CLEVELAND Reg'l Med. Ctr. v. PROPERTIES
| Decision Date | 30 September 2010 |
| Docket Number | No. 09-08-00263-CV.,09-08-00263-CV. |
| Citation | 323 S.W.3d 322 |
| Parties | CLEVELAND REGIONAL MEDICAL CENTER, L.P., Community Health Systems, Inc., and CHS/Community Health Systems, Inc., Appellants, v. CELTIC PROPERTIES, L.C., Appellee. |
| Court | Texas Court of Appeals |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
COPYRIGHT MATERIAL OMITTED.
COPYRIGHT MATERIAL OMITTED.
COPYRIGHT MATERIAL OMITTED.
Daniel V. Flatten, Nicholas A. Simms, Kerry McMahon, Porter & Hedges, L.L.P., Houston, for appellants.
Karen D. Smith, Joseph T. Kennedy, Kirby D. Hopkins, Drucker, Rutledge & Smith, L.L.P., The Woodlands, for appellee.
Before McKEITHEN, C.J., GAULTNEY and KREGER, JJ.
Celtic Properties, L.C. (“Celtic”) filed a lawsuit against Cleveland Regional Medical Center, L.P. (“CRMC”) for breach of a lease agreement, failure to pay rent, and breach of CRMC's common law duty to maintain the building it leased in a suitable condition. Celtic amended its suit adding Community Health Systems, Inc. (“CHS”) and CHS/Community Health Systems, Inc. (“CHS/CHS”) as defendants, alleging additional causes of action. After trial on the merits, the jury returned a verdict in favor of Celtic. Following the jury's verdict, CRMC filed a motion for new trial and a motion for judgment notwithstanding the verdict. The trial court entered final judgment in favor of Celtic on March 11, 2009. CRMC, CHS and CHS/CHS (collectively referred to as “appellants”) filed this appeal raising thirteen separate issues. We affirm in part and reverse in part.
In 1994, CRMC suggested that Dr. Rick Kelley and Dr. John Murphy jointly move their medical practices to a facility in Cleveland, Texas to encourage the production of more patient services in their respective fields of practice. Drs. Kelley and Murphy agreed and formed Celtic Properties, L.P., to purchase 301 Sleepy Hollow in Cleveland, Texas, the property at the center of this dispute (“Property”). The Property contained two office suites, 301A and 301B, which were to be divided between Drs. Kelley and Murphy. Both spaces needed renovation. CRMC financed the build-out, which was completed in late 1995.
On July 15, 1994, Celtic and CRMC executed a written lease agreement whereby CRMC agreed to lease the Property for five years. After CRMC leased the Property from Celtic, CRMC subleased the Property back to Drs. Kelley and Murphy. The subleases allowed the doctors to amortize the cost of the build-out through their monthly lease payments and allowed CRMC to manage and oversee health care in the community without becoming a property owner. In July 1996, Celtic and CRMC executed a first amendment to the lease. The first amendment modified the rent and extended the lease through June 30, 2003. The original lease agreement of July 15, 1994 and the first amendment to the lease executed in July 1996 together were considered the Master Lease.
At some point thereafter Dr. Kelley began experiencing financial difficulties. Eventually, Dr. Murphy purchased Dr. Kelleys interest in Celtic, expecting Dr. Kelley to vacate suite 301A shortly thereafter. The subleases were amended a second time to reflect Dr. Kelleys sale of his interest in Celtic to Dr. Murphy. Contrary to Dr. Murphys expectations, Dr. Kelley continued practicing in suite 301A.
In 1999, the terms of the Master Lease were renegotiated when Dr. Murphy agreed to act as the medical director of the Cleveland Hospital Rural Health Center in Livingston for CRMC. In February 1999, the parties executed a letter of intent, which expressly stated their mutual “intent to execute final documents within 60 days.” The letter of intent provided that CRMC would enter a seven year lease with Celtic for the Property at a rental rate of $1.60 per square foot with an escalation clause providing for a two percent increase in year two and a three percent increase per annum for years three through seven. Dr. Murphy agreed to enter into a five year agreement with CRMC to provide patient services at Livingston Rural Healthcare Center and to act as the clinics medical director.
Prior to executing the formal letter agreement, CRMC and Dr. Murphy's attorney negotiated the provisions in the letter of intent. Dr. Murphy's attorney recommended several changes to the letter to address various issues. The recommended changes were incorporated into the formal letter agreement. Evidence at trial established that the title of the agreement was changed from “Letter of Intent” to “Letter of Agreement” to clarify that the agreement would be a binding, valid contract. The evidence further established that Dr. Murphy expressed concern that Dr. Kelley may vacate suite 301A, and if so, Dr. Murphy wanted Celtic to receive a higher rental rate. To address this concern, the parties added language to the letter agreement to ensure that if Dr. Kelley vacated suite 301A, Celtic would enter into a new rental agreement with CRMC. The agreement further provided that Celtic was to pay to CRMC any remaining balance due from the doctors to CRMC for the initial build-out.
The formal letter agreement (“Letter Agreement”), dated May 14, 1999, signed by Celtic and CRMC, stated that the letter was to “Amemorialize our agreement concerning the lease of certain medical office space located at 301 Sleepy Hollow, Cleveland[,] Texas.” The Letter Agreement referenced the Master Lease, which was attached as an exhibit and “incorporated ... for all purposes.” The Letter Agreement provided in part:
The formal letter agreement (“Letter Agreement”), dated May 14, 1999, signed by Celtic and CRMC, stated that the letter was to memorialize our agreement concerning the lease of certain medical office space located at 301 Sleepy Hollow, Cleveland[,] Texas. The Letter Agreement referenced the Master Lease, which was attached as an exhibit and incorporated ... for all purposes. The Letter Agreement provided in part:
The terms of the agreement are as follows:
seven, based upon a total agreed square footage of 7,661 sq. ft., payable in equal monthly installments.
