St. Joseph Hosp., Augusta, Ga., Inc. v. Health Mgmt. Assocs., Inc.

• Decision Date: 24 January 2013
• Docket Number: No. 11–13069.,11–13069.
• Citation: 705 F.3d 1289
• Parties: ST. JOSEPH HOSPITAL, AUGUSTA, GEORGIA, INC., St. Joseph Ventures, Inc., St. Joseph M.O.B., L.P., a Georgia Limited Partnership, Plaintiffs–Counter Defendants–Appellants, v. HEALTH MANAGEMENT ASSOCIATES, INC., Defendant–Counter Claimant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

705 F.3d 1289

ST. JOSEPH HOSPITAL, AUGUSTA, GEORGIA, INC., St. Joseph Ventures, Inc., St. Joseph M.O.B., L.P., a Georgia Limited Partnership, Plaintiffs–Counter Defendants–Appellants,

v.HEALTH MANAGEMENT ASSOCIATES, INC., Defendant–Counter Claimant–Appellee.

No. 11–13069.

United States Court of Appeals,Eleventh Circuit.

Jan. 24, 2013.

Thomas L. Cathey, David E. Hudson, William James Keogh, III, Hull Barrett, PC, Augusta, GA, Leah Ward Sears, Schiff Hardin, LLP, Richard H. Sinkfield, Rogers & Hardin, LLP, Atlanta, GA, for Plaintiffs–Counter Defendants–Appellants.

Michael J. Bowers, Joshua R. Archer, Balch & Bingham, LLP, David M. Zacks, Kilpatrick, Townsend & Stockton, LLP, Atlanta, GA, Joseph H. Huff, Robert Perry Sentell, III, Kilpatrick, Townsend & Stockton, LLP, Augusta, GA, for Defendant–Counter Claimant–Appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before TJOFLAT, PRYOR and KRAVITCH, Circuit Judges.

TJOFLAT, Circuit Judge:

In this case, a corporate owner and operator of healthcare facilities across the United States reneged on its “promise” to purchase the assets of a hospital in Augusta, Georgia, so the hospital sued the corporation for breach of contract and, alternatively, under the doctrine of promissory estoppel. It sought to recover as damages the approximate difference between the price the corporation promised to pay for the hospital's assets, $75 million, and the price the hospital obtained, approximately $37 million, when it sold the assets to a third party. The corporation is Hospital Management Association, Inc. (“HMA”). The hospital is St. Joseph Hospital (“SJH”), a non-profit, general acute care facility located in Augusta, Georgia.¹

SJH sued HMA in the Superior Court of Richmond County, Georgia. HMA removed the case to the United States District Court for the Southern District of Georgia,² and after the parties joined issue and engaged in discovery, HMA moved the District Court for summary judgment. The District Court granted HMA's motion and entered final judgment accordingly. SJH appeals the judgment. We affirm.

I.

We begin our review of the District Court's decision with a recitation of the historical facts underpinning SJH's claims for breach of contract and promissory estoppel.

A.

In July 2005, SJH sought bids for the purchase of its hospital assets. ³ HMA submitted the highest of several bids, and the parties began negotiating the terms of the purchase. By December 2005, they had reduced the terms to writing in a draft agreement (the “Asset Sale Agreement” or the “Agreement”). Sections 2.2 and 3.2 of the Agreement, titled “Binding Agreement,” stated that the Agreement would “constitute[ ] a valid and binding obligation” of the parties when both HMA and SJH “duly and validly execute [ ] and deliver[ ]” it. Record, vol. 1, no. 1–2, at 63–64, 72. Before the parties could execute the Agreement, however, they needed to submit it to the Attorney General of Georgia for his approval. The Georgia Hospital Acquisition Act (the “Acquisition Act”) mandates that a transfer of fifty percent or more of the assets of a non-profit hospital cannot go forward without the Attorney General's consent. O.C.G.A. § 31–7–400 (2012) et seq. The parties to the transfer must notify the Attorney General of the terms of the transfer at least ninety days before it is to take place;⁴ then, within sixty days after receiving notice, the Attorney General must hold a public hearing.⁵

On December 22, 2005, the parties submitted to the Attorney General the Acquisition Act's prescribed Notice of Intent to Acquire or Dispose of Assets of a Hospital (the “Notice of Intent” or the “Notice”). The Notice informed the Attorney General that HMA had agreed to purchase SJH's assets under the terms stated in an Asset Sale Agreement, an unsigned copy of which was attached to the Notice, and stated that the transaction would be closed “as soon as practical after the Attorney General Process is concluded.” Record, vol. 1, no. 1–2, at 26. On receiving the Notice, the Attorney General scheduled a public hearing on the parties' proposal for February 13, 2006, in Augusta, Georgia.

