Columbia/HCA Healthcare Corp. v. Cottey

72 S.W.3d 735, 2002 Tex. App. LEXIS 1681, 2002 WL 356514
CourtCourt of Appeals of Texas
DecidedMarch 6, 2002
Docket10-00-337-CV
StatusPublished
Cited by33 cases

This text of 72 S.W.3d 735 (Columbia/HCA Healthcare Corp. v. Cottey) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Columbia/HCA Healthcare Corp. v. Cottey, 72 S.W.3d 735, 2002 Tex. App. LEXIS 1681, 2002 WL 356514 (Tex. Ct. App. 2002).

Opinions

OPINION

BILL VANCE, Justice.

In 1992, David Cottey was working as the chief financial officer of Heights Hospital in Houston, Texas. Heights Hospital was acquired by Appellant, West Houston Healthcare Group, Ltd. (“West Houston”), a limited partnership in which Columbia Healthcare Corporation had been involved since 1991. In 1994, Columbia Healthcare Corporation merged with HCA and became Columbia/HCA Healthcare Corporation (“Columbia”), the second Appellant in this case. The third Appellant, Silsbee Hospital, Inc. d/b/a/ Silsbee Doctors Hospital (“Silsbee”), operates a hospital owned [740]*740by Columbia where Cottey went to work in 1993. Cottey eventually sued all three Appellants on multiple claims, and they have appealed from a judgment holding them jointly and severally hable for close to $500,000 in damages.

Cottey was offered an attractive financial package if he would stay on as chief financial officer of Heights Hospital after West Houston acquired it. Although there is a dispute over whether Cottey was hired by West Houston, Columbia, or both, a letter dated April 17, 1992, introduced into evidence at trial, offering him the position and describing his financial incentives, was from Russell Harms, Vice-President-Controller of “Columbia Hospital Corporation-Southwest Division.” Part of Cottey’s compensation was participation in an executive “Top Hat Plan,” which provided a large bonus when the investment plan fully vested in the sixth year of its existence. The parties agree that when he was hired, Cottey was not given a written description of the plan, and he was not told the plan could be rescinded at the discretion of the company. The plan was mentioned, although not specifically by name, in the letter from Harms. Cottey testified at trial that the existence of the plan was crucial to his accepting employment with West Houston.

In March 1993, for the first time, Cottey received a written description of the Top Hat Plan from Russell Schneider, President of “Columbia Hospital Corporation Southwest Division.” For an initial investment of $36,000, Cottey’s interest in the plan would become fully vested on the first day of the sixth year of his employment at $240,000. Vesting was to occur according to a schedule with most of the return vesting in the last three years. The vesting period was allowed to begin before Cottey’s actual date of employment. A provision in one of the documents reads in part: “... the Committee has authority to prescribe, amend and rescind the Plan and any rules and regulation relating to the Plan. All Committee interpretations, determinations and actions shall be binding on all parties.” After reviewing the documents, in August 1993 Cottey completed the necessary forms to participate in the Plan, and made an initial contribution of $18,000 of his own money plus another $18,000 which he borrowed on an unsecured promissory note.1 Cottey testified at trial he did not realize the company could rescind the Plan at its discretion.

Cottey transferred to Silsbee in July 1993 and became its chief executive officer. In September 1995, Silsbee instituted a severance pay plan for employees who were terminated due to a staff reduction or because their positions were eliminated. The plan did not apply to employees terminated “for cause.”

The Top Hat Plan was rescinded in June 1995. Cottey found out by a memorandum from Columbia. His vested interest, accrued over three years, was $72,000. Subtracting the $18,000 he had borrowed to invest, the plan paid Cottey $54,000. Because the six-year vesting period had not expired, Cottey did not realize the full $240,000 (minus $18,000) return he would have if the plan had fully vested.2 Cottey complained but was told that the plan by its express terms allowed for rescission at the company’s discretion.

