Richard Gitter v. Cardiac & Thoracic Surgical A, No. 10-1235 (4th Cir. 2011)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1235 RICHARD GITTER, Plaintiff - Appellant, v. CARDIAC & THORACIC MEMORIAL HOSPITAL, SURGICAL ASSOCIATES, LTD.; ROCKINGHAM Defendants - Appellees. Appeal from the United States District Court for the Eastern District of Virginia, at Richmond. Richard L. Williams, Senior District Judge. (3:07-cv-00546-RLW) Argued: January 25, 2011 Decided: March 23, 2011 Before TRAXLER, Chief Judge, and WILKINSON and GREGORY, Circuit Judges. Vacated and remanded by unpublished opinion. Judge Gregory wrote the majority opinion, in which Chief Judge Traxler joined. Judge Wilkinson wrote a dissenting opinion. ARGUED: Victor Lee Hayslip, BURR & FORMAN, LLP, Birmingham, Alabama, for Appellant. Marshall Howard Ross, WHARTON ALDHIZER & WEAVER, PLC, Harrisonburg, Virginia; Charles Manley Allen, GOODMAN, ALLEN & FILETTI, Glen Allen, Virginia, for Appellees. ON BRIEF: Walker S. Stewart, BURR & FORMAN, LLP, Birmingham, Alabama, for Appellant. Unpublished opinions are not binding precedent in this circuit. 2 GREGORY, Circuit Judge: This is a diversity jurisdiction case regarding a claim of equitable estoppel in a breach of contract suit. search, ( CTSA ) Appellees and Cardiac Rockingham & Thoracic Memorial After a hiring Surgical Hospital Associates ( RMH ) chose Appellant Dr. Richard Gitter as their new chief cardiac surgeon. The parties failed to complete a signed contract memorializing the agreement, but Gitter closed his medical practice in Alabama and prepared to move to Virginia to begin working at RMH. When Appellees informed Gitter he was no longer their choice for the position, Gitter brought suit claiming that he had relied on their assurances of an agreement, and asking that they be equitably estopped from asserting a Statute of Frauds defense. Because there is a genuine issue of material fact as to the reasonableness of Gitter s reliance on Appellees promises, the case should have survived summary judgment. Therefore, we vacate the order of summary judgment and remand to the district court for further proceedings. I. In the summer of 2006, CTSA and RMH initiated a hiring search to find a director for their new cardiac surgery program. Gitter submitted his name as a candidate for the position, and was first interviewed on or around December 6, 2006. 3 A series of interviews ensued, and Gitter was informed on February 12, 2007 that offering Gitter the him panel the completed hiring process. * conducting search had Sometime before March position. the a credentialing application as recommended 14, part 2007, of the One of the questions on the application asked: Whether voluntarily or involuntarily, has any Hospital . . . ever restricted (including probation), reduced, suspended, revoked, surrendered, or refused your participation and/or privileges, invoked probation or taken any disciplinary action against you for any reason other than incomplete medical records? Joint Appendix ( J.A. ) at 56. question. This was in spite Gitter answered no to this of the fact that he had been suspended by St. Vincent s Medical Center East in Alabama after failing to find coverage for an on-call shift he missed while traveling to Virginia to interview with RMH. On February 21, 2007, nine days after the suspension was issued, St. Vincent s rescinded the suspension and placed Gitter on probation. Gitter stated in his deposition that he considered this to be a return to the probationary status of all first-year medical staff, and not a disciplinary action. When asked in the deposition whether his answer to the above question was accurate, he responded, * There is some confusion as to the exact date Gitter completed the application. The signed document is dated February 5, 2007, but Gitter acknowledged in his deposition that it should have read March 5, 2007. The returned application was stamped as received by the hospital on March 14, 2007. J.A. 231, 51. 4 [p]erhaps not, in light of what we discussed today. But at the time, I did feel it was accurate because of the issues we ve discussed. J.A. 220-22. On March 26, 2007, RMH received a completed form from St. Vincent s stating that there were no restrictions on Gitter s privileges, and recommending him without reservation. St. Vincent s also submitted a form to the Iowa Board of Medical Examiners stating that disciplinary action had never been taken against Gitter. questions were attempting to Id. Gitter concedes that his answers to the incorrect, mislead RMH but or maintains CTSA and that that he he was not believed his answers were justified. Negotiations on an employment contract had been ongoing, and the two parties came to an agreement on March 28, 2007. Although Appellees never signed the agreement, it is undisputed that both parties believed a deal had been reached. Indeed, congratulatory emails were exchanged making clear that Gitter