Court Opinion

ID: 213118
Source: CourtListenerOpinion
Date Created: 2011-03-23 19:55:35+00
Date Added: 2024-06-11T15:07:49.952656
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                              No. 10-1235

RICHARD GITTER,

                  Plaintiff - Appellant,

           v.

CARDIAC & THORACIC      SURGICAL   ASSOCIATES,   LTD.;   ROCKINGHAM
MEMORIAL HOSPITAL,

                  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Vacated and remanded by unpublished opinion.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Unpublished opinions are not binding precedent in this circuit.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.                       After a hiring

search,     Appellees          Cardiac    &        Thoracic    Surgical    Associates

(“CTSA”)     and     Rockingham          Memorial       Hospital       (“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.                          A series

                                              3
of interviews ensued, and Gitter was informed on February 12,

2007       that   the    panel    conducting       the    search    had     recommended

offering      him   the    position.       Sometime       before    March      14,    2007,

Gitter      completed     a     credentialing      application      as    part   of    the

hiring process. *         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.                     Gitter answered “no” to this

question.         This    was    in   spite   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.        Id.     Gitter concedes that his answers to the

questions     were     incorrect,    but        maintains   that     he    was   not

attempting    to     mislead   RMH   or   CTSA     and   that   he   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.                        The case was removed to the

United    States       District       Court     for       the    Northern     District      of

Alabama,       and    then     transferred      to       the    United    States    District

Court    for    the    Eastern       District       of    Virginia.        Gitter    alleged

(1) breach       of     contract;       (2)        fraud,       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.        On     July    15,    2008,       the    magistrate      judge    issued    a

Report    and        Recommendation      (“2008          Report”)    recommending      that

Appellees’ motions be granted.                     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          because,       having    knowingly

                                               6
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   determined    that       the    parties’     e-mails    did    not

constitute   a    sufficient    written          agreement.       Id.    at     349.

However, we also held that the district court erred when it

concluded that the unclean hands doctrine barred Gitter from

claiming   equitable     estoppel.         Id.    at    349-50.    Because       the

credentialing     application   had    not       been    relied   on,    nor    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   his   post-March     28,       2007      conduct    (that      is,   whether

Gitter     reasonably         relied    on        Defendants’        March     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.                    Using this holding as proof of

Gitter’s      knowledge   of     his   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      Martin    Logistics

Mgmt., 354 F.3d 277, 283 (4th Cir. 2004).                        Summary judgment is

appropriate      when     “the     pleadings,           depositions,         answers    to

interrogatories,        and    admissions         on    file,    together      with    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,   reliance,    a     change     of    position,    and

detriment.”   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)).          However, the district court erred when it stated

that    we     upheld       its    previous    finding          that      Gitter        knowingly

submitted a false application as the law of the case.                                     We did

not    leave     “undisturbed         [the    district          court’s]        finding       that

Gitter       knew    on     March    28,     2007       that        he   had     submitted       a

credentialing         application       with       material         omissions,          and   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.               Instead of making a full inquiry into

the    facts    surrounding         Gitter’s       reliance,         the    district          court

misapplied      this       Court’s    decision          concerning        Gitter’s        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.                 Instead, we stated that “Gitter’s

application,         even    if    misleading,          could    not      have      encouraged,

invited, aided, compounded, or fraudulently induced Appellees.

. . .”         Gitter,       338     F.App’x       at     349-50         (emphasis        added).

Likewise,       we    characterized        Gitter’s        omissions           as   “allegedly

incorrect responses.”               Id. at 350 (emphasis added).                         Further,

                                              10
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.”            Id.     We       thus      did     not        make    a    binding

determination      about       the   nature         of   Gitter’s           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,     the       district     court        erred       when     it    refused     to

consider       Gitter’s     testimony       that         he    was     not     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.                                      The district

court    supported       its    decision       by    pointing          to    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).                              In Binhammer, the

plaintiff      claimed     reliance       on    incorrect         assumptions            she   made

about    her    father-in-law’s        lack         of   financial           interest     in   her

home.     2003 WL 282381, at *4-5.                  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.                            Id. at *1.            This

interest       passed       to     Binhammer’s           ex-husband,     Daniel       Reilly,

against whom Binhammer initiated suit, seeking enforcement of a

previous      settlement          agreement      that     incorrectly        purported      that

the father-in-law had no interest in the home.                           Id. at *2.          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

and overwhelmingly indicates the contrary.”                             Id. at *5.           The

court held that Binhammer’s reliance on such an assumption was

“per se unreasonable.”              Id.

        In   Schryer,       an    employee       relied     on   oral    assurances         from

agents of his employer that his term of employment would be for

no less than five years.                   1991 WL 835295, at *2.               This was in

spite    of    a     written       agreement       that    clearly      stated     plaintiff

“could not rely” on statements made concerning his employment

which    were       not    part    of   the   written       agreement.          Id.   at     *2.

Plaintiff       was       fully    aware    of     this    condition,        and   thus     his

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.”            Unlike      in    Binhammer,     Gitter       was    not

confronted          with    evidence        that     “clearly      and       overwhelmingly

                                               12
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        as    a    matter    of    law       was    inappropriate      in    this

case.

      As      the      district          court        conceded,         “[r]eliance        and

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   transaction,         the     representations,             [and]      omissions.

. . .”);      Barry, 781 F.2d    at        1043    (holding        that   issue     of

reasonable      reliance         was   question        of        fact   requiring     trial);

                                               13
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     action      against       Gitter    also    creates     an

inference      that   he   was   not     unreasonable       in   thinking    that   his

answers       on    the    credentialing         application      were      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

probation.        See Majority Opinion at 4.                        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       while    traveling         to

Virginia to interview with RMH.”                       Id.        After the suspension was

rescinded, the hospital placed Gitter on probation.                                Id.

     This        answer      would        have     concerned         defendants          for    two

separate        and   independent          reasons.           The        first    is    that    any

hospital    must      be     able    to    depend          upon    the    availability         of    a

cardiac surgeon should someone in the community suffer a heart

attack   or      experience         some    other       cardiac       event.           The   second

reason     is     that      physicians       who       possess       staff       privileges         at

                                                 16
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