Cottey continued to work at Silsbee, although he was informed by his supervisor, Luis Silva, that his position was soon to be eliminated in the course of a reorganiza[741]*741tion plan. In July 1997, Cottey made a written complaint about the rescission of the Top Hat Plan. He wrote: “I have been doing contracts for 23 years; I know what it says. I want a sincere response from you on why the cancellation of your commitment to me is justified, and is the right thing to do.” He got no response.

In August 1997, Cottey was approached by doctors at Silsbee who persuaded him to allow a birthday surprise for another doctor in which a female dancer would perform in the hospital’s operating room. The day after the “surprise,” the husband of a nurse at Silsbee filed a complaint. The local newspaper was also informed about the incident. An investigation was conducted by Silva, and Cottey was fired in September. He was told there was an “uproar from the community” over the incident, and he was being fired “for cause” in that he “allowed an atmosphere in the hospital where the doctors felt comfortable in [having the party].” He was given two months severance pay.3

In August 1998, Cottey sued the Appellants for fraudulently inducing him into an employment contract, breach of employment contract, wrongful discharge, and breach of the severance-pay provision. After a trial in April 2000, the jury found that each of the Appellants had fraudulently induced Cottey into the contract and had breached the severance pay provision,4 and awarded him approximately $375,000 in damages. He also recovered prejudgment interest, attorney’s fees and expenses of $50,000, and postjudgment interest. The judgment held all three Appellants jointly and severally liable.

Appellants bring nine issues which we group as follows:

1. Issues One, Two, Three, and Four: The evidence is legally and factually insufficient (a) that Cottey was fraudulently induced into the employment contract, and (b) to support the damages awarded for fraudulent inducement, because they are based on a wrongful discharge which is a claim not presented to the jury. Furthermore, Cottey ratified or waived any fraudulent inducement by continuing his employment for two years after learning the Top Hat Plan was rescinded, and the jury should have been instructed about ratification and waiver.
2. Issues Six, Seven, and Eight: The evidence is legally and factually insufficient that the severance pay provision was breached. Furthermore, Cottey had no right to severance pay because it was not a legally enforceable provision of his employment contract, and the issue should not have been presented to the jury.
3. Issue Five: Columbia and Silsbee cannot be jointly and severally liable with West Houston for damages on the fraudulent inducement claim, because they are not “successors-in-interest” to West Houston, the only original party to the contract with Cottey.
4. Issue Nine: The amount of attorney’s fees and costs was inappropriate and excessive.

We will reverse the judgment in part and modify and affirm it in part.

[742]*742FRAUDULENT INDUCEMENT

In issues One, Two, Three, and Four, Appellants complain about the fraudulent inducement claim. Specifically, they claim Cottey ratified or waived any fraudulent inducement by continuing his employment after learning the Top Hat Plan could be rescinded. Therefore, the jury should have been instructed not to find fraudulent inducement if it found ratification or waiver.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Monica Cordero v. Avon Products, Incorporated
629 F. App'x 620 (Fifth Circuit, 2015)
CENTOCOR, INC. v. Hamilton
310 S.W.3d 476 (Court of Appeals of Texas, 2010)
Henry Marsh Diggs v. State
Court of Appeals of Texas, 2008
Wells v. Dotson
261 S.W.3d 275 (Court of Appeals of Texas, 2008)
Farnham v. Electrolux Home Care Products, Ltd.
527 F. Supp. 2d 584 (W.D. Texas, 2007)
Matis v. Golden
228 S.W.3d 301 (Court of Appeals of Texas, 2007)
Celanese Corp. v. Coastal Water Authority
475 F. Supp. 2d 623 (S.D. Texas, 2007)
KMG Kanal-Muller-Gruppe Deutschland GmbH & Co. KG v. Davis
175 S.W.3d 379 (Court of Appeals of Texas, 2005)
Blackmon v. American Home Products Corp.
346 F. Supp. 2d 907 (S.D. Texas, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
72 S.W.3d 735, 2002 Tex. App. LEXIS 1681, 2002 WL 356514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/columbiahca-healthcare-corp-v-cottey-texapp-2002.