Madison Hma Inc. D/b/a Madison Reg'l Med. Ctr. v. St. Dominic-jackson Mem'l Hosp.

• Decision Date: 03 June 2010
• Docket Number: No. 2009-CA-00754-SCT.,2009-CA-00754-SCT.
• Citation: 35 So.3d 1209
• Parties: MADISON HMA, INC. d/b/a Madison Regional Medical Centerv.ST. DOMINIC-JACKSON MEMORIAL HOSPITAL.
• Court: Mississippi Supreme Court

35 So.3d 1209

MADISON HMA, INC. d/b/a Madison Regional Medical Centerv.ST. DOMINIC-JACKSON MEMORIAL HOSPITAL.

No. 2009-CA-00754-SCT.

Supreme Court of Mississippi.

June 3, 2010.

[35 So.3d 1209 1212]

Andy Lowry, Thomas L. Kirkland, Jr., Ridgeland, Allison Carter Simpson, attorneys for appellant.

Jonathan Robert Werne, Sheldon G. Alston, Edmund L. Brunini, Jr., Jackson, attorneys for appellee.

EN BANC.

RANDOLPH, Justice, for the Court:

¶ 1. In the case sub judice, this Court is presented with competing contracts for the acquisition of the same property: Madison Ambulatory Surgery Center, LLC's (“ASC”) membership interest and its assets, which included a Certificate of Need (“CON”) to exclusively operate an ambulatory center in Canton, Mississippi. St. Dominic-Jackson Memorial Hospital (“St. Dominic”) entered into an agreement to purchase ASC and its interest in the aforementioned property. As the deal was not consummated, ASC and its interests in this property were placed on the market again. ASC then entered into an agreement for Madison HMA, Inc. (“HMA”) to acquire the same interest. Subsequently, St. Dominic sued ASC to enforce the first agreement, and HMA moved to intervene in the suit to protect its interest. After the Chancery Court of Madison County denied HMA's motion to intervene, HMA proceeded with this interlocutory appeal.

¶ 2. As intervention of right existed, this Court concludes that the chancellor erred by denying HMA's motion to intervene. Therefore, this Court reverses that ruling and remands for further proceedings consistent with this opinion.

FACTS

¶ 3. The object of the present dispute is not only ASC's membership interest, but also the right to operate the facility granted by the CON. The CON, issued by the Mississippi State Department of Health, permitted the construction and exclusive operation of an ambulatory center within a designated area. The Department of Health initially issued the CON to Progressive Family Medical Corporation (“Progressive”) on April 25, 2002.

¶ 4. On December 19, 2002, Progressive transferred ownership of the CON to ASC. On January 31, 2005, Heritage Banking Group (“Heritage”) issued a loan to Progressive for $2.92 million and, as collateral, Progressive granted Heritage a security interest in its business assets. In March 2008, Progressive defaulted on the loan, and Heritage initiated foreclosure proceedings on the real property. Before Progressive's default, a Tennessee corporation, Surginet, Inc., transferred seventy-seven percent of its membership interest in ASC to Progressive, which subjected that interest to Heritage's security interest. Thereafter, an offer to sell ASC's membership interest was made to St. Dominic.

¶ 5. On April 28, 2008, St. Dominic sent a purchase agreement to ASC regarding the purchase of its membership interest. Two days later, the owners holding ninety-two percent of the membership interest in ASC executed a letter of agreement with St. Dominic. This agreement set a target date of thirty days after its execution for the completion of the purchase, and contained two conditions precedent which precluded any binding effect upon St. Dominic until their satisfaction. The first condition was that a final agreement for the transfer of the CON and the purchase of ASC's building must be executed. The second condition was that the Department of Health must approve the transfer of the CON to St. Dominic. By June 24, 2008, nearly thirty days after the target date, the transaction had not been completed,

[35 So.3d 1209 1213]

and ASC sent a letter informing St. Dominic that it intended to place the CON and the building back on the market, based upon St. Dominic's alleged failure to act. Thus, ASC took the position that St. Dominic had breached the agreement.

¶ 6. On July 8, 2008, ASC entered into a letter of intent with HMA for the purchase of its membership interest, assets, and transfer of its CON. HMA placed $80,000 in escrow for the benefit of ASC, which represented ten percent of the $800,000 purchase price.¹ That contract reveals, in relevant part, that:

[HMA] contemplates the expenditure of substantial sums of time and money in connection with legal, accounting, financial, and due diligence work to be performed in conjunction with the proposed transaction prior to execution of Definitive Agreements ... [ASC] shall not directly or indirectly, solicit or entertain offers from, negotiate with, or in any manner encourage, discuss, accept or consider any proposal of any other person relating to the purchase of the CON....

