Universal Health Services v. Thompson

• Decision Date: 13 July 2000
• Citation: Universal Health Services v. Thompson, 24 S.W.3d 570 (Tex. App. 2000)
• Parties: (Tex.App.-Austin 2000) Universal Health Services, Inc.; RCW of Edmond, Inc.; Renaissance Women's Center of Austin L.L.C.; and Renaissance Women's Center of Austin, L.P., Appellants v. Margaret Thompson, M.D.; Linda Litzinger, M.D.; Donna Hurley, M.D.; Melanie Collins, M.D.; Sherry Neyman, M.D.; Laura Meritt, M.D.; Byron Darby, M.D.; and Renaissance Women's Group, P.A., Appellees NO. 03-00-00052-CV Filed
• Court: Texas Court of Appeals

Page 570

24 S.W.3d 570 (Tex.App.-Austin 2000)

Universal Health Services, Inc.; RCW of Edmond, Inc.; Renaissance Women's Center of Austin L.L.C.; and Renaissance Women's Center of Austin, L.P., Appellants v.Margaret Thompson, M.D.; Linda Litzinger, M.D.; Donna Hurley, M.D.; Melanie Collins, M.D.; Sherry Neyman, M.D.; Laura Meritt, M.D.; Byron Darby, M.D.; and Renaissance Women's Group, P.A., Appellees

NO. 03-00-00052-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

Filed July 13, 2000

Released for Publication August 31, 2000

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT NO. 99-14404, HONORABLE PAUL DAVIS, JUDGE PRESIDING

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]Before Chief Justice Aboussie, Justices Kidd and B. A. Smith

BEA ANN SMITH, Justice.

This dispute grows out of a good idea that proved financially disappointing.Certain corporate investors contracted with a group of Austin gynecologists and obstetricians to open a unique medical facility housing a hospital, clinic, and doctors' offices, all dedicated to women's health care needs.Appellants are "the Investors" who owned and operated the facility; appellees are "the Doctors" who located their offices in the facility and sent their patients to its hospital.When the facility continued to lose money, the Investors decided to close the hospital.The Doctors responded by suing for breach of contract and fraud and seeking a temporary injunction to prevent the Investors from closing the hospital pending a trial on the merits, which is scheduled for August 7, 2000.The trial court granted the Doctors' application for a temporary injunction.In eight points of error, the Investors bring this consolidated, interlocutory appeal challenging both the order granting the injunction and a subsequent order denying their motion to dissolve the injunction.¹We will affirm both orders.

BACKGROUND

In 1995, the Investors² approached Margaret Thompson and Linda Litzinger, doctors specializing in obstetrics and gynecology, with the concept of a multi-service women's health care center to be known as Renaissance Women's Center of Austin (the Center).The two-story facility would offer a women's hospital on the first floor and physicians' offices and a clinic on the second floor.Thompson and Litzinger decided to commit to the project and on October 11, 1995, entered into a lease and letter agreement (the Agreement) with the Investors memorializing their commitment to the contemplated Center.³The Agreement provides in relevant part:

5.Renaissance shall use reasonable efforts to obtain, and maintain in full force and effect throughout the Term of the Lease, written agreements . . . certifying the Project as an approved hospital by all health insurance companies, health maintenance organizations, health care plans or other health care benefit providers . . . for which [the Doctors] are approved providers.

. . . .

8.This letter agreement shall remain in effect and binding on Renaissance and [the Doctors] throughout the term of the Lease.In the event of any conflict or inconsistency between the provisions of this letter agreement and the provisions of the Lease, the provisions of this letter agreement shall govern and control.

. . . .

9.Each of Renaissance and [the Doctors] agree to act reasonably and in good faith in all of the matters which require the cooperation, approval or joinder of these parties under the provisions of this letter agreement.⁴

The Investors built a two-story building to house the facility, and the Center opened on September 7, 1997.

Throughout its operation, the Center suffered serious financial losses, allegedly due in part to managed care companies' low reimbursement levels for women's medical procedures.In late 1999, the Investors decided to close the hospital.Upon learning of the Investors' intention, the Doctors filed a lawsuit on December 10, pleading breach of contract and fraud.The Doctors claimed in part that the Investors had breached paragraph five of the Agreement by failing to use reasonable efforts throughout the term of the lease to certify the Center as a hospital approved by all insurance companies and health maintenance organizations for which the Doctors are approved providers.The Doctors also sought a temporary and a permanent injunction to prevent the closing of the Center.In their request for a temporary injunction, the Doctors claimed that they"have and are suffering harm and irreparable harm as a result of the actions of [the Investors]" and sought to enjoin the Investors "from closing the hospital, selling the hospital, reducing the hospital staff or nurses, or reducing the quality of women's health care services" during the pendency of the suit.

