In the case of Edwards v. Urosite Partners, the Tennessee Court of Appeals was presented with an interesting fact situation involving a physician and a real estate investment limited partnership.
Dr. Edwards was a partner in a medical group of urologists in the Nashville area. In 2000, Dr. Edwards and twenty-one other physician/shareholders in the medical group formed a limited partnership for the purpose of purchasing, owning, managing, and operating the real and personal property located at the medical group’s primary office location. The limited partnership agreement provided that partnership in the limited partnership was conditioned on continuing employment with the medical group. The language of the agreement was that the limited partnership had the right to purchase a limited partner’s units in the limited partnership “upon the termination of a Limited Partner’s employment agreement with [the medical group] for any reason other than death, disability or retirement from the practice of medicine.”
Dr. Edwards worked at the medical group under an employment agreement through June 2011. Thereafter, he worked as an employee at will through December 2013. In January 2014, he entered into a separation agreement and mutual release with the medical group and the limited partnership that if he practiced outside Hickman or Giles Counties, the limited partnership could exercise its right to redeem his interest in the limited partnership.
In the spring of 2014, Dr. Edwards began providing medical services to veterans in Rutherford and Davidson Counties at the request of the Veterans Administration. In March 2015, the limited partnership notified Dr. Edwards that it was exercising its right to redeem his interest in the limited partnership.
Dr. Edwards filed suit, claiming a breach of contract. He essentially raised three issues: (1) that the limited partnership’s exercise of its right to purchase his interest in the limited partnership forty-five months after his employment agreement with the medical group terminated in June 2011 was too long and not reasonable under the circumstances; (2) that the work that he did for the VA in Rutherford and Davidson Counties was not material because the VA does not compete with the medical group for urology patients; and (3) that allowing the limited partnership to redeem his limited partnership interest due to his practice in Rutherford and Davidson Counties amounts to a restriction on his ability to practice medicine and violates Tennessee public policy.
The Court disagreed with all of the points raised by Dr. Edwards. On the first two points, the Court noted that its responsibility was to enforce the contract as written. Since the separation agreement and mutual release did not set an outside date within which the limited partnership could purchase Dr. Edwards’ limited partnership interest if he practiced medicine outside of Hickman or Giles Counties, the time between the end of Dr. Edwards’ employment agreement and the date of exercise of the limited partnership’s option was not relevant. In addition, it was also irrelevant that the medical group and the VA did not compete for urology patients, since that was not a requirement in the agreement between the parties. Finally, with respect to the third point, the Court said that Dr. Edwards’ was not restricted from practicing medicine wherever he wished by an employer–rather, he could practice medicine in Rutherford and Davidson Counties if he wished to do so, but the cost of that action would be that the limited partnership had the right to purchase his limited partnership interest.