horizon/cms Healthcare v. Southern Oaks

732 So. 2d 1156, 1999 WL 218410
CourtDistrict Court of Appeal of Florida
DecidedApril 16, 1999
Docket98-1508
StatusPublished
Cited by2 cases

This text of 732 So. 2d 1156 (horizon/cms Healthcare v. Southern Oaks) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
horizon/cms Healthcare v. Southern Oaks, 732 So. 2d 1156, 1999 WL 218410 (Fla. Ct. App. 1999).

Opinion

732 So.2d 1156 (1999)

HORIZON/CMS HEALTHCARE CORPORATION, et al., Appellants/Cross-Appellees,
v.
SOUTHERN OAKS HEALTH CARE, INC., et al., Appellees/Cross-Appellants.

No. 98-1508.

District Court of Appeal of Florida, Fifth District.

April 16, 1999.
Rehearing Denied May 28, 1999.

*1157 Stephen H. Grimes and Susan L. Turner and Jennifer Parker LaVia of Holland & Knight, LLP, Tallahassee, for Appellants/Cross-Appellees.

Douglas C. Spears and Peter C. Vilmos of Adams & Spears, P.A., and Barbara A. Eagan of Arnold, Matheny & Eagan, P.A., Orlando, for Appellees/Cross-Appellants.

GOSHORN, J.

Horizon/CMS Healthcare (hereinafter "Horizon") appeals the final judgment in favor of Southern Oaks Health Care, Inc. (hereinafter "Southern Oaks") in the multimillion dollar breach of contract case filed by Southern Oaks. Of the numerous issues argued in the appeal and cross appeal, only one issue merits discussion.[1]

Horizon is a large, publicly traded provider of both nursing home facilities and management for nursing home facilities. It wanted to expand into Osceola County in 1993. Southern Oaks was already operating in Osceola County; it owned the Southern Oaks Health Care Center and a Certificate of Need issued by the Florida Agency for Health Care Administration for a new 120-bed facility in Kissimmee. Horizon and Southern Oaks decided to form a partnership to own the proposed Kissimmee facility, which was ultimately named Royal Oaks, and agreed that Horizon would manage both the Southern Oaks facility and the new Royal Oaks facility. To that end, Southern Oaks and Horizon entered into several partnership and management contracts in 1993.

In 1996, Southern Oaks filed suit alleging numerous defaults and breaches of the twenty-year agreements. The case was tried in two parts. Following the bench trial, the trial court found largely in favor of Southern Oaks, concluding that Horizon breached its obligations under two different partnership agreements. The jury likewise found, inter alia, that Horizon had breached several management contracts. Thereafter, the court ordered that the partnerships be dissolved, finding that "the parties to the various agreements which are the subject of this lawsuit are now incapable of continuing to operate in business together" and that because it was dissolving the partnerships, "there is no entitlement to future damages...." In its cross appeal, Southern Oaks asserts that because Horizon unilaterally and wrongfully sought dissolution of the partnerships, Southern Oaks should receive a damage award for the loss of the partnerships' seventeen remaining years' worth of future profits. We reject its argument.

Southern Oaks argues Horizon wrongfully caused the dissolution because the *1158 basis for dissolution cited by the court is not one of the grounds for which the parties contracted. The pertinent contracts provided in section 7.3 "Causes of Dissolution":

In addition to the causes for dissolution set forth in Section 7.2(c)[[2]], the Partnership shall be dissolved in the event that: (a) the Partners mutually agree to terminate the Partnership; (b) the Partnership ceases to maintain any interest (which term shall include, but not be limited to, a security interest) in the Facility; (c) the Partnership, by its terms as set forth in this Agreement, is terminated; (d) upon thirty (30) days prior written notice to the other Partner, either Partner elects to dissolve the Partnership on account of an Irreconcilable Difference which arises and cannot, after good faith efforts, be resolved; (e) the Partners determine, based on the opinion of Partnership counsel, that the Partnership cannot legally remain in existence or continue its business operations without material detriment under 42 U.S.C. §§ 1320a-7 and 1320a-7b(b) and regulations promulgated or proposed pursuant thereto, or any other federal or similar state laws; (f) the Transferring Partner sells its Partnership Interest to the Purchasing Partner; (g) pursuant to a court decree; or (h) on the date specified in Section 2.4.

The term "irreconcilable difference" used in the above quote is defined in the contracts as

[A] reasonable and good faith difference of opinion between the Partners where either (i) the existence of the difference of opinion has a material and adverse impact on the conduct of the Partnerships' Business, or (ii) such difference is as to (x) the quality of services which is or should be provided at the long-term care facilities owned by the Partnership, (y) the adoption of a budget for a future fiscal year, or (z) any matter requiring unanimous approval of the Partners under the terms of this Agreement.

Southern Oaks argues that what Horizon relied on at trial as showing irreconcilable differences—the decisions of how profits were to be determined and divided—were not "good faith differences of opinion," nor did they have "a material and adverse impact on the conduct of the Partnerships' Business." Horizon's refusal to pay Southern Oaks according to the terms of the contracts was not an "irreconcilable difference" as defined by the contract, Southern Oaks asserts, pointing out that Horizon's acts were held to be breaches of the contracts. Because there was no contract basis for dissolution, Horizon's assertion of dissolution was wrongful, Southern Oaks concludes.

Southern Oaks contends further that not only were there no contractual grounds for dissolution, dissolution was also wrongful under the Florida Statutes. Southern Oaks argues that pursuant to section 620.8602,[3] Horizon had the power to dissociate *1159 from the partnership, but, in the absence of contract grounds for the dissociation, Horizon wrongfully dissociated. It asserts that it is entitled to lost future profits under Florida's partnership law,[4] relying on subsection 620.8602(3), Florida Statutes. Southern Oaks also cites Born v. Goldstein, 450 So.2d 262, 264 (Fla. 5th DCA) ("In a breach of contract action, the innocent party is entitled to recover any gains presented and losses sustained, including the loss of prospective profits."), pet. for rev. dismissed, 458 So.2d 272 (Fla. 1984). See also Twyman v. Roell, 123 Fla. 2, 6, 166 So. 215, 217 (1936) ("The rule is well settled that if there is a yardstick or measure of damages by which prospective profits may be determined and they arise out of a contract in which profit is the inducement to its making, they may be allowed if proven, whether they arise from farming, mechanical, or other contracts."); 59A Am.Jur.2d Partnership § 565 (1987) ("The right of actions for damages from a partnership dissolution depends on the fact that the dissolution is brought about in violation of the contract between the partners."). Southern Oaks states that its claim is not for wrongful dissolution, but rather arises under applicable contract law.

We find Southern Oaks' argument without merit. First, the trial court's finding that the parties are incapable of continuing to operate in business together is a finding of "irreconcilable differences," a permissible reason for dissolving the partnerships under the express terms of the partnership agreements. Thus, dissolution was not "wrongful," assuming there can be "wrongful" dissolutions, and Southern Oaks was not entitled to damages for lost future profits.

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Cite This Page — Counsel Stack

Bluebook (online)
732 So. 2d 1156, 1999 WL 218410, Counsel Stack Legal Research, https://law.counselstack.com/opinion/horizoncms-healthcare-v-southern-oaks-fladistctapp-1999.