Following a hearing, the trial court granted the temporary injunction.In support of its decision, the court made the following findings: (1) the Doctors have a probable right of recovery; (2) the Doctors will suffer imminent, irreparable harm in the absence of the injunction; (3) the Doctors have no adequate remedy at law for their interim damages, and their financial damages will be immeasurable; and ⁴ the balance of hardships and the public interest favors an injunction maintaining the status quo.Until judgment is rendered in the pending suit, the Investors are enjoined from closing the hospital or changing its status from the women's health care hospital that was in operation as of the date the Doctors filed their petition.The trial court further ordered the Investors to "continue to use reasonable efforts to obtain, and maintain in full force and effect . . . written agreements certifying the hospital . . . as an approved hospital by all health care insurance companies, health maintenance organizations, health care plans or other health care benefit providers for which [the Doctors] are approved providers."Having lost at the hearing, the Investors filed a motion to dissolve the temporary injunction based on fundamental error and changed circumstances.The trial court denied the motion.The Investors now appeal both the trial-court order granting the temporary injunction and the order refusing to dissolve it.

DISCUSSION

Standard of Review

The purpose of a temporary injunction is to preserve the status quo pending a trial on the merits.SeeWalling v. Metcalfe, 863 S.W.2d 56, 58(Tex.1993).In an appeal from an order granting or denying a request for a temporary injunction, appellate review is confined to the validity of the order that grants or denies the injunctive relief.Seeid.The decision to grant or deny the injunction lies within the sound discretion of the court, and we will not reverse that decision absent a clear abuse of discretion.Seeid.This Court may neither substitute its judgment for that of the trial court nor consider the merits of the lawsuit.Seeid.;Texas Indus. Gas v. Phoenix Metallurgical Corp., 828 S.W.2d 529, 532(Tex. App.--Houston[1st Dist.]1992, no writ).Rather, we view the evidence in the light most favorable to the trial court's order, indulging every reasonable inference in its favor, and determine whether the order was so arbitrary as to exceed the bounds of reasonable discretion.SeeCRC-Evans Pipeline Int'l, Inc. v. Myers, 927 S.W.2d 259, 262(Tex. App.--Houston[1st Dist.]1996, no writ).We cannot reverse a trial court's order if the trial court was presented with conflicting evidence and the record includes evidence that reasonably supports the trial court's decision.Seeid.

An applicant requesting a temporary injunction is not required to establish that she will prevail at trial.SeeWalling, 863 S.W.2d at 58.The applicant's burden is to establish a probable right of recovery following a trial on the merits and a probable injury in the interim, warranting preservation of the status quo pending the trial.Seeid. at 57.

Mandatory or Prohibitive Injunction

As a preliminary matter, the Investors argue that although the temporary injunction is couched in terms of prohibiting them from closing the hospital, the order is really mandatory in nature because it requires the Investors to seek funding to keep the hospital open.A mandatory injunction, urge the Investors, should be denied unless the right to relief is clear and compelling and a case of extreme necessity or hardship is presented.SeeRhodia, Inc. v. Harris County, 470 S.W.2d 415, 419(Tex. Civ. App.--Houston[1st Dist.]1971, no writ).

A mandatory injunction requires conduct from a party, whereas a prohibitive injunction forbids conduct.SeeLeFaucheur v. Williams, 807 S.W.2d 20, 22(Tex. App.--Austin 1991, no writ).The primary function of the trial court's order here is to forbid the Investors from closing the hospital or changing its status.The order does not include any provisions mandating the Investors to seek funding for the hospital, nor did the Doctors request such relief.If the effect of the order implies that the Investors must seek funding, this implication is only incidental to the order's primary function of preventing the Investors from closing the hospital, and we will not presume such an order is mandatory.SeeWoodward v. Smith, 253 S.W. 847, 853(Tex. Civ. App.--Austin 1923, no writ).We hold that the trial court's temporary injunction is prohibitive; its ordering provisions are preventive in nature and necessary for the preservation of the status quo.

Preserving the Status Quo

The Investors further contend that because the order requires that they take some affirmative action, it disturbs the status quo.Status quo is defined as "the last, actual, peaceable, noncontested status which preceded the pending controversy."Transport Co. v. Robertson Transports, Inc., 261 S.W.2d 549, 553-54(Tex.1953)(internal quotations omitted)."If an act of one party alters the relationship between that party and another, and the latter contests the action, the...