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Burris v. Main Line Health System

United States District Court, E.D. Pennsylvania

June 8, 2017



          GENE E.K. PRATTER United States District Judge

         William Burris seeks equitable relief and damages for an array of claims arising out of Main Line Health System's (“Main Line” or “MLH”) alleged abuse of a purported legal relationship with Mr. Burris and Main Line's alleged misuse of materials obtained during the course of that relationship in connection with the purchase of real property from Saint Charles Borromeo Roman Catholic Seminary (“St. Charles” or “the Seminary”). Mr. Burris also alleges, inter alia, that St. Charles aided and abetted Main Line's breach of fiduciary duty and is liable for civil conspiracy.

         Main Line and St. Charles each moved for summary judgment shortly after the Complaint was filed, seeking to dismiss all of Mr. Burris's claims against them. Because the Court concludes that the evidence in the record raises some genuine issues of material fact, summary judgment will be denied.

         Factual and Procedural History

         Mr. Burris is the Chairman and Chief Executive Officer of various business entities involved in the development and operation of post-acute care facilities in the tri-state area, and beginning in 2013, he sought to expand his network by acquiring a 40-acre parcel of land[1](the “Parcel”) located in Lower Marion Township, Pennsylvania and owned by St. Charles Seminary. Lankenau Hospital, which is is owned and operated by defendant Main Line, is located across the street from the Parcel. Burris Aff. ¶ 10. After reading an article published by the Philadelphia Inquirer reporting that the Archdiocese of Philadelphia was considering selling the Parcel, Mr. Burris contacted officials at St. Charles about acquiring it in order to open and operate a post-acute care facility. Burris Aff. ¶ 5.

         The Seminary engaged a broker-Holliday Fenoglio Fowler, L.P. (“HFF”)-to list the Parcel and manage the bidding process. Summary Judgment Record (“S.J.R.”), at 1-4. Jeffrey Julien, the Managing Director at HFF, served as the point person for the Seminary. Mr. Burris submitted a first-round bid for the Parcel in December 2013 and a second-round bid in January 2014. S.J.R. 3-9; S.J.R. 17-18.[2] After he submitted his second-round bid, Mr. Burris engaged professionals to, among other things, draft “Renderings and Plans” and ensure his planned facility would comply with Township requirements. Burris Aff. ¶¶ 8-9. The Renderings and Plans describe possible improvements to the Parcel if Mr. Burris's bid was successful. S.J.R. 23-36; Burris Aff. ¶ 9.

         I. Burris and Main Line Discuss Involvement

         In April 2014, members of St. Charles's Board of Directors encouraged Mr. Burris to meet with John “Jack” Lynch III, Main Line's President, due to Main Line's neighboring Lankenau Hospital. S.J.R. 38. At this recommendation, Mr. Burris contacted Mr. Lynch and the two began discussing possibilities for the Parcel. S.J.R. 11; Burris Aff. ¶ 12. In May 2014, Mr. Burris invited Mr. Lynch, Jo Ann Magnatta (Main Line's Senior Vice President of Facilities Design and Construction), Donna Phillips (President of Bryn Mawr Rehabilitation Hospital), and other Main Line executives on a tour of a post-acute care facility he owns in Moorestown, New Jersey. Burris Aff. ¶ 15.

         According to Mr. Burris, Main Line executives were “blown away” by his New Jersey facility, and after the tour, Mr. Lynch told Mr. Burris “I want in, ” meaning, in Mr. Burris' estimation, that he wanted Main Line to join Mr. Burris in a partnership, joint venture, or as a co-developer of Burris's proposed facility. Burris Aff. ¶¶ 16-17. Mr. Burris emailed Mr. Julien at HFF, the Seminary's broker, following the tour and reported that “[t]he goal of the meeting was to solicit the support of Lankenau Hospital for our pursuit at St. Charles. Mr. Lynch advised after the tour and subsequent meeting that he would not simply endorse our project, he wants to be a part of it, and wants you to know that.” S.J.R. 849.

