TJOFLAT, Circuit Judge:
In this case, a corporate owner and operator of healthcare facilities across the United States reneged on its "promise" to purchase the assets of a hospital in Augusta, Georgia, so the hospital sued the corporation for breach of contract and, alternatively, under the doctrine of promissory estoppel. It sought to recover as damages the approximate difference between the price the corporation promised to pay for the hospital's assets, $75 million, and the price the hospital obtained, approximately $37 million, when it sold the assets to a third party. The corporation is Hospital Management Association, Inc. ("HMA").
SJH sued HMA in the Superior Court of Richmond County, Georgia. HMA removed the case to the United States District Court for the Southern District of Georgia,
We begin our review of the District Court's decision with a recitation of the historical facts underpinning SJH's claims for breach of contract and promissory estoppel.
In July 2005, SJH sought bids for the purchase of its hospital assets.
On December 22, 2005, the parties submitted to the Attorney General the Acquisition Act's prescribed Notice of Intent to Acquire or Dispose of Assets of a Hospital (the "Notice of Intent" or the "Notice"). The Notice informed the Attorney General that HMA had agreed to purchase SJH's assets under the terms stated in an Asset Sale Agreement, an unsigned copy of which was attached to the Notice, and stated that the transaction would be closed "as soon as practical after the Attorney General Process is concluded." Record, vol. 1, no. 1-2, at 26. On receiving the Notice, the Attorney General scheduled a public hearing on the parties' proposal for February 13, 2006, in Augusta, Georgia.
After the parties notified the Attorney General of their intent, HMA made several public announcements about its negotiations with SJH. On December 27, 2005, HMA issued a news release, which stated
Section 201 of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), 15 U.S.C. § 18a (2006), requires the Federal Trade Commission (the "FTC") and the Department of Justice (the "DOJ") to scrutinize the antitrust implications of any transfer or acquisition of assets valued at over $50 million.
The Letter of Intent (the "Letter"), which the parties ascribed to by signing,
The third, fourth, and fifth paragraphs of the Letter obligated the respective parties as follows. In the third paragraph, SJH promised that from January 25, 2006, "through the earlier of (a) the execution of the Asset Sale Agreement and (b) March 31, 2006, [it] shall not ..., without the prior written consent of [HMA]," offer to sell or lease to a third party or otherwise alienate the assets of the hospital. Id. at 5-6.
The sixth paragraph explained the parties' intent in executing the Letter of Intent with this statement:
Id. at 6-7.
SJH sent a copy of the Letter to the Georgia Attorney General the day the parties signed it, January 25, 2006. SJH's transmittal letter explained that the "[Letter] was required for the parties' Hart-Scott-Rodino filing" and "[was] nonbinding as to the sale of the assets." Record, vol. 4, no. 103, Ex. 223, at 1.
On February 12, 2006, HMA informed SJH that it would not sign the Asset Sale Agreement.
SJH filed this lawsuit to recover the loss it claims it sustained, in excess of $35 million, as a result of HMA's failure to go through with the purchase. Its complaint contained five counts. Two are before the court today: Count One, which sounds in contract; Count Four, which sounds in promissory estoppel.
Count One incorporates by reference the historical facts recited in subparts A and C of part I, supra, and alleges that SJH and HMA "ultimately ... reached a firm and definite agreement, as evidenced by writings signed by the parties that contain all of the material terms of the contract for the purchase and sale of the assets of the hospital." Record, vol. 1, no. 1-2, ¶ 12. Attached to the complaint as an exhibit, and made a part of this allegation, is the Notice of Intent the parties submitted to the Attorney General on December 22, 2005, which appends the Asset Sale Agreement. Count One alleges, in the next sentence, that "[t]hereafter, HMA repeatedly
Count Four, an alternative basis for the recovery of damages, assumes that the parties did not reach an enforceable contract and alleges that "HMA promised to purchase the assets of [SJH] and reasonably expected to and did induce [SJH] to rely on its promises," id. ¶ 36, and that "[SJH] reasonably relied on HMA's repeated promises and public statements that HMA agreed to purchase the assets of [SJH]." Id. ¶ 37.
HMA's answer to Count One admits the allegations of historical fact except that the Asset Sale Agreement constituted a binding contract between the parties. As an affirmative defense, apparently assuming that Count One is based on an oral agreement, HMA asserts that the agreement, if incorporating the terms of the Asset Sale Agreement, was unenforceable under Georgia's statute of frauds, O.C.G.A. § 11-2-201 (2012) and O.C.G.A. § 13-5-30 (2012).
Following discovery, the parties filed cross motions for summary judgment.
