Idstrom v. Alliance Radiology, P.A.

1

NOT DESIGNATED FOR PUBLICATION

No. 115,099

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

MARK E. IDSTROM, M.D.,
Appellee/Cross-appellant,

v.

ALLIANCE RADIOLOGY, P.A.,
Defendant;

LUKE WILSON, M.D.,
ANDREW HARMON, M.D.,
ROBERT NEWTH, M.D.,
DOUGLAS BEST, M.D.,
JOSEPH VARRIANO, M.D., and
RALPH RICHARDSON, M.D.,
Appellants/Cross-appellees;

and JAMES ANTHONY, M.D.,
Defendant.


MEMORANDUM OPINION

Appeal from Johnson District Court; ROBERT J. WONNELL, judge. Opinion filed January 13,
2017. Affirmed.

Michael F. Saunders, J. Nick Badgerow, Blane R. Markley, and Kathryn G. Lee, of Spencer Fane
LLP, of Overland Park, for appellants/cross-appellees.

Brandon J.B. Boulware, Charles W. German, and Daniel B. Hodes, of German May PC, of
Kansas City, Missouri, for appellee/cross-appellant.

Before SCHROEDER, P.J., LEBEN and GARDNER, JJ.

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Per Curiam: In a dispute amongst doctors involving the management and
business opportunities of the Midwest Division of Alliance Radiology, P.A. (Alliance
Radiology), Dr. Mark E. Idstrom was terminated as a stockholder and an employee of
Alliance Radiology. Idstrom then sued several of the doctors and Alliance Radiology,
primarily alleging violations of the Kansas Restraint of Trade Act, breaches of fiduciary
duty, and civil conspiracy. The jury awarded damages for Idstrom's benefit and against
Drs. Luke Wilson, Andrew Harmon, Robert Newth, Douglas Best, Joseph Varriano, and
Ralph Richardson (collectively, the Directors) of $1 each for breach of fiduciary duty
along with a judgment of $718,500 against all of the defendants for civil conspiracy. The
jury ruled in favor of defendants on the restraint of trade claims.

The Directors appeal raising six issues, and Idstrom cross-appeals raising five
issues. Based on our review of the record, we find no trial errors and affirm.

FACTS

In 1998, four competing radiology practices created a super group in the Kansas
City metropolitan area. In 2000, the super group registered as a professional association
in Kansas as Alliance Radiology, P.A. Alliance Radiology was formed, in part, to create
economies of scale in billing services, health insurance, dental and malpractice insurance;
share administrative services; improve reimbursement rates; and to recruit and retain
qualified radiologists.

Each of the previously independent groups became a "division" of Alliance
Radiology but operated their respective businesses autonomously. The four divisions
were named Carondelet, Liberty, Saint Luke's, and Shawnee Mission, which generally
identified their location for services within greater Kansas City. Each division hired its
own employees, had its own income statement, and, for the most part, did not share
expenses.
3

Dr. Mark E. Idstrom became an employee at will of the St. Luke's Division in May
2005. He became a shareholder and president of the Division in either April or July
2007. Idstrom knew Alliance Radiology's contract with St. Luke's Plaza Hospital was
expiring when he became a shareholder and used this information to lower his buy-in.
Upon becoming a shareholder and president of the St. Luke's Division, Idstrom became a
member of the Alliance Radiology Board of Directors (the Board).

The contract with St. Luke's Plaza Hospital expired because the Board was
unwilling to approve the new contract since the new contract required Alliance Radiology
to agree it would not be the exclusive provider of specialized radiology review.
However, the St. Luke's Division had requested the Board approve the new contract.
Upon losing the St. Luke's Plaza Hospital contract, the St. Luke's Division rebranded
itself as the Midwest Division.

As president of the Midwest Division, Idstrom began exploring business
opportunities to replace the loss of the St. Luke's Plaza Hospital contract. Idstrom
initiated negotiations with U.S. Oncology on behalf of the Midwest Division to provide
services at a new facility U.S. Oncology was building. When Idstrom presented this
opportunity at a Board meeting, the Midwest Division's proposal was denied. Ultimately,
the Board decided the Shawnee Mission Division would provide services for U.S.
Oncology. Idstrom was prevented from working at U.S. Oncology.

In 2008, the Midwest Division began working at Centerpoint Hospital. The
contract included language about exploring a merger between Alliance Radiology and the
Western Missouri Radiology Group (WMRG) since both groups were providing services
at the hospital. Despite the Board's preference to only hire some of the WMRG
radiologists, Idstrom continued to negotiate a complete merger; however, no merger
occurred. In 2010, Centerpoint Hospital sought new contracts for radiology services.
Alliance Radiology submitted a proposal but the contract was awarded to a competitor.
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In July 2010, the Board—except representatives from the Midwest Division—met
at the Halbrook Country Club to discuss removing the Midwest Division from Alliance
Radiology if it did not agree to remove Idstrom from the Board and as president of the
division. Dr. Harmon presented the idea and Drs. Wilson and Newth supported the plan.
Thereafter, shareholders from the other three divisions voted to remove the Midwest
Division from Alliance Radiology. After being removed from Alliance Radiology, the
Midwest Division shareholders voted to remove Idstrom as president of their division.
Following the Midwest Division's vote to remove Idstrom as president, Alliance
Radiology shareholders voted to reinstate the Midwest Division. Idstrom remained
employed by the Midwest Division.

