Lake v. Cravens
| Citation | 488 S.W.3d 867 |
| Decision Date | 28 April 2016 |
| Docket Number | NO. 02–11–00464–CV,02–11–00464–CV |
| Parties | Darrell Lake, Rian Maguire, RCC Medical #1 GenPar, LLC, and Realty Capital Corp. and Richard Myers and Realty Capital Partners, LLC, Appellants v. George F. Cravens, M.D., RCC Medical District Facilities, Ltd., and Center for Neurological Disorders Hospital, LP, Appellees |
| Court | Court of Appeals of Texas |
DONALD E. HERRMANN, BRANDON HURLEY, MEGAN M. COOLEY, KELLY HART & HALLMAN LLP, FORT WORTH, TX, FOR APPELLANTS DARRELL LAKE, RIAN MAGUIRE, RCC MEDICAL #1 GENPAR, LLC, AND REALTY CAPITAL CORP.
WADE C. CROSNOE, SARA M. BERKELEY, THOMPSON, COE, COUSINS & IRONS, L.L.P., AUSTIN, TX, AND WILLIAM N. RADFORD, BRADFORD K. BURDETTE, THOMPSON, COE, COUSINS & IRONS, L.L.P., DALLAS, TX, FOR APPELLANTS RICHARD MYERS AND REALTY CAPITAL PARTNERS, LLC.
PAUL F. WIENESKIE, BAILEY & GALYEN, ARLINGTON, TX, AND CARTER L. HAMPTON, THE HAMPTON LAW FIRM, P.C., FORT WORTH, TX, FOR APPELLEES.
PANEL: DAUPHINOT, MEIER, and GABRIEL, JJ.
BILL MEIER
Appellees George F. Cravens, M.D.; RCC Medical District Facilities, Ltd. (the Partnership); and Center for Neurological Disorders Hospital, LP (CNDH) filed a motion for rehearing of our opinion that issued on October 29, 2015. We deny the motion, withdraw our opinion and judgment dated October 29, 2015, and substitute the following.
Dr. Cravens dreamed of constructing and owning a neurosurgical hospital in Fort Worth. Between mid–2007 and November 2009—while the country was experiencing the worst economic downturn since the Great Depression—numerous individuals and entities worked towards making that dream a reality. Ultimately, however, the project never obtained a construction loan commitment, the hospital was never built, and Dr. Cravens sued all of the appellants under a number of theories for various acts or omissions that allegedly occurred both before and during the development process. A jury later made a number of affirmative findings on liability and damages, and after Dr. Cravens and the Partnership elected their remedies, the trial court signed a final judgment on the jury's verdict. This appeal followed.
There are two groups of appellants. In nine issues, Appellants Darrell Lake, Rian Maguire, RCC Medical # 1 GenPar, LLC (GenPar), and Realty Capital Corp. (RCC) (collectively, the RCC Appellants) challenge (i) Dr. Cravens's standing to recover in his individual capacity, (ii) the jury's fraud, promissory estoppel, and unjust enrichment findings, (iii) the admissibility of expert testimony, (iv) the jury's attorneys' fees and damages awards, and (v) the trial court's denial of contractual indemnification for Rian. In six issues, Appellants Richard Myers and Realty Capital Partners, LLC (RCP) (collectively, the RCP Appellants) argue that Dr. Cravens lacks standing to recover in his individual capacity, that the evidence is legally and factually insufficient to support the jury's liability and damages findings, that Dr. Cravens ratified the parties' partnership agreement, and that Dr. Cravens should not recover attorneys' fees. We will reverse and remand.
Dr. Cravens practices neurological surgery
in Fort Worth. He heads the Department of Neurosurgery at John Peter Smith Hospital and has privileges at “[e]ssentially all of the downtown hospitals” in Fort Worth.
Dr. Cravens does business through, and is the president of, Center for Neurological Disorders, PA (CND, PA), a professional association founded in 1992. CND, PA consists of five neurosurgeons, two anesthesiologists, and one neurologist.
Kim Reed began working as the administrator for Dr. Cravens and CND, PA in 2001. Dr. Cravens does not have an email address, so to correspond with him, all email flowed to and from an address utilized by Reed.1
Myers is the CEO and 100% owner of RCC, an entity founded in 1987 to “acquire, develop, own and manage investment-grade commercial and residential real estate projects.” Myers is also the co-CEO and 52% owner of RCP, a commercial real estate investment firm founded in 2000. Myers oversees the operations of both RCC and RCP.