Second, treating Count One as alleging, in effect, the breach of an oral contract, the District Court found no evidence that the parties, after drafting the Asset Sale Agreement, orally agreed to be bound by its terms. The court discounted altogether SJH's argument that statements HMA made in news and press releases between December 27, 2005, and January 24, 2006, and in the reports filed with the SEC on December 29, 2005, and February 9, 2006, confirmed that the parties had orally agreed to be bound to the terms of the Asset Sale Agreement. The court considered the statements lacking in probative value because they were "ambiguous." Record, vol. 3, no. 123, at 14. Finally, the court found that the Letter of Intent conclusively established that HMA was not contractually bound to purchase the hospital assets. Although HMA "may have promised that it was interested in acquiring the Hospital," id. at 26, SJH knew, when the parties signed the Letter on January 25, 2006, that HMA would not "be bound [to purchase the facility] until a definitive and binding [Asset Sale Agreement] was finalized and executed." Id. at 27.
The District Court found no merit in the Count Four promissory estoppel claim on the ground that SJH could not reasonably have relied on HMA's representations that it had negotiated a purchase of the hospital assets. SJH knew that until the parties signed the Asset Sale Agreement (or a substitute thereof), HMA could back out of the transaction. The court pointed to a checklist SJH's attorneys prepared for the closing of the transaction, if and when the Attorney General gave the transaction his approval, as evidence of that possibility: "[T]he `Pre-Closing Checklist' prepared by [SJH's] counsel in January of 2006 include[d] a list of `Items to be Done Prior to Closing,' which indicate[d] that the [Asset
The District Court entered a final judgment for HMA on Counts One, Two, Four, and Five pursuant to Federal Rule of Civil Procedure 54(b), in accordance with its order granting HMA's motion for summary judgment. SJH now appeals the judgment on Counts One and Four.
In considering SJH's arguments, we take a different path than the one the District Court took.
Count One incorporates by reference the Asset Sale Agreement.
In sum, as a claim for breach of a contract in writing, Count One could not survive summary judgment.
Although Count One does not explicitly allege that HMA breached an oral agreement, such allegation is implicit. And SJH's brief on appeal does not disavow it, as a fallback position.
SJH faces two hurdles in its attempt to establish the existence of an oral agreement. First, the record contains no evidence that the parties ever met face-to-face and agreed to be bound by the terms of the Asset Sale Agreement. Second, the Letter of Intent expressly supercedes any agreements the parties previously may have made to that effect. SJH would overcome the first hurdle with the argument that, for summary judgment purposes, the absence of an oral agreement made at a particular point in time is of no moment; a jury reasonably could infer from HMA's post-December 22, 2005, behavior
SJH presented these arguments to the District Court, together, in three parts of its brief in opposition to HMA's motion for summary judgment (and in support of its motion for summary judgment). It stated the following:
Record, vol. 6, no. 116, at 4 (emphasis added). Stated another way,
Id. at 12-13 (emphasis added).
Responding to HMA's argument that the language of the Letter conclusively established that an agreement in the form of the Asset Sale Agreement would not be finalized and executed until after the Attorney General approved the sale of the hospital assets, SJH repeated this theme:
Id. at 36 (emphasis added).
In short, SJH argues that HMA's words and deeds in connection with the sale of the Hospital — specifically, HMA's press and news releases, the SEC reports it filed, and the steps it took at the hospital to acquaint the staff with its protocols and to prepare for the change over — constituted proof sufficient to enable a jury to infer that HMA and SJH reached a meeting of the minds and thus exchanged promises for the purchase and sale of the hospital assets. And the same evidence would permit the jury to find that the Letter of Intent was not intended to render those promises legally ineffective.
The HSR Act required the parties to notify the FTC and the DOJ of the transaction they planned to consummate because the assets involved exceeded $50 million in value.
The Premerger Notification form that each party filed contained a heading, "DESCRIPTION OF ACQUISITION." Under the heading in the form it filed, SJH stated, in pertinent part, the following:
Record, vol. 4, no. 103, Ex. 210, at 5.
In the form it filed, HMA stated under the same heading the following, in pertinent part:
Record, vol. 4, no. 103, Ex. 288, at 6.
Under the heading "SUBMIT A COPY OF THE MOST RECENT VERSION OR AGREEMENT (or letter of intent to ... acquire)," both parties cited to, and provided copies of, the Letter of Intent and the unsigned Asset Sale Agreement. Record, vol. 4, no. 103, Ex. 210, at 7; Record, vol. 4., no. 103, Ex. 288, at 8.
We assume that the parties prepared and filed the Premerger Notifications after reading the following FTC interpretation of the HSR Act's requirements, as amplified by the rules promulgated pursuant to the Act:
64 Fed.Reg. 51764 (Sept. 24, 1999) (emphasis added).
The Premerger Notifications are certified under penalty of perjury. Section 1001 of Title 18 of the United States Code makes it a felony to, among other things, make a "materially false ... statement or representation" "in any matter within the jurisdiction of the executive ... branch of the Government of the United States."
The record contains no evidence to the effect that the parties failed to comply with the HSR Act and the implementing regulations; the information they provided the FTC and the DOJ about their contractual relationship, as depicted in the Letter of Intent, was complete and accurate. As stated in the Letter, it was their "intention to finalize and execute a binding Asset Sale Agreement in the ... form attached to th[e] Letter of Intent." Record, vol. 1, no. 1-5, at 5. After reading these words and assuming that the parties filed the Premerger Notifications intending to complete the transaction, the FTC and the DOJ would assume that if the Georgia Attorney General approved the transaction as depicted in the Agreement, the transaction would close.
