Carson v. Ross

• Decision Date: 29 June 1987
• Docket Number: No. 11A01-8612-CV-324,11A01-8612-CV-324
• Citation: 509 N.E.2d 239
• Parties: Bert CARSON, Thomas Hobbs, William Paddack, and John D. Hardin, Jr., As Members of the Board of Trustees of the Hendricks County Hospital and Hendricks County Hospital Foundation, Inc., Defendants-Appellants, v. Frank ROSS, James Malayer, Charles Whitaker, Keith Ernst, and John Long, as Members of the Board of Trustees of the Putnam County Hospital, Plaintiffs- Appellees.
• Court: Indiana Appellate Court

Page 239

509 N.E.2d 239

Bert CARSON, Thomas Hobbs, William Paddack, and John D Hardin, Jr., As Members of the Board of Trustees of the Hendricks County Hospital and Hendricks County Hospital Foundation, Inc., Defendants-Appellants, v. Frank ROSS, James Malayer, Charles Whitaker, Keith Ernst and John Long, as Members of the Board of Trustees of the Putnam County Hospital Plaintiffs- Appellees.

No. 11A01-8612-CV-324.

Court of Appeals of Indiana First District.

June 29, 1987.

Rehearing Denied Aug. 24, 1987.

Russell M. Webb, Jr., Hinkle Keck Webb & Pierce, Danville, for defendants-appellants.

J.D. Calbert, Greencastle, for plaintiffs-appellees.

RATLIFF, Chief Judge.

STATEMENT OF THE CASE

Defendants, Bert Carson, Thomas Hobbs, William Paddack, and John D. Hardin, Jr., as members of the Board of Trustees of the Hendricks County Hospital and Hendricks County Hospital Foundation, Inc., appeal the preliminary injunction and contempt order entered by the Clay Circuit Court. We reverse in part and affirm in part.

FACTS

The individual plaintiffs are members of the Board of Trustees of Putnam County Hospital (PCH). The defendants are the Board of Directors for Hendricks County Hospital (HCH) and comprise four of the seven members of the Board of Directors for Hendricks County Hospital Foundation (HCH Foundation). HCH is a public county hospital operated in Hendricks County. HCH incorporated HCH Foundation under the laws of the State of Indiana and pursuant to Indiana Code section 16-12.1-3-1 to promote and benefit HCH. HCH Foundation is funded primarily by HCH pursuant to Ind.Code Sec. 16-12.1-3-12. HCH Foundation has no independent facilities, officers or employees. Accordingly, HCH Foundation functions through use of HCH facilities, offices, and employees.

On September 16, 1985, HCH Foundation purchased approximately three acres of real estate in Putnam County and took title by warranty deed. HCH Foundation's stated purpose in acquiring the land was to construct and sell a medical office building. Before purchasing the land, HCH Foundation had negotiated to sell the medical office building to four physicians. The medical office building was to be sold for cost plus interest, calculated at one percent (1%) over prime. Although the buying physicians were on staff at HCH, no agreement was made that would require them to maintain contact or refer patients to HCH for hospital services.

An advertisement was mistakenly placed in the Banner-Graphic on January 20, 1986, which indicated that HCH would take bids on a building project in Bainbridge. A construction document was issued on March 26, 1986, and bore the project name, "Hendricks County Hospital Bainbridge Family Health Center." Construction commenced after the issuance of the building permit.

On June 25, 1986, PCH filed a complaint against defendants and requested an injunction and restraining order. On August 6, 1986 before a change of venue was perfected, plaintiffs sought, and Judge Vaughn granted, an emergency injunction and temporary restraining order without notice. A hearing on the order was set for and held on August 12, 1986. Attorneys for both sides were present at the hearing, but the validity of the restraining order was not argued at that time. The temporary restraining order was continued at that time by consent of both attorneys and by written order of Judge Vaughn, "until further order of selected special judge or judge of the county to which this cause is venued."

On August 19, 1986, venue was perfected in the Clay Circuit Court. On that same day, on advice of defendant's counsel, construction resumed. Plaintiffs filed an affidavit for Order to Show Cause for Contempt. Plaintiffs' contempt motion and request for preliminary injunction was heard by the Clay Circuit Court on September 4, 1986. On November 6, 1986, Judge Yelton issued findings of fact, conclusions of law, and judgment in favor of PCH. The judge issued a preliminary injunction against defendants for violation of Ind.Code Sec. 16-12.1-3-2 and found defendants in contempt of the temporary restraining order issued by Judge Vaughn. Judge Yelton also fined defendants five hundred dollars ($500) each and ordered them to pay that portion of PCH's attorney's fees attributable to the enforcement of the restraining order contempt citation.

HCH and HCH Foundation challenge the preliminary injunction and contempt order by interlocutory appeal.

