Gulf Coast Hospice LLC v. LHC Grp. Inc.

• Decision Date: 06 June 2019
• Docket Number: NO. 2017-CA-01634-SCT,2017-CA-01634-SCT
• Citation: Gulf Coast Hospice LLC v. LHC Grp. Inc., 273 So.3d 721 (Miss. 2019)
• Parties: GULF COAST HOSPICE LLC, a Mississippi Limited Liability Company, Jyoti Desai, Krupa Desai and Iqbal Savani v. LHC GROUP INC., a Delaware Corporation, Mississippi Health Care Group, LLC, a Mississippi Limited Liability Company and LHCG XXVI, LLC, a Mississippi Limited Liability Company
• Court: Mississippi Supreme Court

273 So.3d 721

GULF COAST HOSPICE LLC, a Mississippi Limited Liability Company, Jyoti Desai, Krupa Desai and Iqbal Savani

v.LHC GROUP INC., a Delaware Corporation, Mississippi Health Care Group, LLC, a Mississippi Limited Liability Company and LHCG XXVI, LLC, a Mississippi Limited Liability Company

NO. 2017-CA-01634-SCT

Supreme Court of Mississippi.

June 6, 2019

ATTORNEYS FOR APPELLANTS: MICHAEL B. HOLLEMAN, Gulfport, PATRICK WILLIAMS, Jackson

ATTORNEYS FOR APPELLEES: TAYLOR B. McNEEL, Biloxi, STEPHEN J. CARMODY, L. KYLE WILLIAMS, Jackson

EN BANC.

COLEMAN, JUSTICE, FOR THE COURT:

¶1. Louisiana Hospice Corporation, otherwise known as LHC, sought to acquire Gulf Coast Hospice LLC in D'Iberville, Mississippi. LHC and Gulf Coast Hospice executed a letter of intent outlining the basic terms of the proposed acquisition. Ultimately, the parties failed to consummate the transaction. Gulf Coast Hospice LLC and its members, Jyoti Desai, Krupa Desai, and Iqbal Savani¹ sued LHC Group Inc., LHCG XXVI LLC, and Mississippi Health Care Group LLC,² asserting several theories of liability stemming from the failed acquisition.

¶2. The trial court granted LHC's motion for summary judgment and dismissed Gulf Coast Hospice's claims. Gulf Coast Hospice appeals, arguing that genuine issues of material fact should have prevented summary judgment. Gulf Coast Hospice's chief argument is that LHC entered into an enforceable contract to acquire its hospice operations. Alternatively, Gulf Coast Hospice argues that if no enforceable contract to purchase exists, its claims for breach of contract and duty of good faith with respect to the letter of intent and tortious interference should have survived summary judgment.

¶3. We hold that no enforceable contract exists, that the doctrine of estoppel is inapplicable, and that no genuine issue of material fact exists regarding Gulf Coast Hospice's misrepresentation claims. We further hold no genuine issue of material fact exists regarding Gulf Coast Hospice's alternative claims. As such, we affirm.

FACTS AND PROCEDURAL HISTORY

¶4. Between June 2007 and December 2008, Prasant Desai owned and operated Gulf Coast Hospice. Around December 2008, Prasant transferred his 100 percent ownership interest to his mother Jyoti Desai (50 percent ownership), his sister Krupa Desai (25 percent ownership), and Dr. Iqbal Savani³ (25 percent ownership). Jyoti's husband Haresh Harry Desai, who is Prasant's and Krupa's father, was the "managing member of the board for the meetings[,]" did "some paperwork[,]" and "handl[ed] the checkbooks." Although the record is unclear about Harry's actual role with Gulf Coast Hospice, the parties do not dispute that he served in a representative capacity and handled negotiations.⁴

¶5. Around the time of the ownership transition within the family, Gulf Coast Hospice hired Linda Rogers to serve as director of nursing and administrator. Shortly after Rogers's hire, she became the primary decisionmaker in charge of daily operations. Neither the Gulf Coast Hospice members nor Harry had any role in daily operations. Under Rogers's leadership, profits and revenues grew by substantial amounts. Of importance, the patient census grew from six to fifty by the end of 2010. Harry considered Rogers to be the key employee running daily operations, as well as the most valuable employee.

¶6. In November 2010, independent broker Craig Kincannon contacted Harry, inquiring whether Gulf Coast Hospice would be interested in selling its hospice operations to LHC. Harry responded affirmatively. On December 27, 2010, LHC and Gulf Coast Hospice entered into a letter of intent with respect to the proposed acquisition of Gulf Coast Hospice's operations. The first paragraph provided as follows:

This letter sets forth our mutual understandings with respect to the basic terms of a proposed acquisition by LHC Group, Inc. ("LHCG ") of the assets of the hospice operations of Gulf Coast Hospice ("Seller ") that serve the Mississippi counties of George, Hancock, Harrison, Jackson, and Stone (the "Business "). As more fully described in this letter, it is our mutual intent to negotiate a satisfactory, definitive asset purchase agreement (the "Asset Purchase Agreement ") and such other documents as may be necessary to consummate the proposed transaction (together with the Asset Purchase Agreement, the "Agreements "). The intention to consummate the transaction described herein (the "Transaction ") is subject to the following terms and conditions:

