United States District Court, W.D. Louisiana, Monroe Division
JUDGE KAREN L. HAYES
A. DOUGHTY UNITED STATES DISTRICT JUDGE
before the Court are two motions for summary judgment,
to-wit, the Motion for Summary [Doc. No. 24] filed by
Plaintiff Ruston Louisiana Hospital Company, LLC,
(“Ruston”), and the Motion for Summary Judgment
[Doc. No. 26] filed by Defendant Lincoln Health Foundation,
Inc., (“the Foundation”). The motions are, in
effect, cross motions for summary judgment, both parties
seeking judgment on all claims in this case. Both motions are
opposed [Doc. Nos. 30, 31], and each party has filed a reply
brief in response to the other's opposition brief [Doc.
Nos. 32, 33]. For the following reasons, Ruston's motion
[Doc. No. 24] is DENIED and the Foundation's motion [Doc.
No. 26] is GRANTED.
FACTUAL AND PROCEDURAL BACKGROUND
to February 1, 2007, Lincoln Health System, Inc.,
(“System”) was the owner and operator of Lincoln
General Hospital and certain related health care facilities
located in Ruston, Louisiana (“the Hospital”). On
February 1, 2007, System entered into an Asset Purchase
Agreement (“the Agreement”) with Ruston whereby
Ruston purchased certain assets utilized by System in its
operation of the Hospital. [See Asset Purchase Agreement,
Doc. Nos. 25-2, 3]. As part of the Agreement, Ruston
purchased most, but not all, of System's assets. System
took on certain indemnification obligations through the
Agreement, including indemnification for “any claim
made by a third party with respect to the operation of the
Hospital prior to the Closing Date.” [Id.].
The Closing Date was April 1, 2017. Ruston and System further
agreed that the Agreement inured to the benefit of and was
binding upon the parties and their respective legal
representatives, successors, and assigns.
25, 2017, more than ten years after the sale of the Hospital,
Ruston received a notification from Centers for Medicare
& Medicaid Services (“CMS”) that an outlier
reconciliation had been performed by CMS regarding charges
submitted by System to Medicare from October 1, 2006 through
March 31, 2007, a time period prior to the purchase by
Ruston, as a result of which $703, 562.00 was being assessed
by CMS against Ruston. [Doc. No. 24-8]. This amount was then
withheld by CMS from its ongoing payments to Ruston.
subsequently made demand on both System and the Foundation
for reimbursement of the amount assessed to Ruston by CMS for
System's pre-closing obligation. Ruston contends that the
Foundation is liable on the basis that it is the
“successor” of System. Neither System nor the
Foundation have tendered any payment to Ruston to reimburse
it for this assessment levied by CMS against System prior to
the Agreement Closing Date.
then initiated this lawsuit against the Foundation. Ruston
now seeks judgment as a matter of law in the amount of $703,
562.00, plus reasonable attorney's fees and costs.
Foundation, on the other hand, denies that it is the
successor of System. The Foundation contends that it was
merely a stockholder of a 60% interest in System, with the
other stockholders being Willis-Knighton Health System, Inc.,
and Franciscan Missionaries of Our Lady, who have not been
made parties to this suit; that it was not a party to the
Agreement; and that it did not execute any written assumption
of System's obligations. The Foundation concludes that,
as a stockholder, it is not personally liable for the
obligations of System. The Foundation, therefore, seeks
summary judgment dismissing Ruston's claims against it.
The matter is fully briefed, and the Court is prepared to
LAW AND ANALYSIS
Summary Judgment Standard
judgment “shall [be] grant[ed] ... 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). A fact is “material” if
proof of its existence or nonexistence would affect the
outcome of the lawsuit under applicable law in the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A dispute about a material fact is
“genuine” if the evidence is such that a
reasonable fact finder could render a verdict for the
nonmoving party. Id.
moving party can meet the initial burden, the burden then
shifts to the nonmoving party to establish the existence of a
genuine issue of material fact for trial. Norman v.
Apache Corp., 19 F.3d 1017, 1023 (5th Cir. 1994). The
nonmoving party must show more than “some metaphysical
doubt as to the material facts.” Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986). In evaluating the evidence tendered by the
parties, the Court must accept the evidence of the nonmovant
as credible and draw all justifiable inferences in its favor.
Anderson, 477 U.S. at 255.
bench trial, “a district court has somewhat greater
discretion to consider what weight it will accord the
evidence.” In re Placid Oil Co., 932 F.2d 394,
397 (5th Cir. 1991). A court “has the limited
discretion to decide that the same evidence, presented to him
or her as a trier of fact in a plenary trial, could not
possibly lead to a different result.” Id.
Louisiana law, when a company acquires the assets of another
company, it is not obligated for the liability of the company
from which the assets are acquired. Russell v. SunAmerica
Securities, Inc., 962 F.2d 1169, 1175 (5th Cir. 1992)
citing Mozingo v. Correct Mfg. Corp., 752
F.2d 168, 174 (5th Cir. 1985). There are four exceptions to
1) When the successor expressly or impliedly agrees to assume
the liabilities of the predecessor;
2) When the transaction may be considered a de facto merger;
3) When the successor may be considered a ‘mere
continuation' of the predecessor; or
4) When the transaction was fraudulent.
Id. Ruston argues that the Foundation is liable as a
successor of System under two separate theories of liability:
(1) assumption of liability, and (2) continuation.
Assumption of Liability
Louisiana law, a person can assume the liability of another
person by doing so in writing by agreement. La. Civ. Code.
art. 1821. Ruston contends that the Foundation expressly
assumed the liability of System through two (2) separate
series of acts. First, the Foundation assumed liability of
System by writing to the Louisiana Attorney General in order
to obtain approval from the Attorney General for the sale of
the Hospital and subsequently amending its Articles of
Organization. Secondly, it did so again in writing in its
effort to secure the assignment of a bequest which was made
Assumption by ...