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Dunn v. Fastmed Urgent Care PC

Court of Appeals of Arizona, First Division

June 19, 2018

MICHAEL DUNN, MD, Plaintiff/Appellant,
v.
FASTMED URGENT CARE PC, et al., Defendants/Appellees.

          Appeal from the Superior Court in Maricopa County No. CV2016-095137 The Honorable David King Udall, Judge

          Wallin Hester, PLC, Gilbert By Chad A. Hester, Ryan M. Osugi Co-Counsel for Plaintiff/Appellant

          Spencer Fane, LLP, Phoenix By Andrew M. Federhar, Jessica Anne Gale Co-Counsel for Defendants/Appellees

          James B. Morse Jr. Judge delivered the opinion of the Court, in which Randall M. Howe Presiding Judge and Kenton D. Jones Judge joined

          OPINION

          MORSE, JUDGE

         ¶1 Michael Dunn ("Dunn") appeals the superior court's order of dismissal of his Verified Complaint ("Complaint") without prejudice for improper venue pursuant to a contractual forum-selection clause. For the following reasons, we affirm.

         FACTS AND PROCEDURAL HISTORY

         ¶2 Dunn is a doctor who held an ownership interest in Urgent Cares of America Holdings I, LLC ("Urgent Cares"). In May 2015, Dunn signed a Letter of Transmittal ("LOT") in which he sold his interest in Urgent Cares to FastMed Holdings, LLC, and agreed to be bound by a Purchase Agreement and Plan of Merger ("Purchase Agreement"). The Purchase Agreement involved multiple parties and more than $200, 000, 000 in total consideration.

         ¶3 Upon the closing of the Purchase Agreement transaction, Dunn received $1, 000, 000. The LOT specified that the payment was in exchange for (1) Dunn's ownership interest, including goodwill, in Urgent Cares; (2) his consent and agreement to the Purchase Agreement, which selected Delaware's governing law and forum; and (3) a covenant not to compete with the business for five years after the closing of the Purchase Agreement.

         ¶4 In June 2015, after the Purchase Agreement transaction closed, Dunn entered a Second Amended and Restated Employment Agreement ("Second Employment Agreement") with FastMed Urgent Care, P.C. ("FastMed"). The parties both describe FastMed as an entity that resulted from the Purchase Agreement transaction. The Second Employment Agreement included a six-month non-competition covenant following termination of employment. Dunn later resigned from FastMed and in September 2015, Dunn and FastMed entered a "Separation Agreement" to "settle[] [] matters relating to the end of [Dunn's] employment" with FastMed. The Separation Agreement expressly incorporated the six-month non-competition provision of the Second Employment Agreement and provided that all disputes arising out of the Separation Agreement be brought in Arizona and interpreted according to Arizona law.

         ¶5 In August 2016, Dunn accepted an executive employment offer from Banner Health. Once FastMed learned of Dunn's employment, it informed Banner Health and Dunn that his prospective employment would breach the contractual five-year non-competition provision contained within the LOT. In response, Dunn claimed that the Separation Agreement, which contained an integration clause, superseded the LOT and that Dunn was subject only to the expired six-month non-competition provision contained within the Second Employment Agreement. Due to the parties' dispute, Banner Health withdrew its employment offer to Dunn.

         ¶6 In September 2016, Dunn filed a Complaint against Appellees, alleging breach of the Separation Agreement and related contract and tort claims. Dunn requested declaratory relief in the form of an order from the superior court "that the restrictive covenant in the Letter of Transmittal was superseded by the restrictive covenant and integration clause agreed upon in the" Separation Agreement. Dunn also sought to enjoin Appellees from "improper application of the alleged restrictive covenant, " and requested punitive damages and attorneys' fees and costs pursuant to Arizona Revised Statutes ("A.R.S.") sections 12-341.01 and 12-349.

         ¶7 Appellees moved to dismiss the Complaint, pursuant to Arizona Rules of Civil Procedure 9(b) and 12(b)(6), arguing that the Purchase Agreement, to which Dunn had assented in the LOT, provided that Delaware was the exclusive forum for the action. Dunn opposed the motion to dismiss, arguing that the Separation Agreement superseded the LOT and Purchase Agreement.

         ¶8 The superior court found in favor of Appellees and dismissed the Complaint without prejudice, allowing Dunn the opportunity to refile the action in Delaware, and awarded Appellees ...


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