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COURT OF APPEALS DECISION DATED AND RELEASED April 10, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0746
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
J. MICHAEL DOYLE,
D.D.S.,
KATHLEEN M.
DOYLE-KELLY, D.D.S.,
and TIMOTHY MC BRIDE,
D.D.S.,
Plaintiffs-Respondents,
v.
PREPAID PROFESSIONAL
SERVICES, LTD.,
a Wisconsin
Corporation,
Defendant-Appellant.
APPEAL from a judgment
of the circuit court for Fond du Lac County:
HENRY B. BUSLEE, Judge. Affirmed.
Before Anderson, P.J.,
Brown and Snyder, JJ.
PER CURIAM. Prepaid Professional
Services, Ltd. (Prepaid) appeals from a judgment in favor of J. Michael Doyle,
Kathleen M. Doyle-Kelly and Timothy McBride, dentists who formerly
participated in Prepaid's dental insurance plan. We affirm because the trial court's finding that the parties
modified the compensation scheme in the original contract is not clearly
erroneous and Prepaid breached the contract as modified.
Doyle entered into a
contract with Prepaid in January 1985, McBride entered into his contract in
March 1987, and Doyle-Kelly entered into her contract in February 1991. The original Prepaid contract was a
"capitation contract" in which the dentists agreed to treat all
patients referred by Prepaid at a stated monthly fee, regardless of the
dentist's usual and customary rates or the amount of services provided to each
patient. The question at trial was
whether the parties modified the contract by virtue of an October 1989 letter
which discussed another compensation scheme.
In August 1989, Doyle
and McBride advised Prepaid of their desire to leave the plan because the low
capitation fee was generating insufficient revenue to the practice. During a meeting with Gary Zaskey, Prepaid's
director, the parties reached an agreement which was memorialized in an October
11, 1989, letter from Zaskey to Doyle.
The letter stated that
it would become part of the parties' contract.
It further stated: "In consideration of the utilization you have
experienced, we are agreeing to deviate from our standard capitation per month
method of compensation and accelerate capitation payments to you, based on 75%
of your UCR [usual and customary rates]."
The dentists were instructed to submit charges for the procedures they
performed and Prepaid would "adjust to the agreed discounted percentage
and compensate accordingly. You
understand that his [sic] method of compensation is not to be discussed with
either the patient or any of the other providers, and is being agreed to only
because of your unique situation."
The dentists interpreted this as a wholesale departure from the
capitation compensation structure, while Prepaid deemed it a method of
advancing capitation fees to the dentists.
In December 1991, the dentists terminated their participation in the
plan and sued Prepaid under theories of breach of contract and promissory
estoppel to recover amounts due. The
parties stipulated that the dentists' damages were $132,819.
After a trial to the
court, the court found that the parties' contract consisted of the original
contract and the 1989 letter, that the 1989 letter was ambiguous, that the
parties had a meeting of the minds with regard to changing the compensation
scheme from capitation to 75% of UCR and that Prepaid breached the amended
contract.[1]
On appeal, Prepaid
argues that the original contract and 1989 amendment unambiguously obligated it
to pay on the basis of capitation, not fee-for-service based on UCR, and that
Prepaid did not breach. Even if the modified
contract is ambiguous, Prepaid contends that the parties' subsequent conduct
makes it clear that they understood Prepaid was obligated to make capitation
payments, not fee-for-service payments.
While construction of a
contract to ascertain the intent of the parties is normally a matter of
law for this court, see Eden Stone Co. v. Oakfield Stone Co.,
166 Wis.2d 105, 115-16, 479 N.W.2d 557, 562 (Ct. App. 1991), where a contract
is ambiguous, the question of intent is for the trier of fact. Armstrong v. Colletti, 88
Wis.2d 148, 153, 276 N.W.2d 364, 366 (Ct. App. 1979). We will not disturb a trial court's findings of fact regarding
intent unless they are contrary to the great weight and preponderance of the
evidence, i.e., clearly erroneous. See id.; see also Noll v.
Dimiceli's, Inc., 115 Wis.2d 641, 643, 340 N.W.2d 575, 577 (Ct. App.