         Main Line took steps to explore developing the Parcel with Mr. Burris. Ms. Magnatta attended calls and meetings with Mr. Burris a few weeks after the tour, and Mr. Burris began disclosing information about and plans for the Parcel, including the Renderings and Plans he had commissioned. Burris Aff. ¶¶ 18-19; S.J.R. 13. In mid-June 2014, Mr. Lynch emailed Bishop Timothy Senior, Rector of the St. Charles Seminary, to show his support for and involvement in Mr. Burris's bid. He explained that while Main Line and Mr. Burris “ha[d] not reached formal agreement” yet, they were “in the process of developing a relationship that would include [Main Line's] participation in the operation of the facilities.” S.J.R. 11. On June 27, 2014, Lydia Hammer, Main Line's Senior Vice President of Marketing and Business Development drafted and circulated a memorandum called “Options for MLH Burris Partnership at St. Charles Seminary, ” which outlined possible arrangements for a Burris-Main Line relationship. S.J.R. 42- 44. Throughout June and July 2014, Main Line executives attended meetings with Mr. Burris about the development, including one with a Lower Merion Township official to discuss various issues, including rezoning. S.J.R. 12; Burris Aff. ¶¶ 22-23.

         Mr. Burris[3] and Mr. Lynch went back-and-forth about the proposed relationship between the parties and the manner in which responsibilities would be divided. Some communications indicate a co-ownership partnership, while others contemplate a management arrangement. On August 9, 2014, Mr. Burris sent Mr. Lynch an email attaching details for a planned facility at the Seminary called “MLH at Wynnewood, ” and alerting him that “[w]ithin the next week or so, [he would] put forth a proposal . . . for [Main Line's] operations to run the campus we are proposing in the context of a joint venture between the parties.” S.J.R. 53-54. Mr. Burris sent a Letter of Intent (“LOI”) outlining a joint venture to Main Line on August 22, 2014.[4] S.J.R. 55-58.

         Negotiations continued throughout September and October 2014. Several emails among Main Line personnel during this time period show that Main Line was considering the ownership and management proposals provided by Mr. Burris and that its position was not set in stone. For example, an email from Lydia Hammer to Donna Phillips stated that Main Line was reluctant to pursue 50/50 ownership of the entire project, but remained open to partial ownership or management “joint venture” arrangements. S.J.R. 59. Main Line executives exchanged a draft response to Burris, stating that they were “not interested in Joint Venturing on the MOB, Assisted Living and the Alzheimers unit[, ] [and were] [i]nterested only in doing a joint venture on the SNF [skilled nursing facility] and managing the outpatient therapy and contracting [MLH] therapists for the SNF.” S.J.R. 71. In Main Line's following communication with Mr. Burris, it affirmed its continued desire to discuss a joint venture, but clarified that its interest was limited to the skilled nursing facility. S.J.R. 118.

         Meanwhile, both Mr. Burris and Mr. Lynch were in communication with the Seminary, either directly or through HFF, about the Parcel. On September 18, 2014, Mr. Lynch wrote that he had “a good conversation with Bishop Senior” and that “they [were] very pleased to hear that [Main Line] [was] involved in the Burris proposal.” S.J.R. 74. On that same date, Mr. Burris wrote to Mr. Julien to report that he “h[ad] been actively working on the partnership with Main Line Health.” Id. Mr. Burris continued to communicate with Mr. Julien at HFF and develop the project by, for example, instructing his architects to incorporate medical office space for Main Line and engaging in due diligence such as obtaining traffic analysis for the proposed project and speaking with Lower Merion officials. Id.

         At the end of September, Donna Phillips from Main Line and Ken Keegan from the Burris Post-Acute Network executed a Non-Disclosure Agreement (“NDA”) enabling each party to “share certain proprietary information” in discussions “regarding possible collaboration.” S.J.R. 65. The NDA states that “[t]he Receiving Party agrees to use the Confidential Information solely in connection with the current or contemplated business relationship between the parties and not for any purpose other than as authorized by this Agreement.” S.J.R. 66. Of particular relevance here, the NDA contained a section stating that it did not constitute an outside legal obligation:

The parties agree that neither party will be under any legal obligation of any kind whatsoever with respect to a Transaction by virtue of this Agreement, except for the matters specifically agreed to herein. The parties further acknowledge and agree that they each reserve the right, in their sole and absolute discretion, to reject any and all proposals and to terminate discussions and negotiations with respect to a Transaction at any time. This agreement does not create a joint venture or partnership between the parties. . . .

