Court Opinion

ID: 63909
Source: CourtListenerOpinion
Date Created: 2010-04-26 05:05:18+00
Date Added: 2024-06-11T08:50:43.619407
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                          FILED
                                                                        October 17, 2008

                                      No. 07-60715                   Charles R. Fulbruge III
                                                                             Clerk

GREENVILLE IMAGING, LLC

                                          Plaintiff-Appellant-Cross-Appellee
v.

WASHINGTON HOSPITAL CORPORATION, doing business as The King’s
Daughters Hospital

                                          Defendant-Appellee-Cross-Appellant

                  Appeals from the United States District Court
                     for the Northern District of Mississippi
                                  (05-CV-137)

Before JONES, Chief Judge, and GARWOOD and SMITH, Circuit Judges.
PER CURIAM:*
       Plaintiff-appellant, Greenville Imaging, LLC (Imaging), appeals the
district court’s judgment, after a bench trial, denying its claim for compensatory
damages for a breach of contract committed by defendant-appellee, Washington
Hospital Corporation (WHC). WHC cross-appeals the award of attorneys’ fees
and costs to Imaging and the denial of its own fee request. Following a bench
trial, we review findings of fact for clear error and legal conclusions de novo.

       *
        Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Lehmann v. GE Global Ins. Holding Corp., 524 F.3d 621, 624 (5th Cir. 2008). As
this is a diversity case and the parties have agreed that Mississippi law will
govern any disputes arising under the contract, we apply the substantive law of
Mississippi. Erie R.R. v. Tompkins, 58 S.Ct. 817, 822 (1938). Because state law
supplies the rule of decision, it also controls the award of attorneys’ fees. Mathis
v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002).
       Imaging is a magnetic resonance imaging (MRI) company based in
Greenville, Mississippi. Imaging entered into an MRI service agreement with
WHC in which WHC agreed to employ Imaging to satisfy all of WHC’s “mobile
MRI needs” at WHC’s King’s Daughters Hospital (KDH) campus for a four-year
period.1 The agreement was a requirements contract with no minimum number
of scans to be performed and with payment to be made on a per scan basis. The
agreement contained a successor clause mandating that WHC “require any
successor . . . to expressly assume and agree to perform [WHC’s] duties and
responsibilities pursuant to this Agreement.” The contract also included two
provisions relating to attorneys’ fees and costs. Section 7.9 stated that in any
contract dispute, “the prevailing party will be entitled to reimbursement of its
expenses, including court expenses and lawyers’ fees.” Section 8.3 provided that,
in the event of a breach, “the defaulting party shall pay the other part[y’s]
reasonable attorney’s fees together with an amount equal to all expenses paid
or incurred in the enforcement of any rights or privileges hereunder.”
       Approximately seven months into performance of the contract, WHC sold
nearly all of its assets to Delta Regional Medical Center (DRMC), another
Greenville hospital which was a competitor of WHC’s. Despite WHC’s efforts to

       1
        The original entity that contracted with WHC was Imaging Resources, LLC, but it
later assigned the contract to Greenville Imaging, LLC. Imaging Resources initially joined
Greenville Imaging in filing this suit but voluntarily dismissed its claims before trial.

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comply with the successor clause, DRMC refused to assume the MRI service
agreement as part of the purchase, believing that its own fixed MRI unit had
sufficient capacity to absorb whatever new demand would be created by its
acquisition of KDH.2 Undeterred, WHC went ahead with the sale. WHC
subsequently informed Imaging that its services were no longer required and
requested that Imaging promptly remove all of its mobile MRI equipment from
KDH premises.
       Imaging sued WHC for breach of contract based on WHC’s failure to assign
the MRI service agreement to DRMC. The district court found that WHC had
breached the contract, but it declined to award any compensatory damages to
Imaging. The district court found that, even if WHC had assigned the MRI
service agreement to DRMC as required, DRMC had no need for Imaging’s
mobile MRI services. The district court found that DRMC’s own fixed unit was
capable of handling all of its MRI requirements, therefore DRMC would have
had no need to engage Imaging’s services even if it had assumed the contract.
Nevertheless, the district court did charge WHC with attorneys’ fees and costs
as the “defaulting party” pursuant to section 8.3 of the contract.
       Imaging argues that the district court committed legal error by
mischaracterizing its burden of proof in this case. The district court required
Imaging to prove damages by showing that DRMC would have had a need for
Imaging’s services had it assumed the contract. This was not error. The remedy
for breach of contract is to place the party in the position it would have occupied
had the contract been performed. Theobald v. Nosser, 752 So. 2d 1036, 1042