Rian joined RCC in 2005. Working as a developer, with a background in engineering, he eventually held the title of vice-president. Rian's twin brother is Rory Maguire. As the vice-president of acquisitions for RCP, Rory was responsible for sourcing potential investment opportunities for RCP.2
Lake joined RCC as a developer in 2006 and held the title of executive vice president. He left RCC sometime in the spring or summer of 2008 to operate his own development company, Principal Property Resources (PPR), but he continued to work on several projects that he had been involved with while at RCC, including the project in this case.
Dr. Cravens began thinking about constructing a physician-owned neurosurgical hospital sometime in 2000 or 2001. He claimed that it was a way for him to “provide better patient care and be an advocate for patients,” but he also acknowledged that the fees generated from owning the hospital would be “significantly more” than the fees collected by the CND, PA physicians.3 Before 2007, Dr. Cravens had hired an architect to create renderings, had lined up an entity to operate the hospital (Matrx), had spoken to several local banks about financing, and had interviewed numerous people about the project, but he had not signed a development agreement.
Rory contacted Dr. Cravens in late April 2007, and the two met several times soon thereafter. Rory told Dr. Cravens about RCP, Myers, and RCP's line of work; he forwarded literature about RCP to Dr. Cravens; and he later provided Dr. Cravens with a nonbinding first Letter of Intent (LOI) that detailed the contours of the proposed transaction to construct a physician-owned hospital.4 Dr. Cravens did not sign the LOI.
After several months, in September 2007, Rory again contacted Dr. Cravens, they met at a colleague's condominium, and Rory communicated both his and Myers's interest in the hospital project, explained that a developer would need to be hired, and recommended several developers, including Lake at RCC. Thereafter, Reed and a representative from Matrx met with Rory, who later introduced Lake to Dr. Cravens. According to Dr. Cravens and Reed, Lake said that he had developed a 20–acre hospital campus in Atlanta while working for Hillwood, that he had overseen an expansion at Baylor Grapevine Hospital while serving as Chairman of its board of directors, that Myers had banking relationships and a successful track record of developing and raising equity for these types of projects, and that RCC and RCP could secure the debt and equity financing for the project. Dr. Cravens turned over all of the hospital-related materials that he had collected by that point.
In November 2007, Dr. Cravens signed a second nonbinding LOI to develop and construct a physician-owned neurosurgical hospital. Unlike the first LOI, the second LOI identified RCC as the developer and provided for a developer fee. Dr. Cravens then met Rian, who like Lake, told Dr. Cravens about his background, including that he had been involved in several hospital construction projects (Arlington Memorial and Harris Southwest) as a professional engineer.5
Between mid-November 2007 and mid-February 2008, the parties worked towards finalizing the operative written agreements for the project. They contemplated that RCC would be the project's developer, that Dr. Cravens would be a limited partner in a newly formed limited partnership, that a lease agreement between the limited partnership and the CND, PA physicians would be signed and guaranteed by the physicians, and that Dr. Cravens would have the opportunity to buy the new hospital. Regarding financing, Lake expressed confidence that they could achieve an 80/20 debt-to-equity ratio—a figure that Dr. Cravens was pushing so that his anticipated equity position in the limited partnership would not be diluted, thus adversely affecting his chances of later purchasing the new hospital. Dr. Cravens had the understanding that RCP would be responsible for raising the equity portion of the financing.
As for the new hospital, the parties planned to locate it on the same parcel of land where CND, PA housed its existing medical practice (the Property). The Property was owned by Willmar Investments, Ltd.—a limited partnership that Dr. Cravens, the general partner, had previously created to own and hold property in trust for his children—but the parties contemplated that Willmar would contribute the Property to the new limited partnership. The original designs planned to locate a parking garage below the new hospital and to renovate the existing medical facility, but the parties had hopes of instead locating the garage on an adjacent property, increasing the size of the new hospital, and potentially demolishing the existing medical facility; Dr. Cravens and RCC were in discussions with the owner of the adjacent property, Dr. David Bruhl. Although he would later complain that several terms should not have been excluded from the written agreements, including deadlines for obtaining financing and completing construction, Dr. Cravens participated in the negotiation process, had the assistance of counsel, and made recommendations.6
The Partnership was formed effective February 15, 2008. The Partnership Agreement identified RCC as the developer, GenPar as the general partner, and Dr. Cravens as a Class A limited partner with a 99.8% limited partnership interest before payout.7 The Partnership Agreement credited Dr. Cravens with a $3,320,000 initial capital contribution based on Willmar's future contribution of the Property, and it credited both GenPar and unidentified Class B limited partners with an initial capital contribution of $3,326.65 each.8 The Partnership determined the $3,320,000 figure by subtracting the preexisting debt on...
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