the Good Shepherd Hospital, Inc. D/B/A Christus Good Shepherd Medical Center Longview v. Select Specialty Hospital - Longview, Inc. , 563 S.W.3d 923 ( 2018 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
No. 06-18-00053-CV
THE GOOD SHEPHERD HOSPITAL, INC. D/B/A CHRISTUS GOOD SHEPHERD
MEDICAL CENTER LONGVIEW, Appellant
V.
SELECT SPECIALTY HOSPITAL - LONGVIEW, INC., Appellee
On Appeal from the 71st District Court
Harrison County, Texas
Trial Court No. 18-0718
Before Morriss, C.J., Moseley and Burgess, JJ.
Opinion by Chief Justice Morriss
OPINION
In leased space located on the first two floors of Good Shepherd Hospital, Inc. d/b/a
Christus Good Shepherd Medical Center Longview (Good Shepherd), Select Specialty Hospital-
Longview, Inc. (Select), owns and operates a long-term care facility for certain former patients of
Good Shepherd. Also, by a Purchased Service Agreement (PSA), 1 Select contracted for Good
Shepherd to provide Select’s patients with a range of hospital-based services, at least a few of
which were for emergency situations. After Christus Health System (Christus) took over Good
Shepherd, Good Shepherd offered Select a buyout of both the lease and the PSA, allegedly to
substitute a Christus contractor for Select. Select refused the offer. 2 When Good Shepherd later
1
In 2002, Good Shepherd had entered into the lease agreement with Select’s predecessor. By its terms, the lease is
effective through June 30, 2023, and provides that the relationship between Good Shepherd and the lessee “at all times
shall remain solely that of Lessor and Lessee and shall not be deemed to constitute a partnership or joint venture.” It
also states, “Lessee and Lessor may enter into ancillary agreement[s] for the provision of [various] services.”
On the same day that the lease was signed, Good Shepherd entered into an Ancillary and Support Services
Agreement (Ancillary Agreement) with Select’s predecessor which required Good Shepherd to provide dietary
services, radiology/imaging services, laboratory and pathology services, blood banking services, surgery services,
laundry and linen services, emergency response services, biomedical equipment maintenance and repair services,
transcription services, and other additional purchased services. The fees for the provision of the services were included
in the Ancillary Agreement, in detail. The Ancillary Agreement stated, “If the term of the Lease is extended beyond
its initial term, this Agreement shall be automatically extended for the same length of time.”
On December 18, 2012, Good Shepherd entered into the PSA with Select after renegotiating the provision of
and rates for certain services. In addition to the services which had previously been provided under the Ancillary
Agreement, Good Shepherd agreed to provide “additional services, such as hyperbaric therapy and wound care
services, biomedical engineering services and maintenance repairs, and annual preventative maintenance services.”
The PSA specified that it “constitute[d] the entire Agreement between the parties with respect to the subject matter
[t]hereof, and supersede[d] any and all other agreements, understanding, negotiations, or representations, oral or
written, between them.”
2
In 2017, Good Shepherd requested a meeting with Brian E. Davis, the president of Select’s Long-Term Acute Care
Hospital Division, for the purpose of discussing whether Select would consider giving up its remaining term on the
Lease in exchange for economic remuneration. Select declined the offer. On April 27, 2018, Good Shepherd notified
Select, in writing, that it was invoking Section 7.2.5 of the PSA and was terminating the PSA after “evaluating [its]
strategic plans” and that the effective date of the termination was July 31, 2018. On June 25, 2018, Good Shephard
wrote to Select to clarify that it was terminating only the PSA and that it had “at no time . . . stated or implied that it
would not comply with [the Lease’s] terms and conditions.” Further, Good Shepherd “request[ed] a meeting with the
2
notified Select that Good Shepherd was terminating the PSA, Select sued 3 for breach of contract
and anticipatory breach of contract and was awarded a temporary injunction blocking Good
Shepherd’s termination of the PSA. 4 This interlocutory appeal challenges that temporary
injunction. Because we conclude that the temporary injunction fails adequately to recite specific
reasons supporting the temporary injunction, as required by Rule 683 of the Texas Rules of Civil
Procedure, we will, without the need to rule on any substantive issues between the parties, dissolve
the temporary injunction and remand this matter to the trial court for further proceedings.
appropriate Select staff to discuss the orderly transition of services to the new provider” and assured that Good
Shepherd would “not allow patient care to be compromised, including the provision of Code Coverage.”
