Acree v. McMahan,
No. A02A0903 (Ga. Ct. App. Nov. 19, 2002)

The Court of Appeals of Georgia upheld a jury verdict in favor of Dr. McMahan, who sued Dr. Acree and the hospital management corporation that Dr. Acree owned (Management Corporation 1) for breach of contract. The physicians had been partners in a corporation that managed hospitals (Management Corporation 2). When their relationship soured, Dr. Acree agreed to buy out the shares of Dr. McMahan, provided Dr. McMahan continued to practice in the hospital managed by Management Corporation 2. The buyout agreement required Dr. Acree to make a series of payments to Dr. McMahan, the first of which was made, on time, by Management Corporation 1. Eventually, Dr. Acree ceased all payments to Dr. McMahan, allegedly because Dr. McMahan was not referring a sufficient number of patients to the hospital.

Dr. McMahan sued Dr. Acree for breaching the buyout agreement. The court noted that while Dr. Acree was personally obligated to make payments to Dr. McMahan under the buyout agreement, he attempted to unilaterally modify that agreement by making those payments conditional upon Dr. McMahan making referrals to the hospital. The court also found that Dr. Acree had abused the separateness of himself and the corporation that he controlled (Management Corporation 2), thus supporting the jury's determination to pierce the corporate veil and hold the corporation liable for Dr. Acree's personal obligations (in this case, the obligation to make payments under the buyout agreement to Dr. McMahan).