would be joining the staff at RMH. The following day, Gitter resigned from Trinity Hospital in Birmingham and told friends he would be moving to Virginia. Gitter also sold his house in Birmingham sometime before March 28, 2007. On March 29, 2007, Gitter was informed that his physician s assistant had not been hired by RMH. He responded negatively to this news, and the next day, despite their previous assurances to the contrary, the 5 selection committee decided not to hire Gitter. They feared that, based on the acrimony that arose during the negotiations, he would not be an easy person to work with. On April 5, 2007, Gitter sued CTSA in the Circuit Court of Jefferson County, Alabama. He amended his complaint to add RMH as a defendant on April 17, 2007. United States Alabama, Court and District then for the (1) breach of Court for transferred Eastern to District contract; The case was removed to the (2) the the of Northern United Virginia. fraud, District States of District Gitter alleged misrepresentation, and deceit; (3) fraudulent suppression; (4) fraudulent inducement to enter a contract; and (5) conspiracy. The case was referred to a magistrate judge, who on April 15, 2008, heard oral argument on Appellees motions for summary judgment. Report On and July 15, 2008, Recommendation the ( 2008 Appellees motions be granted. magistrate Report ) judge issued recommending a that The magistrate judge held that the Statute of Frauds doctrine applied, and that the parties e-mails did not constitute a written agreement sufficient to satisfy that doctrine. The court then denied Gitter equitable relief with respect to both the fraud and breach of contract claims. Finding that Alabama law governed the fraud claim, the court determined that Gitter could not show that his reliance on Appellees conduct was reasonable 6 because, having knowingly omitted material on the credentialing application, he had come to the matter with unclean hands. Virginia law governed the breach of contract claim, and the court again ruled that Gitter could not seek equitable estoppel because of his unclean hands. The district court judge adopted the 2008 Report in full, and Gitter appealed only the breach of contract claim to this Court. On July 21, 2009, we affirmed in part, vacated in part, and remanded the case to the district court. Gitter v. Cardiac & Thoracic Surgical Assocs., Ltd., No. 08-2221, 338 F.App x 348 (4th. Cir. July 21, 2009). In a per curiam opinion, we held that the Statute of Frauds applied, and that the district court had correctly constitute a determined that the sufficient written parties e-mails agreement. Id. did at not 349. However, we also held that the district court erred when it concluded that the unclean hands doctrine barred Gitter from claiming equitable credentialing estoppel. application had Id. not at 349-50. been relied Because on, nor the even reviewed by Appellees in their decision not to hire Gitter, his equitable estoppel claim was not automatically barred by his unclean hands. Id. Finding that reasonable reliance is a necessary element of Virginia s equitable estoppel doctrine, Id. (citing T--- v. T---, 216 Va. 867 (Va. 1976)), we held that the magistrate judge did not conclusively determine whether Gitter could establish 7 the necessary elements of Virginia s equitable estoppel doctrine based on Gitter his post-March reasonably 28, relied 2007 on conduct (that Defendants is, March whether 28, 2007 assurances that the terms of his employment were agreed upon). Gitter, 338 F.App x at 350. The matter was referred back to the magistrate judge, who again decided in favor of Appellees at summary judgment. The court found that its previous holding as to the fraud claim, that Gitter knowingly submitted a credentialing application with material omissions, was now the law of the case with respect to the breach of contract claim. Gitter s knowledge of his Using this holding as proof of errors, the court determined that Gitter s mistakes rendered his reliance on Appellees assertions unreasonable as a matter of law. The district court adopted the new Report and Recommendation in full, and Gitter appeals its decision. II. We review de novo the decision of the district court to grant summary judgment. Hill v. Lockheed Mgmt., 354 F.3d 277, 283 (4th Cir. 2004). appropriate when interrogatories, the and pleadings, admissions on Martin Summary judgment is depositions, file, Logistics answers together with to the affidavits, if any, show that there is no genuine issue as to 8 any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The facts and inferences are to be drawn in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). In Virginia, the necessary elements of equitable estoppel are representation, detriment. reliance, a change of position, and Barry v. Donnelly, 781 F.2d 1040, 1042-43 (4th Cir. 1986) (quoting T--- v. T---, 224 S.E.2d at 152). Additionally, a party s reliance upon the