In late 2011, Dr. Best, a Midwest Division shareholder and Alliance Radiology
board member, began communicating with Virtual Radiology Group (vRAD), about a
potential merger. If the merger occurred, Midwest Division shareholders would receive a
combined $4 million payout. However, vRAD refused to complete the merger if Idstrom
remained a stockholder and employee of the Midwest Division. The Midwest Division's
shareholders—other than Idstrom—unanimously voted to terminate Idstrom. His
employment with the Midwest Division was terminated without cause on February 3,
2012.

On May 8, 2012, Idstrom filed suit against Alliance Radiology and Drs. Harmon,
Wilson, Newth, Best, James Anthony, Richardson, and Varriano, among others. The
other defendants were subsequently dismissed. He alleged a violation of the Kansas
Restraint of Trade Act, K.S.A. 50-101 et seq.; tortious interference with contract,
business relations, and business expectancy; breaches of fiduciary duty; and breach of
contract. Idstrom amended his petition to include a claim for civil conspiracy.

The Directors moved for summary judgment, based in part on the statute of
limitations. Idstrom opposed summary judgment arguing the discovery rule and
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equitable estoppel applied to toll the statute of limitation since Alliance Radiology's
outside counsel told him he "could not sue Alliance [Radiology] at any time while he was
employed by them." The district court held the statute of limitations applied because
"there is no factual authority for any exception to toll the limitations period." The district
court also granted summary judgment for Directors on Idstrom's claim for tortious
interference with a business relationship or expectancy. Finally, the district court held
Idstrom could not recover posttermination damages.

On April 17, 2015, Idstrom moved for leave to amend his petition to include a
claim for punitive damages. The district court denied the request, stating:

"[T]he parties are bound by the agreement that they made at the March 27, 2015, hearing
when they agreed that the April 10, 2014 Pretrial Order was the final Pretrial Order.
[Idstrom] is bound that no amendments to the pleading were to be made and his
subsequent motion to amend is accordingly denied."

The case proceeded to a jury trial. The jury found Alliance Radiology had not
violated the Kansas Restraint of Trade Act, K.S.A. 50-101 et seq. It found Drs. Anthony,
Wilson, Newth, and Harmon breached fiduciary duties owed to Idstrom and awarded
damages of $1 against each defendant for the period from May 9, 2010, until February 3,
2012. The jury also found Drs. Best, Richardson, and Varriano breached fiduciary duties
owed to Idstrom and awarded damages against each defendant from February 4, 2012,
forward of $1. The jury found the Directors engaged a civil conspiracy and awarded
damages of $718,500.

The Directors filed a motion to alter or amend the judgment alleging numerous
errors. Idstrom filed a motion for new trial, also alleging numerous errors. The district
court denied Idstrom's motion for a new trial. It also denied most of Alliance Radiology's
motion to alter or amend the judgment. However, the district court did vacate the breach
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of fiduciary duty verdict against Dr. Anthony. It further vacated the posttermination
damages award against Best, Richardson, and Varriano because the district court
previously ruled Idstrom could not recover posttermination damages and that part of the
jury instruction directing the jury to consider posttermination damages was in error. The
district court also vacated the civil conspiracy verdict as to Alliance Radiology and Dr.
Anthony.

Additional facts will be provided as necessary.

ANALYSIS

Idstrom has standing.

On appeal, the Directors argue Idstrom lacked standing to bring breach of
fiduciary duty claims. Idstrom contends the Directors did not preserve standing as an
issue for appeal and have waived the argument. However, standing is a component of
subject matter jurisdiction, and, as such, may be raised at any time. Stechschulte v.
Jennings, 297 Kan. 2, 29, 298 P.3d 1083 (2013). The Directors have not waived this
argument.

If a party does not have standing to bring an action or request a particular type of
relief, the suit must be dismissed because there is no justiciable case or controversy.
Lightner v. Lightner, 46 Kan. App. 2d 540, 546, 266 P.3d 539 (2011).

"When a corporation has been injured by the actions of those in control thereof,
the well-established general rule is that the suit seeking redress for such a grievance
belongs to the corporation and must be brought as a derivative action, meaning one or
more shareholders may bring suit on behalf of the corporation for harm done to the
corporation. Kramer v. Western Pacific Industries, 546 A.2d 348, 351 (Del. 1988)
(quoting R. Clark, Corporate Law 639-40 [1986]). Direct actions by a shareholder against
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officers or directors of a corporation are generally reserved for injuries affecting the
individual legal rights of that shareholder. Tooley v. Donaldson, Lufkin & Jenrette, 845
A.2d 1031, 1036 (Del. 2004). Shareholders do not have standing to sue for harms to the
corporation or even for the derivative harm to themselves that might arise from a tort or
other wrong to the corporation. Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774,
777 (7th Cir. 1994); see In re First Interstate Bancorp Litigation, 729 A.2d 851 (Del. Ch.
1998)." Lightner, 46 Kan. App. 2d at 547.

