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Carlson v. Arnot-Ogden Memorial Hospital

argued: August 22, 1990.

CARLSON, DAVID, APPELLANT,
v.
ARNOT-OGDEN MEMORIAL HOSPITAL



On Appeal from the United States District Court for the Eastern District of Pennsylvania; E.D. Pa. No. 88-04353.

Stapleton, Cowen and Weis, Circuit Judges.

Author: Cowen

Opinion OF THE COURT

COWEN, Circuit Judge

This diversity action arises from an employment dispute between Arnot-Ogden Memorial Hospital (the "hospital") and David Carlson, D.O. ("Dr. Carlson"). The hospital contracted to hire Dr. Carlson, but cancelled the contract when it discovered that he did not qualify in his specialty for staff privileges at their hospital. Dr. Carlson initiated this action, seeking relief under five causes of action, including breach of contract. The district court granted summary judgment in favor of the hospital on all five claims. With respect to the contract claim, the district court found that Dr. Carlson had not presented evidence sufficient to rebut the presumption of employment at-will. Because we find that the notice provision in the contract removes it from employment at-will and creates a contract for at least the length of the notice period, we will reverse the judgment of the district court on the contract claim, but affirm the district court with respect to all other claims.

I.

In 1987 the hospital, located in Elmira, New York, sought two primary care physicians, and retained a medical recruitment firm to assist its recruitment efforts. That firm contacted Dr. Carlson, a second-year resident osteopath at Suburban General Hospital in Norristown, Pennsylvania. Dr. Carlson traveled to New York and interviewed for a family practice position with several representatives of the hospital, including Vincent Derisio, M.D. and Robert Nowlan.

During the interview process, Nowlan gave Dr. Carlson a blank form employment contract as an explanation of some of the hospital's employment policies. Paragraph ten of that contract has particular significance to this case. It provides that "this agreement shall . . . continue until terminated by either party by ninety (90) days written notice to the other." App. at 503.

During his interview, Dr. Carlson informed Dr. Derisio that he had only two years of residency experience, and Dr. Derisio told him that he was qualified for staff privileges at the hospital. Dr. Derisio was wrong. As the parties later realized, a family practice physician must have three years of residency experience in order to qualify for staff privileges at the hospital.

On April 14, 1988, Nowlan telephoned Dr. Carlson and offered him the family practice position. Dr. Carlson accepted the offer by phone on April 18, 1988. Dr. Carlson traveled to New York and again met with Nowlan. At this time Nowlan gave Dr. Carlson a written employment contract identical to the form contract he had been given earlier, except that Dr. Carlson's name and proposed annual salary had been inserted. The parties agreed that Dr. Carlson was to begin work for the hospital on or about July 11, 1988. Dr. Carlson signed the employment contract and returned it to the hospital in early May. No representative of the hospital ever signed this written contract.

Dr. Carlson began his preparations to move to New York in early May.*fn1 Around that time, Dr. Derisio realized that Dr. Carlson was not eligible for staff privileges at the hospital because he had only two years of residency experience. On May 11, Dr. Derisio called Dr. Carlson and informed him of the problem, effectively cancelling the employment relationship. The hospital tried to make arrangements with Dr. Carlson that would minimize his costs and inconvenience, but the parties were unable to reach an agreement. Dr. Carlson thereafter initiated this suit seeking relief under five causes of action: breach of contract, estoppel, fraud, negligence, and willful and wanton misconduct.

II.

The district court had jurisdiction pursuant 28 U.S.C. § 1332(a). In determining which state's law to apply, the district court applied the choice of law rules of Pennsylvania in accordance with Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941) (district court must apply choice of law rules of state in which it sits in diversity action). After evaluating the relative interests of New York and Pennsylvania in the outcome of this case, as required by Pennsylvania's choice of law rules,*fn2 the court determined that this case should be decided under Pennsylvania law.

The district court granted the hospital's motion for summary judgment, dismissing all five counts of Dr. Carlson's complaint. We have jurisdiction to review that order pursuant to 28 U.S.C. § 1291. Our review of a grant of summary judgment is plenary. ...


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