Court Opinion

ID: 9897350
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:10:29.751647+00
Date Added: 2024-06-11T09:15:44.323036
License: Public Domain

FILED
                                                                           Jun 30 2023, 10:27 am

                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court

ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Robert A. Anderson                                         Michael E. Tolbert
Hillary N. Buchler                                         Candace C. Williams
Krieg DeVault LLP                                          Tolbert & Tolbert, LLC
Merrillville, Indiana                                      Gary, Indiana
Libby Yin Goodknight                                       Kevin C. Smith
Krieg DeVault LLP                                          Smith Sersic, LLC
Indianapolis, Indiana                                      Munster, Indiana
                                                           David W. Westland
                                                           Westland & Bennett, P.C.
                                                           Hammond, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Franciscan Alliance, Inc.,                                 June 30, 2023
Appellant-Defendant,                                       Court of Appeals Case No.
                                                           22A-PL-3085
        v.                                                 Appeal from the Lake Superior
                                                           Court
City of Hammond, Indiana,                                  The Honorable Bruce D. Parent,
Appellee-Plaintiff                                         Judge
                                                           Trial Court Cause No.
                                                           45D11-2212-PL-707

Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023                               Page 1 of 11
                                      Opinion by Judge Weissmann
                                     Judges Bailey and Brown concur.

      Weissmann, Judge.

[1]   Following years of financial losses, Franciscan Alliance, Inc. (Franciscan)

      moved to close St. Margaret’s Hospital (the Hospital) in Hammond, Indiana, at

      the end of 2022. But little more than two weeks before the Hospital’s closure,

      the City of Hammond (the City) sought a preliminary injunction to keep the

      Hospital open, relying on a purported promise made by Franciscan executives

      17 months prior that Franciscan would not shut down the Hospital and its

      emergency room.

[2]   Under a tight deadline to act, the trial court granted the injunction and ordered

      Franciscan to keep the Hospital open for nine more months. Because the

      looming loss of the Hospital’s licensure and accreditation at the end of the year

      would make it impossible to comply with the injunction, Franciscan filed an

      emergency motion to stay, which this Court granted on December 30, 2022.

[3]   We now find the City lacks standing and, therefore, reverse and remand to the

      trial court to dismiss the City’s claim.

      Facts
[4]   The Hospital has operated in Hammond for over a century. Dwindling patient

      numbers, however, caused significant losses in recent years. To turn things

      around, Franciscan decided in May 2021 to downsize the Hospital to eight beds

      and an emergency department. A group of Franciscan executives met with the

      Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023        Page 2 of 11
      City’s Mayor, Joseph McDermott, Jr., and his executive team the next month

      to discuss the downsizing plans. At the meeting, the Franciscan executives

      stated their intent to keep the Hospital’s emergency department open. The

      executives then reiterated this desire in a letter to Mayor McDermott the next

      day, writing:

              Our Hammond hospital will continue to offer an emergency
              department staffed with board certified emergency medicine
              physicians and well-trained, experienced ER nurses. Eight short-
              stay beds will be open and another eight-bed area shelled for
              expansion if volumes are sufficient to support them. As the
              downtown residential area grows, the hospital will grow with it.

      Exhs. Vol. III, pp. 6, 22.

[5]   Despite the downsizing, the Hospital’s financial health continued to deteriorate,

      with an annualized operating loss exceeding $39 million in 2022. Recognizing

      this bleak future, Franciscan decided to close the Hospital completely. On

      November 3, 2022—roughly 17 months after the June 2021 meeting with

      Mayor McDermott—Franciscan sent a letter to the Mayor informing him of

      Franciscan’s “plans for ceasing inpatient admissions in Hammond” by the “end

      of this year.” Id. at 23. Franciscan moved quickly to shut down the Hospital,

      terminating its employment and service provider contracts effective the last day

      of 2022.

