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EARLY DETECTION CENTER5/24/1991
The opinion of the court was delivered by
Early Detection Center, Inc., (EDC) appeals from the decision of the trial court granting summary judgment to Dr. Marvin H. Wilson. EDC filed this action against Dr. Marvin H. Wilson, an incorporator, officer, director, 30% shareholder, and employee of EDC, alleging that Dr. Wilson, after having been removed as president of EDC, breached his fiduciary duty to the corporation by forming a competing business with Lou A. Standiferd, which business was known as Advanced Diagnostic Center (ADC). The trial court dismissed EDC's claims against Standiferd and ADC. That decision is not an issue in this appeal. EDC's appeal was transferred to this court pursuant to K.S.A. 20-3018 (c).
Dr. Wilson and Dr. Benson Powell, who are licensed to practice medicine and surgery in Kansas, formed a partnership in 1977. In 1983 the partnership was incorporated as Vascular Diagnostic Center, P.A., a professional corporation. The articles of incorporation and the certificate issued by the Kansas State Board of Healing Arts were filed with the Kansas Secretary of State. The articles of incorporation restricted the directors and ownership of the corporation stock to persons licensed to practice medicine or professional nursing in the State of Kansas. All stock certificates issued by the corporation were required to state that "the ownership and transfer of this stock and the rights and obligations of stockholders are subject to the limitations and provisions of the professional corporation law of Kansas."
In 1985, relying on advice of counsel, Dr. Wilson and Dr. Powell, filed Restated Articles of Incorporation as a general corporation with the secretary of state and changed the name of the corporation to Early Detection Center, Inc. The articles of incorporation were amended to allow individuals not licensed to practice medicine to be directors and own stock in the corporation. Dr. Powell and Dr. Wilson sold 40% of their stock to C. W. Hicks and Harvey Doud. Neither Hicks nor Doud were licensed to practice medicine.
Since 1986, EDC's only business consisted of providing noninvasive vascular testing medical services.
On January 9, 1987, Wilson was removed as president and CEO of EDC because of disagreement by the other directors with Wilson's management policies. He remained a 30%
shareholder, a director, and co-medical director of EDC. On January 29, 1987, Wilson submitted to the corporation a letter of resignation effective immediately. On February 3, 1987, EDC rejected Wilson's resignation. Wilson was later removed from the Board of Directors on March 27, 1987.
Beginning in February 1987, Wilson started contacting hospitals served by EDC and suggesting they utilize the services of ADC. Subsequently, EDC noted an absence of requests for testing from these hospitals.
In April 1987, EDC filed this action, alleging Wilson breached his contract not to compete and interfered with EDC client hospitals by contracting with the hospitals on behalf of ADC to allow ADC to perform noninvasive vascular diagnostic services. Dr. Powell left EDC's employment on May 3, 1988, leaving EDC without a physician employed or affiliated with it. EDC has not conducted business since Powell left.
Both parties filed motions for summary judgment. The trial court found (1) EDC could not legally provide healing arts services, (2) EDC had no legitimate claim to profits derived from the practice of the healing arts, and (3) Dr. Wilson owed no fiduciary duty to EDC. The court dismissed EDC's other claims against Wilson and granted Dr. Wilson's motion for summary judgment.
A moving party is ent
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