When Dr. Murphy left to direct the Livingston Clinic, other physicians subleased suite 301B from CRMC. In April 2002, Dr. Murphy inquired of CRMC regarding the status of his repayment of the build-out costs for suite 301B. CRMC initially told Dr. Murphy that the build-out cost would be fully amortized in September 2002. However, CRMC later informed Dr. Murphy that the September 2002 date was incorrect and that the build-out cost would not be fully amortized until September 2003. Dr. Murphy testified at trial that another physician rented suite 301B from CRMC from 2002 until 2007.
In December 2003, Dr. Kelley gave CRMC notice that he would vacate suite 301A in February 2004. Dr. Murphy testified that CRMC did not inform him of Dr. Kelley's plan to vacate the leased premises. According to Dr. Murphy, he did not learn that Dr. Kelley had vacated suite 301A until June 2004. Dr. Murphy explained that pursuant to the Letter Agreement, once Dr. Kelley vacated suite 301A, the Master Lease terminated and CRMC was obligated to begin paying Celtic $1.60 a square foot in rental income. In June 2004, Dr. Murphy received a letter from then CEO of CRMC, Ron MacLaren, stating that a new physician was interested in leasing suite 301A and had requested that CRMC pay for certain renovations to the suite. Dr. Murphy testified that after receiving this letter, he scheduled a meeting with MacLaren at the Property. According to Dr. Murphy, at the meeting he demanded the increased rent of $1.60 a square foot, which he contended he was due under the Letter Agreement. Dr. Murphy further testified that he and MacLaren discussed renovations to suite 301A to accommodate the new physician, as well as the execution of a new master lease agreement. Dr. Murphy stated that MacLaren agreed at the meeting to execute a new agreement. However, Dr. Murphy had no follow-up conversations with MacLaren regarding the new lease agreement or the higher rental rate because MacLaren subsequently left CRMC's employment.
Dr. Murphy testified that he later raised the issue of a new master lease and the higher rental rate CRMC owed Celtic under the Letter Agreement with the subsequent CEO of CRMC, Jude Torchia, and with Steve Courtier, a...
To continue reading
Request your trial
-
Hyun Ju Park v. City of Honolulu
...policies or procedures will not create a negligence duty where none otherwise exists." (quoting Cleveland Reg'l Med. Ctr., L.P. v. Celtic Props., L.C., 323 S.W.3d 322, 351 (Tex. App. 2010) ).14 Although, as previously discussed, Hawaii courts require plaintiff to establish foreseeability fo......
-
R&M Mixed Beverage Consultants, Inc. v. Safe Harbor Benefits, Inc.
...Inc. , 948 S.W.2d 381, 383–84 (Tex. App.—Houston [14th Dist.] 1997, no writ) ; Cleveland Reg'l Med. Ctr., L.P. v. Celtic Properties, L.C. , 323 S.W.3d 322, 350–52 (Tex. App.—Beaumont 2010, pet. denied). Thus, as the Texas Supreme Court has stated, it has "never held corporations liable for ......
-
Kenyon v. Elephant Ins. Co.
...for a failure to act in accordance with those policies or procedures. See, e.g. , Cleveland Reg'l Med. Ctr., L.P. v. Celtic Props., L.C. , 323 S.W.3d 322, 351 (Tex. App.—Beaumont 2010, pet. denied). The evidence shows Moritz undertook an affirmative course of action in accordance with Eleph......
-
Cox v. the City of Fort Worth
...company's internal policies or procedures will not create a negligence duty where none otherwise exists.” Cleveland Reg'l Med. Ctr., L.P. v. Celtic Props., L.C., 323 S.W.3d 322, 351 (Tex.App.-Beaumont 2010, no pet. h.) (in “negligent undertaking” case, holding that provisions in medical cen......
-
Good Samaritan Or Negligent Undertaking? Be Wary.
...FFE Transp. Servs., Inc. v. Fulgham, 154 S.W.3d 84, 92 (Tex. 2004)); see Cleveland Reg'l Med. Ctr., L.P. v. Celtic Properties, L.C., 323 S.W.3d 322, 351-52 (Tex. App.'Beaumont 2010, pet. The content of this article is intended to provide a general guide to the subject matter. Specialist adv......
-
Texas. Practice Text
...191. Id. at *4. 192. 359 S.W.3d 318 (Tex. App. 2012). 193. Id. at 337-38. 194. See, e.g. , Cleveland Reg’l Med. Ctr. v. Celtic Props., 323 S.W.3d 322, 348 (Tex. App. 2010) (“We agree with the courts of appeals in Houston, Corpus Christi, and Dallas and conclude that as a matter of law, a pa......
-
CHAPTER 2.I. Motion Authorities
...was so one-sided that the error likely made no difference in the judgment."). Cleveland Reg'l Med. Ctr., L.P. v. Celtic Props., L.C., 323 S.W.3d 322, 339 (Tex. App.—Beaumont 2010, pet. denied) (evidence of email communications between landlord's prior counsel and tenant's counsel was "merel......