Issue was the language, “mutually acceptable,” ambiguous in the

Citation: Dutta v. St. Francis Reg’l Med. Ctr., 850 P.2d 928 (Kan. Ct. App.

1993)

Facts

On July 1, 1987, Dr. Dutta, a radiologist, began working in the radiology

department of the hospital as an employee of Dr. Krause, the medical

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director of the hospital’s radiology department. On August 5, 1988, the

hospital terminated Krause’s employment as medical director. On August 8,

1988, Dutta and the hospital entered into a written employment contract with

a primary term of 90 days. The contract provided that if a new medical

director had not been hired by the hospital within the 90-day period, the

agreement was to be automatically extended for a second 90-day period.

Following a period of recruitment and interviews, the hospital offered Dr. Tan

the position. Tan and the hospital executed a contract making him the

medical director of the radiology department. The contract granted Tan the

right “to provide radiation oncology services on an exclusive basis subject to

the exception of allowing Dutta to continue her practice of radiation oncology

at the hospital.” On April 24, 1989, the hospital notified Dutta that the 90-day

contract had expired and that Tan was appointed as the new medical

director. The letter provided in part:

It is our intent at this time to establish an exclusive contract with Dr.

Donald Tan for medical direction and radiation therapy at SFRMC. Your

medical staff privileges to practice radiation therapy at SFRMC will not

be affected by this action. You will be allowed to maintain your current

office space for radiation oncology activities; however, you should make

alternative arrangements for your billing and collection activities. [Id. at

931]

Dutta and Tan then practiced independently of each other in the same

facility. On October 13, 1989, Tan became unhappy with this arrangement

and requested exclusive privileges, stating he could not continue as medical

director without exclusivity. On February 2, 1990, an exclusive contract was

authorized by the hospital. Dutta was notified that she would no longer be

permitted to provide radiation therapy services at the hospital after May 1,

1990. By letter, Dutta twice requested a hearing on the hospital’s decision to

revoke her right to use hospital facilities. Both requests were denied.

Dutta sued the hospital for breach of employment contract after the hospital

entered into an exclusive agreement with Tan, thereby denying Dutta the

use of the hospital’s radiology department and equipment. Dutta presented

evidence about the purpose of the requirement in her contract with the

hospital that provided that the new medical director be mutually acceptable

to both parties. A hospital administrator testified that the hospital and Dutta

included the phrase “mutually acceptable” in the contract because “[w]e both

agreed that we wanted the person being recruited to be compatible with

Dutta” [Id. at 932].

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Issue

Was the language, “mutually acceptable,” ambiguous in the employment

contract between the hospital and Dutta?

Holding

The Kansas Court of Appeals held that substantial evidence supported the

jury’s verdict that the hospital breached its written employment contract with

Dutta by hiring a medical director who was not mutually acceptable to both

the hospital and Dutta.

Reason

The language in the contract is ambiguous if the words in the contract are

subject to two or more possible meanings. The determination of whether a

contract is ambiguous is a question of law. Paragraphs 4 and 5 of the

hospital’s employment agreement with Dutta, dated August 8, 1988, read as

follows:

4. During the term of this Agreement the Medical Center shall be actively

recruiting for a full-time Medical Director for the Radiation Therapy

department. . . . Dr. Dutta shall be involved in the interviewing process.

The person selected for [the] above positions shall be mutually

acceptable to the Medical Center and Dr. Dutta. Dr. Dutta may discuss

potential business arrangements with each individual interviewed.

5. Once the full-time Medical Director or part-time radiation therapist is

selected, Dr. Dutta will, in good faith, attempt to reach a satisfactory

business arrangement with the selected individual. [Id. at 936]

The testimony of Dutta, the hospital administrator, and the attorney who

represented Dutta in contract negotiations provides a factual basis for the

jury to find that the phrase, “mutually acceptable,” in the contract was

intended by Dutta to ensure that the hospital would select a medical director

who indicated a willingness to form a partnership or otherwise acceptable

business relationship.