#24860-a-GIENAPP, Circuit Judge
2009 SD 12
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
* * * *
SAMINA GUL, M.D., Plaintiff and Appellant,
v.
CENTER FOR FAMILY
MEDICINE and DR. EARL KEMP, Defendants and Appellees.
* * * *
APPEAL FROM THE CIRCUIT COURT
OF THE SECOND JUDICIAL CIRCUIT
MINNEHAHA COUNTY, SOUTH DAKOTA
* * * *
HONORABLE WILLIAM J. SRSTKA, JR.
Judge
* * * *
SHAWN M. NICHOLS of
Cadwell, Sanford, Deibert & Garry, LLP Attorneys for plaintiff
Sioux Falls, South Dakota and appellant.
R. ALAN PETERSON
STEVEN J. MORGANS
DANA VAN BEEK PALMER of
Lynn, Jackson, Shultz & Lebrun, PC Attorneys for defendants
Sioux Falls, South Dakota and appellees.
* * * *
ARGUED ON
September 29, 2008
OPINION FILED 2/25/09
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GIENAPP, Circuit Judge
[¶1.] Samina Gul, M.D. (Dr. Gul) commenced an action for breach of
contract, defamation, and violation of due process against the Center for Family
Medicine (CFM) and one of its physicians, Dr. Earl Kemp (Dr. Kemp). The parties
filed cross motions for summary judgment, although Dr. Gul's motion was for
partial summary judgment as to liability on the contract claim. The circuit court
ruled in favor of CFM and Dr. Kemp on the defamation, due process, and breach of
contract claims. The circuit court also ruled that Dr. Gul was entitled to summary
judgment as to her last month of salary under the contract. Dr. Gul appeals the due
process and breach of contract summary judgment rulings and we affirm.
FACTS AND PROCEDURE
[¶2.] CFM is affiliated with the University of South Dakota Medical School.
In April 2004 Dr. Gul was accepted into CFM's medical residency program in the
area of family medicine. Dr. Kemp, a family practice physician employed by CFM,
supervised the residency program. Dr. Gul was accepted into the program on April
19, 2004, and signed a contract for the program on April 28, 2004. The contract was
for a one-year term that was the first year of the three-year residency program.1
Pursuant to the contract, Dr. Gul was paid a stipend for her services. Dr. Gul began
her residency with CFM on June 26, 2004. 2
1. There is no contractual guarantee that a contract will be offered for the
second year of residency. The three-year residency program consists of three
separate one-year contracts.
2. The term of the contract was from June 23, 2004, to June 30, 2005. The
annual compensation was $41,355.
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[¶3.] Problems with Dr. Gul's work developed and Dr. Gul was advised on
December 30, 2004, that she was receiving a Notice of Unsatisfactory Performance
and was placed on probation. That document provided in part that there were
concerns about Dr. Gul's professionalism, organizational skills, and problem-solving
abilities. Additionally, there were concerns with Dr. Gul's proficiency in speaking
and writing the English language.
[¶4.] On April 27, 2005, Dr. Gul was notified by CFM that her residency
contract would not be renewed for another year. CFM provided Dr. Gul with a
document titled Notice of Non-Renewal of Resident Contract for Dr. Gul (Notice of
Non-Renewal) which explained the non-renewal decision. The document served as
official notice that Dr. Gul's residency contract would not be renewed by CFM after
June 30, 2005, and that she would not be receiving a certificate of completion for
her first year of residency. The Notice of Non-Renewal referenced the granting of a
remedial month. Dr. Gul was subsequently told to turn in her keys and badge, and
her scheduled rotations were assigned to other residents. At that time Dr. Gul was
informed by CFM that she would be paid through the month of May.
[¶5.] Dr. Gul was provided with the Residents Manual which was comprised
of the various policies and guidelines pertinent to the residency program. The
manual provided that if a resident was being considered for dismissal from the
program, she could request a hearing before the Resident Oversight Committee
(ROC) in order to contest the dismissal.
