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First Guaranty Bank v. Independent Healthcare Management, Inc.

United States District Court, S.D. Mississippi, Northern Division

October 25, 2019




         BEFORE THE COURT is the [51] Motion for Summary Judgment filed by the plaintiff, First Guaranty Bank (“FGB”). FGB asserts that no material issues of fact preclude finding that, as a matter of law, Defendant Independent Healthcare Management, Inc. d/b/a Lackey Memorial Hospital (“Lackey”) breached the Conditional Sales Agreement (“CSA”) and owes the unpaid balance of $806, 528.56 on the contract. Lackey responds that factual issues over whether the individual who signed on behalf of Lackey had authority to bind it preclude summary judgment. The motion is fully briefed. Having considered the submissions of the parties, the record, and relevant law, the Court concludes that no material issues of fact remain as to liability. However, the evidence in the record is inadequate to support a determination on damages. FGB's Motion for Summary Judgment will accordingly be granted in part as to liability and denied insofar as damages are concerned.[1]

         I. BACKGROUND

         This case is a breach of contract action brought for payments purportedly owed under the CSA. (See Mot. Summ. J. Ex. 7, at 10-14, ECF No. 51-7.) The CSA arranged for Med One Capital Funding, LLC (“Med One”) to finance Pioneer Health Services, Inc.'s (“Pioneer”) purchase of software and related services from McKesson Information Solutions for seven hospitals, one of which was Defendant Lackey. Med One assigned the CSA to Republic Bank, Inc., who later assigned the CSA to Plaintiff FGB via a Portfolio Purchasing Agreement (“PPA”). At the time of the CSA's execution, Pioneer managed Lackey under a management contract. Pioneer owned the other six hospitals.

         On March 30, 2016, Pioneer and its hospitals declared bankruptcy. FGB did not file a claim in the Chapter 11 proceeding because it was not given notice of the pending bankruptcy until the day before the deadline for creditors to file a claim. Payments ceased on the CSA, and, on November 23, 2016, FGB sent a written demand for payment of the full balance owed to Lackey. Lackey says in its briefing that this was the first time it became aware of its supposed obligation on the CSA. After Lackey failed to make any payment, FGB filed this lawsuit to recover the amount still owed on the CSA.

         In a separate proceeding pending the United States District Court for the District of Utah, FGB is seeking rescission of the PPA by which Republic Bank assigned the CSA to FGB. Lackey previously asked to stay proceedings in this case pending the outcome of that litigation. The Court denied that request, finding that the Utah action had no bearing on the determination of Lackey's liability under the CSA. (Order, ECF No. 59, aff'd by Order Denying Mot. for Review of Mag. Order, ECF No. 69.)

         Lackey does not dispute that it has failed to make payments on the CSA. Lackey contends, however, that it is not liable on the CSA because Julie Gieger - who purportedly signed the CSA on behalf of Lackey (see Id. at 14) - did not have actual authority to bind Lackey as a guarantor. Gieger was CFO of both Pioneer and Lackey. “[N]either Lackey['s] internal financials, nor its IRS Form 990 tax returns, both of which were prepared by Ms. Gieger, ever reflected that such a credit extension was executed by Lackey . . . or that such a liability existed as to Lackey . . . .” (Resp. Opp. 2, ECF No. 71.) “Moreover, ” says Lackey, Lackey “would have never authorized the agreement and put its 501(c)(3) status at risk - a fact that Med One was aware of before the Agreement was executed.” (Id.)


         a. Summary Judgment Standard

         Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “[T]he nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).

         “A genuine dispute of material fact means that ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). If the evidence presented by the nonmovant “‘is merely colorable, or is not significantly probative,' summary judgment is appropriate.” Cutting Underwater Techs. USA, Inc. v. ENI U.S. Operating Co., 671 F.3d 512, 516 (5th Cir. 2012) (quoting Anderson, 477 U.S. at 249). In deciding whether summary judgment is appropriate, the Court views the evidence and inferences in the light most favorable to the nonmoving party. RSR Corp. v. Int'l Ins. Co., 612 F.3d 851, 857 (5th Cir. 2010).

         b. Analysis

         The parties agree that Mississippi law governs this breach of contract action. As the plaintiff, FGB has the burden to prove, by a preponderance of the evidence, “1. the existence of a valid and binding contract; and 2. that the defendant has broken, or breached it.” Bus. Commc'ns, Inc. v. Banks, 90 So.3d 1221, 1224-25 (Miss. 2012). This case turns on the first element - whether a valid and binding contract exists between FGB and Lackey. Forming a valid contract requires “(1) two or more contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition precluding contract formation.” NC Leasing, LLC v. Junker, 172 So.3d 155, 160 (Miss. 2015) (citation omitted).

         Lackey maintains that issues of fact surrounding the legal capacity of Julie Gieger to contract on Lackey's behalf preclude summary judgment. FGB seems to concede that material issues of fact persist over Gieger's actual authority to bind Lackey to the CSA.[2] However, FGB argues that uncontested record ...

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