By filing the Premerger Notifications, the parties represented the following as true: (1) the Asset Sale Agreement would not become a binding, enforceable contract until signed by the parties; (2) the Letter of Intent superceded any agreements — whether written or oral — that may have existed between the parties regarding HMA's acquisition of the hospital assets; (3) the parties had a good faith intention to complete the transaction and were not using the notification process to vet a purely
In light of the foregoing, we find no error in the District Court decision to grant HMA summary judgment on Count One.
SJH is nonetheless convinced that HMA should be held to account in damages for representing to the public over a considerable period of time that it was acquiring the hospital assets and for inducing SJH to change its position in reliance on such representation. SJH states its case for damages on that theory in Count Four, to which we now turn.
SJH contends that a jury, once informed of HMA's conduct after it joined SJH in seeking the Attorney General's approval of the transaction, could reasonably find HMA estopped to deny that it was obligated to purchase the hospital assets on the terms set out in the Agreement. For, in addition to announcing to the public on six occasions — via news and press releases and SEC filings — that it had "negotiated an agreement" to acquire the 231-bed St. Joseph Hospital, HMA took several steps toward completing the acquisition. HMA met with the hospital staff, held training sessions for the purpose of acquainting the staff with HMA protocols and the operation of its computer system, which it installed, and applied to have licenses transferred from SJH to HMA.
A jury, as lay persons, might be persuaded to hold HMA accountable for engaging in such conduct. The proper application of the doctrine of promissory estoppel to this record, however, would mean that the jury would not decide the claim.
Promissory estoppel is codified in Georgia as O.C.G.A. § 13-3-44(a), which reads as follows:
O.C.G.A. § 13-3-44(a) (2012).
The District Court read SJH's Count Four claim as follows:
Record, vol. 3, no. 123, at 25.
The court held that the claim failed because the Letter of Intent "clearly reflects the parties' intentions not to be bound
For the reasons stated above, we find no reason for disturbing the District Court's judgment on Counts One and Four of SJH's complaint. The judgment is, accordingly,
AFFIRMED.
O.C.G.A. § 11-2-201 (2012).
Section 13-5-30 of the Official Code of Georgia Annotated, titled "Obligations which must be in writing," states in pertinent part:
O.C.G.A. § 13-5-30 (2012).
As indicated in part II.A, supra, paragraph 12 of SJH's complaint alleged that the parties "ultimately ... reached a firm and definitive agreement, as evidenced by writings signed by the parties that contain all of the material terms of the contract for the purchase and sale of the assets of the hospital." Record, vol. 1, no. 1-2, ¶ 12. The Notice of Intent and the Asset Sale Agreement were appended to the complaint immediately following that allegation, the implication being that the Asset Sale Agreement was the agreement the parties had reached. In its brief in opposition to HMA's motion for summary judgment, SJH, in referring to the January 25, 2006, Letter of Intent the parties submitted to the FTC and the DOJ, stated that the "[p]arties did not intend the Letter of Intent to alter the prior agreement reached by them at the time they submitted the Notice [of Intent to the Attorney General]" on December 22, 2005. Record, vol. 6, no. 116, at 4 (emphasis added).
In its order granting HMA summary judgment on Count One, the District Court reads Count One without differentiating between a contract in writing and an oral agreement, stating that SJH "maintain[s] that the parties entered into a binding contract to consummate the transaction and that [HMA] was bound, on or before December 22, 2005, when the [Asset Sale Agreement] was submitted to the Attorney General's office for approval." Record, vol. 3, no. 123, at 14 (emphasis added). In the next sentence, the court states the following: "[SJH] posits that by the time [HMA] withdrew from the transaction in February of 2006, the parties had a binding, but unconsummated, contract for the sale of the hospital." Id. (emphasis added).
In deciding whether summary judgment was appropriate on Count One, we treat SJH as having alleged that the contract referred to in Count One was entered into by the parties (1) on or before December 22, 2005, and before the Attorney General received the Notice of Intent and the unsigned Asset Sale Agreement, or (2) at some time before HMA withdrew from the transaction in February 2006.
Record, vol. 1, no. 1-5, at 6.
Further, the parties were charged with "cooperat[ing] with each other concerning the Sale Transaction (i) in the preparation and submittal of any filings required pursuant [to] the [Acquisition Act] and (ii) during the course of any public hearings which take place pursuant to the [Acquisition Act]." Id.
Many obligations contained in the Letter had already been satisfied, at least in part; the parties had made the Notice of Intent filing under the Acquisition Act, and SJH had complied with the Letter's third paragraph by not negotiating with a third party for the sale of its assets. And, after signing the Letter, the parties satisfied their obligation to file the Premerger Notification called for by the HSR Act.
16 C.F.R. § 803.5 (2012).