Court Opinion

ID: 3112420
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:03:58.228255+00
Date Added: 2024-06-11T11:52:34.623827
License: Public Domain

Opinion issued November 7, 2013

                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                          ————————————
                            NO. 01-13-00273-CV
                          ———————————
    SHATISH PATEL, M.D., HEMALATHA VIJAYAN, M.D., SUBODH
      SONWALKAR, M.D., WOLLEY OLADUT, M.D., Appellants
                                      V.
  ST. LUKE’S SUGAR LAND PARTNERSHIP, L.L.P. AND ST. LUKE’S
   COMMUNITY DEVELOPMENT CORPORATION-SUGAR LAND,
                         Appellees

                  On Appeal from the 152nd District Court
                           Harris County, Texas
                     Trial Court Case No. 2011-24016

                                OPINION

      Appellants Dr. Shatish Patel, Dr. Hemalatha Vijayan, Dr. Subodh

Sonwalkar, and Dr. Wolley Oladut bring this interlocutory appeal from the trial
court’s denial of their renewed application for a temporary injunction relating to St.

Luke’s Sugar Land Hospital. The physicians sought to enjoin St. Luke’s Sugar

Land Partnership, L.L.P. and its managing partner, St. Luke’s Community

Development Corporation—Sugar Land (collectively, “St. Luke’s”) from taking

certain actions that would prevent their participation in the management and

control of a partnership formed to own and operate the hospital. We reverse the

trial court’s order denying the application on the grounds of mootness.

                                    Background

      This is the second interlocutory appeal from denials of requests for a

temporary injunction in a lawsuit between several physicians and a hospital

management partnership.        The appellants are physicians who purchased

partnership interests in St. Luke’s Sugar Land Partnership, L.L.P., which was

created to own and operate a hospital in Sugar Land. Ownership of the Partnership

was divided into two classes of partnership units: Class A units, which were

reserved for physicians, and Class B units, which were reserved for the

Partnership’s   managing     partner,   St.   Luke’s    Community       Development

Corporation—Sugar Land, which in turn is a wholly-owned subsidiary of the St.

Luke’s Episcopal Health System Corporation.

      In 2007, the Partnership adopted an Amended Partnership Agreement that

established a Governing Board to manage several aspects of the Partnership.

                                          2
Although certain decisions could be made by the holders of an outright majority of

the Partnership units, an affirmative vote of board members controlling greater

than 50% of the “Voting Interest” was required for all decisions of the Governing

Board. The physician representatives on the board who held Class A units were to

“collectively control forty-nine (49%) of the Voting Interest.”          A vote of

Governing Board members representing a supermajority of at least 75% of the

Voting Interest was required to take several major actions, including making a

capital call.

       In April 2011, Shatish Patel, a physician partner who had served on the

Governing Board, sued the Partnership. Patel alleged that he was promised healthy

returns when he purchased his Class A units, but instead the Partnership was

operating at a net loss. He further alleged that after an unsuccessful attempt to

obtain financial information from the Partnership, he was forced to resign his

hospital privileges and also to resign as a member of the Governing Board. He

asserted various causes of action including breach of fiduciary duty, fraud,

misrepresentation, and theft. A few weeks later, the Partnership made a rescission

offer to each physician owner of Class A units. The letter noted that:

       [I]t is possible that the Partnership may (1) adopt a mandatory capital
       call strategy to address future funding of the Partnership and its
       operation; and/or (2) dissolve, and transfer the hospital to a wholly
       owned nonprofit affiliate of [St. Luke’s Episcopal Hospital System]
       due to capital constraints.

                                         3
All but four of the physician owners of Class A units accepted the Partnership’s

rescission offer. The four who refused the offer are the appellants in this case.

After the other physicians’ acceptance of the rescission offer, the appellant

physicians owned 12 partnership units, and the managing partner owned the rest.

The Partnership interpreted the Amended Partnership Agreement to allow the

managing partner to control the actions of the Governing Board by virtue of its

post-rescission claim to ownership of 95.5% of the partnership units.