other s acts or assertions must be reasonable. [E]stoppel occurs where the aggrieved party reasonably relied on the words and conduct of the person to be estopped. Barry, 781 F.2d at 1042 (quoting City of Bedford v. James Leffel Co., 558 F.2d 216, 217-18 (4th Cir. 1977)). III. The district court incorrectly applied the law of the case to Gitter s breach of contract claim. [T]he doctrine [of the law of the case] posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages of the same case. United States v. Aramony, 166 F.3d 655, 661 (4th Cir. 1999) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 815-16 (1988) (alteration 9 in original)). that we However, the district court erred when it stated upheld its previous finding that Gitter knowingly submitted a false application as the law of the case. not leave Gitter undisturbed knew credentialing on [the March 28, application district 2007 with court s] that he We did finding that submitted omissions, material had and a that therefore, any reliance on Appellees representation after March 28, 2007 was unreasonable. Gitter v. Cardiac & Thoracic Surgical Associates, No. 3:07CV546, 2010 WL 629843, at *7 (E.D. Va. Feb. 19, 2010). Rather, that is the very issue for which the case was remanded. the facts misapplied surrounding this Instead of making a full inquiry into Gitter s Court s reliance, decision the concerning district Gitter s court alleged omissions on the credentialing application, making of it a de facto determination that his reliance was unreasonable. Contrary to the district court s order and Appellees arguments, this Court never conclusively determined that Gitter knowingly or intentionally omitted material information on the credentialing application. application, even if Instead, we stated that Gitter s misleading, could not have encouraged, invited, aided, compounded, or fraudulently induced Appellees. . . . Gitter, Likewise, we 338 F.App x characterized incorrect responses. at Gitter s 349-50 (emphasis omissions as Id. at 350 (emphasis added). 10 added). allegedly Further, the original determination that Gitter was aware of his omissions was found in the 2008 Report s section discussing the unclean hands doctrine; we expressly vacated this portion of the district court s decision, holding we vacate the district court s order to the extent the court applied Virginia s unclean hands doctrine. determination Id. thus the about We nature of did not Gitter s make a binding answers, and the district court was incorrect when it adopted as the law of the case its previous decision that Gitter knowingly misled Appellees. Moreover, consider the Gitter s district court erred testimony that he when was it not refused to attempting to mislead Appellees with his answers, and then used its incorrect interpretation of the law of the case to decide that Gitter s reliance was unreasonable as a matter of law. court supported its decision by pointing to The district two unpublished Virginia cases where reliance was deemed per se unreasonable. Binhammer v. Reilly, No. 1907-01-2, 2003 WL 282381, at *4-5 (Va. Ct. App. Feb 11, 2003); Schryer v. VBR, No. 101692, 1991 WL 835295, at *2 (Va. Cir. Ct. Nov. 13, 1991). plaintiff about home. her claimed reliance father-in-law s on incorrect lack 2003 WL 282381, at *4-5. of In Binhammer, the assumptions financial she interest in made her The father-in-law had provided money for the down payment on the house, and had deducted the 11 mortgage interest payments from his taxes. interest passed to Binhammer s Id. at *1. ex-husband, Daniel This Reilly, against whom Binhammer initiated suit, seeking enforcement of a previous settlement agreement that incorrectly purported Id. at *2. the father-in-law had no interest in the home. that The court found it inconceivable that Binhammer would rely on the assumption that her father-in-law possessed no ownership or financial interest in the marital home when the evidence clearly Id. at *5. and overwhelmingly indicates the contrary. The court held that Binhammer s reliance on such an assumption was per se unreasonable. In Schryer, an Id. employee relied on oral assurances from agents of his employer that his term of employment would be for no less than five years. spite of a written 1991 WL 835295, at *2. agreement that clearly This was in stated plaintiff could not rely on statements made concerning his employment which were Plaintiff not was part fully of the aware written of this agreement. condition, at *2. thus his Id. and reliance upon the oral statements was unreasonable as a matter of law. Id. However, both of these cases can be distinguished from the case at bar and do not tend to show how Gitter s reliance was per se unreasonable. confronted with evidence Unlike that 12 in Binhammer, clearly and Gitter was not overwhelmingly indicate[d] Appellees assurances of employment would not be upheld. Binhammer, 2003 WL 282381, at *5. Similarly, unlike the