After the parties notified the Attorney General of their intent, HMA made several public announcements about its negotiations with SJH. On December 27, 2005, HMA issued a news release, which stated that it had “negotiated an agreement to acquire St. Joseph” and that “[t]he execution and closing of the purchase agreement [were] subject to the review and approval of the Georgia Attorney General's office pursuant to applicable state law.” Record, vol. 1, no. 1–4, at 82. Two days later, HMA filed a Form 10–K annual report with the Securities and Exchange Commission (the “SEC”),⁶ which included a statement “announc[ing] the negotiation of an agreement to acquire St. Joseph Hospital” and that “the execution of a definitive purchase agreement and closing of the transaction [were] subject to review and approval by the Georgia Attorney General's office.” Record, vol. 1, no. 1–3, at 21. On January 3, 2006, HMA issued another “news release,” proclaiming that it had “signed or finalized negotiations on definitive agreements regarding four acquisition opportunities” and, in reference to the SJH acquisition, stating that “upon completion of the previously announced transaction [ ] to acquire the 231–bed St. Joseph Hospital ..., HMA will operate 61 hospitals in 16 states with approximately 8,912 licensed beds.” Record, vol. 1, no. 1–4, at 85. On January 13, HMA issued a third news release that included a similar statement. On January 24, HMA issued a “press release,” announcing once again that it had “negotiated an agreement to acquire the 231–bed St. Joseph Hospital” and that “execution and closing of the purchase agreement [were] subject to review and approval of the Georgia Attorney General's office pursuant to applicable state law.”⁷ Record, vol. 5, no. 108, Ex. J, at 5. On February 9, HMA filed a Form 10–Q quarterly report with the SEC, ⁸ which included a statement similar to the one contained in its earlier Form 10–K report.

B.

Section 201 of the Hart–Scott–Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), 15 U.S.C. § 18a (2006), requires the Federal Trade Commission (the “FTC”) and the Department of Justice (the “DOJ”) to scrutinize the antitrust implications of any transfer or acquisition of assets valued at over $50 million.⁹ Since the transaction the parties contemplated involved the transfer of assets exceeding $50 million in value, they filed with the FTC and the DOJ, on January 27, 2006, a “Premerger Notification and Report” (the “Premerger Notification”). Attached to the Premerger Notification as Exhibits were a “Letter of Intent,” which the parties executed on January 25, 2006, and the unsigned Asset Sale Agreement that they sent to the Georgia Attorney General with their Notice of Intent on December 22, 2005. The HSR Act precluded HMA from acquiring SJH's assets until the Act's “waiting period” expired. The waiting period began the day the FTC and the Assistant Attorney General in charge of the DOJ's Antitrust Division received the Premerger Notification, presumably January 27, 2006, and would end on February 26, 2006, unless terminated before that date by the FTC and the Assistant Attorney General.¹⁰

C.

The Letter of Intent (the “Letter”), which the parties ascribed to by signing,¹¹ “set forth [their] mutual understanding ... with respect to” HMA's acquisition of SJH's assets. Record, vol. 1, no. 1–5, at 5. In its second paragraph, the Letter “reflect[ed] the parties' intention to finalize and execute a binding Asset Sale Agreement in the current form attached to this Letter of Intent¹² ... with those changes (a) which are required by the Attorney General of the State of Georgia ..., (b) which otherwise result from the process set forth in [the Acquisition Act], or (c) which are otherwise agreed upon [by the parties].” Id.

The third, fourth, and fifth paragraphs of the Letter obligated the respective parties as follows. In the third paragraph, SJH promised that from January 25, 2006, “through the earlier of (a) the execution of the Asset Sale Agreement and (b) March 31, 2006, [it] shall not ..., without the prior written consent of [HMA],” offer to sell or lease to a third party or otherwise alienate the assets of the hospital. Id. at 5–6.¹³ In the fourth paragraph, each party consented to the other party “making the necessary filings and/or notifications, if any, with all governmental agencies or authorities which are required to be made, including ... pursuant to [the Acquisition Act] ... in order for [HMA] to acquire the assets described in the Asset Sale Agreement.” Id. at 6. The parties also “agree[d] to cooperate with each other concerning the Sale Transaction (i) in the preparation and submittal of any filings required pursuant to the [Acquisition Act] and (ii) during the course of any public hearings which take place pursuant to the [Acquisition Act].” Id. The fifth paragraph provided that “[i]n the event a definitive Asset Sale Agreement is not executed,” each party would “bear its own legal, accounting and other fees and expenses related to the proposed transaction,” subject to certain exceptions not relevant here. Id.

The sixth paragraph explained the parties' intent in executing the Letter of Intent with this statement:

This Letter of Intent is intended as an expression of mutual intent only and does not constitute an obligation binding in any way on the parties, except for the provisions of the third, fourth and fifth paragraphs hereof. This Letter of Intent will be governed by and construed in accordance with the laws of the State of Georgia.

Id. at 6–7.

SJH sent a copy of the Letter to the Georgia Attorney General the day the parties signed it, January 25, 2006. SJH's transmittal letter explained that the “[Letter] was required for the parties' Hart–Scott–Rodino filing” and “...