      On September 2, 2011, the Partnership’s Governing Board initiated a capital

call without the participation of any board members appointed by the physician

partners. Notice of the capital call was sent to Patel, Vijayan, Sonwalkar, and

Oladut. The capital call required a contribution of $487,037 each from Patel and

Vijayan and $243,518.50 each from Sonwalkar and Oladut, based on the number

of units owned by each. The notice of capital call stated that the failure to make

the capital contribution by September 30 would amount to a default, allowing the

Partnership to terminate the physician’s partnership interest.          In response,

Sonwalkar and Oladut joined Patel and Vijayan in their lawsuit.

      The physician partners did not make any contribution in response to the

capital call, and the Partnership sent written notice of their purported default. In

response, the physicians’ attorneys sent the Partnership a letter asserting that the

capital call was an ultra vires act under the terms of the Amended Partnership

                                         4
Agreement.     On October 3, 2011, the physicians applied for a temporary

injunction. They sought to enjoin St. Luke’s from taking various actions with

respect to the Partnership.

      In mid-October, the Partnership sent a notice to the physicians, contending

that their partnership interests had been terminated, and a request was later sent for

the physician partners to assign their interests to the Partnership. On November 8,

2011, the trial court denied the application for temporary injunction.            The

physicians appealed the denial, but they did not request temporary relief to prevent

the Partnership from undertaking any further actions pending the interlocutory

appeal. See TEX. R. APP. P. 29.3.

      After denial of the temporary injunction and while the interlocutory appeal

was pending, St. Luke’s considered the physicians’ interests in the Partnership to

have been terminated. Based on this understanding, the managing partner treated

the Partnership as a defunct entity, and beginning in late 2011 it began the process

of assuming direct responsibility for operation of the hospital by transferring

essential licenses and other paperwork into its own name.

      The physician partners ultimately prevailed in their interlocutory appeal of

the trial court’s denial of their October 2011 application for a temporary injunction.

See Sonwalkar v. St. Luke’s Sugar Land P’ship, L.L.P., 394 S.W.3d 186 (Tex.

App.—Houston [1st Dist.] 2012, no pet.). This court concluded that as of the time

                                          5
of the denial of their application for temporary injunction, the physician partners

were entitled to enjoin actions intended to effect the termination of their

partnership interests. Because the capital call was disallowed under the Amended

Partnership Agreement, the physicians’ partnership interests could not be

terminated for failure to pay. Therefore, absent an injunction, they faced the

possibility of the irreparable injury of the loss of their management rights. Id. at

201–03. Specifically, this court determined that the physician partners collectively

controlled 49% of the Partnership’s Voting Interest as the remaining Class A unit

holders, allowing them to block certain actions of the Governing Board that

required a supermajority vote. Id. at 201. We remanded for further proceedings in

the trial court. Id. at 203. St. Luke’s did not file a petition for review of our

decision.

      After our mandate issued, the physicians renewed their October 2011

application for temporary injunction. A temporary injunction hearing was set for

December 21, 2012. Two days before the hearing, St. Luke’s filed a motion to

dismiss the application for temporary injunction on the basis of mootness. Despite

having never suggested mootness during the course of the interlocutory appeal, and

despite our opinion which explained that the capital call had been ineffective to

terminate the physicians’ partnership interests, St. Luke’s argued to the trial court

that the request for a temporary injunction was moot because there had been

                                         6
“Changed Circumstances Since the Filing of the Application.”            In its written

response filed in the trial court, St. Luke’s argued as follows:

             Plaintiffs made no attempt to preserve their rights pending
      appeal. So the Partnership went forward with the previously planned
      and noticed capital call. The Managing Partner contributed capital in
      excess of $24,000,000. Plaintiffs did not contribute any additional
      capital. When notified and provided the opportunity to cure, they
      failed to do so. Therefore, the Partnership sent Plaintiffs a notice
      stating that their partnership interests had been terminated. As a result
      of the termination, only the Managing Partner remained a unit holder.
      Because there were no longer at least two partners, the Hospital
      ceased to operate as a partnership. It was owned solely by the
      Managing Partner, a non-profit entity.

