Priority Hosp. Grp., Inc. v. Manning

303 So.3d 1106

PRIORITY HOSPITAL GROUP, INC. Appellant

v.James MANNING, Pathway Healthcare, LLC, Pathway Rehabilitation Hospital of Bossier, LLC, and Dan Bob Turner Appellees

No. 53,564-CA

Court of Appeal of Louisiana, Second Circuit.

Judgment rendered September 23, 2020

LUNN, IRION LAW FIRM By: Ronald E. Raney, Shreveport, William H. Priestley, Jr., Counsel for Appellant

AYRES, SHELTON, WILLIAMS, BENSON & PAINE, LLC By: J. Todd Benson, Shreveport, Counsel for Appellees

Before STONE, COX, and THOMPSON, JJ.

COX, J.

This suit arises out of the 26th Judicial District Court, Bossier Parish, Louisiana. Priority Hospital Group, LLC ("Priority"), appeals the trial court's granting of the motion for partial summary judgment filed by James Manning, Pathway Healthcare, LLC ("Pathway Healthcare"), Pathway Rehabilitation Hospital of Bossier, LLC ("Pathway Hospital"), and Dan Bob Turner (defendants collectively referred to as "Pathway Defendants"). The partial summary judgment dismissed with prejudice Priority's claims against Mr. Manning, Mr. Turner, and Pathway Hospital and dismissed Priority's claims for attorney fees against all parties. Priority's breach of contract claim against Pathway Healthcare was preserved, as well as a claim against Cornerstone Healthcare Group. For the following reasons, we respectfully reverse the trial court's granting of the motion for partial summary judgment.

FACTS

Priority filed suit against Pathway Defendants on October 15, 2015. Priority alleged the following in its petition. Priority contacted Pathway Defendants on May 22, 2013, about purchasing Pathway Hospital. During negotiations, Pathway Defendants stated they would require a nonrefundable deposit of $400,000. Priority claims it did not agree to these terms, but did agree to pay a $100,000 refundable deposit. On July 23, 2013, Priority sent a letter of intent ("LOI") to Pathway Healthcare regarding the potential acquisition of Priority Hospital.

Pathway Hospital operates within Cornerstone Hospital. Cornerstone Hospital owns and leases the premises to Pathway Hospital. Priority claims that it needed to meet with Cornerstone privately concerning the lease before purchase, but Pathway Defendants would not allow it and insisted one of their representatives be present at all meetings. Priority claims that by November 13, 2013, Pathway Defendants had not provided all of their financial records and had not consented to Priority meeting with Cornerstone. In December of 2013, Pathway Defendants allowed Priority to meet with Cornerstone.

On January 27, 2014, Priority learned from Cornerstone that Pathway Defendants were in breach of their existing lease and any lease renewal would contain additional terms. Priority claims Pathway Defendants intentionally concealed these facts. On March 25, 2014, Priority notified Pathway Defendants that it would withdraw from the purchase negotiations. Priority claims that when it asked Pathway Defendants for the return of the deposit, they gave excuses as to why it would be delayed. Priority states that Pathway Defendants only claimed the deposit was nonrefundable once they learned Priority would pursue legal action.

Pathway Defendants answered the petition on November 13, 2015, denying the allegations. Mr. Manning, Mr. Turner, and Pathway Hospital also filed a motion for partial summary judgment arguing Mr. Manning and Mr. Turner should be dismissed because they only acted as agents and never obligated themselves in their personal capacity. They argued Pathway Hospital should be dismissed because it had "no contractual privity..., no duty, contractual or otherwise, with [Priority]." They also argued that Priority's claims were frivolous, not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and interposed for an improper purpose, such as to harass or needlessly increase the cost of litigation.

In his affidavit, Mr. Manning states that he and Mr. Turner are the only members of Pathway Healthcare, which is the owner of Pathway Hospital. He states that as agents for Pathway Healthcare, they received a letter of intent and confidentiality agreement from Priority. He states the $100,000 check was paid by Priority to Pathway Healthcare and was endorsed by Pathway Healthcare. He states that he never informed Priority that he would be personally guaranteeing any obligation of Pathway Healthcare and would not sign an indemnity agreement. Mr. Turner's affidavit mirrors Mr. Manning's affidavit.

Attached to Priority's opposition to the motion for summary judgment is Kemp Wright's affidavit. Mr. Wright is a partner in Priority. He verifies Priority's account of the events leading up to the suit.