[¶6.] After receiving the Notice of Non-Renewal, Dr. Gul requested a
hearing before the ROC, which was held a few weeks later. After the hearing, at
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which Dr. Gul was represented by counsel, the ROC voted sixteen to one to approve
the non-renewal decision. In accordance with the procedure set forth in the
Residents Manual, Dr. Gul appealed the ROC's decision to the Graduate Medical
Education Committee. Dr. Gul was granted a hearing before that Committee,
which was comprised of seven physicians who supervise medical residents. The
Committee heard evidence provided by Dr. Gul and her attorney, and the
Committee ultimately affirmed the decision of the ROC. Dr. Gul then appealed the
decision to CFM's Board of Directors, which affirmed the decision not to renew Dr.
Gul's residency contract.
[¶7.] Dr. Gul commenced an action against CFM and Dr. Kemp for
defamation, breach of contract, and due process violations. The circuit court
granted summary judgment in favor of CFM and Dr. Kemp on those claims while
simultaneously granting summary judgment in favor of Dr. Gul for her last month's
salary, that being the month of June. Dr. Gul is appealing the circuit court's
decision granting summary judgment in favor of CFM and Dr. Kemp on the issues
of breach of contract and a claimed denial of due process. The summary judgment
as to the defamation claim was not appealed.
STANDARD OF REVIEW
[¶8.] This matter is before the Court on appeal from a grant of summary
judgment. Summary judgment
shall be rendered forthwith if the pleadings, depositions,
answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.
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SDCL 15-6-56(c). "In reviewing a grant of summary judgment under SDCL 15-6-
56(c) we must determine whether the moving party has demonstrated there is no
genuine issue of material fact and [the moving party] is entitled to judgment as a
matter of law." Hoglund v. Dakota Fire Ins. Co., 2007 SD 123, ¶7, 742 NW2d 853,
856. All reasonable inferences drawn from the facts must be viewed in favor of the
nonmoving party and reasonable doubts should be resolved against the moving
party. Wilson v. Great N. Ry. Co., 83 SD 207, 212, 157 NW2d 19, 21 (1968). "The
burden is on the moving party to clearly show an absence of any genuine issue of
material fact and an entitlement to judgment as a matter of law." Butler Mach. Co.
v. Morris Const. Co., 2004 SD 81, ¶5, 682 NW2d 773, 776 (quoting Chilson v.
Kimbell Sch. Dist. No. 7-2, 2003 SD 53, ¶7, 663 NW2d 667, 669). "Our task on
appeal is to determine only whether a genuine issue of material fact exists and
whether the law was correctly applied" by the lower court. Wojewski v. Rapid City
Reg'l Hosp., Inc., 2007 SD 33, ¶12, 730 NW2d 626, 631 (quoting Reed v. McKennan
Hosp., 2000 SD 66, ¶8, 610 NW2d 782, 784). The construction of a written contract
is a question of law for the Court to consider. Dirks v. Sioux Valley Empire Elec.
Ass'n, 450 NW2d 426, 427-28 (SD 1990). Affirmance is proper if any basis exists
which would support the circuit court's ruling. Breen v. Dakota Gear & Joint Co.,
Inc., 433 NW2d 221, 223 (SD 1988). "A disputed fact is not 'material' unless it
would affect the outcome of the suit under the governing substantive law in that a
'reasonable jury could return a verdict for the nonmoving party.'" Weitzel v. Sioux
Valley Heart Partners, 2006 SD 45, ¶17, 714 NW2d 884, 891 (quoting S.D. State
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Cement Plant Comm'n v. Wausau Underwriters Ins., Co., 2000 SD 116, ¶9, 616
NW2d 397, 401).
ANALYSIS AND DECISION
ISSUE ONE
[¶9.] Whether there was a breach of the one-year residency contract.
[¶10.] "A contract is an agreement to do or not to do a certain thing." SDCL
53-1-1. The elements that must be met in a breach of contract claim are: (1) an
enforceable promise; (2) a breach of the promise; and (3) resulting damages.
Guthmiller v. Deloitte & Touche, LLP, 2005 SD 77, ¶14, 699 NW2d 493, 498.