             In order to carry out its status as a non-profit corporation and in
      order to comply with regulatory guidelines applicable to the operation
      of a non-profit Hospital, the Managing Partner undertook certain
      actions. Specifically, the Managing Partner:

             (i)     Withdrew the registration of the Partnership as a limited
                     liability partnership with the Texas Secretary of State;

             (ii)    Filed an assumed name certificate for St. Luke’s to do
                     business as St. Luke’s Sugar Land Hospital;

             (iii)   Filed a final sales tax return for the Partnership with
                     Texas Comptroller;

             (iv)    Terminated the existing Management Agreement and
                     Purchased Services Agreements;

             (v)     Transferred its provider number though CMS [Centers
                     for Medicare and Medicaid Services];

             (vi)    Assigned equipment leases;

             (vii) Advised and/or registered St. Luke’s as the provider of
                   services with several governmental entities and agencies,
                                           7
                   including, Texas Medicaid, the Drug Enforcement
                   Agency, the Texas Board of Pharmacy, and the Texas
                   Department of Public Safety (for registration of narcotics
                   and radiation resources); and

             (viii) Obtained, as required, new accreditation (or provided
                    notification of changes for accreditation) with numerous
                    agencies or entities, including with Det Norske Veritas,
                    the College of American Pathologists, and the American
                    College of Radiology.

             In addition, as a result of the change in ownership of the
      Hospital, the Managing Partner was required to change its insurance
      coverage, utilities, supply and vendor contracts, and equipment and
      services agreements. Finally, the property where the Hospital is
      located (which was previously leased by the Partnership) was
      purchased by an affiliated company of the Managing Partner at
      significant expense.

Notably, St. Luke’s did not attach to its written response any evidence to support

the factual allegations recited in support of its mootness argument.

      The hearing on the renewed application for temporary injunction focused on

the suggestion of mootness.      St. Luke’s presented one witness to support its

argument, David Koontz, Senior Vice President of the St. Luke’s Health Care

System. Koontz had assumed numerous roles with respect to the operations of the

Partnership, including serving as “member of the Board, sometimes Interim CEO

and for a period the Chair of the Board of the Partnership.”

      In his testimony, Koontz recounted the history of the Partnership’s attempted

capital call, including the refusal of the four physician partners to make the capital

contribution and the Partnership’s subsequent notification to them of the purported
                                          8
termination of their partnership interests. He repeatedly testified that after the

purported termination of the remaining physician partners’ interests, the managing

partner considered the Partnership to have no other remaining partners.

      Koontz then proceeded to describe the course of events upon which

St. Luke’s relied to demonstrate the mootness of the request for a temporary

injunction.   In his capacity as Senior Vice President, it was Koontz’s job to

confirm completion of all action necessary for the managing partner to assume the

authority to operate St. Luke’s Sugar Land Hospital. One such action was to

“transfer” a “provider number” 1 through the Centers for Medicare and Medicaid

Services (CMS), which was necessary for the managing partner to receive payment

from the government for services covered by Medicare and Medicaid, as well as

payment from private insurers. Koontz testified that it took “six to nine months” to

transfer the provider number for St. Luke’s Sugar Land Hospital from the

Partnership to the managing partner. He explained that the “main challenge was

the unusual nature of the request we were making of CMS” because:

      When they see a transfer of CMS number from one company to
      another, they are used to some documents accompanying that. Some
      – you know, some codifying documents. And one of the things that
      they suggested would be a Bill of Sale. Instead we had to produce

1
      The “provider number” was an apparent reference to the National Provider
      Identifier, which is used by health care providers and other entities to
      comply with federal health care regulations and to collect Medicare and
      Medicaid payments. See generally 45 C.F.R. §§ 162.100–162.1902 (2012).

                                         9
      other documents. I think those related to the rescission and so on to
      show that there was only one partner.

Koontz opined that if a court were to order the hospital to transfer the provider

number back to the Partnership, there is “no guarantee” that CMS would be able to

do that, and to “send it back” now would be “very confusing . . . not only to CMS

but a number of others.”      Another “potential impediment” to transferring the

number back to the Partnership, according to Koontz, is an Affordable Care Act

provision which prohibits “the ownership of any new physician-owned hospital or

the increase in percentage ownership of physicians in general acute care hospitals.”

      Koontz generally discussed the various licenses held by St. Luke’s Sugar

Land Hospital. He testified that the overall process of relicensing the hospital had

taken “more than a few months,” and involved “sending notification of a change of

a tax ID associated with the provider number” and “a re-inspection.” He also

testified that since the managing partner’s assumption of responsibility for

operating the hospital, it has been operated “as a not-for-profit entity,” which in the

first year resulted in tax savings of “$2- to $3 million as a combination of property

taxes, margin tax and sales tax.”

