Jackson v. MH Master Holdings, LLLP, 2025 NCBC 21.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION BUNCOMBE COUNTY 23CVS005013-100
JEFF JACKSON, Attorney General, ex rel. DOGWOOD HEALTH TRUST,
Plaintiff,
v. ORDER AND OPINION ON DEFENDANT’S MOTION FOR MH MASTER HOLDINGS LLLP, PARTIAL SUMMARY JUDGMENT Defendant.
1. This case centers on the terms of an Amended and Restated Asset
Purchase Agreement (APA) memorializing MH Master Holdings LLLP’s (HCA 1)
acquisition of a six-campus hospital system serving western North Carolina
(Mission). In its Motion for Partial Summary Judgment (Motion), HCA asks the
Court to determine that the language “shall not discontinue” in Section 7.13(a) of the
APA is unambiguous and to interpret the language as a matter of law. (Mot. Partial
Summ. J., ECF No. 69.)
2. Having considered the Motion, the related briefs, other appropriate
matters of record, and the arguments of counsel at a hearing held on 12 December
2024, the Court hereby DENIES the Motion.
1 Pursuant to Section 7.10 of the APA, MH Master Holdings LLLP is authorized to do business as HCA. Therefore, for purposes of this Motion, the Court refers to Defendant as “HCA.” North Carolina Department of Justice, by Brian Rabinovitz, Llogan R. Walters, Daniel P. Mosteller, Danielle Wilburn Allen, and Marc D. Brunton, for Plaintiff Attorney General Jeff Jackson ex. rel. Dogwood Health Trust. 2
Latham & Watkins, LLP, by Nathan A. Sandals and Chase A. Chesser; Kirton McConkie, by Allen Gardner; and Roberts & Stevens, PA, by Phillip T. Jackson, John Noor, and David Hawisher, for Defendant MH Master Holdings, LLLP.
Earp, J.
I. FACTUAL AND PROCEDURAL BACKGROUND
3. The Court does not make findings of fact when ruling on a motion for
summary judgement. Instead, the Court summarizes the material facts it considers
to be uncontested. See, e.g., Vizant Techs., LLC v. YRC Worldwide, Inc., 373 N.C.
549, 551 (2020).
4. Section 7.13(a) of the APA and its accompanying schedule speak to
HCA’s obligation to continue certain services during the ten-year period following its
acquisition of Mission, barring certain defined contingencies or extenuating
circumstances. (Am. Compl., Ex. 1 [APA], Section 7.13(a), ECF No. 50.1.)
5. Section 7.13(a) states in relevant part:
Unless otherwise consented to in writing by the Advisory Board for a period of ten (10) years immediately following the Closing Date, Buyer shall not discontinue the provision of the services set forth on Schedule 7.13(a) (the “Mission Hospital / CarePartners Services”) at the Mission Hospital Campus Facility, the Community CarePartners Facilities or the Mission Children’s Hospital Reuter Outpatient Center, as applicable, subject to Force Majeure making the provision of such services impossible or commercially unreasonable (but only for the period of Force Majeure and the applicable Remediation Period).
2 Jessica Vance Sutton, Jasmine McGhee, South A. Moore and Sarah G. Boyce also appeared
on behalf of the Attorney General at oral argument but have since been permitted to withdraw as counsel in this matter. (See ECF Nos. 104, 107, 114.) (APA, Section 7.13(a) (emphasis added)).
6. The accompanying Schedule 7.13(a) specifies the services:
• Behavioral Health – child, adolescent and adult inpatient and partial hospitalization outpatient services. • Cardiac Services – Cardiology, Interventional Cardiology, Electrophysiology, Cardiac Surgery and rehabilitation services. • Emergency and Trauma services generally consistent with the current Level II Trauma Program with emergency services for pediatrics and adults, ground/air medical transport services and forensic nursing services. • General Medicine Services – hospitalist, gastroenterology, infectious disease, nephrology, pulmonary/critical care, neurology, and palliative care services. • Imaging and Diagnostic Services – CT, Cardiac CT, MRI, neuro- interventional and interventional radiology and high-risk mammography services. • Neuro Trauma Services. • Obstetrical services – OB emergency, labor, delivery, post-partum and high-risk maternal fetal services. • Oncology Services – inpatient and outpatient cancer services, radiation therapy, surgery, chemotherapy, and infusion services. • Pediatric Services – Level III neonatal intensive care and associated transport, and pediatric inpatient/intensive care. • Surgical Services – bariatric, cardiac, ear/nose/throat, breast, endoscopy, gynecologic/gynecologic oncology, neuro-spine, oncology, orthopedic trauma, orthopedic pediatrics, cardiothoracic, trauma, ophthalmology, plastics, urology, vascular, and minimally invasive and robotic surgery.