In Richards v. Bryan, 19 Kan. App. 2d 950, 961, 879 P.2d 638 (1994), a panel of
this court described the difference between derivative and direct actions:

"A claim is said to be derivative if injury is either to the corporation directly or to
the shareholder but mediated through the corporation. Bagdon v. Bridgestone/Firestone,
Inc., 916 F.2d 379, 383 (7th Cir. 1990), cert. denied 500 U.S. 952 (1991); McDaniel v.
Painter, 418 F.2d 545, 547 (10th Cir. 1969). A shareholder may only litigate as an
individual if the wrong to the corporation inflicts a distinct and disproportionate injury on
the shareholder, or if the action involves a contractual right of the shareholder which
exists independently of any right of the corporation. Bagdon, 916 F.2d at 383; Moran v.
Household Intern., Inc., 490 A.2d 1059, 1070 (Del. Ch. 1985)."

The test for determining whether an action is derivative or direct is twofold: who
suffered the alleged harm and who would receive the benefit of the recovery? Lightner,
46 Kan. App. 2d at 547. The key inquiry is whether the plaintiff has demonstrated he or
she can prevail on the alleged claims without showing an injury to the corporation. 46
Kan. App. 2d at 547-48. Stated another way, to determine whether a cause of action is
derivative or direct is dependent on the "'"nature of the wrong alleged" and the relief, if
any, which could result if plaintiff were to prevail.'" Richards, 19 Kan. App. 2d at 961-
62 (quoting Kramer, 546 A.2d at 352).

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Under the two prong test, the fiduciary duty claims against Wilson, Harmon, and
Newth are clearly derivative despite Idstrom's arguments otherwise. Idstrom alleged
these directors breached their fiduciary duties owed to him through:

"[V]arious acts of self-dealing, including:
"By self-dealing and allocating hospital contracts in a manner and effort to derive
personal financial benefit (as opposed to a benefit which falls upon the professional
association or all shareholders generally);
"By self-dealing and precluding certain radiologists within Alliance from
performing radiology services at certain hospitals: and
"By causing certain business to be directed away from Alliance."

First, despite Idstrom's contentions to the contrary, his damage claim for breach of
fiduciary duties was not unique to him. Instead, every shareholder in the Midwest
Division was damaged by losing the contracts to St. Luke's, U.S. Oncology, and
Centerpoint as a result of the Board's decisions. Even Idstrom's expert testified every
Midwest Division shareholder suffered the same harm Idstrom alleges. In addition,
Idstrom cannot show he could prevail without showing injury to the corporation. The
Midwest Division lost business when it lost the St. Luke's, Centerpoint, and U.S.
Oncology contracts, not just Idstrom. The fiduciary duty claims against Wilson, Harmon,
and Newth are clearly derivative. Accordingly, they cannot be brought in a direct action
unless some exception applies to allow it.

There is an exception that may apply when a corporation is closely held. In such
cases, the court has discretion to

"treat an action raising derivative claims as a direct action if it finds to do so will not (1)
unfairly expose the corporation to a multiplicity of actions; (2) materially prejudice the
interests of creditors in the corporation; or (3) interfere with a fair distribution of the
recovery among all interested persons." Richards, 19 Kan. App. 2d at 965.
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Although the Directors cite Lightner for the proposition that the Richards
exception only applies to close corporations as defined by K.S.A. 17-7202 since Kansas
does not recognize common-law corporations, the Directors' reliance on Lightner is
misplaced. Instead, the Lightner panel opined:

"Reading Richards and Hunt [v. Data Management Resources, Inc., 26 Kan.
App. 2d 405, 407-08, 985 P.2d 730 (1999)] together, Kansas does not recognize
common-law close corporations and, therefore, the exception to the requirement for
derivative claims to be brought in a derivative action may not apply unless the
corporation is a close corporation under K.S.A. 17-7202. We are not prepared to hold,
however, that the exception must be strictly limited to statutory close corporations
because both our court in Richards and our Supreme Court in Mynatt [v. Collis, 274
Kan. 850, 57 P.3d 513 (2002),] use the terms 'close corporation' and 'closely held
corporation' interchangeably and did not restrict the exception to close corporations
formed under K.S.A. 17-7202." (Emphasis added.) Lightner, 46 Kan. App. 2d at 550-51.

The panel concluded:

"Kansas law embraces the general rule that a shareholder suit for injuries to a corporation
as a result of officer or director misconduct—including self-dealing or breach of fiduciary
duty—must be brought as a derivative action and may not be brought as a direct action
unless the corporation is at least a closely held if not a statutory close corporation under
K.S.A. 17-7202 and the plaintiffs can prove that the action will not unfairly expose the
corporation to a multiplicity of actions, materially prejudice the interests of creditor of the
corporation, or interfere with the fair distribution of the recovery among all interested
persons. Then and only then does the trial court have the discretion to permit a direct
action rather than a derivative action." 46 Kan. App. 2d at 552.

