Hyperbaric Oxygen Therapy Systems, Inc. v. St. Joseph Medical Center of Ft. Wayne, Inc., 02A03-9702-CV-57

CourtCourt of Appeals of Indiana
Citation683 N.E.2d 243
Docket NumberNo. 02A03-9702-CV-57,02A03-9702-CV-57
Decision Date14 July 1997

Page 243

683 N.E.2d 243
No. 02A03-9702-CV-57.
Court of Appeals of Indiana.
July 14, 1997.
Transfer Denied Dec.9, 1997.

Page 245

Michael T. Yates, Moss, Crowell, Harris, Yates & Long, Fort Wayne, for Appellant-Plaintiff.

Steven H. Pratt, Pamela J. Jones, Hall, Render, Killian, Heath & Lyman, P.C. Indianapolis, for Appellee-Defendant.



The trial court denied Hyperbaric Oxygen Therapy Systems' ("HOTS") motion for partial summary judgment and granted St. Joseph Medical Center of Fort Way ne's ("St.Joseph") cross-motion for summary judgment. HOTS appeals the trial court's order.


HOTS is a California corporation authorized to conduct business in Indiana. Its business includes the manufacture, sale and leasing of hyperbaric oxygen equipment and the providing of hyperbaric oxygen chamber services, related services and staff to medical care providers for use in the treatment of certain emergency and trauma patients, non-healing wound patients and burn patients. Record at 27. On July 11, 1990, HOTS entered into an "Exclusive Hyperbaric Lease Services Agreement" (hereinafter "the Agreement") with St. Joseph, agreeing to lease certain equipment and provide exclusive hyperbaric services subject to the conditions of the Agreement. In addition to providing St. Joseph with an option to purchase HOTS' equipment, the Agreement contained a clause addressing the potential purchase and installation by St. Joseph of a permanent hyperbaric medical system within the hospital. Section 6.16 of the Agreement provided:

If the Hospital elects to buy the Equipment, and install it as a permanent system, the Hospital agrees that Company shall have the right to match the lowest responsive bid or highest ranked proposal, to engineer the installation, i.e., design for removal from the mobile trailer and installation into a permanent site inside the Hospital, and to perform the actual installation of all the necessary components to ensure a certified and licensable hyperbaric medical system. If the Hospital purchases a new hyperbaric medical system for installation into a permanent site inside the hospital during the term of this Agreement or within two (2) years after termination of this Agreement (except if such termination is pursuant to Section 6.3(a) of this Agreement), the Hospital agrees to provide Company the right to match the lowest responsive bid or highest ranked proposal to sell Hospital the new equipment and install such system in the designated location. As a condition of the right of first refusal conferred in this Section, Company shall proffer a responsive bid or proposal in connection with (i) the engineering services relating to the installation and the actual installation of the equipment in a permanent site, and (ii) the sale and installation of a new hyperbaric oxygen system....

Record at 58-59. 1

In April 1994, St. Joseph sent a letter to HOTS indicating that St. Joseph was in the planning stages for replacing its hyperbaric oxygen treatment system, and enclosed a "Request for Proposal" which outlined the

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specifications. St. Joseph asked HOTS to respond to the request and, in May 1994, HOTS submitted its proposal which included the pricing of its system.

St. Joseph sent correspondence to HOTS on December 13, 1994, indicating that it had selected a vendor, Gulf Coast Hyperbaric ("Gulf Coast"), based on "their being able to provide a system that meets the specifications as listed in our RFP [Request for Proposal] and at the lowest cost." Record at 101. Additionally, St. Joseph's letter to HOTS stated, in part:

Per the terms of our current contract with Hyperbaric Oxygen Therapy Systems Inc., Hyperbaric Oxygen Therapy Systems has the right of first refusal on providing a chamber to St. Joseph Medical Center.

Enclosed is a copy of the proposal from Gulf Coast Hyperbaric. Please submit in writing your intentions to meet or exceed the pricing and equipment specified by Gulf Coast Hyperbarics in their proposal. The system selected includes the color closed circuit television at a total price of $982,035.

Your response is to be mailed to the attention of Phil Henneman, and must be received no later than Thursday, December 22, 1994. Failure to respond by December 22, 1994 will result in your forfeiting your right of first refusal.