1983) (the great weight and preponderance of the evidence standard is identical
to the clearly erroneous standard).
However, whether a contract is ambiguous in the first instance is a
question of law which we decide independently of the trial court. Wausau Underwriters Ins. Co. v. Dane
County, 142 Wis.2d 315, 322, 417 N.W.2d 914, 916 (Ct. App. 1987). Ambiguity exists in a contract if it is
reasonably susceptible to more than one meaning. Id.
The parties agree that
their contract consisted of the original agreement and the 1989 letter.[2] However, they disagree as to whether the
1989 letter created ambiguity regarding the compensation scheme. The trial court concluded that such
ambiguity existed. We agree with this
legal conclusion. The letter stated
that Prepaid agreed to deviate from its standard capitation per month method of
compensation and accelerate capitation payments to the dentists based on 75% of
their UCR. The dentists interpreted
this as a wholesale departure from the capitation compensation structure, while
Prepaid deemed it a method of advancing capitation fees to the dentists. The letter is reasonably susceptible to
either meaning and is therefore ambiguous.
See id.
Having concluded that
the October 1989 letter created an ambiguity regarding compensation, we turn to
the trial court's findings of fact regarding the parties' intent. In order to determine the intent of parties
to an ambiguous contract, the trial court may consider extrinsic evidence,
such as the parties' words and conduct.
Spencer v. Spencer, 140 Wis.2d 447, 450, 410 N.W.2d 629,
631 (Ct. App. 1987). The trial court
can consider the circumstances before and after the signing of the ambiguous
agreement. Board of Regents v.
Mussallem, 94 Wis.2d 657, 671, 289 N.W.2d 801, 808 (1980). It was within the trial court's province to
assess the credibility of the witnesses and the weight of the evidence. Micro-Managers, Inc. v. Gregory,
147 Wis.2d 500, 512, 434 N.W.2d 97, 102 (Ct. App. 1988). We will not overturn the trial court's
findings unless they are clearly erroneous.
See id.
The trial court
considered the following in assessing the parties' intent. Prior to the October 11, 1989 letter, the
dentists sought to terminate their participation in the plan due to inadequate
revenue. Doyle testified that a
dentist's break-even point is approximately 60% to 65% of the UCR and that he
and his colleagues could not profitably continue in the plan without receiving
at least 75% of their UCR. The dentists
testified that Zaskey promised them in a meeting and in the October 1989 letter
that Prepaid would compensate them up to 75% of their UCR in order to keep them
in the plan. Zaskey told the dentists
they could switch back to the capitation plan at a later date. Doyle testified that as a result of the
letter, he felt he was no longer operating under the capitation compensation
scheme and was being compensated at 75% of UCR. The trial court acknowledged that Zaskey denied having promised
compensation at 75% of UCR, that Zaskey intended the plan to pay an advance on
capitation payments calculated at 75% of UCR, and that the letter was not
intended to alter the basic nature of the plan from capitation to another
method of compensation.
The court found that the
parties' conduct subsequent to the October 1989 letter illuminated their
intentions and evidenced a meeting of the minds to change the compensation
scheme. Before the 1989 modification,
the dentists submitted a weekly report which did not indicate the value of the
services provided to patients in the plan.
After October 1989, the dentists submitted their charges on a standard
insurance form which listed a fee for each service provided. The court found that the form had no
relation to the capitation agreement and that its use was agreed to by
Prepaid. The court found that
subsequent to the October 1989 agreement, Prepaid paid the dentists based on
work actually performed at a rate equal to 75% of their UCR; compensation was
not based upon the number of patients assigned to them. The court also noted that in light of Zaskey's
promise to pay 75% of UCR, Doyle and McBride remained with the plan for two
more years until 1991. The court noted
the dentists' testimony that they had no reason to remain with the plan unless
they were paid 75% of their UCR.