      With respect to the Partnership’s debts, Koontz testified that the Partnership

had approximately $50 million in debt at the time the physicians’ interests were

purportedly terminated. Of that amount, $12 million was a working capital loan

owed to Chase, and $35 million was a seven-year loan also payable to Chase. The
                                          10
balance of the debt was owed to St. Luke’s Episcopal Health System. On cross-

examination, Koontz conceded that approximately $10 million of the debt was due

to the rescission offer. He testified that St. Luke’s Episcopal Health System paid

off the working capital loan and extinguished its loan to the Partnership, all of

which he said would have to be repaid by the Partnership “if it were reformed.”

      On cross-examination, Koontz also testified that it was his “understanding”

that the hospital “is currently owned” by the managing partner. However, he

agreed that there was no bill of sale documenting the transfer of hospital assets

from the Partnership to the managing partner, and no asset purchase agreement or

other document memorializing the transfer of the hospital.              Notably, the

Partnership’s attorney objected to the cross-examination insofar as Koontz was

asked about the purported “transfer” of the hospital. The Partnership’s counsel

argued to the trial court: “I think ‘transfer’ is misleading and inappropriate. There

is no evidence there was a transfer. Once you get down to one person—I believe

the law is a partnership no longer exists if there is only one partner. So, there is no

transfer document necessary.” (Emphasis supplied.)

      Koontz denied any knowledge of any agreement with the Partnership

concerning the payment of its debts by St. Luke’s Episcopal Health System. He

also denied knowledge of whether the Partnership currently owned any assets.

With respect to the current legal status of the Partnership, Koontz testified that his

                                          11
understanding was that it “still needs to exist as a legal entity for the purposes of

this litigation.”

       After the evidentiary hearing, the trial court denied the temporary injunction

as moot, explaining in its order: “Since the act sought to be enjoined has already

been performed, this court is no longer capable of granting the relief sought.” The

physicians then filed this interlocutory appeal. See TEX. CIV. PRAC. & REM. CODE

ANN. § 51.014(a)(4) (West Supp. 2012). 2

                                      Analysis

       “In general, a temporary injunction is an extraordinary remedy and does not

issue as a matter of right.” Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993).

The purpose of a temporary injunction is to preserve the status quo of the

litigation’s subject matter pending a trial on the merits. Butnaru v. Ford Motor

Co., 84 S.W.3d 198, 204 (Tex. 2002).          The status quo is “the last, actual,

peaceable, non-contested status which preceded the pending controversy.” In re

Newton, 146 S.W.3d 648, 651 (Tex. 2004) (quoting Janus Films, Inc. v. City of

Fort Worth, 163 Tex. 616, 617, 358 S.W.2d 589, 589 (1962) (per curiam)). To

2
       The doctors also filed in this court a separate original proceeding requesting
       the issuance of a writ of temporary injunction. In re Patel, No. 01-13-
       00330-CV, 2013 WL 3422026 (Tex. App.—Houston [1st Dist.] July 2,
       2013, orig. proceeding). We denied the request for equitable relief, noting
       that “the interlocutory appeal already filed by the relators provides an
       avenue of relief, including procedures to obtain temporary relief.” Id. at *1
       (citing TEX. R. APP. P. 29.3).

                                         12
obtain a temporary injunction, the applicant must ordinarily plead and prove three

specific elements: (1) a cause of action against the defendant; (2) a probable right

to the relief sought; and (3) a probable, imminent, and irreparable injury in the

interim. Butnaru, 84 S.W.3d at 204. The applicant is not required to establish that

he will prevail on final trial; rather, the only question before the trial court is

whether the applicant is entitled to preservation of the status quo pending trial on

the merits. Walling, 863 S.W.2d at 58.

      The decision to grant or deny a temporary injunction lies in the discretion of

the trial court, and the court’s ruling is subject to reversal only for a clear abuse of

that discretion. Id. A trial court abuses its discretion in granting or denying a

temporary injunction when it misapplies the law to the established facts. INEOS

Grp. Ltd. v. Chevron Phillips Chem. Co., 312 S.W.3d 843, 848 (Tex. App.—

Houston [1st Dist.] 2009, no pet.) (citing State v. S.W. Bell Tel. Co., 526 S.W.2d
526, 528 (Tex. 1975)). We review the evidence submitted to the trial court in the

light most favorable to its ruling, drawing all legitimate inferences from the

evidence, and deferring to the trial court’s resolution of conflicting evidence. Id.