3
Select sued Good Shepherd on the same day the June 25 letter was received, for, among other things, breach and
anticipatory breach of the lease agreement, Ancillary Agreement, and PSA. Select also sought a declaratory judgment
regarding its rights and status under these agreements and asked the trial court for a temporary injunction to preserve
the status quo as it existed before Good Shepherd’s termination of the PSA. Good Shepherd responded that the lease
agreement did not require it to provide any services, that the Ancillary Services Agreement was “no longer in effect
and was superseded by the PSA,” and that it properly terminated the PSA by providing written notice in a timely
manner.
4
The temporary injunction forbids Good Shepherd from:
a. refusing to provide Plaintiff and its patients any and all services that Defendant currently
provides to them pursuant to the Lease, the PSA, or any other agreements, understanding, or protocol
in place between Plaintiff and Defendant;
b. terminating the Lease or any agreement ancillary thereto, including the PSA;
c. interfering with Plaintiffs right to quiet possession of the Leased Premises and the common
areas of Defendant’s hospital;
d. materially changing the referral process and inhibiting the proper referral of patients to the
Select [facility];
e. restricting Plaintiffs access to patient information for patients referred to the Select
[facility]; and
f. refusing services to any of Plaintiffs patients that would materially compromise a patient’s
health and wellbeing.
The temporary injunction set a $1,000.00 bond and a trial date of June 17, 2019.
3
The temporary injunction was issued July 2, 2018, seven days after Select’s petition was
filed. 5 The trial court’s order stated:
The Court . . . finds that Select has shown a probable right to relief at trial. The
Court also finds that Select has shown that Select and Select’s patients will suffer
a probable, imminent, and irreparable injury before trial if this temporary injunction
is not issued. Specifically, the Court finds that [Good Shepherd] has threatened to
discontinue certain healthcare-related services to Select and to Select’s patients that
[Good Shepherd] has provided to Select and Select’s patients for numerous years
pursuant to a Lease Agreement, an Ancillary and Support Services Agreement, and
a Purchased Services Agreement (“PSA”). These services include life-saving
healthcare services, such as emergency medical services (Code coverage) and
blood-transfusion services, as well as other important medical services. The Court
finds that, if [Good Shepherd] discontinues its services or inadequately performs
its services before trial, then Select’s patient care will likely be compromised and
some of Select’s patients will likely be exposed to a significant risk of serious harm
and possibly even death. In addition, the Court finds that, if [Good Shepherd]
discontinues its services before trial, then Select will likely be forced to shut down
its long-term acute care hospital.
Temporary injunctions are issued to preserve the status quo until trial on the merits.
Hartwell v. Lone Star, PCA, 528 S.W.3d 750, 759 (Tex. App.—Texarkana 2017, pet. dism’d). To
support issuance of a temporary injunction, there must be proof of “(1) a cause of action against
the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and
5
At the temporary injunction hearing, Andrew M. Meade, Select’s Chief Executive Officer, testified that Select’s
patients would have to be transferred by ambulance to another acute care hospital to receive many of the services
Good Shepherd was terminating. Brenda Vozza, Select’s Medical Director, testified that transporting Select’s patients
by ambulance to the nearest facility could be life threatening. She added that it was not feasible to continue to operate
without the services provided by Good Shepherd.
Mead testified that Select operates twenty-six free-standing long-term care facilities across the country and
that it was possible to operate the facility without being attached to an acute care hospital. According to Mead, Select
had $122 million in cash and was currently in discussions with other service providers. Mead further testified that
Select was negotiating with Longview Regional Center, located two and one-half miles away, to provide the services
previously provided by Good Shepherd and that their conversations with Longview Regional Center were progressing
toward a deal. Mead clarified that the lease did not require Good Shepherd to provide them with ancillary services
and that Good Shepherd provided ninety-day written notice of the PSA’s termination.