S.J.R. 67. Two other provisions are relevant here. First, the NDA contained an integration clause: “This agreement constitutes the entire understanding between the parties and supersedes any and all prior or contemporaneous understandings and agreements, whether oral or written, between the parties, with respect to the subject matter hereof.” S.J.R. 67. Second, the NDA provides that “[t]he receipt of Confidential Information pursuant to this Agreement will not prevent or in any way limit either party from: (i) developing, making or marketing products or services that are or may be competitive with the products or services of the other; or (ii) providing products or services to others who compete with the other.” S.J.R. 68. In light of this agreement, Mr. Burris disclosed plans for the Parcel and confidential information about his business operations to Main Line. S.J.R 69-70.

         II. Submitting the Buyer Qualification Questionnaire to St. Charles

         In October 2014, HFF requested that Burris and the other two final candidates[5] who placed bids on the Parcel submit a Buyer Qualification Questionnaire (“BQQ”). S.J.R. 82; S.J.R. 102-05. Mr. Burris, Mr. Lynch, and others such as Thomas Comitta Associates (town planners/landscape architects brought on by Mr. Burris) were involved in preparing the BQQ. S.J.R. 119-22. Before the BQQ was submitted, Mr. Lynch presented the opportunity to Main Line's Board of Directors, explaining that “MLH is interested in developing the [Seminary's] lower campus. . . . Burris Construction has offered to build a 124-bed skilled nursing facility and is interested in a 50/50 partnership with MLH.” S.J.R. 138. On October 28, 2014, Mr. Burris circulated the final draft of the BQQ to Mr. Lynch and others. S.J.R. 140.[6]

         The Burris team submitted the BQQ[7] to HFF on October 29, 2014 in advance of the final bid meeting scheduled that day. S.J.R. 159-76. The BQQ acknowledged that Burris was “negotiating the finer points of a partnership with Main Line.” S.J.R. 172. However, it included the Addendum that had been circulated to Main Line explaining that Burris was acting “in partnership with Main Line Health” in order “to retain the existing seminary building, including the chapel, and redevelop it . . .” S.J.R. 175. Mr. Burris asserts that the business entities that would acquire the Parcel itself had not yet been created. Burris Aff. ¶ 40; S.J.R. 160. Mr. Burris and Mr. Lynch made a presentation to Bishop Senior and the St. Charles Seminary Board during which they each discussed proposed plans for the Parcel. Mr. Burris alleges in his affidavit that Mr. Lynch personally spoke during the joint presentation and voiced his approval of a partnership of some sort between the two entities. See Burris Aff. ¶¶ 42-43.

         III. Post-BQQ Negotiations Between Burris and Main Line

         Discussion between personnel associated with Mr. Burris and Main Line on the structure of the alleged joint venture continued after the presentation to the Seminary Board.[8] Emails between members of Burris's team and Main Line executives in early November show that the parties were hammering out detains of a “St. Charles JV.” See S.J.R. 178. Ms. Magnatta at Main Line reported that she thought Mr. Burris and Mr. Breslin were “concerned that there is nothing in writing that solidifies what Burris keeps telling us he is willing to do. We are right beside him in everything and yet have nothing to indicate that we in fact will have the first option to reside on the site with him, etc. if he does get the approval to occupy/build.” S.J.R. 185.

         Mr. Schmotzer sought additional confidential financial and operations details from Mr. Breslin and Mr. Burris following the presentation to the Board, which they provided. S.J.R. 243-50. Using information Mr. Burris's team shared, Mr. Schmotzer prepared a thorough comparison of various financial metrics between Main Line's own operations and the St. Charles proposal. See e.g., S.J.R. 266-306.

         Mr. Burris, Mr. Breslin, and various Main Line executives attended a “Strategy Council” meeting on November 18, 2014. Burris Aff. ¶ 46. Mr. Burris alleges that Main Line sought assurance during this meeting and others that it would be the exclusive partner/co-venturer with respect to the Parcel if Mr. Burris won the bid. Burris Aff. ¶ 47-48. Mr. Burris allegedly assured Main Line personnel that he had long considered Main Line a partner and co-venturer. Id. Notes from the meeting, while not necessarily detailing a final arrangement, show that indeed, the “finer points” of their relationship was the focus of discussion. S.J.R. 192-97. A “Financial Follow Up Meeting” was held on December 1, 2014, where the parties reviewed the financial metrics Mr. Burris shared. S.J.R. 251-65. Throughout December 2014 and January 2015, Main Line requested additional proprietary information about Mr. Burris's operations, which was disclosed. S.J.R. 331-43; 412-13; 414-443.