Mr. Manning stated in his deposition, that in his opinion, the untimely lease payments had been taken care of early in negotiations, which was by the middle of August of 2013. He stated that Priority knew (through face-to-face meetings and phone calls) that they were a distressed property, which was the reason behind the relatively low purchase price. He also stated that he told Priority (over the phone) that Cornerstone added additional provisions to the assignment of the lease.

Pathway Defendants filed a reply memo in support of the motion for summary judgment. They argued Priority did not properly plead a cause of action for fraud against Mr. Manning or Mr. Turner, and even if it did properly allege fraud, it cannot prevail because it could have found out the information without difficulty, inconvenience, or special skill. They also argue that Priority asserts no cognizable claim for redhibition. Priority responded with a supplemental memo in opposition to the motion for summary judgment.

On July 13, 2016, the trial court denied the motion for partial summary judgment. The trial court found there was a genuine issue of material fact. The trial court stated that Priority was not asserting a claim of fraud by silence, but of fraud by action (misrepresentations, intentional nondisclosures, and intentional concealing).

Pathway Defendants filed a writ with this Court, which was denied because exercise of this Court's supervisory jurisdiction was not warranted. They also filed a writ with the Louisiana Supreme Court, which was denied.

On April 17, 2017, Priority filed an amended petition, adding Cornerstone as a defendant. It asserts that Mr. Manning and Mr. Turner made intentional misrepresentations which they did not assert during negotiations—that Cornerstone was incorrect in its statement of the lease being in default. It claims that Cornerstone and Pathway Defendants colluded to drive up the price of the new lease between Priority and Cornerstone.

On April 25, 2019, Pathway Defendants filed a second motion for partial summary judgment. They argued the trial court should dismiss Priority's fraud claims, or in the alternative, dismiss Priority's claims for attorney fees. Pathway Defendants asserted the same arguments as before that Mr. Manning, Mr. Turner, and Pathway Hospital had no contractual privity with Priority. They also argued that discovery revealed no fraud on the part of Pathway Defendants.

A hearing on the motion was held August 26, 2019. On September 20, 2019, the trial court granted Pathway Defendants’ motion for partial summary judgment, dismissing with prejudice the claims against Mr. Manning, Mr. Turner, and Pathway Hospital. It also dismissed with prejudice Priority's claims for attorney fees. The trial court did not dismiss Priority's breach of contract claims against Pathway Healthcare and Cornerstone. In its oral reasons at the hearing, the trial court found that there was no duty to disclose because of the lack of relationship. The trial court highlighted Mr. Wright's deposition where he said "no" when asked whether the defendants misrepresented anything in terms of the lease and stated that no one lied to him about the lease ever being in default. The trial court found there were no genuine issues of material fact. As to attorney fees, the trial court stated, "I agree that this is not the type [of] action that would prompt or would justify the awarding of attorney fees so I'm granting the motion for partial summary judgment on both of the issues."

Priority now appeals.

DISCUSSION

Priority argues that Pathway Defendants misrepresented the status of its lease with Cornerstone and had a duty to disclose the lease information. It argues that Pathway Defendants committed fraud by silence or inaction under La. C.C. art. 1953. Priority argues that under the LOI, Pathway Defendants had a contractual duty to cooperate with it and provide accurate information. It argues the trial court erred in dismissing all claims against Mr. Manning, Mr. Turner, and Pathway Hospital.

Pathway Defendants argue that they did not make any misrepresentations. They also argue that there can be no fraud by silence because there was no duty to speak based on a relationship of confidence between the parties.

We review the granting of the motion for summary judgment de novo . A de novo standard of review is required when an appellate court considers rulings on summary judgment motions, and the appellate court must use the same criteria that governed the trial court's determination of whether summary judgment was appropriate. Bank of New York Mellon v. Smith , 2015-0530 (La. 10/14/15), 180 So. 3d 1238 ; Johnson v. Bhandari , 52,545 (La. App. 2 Cir. 2/27/19), 266 So. 3d 961, writ denied , 2019-0658 (La. 6/17/19), 274 So. 3d 572. A court must grant a motion for summary judgment if the motion, memorandum, and supporting documents show that there is no genuine issue as to a material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966.

The judge considering a motion for summary judgment is not to weigh the evidence or determine the truth of the matter; rather, the judge's role is to determine whether there is a genuine issue of fact for trial. Franklin v. Dick...