Pet Doctor Liable After Sex Offense Hurt Practice

(CN) - A veterinarian who was convicted of a sex crime is liable to those who bought his practice for the resulting downturn in business, a New York appeals court ruled.

Timothy Fitzpatrick was a well-known vet in Vestal, N.Y., who sold his practice to Animal Care Hospital PLLC for $1.7 million in late 2004. He was to continue working occasionally at the practice.

That changed in March 2005, however, when he arrested in Virginia and charged with soliciting sex over the Internet from a person he thought was a minor. He was ultimately convicted and sentenced to one year in prison.

Business at veterinary practice plummeted over the next two months, and Animal Care failed to make payments to Fitzpatrick on the promissory note. Fitzpatrick then declared Animal Care in default and accelerated the note.

Fitzpatrick sued Animal Care for the outstanding balance on the promissory note, and the defendants volleyed back with a claim for breach of contract.

Animal Care claimed that Fitzpatrick's arrest damaged the goodwill of the company, violating the asset-purchase agreement (APA).

A Broome County Supreme Court judge gave both parties some relief in 2011, awarding $89,030 in lost profits to Animal Care but offsetting that amount against the balance of the promissory note.

A four-judge panel of the Appellate Division's Albany-based Third Judicial Department affirmed last week, but added interest to both awards and found that Fitzpatrick did not have the right to accelerate the promissory note.

"While plaintiff argues that he did not breach the APA because he did not intend his conduct to impair the goodwill of the practice, such an interpretation is contrary to the plain meaning of [the contract], and Supreme Court properly determined that the conduct that led to plaintiff's arrest and conviction constituted a breach of the APA," Justice Leslie Stein wrote for the panel.

"Under all the circumstances, we conclude that defendants proved to a reasonable certainty that such decrease in revenue was caused by plaintiff's arrest," Stein added. "Moreover, plaintiff failed to prove that would establish the extent, if any, to which any efforts by defendants to mitigate damages would have prevented such damages."

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