On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-0029-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lisa, Lihotz and Simonelli.
Plaintiff Monmouth Radiologists, P.A. (MR) is a professional association whose current shareholders are the four individual doctor-plaintiffs named in this litigation, Drs. Perrine, Rose, Stein, and Smuro.*fn1 Plaintiff, M.R. Realty, L.L.P., is a limited liability partnership owned by the individual doctor-plaintiffs, along with defendant-doctors Richard B. Ruchman and Thomas Kelly. Among M.R. Realty's holdings is a condominium in a medical office building adjacent to the hospital (Third Avenue property) used by MR in its private business operations. M.R. Realty also owns an interest in a competing radiology group, which offers imaging services (e.g., MRI and CT scan services) that initially were unavailable at the hospital.
MR exclusively provided radiology services to defendant Monmouth Medical Center (MMC), which owns and operates a nonprofit hospital in Long Branch. In 1970, MR and MMC negotiated a five-year written contract governing this relationship; the agreement was renewable for a second five-year term. After 1980, MR continued to provide radiology services to MMC without the benefit of a writing governing the terms of their relationship. In 1993 and 1998, proposed written contracts were drafted, but the parties remained unsuccessful in negotiating another written agreement.*fn2
Defendant Dr. Frank Vozos is the Executive Director of MMC; David A. Mebane is the Vice-President of Legal Affairs. Defendant-doctors Ruchman and Kelly were former members of MR and are the hospital's current radiologists.
In the course of the relationship between MR and MMC, MR nominated one of its members as the Chair of MMC's Radiology Department. In 2000, MR nominated Ruchman, who acted as Chair pending approval by the hospital's search committee. MMC presented Ruchman with a contract to act as Contract Chairman of the department. As Contract Chairman, Ruchman had the responsibility to hire staff and to meet service standards.
Throughout 2000 and into 2001, negotiations between MR and MMC continued with an eye toward defining an exclusive relationship between the radiologists and the hospital. An impasse developed because MMC sought a captive radiology department and requested MR to close its competing private practice located in the Third Avenue property. During this period, MR continued to provide the hospital's necessary radiological services.
Early in 2001, MMC notified MR that it was necessary to reach a written agreement and absent the parties' ability to strike an accord, MMC expressed its position that it would contract with others to provide radiological services for the hospital. No agreement was reached. On April 18, 2001, MMC terminated its relationship with MR. On April 26, 2001, MR agreed MMC could approach individual members of MR. On May 18, 2001, MMC entered into a contract with Ruchman to provide the hospital's exclusive radiology services. Ruchman and Kelly formed Monmouth Medical Imaging, which contracted for the exclusive right to provide radiological services at MMC.
Plaintiffs filed a Chancery action seeking various relief against all defendants. Defendants MMC, Vozos and Mebane filed a request for summary judgment. After review, Judge Gilroy dismissed plaintiffs' complaint against MMC, Vozos and Mebane. Plaintiffs later settled the claims against Ruchman and Kelly and appealed from the summary judgment dismissing the claims against MMC, Vozos and Mebane.
On appeal plaintiffs argue:
Point I: The Court Below Erred by Attempting to Determine Questions of Intent and Bad Faith.
Point II: The Court Below Erred in Dismissing the Plaintiffs' Claims for Violation of the Covenant of ...