4
irreparable injury in the interim.” Id.; Townson v. Liming, No. 06-10-00027-CV, 2010 WL
2767984, at *2 (Tex. App.—Texarkana July 14, 2010, no pet.) (mem. op.)).
Good Shepherd asserts that a de novo review of the trial court’s apparent construction of
the lease agreement, Ancillary Agreement, and PSA, require reversal of the temporary injunction.
Good Shepherd argues that a plain reading of the contracts compels the conclusions that (1) the
lease does not require Good Shepherd to provide any ancillary services, (2) the terms of the PSA
specify that the Ancillary Agreement was superseded by the PSA, (3) the PSA provided for
termination without cause on ninety-days’ written notice, and, therefore, that Select cannot
maintain any cause of action against Good Shepherd. Select responds by arguing that the Ancillary
Agreement is in full force because, inter alia, it stated that its terms would be effective until the
lease was terminated. 6
“Our review of the trial court’s granting of a temporary injunction is limited to determining
whether the trial court clearly abused its discretion.” Id. (citing Gannon v. Payne, 706 S.W.2d
304, 305 (Tex. 1986); Bay Fin. Savs. Bank, FSB v. Brown, 142 S.W.3d 586, 589 (Tex. App.—
6
The PSA contains the following relevant provisions:
7. TERM AND TERMINATION OF THIS AGREEMENT
7.1 Term. This Agreement shall be effective as of November 26, 2012[,] and shall
thereafter coincide with the term of the Lease.
7.2 Termination. This Agreement may be sooner terminated on the first to occur of
the following:
7.2.5 Termination Without Cause. Either party may terminate this Agreement at
anytime on ninety (90) days written notice to the other party . . . .
7.2.6 Effects of Termination. On termination of this Agreement, as hereinabove
provided, neither party shall have any further obligation hereunder except for obligations accruing
before the date of termination.
5
Texarkana 2004, no pet.)). However, “[a] trial court has no ‘discretion’ in determining what the
law is.” Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). “Although an abuse of discretion
does not occur when the trial court heard conflicting evidence and substantive, probative evidence
reasonably supports the trial court’s decision, we will apply a de novo standard of review when
the issue turns on a pure question of law,” even when reviewing a trial court’s decision to grant or
deny a temporary injunction. Pinnacle Premier Props., Inc. v. Breton, 447 S.W.3d 558, 562 (Tex.
App.—Houston [14th Dist.] 2014, no pet.); see Camp v. Shannon, 348 S.W.2d 517, 519 (Tex.
1961); Estate of Gilbert, 513 S.W.3d 767, 771 (Tex. App.—San Antonio 2017, no pet.) (citing
Marketshare Telecom, L.L.C. v. Ericsson, Inc., 198 S.W.3d 908 (Tex. App.—Dallas 2006, no
pet.)). “We review questions of law without deference to a lower court’s conclusion.” Breton,
447 S.W.3d at 562.
Because we find that the language of the temporary injunction does not provide the
required detail under Rule 683 of the Texas Rules of Civil Procedure, we need not decide whether
a temporary injunction should have been issued on this record.
“In relevant part, [Rule] 683 requires every order granting a temporary injunction to state
the reasons for its issuance and to be specific in its terms.” Indep. Capital Mgmt., L.L.C. v. Collins,
261 S.W.3d 792, 795 (Tex. App.—Dallas 2008, no pet.) (citing TEX. R. CIV. P. 683). “The
requirements of rule 683 are mandatory and must be strictly followed.” Id. (citing Qwest
Commc’ns Corp. v. AT & T Corp., 24 S.W.3d 334, 337 (Tex. 2000) (per curiam); InterFirst Bank
San Felipe, N.A. v. Paz Constr. Co., 715 S.W.2d 640, 641 (Tex. 1966) (per curiam)). “If a
temporary injunction order fails to comply with the requirements of rule 683, it is void.” Id. (citing
6
Qwest Commc’ns Corp., 24 S.W.3d at 337; AutoNation, Inc. v. Hatfield, 186 S.W.3d 576, 581
(Tex. App.—Houston [14th Dist.] 2005, no pet.)). We may declare a temporary injunction void
even if that claim has not been raised. Id.; City of Sherman v. Eiras, 157 S.W.3d 931, 931 (Tex.