(APA Schedule 7.13(a).)
7. Pursuant to Section 55A-12-02(g) of the North Carolina General
Statutes, the Attorney General conducted a review of the APA prior to the transaction
closing. The purpose of the review was, among other things, to ensure that the price
paid for the assets was fair and that any charitable assets remained dedicated to a
charitable purpose. (Am. Compl. ¶ 32, ECF No. 50.) As part of the review process, the Attorney General’s Office requested and reviewed a wealth of information
submitted by the parties.
8. The Attorney General identified several matters of concern with respect
to the deal. As a result, counsel in the Attorney General’s Office were tasked with
negotiating modifications to the language of the APA. (Am. Compl. ¶ 33.)
9. Having completed the negotiations, on 16 January 2019, the Attorney
General issued a Letter of Nonobjection detailing the agreed changes to the APA.
(Def.’s Answ. and Countercls. Ex. 1, ECF No. 55.1.) It is undisputed that the
negotiations did not result in a change to the language of Section 7.13(a) or its
schedule. (Decl. of Att’y Gen’l Stein [Stein Decl.] § 5, ECF No. 94.6.)
10. The transaction closed in January 2019. (Am. Compl. ¶ 29.)
11. On 14 December 2023, the Attorney General, 3 acting on behalf of
Dogwood Health Trust, 4 initiated this action. The Attorney General alleges that HCA
has breached the APA by failing to provide the emergency and trauma services, as
well as the oncology services, required by the APA. HCA denies these allegations.
3 On 1 January 2025, Jeff Jackson took the oath of office to become North Carolina’s Attorney
General and lead the North Carolina Department of Justice, replacing Joshua H. Stein, the original Plaintiff in this action.
4 Dogwood Health Trust is a nonprofit corporation identified as the “Foundation” in the APA.
(Def.’s Countercls. ¶ 6, ECF No. 55.) According to its website, “[i]n addition to investing in the health and wellness of our region, one of Dogwood Health Trust’s roles is to ensure that HCA remains in compliance with the terms it agreed to when it purchased the assets of Mission Health System.” (https://dogwoodhealthtrust.org/about/independent-monitor/. Last visited 14 April 2025.) Section 13.13(b) of the APA gives the Attorney General the right to enforce Section 7.13(a) on behalf of Dogwood Health Trust. 12. On 26 July 2024, HCA filed this Motion seeking partial summary
judgment “on the proper textual construction of the words ‘shall not discontinue’ in
Section 7.13(a) of the [APA].” HCA maintains that the Attorney General’s claims for
breach of the APA turn on the meaning of these three words.
13. After full briefing, the Court held a hearing on the Motion on 12
December 2024, at which all parties were represented by counsel. (Not. Hr’g., ECF
No. 95.) The Motion is now ripe for disposition.
II. LEGAL STANDARD
14. Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
show there is no genuine issue as to any material fact and that [the movant] is
entitled to a judgment as a matter of law.” N.C. R. Civ. P. 56(c).
15. Genuine issues of material fact are those “which can be maintained by
substantial evidence.” Kessing v. Nat’l Mortg. Corp., 278 N.C. 523, 534 (1971).
“Substantial evidence is such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion and means more than a scintilla or a permissible
inference.” Daughtridge v. Tanager Land, LLC, 373 N.C. 182, 187 (2019) (citation
and internal quotation marks omitted).
16. In reviewing a motion for summary judgment, the Court must consider
all evidence in the light most favorable to the non-moving party. Belmont Ass’n v.
Farwig, 381 N.C. 306, 310 (2022). Parties moving for summary judgment have the burden of establishing the lack of any triable issue of fact. Pembee Mfg. Corp. v. Cape
Fear Constr. Co., 313 N.C. 488, 491 (1985).
