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4th Circuit Sends Back Hiring Case A Second Time — For Trial

Published by on May 26, 2011

In Gitter v Cardia & Thoracic Surgical Associates, LTD,; Rockingham Memorial Hospital, the U.S. Court of Appeals for the Fourth Circuit vacated summary judgment for Defendants/Appellees Thoracic, et. al. in relation to a fraud and breach of contract suit, finding a genuine issue of material fact as to the reasonableness of Gitter’s reliance on Appellees’ […]

In Gitter v Cardia & Thoracic Surgical Associates, LTD,; Rockingham Memorial Hospital, the U.S. Court of Appeals for the Fourth Circuit vacated summary judgment for Defendants/Appellees Thoracic, et. al. in relation to a fraud and breach of contract suit, finding a genuine issue of material fact as to the reasonableness of Gitter’s reliance on Appellees’ promises when he closed his medical practice in Alabama and moved to Virginia to work for them.  More after the break.

The lawsuit stemmed from Appellees’ search to hire a chief cardiac surgeon.  After a series of interviews, Appellees informed Gitter that he was their choice as the new chief cardiac surgeon.  The parties did not have a signed contract, but Gitter nevertheless closed his Alabama practice, sold his house and prepared to move to Virginia.  Negotiations on an employment agreement, however, did take place and the two parties came to an agreement.  Congratulatory emails were exchanged making it clear that Gitter would join the staff.  No contract was signed at that time.  Subsequently, Gitter became unhappy that the Appellees did not also hire his physician’s assistant, and the parties went through some tough negotiations.  The Appellees decided not to hire Gitter, in part because they feared, based on the acrimony that arose during negotiations, that he would not be an easy person to work with.  When Appellees informed Gitter he was no longer their choice, Gitter brought suit claiming that he had relied on their assurances of an agreement, and asking that they be equitably stopped from asserting a Statute of Frauds defense. 

During the above process, in the application, Gitter had responded “no” to a question about whether he had faced any reduction in his hospital privileges.  Gitter had been briefly suspended by a medical center in Alabama for failure to find coverage for an on-call shift he missed while traveling to Virginia to interview for the new post. But the suspension was lifted a few days later and Gitter was placed on probation, which he did not interpret as a disciplinary action.  Several weeks later, the Alabama medical center sent the Virginia hospital a completed form stating there were no restrictions on Gitter’s privileges. 

The magistrate judge heard oral argument on Appellees’ motion for summary judgment and held that the Statute of Frauds doctrine applied, and that the parties’ emails did not constitute a written agreement sufficient to satisfy the doctrine.  The court denied Gitter equitable relief with respect to both the fraud and breach of contract claims.  Applying Alabama law, the court determined that Gitter could not show his reliance on Appellee’s conduct was reasonable because, having knowingly omitted material on the credentialing application, he had come to the matter with “unclean hands.”  The court ruled that Gitter could not seek equitable estoppel because of his unclean hands, applying Virginia law to the breach of contract claims. 

On appeal, the Fourth Circuit Court of Appeals affirmed in part and vacated in part and remanded the case to the district court.  The Fourth Circuit found that the Statute of Frauds applied and that the district court had correctly determined that the parties’ emails did not constitute a sufficient written agreement. The Court of Appeals also held, however, held that the district court erred when it concluded that the unclean hands doctrine barred Gitter from claiming equitable estoppel, because the credentialing application was not relied on by (or even reviewed by) Appellees.  The matter was referred back to the District Court who again decided in favor of Appellees on summary judgment.

On the second appeal to the Fourth Circuit, the appellate panel stated that the lower court erred by failing to adequately address the very issue the case had been sent back for — Was it reasonable for Gitter to rely on alleged promises by the defendants? 

The March 23, 2011, Fourth Circuit opinion stated that Gitter’s belief that his answers were correct, or at least justified, was enough to support the claim that the surgeon acted reasonably in relying on the hospital’s assurances of employment.  The Alabama medical center’s letters saying it had not taken disciplinary action against Gitter also supported his belief that his answers on the credentialing application were justified.  (Judge J. Harvie Wilkinson III dissented because he agreed that Gitter knew he had submitted an improper credentialing application.)  Gitter’s reliance was not “per se unreasonable” and Appellees did nothing to convey to Gitter he could not rely on their assurances of an agreement.  Therefore, the district court’s determination of reasonableness as a matter of law was inappropriate.  Gitter’s evidence 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.  That is enough to raise a genuine issue of material fact as to his reasonableness, and survive summary judgment. 

A complete copy of the opinion can be found here.

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