The district court did not conduct an analysis based on Richards, but it did let
Idstrom pursue the claims in a direct action. Our analysis of the first Richards factor
shows the district court had the discretion to do so. Here, Idstrom has shown his suit did
not unfairly expose the corporation to a multiplicity of actions as no one else was
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pursuing the interests he was; additionally, the statute of limitations has run and no other
causes of action have been filed. As previously noted, the entire Midwest Division
suffered the harm Idstrom suffered in his claims against Drs. Wilson, Harmon, and
Newth; and the damages would be the same for every Midwest Division shareholder, but
none of them chose to join in Idstrom's action against Drs. Wilson, Harmon, Newth, and
Alliance Radiology. Additionally, we find no evidence Alliance Radiology's creditor's
interest was materially affected or interfered with the fair distribution of the recovery
amongst all interested parties since Idstrom is the only party.

The exception applies and Idstrom had standing to pursue his breach of fiduciary
duty claims against Drs. Wilson, Harmon, Newth, and Alliance Radiology as derivative
claims in a direct action.

In contrast, the claims against Drs. Best, Richardson, Varriano, and Alliance
Radiology are not derivative claims. Idstrom alleged these directors held secret meetings
to discuss a possible merger between the Midwest Division and vRAD and then
orchestrated a shareholder vote to terminate him—a requirement to moving forward with
the vRAD merger. Since the breach of fiduciary duty uniquely harmed Idstrom, he has
standing to bring the claims in a direct action against Drs. Best, Richardson, and
Varriano.

The jury verdict based on the Directors' action after May 8, 2010, reflects no error.

When a party challenges a jury verdict

"'for insufficiency of evidence or as being contrary to the evidence, it is not the function
of the appellate court to weigh the evidence or pass on the credibility of the witnesses. If
the evidence, . . . when considered in the light most favorable to the prevailing party,
supports the verdict, it will not be disturbed on appeal.'" Wolfe Electric, Inc. v.
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Duckworth, 293 Kan. 375, 407, 266 P.3d 516 (2011) (quoting Dougan v. Rossville
Drainage Dist., 270 Kan. 468, 478, 15 P.3d 338 [2000]).

The Directors argue Idstrom did not present evidence of any actions taken by Drs.
Wilson, Harmon, Newth, Best, Richardson, and Varriano as directors after May 8, 2010.
The May 8, 2010, date starts the beginning of the 2-year look-back provision of the
statute of limitations in Kansas because Idstrom filed this action on May 8, 2012. See
K.S.A. 60-513(a)(4). As a result, the Directors contend the jury's verdicts for breach of
fiduciary duty and conspiracy should be vacated.

However, the record contains some evidence of actions taken by Drs. Wilson,
Harmon, and Newth as directors after May 8, 2010. Dr. Burkhart testified the Directors
decided Idstrom needed to be removed as president of the Midwest Division, and the
Board members of the other three divisions met at the Hallbrook Country Club to discuss
removing the Midwest Division if it did not agree to remove Idstrom as its president.
Harmon presented the plan to have the remaining divisions vote out the Midwest
Division; Drs. Wilson and Newth were at the meeting and supported the plan. Dr.
Burkhart testified "most of the people there expressed" approval for the plan and
indicated some of the Board members did not want the Midwest Division to get the
Centerpoint contract because it would give the Midwest Division more votes on the
Board. Although the Directors contend this testimony is insufficient to support the jury's
verdict, they do not explain why.

While the resulting vote to remove the Midwest Division was a shareholder vote,
the initial discussion among the Board—including Wilson, Harmon, and Newth—was
not. The Hallbrook County Club meeting was evidence of direct action taken by the
Wilson, Harmon, and Newth as directors. It supports the jury's verdict for breach of
fiduciary duty as to those defendants.

12

Similarly, the record contains some evidence of actions taken by Best, Richardson,
and Varriano as directors after May 8, 2010. Best was one of the Midwest Division's
representatives on the Board. In late 2011 and early 2012, Best communicated with
vRAD about a potential merger. If vRAD and the Midwest Division merged, the
shareholders of the Midwest Division would receive a combined payout of approximately
$4 million. The potential merger did not include Idstrom and, in late January 2012, Best
hosted a meeting at his house, at which Richardson and Varriano attended, to discuss
firing Idstrom. After the vote to terminate Idstrom, Best reported Idstrom's termination to
vRAD. Best indicated Idstrom was aware of the discussions regarding a potential merger
with vRAD but indicated Idstrom was not informed he was going to be fired if they
merged because "they were unrelated." The actions are related and the evidence supports
the jury's verdict.

The Directors also argue there was no evidence presented of self-dealing because
self-dealing requires a transaction. Since the merger between WMRG and the Midwest
Division—which would have given the Midwest Division more seats on the Board—was
not completed, the Directors argue there was no transaction Wilson, Harmon, and Newth
were involved in. Similarly, the Directors argue there was no evidence of a self-dealing
transaction involving Best, Richardson, and Varriano because the proposed merger with
vRAD was not completed. However, the Directors cite no authority indicating self-
dealing requires a completed transaction instead of simply a proposed transaction. Here,
the proposed transactions had definite and defined consequences that caused Alliance
Radiology and the Midwest Division to take actions against Idstrom.

In addition, citing Kansas Heart Hospital v. Idbeis, 286 Kan. 183, 212, 184 P.3d
866 (2008), the Directors argue Wilson, Harmon, and Newth did not engage in self-
dealing because maintaining their division's current level of representation on the Board
benefited all non-Midwest Division shareholders. However, unlike in Kansas Heart
Hospital, not all Alliance Radiology shareholders received the benefit: the Midwest
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Division's shareholders did not benefit from—and were arguably harmed by—
maintaining the current divisional makeup of the Board.