17. A movant may satisfy its burden by proving that “an essential element
of the opposing party’s claim does not exist, cannot be proven at trial, or would be
barred by an affirmative defense, or by showing through discovery that the opposing
party cannot produce evidence to support an essential element of [the] claim.” Dobson
v. Harris, 352 N.C. 77, 83 (2000) (citations omitted). Should the movant satisfy its
burden, “then the burden shifts to the non-moving party to ‘set forth specific facts
showing that there is a genuine issue for trial.’ ” Lowe v. Bradford, 305 N.C. 366,
369−70 (1982) (quoting N.C. R. Civ. P. 56(e) (emphasis omitted)).
18. When ruling on a motion for summary judgment, the Court does not
resolve issues of fact and must deny the motion if there is any genuine issue of
material fact. Singleton v. Stewart, 280 N.C. 460, 464 (1972).
19. “Ordinarily it is error for a court to hear and rule on a motion for
summary judgment when discovery procedures, which might lead to the production
of evidence relevant to the motion, are still pending and the party seeking discovery
has not been dilatory in doing so.” Conover v. Newton, 297 N.C. 506, 512 (1979).
III. ANALYSIS
20. In North Carolina, “[w]henever a court is called upon to interpret a
contract its primary purpose is to ascertain the intention of the parties at the moment
of its execution.” Lane v. Scarborough, 284 N.C. 407, 409–10 (1973); Galloway v.
Snell, 384 N.C. 285, 287–88 (2023) (“Written contracts are to be construed and enforced according to their terms. They must receive a reasonable interpretation,
according to the intention of the parties at the time of executing them, gathered from
the language employed by them.” (internal citation and quotation marks omitted)).
21. The language in a contract “should be given its natural and ordinary
meaning.” Southpark Mall Ltd. P’ship v. CLT Food Mgmt., Inc., 142 N.C. App. 675,
678 (2001) (citation omitted). If the terms of a contract are unambiguous, then the
court “cannot look beyond the terms of the contract to determine the intentions of the
parties.” Stovall v. Stovall, 205 N.C. App. 405, 410 (2010) (quoting Lynn v. Lynn, 202
N.C. App. 423, 431 (2010)); see also Walton v. City of Raleigh, 342 N.C. 879, 881 (1996)
(“If the plain language of a contract is clear, the intention of the parties is inferred
from the words of the contract.”); Johnston Cnty. v. R.N. Rouse & Co., Inc., 331 N.C.
88, 95 (1992) (“[T]he most fundamental principle of contract construction [is] that the
courts must give effect to the plain and unambiguous language of a contract.”).
22. An ambiguity exists when the language of a contract is fairly and
reasonably susceptible to differing interpretations. Salvaggio v. New Breed Transfer
Corp., 150 N.C. App. 688, 690 (2002). While not controlling, “[t]he fact that a dispute
has arisen as to the parties’ interpretation[s] of the contract is some indication that
the language of the contract is, at best, ambiguous.” Id. (quoting St. Paul Fire &
Marine Ins. Co. v. Freeman-White Assoc., Inc., 322 N.C. 77, 83 (1988)).
23. Ultimately, deciding whether the language of a contract is ambiguous is
a question for the court. Lynn v. Lynn, 202 N.C. App. 423, 432 (2010). If it is
ambiguous, extrinsic evidence may be used to determine the parties’ intent. Int’l Paper Co. v. Corporex Constructors, Inc., 96 N.C. App. 312, 317 (1989) (“If the writing
leaves it uncertain as to what the agreement was, parol evidence is competent, not to
contradict, but to show and make certain what was the real agreement between the
parties.”). However, in that event, interpretation of the contract is no longer a
question of law but is rather a question of fact. See, e.g., Schenkel & Schultz, Inc. v.
Hermon F. Fox & Assocs., P.C., 362 N.C. 269, 273 (2008) (“When an agreement is
ambiguous and the intention of the parties is unclear . . . interpretation of the
contract is for the jury.”); Martin v. Ray Lackey Enters., Inc., 100 N.C. App. 349, 354
(1990) (“[I]ntent is a question of law [only] where the writing is free of any ambiguity
which would require resort to extrinsic evidence or the consideration of disputed
fact.”); Cleland v. Children’s Home, Inc., 64 N.C. App. 153, 157 (1983) (“Ambiguities
in contracts are to be resolved by the [factfinder.]”).
24. In its Motion, HCA argues that the phrase “shall not discontinue”
unambiguously means that it cannot completely stop one or more of the services
identified in Schedule 7.13(a). It asks the Court to interpret its obligation
accordingly.