plaintiff in Schryer, Gitter was not expressly told that he could not rely on Appellees emails stating that there was an agreement. Schryer, 1991 WL 835295, at *2. Instead, CTSA informed Gitter that the negotiations were complete and mailed him the employment agreement to sign. RMH and CTSA did nothing to convey to Gitter that he could not rely on their assurances of an agreement. Thus, the district court s determination of reasonableness a as matter of law was inappropriate in this [r]eliance and case. As the district court conceded, reasonableness are preeminently factual issues for the trier of fact because they go to the subjective state of mind of the person asserting equitable estoppel. Gitter, 2010 WL 629843, at *5 (quoting Miller v. Premier Corp., 608 F.2d 973, 982 (4th Cir. 1979)). Thus, the bar for deciding the reasonableness of a party s reliance at the summary judgment stage is high. See Bank of Montreal v. Signet Bank, 193 F.3d 818, 834 (4th Cir. 1999) ( the reasonableness of reliance [is a] question to be decided by the jury in light of . . . the nature of the parties and the . . . ); reasonable transaction, Barry, 781 reliance the F.2d was representations, at 1043 question 13 of [and] (holding fact that omissions. issue requiring of trial); Tidewater Equipment Co., Inc. v. Reliance Ins. Co., 650 F.2d 503, 506 (4th Cir. 1981) ( Whether or not an estoppel arises in any case is ordinarily a question for the trier of fact to determine. ) (applying Maryland law). This high bar has not been reached here. Gitter s belief that his answers were correct, or at least justified, is enough for a reasonable finder of fact to determine that he acted reasonably in relying on Appellees assurances of employment. In his deposition testimony, Gitter acknowledged that his answers might have been factually wrong, but stated that at the time, I did feel it was accurate because of the issues we ve discussed. J.A. 220. Additionally, St. Vincent s letters stating that it had not taken disciplinary inference answers that on he the action was not against Gitter unreasonable credentialing in application also creates thinking were that an his justified. Drawing all inferences in Gitter s favor, as we must do, his testimony, along with St. Vincent s letters, supports a finding that he reasonably believed his answers were correct, and that his employment agreement with RHM and CTSA was not in jeopardy. This is enough to raise a genuine issue of material fact as to his reasonableness, and to survive summary judgment. 14 IV. Accordingly, the order of the district court is vacated, and the case is remanded for further proceedings as to whether Gitter s reliance on Appellees assurances was reasonable. VACATED AND REMANDED 15 WILKINSON, Circuit Judge, dissenting: I would affirm the judgment for the reasons given by the district court. As it noted: Given Gitter s knowledge that he had made material misrepresentations or omissions in his Credentialing Application that the Defendants had not yet reviewed, where such misrepresentations or omissions would give the Defendants cause to terminate negotiations and/or any agreement, any reliance by Gitter on the representations of the Defendants was unreasonable. Gitter knew he had submitted an improper Credentialing Application, and he cannot claim reasonable reliance. J.A. 355. I agree with this observation. As the majority notes, the question asked of Gitter on the Credentialing Application was whether any hospital had suspended him or had placed him on See Majority Opinion at 4. probation. Gitter answered no, despite the fact that he had actually been suspended by St. Vincent s Medical Center East in Alabama after failing to find coverage for an on-call shift he missed Id. Virginia to interview with RMH. while answer would have concerned separate and independent reasons. hospital must be depend able to to After the suspension was rescinded, the hospital placed Gitter on probation. This traveling defendants The upon Id. first the is for two that any availability of a cardiac surgeon should someone in the community suffer a heart attack or experience reason is that some physicians other who 16 cardiac possess event. staff The second privileges at hospitals or work together in smaller practice groups must enjoy a sense of mutual respect and trust. Gitter s erroneous response drew both his medical professionalism and veracity into some question, at least to such a degree that his reliance upon defendants representations was not reasonable. For all I know, Dr. Gitter may be a fine surgeon, but it was not reasonable for him to expect, in light of his response, that defendants would take a leap of faith that things would run smoothly between the parties in their new and mutually dependent relationship. With thanks to my colleagues for the thoughtful expression of their differing views, I respectfully dissent. 17

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