¶7. The four page letter of intent continued by outlining terms and conditions of the proposed transaction and included the tentative proposed purchase price of $ 1.75 million, "[b]ased on the information made available thus far[.]" Paragraph five contained a non-exhaustive list of conditions to closing:

Conditions to Closing . The Closing of the Transaction shall be subject to the satisfaction of mutually agreeable terms and conditions, including, without limitation, the following:

(a) Negotiation, execution and delivery by the parties of the Agreements;

(b) The approval of the transactions contemplated herein and the Agreements by the Board of Directors or other governing body of each party, approval of which shall be obtained by each party prior to the execution of the Agreements;

(c) Satisfactory completion of due diligence by LHC[ ] and its affiliates;

(d) Receipt of all necessary consents and approvals of state and federal governmental authorities and other third parties, if any;

(e) Receipt of adequate assurances from the applicable state Department of Health Services and the federal Centers for Medicare and Medicaid Services that the home health agency licenses and provider agreements with the Medicare and Medicaid programs are in good standing and are transferable to [LHC]. LHC[ ] or one of its affiliates will be responsible for obtaining the foregoing assurances timely; and

(f) Satisfaction of such other conditions as may be reasonable and customary in acquisition agreements.

¶8. Paragraph fourteen provided, in pertinent part, as follows:

Non-Binding Effect. It is understood that this letter merely constitutes a statement of the mutual intentions of the parties with respect to the Transaction, does not contain all matters upon which agreement must be reach in order for the Transaction to be consummated and, except in respect to Paragraphs 6 through 13, inclusive, and this Paragraph 14, creates no binding rights in favor of any party. A binding commitment with respect to the Transaction will result only if the Agreements are executed and delivered, and are then subject only to the terms and conditions contained therein.

¶9. The letter of intent granted LHC the ability to "conduct, to the extent determined desirable or necessary by its own discretion, a review of the business, assets, liabilities, financial condition and results of operations, properties owned or operated by [Gulf Coast Hospice] and the books and records of [Gulf Coast Hospice]."

¶10. On January 4, 2011, LHC's project manager Dustin Delahoussaye for the Gulf Coast Hospice acquisition emailed Harry. Dustin explained the preliminary steps of the acquisition process, attached several documents to be either reviewed or completed, summarized the documents, and informed Harry that LHC's attorney would send draft documents in the weeks to come. An acquisition timeline attached to the email provided a target closing date of February 28, 2011, and the "Target Effective Date 3/1/2011." On January 7, 2011, LHC emailed Harry transaction documents, including a draft asset purchase agreement labeled "LHCG Draft" and "For Discussion Purposes Only." LHC also sent a change of ownership notification to the Mississippi State Department of Health's Health Facilities Licensure and Certification Division. LHC notified the Department that, effective March 1, 2011, LHC would be purchasing Gulf Coast Hospice.

¶11. On January 13, 2011, Dustin emailed LHC employees Lori Stagg, vice president of LHC hospice operations, and Brach Myers, assistant director of acquisitions, informing them of Harry's concern that LHC attempt to retain all employees or, at minimum, try to find positions for them with LHC. Dustin explained that, although Rogers's salary is much higher than LHC's staffing model for administrators, "keeping Linda [Rogers] is key to this deal and we must keep her on board."

¶12. On January 28, 2011, Dustin emailed fellow LHC employees: "As you all are aware of at this point, we are set to acquire Gulf Coast Hospice in D'Iberville, MS effective on 3/1." Dustin generally briefed the LHC employees about Gulf Coast Hospice and described Rogers's role with Gulf Coast Hospice. On January 31, 2011, Rogers had a dinner meeting with LHC employees Stagg and Shelly Denton, LHC's hospice regional manager. The three discussed compensation, and Rogers told them about her success. Following the dinner, Stagg emailed Dustin explaining that Rogers seemed capable but that she had refused to accept a salary of $ 85,000 with a 12 percent bonus. Rogers told Lori and Denton that she would accept a salary of $ 102,000. Stagg explained that LHC "cannot pay her this salary for a Hospice this size especially since she would make 30K more than the other Administrators and more than her supervisor, Shelley [Denton]." Stagg also explained that Rogers had told them that Gulf Coast Hospice staff were worried about the mandatory staff meeting scheduled for the next day. Stagg mentioned that "the broker [had] ‘promised’ them that LHC would not cut anyone's salary."

¶13. On February 1, 2011, a team of LHC representatives arrived at Gulf Coast Hospice and met with employees. With Gulf Coast Hospice's permission, LHC announced to employees that it was to acquire Gulf Coast Hospice, effective March 1, 2011. LHC showed a presentation about its company and provided additional written materials, including employee benefits. Gulf Coast Hospice employees became disgruntled...