       2
        A fixed MRI unit is one that is permanently housed in a single medical facility,
whereas a mobile MRI unit is contained in a trailer that can be moved from place to place.
The expert witness for Imaging admitted that the terms of the agreement did not prevent
WHC, and therefore any successor, from meeting any and all of its MRI needs with its own
fixed unit before utilizing Imaging’s mobile unit.

                                            3
(Miss. 1999). It is therefore entirely reasonable to require a plaintiff suing on
a needs-based contract with no minimum requirements to show that the other
contracting party had a need for the plaintiff’s services. As the chief witness for
Imaging admitted at trial, if no need existed, then Imaging lost no revenues and
incurred no damages.
      Furthermore, we determine that the district court did not commit clear
error when it found that DRMC did not have a need for Imaging’s mobile MRI
services. Imaging asserts that DRMC’s needs were dictated by the demands of
patients in the Greenville community.            Imaging relies on its own market
analysis to contend that the needs of the community exceeded the capacity of
DRMC’s fixed unit. WHC presented the testimony of DRMC’s director of
radiology and chief operating officer indicating that, to the contrary, DRMC had
excess capacity in its fixed unit. Therefore, according to DRMC’s employees,
who, unlike Imaging’s witnesses, had no economic interest in the suit, DRMC
was able to accommodate all of its patients from KDH and the community at
large without using Imaging’s mobile MRI services. Based on these statements
and the speculative nature of Imaging’s evidence, the district court did not
commit clear error in finding that DRMC had no need for Imaging’s services.
      We also find that the district court did not abuse its discretion in awarding
Imaging attorneys’ fees and costs. Although Imaging was unable to prove
damages, Imaging did establish that WHC breached the MRI service
agreement.3 Thus, the district court properly charged WHC with attorneys’ fees

      3
         We reject WHC’s arguments that it did not breach the contract and that the
provision in question is invalid under Mississippi law. There is no evidence that WHC ever
offered DRMC to make any reduction in the purchase price (which provided WHC a large
profit), or make any other compensating adjustment in proposed sale, if DRMC would
assume the contract with Imaging, or that any such offer would have been futile. Nor was
WHC under any compulsion to sell. The evidence certainly does not compel the conclusion
that the assumption provision in the WHC-Imaging contract was invalid as an illegal or

                                            4
and costs as the “defaulting party” under section 8.3 of the contract. WHC
argues that the evidence Imaging presented in regard to attorneys’ fees was
untimely and insufficient. We disagree. The district court specifically requested
that Imaging submit a post-trial affidavit outlining its fees and expenses. WHC
made no objection to that procedure, and Imaging complied with it, submitting
an affidavit. When WHC subsequently objected to the sufficiency of that
affidavit, Imaging timely responded with an adequately detailed affidavit. Thus,
the award of attorneys’ fees to Imaging was reasonable and proper.
      WHC also contends that it should have been awarded attorneys’ fees and
costs, because Imaging’s failure to obtain compensatory damages rendered WHC
the “prevailing party” under section 7.9 of the contract.              Even assuming
arguendo that WHC was the “prevailing party,” this argument has no merit.
WHC breached the agreement, and a party who violates a contract cannot then
enforce that same contract to its benefit. LeBleu v. Jim Murphy & Assoc., Inc.,
557 So. 2d 526, 528 (Miss. 1990); Matheney v. McClain, 161 So. 2d 516, 520
(Miss. 1964). Thus, the district court did not abuse its discretion in denying
WHC’s request for attorneys’ fees and costs.
      The judgment of the district court is
                                     AFFIRMED.

unreasonable restraint on alienation or that WHC’s failure to comply therewith was
excused (or excusable) under the contract’s general force majeure clause.

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