In the light most favorable to Idstrom, the jury could have determined Best,
Richardson, Varriano, Wilson, Harmon, and Newth took actions as directors after May 8,
2010, which breached their fiduciary duties to Idstrom. Further, the record contains
evidence of self-dealing. The jury's verdict as to Best, Richardson, Varriano, Wilson,
Harmon, and Newth is supported by the evidence and is affirmed.

The jury's verdicts on the breach of fiduciary duty claims and for civil conspiracy are
supported by the evidence.

The elements of civil conspiracy are:

"'(1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds in
the object or course of action; (4) one or more unlawful overt acts; and (5) damages as
the proximate result thereof.' [Citation omitted.] Conspiracy is not actionable without
commission of some wrong giving rise to a cause of action independent of the
conspiracy." Stoldt v. City of Toronto, 234 Kan. 957, 967, 678 P.2d 153 (1984) (quoting
Citizens State Bank v. Gilmore, 226 Kan. 662, Syl. ¶ 7, 603 P.2d 605 [1979]).

Directors argue the trial evidence failed to establish a breach of fiduciary duty and
as a result the verdict for conspiracy should be vacated because there were no unlawful
overt acts. However, as previously discussed, the jury found, based on the evidence
presented, a breach of fiduciary duty. Therefore, the jury could find for Idstrom on the
civil conspiracy claim, provided there was sufficient evidence of the conspiracy itself.




14

The jury verdict for conspiracy against Best, Richardson, and Varriano is
supported by the evidence.

A district court's decision on a motion to alter or amend a judgment pursuant to
K.S.A. 2015 Supp. 60-259(f) is reviewed for an abuse of that discretion. Miller v.
Johnson, 295 Kan. 636, 677, 289 P.3d 1098 (2012).

"A district court abuses its discretion when: (1) no reasonable person would take
the view adopted by the trial judge; (2) the ruling is based on an error of law; or (3)
substantial competent evidence does not support a finding of fact on which the exercise
of discretion was made. State v. Huddleston, 298 Kan. 941, 960, 318 P.3d 140 (2014)."
Wiles v. American Family Life Assurance Co., 302 Kan. 66, 74, 350 P.3d 1071 (2015).

Directors argue the district court abused its discretion when it denied their motion
to alter or amend the jury's verdict against Best, Richardson, and Varriano because the
decision was based on an error of law. The district court ruled the jury's verdict for
breach of fiduciary duty—without an award for damages—against Best, Richardson, and
Varriano were sufficient unlawful overt acts to support the jury's verdict against them for
conspiracy.

Citing Stoldt, 234 Kan. at 967, the Directors argue the verdict for conspiracy must
be vacated because Idstrom's termination was lawful and any breach of fiduciary duty by
Best, Richardson, and Varriano had no unlawful result sufficient to support the verdict.
However, the Directors did not raise this argument in its memorandum supporting its
motion to alter or amend the judgment; it only argued the claims against Best,
Richardson, and Varriano should not have been submitted to the jury because prior orders
of the district court had already disposed of the claims as a matter of law. Because the
Directors did not preserve this argument in the district court, we do not consider it here.
See Wolfe Electric, Inc., 293 Kan. at 403.

15

The evidence supports the jury's award of $718,500 for civil conspiracy.

The Directors contend the jury's damage award for conspiracy was "a manifest
error of fact" and the district court committed "a manifest error of law" when it refused to
vacate the award. It contends Trial Exhibit 483 is insufficient to support the jury's
damages award for conspiracy.

The district court's decision on a motion to alter or amend a judgment pursuant to
K.S.A. 60-259(f) is reviewed for an abuse of discretion. Miller, 295 Kan. at 677.

The district court did not abuse its discretion when it denied the Directors' motion
to alter or amend the judgment because the jury's award for damages was less than the
range of damages suggested by Dr. Craig Schulman's testimony. The district court ruled
there was "sufficient evidence to support the overall amount as the record contain[ed]
expert evidence that the plaintiff, in the year 2012, suffered damages in the amount of
$787,106.00 for the breach of fiduciary duty." The district court was not required to
identify why the jury awarded the verdict it did, merely that sufficient evidence supports
the verdict.

Trial Exhibit 483 reflects the possible ranges of Idstrom's damages. If a damages
verdict is within the range of evidence, the verdict will not be disturbed simply because
the court cannot determine exactly how the jury arrived at the verdict's amount.
Diefenbach v. State Highway Commission, 195 Kan. 445, 447, 407 P.2d 228 (1965).
Here, the damages verdict is less than the range of damages presented by Dr. Schulman.
Averaging the shareholder incomes across the three unaffected divisions, Dr. Schulman
testified Idstrom suffered approximately $847,000 in damages between August 20, 2007,
and February 1, 2012. Averaging the compensation of the Liberty Division shareholders,
a comparable group of shareholders, Dr. Schulman testified Idstrom suffered
approximately $1.1 million in damages over that same time period.
16

Therefore, the decision to deny the Directors' motion to alter or amend the
judgment was not unreasonable, based on an error of fact, or an error of law. The district
court did not abuse its discretion when it denied Directors' motion to alter or amend the
judgment.