[6]   To Mayor McDermott, Franciscan’s actions were an “absolute betrayal” of

      Franciscan’s statements at the June 2021 meeting. Tr. Vol. II, p. 34. And so, on

      December 19, 2022, a month and a half after receiving Franciscan’s letter, the
      Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023      Page 3 of 11
      City brought a claim for promissory estoppel against Franciscan and sought

      injunctive relief to keep the Hospital open. In its complaint, the City claimed

      that Franciscan had “renege[d]” on its “promise to keep the emergency

      department of [the Hospital] operational.” App. Vol. II, pp. 19-20. The City

      alleged that Franciscan’s conduct would leave “approximately 80,000 residents

      without immediate access to emergency medical services” and that “people

      [would] die as a result of [the Hospital’s] closure.” Id. Facing dual time

      constraints with the Hospital set to close at the end of the year and the winter

      holidays, the trial court set a hearing on the City’s complaint for the following

      afternoon.

[7]   Franciscan responded to the City’s complaint just before the hearing.

      Franciscan challenged the City’s standing to bring its claim and argued that it

      did not qualify for injunctive relief. Franciscan also argued that the City could

      not establish the elements of promissory estoppel, the only legal theory

      underlying its request for injunctive relief.

[8]   After an evidentiary hearing, the trial court issued its order granting the

      preliminary injunction on December 22. The injunction provided:

                   1. The Court hereby enjoins [Franciscan] from closing the
                      emergency department presently operating in downtown
                      Hammond.

                   2. The emergency department is to remain open and
                      [Franciscan] is Ordered to take all steps necessary to
                      ensure that the facility in downtown Hammond remains
                      legally licensed and operational.

      Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023            Page 4 of 11
                    3. [Franciscan] is prohibited, until further Order of this
                       Court, from taking steps to diminish or in any way reduce
                       the health care currently provided to patients at the
                       downtown Hammond facility for a period of nine (9)
                       months.

       App. Vol. II, p. 15.

[9]    In granting the preliminary injunction, the trial court concluded that the City

       was “the proper party to bring this action” and that it had standing. Id. at 12.

       The trial court also determined that the City had met the requirements to obtain

       a preliminary injunction, including that it “demonstrated a reasonable

       likelihood of success on the merits of its promissory estoppel claim.” Id. at 13-

       15.

[10]   After the trial court denied Franciscan’s motions to stay the injunction,

       Franciscan appealed and filed an emergency motion to stay the proceedings and

       the preliminary injunction with this Court on December 28, 2022. Two days

       later, this Court’s motions panel granted Franciscan’s request, stayed the

       preliminary injunction, and required Franciscan to post a $100,000 appeal

       bond. After the resolution of Franciscan’s emergency motions, this appeal

       proceeded in due course to address the merits of the preliminary injunction.

       Discussion and Decision
[11]   Franciscan raises two issues on appeal. It alleges that the City lacks standing to

       bring its claims and that the trial court erred in granting the preliminary

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023           Page 5 of 11
       injunction. But because we find the standing issue dispositive, we do not reach

       the preliminary injunction’s merits.

       I. Standing
[12]   “Standing is a fundamental, threshold, constitutional issue that must be

       addressed by this, or any, court to determine if it should exercise jurisdiction in

       the particular case before it.” Doe v. Adams, 53 N.E.3d 483, 495 (Ind. Ct. App.

       2016) (quoting Alexander v. PSB Lending Corp., 800 N.E.2d 984, 989 (Ind. Ct.

       App. 2003)). “The main purpose of standing is to insure that the party before

       the court has a substantive right to enforce the claim that is being made in the

       litigation.” Schulz v. State, 731 N.E.2d 1041, 1044 (Ind. Ct. App. 2000).

       Standing is an issue of law that we review de novo. City of Gary v. Nicholson, 190

       N.E.3d 349, 351 (Ind. 2022).