(citing Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978)). Our review is limited to

determining whether the trial court abused its discretion in ruling on the

application for temporary injunction; we do not reach the merits of the underlying

case. Davis, 571 S.W.2d at 861–62.

                                          13
      The trial court expressly denied the physicians’ renewed application for

temporary injunction based on the conclusion that it was moot. In the order

denying the application for temporary injunction, the trial court stated, “Since the

act sought to be enjoined has already been performed, this court is no longer

capable of granting the relief sought . . . .”

      An issue may be moot if it becomes impossible for the court to grant

effective relief.   H&R Block Fin. Advisors, Inc., 262 S.W.3d 896, 900 (Tex.

App.—Houston [14th Dist.] 2008, no pet.) (citing Williams v. Lara, 52 S.W.3d
171, 184 (Tex. 2001)).       The appeal of a trial court’s denial of a motion for

temporary injunction may become moot if the actions sought to be enjoined occur

prior to the resolution of the appeal of the denial of the temporary injunction. See

Day v. First City Nat’l Bank of Hous., 654 S.W.2d 794, 795 (Tex. App.—Houston

[14th Dist.] 1983, no writ). According to St. Luke’s, that description applies to the

physicians’ application for temporary injunction in this case.

      After this court issued its opinion in Sonwalkar v. St. Luke’s Sugar Land

Partnership, L.L.P., 394 S.W.3d 186 (Tex. App.—Houston [1st Dist.] 2012, no

pet.), the physicians reurged their prior application for temporary injunction in the

trial court. This application for temporary injunction did not request that St.

Luke’s be required to reverse any acts it had already performed, but only sought to

prevent St. Luke’s from taking certain future actions pertaining to the governance

                                            14
of the Partnership and disposition of its assets. To evaluate whether the request for

temporary injunctive relief has become moot in light of the evidence presented by

St. Luke’s, we must consider the precise requests for relief. Those requests were:

      a.   Taking any action to terminate the Partnership Interests or
      ownership interest of . . . any of the Plaintiffs;

      b.     Except pursuant to a vote of the partners where Class A Unit
      holders have the ability to vote, collectively, 49% of the partnership
      interest, taking any action identified in Paragraph 8.03(h) of the
      Amended Partnership Agreement, including actions to:

             i.     Reorganize the Partnership;

             ii.    Take any action in contravention of the Amended
                    Partnership Agreement;

             iii.   Make an assignment for the benefit of creditors of the
                    Partnership or file a voluntary petition under the federal
                    Bankruptcy Code or any state insolvency law;

             iv.    Confess any judgment against the Partnership; or

             v.     Amend or otherwise change the Amended and Restated
                    Partnership Agreement.

      c.     Except pursuant to a vote of the Governing Board that includes
      representatives of Class A Unit holders who are permitted,
      collectively, to vote 49% of the Voting Interest, taking any action
      identified in Paragraphs 8.09(a)–(f) of the Amended Partnership
      Agreement, including actions to:

             i.     Issue new Units, admit new partners, or substitute
                    partners in the Partnership;

             ii.    Borrow money in an amount exceeding $250,000 from
                    any third party for any purpose;

                                         15
             iii.    Sell, transfer, assign, dispose of, trade, exchange,
                     quitclaim, surrender, release or abandon any Partnership
                     property or interests therein other than in an amount less
                     than $250,000;

             iv.     Purchase any real property or make, execute, or deliver
                     any deed or long-term ground lease for any real property;

             v.      Require or call for any additional capital contributions by
                     the partners or approve the amounts and proportions of
                     such additional capital contributions; or

             vi.     Impose or approve any fundamental or material change
                     to the general business objectives and purpose of the
                     Partnership.

      d.    Calling a Meeting of Governing Board without providing notice
      to the Class A Governing Board representatives elected by Class A
      Unit holders.

Comparing these requests to the arguments and evidence presented by St. Luke’s,

no new development has mooted the physicians’ application for temporary

injunctive relief.