ISSUES

The issues presented by HCH and HCH Foundation are restated as follows:

1. Whether the trial court abused its discretion in issuing a preliminary injunction based on Ind.Code Sec. 16-12.1-3-2.

2. Whether the trial court's order finding the defendants in contempt of court was proper.

DISCUSSION AND DECISION

Issue One

The grant or denial of a preliminary injunction is in the sound discretion of the trial judge. Mid-America Marketing, Inc. v. Falender Development Corp. (1980), Ind.App., 406 N.E.2d 372. Therefore, we will not reverse unless it is shown that the trial court abused its discretion or acted contrary to law. Lambert v. State Department of Highways (1984), Ind.App., 468 N.E.2d 1384, 1389, trans. denied; Steenhoven v. College Life Insurance Co. (1984), Ind.App., 458 N.E.2d 661, 664. An injunction, however, is an extraordinary remedy and should be used sparingly. Wells v. Auberry (1982), Ind.App., 429 N.E.2d 679, 682; F.W. Means and Co. v. Carstens (1981), Ind.App., 428 N.E.2d 251, 260, trans. denied. The court should issue a preliminary injunction only when the law and facts are clearly in the moving party's favor. Steenhoven, at 667; Wells, at 682.

In reviewing for abuse of discretion in the grant or denial of a preliminary injunction, this court must review the trial court's findings of fact and conclusions of law. Steenhoven, at 664. The court is generally guided by four factors in determining the propriety of a preliminary injunction. ¹ However, when the acts sought to be enjoined are declared unlawful by the legislature the plaintiff does not have to show either irreparable injury or a balance of hardship in his favor. State ex rel. Department of Natural Resources v. Mason (1981), Ind.App., 416 N.E.2d 1312, 1316, trans. denied; DeMayo v. State ex rel. Department of Natural Resources (1979), 182 Ind.App. 241, 394 N.E.2d 258, 261. If the trial court's findings of fact are clearly erroneous or the conclusions contrary to law, then the trial court's grant of a preliminary injunction will be reversed as an abuse of discretion. Steenhoven, at 665; Wells, at 684. In the present case, the trial court's findings of fact and conclusions thereon were contrary to law and an abuse of discretion. Accordingly, we reverse.

In the present case, PCH requested a preliminary injunction based upon the argument that HCH Foundation was in violation of Ind.Code Sec. 16-12.1-3-2 which reads:

"The board may purchase, construct, remodel, repair, enlarge, or acquire in any lawful manner a building or buildings, within or outside the county, for hospital purposes as defined in this article. However, if the building is located outside the county, the board must receive the approval of:

(1) the commissioners of the county in which the hospital is located; and

(2) the commissioners of the county in which the building is located."

Application of this section, however, requires that the purchase, acquisition or construction of a building take place for "hospital purposes," which is defined in Ind.Code Sec. 16-12.1-1-2(h) as follows:

" 'Hospital purposes' shall mean the providing to the general public of in-patient or out-patient diagnostic and treatment facilities and services generally recognized as hospital services, under the direction and supervision of the patient's attending physician and may include, where provision is made therefor, in the discretion of the board, extended care facilities, and other related health care facilities and services."

Accordingly, if the medical office building was not constructed for hospital purposes as defined by statute, then Ind.Code Sec. 16-12.1-3-2 is inapplicable and may not be used to support the preliminary injunction.

In order for the construction to occur for hospital purposes, HCH or HCH Foundation as an alter ego must provide or intend to provide treatment facilities or services to the general public that are generally recognized as hospital services. Plaintiffs have failed to present any evidence that HCH or HCH Foundation would provide treatment facilities and services generally recognized as hospital services. The undisputed evidence shows, and the trial court found, that HCH Foundation intended to resell the medical office building to four physicians as soon as construction was completed. Record at 106. HCH Foundation's actions were geared toward financial investment and not the providing of hospital services. The medical office building clearly was not being constructed for hospital purposes as defined by statute.

PCH argues that HCH Foundation's actions inherently must be for hospital purposes, because HCH Foundation was established for the exclusive benefit of HCH. However, the mere fact that HCH Foundation's actions ultimately would benefit HCH financially and possibly indirectly through referred hospital patients does not mean that HCH Foundation's actions were for hospital purposes. In defining "hospital purposes" the statute makes no mention of "benefit". Rather, "hospital purposes" is defined exclusively with respect to the ultimate goal of a hospital--provision of treatment facilities or services generally recognized as hospital services. If the legislature meant to include HCH Foundation's actions within the definition of hospital purposes they would have defined it from the standpoint of activities that will financially benefit the hospital. However, the legislature did not define hospital purpose in this manner. Since HCH Foundation was motivated by return on financial...