[13]   To establish standing, a plaintiff must demonstrate “a personal stake in the

       outcome of the litigation and . . . show that they have suffered or were in

       immediate danger of suffering a direct injury as a result of the complained-of-

       conduct.” Solarize Ind., Inc. v. S. Ind. Gas & Elec. Co., 182 N.E.3d 212, 217 (Ind.

       2022) (quoting Bd. of Comm’rs of Union Cnty. v. McGuiness, 80 N.E.3d 164, 168

       (Ind. 2017)). The City has not made such a showing here.

[14]   In its initial complaint and at the evidentiary hearing, the City argued that the

       Hospital’s closure would “negatively impact” Hammond’s citizens by leaving

       “approximately 80,000 residents without immediate access to emergency

       medical services.” App. Vol. II, p. 10. And the City also alleged that the closure

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023           Page 6 of 11
       would significantly damage the City’s reputation and its ability to attract

       businesses. Yet even if true, any alleged negative effects on Hammond’s citizens

       cannot sustain the City’s standing. As a municipality, the City may not assert

       claims on behalf of its citizens. See Bd. of Comm’rs of Union Cnty. v. McGuinness,

       80 N.E.3d 164, 167-68 (Ind. 2017) (holding county did not have standing to

       seek a declaratory judgment and injunctive relief on behalf of its residents

       because it lacked a “personal interest” in the case). Additionally, damages for

       the loss of one’s reputation are not recoverable on a promissory estoppel claim.

       Greives v. Greenwood, 550 N.E.2d 334, 338 (Ind. Ct. App. 1990) (“Damages for

       loss of reputation are only available in actions for libel, slander, abuse of

       process, malicious prosecution and third-party contract interference.”).

       Consequently, our analysis of City’s standing focuses on other grounds.

[15]   City officials testified that in the short time since Franciscan announced it

       would close the Hospital, discussions had taken place about increased costs that

       may result from the closure. These potential costs included new ambulances

       (with a price tag of $300,000 each), costs associated with the search to find a

       new emergency healthcare provider, and the potential for increased legal

       liability stemming from delayed response times to medical emergencies. The

       City anticipated it would take around 18 months to adequately plan, approve a

       budget, and incur these costs. Because of this extended timeline, city officials

       blamed Franciscan for the “loss of an opportunity” to address these problems

       earlier when Franciscan first discussed its downsizing plans in June 2021.

       Appellee’s Br., p. 13.

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023          Page 7 of 11
[16]   The trial court agreed with these claims. In its order granting the preliminary

       injunction, the trial court noted that closing the Hospital would endanger

       Hammond’s citizens by delaying response times to medical emergencies. The

       court also noted the high cost of new ambulances to mitigate this danger and

       that the City’s officials quickly began discussing the need to buy new

       ambulances upon learning of the Hospital’s closure. Taken together, the trial

       court believed that Franciscan denied City an “opportunity to secure a

       substitute emergency care provider” and City was “in immediate danger of

       further suffering[] a direct injury as a result . . . .” App. Vol. II, pp. 12, 14.

[17]   But in arriving at that conclusion, the trial court improperly focused on

       speculative and hypothetical damages. In particular, the City’s potential future

       purchases of new ambulances and allegations of lost time are “too remote and

       speculative” to constitute the “direct injury” necessary for standing. Solarize

       Ind., Inc., 182 N.E.3d at 220. For example, the following testimony between

       Franciscan’s counsel and the City’s Fire Chief highlights the extent of the City’s

       plans to buy new ambulances:

               Q: You were asked about ambulances, and I only want to know
               about ambulances that you’re adding to increase capacity. Do
               you have ambulances under contract right now to increase your
               capacity due to the closing of the emergency room at [the
               Hospital]?

               A. What do you mean under contract?

               Q. Well, are you under contract to buy some additional
               ambulances or are you intending to buy additional ambulances,

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023              Page 8 of 11
               not to replace old ambulances but because [the Hospital] is
               closing its ER?

