Lourdes Med. Pavilion v. Cath. Healthcare Partners, Inc.

BREACH OF CONTRACT – NONCOMPETITION

Lourdes Med.
Pavilion v. Cath. Healthcare Partners, Inc., No. Civ.A. 5:03CV231M (W.D. Ky.
2006)

The United States District Court for the Western District of Kentucky
denied a hospital’s motion for summary judgment, finding that a state statute
prohibits the use of "authority to sue" as a defense in an action
brought on behalf of a limited liability company (LLC). A hospital agreed to
form an LLC with multiple physician specialty groups, in order to collaborate
in providing various medical services to the community. The hospital then signed
a noncompetition agreement with the LLC, under which it agreed not to engage
in any lines of business that would compete with the LLC. Later, a physician,
on behalf of the LLC, filed a suit against the hospital, alleging it breached
the noncompetition agreement when it expanded its outpatient surgery services
and constructed new physician office space. The hospital filed a motion for
summary judgment, claiming that because it held an equal share in the LLC,
the LLC was not authorized to bring a lawsuit without the hospital’s authorization.
The district court agreed that the physicians did not have the authority to
file suit, but denied the hospital’s motion for summary judgment, finding that
a state statute prohibits the use of "authority
to sue" as a defense in an action brought on behalf of an LLC.