On May 30, 1990, Zaskey
sent a personalized letter to Doyle and McBride expressing his concern that
they may have misunderstood the compensation method under the plan. The letter stated that in some cases where
dental services were exceeding the capitation fees, Prepaid had used an
advanced capitation compensation formula to soften the initial burden on
dentists experiencing a large influx of patients requiring significant amounts
of dental work. Zaskey stated that such
financial assistance did not change the basic method of compensation under the
original contract. Doyle testified that
he did not receive this letter. Rather,
he received a form letter addressed to "Dear Dr." which prompted
him to call Zaskey for an explanation of its discussion of advanced capitation
payments.[3] Doyle testified that Zaskey told him the
form letter was not really meant for him and McBride. On cross-examination, Zaskey acknowledged
his conversation with Doyle and stated that he believed the 1989 letter was
still in effect when he and Doyle spoke about the "Dear Dr." letter.
Doyle testified that Zaskey told him they were still operating under the
75% of UCR compensation scheme.
Doyle and McBride sent
Zaskey another termination letter in November 1990 and demanded a large payment
on the arrearage under the contract based on payments at 75% of their UCR. Zaskey responded that the plan was unable to
make such a large payment and that the plan had not guaranteed that the
dentists would be paid 75% of UCR for services provided. However, Zaskey reiterated that they would
be compensated based on 75% of their UCR.
The court found that
"Zaskey knew or should have known that the dentists would interpret his
[October 1989] letter as a promise to pay 75% of their usual and customary
rates, because if only such a promise were paid [sic] and abided by, would the
dentists remain in the plan." The
court found that Zaskey was motivated to retain the dentists in the plan
because he was also a sales person whose commission was based upon each new
group of patients he enlisted in the plan and referred to participating
dentists.
The court considered the
testimony of Doyle, Nancy Schneider, the dentists' bookkeeper, and Bobbi Flood,
another dental office employee, and the manner in which the dentists filed
compensation requests with Prepaid. The
court concluded that the parties had agreed to compensation at 75% of the dentists'
UCR and that Prepaid failed to comply with the amended contract and was liable
as a result of the breach.
Prepaid argues that
other inferences and findings can be drawn from the evidence adduced at
trial. However, we are bound by the
trial court's assessment of the credibility of the witnesses and its findings
and inferences because they are not clearly erroneous. Micro-Managers, 147 Wis.2d at
512, 434 N.W.2d at 102.
The dentists seek costs
under Rule 809.25(3), Stats., on the grounds that this appeal
is frivolous because Prepaid makes an argument on appeal which was not raised
below—that the 1989 contract modification, even if agreed to, was unenforceable
because Prepaid is not a traditional insurance provider and is not chartered in
Wisconsin to compensate participating dentists on a fee-for-service basis. A party's presentation of an issue for the
first time on appeal cannot, as a matter of law, be deemed frivolous under Rule 809.25(3). See Tomah-Mauston Broadcasting
v. Eklund, 143 Wis.2d 648, 660, 422 N.W.2d 169, 174 (Ct. App.
1988).
The dentists next argue
that Prepaid has failed to cite to the record to support facts recited in its
brief as required by Rule
809.19(1)(d) and (e), Stats. The appellant's brief does contain citations
to the record on appeal and to the extent that some citations may be lacking,
the court does not conclude that such requires the imposition of frivolous
costs under Rule 809.25, Stats.
If factfinding is not required,
we may make the determination of frivolousness under Rule 809.25(3), Stats.,
as a matter of law. Stern v.
Thompson & Coates, Ltd., 185 Wis.2d 220, 252-53, 517 N.W.2d 658,
670 (1994). That we affirmed the trial
court is not grounds, in this case, to deem the appeal frivolous. Accordingly, we deny the dentists' request
for frivolous costs under Rule
809.25(3). However, costs are available
to them as the prevailing parties under Rule
809.25(1).
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] The trial court also found Prepaid liable on a theory of promissory estoppel. However, because we affirm the trial court's breach of contract ruling we need not address its promissory estoppel ruling.
[2] Finding of fact number 13 indicates that Prepaid intended Doyle-Kelly to be covered by the same agreement that applied to Doyle and McBride. The court found that the original contract, the 1989 letter and Prepaid's promise to pay 75% of UCR applied to Doyle-Kelly. On appeal, Prepaid does not dispute the applicability of the modified contract Doyle-Kelly.