25. The Attorney General contests this interpretation and points out that
the phrase in question is actually, “Buyer shall not discontinue the provision of the
services set forth on Schedule 7.13(a).” He argues that HCA agreed to commit itself,
not just to an organizational structure that includes certain service lines, but to
actually providing all of the services contained within Schedule 7.13(a). 26. HCA relies on several dictionary definitions of the verb “discontinue” to
support its position. According to the Merriam-Webster Dictionary, “discontinue”
means “to break the continuity of: cease to operate, administer, use, produce, or take.”
(Def.’s Br. Supp. of Mot. [Def.’s Br.] 17, ECF No. 70.) HCA contends that it is
providing each of the services listed and that the Attorney General is attempting to
add quality and volume metrics that were not negotiated. (Def.’s Br. 14, 17–19; Def.’s
Reply in Supp. Mot. Partial Summ. J. [Def.’s Reply Br.] 8, ECF No. 94.)5
27. HCA also points to other provisions in the APA to support its argument.
Among other things, HCA contends that Section 7.13(h), which requires HCA to cause
the facilities to “remain enrolled and in good standing in Medicare, Medicaid or their
successor programs,” as well as the changes made to add measurable requirements
to the service commitments found in Schedule 7.13(b), prove that the Attorney
General knew how to negotiate for these metrics but did not do so with respect to
Section 7.13(a) and its schedule. (Def.’s Br. 9−10.)
28. The Attorney General agrees that to breach the APA, HCA must
discontinue a service. However, he argues that HCA’s interpretation is a “cramped
reading” of the relevant language and that discontinuing a service means more than
just shuttering an entire service line. For example, the Attorney General contends
that HCA is no longer providing inpatient treatment to complex hematology cancer
5 The Court declines the parties’ invitation to look to extrinsic evidence to determine whether the language of Section 7.13(a) is unambiguous. (See, e.g., Def.’s Br. 20−23.) As discussed below, extrinsic evidence only becomes relevant if the language is ambiguous, and then summary judgment is appropriate only if there is no genuine issue of material fact with respect to the intent of the contracting parties. patients, a service he argues was provided at the time the APA was executed. (Pl.’s
Resp. Opp. Def.’s Mot. Summ. J. [Pl.’s Br.] 2, ECF No. 93.) He maintains that HCA
discontinued a service when it stopped providing otolaryngology (ear, nose and
throat) surgical services “for periods lasting longer than a week, even though Level
II Trauma facilities are required to provide those services around-the-clock.” (Pl.’s
Br. 10.)
29. Again, referencing the Merriam-Webster Dictionary definition of
“discontinue,” the Attorney General focuses on the phrase “to break the continuity of”
and argues that even a gap or temporary break in a service constitutes a
discontinuation of that service for the patient impacted. (Pl.’s Br. 18.) Using HCA’s
interpretation, the Attorney General argues, all that would be required to comply
with Section 7.13(a) is for HCA to have provided some type of oncology service (for
example, one chemotherapy treatment for breast cancer) to a single patient at some
point in 2023 – an interpretation so parsimonious as to be inconceivable given the
Attorney General’s duty to protect the public’s access to healthcare. (Pl.’s Br. 2.) And,
turning HCA’s argument on its head, the Attorney General contends that had the
parties intended for “discontinue” to mean the total cessation of a service, they could
have simply used the word “cease.” (Pl.’s Br. 20−21.)
30. As for emergency and trauma services, the Attorney General points out
that Schedule 7.13(a) requires the service to be “generally consistent with the current
Level II Trauma Program,” (that is, the Level II Trauma Program that existed at the
time the transaction closed), a requirement that the Attorney General contends necessarily incorporates quantity and quality measurements. He argues, for
example, that a break in the continuity of the provision of ENT surgical services is a
breach of HCA’s obligation because such services were available prior to HCA’s
acquisition. (Pl.’s Br. 22−24.)
31. Finally, like HCA, the Attorney General argues that other provisions of
the APA support his interpretation. He contends that the parties heavily negotiated
Section 7.13(a)’s definition of “Contingencies” (circumstances that would allow HCA
to discontinue a service, such as the unavailability of qualified physicians) to include
only circumstances that occur after the first ten years. They did not include
circumstances that might occur earlier because the parties always intended for HCA
to “provide the services Mission Hospital previously offered (if encompassed by
Schedule 7.13(a)) even if independent physician groups decline to provide the service
at the Hospital or even offer a competing service nearby.” (Pl.’s Br. 23−24.)