[¶11.] The contract at issue provides that "CFM retains the right to
terminate this contract at any time should the Resident, in the opinion of CFM, fail
to act within his/her best professional capacity and ability, and commensurate with
the highest standards of practice and ethics applicable to the Family Practice
specialty." The contract also references a Residents Manual that provides "rules,
regulations, policies and procedures." The pertinent language in the Residents
Manual pertaining to dismissals states, "[w]hen a resident is being considered for
dismissal, the Program Director or designee shall notify the resident, in writing, of
the charges and of the proposed dismissal. The resident may request a hearing
before the ROC." 3
3. Although the residency program is a three-year program the contract is a
one-year contract specifically stating that: "The term of this agreement
commences June 23, 2004 and terminates June 30, 2005. It is understood
that this contract is for a portion of a three year program." Dr. Gul received
payment for the entire term of the contract. Dr. Gul had originally received
payment for eleven months, but the circuit court's decision added the
payment for the twelfth month with the indication that this was done
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[¶12.] Dr. Gul contends that summary judgment was improper because CFM
terminated her without a hearing prior to termination, in breach of the contract.
However, the record shows otherwise.
[¶13.] The record demonstrates that Dr. Gul was notified in writing of the
charges and of the proposed dismissal. On April 27, 2005, Dr. Gul received the
Notice of Non-Renewal which summarized her unsatisfactory performance. 4 The
record also reveals other circumstances, prior to the April 27, 2005, notice, where
Dr. Gul received notice, feedback, and opportunities to be heard regarding her
deficient performance. In that regard, Dr. Gul was given a Notice of Unsatisfactory
Performance in December 2004 which outlined her unsatisfactory performance. She
discussed the items in this document with Dr. Kemp and another physician. At this
time she was also placed on probation. The Residents Manual indicates that Dr.
Gul could have requested a hearing before the ROC upon receipt of this notice, but
she did not do so. After Dr. Gul received the Notice of Unsatisfactory Performance,
she continued to receive evaluations and feedback and was given copies of her
performance reviews which showed inadequate performance in several areas.
Furthermore, the Notice of Non-Renewal on April 27, 2005, did not act as
pursuant to discussions at the summary judgment hearing. The transcript of
that hearing is not a part of the record before this Court.
4. The document listed several deficiencies including doubts about Dr. Gul's
ability to independently develop differential diagnoses for complex patients
and an inability to develop appropriate diagnostic and therapeutic plans.
The document also noted Dr. Gul's problems in speaking and understanding
verbal English and problems communicating in written English. Finally, the
document expressed doubts about whether Dr. Gul would be able to "develop
adequate skills in application of basic clinical knowledge to care for patients
even with more clinical training."
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immediate termination. The document states that Dr. Gul's "residency contract will
not be renewed after June 30, 2005."
[¶14.] After the Notice of Non-Renewal on April 27, 2005, Dr. Gul did not
perform any duties in connection with her first-year residency contract except for
some minimal duties in connection with finishing uncompleted medical reports.
There does exist a factual dispute as to whether or not Dr. Gul was told not to
report to work by Dr. Kemp, or whether Dr. Gul did not show up for duties as
instructed. 5 However, this factual dispute is not material to Dr. Gul's claims and as
a consequence does not defeat summary judgment. 6 "A disputed fact is not
'material' unless it would affect the outcome of the suit under the governing
substantive law in that a 'reasonable jury could return a verdict for the non-moving
party.'" Weitzel, 2006 SD 45, ¶17, 714 NW2d at 891.
[¶15.] Dr. Gul was also provided all of the hearings outlined in the Residents
Manual. A hearing before the ROC was held within a few weeks of Dr. Gul's
request. After the hearing, during which Dr. Gul was represented by counsel, the
ROC voted sixteen to one to approve the non-renewal decision. Dr. Gul then
appealed the ROC's decision to the Graduate Medical Education Committee, which
5. The assignment of duties or non-assignment of duties was solely at the
discretion of CFM.
6. It was at the time of this factual dispute that Dr. Kemp informed Dr. Gul
that she would be paid through May 2005, but pursuant to the circuit court's
decision she was ultimately paid through June 2005, which was the entire
amount she was to be paid under the contract. No person may recover a
greater amount in damages for the breach of an obligation than he could have
gained by full performance on both sides absent statutory exemplary or penal
damages. See SDCL 21-1-5; Nelson v. WEB Water Dev. Ass'n, Inc., 507
NW2d 691, 700 (SD 1993).
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was comprised of seven physicians who supervise medical residents. The
Committee heard evidence provided by Dr. Gul and her attorney, but ultimately
affirmed the decision of the ROC. Dr. Gul then appealed the decision to CFM's
Board of Directors, which also agreed with the decision not to renew Dr. Gul's
residency contract.