               A. It just recently came up in conversation December 13th
               because of what happened on December 12th. So, it’s been talked
               about.

               Q. What was the result of that?

               A. The talks aren’t done yet.

               Q. What’s that?

               A. We’re not done talking about it yet.

               Q. Okay. So, it’s under discussion.

       Tr. Vol. II, pp. 93-94.

[18]   To Franciscan, this exchange proves the City had no immediate plans to buy

       new ambulances and any alleged injury is correspondingly remote and

       speculative. At the same time, to the City, this conversation is proof that “[it]

       would be required to purchase new ambulances.” Appellee’s Br., p. 13 (emphasis

       added). We side with Franciscan’s reading.

[19]   First, the City has failed to show it “‘has sustained or was in immediate danger

       of sustaining’ a demonstrable injury.” Solarize, 182 N.E.3d at 220 (quoting

       Hammes v. Brumley, 659 N.E.2d 1021, 1029-30 (Ind. 1995)). The City does not

       contend that it suffered or sustained any injury at the time of this case. Rather,

       it alleged that the Hospital’s closure will lead to damages born out of new

       ambulances or the loss of prospective businesses moving to Hammond. But as

       city officials admitted to above, the City was not at any immediate risk of

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023         Page 9 of 11
       incurring costs from new ambulances, and any “possible effect[s] on ‘potential’”

       businesses moving to Hammond evidently “isn’t a demonstrable injury.”

       Solarize, 182 N.E.3d at 220.

[20]   Nor has the City alleged a “direct injury” from Franciscan’s conduct. The direct

       injury required for standing is “an injury resulting directly from a particular

       cause, without any intervening causes.” Solarize, 182 N.E.3d at 220 (quoting

       Black’s Law Dictionary (11th ed. 2019)). In Solarize, a company promoting the

       use of solar power in Indiana sought judicial review of an administrative

       decision by the Indiana Utility Regulatory Commission (IURC) alleging that

       the decision would “result in fewer people entering the solar market” and

       thereby reduce the company’s funding. Id. But, as the Court noted, the IURC’s

       decision did not directly impact the company—its theoretical injury resulted

       from “market forces” on the company’s “potential customers and suppliers.” Id.

       In essence, “this sort of ‘abstract speculation’” on the “indirect result of

       intervening causes” does not constitute direct injury. Id. (citing Pence v. State,

       652 N.E.2d 486, 488 (Ind. 1995)). So too here.

[21]   The Hospital’s closure is not the direct cause of the City’s feared harms. Indeed,

       the City admits as much when it links the Hospital’s closure not to tangible

       costs or expenses, but to “a delay in response times for Hammond ambulances

       arriving to patients,” potentially resulting in avoidable injuries that increase the

       City’s legal liability. Appellee’s Br., p.12. Just as the “market forces” in Solarize

       were an intervening cause, the potential increase in patient response times plays

       the same role here. The City merely fears that it will incur the cost of new

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023          Page 10 of 11
       ambulances from the pressure of increased response times—which arises only

       indirectly from Franciscan’s decision to close the Hospital. Thus, there is no

       direct injury traceable to Franciscan’s conduct. See, e.g., Fort Wayne Educ. Ass’n

       v. Ind. Dep’t of Educ., 692 N.E.2d 902, 904 (Ind. 1998) (holding no direct injury

       suffered in challenge to a school board’s funding decisions that would “result in

       less money being available for other programs”). Without more, the City lacks

       standing.

       Conclusion
[22]   The City of Hammond lacks standing to bring this case because any alleged

       injury is speculative and not directly traceable to Franciscan’s conduct.

       Accordingly, we reverse the trial court’s preliminary injunction and remand to

       the trial court with instructions to dismiss the City’s claim.

       Bailey, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 22A-PL-3085 | June 30, 2023        Page 11 of 11