The jury verdict awarding $718,500 for damages for civil conspiracy after awarding
nominal damages for breach of fiduciary duty does not reflect error.

The decision to grant a motion to alter or amend a judgment pursuant to K.S.A.
60-259(f) is reviewed for an abuse of that discretion. Miller, 295 Kan. at 677.

Directors contend the district court committed an error of law and therefore abused
its discretion by affirming the jury's award of $718,500 for damages for civil conspiracy.
They argue the district court's reliance on Beverly v. McCullick, 211 Kan. 87, 505 P.2d
624 (1973), was misplaced because Beverly did not hold that conspiracy damages may
exceed damages awarded for the underlying tort.

In Beverly, the plaintiffs alleged the defendants associated with the Salina
Livestock Commission Company breached a partnership agreement prohibiting the
parties from engaging in competitive businesses. The plaintiffs also contended the Salina
Livestock Commission Company defendants conspired with other defendants—
associated with the Farmers and Ranchers Livestock Commission Company—to breach
the partnership agreement and destroy the plaintiffs' property as a livestock auction
facility. The trial court found for the plaintiffs and awarded $250,000 in damages for loss
of rents and other actual damages to the plaintiffs. On appeal, the defendants argued
damages should be limited to loss of rents and profits because only those damages
naturally arose from the breach of the contract. The Kansas Supreme Court responded:

"This action is not limited to breach of contract. The trial court found each of the
defendants was guilty of conspiracy. Conspiracy is a tort and all injuries and losses that
17

are the natural and probable results of the wrongful and tortious acts are recoverable.
(Foster v. Humberg, 180 Kan. 64, 299 P.2d 46 [1956].) Diminution of the value of
plaintiffs' business facility, as well as the loss of rents and profits, were the natural and
probable results of defendants' tortious acts." Beverly, 211 Kan. at 98-99.

While we acknowledge Beverly is not directly on point, it persuades us to find
damages for the tort of civil conspiracy are not limited to the damages awarded for the
underlying wrong. Further, the Directors cite no authority holding that damages for civil
conspiracy are limited to the damages of the underlying unlawful act. Here, as we have
already discussed, the Directors took specific actions toward accomplishing the vRAD
merger that caused harm to Idstrom, even though the merger ultimately wasn't completed.
The district court did not commit an error of law or abuse its discretion when it affirmed
the jury's damage award for $718,500.

Alliance Radiology was not an unlawful trust as defined by the Kansas Restriction of
Trade Act.

In his cross-appeal, Idstrom claims the jury's verdict finding Alliance Radiology is
not a trust as defined by K.S.A. 50-101 et seq. "goes against the weight of evidence and
merits a new trial."

It is within the discretion of the trial court to grant or deny a new trial under
K.S.A. 2015 Supp. 60-259(a). A ruling on a motion for new trial will not be disturbed on
appeal except upon a showing of abuse of discretion. Miller, 295 Kan. at 684-85. Further,
when a party challenges a jury verdict for insufficiency of evidence or as being contrary
to the evidence, it is not the function of the appellate court to reweigh the evidence or
pass on the credibility of the witnesses. When considered in the light most favorable to
the prevailing party, if the evidence supports the verdict, the appellate court should not
intervene. Unruh v. Purina Mills, 289 Kan. 1185, 1195, 221 P.3d 1130 (2009). "It is of
18

no consequence that contrary evidence might have supported different findings if
believed by the jury." 289 Kan. at 1196.

K.S.A. 2015 Supp. 50-101 states, in relevant part:

"Except as provided in K.S.A. 2015 Supp. 50-163, and amendments thereto, a
trust is a combination of capital, skill, or acts, by two or more persons, for either, any or
all of the following purposes:
"First. To create or carry out restrictions in trade or commerce, or to carry out
restrictions in the full and free pursuit of any business authorized or permitted by the laws
of this state."

Even a reasonable restriction may be unlawful. See O'Brien v. Leegin Creative
Leather Products. Inc., 294 Kan. 318, 349, 277 P.3d 1062 (2012).

Idstrom contends the undisputed evidence shows Alliance Radiology, which was
formed by four competing radiology groups in 1998, is an unlawful trust because the
competing groups are now "Divisions" of Alliance Radiology allocating geographic
"turfs" and enforcing exclusive contracts. Idstrom also argues Alliance Radiology was
not a single entity and its corporate formalities do not exempt it from antitrust law.
However, we find it would be contrary to long-standing Kansas law to address these
arguments because, when the evidence is viewed in the light most favorable to Alliance
Radiology—the prevailing party—the jury's verdict is supported.

Dr. Anthony testified the impetus for starting Alliance Radiology was to create
economies of scale in billing services; health, dental, and malpractice insurance; share
administrative services; improve reimbursement rates; and to recruit and retain qualified
radiologists. Dr. Anthony also testified Alliance Radiology did not have an unwritten
rule regarding the allocation of business. Instead, he indicated any new business came to
the Board and "if it was new business and there was interaction between more than one
19

division, those divisions got together, decided how they could cover it, and brought it to
the [B]oard." Dr. Anthony also testified hospitals encouraged exclusive contracts
because the hospitals "wanted the same faces and the same names and the same people to
be at their institution and show up every morning."