      The mootness arguments are essentially predicated on two premises. The

first is that the physicians’ interests in the Partnership were actually terminated

such that the Partnership is now a defunct entity which only survives to defend this

pending litigation. The second is that the Partnership’s assets, principally the

hospital, were conveyed to or otherwise absorbed by the managing partner, so it is

too late to preserve the physicians’ interest in maintaining those assets. Neither

premise survives close scrutiny.

                                          16
      With respect to the purported termination of the physicians’ partnership

interests, our previous opinion already explained that the physicians demonstrated

a probable right to injunctive relief to prevent the Partnership from squeezing out

the physicians by means of the capital call without approval by 75% of the Voting

Interest as required by the Amended Partnership Agreement. Sonwalkar, 394
S.W.3d at 202.3 The managing partner may have acted on the assumption that it

was authorized to take the actions it did, but the physicians have demonstrated a

probable right to injunctive relief based on the argument that the managing

partner’s understanding was an incorrect one. Even assuming that the capital call

was legitimate, and even assuming the physician partners defaulted by failing to

respond to the capital call, the Partnership still failed to effectively terminate the

physicians’ partnership interests under the Amended Partnership Agreement,

which required, among other things, the execution and delivery by the defaulting

partners of “any assignments and other instruments that may be reasonable to

evidence and fully and effectively transfer the interest of the Defaulting Partner.”

The Partnership requested assignments from the physician partners, but the

physicians refused to provide them. The Partnership took no further action to

3
      The dissenting opinion in this appeal is partially premised on its rejection
      and re-evaluation of the grounds upon which the prior panel of this court
      resolved the previous interlocutory appeal.

                                         17
confirm and enforce its interpretation of the Amended Partnership Agreement so as

to terminate the interests of its remaining physician partners. 4

      The mere fact that the Partnership gave the physicians notices of default and

termination does not mean that they actually were in default or that their

partnership interests were actually terminated. The mere fact that the general

partner took various actions and made representations based on a mistaken belief

that the Partnership no longer existed and it somehow became the owner of the

hospital by operation of law did not make it the owner of the hospital, as suggested

by the dissent. The record contains no evidence that the managing partner now

owns the hospital, and the dissent points to none. Accordingly, the course of the

4
      The dissent does not engage this issue and simply accepts at face value the
      assertion that the physicians’ interests have been terminated. For its part, in
      response to these arguments, St. Luke’s notes that the Amended Partnership
      Agreement provided that the managing partner, acting “as the Defaulting
      Partner’s irrevocable agent,” was authorized to execute “any legal
      instruments to the appropriate continuing Partners and/or Purchaser.”
      However, St. Luke’s does not contend that such documents were actually
      executed, nor did it produce any evidence that this happened. St. Luke’s
      attempts to explain this by saying that “no assignment was even necessary
      because the Partnership itself does not hold or exercise individual
      partnership interests.” That response disregards the fact that the assignment
      of the physicians’ partnership interests back to the Partnership would have
      facilitated the treatment of such interests as having been extinguished, and it
      also would have served the function of “evidenc[ing] and fully and
      effectively transfer[ring] the interest of the Defaulting Partner” as
      contemplated by this provision of the Agreement. In any case, the more
      fundamental problem for St. Luke’s still remains—the phyisicans have
      demonstrated a probable right to injunctive relief based on the arguments
      that the capital call was unauthorized, therefore there was no default, and
      thus there also was no basis to terminate the physician partners.
                                          18
managing partner’s conduct was undertaken on the mistaken assumption that the

Partnership had been eviscerated, and in assumption of the risk of all consequences

which may flow from actions taken in reliance on that mistaken understanding.

      With respect to the contention that upon the alleged termination of the

physicians’ partnership interests, the Partnership had ceased to exist for any

purpose other than continuing to defend this litigation, that position is undercut by

the physicians’ demonstration of a probable right to injunctive relief because their

interests were not actually terminated. But even supposing that the general partner

had been the only remaining partner, it does not follow that the general partner was

effectively the legal heir to all of the Partnership’s assets, such that general partner

simply could treat Partnership assets as its own. Even if the general partner had

determined to wind-up the affairs of the Partnership, see TEX. BUS. ORG. CODE

§§ 11.051, 11.057 (West 2012), the final disposition of Partnership assets is a part

of the winding-up process, see id. § 152.706(a), and a prerequisite to the

termination of a partnership business, see id. § 152.701(1).5 Moreover, paragraph