App.—Dallas 2005, no pet.).
“The elements of a claim for breach of contract are (a) a valid, enforceable contract,
(b) performance under the contract by the claimant, (c) breach by the defendant, and (d) an injury
to the claimant caused by the breach.” Great N. Energy, Inc. v. Circle Ridge Prod., Inc., 528
S.W.3d 644, 668 (Tex. App.—Texarkana 2017, pet. denied). “[T]o prevail on a claim for
anticipatory breach of contract, a plaintiff must establish each of the following elements: (1) an
absolute repudiation of the obligation; (2) a lack of a just excuse for the repudiation; and
(3) damage to the non-repudiating party.” 7 Fleming v. Allstate Ins. Co., No. 03-09-00705-CV,
2010 WL 4137502, at *3 (Tex. App.—Austin Oct. 22, 2010, pet. denied) (mem. op.)). “An
injunction plaintiff need not establish the correctness of his claim to obtain temporary relief, but
must show only a likelihood of success on the merits.” DeSantis v. Wackenhut Corp., 793 S.W.2d
670, 686 (Tex. 1990).
The trial court found that “Select ha[d] shown a probable right to relief at trial” and would
suffer a “probable, imminent, and irreparable injury.” However, the reasons provided in a
temporary injunction order “must be specific and legally sufficient, and not mere conclusory
statements.” Collins, 261 S.W.3d at 795; see El Tacaso, Inc. v. Jireh Star, Inc., 356 S.W.3d 740,
7
Select argues that it offered “uncontroverted evidence that Good Shepherd breached the express warranty of quiet
enjoyment in the Lease.” It also argues that Good Shepherd breached the contract by developing and participating in
a competing long-term care facility. We do not address these issues because the temporary injunction made no
mention of them.
7
746 (Tex. App.—Dallas 2011, no pet.). The temporary injunction fails to recite facts supporting
the determination that Select established a probable right to relief at trial based on breach or
anticipatory breach of the contracts, if any. Rather, it states merely that Good Shepherd threatened
to discontinue “certain healthcare-related services . . . provided to Select and Select’s patients for
numerous years pursuant to the lease, Ancillary Agreement, and PSA.” We conclude that this
statement did not constitute a legally sufficient and specific finding that Select had a likelihood of
success of proving the elements of either the breach of contract or anticipatory breach of contract
claim on which the temporary injunction was based. Accordingly, the finding of probable right to
recovery was conclusory. See Arkoma Basin Expl. Co. v. FMF Assos. 1990–A, Ltd., 249 S.W.3d
380, 389 n.32 (Tex. 2008) (“conclusory” is defined as “[e]xpressing a factual inference without
stating the underlying facts on which the inference is based”).
Further, to establish a probable injury that is irreparable, a party moving for a temporary
injunction must show that there is “no adequate remedy at law.” Hartwell, 528 S.W.3d at 444
(citing Blackthorne v. Bellush, 61 S.W.3d 439, 442 (Tex. App.—San Antonio 2001, no pet.) (citing
Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993)). The temporary injunction order recited
potential injuries or death that might be suffered by Select’s patients and opined that Select might
be forced to close its facility. Because the order did not demonstrate how Select would suffer
irreparable injury (a) caused by a probable breach (b) for which there was no adequate remedy at
law, including monetary damages, by explaining “the facts the trial court relied on,” the finding
was improperly conclusory. Collins, 261 S.W.3d at 796; see In re Chaumette, 456 S.W.3d 299,
306 (Tex. App.—Houston [1st Dist.] 2014, no pet.); Kotz v. Imperial Capital Bank, 319 S.W.3d
8
54, 56–57 (Tex. App.—San Antonio 2010, no pet.) (citing Arkoma Basin Expl. Co., 249 S.W.3d
at 389 n.32).
Because the trial court’s temporary injunction does not satisfy the requirements of Rule
683, we conclude it is void. We reverse the trial court’s order, dissolve the temporary injunction,
and remand the matter to the trial court for further proceedings.
Josh R. Morriss, III
Chief Justice
Date Submitted: October 8, 2018
Date Decided: October 11, 2018
9