32. After reviewing the briefing and hearing from the parties at oral
argument, the Court concludes not only that the words “shall not discontinue” in
Section 7.13(a) are ambiguous, but also that the word “services” lacks clarity.
Additional evidence is needed to determine the parties’ intent. For example, does a
discontinuation of chemotherapy under “oncology services” mean a cessation of all
types of chemotherapy, or is it enough to stop providing one type of chemotherapy?
Does it mean that the service stops for all current and prospective patients, or is it
enough for a single patient to experience a discontinuation of treatment? Must the
cessation be permanent, or is a temporary stop enough? 33. To be sure, the three words “shall not discontinue” cannot be interpreted
in a vacuum. Basic rules of contract construction require the Court to consider the
words in their context:
A contract must be construed as a whole, and the intention of the parties is to be collected from the entire instrument and not from detached portions, it being necessary to consider all of its parts in order to determine the meaning of any particular part as well as of the whole. Individual clauses in an agreement and particular words must be considered in connection with the rest of the agreement, and all parts of the writing, and every word in it, will, if possible, be given effect.
Robbins v. C. W. Myers Trading Post, Inc., 253 N.C. 474, 477 (1960) (citation and
quotation marks omitted). It is noteworthy, then, that both HCA and the Attorney
General argue that reading the words in context supports their differing
interpretations of Section 7.13(a). Each likewise argues that the dictionary definition
of “discontinue” supports its/his position. The depth of the parties’ disagreement
about the meaning of the language is telling.
34. The Court concludes that the relevant language of the APA is “fairly and
reasonably susceptible to either of the constructions asserted by the parties.” St. Paul
Fire & Marine Ins. Co., 322 N.C. at 83. Consequently, an ambiguity exists that
prevents the Court from construing the language at this stage as a matter of law.
The intent of the parties as to the meaning of the language cannot be determined
without a more robust record.
35. On that point, the parties appear to agree that it is the intent of the
contracting parties—and not the Attorney General —that should control here. (Pl.’s
Br. 26, Def.’s Reply Br. 14.) HCA argues that it has presented evidence that the seller and HCA agreed on the meaning of the relevant language and that it was incumbent
on the Attorney General to present evidence to the contrary. (Def.’s Reply Br. 14−15.)
36. But the Attorney General takes issue with HCA’s evidence. He argues
that an email exchange between Mission’s then-CEO Ron Paulus and HCA’s counsel
Chuck Hall in which Mr. Paulus wrote that it was “particularly important” that “the
services available today at Mission Hospital are going to be here for at least 10 years”
supports his argument rather than HCA’s argument. (Def.s’ Br. Ex 10, ECF 71.10.)
In the Attorney General’s view, Mr. Paulus’s statement makes it clear that Mission
Health was “only interested in a deal with HCA if HCA agreed to continue each of
the existing services at Mission Hospital.” (Pl.’s Br. 27–28.) More is needed to
determine what Mr. Paulus actually meant.
37. In addition, the Attorney General argues that deciding the contracting
parties’ intent on summary judgment at this stage would be premature because
discovery is ongoing. (Pl.’s Br. 29.) Although HCA challenges the assertion that any
such discovery will shed light on the parties’ intent, the Attorney General disagrees
and has presented an affidavit to that effect. (Def.’s Reply Br. 2, 14–17; Aff. of Jessica
Sutton, ECF No. 93.11.)
38. The Court observes that after a hearing on the Motion, HCA requested
and was given the opportunity to depose the seller. (Order Following BCR 10.9
Conference, ECF No. 116.) In addition, the Court has only recently ruled on
Defendant’s Motion to Compel and has ordered that certain internal documents from
the Office of the Attorney General be produced in discovery. It remains to be seen what, if any, evidence with respect to the contracting parties’ intent will surface in
this discovery. However, there is no doubt that a determination of the parties’ intent
with respect to the contract language at issue requires a more developed record than
the one presented.
IV. CONCLUSION
39. As the party moving for summary judgment, HCA must establish that
there are no genuine issues of material fact. Because it is unable to do so at this
juncture, summary judgment is not appropriate. Accordingly, the Court DENIES
the Motion.
IT IS SO ORDERED, this the 16th day of April, 2025.
/s/ Julianna Theall Earp Julianna Theall Earp Special Superior Court Judge for Complex Business Cases