[¶16.] Dr. Gul does not dispute that the contract was a one-year contract. Dr.
Gul does not dispute that she has now been paid the entire stipend owed her for
that one-year contract period. What Dr. Gul does contend is that the contract and
Residents Manual provided for due process hearings prior to termination. However,
the Notice of Non-Renewal of April 27, 2005, indicated that the residency will not be
renewed after June 30, 2005. The notice also indicated that, "[n]either is it
anticipated that you will be awarded a certification of completion of the first year."
Dr. Gul claims the wording of the Residents Manual provides for an appeal from a
proposed dismissal. The April 27, 2005, notice was a proposed dismissal as of June
30, 2005, not an April 27, 2005, dismissal, so it was a proposed dismissal. As a
result, Dr. Gul's claim is without merit.
[¶17.] The circuit court was correct in finding that there were no genuine
issues of material fact as to whether Dr. Gul was provided adequate notice of her
poor performance prior to receiving the Notice of Non-Renewal. Additionally, Dr.
Gul was provided all opportunities for review as outlined in the Residents Manual.
ISSUE TWO
[¶18.] Whether Dr. Gul's due process rights were violated.
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[¶19.] The Fourteenth Amendment to the United States Constitution and
Article VI, Section 2 of the South Dakota Constitution provide a party a right to due
process before being deprived of life, liberty, or property. Generally, due process
requires "notice and an opportunity to be heard." Wuest v. Winner Sch. Dist. 59-2,
2000 SD 42, ¶25, 607 NW2d 912, 918. Additionally, due process must be granted at
a "meaningful time and in a meaningful manner." Hollander v. Douglas County,
2000 SD 159, ¶17, 620 NW2d 181, 186 (quoting Schrank v. Pennington County Bd.
of Comm'rs, 1998 SD 108, ¶13, 584 NW2d 680, 682). However, this Court has found
that dismissing a student for academic reasons does not necessitate a hearing.
Delaney v. Heimstra, 288 NW2d 769, 772 (SD 1980) (citing Bd. of Curators of Univ.
of Mo. v. Horowitz, 435 US 78, 89, 98 SCt 948, 955, 55 LEd2d 135 (1978)).
[¶20.] The circuit court found that Dr. Gul was a student in CFM's residency
program. Dr. Gul argues that she should be considered an employee, and not a
student, for purposes of the due process analysis. To support this, Dr. Gul cites the
fact that she was paid a salary of $41,355 for her services for the year under the
residency contract. CFM contends that Dr. Gul was a student enrolled in CFM's
residency program. 7
[¶21.] The issue of whether a medical resident is considered a student or an
employee is a matter of first impression before this Court, but has been addressed
7. CFM and Dr. Kemp also assert that they are not state actors and, thus, no
due process analysis is warranted. However, the record does not indicate
that this argument was presented to the circuit court and as a consequence it
has been waived. "An issue may not be presented for a first time on appeal."
Schlumbohm v. City of Sioux Falls, 2001 SD 74, ¶22, 630 NW2d 93, 98. Our
function is that of review, therefore, "issues not presented to the trial court
are not before us on appeal." Chipperfield v. Woessner, 84 SD 13, 19, 166
NW2d 727, 730 (1969).
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in other jurisdictions. A Minnesota court addressed this issue in Ross v. University
of Minnesota, 439 NW2d 28 (MinnCtApp 1989). In Ross, a medical resident in the
University of Minnesota's psychiatry program was dismissed because his work
performance was below minimum standards and he lacked interpersonal skills. Id.
at 30-31. The resident filed suit against the university alleging, among other
claims, that the dismissal from the residency program had violated his due process
rights. Id. The court in Ross found that a medical resident is a student for the
purpose of reviewing a decision to dismiss him for academic reasons, and that
holding otherwise "would be to threaten the autonomy of academic institutions to
determine standards for the passing and failing of students." Id. at 33. The court
further noted that dismissing a resident from a hospital-based residency should be
treated the same as failing a graduate student for the inability to meet academic
requirements. Id.
[¶22.] The Fifth Circuit Court of Appeals also addressed this issue in Davis v.