         At the end of January 2015, Main Line sent a revised Letter of Intent to Burris Construction Company stating, in relevant part:

Based on our review we have concluded that Main Line is not interested in a SNF [skilled nursing facility] joint venture with Burris Construction Company (“Burris”). . . . Main Line would like to propose a full management contract arrangement for a Burris-developed Skilled Nursing Facility (“Facility”) to be located on the St. Charles Seminary Property.

S.J.R. 447. The January 2015 Letter of Intent outlined an 8% management fee for Main Line, Burris's involvement in managing the Facility, and a non-compete provision “to ensure that Burris does not develop, own, operate, manage, or lease to any business on the St. Charles Seminary property site that would be in direct competition with any Main Line entity.” S.J.R. 448. According to Mr. Burris, on a phone call the following day, Mr. Lynch expressed that he was still viewing the arrangement as a partnership or co-venture. Burris Aff. ¶¶ 53-54. Burris contends that as of February 10, 2015, Burris had an agreement with Main Line that it would be partners/co-venturers on the construction of the skilled nursing facility, “Main Line Health at Wynnewood.” Burris Aff. ¶ 55.

         III. HFF & St. Charles Negotiate with Burris

          Following the Seminary Board presentation, communications between Steve Dolan, the Chief Financial Officer at St. Charles, Bishop Senior, and Mr. Julien at HFF show that the Seminary was favoring the Burris bid and nearing a final decision. S.J.R. 350-57; 370. On December 2, 2014, Mr. Julien explained that he had spoken with Mr. Burris, and upon receipt of a final Letter of Intent from Mr. Burris, there would be a final meeting with Mr. Burris and Mr. Lynch and preparation of a ground lease. S.J.R. 353. Mr. Burris reported to Mr. Lynch at Main Line that during the December 2nd conversation, “Julien said the deal is ours.” S.J.R. 379. Mr. Burris submitted the final Letter of Intent on December 27, 2014, and it stated, among other things, that discussions with Main Line have continued and that an arrangement would be finalized by the end of January. S.J.R. 382-85.[9]

         St. Charles did not respond quickly to Mr. Burris's proposal. When, on March 16, 2015, Mr. Burris asked Mr. Lynch whether he had any insight into developments, Mr. Lynch replied, “nothing.” S.J.R. 470. This response, as it turns out, occurred while Mr. Lynch and other Main Line executives were communicating directly with St. Charles about the Burris's bid on the Parcel. Around the same time, Mr. Dolan at St. Charles told Mr. Julien at HFF that the Burris deal “is still going to take place and hopefully in the near future.” S.J.R. 472. Mr. Burris was anxious to hear about the proposal he sent in December, and throughout March and April 2015, he continued to provide HFF and St. Charles details about the project and his proposed “mezzanine” financing for it. See, e.g., S.J.R. 375-76; 473; 471-98.

         The Seminary clarified its position on financing the project in May. On May 12, 2015, counsel for St. Charles sent Mr. Burris a letter stating that St. Charles had decided that it would only accept a buyer with an institutional common equity capability of purchasing the Parcel, as opposed to mezzanine financing, as well as other new requirements in information requests. S.J.R. 676. After receiving the letter, Mr. Burris sought to clarify the financing terms he had secured and stated that Main Line would be operating the Post-Acute Center as an extension of their Lenkenau brand. S.J.R. 677. He also requested a meeting with Mr. Dolan at St. Charles. S.J.R. 678. Lydia Hammer, Senior Vice President of Marketing and Business Development at Main Line, upon learning that Mr. Burris sought a meeting with Mr. Dolan-while Main Line itself was communicating with the Seminary-commented to other Main Line executives “[l]et's sit back and watch this unfold.” Id.

         In light of St. Charles's concerns about financing, Mr. Burris submitted two new Letters of Intent-on June 23, 2015[10] and July 17, 2015. S.J.R. 680-85. The July 17th LOI ...

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