SJ Medical Center, LLC v. Estahbanati
418 S.W.3d 867
Tex. App.2013Background
- Plaintiffs (the Osman Parties) sued SJ Medical Center, L.L.C. (the Medical Center), asserting negligence claims arising from care of a minor. The Medical Center filed a plea to the jurisdiction asserting governmental-immunity protection under Tex. Health & Safety Code §§ 285.071–.072.
- Section 285.071 defines a “hospital district management contractor” as “a nonprofit corporation, partnership, or sole proprietorship” that manages or operates a hospital under contract with a hospital district; § 285.072 treats such a contractor as a governmental unit for tort-immunity purposes.
- The Medical Center is a Texas limited liability company (LLC) that elected partnership treatment for federal and state tax purposes; it argued this tax treatment makes it a “partnership” under § 285.071 and thus entitled to appeal the denial of its plea under Tex. Civ. Prac. & Rem. Code § 51.014(a)(8).
- The trial court denied the plea to the jurisdiction; the Medical Center sought interlocutory appeal under § 51.014(a)(8), which permits appeals from interlocutory orders granting or denying a plea to the jurisdiction by a “governmental unit.”
- The central questions were (1) whether the order is interlocutory (it is), (2) whether § 51.014(a)(8) applies here, and (3) whether the LLC qualifies as a “hospital district management contractor” (and thus a governmental unit) under § 285.071.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the trial court order final or interlocutory? | Order is interlocutory (doesn't dispose of all claims). | Same. | Interlocutory under Lehmann/Crowson analysis. |
| Does § 51.014(a)(8) authorize interlocutory appeal from this statutory-probate-court order? | § 51.014(a)(8) applies to orders denying pleas to the jurisdiction by governmental units; plaintiffs argued statute did not apply to statutory probate courts. | Medical Center assumed statute applies; court presumed without deciding that it can apply to statutory probate courts. | Court presumed § 51.014(a)(8) can reach such probate orders but still required Medical Center be a "governmental unit." |
| May an entity be treated as a governmental unit for purposes of § 51.014(a)(8) by virtue of a statute that treats it as such? | Plaintiffs: no, absent actual governmental status statutory treatment alone insufficient for appeal. | Medical Center: it is entitled by statute (§285.072) to be treated as a governmental unit because it is a "hospital district management contractor." | Court assumed statute can make non-governmental entities "as if" governmental but held Medical Center still must satisfy § 285.071 definition. |
| Does an LLC that elects partnership tax treatment qualify as a "partnership" (and thus as a "hospital district management contractor") under § 285.071? | Plaintiffs: tax treatment does not change entity type; LLC is not a partnership under ordinary meaning. | Medical Center: election to be taxed as a partnership means it should be treated as a partnership under § 285.071. | Held: A Texas LLC is not a partnership for purposes of § 285.071; tax-election does not alter the statutory plain meaning, so the LLC is not a "hospital district management contractor." |
Key Cases Cited
- Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001) (final-judgment test for appealability)
- Crowson v. Wakeham, 897 S.W.2d 779 (Tex. 1995) (discrete probate orders may be final for appeal)
- De Ayala v. Mackie, 193 S.W.3d 575 (Tex. 2006) (statutory finality in probate context; statutory-phase analysis)
- City of Houston v. Estate of Jones, 388 S.W.3d 663 (Tex. 2012) (narrow construction of § 51.014 as exception to final-judgment rule)
- Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835 (Tex. 2007) (state officials may appeal under § 51.014(a)(8))
- Exchange Point, LLC v. S.E.C., 100 F. Supp. 2d 172 (S.D.N.Y. 2000) (tax classification as partnership does not change ordinary-meaning entity type in non-tax statutes)
- Garcia v. Foulger Pratt Dev., Inc., 845 A.2d 16 (Md. Ct. Spec. App. 2004) (LLC electing tax partnership treatment not a "limited partnership" for non-tax contract interpretation)
- Historic Boardwalk Hall, LLC v. Comm’r, 694 F.3d 425 (3d Cir. 2012) (describing LLCs as combining corporate limited liability with partnership tax attributes)