5
      St. Luke’s responds that a wind-up does not require liquidation of assets and
      sale to third parties, and that the termination of the physician partners’
      interests resulted in the managing partner being the sole remaining partner in
      the Partnership. We have explained the flaw in the reasoning that assumes
      an effective termination of the physician partners, but even if the managing
      partner had been the sole remaining partner of the Partnership, a proper
      attempt at winding up the business of the Partnership could have, and
      prudently would have, included a formal, documented transfer of assets,
      particularly a valuable asset such as a hospital.
                                          19
13.02 of the Amended Partnership Agreement expressly provided that “[o]n

termination, the assets of the Partnership shall be liquidated and applied to

payment of the outstanding Partnership liabilities,” and paragraph 13.03 provided

that “the Partnership shall not terminate until there has been a winding up of the

Partnership’s business and affairs, and the assets of the Partnership have been

distributed as provided in Section 13.02.”

      Of course, it still could have been the case that the managing partner,

laboring under its misimpression that the physicians had been squeezed out of the

Partnership, actually took actions to the effect that ownership of the hospital was

actually transferred away from the Partnership.         But there is no evidence

whatsoever that actually occurred, and again the dissent has pointed to none. The

only evidence presented by St. Luke’s on this point had to do with administrative

aspects of operating a hospital: reassignment of the “CMS provider number”;

obtaining new licenses; obtaining a tax advantage by operating the hospital under

auspices of a not-for-profit entity; and transferring debt incurred in the name of the

Partnership to other entities affiliated with St. Luke’s. We cannot infer that any of

these actions indicated an actual transfer of hospital ownership from the

Partnership to the managing partner, and no evidence to that effect was actually

presented to the trial court. The evidence presented actually indicated the opposite,

as illustrated by Koontz’s description of the obstacles encountered in the effort to

                                         20
transfer the CMS provider number. In connection with the request for transfer of

the provider number, CMS expected to receive some supporting documentation,

such as a bill of sale. There was no such document, and the evidence instead

showed that in order to accomplish that transfer, the managing partner had to

“produce other documents” to persuade CMS that a transfer had occurred by

operation of law “related to the rescission” and because the Partnership purportedly

had “only one partner.” As noted previously, the misunderstanding held by the

managing partner about the legal effect of its attempt to terminate the physicians’

partnership interests did not have the effect of extinguishing the Partnership or any

ownership rights the Partnership has in the hospital.

      With the two major premises of the St. Luke’s arguments thus discredited, it

follows that the mootness arguments simply do not correspond to the actual

application for temporary injunction. A request that St. Luke’s be required to

reverse any of its actions predicated on termination of the physicians’ partnership

interests presumably would not be a moot request, but that question is not

presented because no such relief was requested. The physicians did seek to enjoin

“any action to terminate the Partnership Interests or ownership interest of . . . any

of the Plaintiffs”—that request is not moot as the Partnership has not been actually

extinguished, though St. Luke’s evidently persists in a belief otherwise, and in

reliance on that misunderstanding continues to take actions respecting the hospital

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that are adverse to the physicians’ interests. The physicians further sought to

enjoin actions requiring their assent under the Amended Partnership Agreement—

and given the continued viability of the Partnership, those requests also are not

moot. Finally, the physicians sought to enjoin any meeting of the Partnership’s

Governing Board without notice to their representative—again, not a moot request

given the continuation of the Partnership.

      The physicians had the burden of proof to establish their entitlement to the

injunctive relief they sought. See, e.g., Walling, 863 S.W.2d at 58. In our prior

decision we concluded this burden had been satisfied. Sonwalkar, 394 S.W.3d at

202–03. We conclude that the suggestion of intervening circumstances causing the

physicians’ application to become moot is unavailing. And we discern nothing

else in the record of this interlocutory appeal that would support a conclusion that

the requested injunction should not be granted.

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                                   Conclusion

      We reverse the order of the trial court, and we remand the cause for further

proceedings to set an injunction bond and issue the appellants’ requested

temporary injunction.

                                     Michael Massengale
                                     Justice

Panel consists of Justices Keyes, Higley, and Massengale.

Justice Keyes, dissenting.

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