "`The usual manner of waiving a right is by acts which indicate an intention to relinquish it, or by so neglecting and failing to act as to induce a belief that it was the intention and purpose

4 5 6

Hines v Volkswagen of America, Inc, 265 Mich App 432, 443; 695 NW2d 84 (2005). The Cadle Co v City of Kentwood, 285 Mich App 240, 255; 776 NW2d 145 (2009).

Quality Prod and Concepts Co v Nagel Precision, Inc, 469 Mich 362, 374; 666 NW2d 251 (2003); Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 69; 642 NW2d 663 (2002).

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to waive.'"7 "A party who expressly agrees with an issue in the trial court cannot then take a contrary position on appeal."8 "`A party is not allowed to assign as error on appeal something which his or her own counsel deemed proper at trial since to do so would permit the party to harbor error as an appellate parachute.'"9 B. INTERPRETATION OF EMPLOYMENT AGREEMENT Defendants argue that the parties' employment agreement provision regarding the calculation of Dr. Jadali's compensation was unambiguous and should have been decided by the trial court as a matter of law. But defendants waived this argument. When defendants moved for a directed verdict, they did not make such an argument. Further, defendants acquiesced in submitting the interpretation of the contract to the jury. The trial court instructed the jury: The written agreement, along with all attachments thereto, is to be considered in determining the existence or nature of the contractual duties owed by Michigan Neurology Associates to Dr. Jadali. In determining the parties' intentions under the written contract, you should consider the agreement as a whole, including all of its parts and attachments. You should interpret the words of the contract by giving them their ordinary and common meaning. Initially, you must determine the meaning of the provision contained in the contract that was executed by the parties. Interpreting the contract's terms requires a determination by you as to the intent of the parties in entering the contract. The determination of intent allows you to take into consideration extrinsic evidence such as the parties' conduct, the verbal statements of their representatives, and past practice between the parties. If, after taking such evidence into consideration, you are unable to determine what the parties intended their contract to mean, you may then, and only then, construe the document against the party that drafted the contract. After the trial court completed its instructions, it asked the attorneys if they were satisfied with the instructions as read. Both Dr. Jadali's counsel and defense counsel expressed satisfaction with the instructions. Thus, because defendants' counsel acquiesced in submitting the interpretation of the contract to the jury, defendants cannot now harbor error on that basis as an

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The Cadle Co, 285 Mich App at 254-255, quoting Book Furniture Co v Chance, 352 Mich 521, 526-527; 90 NW2d 651 (1958).

8

Grant v AAA Michigan/Wisconsin, Inc (On Remand), 272 Mich App 142, 148; 724 NW2d 498 (2006).

Marshall Lasser, PC v George, 252 Mich App 104, 109; 651 NW2d 158 (2002), quoting Dresselhouse v Chrysler Corp, 177 Mich App 470, 477; 442 NW2d 705 (1989).

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appellate parachute.10 (Although defendants argued in their motion for JNOV that the language of the contract was clear and did not require interpretation by the jury, defendants had by then already waived the issue by agreeing to the instructions, thereby eliminating any error.11) C. UNJUST ENRICHMENT Defendants also waived their argument that Dr. Jadali's unjust enrichment claim should not have been submitted to the jury because an express contract existed. Defendants did not argue in their directed verdict motion that an unjust enrichment claim was entirely precluded, but rather, that the evidence failed to establish such a claim. Further, the trial court instructed the jury: The plaintiff claims that the defendant was unjustly enriched in keeping the plaintiff's funds. To establish a claim of unjust enrichment, the plaintiff must prove: 1) Receipt of a benefit by the defendant from the plaintiff; and 2) an inequity resulting to the plaintiff because of the retention of the benefit by the defendant. When unjust enrichment exists, the law operates to imply a contract in order to prevent it. However, if you find that an actual express contract was entered into by the parties covering the same subject matter, you may not allow the plaintiff to recover under the theory of unjust enrichment. As discussed, at the conclusion of the instructions, Dr. Jadali's counsel and defense counsel each expressed satisfaction with the instructions as read. Thus, by acquiescing in the submission of the unjust enrichment claim as an alternative theory, defendants waived the argument that the jury should not have been permitted to consider unjust enrichment. III. DISPOSITIVE MOTIONS A. STANDARD OF REVIEW This Court reviews de novo a trial court's decision on a motion for directed verdict.12 This Court views the evidence in the light most favorable to the nonmoving party.13 "A directed verdict is appropriate only when no factual question exists upon which reasonable minds could differ."14 This Court also reviews de novo a trial court's decision on a motion for JNOV.15 This

10 11 12 13 14

Marshall Lasser, 252 Mich App at 109. The Cadle Co, 285 Mich App at 255. Genna v Jackson, 286 Mich App 413, 416; 781 NW2d 124 (2009). Id.

Roberts v Saffell, 280 Mich App 397, 401; 760 NW2d 715 (2008), aff'd 483 Mich 1089 (2009).

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Court views the evidence and legitimate inferences therefrom in the light most favorable to the nonmoving party to determine whether the moving party was entitled to judgment as a matter of law.16 "The motion should be granted only when there is insufficient evidence presented to create a triable issue for the jury. When reasonable jurors could honestly reach different conclusions regarding the evidence, the jury verdict must stand."17 B. PAYMENT FOR COLLECTIONS RECEIVED AFTER LAST DATE OF EMPLOYMENT Defendants argue that the trial court erred in denying their motions for directed verdict and JNOV on the issue whether sufficient evidence was presented that Dr. Jadali was entitled to his commission for services rendered during the employment period but where payment was collected after his employment ended. First, we conclude that the contractual language at issue is ambiguous. "A contract is ambiguous when its words may be reasonably understood in different ways."18 Thus, a contract is deemed ambiguous when two provisions irreconcilably conflict with one another or when a term is equally susceptible of more than one meaning.19 Here, the compensation provision of the parties' employment agreement may be reasonably understood in different ways. The first sentence of

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