Viewed in the light most favorable to the prevailing party, the record contains
evidence supporting the jury's verdict that Alliance Radiology was not a trust as defined
by K.S.A. 50-101 et seq. The district court did not abuse its discretion when it denied
Idstrom's motion for new trial.

Jury Instruction 25 was correct.

Idstrom also objects to one of the jury instructions. The standard of review when
addressing challenges to jury instructions is based upon the following analysis:

"'(1) First, the appellate court should consider the reviewability of the issue from both
jurisdiction and preservation viewpoints, exercising an unlimited standard of review; (2)
next, the court should use an unlimited review to determine whether the instruction was
legally appropriate; (3) then, the court should determine whether there was sufficient
evidence, viewed in the light most favorable to the defendant or the requesting party, that
would have supported the instruction; and (4) finally, if the district court erred, the
appellate court must determine whether the error was harmless, utilizing the test and
degree of certainty set forth in State v. Ward, 292 Kan. 541, 256 P.3d 801 (2011), cert.
denied 132 S. Ct. 1594 (2012).' [Citation omitted.]" Foster v. Klaumann, 296 Kan. 295,
301-02, 294 P.3d 223 (2013).

Idstrom argues he "objected at length" to Jury Instruction 25. However, before
beginning the instruction conference, the district court informed the parties the instruction
conference would be handled in two parts: argument regarding the language of the
proposed instructions and an opportunity to object. After finalizing the language of the
20

proposed instructions, the district court presented the instructions and "allow[ed] both
sides to state any objections that they may have to the instructions." When the district
court asked if either party objected to Jury Instruction 25 as written, Idstrom failed to
object. Further, although Idstrom indicated he disagreed with the language of Jury
Instruction 25 many times, he did not object to its language at any of the places cited in
his brief. Accordingly, this court reviews for clear error. Jury Instruction 25 stated:

"Plaintiff Dr. Idstrom may recover damages from the individual defendants for
violation of the Kansas Restraint of Trade Act only if you find that Plaintiff Dr. Mark
Idstrom has proven:
"(1) That Alliance is a Trust (as instructed in Instruction 21);
"(2) That one or more of the individual Defendants formed or are interested,
either directly or indirectly, in Alliance; and
"(3) The actions of the individual defendants were separate from the actions of
defendant Alliance Radiology.
"You may find that an individual was or is interested in Alliance because he or
she served Alliance as a principal, agent. representative, consignee or otherwise."
(Emphasis added.)

Citing Burlington Industries v. Milliken & Co., 690 F.2d 380 (4th Cir. 1982),
Idstrom contends inclusion of the italicized language was error because antitrust law
dictates joint and several liability. The Directors contend that even if Instruction 25 was
erroneous, the error was harmless because the jury determined Alliance Radiology was
not a trust.

The Directors' argument is more persuasive. Jury Instruction 25 required Idstrom
to prove Alliance Radiology was a trust before he could recover damages from the
individual defendants for violations of the Kansas Restraint of Trade Act. Jury
Instruction 21, which Jury Instruction 25 referenced, stated:

21

"Your verdict must be for Dr. Idstrom on his claim under the Kansas Restraint of
Trade Act against Defendant Alliance if Dr. Idstrom proves Defendant Alliance
Radiology is a trust. A trust is a combination of capital, skill, or acts, by two or more
persons, for either, any or all of the following purposes:
"To create or carry out restrictions in trade or commerce, or aids to commerce, or
to carry out restrictions in the full and free pursuit of any business authorized or
permitted by the laws or this state.
"Any such combinations are hereby declared to be against public policy,
unlawful and void.
"Dr. Idstrom has to prove that he was injured.
"Plaintiff only has to prove that one or more of the acts alleged is more probably
true than not. It is not necessary that each of you agree upon a specific claim." (Emphasis
added.)

When the jury found Alliance Radiology had not violated the Kansas Restraint of
Trade Act, it was reasonable to conclude the jury did not find Alliance Radiology was a
trust. As a result, even despite the alleged error, the jury could not find the individual
defendants liable under the Kansas Restraint of Trade Act because Idstrom did not prove
Alliance Radiology was a trust.

In his reply brief, Idstrom contends the jury "may have concluded that Alliance
[Radiology] was a trust, but that Dr. Idstrom was not damaged by it" or "could have
found that Alliance [Radiology] was a trust but ceased its illegal activities prior to [the]
erroneously-determined limitations period [May 8, 2010], irrespective of whether Dr.
Idstrom was damaged."

Here, the record reflects Verdict Form A clearly differentiates between a violation
of the Kansas Restraint of Trade Act and whether Idstrom was injured or damaged by the
violation. Question 1 of Verdict Form A asked: "Do you find that one or more
Defendants violated the Kansas Restraint of Trade Act as instructed in Instructions?"
Had the jury found any defendant violated the Kansas Restraint of Trade Act, Question 3
22

of Verdict Form A asked the jury to determine whether Idstrom was injured or damaged
by the violation. Second, the district court instructed the jury it could consider events
occurring prior to the statute of limitations to determine whether it was an illegal trust.
Even if the inclusion of the complained-of language in Jury Instruction 25 was error—an
argument we do not agree with—we find the error did not affect the jury's verdict and
was harmless.