Record at 101.

HOTS notified St. Joseph in a letter dated December 20, 1994, of its intent to exercise its right of first refusal to match Gulf Coast's bid. 2 On December 21, 1994, St. Joseph sent a letter to HOTS indicating that there had been a misunderstanding regarding acceptable materials for the construction. St. Joseph stated that since materials in Gulf Coast's proposal were listed with specific brand names, HOTS was required to use the same brands with the same specifications as "listed on a line for line basis" in Gulf Coast's proposal. Due to the misunderstanding, 3 St. Joseph was "agreeable to extending the deadline for response from December 22nd until December 29, 1994." Record at 376. On December 27, 1994, HOTS sent a letter to St. Joseph reaffirming its desire to match Gulf Coast's proposal, including the level of installation and the listed brand names on a line for line basis:

First, HOTS acknowledges SJMC's acceptance of Gulf Coast Hyperbaric explanation and correction of non compliant chamber design. HOTS still believes Gulf Coast bid to be non responsive, however, HOTS will proceed to match their proposal.

Second, HOTS hereby matches and rebids $982,034.00 for the Gulf Coast specified system as quoted. HOTS will provide the listed brand names specified by Gulf Cost on a line for line basis in the Gulf Coast proposal where such line items are specified. Likewise the level of installation specified by Gulf Coast will also be met.

Record at 103.

In a letter to HOTS dated January 4, 1995, St. Joseph indicated that it was in receipt of HOTS' December 27, 1994 letter and that "[t]here are additional items that we need clarification and or agreement on before we can reach a decision on the successful vendor." Record at 104. Moreover, St. Joseph requested that HOTS provide the following: a current copy of its FDA registration and ASME certification; a list of references of installed sites where HOTS had no financial interest; a $1,000,000 performance bond; a new proposal based on the specific details in Gulf Coast's proposal; various financial information; and a copy of its standard purchasing agreement. St. Joseph required a response from HOTS in writing by January 13, 1995. Record at 105. HOTS sent a letter dated January 9, 1995 responding to St. Joseph's requests. Record at 380-82.

On January 29, 1995, St. Joseph informed HOTS by letter that it had chosen Gulf Coast

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as the successful vendor based on an evaluation and comparison of the HOTS proposal to the Gulf Coast proposal. St. Joseph concluded that the Gulf Coast proposal was "highest ranked and not matched by HOTS." Record at 383. St. Joseph listed areas in which it believed that HOTS did not match Gulf Coast, including: concerns about HOTS' financial stability; concerns with the FDA registration; failure of HOTS to honor prior promises; concerns regarding HOTS' references; the fact that HOTS had no significant construction since 1990 and that Gulf Coast had built three (3) hyperbaric chambers recently; concerns regarding HOTS' performance under the current lease agreement; concerns regarding the current chamber equipment; and the difference in the manner of payment between Gulf Coast and HOTS. Record at 383-85.

On September 11, 1995, HOTS filed an action alleging that St. Joseph breached the Agreement, more specifically Section 6.16, by refusing to purchase the new hyperbaric medical system from HOTS despite HOTS' agreement to match Gulf Coast's bid. St. Joseph filed an answer on November 7, 1995, denying the allegations and raising affirmative defenses. On March 25, 1996, HOTS filed a motion for partial summary judgment and designation of factual materials, and subsequently, St. Joseph filed its motion for summary judgment and designation of evidentiary materials on April 24, 1996. After a hearing on the motions, the trial court granted summary judgment on May 23, 1996 in favor of St. Joseph and denied HOTS' motion for summary judgment. The trial court denied HOTS' subsequent motion to correct errors. HOTS appeals the trial court's grant of summary judgment in favor of St. Joseph.


I. Whether the Agreement provided HOTS with a right of first refusal to sell.

II. Whether HOTS, provided it had a right of first refusal to sell, failed to properly exercise its right as a matter of law.


"When reviewing the grant of summary judgment, we stand in the shoes of the trial court and apply an identical standard." Lawlis v. Kightlinger & Gray, 562 N.E.2d 435, 438 (Ind.Ct.App.1990), trans. denied. "Summary judgment is appropriate only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Id. "In determining whether there is a...

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