This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Thomas J. Smith,



Sioux Valley Service Corporation,

et al.,


Filed October 28, 1997


Schumacher, Judge

Lyon County District Court

File No. C596778

Patrick A. Lowther, Mueller, Lowther & Vickery, 125 Main Street West, Post Office Box 303, Sleepy Eye, MN 56085-0303 (for appellant)

James Kerr, James E. Kerr & Associates, Post Office Box 1007, Tracy, MN 55321 (for respondent Tracy Municipal Hospital and Tracy Medical Clinic)

Monte R. Walz, Davenport, Evans, Hurwitz & Smith, L.L.P., 513 South Main Avenue, Post Office Box 1030, Sioux Falls, SD 57101-1030 (for respondent Sioux Valley Service Corporation)

Considered and decided by Willis, Presiding Judge, Norton, Judge, and Schumacher, Judge.



Thomas J. Smith appeals from summary judgment in favor of respondents Sioux Valley Service Corporation and Tracy Municipal Hospital and Clinic (collectively SVSC), arguing the district court improperly weighed evidence in refusing to void a negotiated settlement agreement. We affirm.


In February 1995, Smith, a physician assistant, signed a two-year employment contract with SVSC. Under the contract, an employee could be terminated by (1) mutual written agreement, (2) expulsion, suspension, or discipline, or (3) resignation while under threat of disciplinary action.

After receiving a number of complaints about Smith's behavior toward patients and staff, SVSC conducted an investigation. Based on the preliminary investigation report, SVSC suspended Smith. Through an informal review procedure, SVSC and Smith eventually negotiated a settlement agreement (the agreement).

The agreement required Smith to submit to a psychological assessment, enter into a joint report with SVSC to the Minnesota Board of Medical Practice, waive all claims against SVSC, and voluntarily resign from SVSC.

The psychological assessment addressed the complaints and the investigation report. The assessment found that the report frequently relied on hearsay, was subjective, and came to far-reaching conclusions without sufficient documentation. The assessment concluded that caution should be used in relying on the report, and that Smith was safe and always was safe to practice.

Based on the assessment, Smith brought an action against SVSC for breach of contract and implied covenant of good faith and fair dealing, and to declare the agreement void and unenforceable for lack of consideration, misrepresentation, duress, and lack of good faith. The district court granted summary judgment for SVSC. Smith appeals.


On appeal from summary judgment, this court determines whether any genuine issues of material fact exist and whether the district court erred in applying the law. Offerdahl v. University of Minn. Hosp. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). The district court may not weigh the evidence or make factual determinations. Murphy v. Country House, Inc., 307 Minn. 344, 351, 240 N.W.2d 507, 512 (1976). This court must view the evidence in the light most favorable to the nonmoving party. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted).

1. Smith argues the district court erred in granting summary judgment on his claim to set aside the agreement.

Generally, settlement agreements are favored and enforceable under Minnesota law. Hentschel v. Smith, 278 Minn. 86, 92, 153 N.W.2d 199, 204 (1967). A settlement agreement is contractual in nature, requires an offer and acceptance, and is subject to all of the other rules of contract interpretation. Beach v. Anderson, 417 N.W.2d 709, 711 (Minn. App. 1988), review denied, (Minn. Mar. 23, 1988).

The construction and effect of a contract are questions of law for the court, but where there is ambiguity and construction depends upon extrinsic evidence and a writing, there is a question of fact for the jury.

Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979).


Smith argues the district court improperly weighed the evidence in concluding the agreement was supported by consideration. Whether there is sufficient consideration to sustain a contract, however, is a question of law. Concordia College Corp. of Moorhead v. Salvation Army, 470 N.W.2d 542, 546 (Minn. App. 1991), review denied (Minn. Aug. 2, 1991). We review questions of law de novo. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

The record shows the agreement was supported by the following: (1) Smith's choice to proceed with the informal review process rather than the formal process; (2) Smith's continued employment during the review process; (3) Smith's paid time off to search for a job; (4) the joint report to the Medical Board instead of an adverse report; and (5) SVSC's letter verifying Smith's employment with SVSC. The district court did not err in concluding the agreement was supported by consideration as a matter of law.


Smith argues he was misled into signing the agreement because the investigation report failed to disclose that a patient might have incorrectly perceived Smith's alleged inappropriate behavior and that she waited an entire year before making a complaint. The record shows, however, that there were at least five complaints against Smith; any of which could be grounds for termination. Smith did not have any right to know, nor was SVSC required to disclose, the contents of the report during the informal review process. The district court did not err in concluding there were no genuine issues of material fact regarding misrepresentation.

Breach of Good Faith and Fair Dealing

Smith argues SVSC breached an implied covenant of good faith and fair dealing in negotiating the agreement when it failed to make a complete investigation and by not disclosing the nature of the complaints against him.

Generally, every contract includes an implied covenant of good faith and fair dealing requiring that one party not "unjustifiably hinder" the other party's performance of the contract. Zobel & Dahl Constr. v. Crotty, 356 N.W.2d 42, 45 (Minn. 1984); see also Ecklund v. Vincent Brass & Aluminum Co., 351 N.W.2d 371, 378 (Minn. App. 1984) (holding covenant may apply to employment contracts), review denied, (Minn. Nov. 1, 1984).

Because Smith chose the informal review process, a more thorough investigation was unnecessary and SVSC was not required to disclose details of the complaints. Smith has cited no law or rule requiring SVSC to complete an investigation before suspending him. There are no material facts to indicate SVSC breached a covenant of good faith or fair dealing in negotiating the agreement.

Because we determine there were no issues of material fact concerning the enforceability of the agreement, we do not reach Smith's breach of contract or breach of implied covenant claims.