The statute of limitations barred antitrust claims arising prior to May 8, 2009.

Before trial, the district court granted summary judgment against any antitrust
claims that arose before May 8, 2009, based on the statute of limitations.

"'Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law. The trial court is required to resolve all facts and inferences which may
reasonably be drawn from the evidence in favor of the party against whom the ruling is
sought. When opposing a motion for summary judgment, an adverse party must come
forward with evidence to establish a dispute as to a material fact. In order to preclude
summary judgment, the facts subject to the dispute must be material to the conclusive
issues in the case. On appeal, we apply the same rules and when we find reasonable
minds could differ as to the conclusions drawn from the evidence, summary judgment
must be denied.'" Drouhard-Nordhus v. Rosenquist, 301 Kan. 618, 622, 345 P.3d 281
(2015) (quoting Stanley Bank v. Parish, 298 Kan. 755, Syl. ¶ 1, 317 P.3d 750 [2014]).

Idstrom argues the district court erred when it determined damages prior to May 8,
2009, are barred because there was no factual authority for any exception to toll the 3-
year statute of limitations period. See K.S.A. 60-512.

In the district court's order on summary judgment, the district court adopted the
Directors' statements of uncontroverted fact Nos. 1-8, 10-23, 25-37, 39-43, 45-47, 51-53,
23

and 64-68 by reference. The district court also adopted Idstrom's statements of fact No.
69-82, 84-98, and 100. While Idstrom's response to the motion for summary judgment is
included in the record on appeal, the Directors' motion for summary judgment and its
supporting memorandum are not included.

Since Idstrom did not include the Directors' motion for summary judgment, it is
impossible to determine whether reasonable minds could draw different conclusions from
the evidence. The burden is on the party making a claim to designate facts in the record to
support that claim; without such a record, the claim of error fails. Friedman v. Kansas
State Bd. of Healing Arts, 296 Kan. 636, 644-45, 294 P.3d 287 (2013). Idstrom's claim
fails; he failed to designate a record sufficient to support this claim.

The district court correctly denied posttermination damages.

Idstrom argues the district court erred when it "dismissed Dr. Idstrom's
posttermination damages for breach of fiduciary duty essentially sua sponte at summary
judgment."

As discussed above, Idstrom did not include the Directors' motion for summary
judgment or its supporting memorandum in the record on appeal. The burden is on the
party making a claim to designate facts in the record to support that claim; without such a
record, the claim of error fails. Friedman, 296 Kan. at 644-45. Because the motion for
summary judgment is not included in the record on appeal, it is impossible to determine
whether the district court improperly raised this issue sua sponte (assuming that may be
error) or that the district court improperly granted part of the Director's motion for
summary judgment. With a deficient record, Idstrom's claim on this point fails.



24

Idstrom agreed to be controlled by the pretrial order dated April 10, 2014.

Idstrom argues the district court erred when it denied his motion to amend the
petition to include a claim for punitive damages because he asserted punitive damages in
the pretrial order and timely sought to amend his petition to include the claim. A district
court's ruling regarding an amendment for punitive damages is reviewed for an abuse of
discretion. Adamson v. Bicknell, 295 Kan. 879, 887, 287 P.3d 274 (2012).

K.S.A. 60-3703 governs the procedure for the amendment of a pleading to claim
punitive damages, which states:

"No tort claim or reference to a tort claim for punitive damages shall be included
in a petition or other pleading unless the court enters an order allowing an amended
pleading that includes a claim for punitive damages to be filed. The court may allow the
filing of an amended pleading claiming punitive damages on a motion by the party
seeking the amended pleading and on the basis of the supporting and opposing affidavits
presented that the plaintiff has established that there is a probability that the plaintiff will
prevail on the claim pursuant to K.S.A. [2015 Supp.] 60-209, and amendments thereto.
The court shall not grant a motion allowing the filing of an amended pleading that
includes a claim for punitive damages if the motion for such an order is not filed on or
before the date of the final pretrial conference held in the matter."

Idstrom contends the district court "injected a procedural requirement that does not
exist" in order to deny his motion for leave to include a punitive damages claim.
Idstrom's claim lacks merit. Here, Idstrom filed his motion to amend his pleadings to
include punitive damages 2 days before the final pretrial conference on April 29, 2015.
However, the district court relied on the April 10, 2014, pretrial order—which the parties
agreed was to be the final pretrial order and would have been had the trial date not been
continued—to deny Idstrom's motion because Section 6 of the April 10, 2014, pretrial
order, entitled Amendment to Pleadings, clearly stated: "None." The district court held:

25

"[T]he parties are bound by the agreement that they made at the March 27, 2015[,]
hearing when they agreed that the April 10, 2014[,] Pretrial Order was the final Pretrial
Order. [Idstrom] is bound that no amendments to the pleading were to be made and his
subsequent motion to amend is accordingly denied."

Throughout the proceedings, the district court consistently held the parties were
bound by the April 10, 2014, final pretrial order. A reasonable person could take the
view adopted by the district court. The district court did not abuse its discretion when it
denied Idstrom's motion to amend his pleadings to include a claim for punitive damages.

Affirmed.