Mann, 882 F2d 967 (5thCir 1989). In Davis, a dental resident in the University of
Mississippi's dental residency program was dismissed for unsatisfactory academic
performance. Id. at 971. The resident sued the university asserting that his due
process rights had been violated. The court concluded that a dental resident should
be considered a student rather than an employee:
The residency program is distinct from other types of
employment in that the resident's "work" is what is
academically supervised and evaluated. It is well-known
that the primary purpose of a residency program is not
employment or a stipend, but the academic training and
the academic certification for successful completion of the
program.
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Id. at 974. Other courts have agreed that a medical resident should be categorized
as a student rather than an employee. Regents of Univ. of Minn. v. United States,
2008 WL 906799, at *6 (DMinn Apr. 1, 2008) (holding that residents are students,
not employees subject to FICA taxes); Halverson v. Univ. of Utah Sch. of Med., 2007
WL 2892633, at *11 (DUtah Sept. 28, 2007) (holding that medical residents are not
considered employees and are entitled to lesser due process procedures than
employees).
[¶23.] We agree that medical residents are students and not employees. The
fact that Dr. Gul received a stipend does not alter the fact that she was
participating in an academic program in order to receive academic certification. As
a student, Dr. Gul is not entitled to the same due process protection as an employee.
[¶24.] In Delaney v. Heimstra, we held that a hearing is not required when a
student is dismissed for academic reasons. 288 NW2d at 771. The Delaney Court
followed the United States Supreme Court opinion in Board of Curators of
University of Missouri v. Horowitz, 435 US at 89, 98 SCt at 955, and recognized that
a hearing may be "useless or harmful in finding out the truth concerning
scholarship." Id. at 771. In Delaney, we adopted the standard set forth in Gaspar v.
Burton, 513 F2d 843 (10thCir 1975):
[S]chool authorities, in order to satisfy Due Process prior
to termination or suspension of a student for deficiencies
in meeting minimum academic performance, need only
advise that student with respect to such deficiencies in
any form. All that is required is that the student be made
aware prior to termination of his failure or impending
failure to meet those standards.
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Id. at 772. In adopting that standard, we held that an MBA student's procedural
due process requirements were met when the student was notified of his academic
deficiencies and when, after failing to meet the academic criteria, the MBA student
was afforded the opportunity to have a request for special consideration reviewed by
the MBA Committee. Id.
[¶25.] Dr. Gul was provided with ample notice that she was not meeting the
minimum academic performance required for the medical residency. In December
2004, Dr. Gul was given the Notice of Unsatisfactory Performance and was placed
on probation. This notice detailed the concerns that CFM had with Dr. Gul's
performance. Also, between January and April 2005, Dr. Gul was given copies of
her performance reviews that showed her inadequate performance in several areas.
Additionally, in April 2005, Dr. Gul was given a follow-up review that indicated
that, while she was making some improvements, her performance still fell below
what was expected of a first-year resident. Dr. Gul was afforded all due process to
which a medical resident is entitled, and summary judgment was proper.
[¶26.] GILBERTSON, Chief Justice, KONENKAMP and MEIERHENRY,
Justices, concur.
[¶27.] ZINTER, Justice, concurs specially.
[¶28.] GIENAPP, Circuit Judge, for SABERS, Retired Justice, disqualified.
ZINTER, Justice (concurring specially).
[¶29.] I agree there is a genuine issue of disputed fact whether Dr. Gul was
terminated on April 27, 2005, before she received her contractual right to a hearing.
See supra ¶14. Defendants admitted the point at oral argument when they
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conceded that at a minimum there was "confusion" over the matter. This Court
notes that this dispute of fact was not material because Dr. Gul was paid for the
balance of her contract. Id. n6. I write to address Dr. Gul's additional contention
that the dispute of fact regarding termination was material to her claim for
consequential damages.
[¶30.] Dr. Gul is mistaken because she sued in contract rather than tort, and
therefore, she was not entitled to the consequential damages she claimed (collateral
damages arising after her contract ended). Damages for breach of a definite term
employment contract are generally limited to the lost wages that would have been
earned until the end of the contract. Bad Wound v. Lakota Cmty. Homes, Inc., 1999
SD 165, ¶11, 603 NW2d 723, 726. Although Dr. Gul's claimed consequential
damages may have been recoverable in tort, they were not recoverable in her suit
for breach of contract. See id. ¶¶11-13, 603 NW2d at 726. Therefore, the dispute of
fact regarding termination was not material to the issue of consequential damages.
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