A mutual agreement to terminate was the only avenue to release the signatories from their respective obligations.

¶ 7. On September 18, 2008, St. Dominic initiated suit, alleging that ACS had breached its agreement for the purchase and transfer of ASC and its CON. St. Dominic sought specific performance under the agreement and a preliminary injunction to prevent ASC from engaging in negotiations with any other person or entity.

¶ 8. On November 19, 2008, Heritage moved the chancery court for leave to intervene in the suit between St. Dominic and ASC, which was granted. Heritage's security interest in ASC's membership interest, which resulted from an after-acquired clause in the promissory note, indirectly allowed it to control the CON.

¶ 9. On December 23, 2008, St. Dominic and ASC agreed to a preliminary injunction, which provided:

Defendants are hereby enjoined and restrained from directly or indirectly initiating, soliciting, encouraging, negotiating or responding favorably to any solicitation from any other person or entity regarding the sale of [ASC], their membership interests in [ASC], or any of the assets of [ASC], including the [CON]....

Defendants are hereby enjoined and restrained from taking any other action to market or sell [ASC], their membership interests in [ASC], or any of the assets of [ASC], including the [CON], to any other person on entity.

Defendants are hereby enjoined and restrained from finalizing any transaction with any other person or entity for the sale of [ASC], their membership interests in [ASC], or any of the assets of [ASC], including the [CON], to any other person or entity.

(Emphasis added.)

¶ 10. On January 27, 2009, HMA moved to intervene in the action. Relying on its executed, binding letter of intent, HMA maintained that it possessed the exclusive contractual right to finalize the purchase of ASC, its assets, and its interest in the CON. HMA averred that its interests were not adequately represented by ASC and asserted that if it were not allowed to intervene, its interest could be impeded or impaired, and it was not otherwise protected.

¶ 11. Following argument, the chancellor denied HMA's motion, offering only

[35 So.3d 1209 1214]

that the motion was not made in good faith. In so doing, the chancellor failed to address the requirements to be considered for purposes of intervention of right see Guaranty National Insurance Co. v. Pittman, 501 So.2d 377, 381 (Miss.1987), or provide any factual findings which might aid this Court in its appellate review. Following that ruling, HMA sought interlocutory appeal.

ISSUE

¶ 12. This Court will consider:

Whether the chancery court erred in denying HMA's Rule 24 motion for intervention of right.

STANDARD OF REVIEW

¶ 13. Rule 24 governs both intervention of right and permissive intervention, stating, in pertinent part, that:

(a) Intervention of Right. Upon timely application, anyone shall be permitted to intervene in an action:

...

(2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.[ ²]

(b) Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action:

...

(2) when an applicant's claim or defense and the main action have a question of law or fact in common.

Miss. R. Civ. P. 24 (emphasis added).

¶ 14. Rule 24, its comment, and the underlying purposes of the Rules clearly demonstrate that a de novo standard of review applies to all intervention-of-right judgments. However, our caselaw regarding the proper standard of review for Rule 24 intervention rulings is in conflict. We previously have stated “a trial court has considerable discretion in ruling on a motion to intervene.” Hayes v. Leflore County Bd. of Supervisors, 935 So.2d 1015, 1017 (Miss.2006) (quoting City of Tupelo v. Martin, 747 So.2d 822, 826 (Miss.1999)). See also Cohen v. Cohen, 748 So.2d 91, 93 (Miss.1999) (holding Rule 24 rulings are subject to an abuse-of-discretion standard of review). Contrastingly, this Court has held, in the seminal case for intervention under our current rules, that “Rule 24(a)(2) is entitled ‘Intervention of Right’ and includes the mandatory ‘shall,’ thus giving the impression that the trial court has little, if any, discretion in the matter [,]” which is consistent with the Comment to Rule 24, which states that “[a]n application for permissive intervention is addressed to the discretion of the court, whereas an application for intervention of right poses only a question of law.” Guar. Nat'l Ins. Co., 501 So.2d at 381 n. 1; Miss. R. Civ. P. 24 cmt. (emphasis added).

¶ 15. Circumscribing all intervention decisions is that the Rules “shall be construed to secure the just, speedy, and inexpensive determination of every action.” Miss. R. Civ. P. 1. The Comment to Rule 1 adds that:

[35 So.3d 1209 1215]

[t]he mandate in the final sentence of Rule 1 is only one of a number of similar admonitions scattered throughout the rules [and] directing that the rules be interpreted liberally in order that the procedural framework in which litigation is conducted promotes the ends of justice and facilitates decisions on the merits, rather than determinations on technicalities.

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