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Case 1:18-cv-00237-LG-RHW Document 3 Filed 07/23/18 Page 1 of 17

IN THE UNITED STATES DISTRICT COURT


FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION

JACKSON COUNTY, )
MISSISSIPPI, )
)
Plaintiff, ) CIVIL ACTION NO.: 1:18-cv-00237
)
v. )
)
SINGING RIVER HEALTH )
SYSTEM AND SINGING RIVER )
MOB, LLC, an Alabama Limited )
Liability Company, )
)
Defendants. )

SINGING RIVER MOB, LLC’S ANSWER AND COUNTERCLAIM

Defendant Singing River MOB, LLC (“Singing River MOB”), hereby

submits its Answer and Counterclaim to the Complaint filed by Jackson County,

Mississippi (“Jackson County”) in this action.

ANSWER

As and for its Answer in this civil action, Singing River submits:

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FIRST DEFENSE

Signing River MOB responds to the corresponding numbered paragraphs and

unnumbered allegations of the Complaint as follows:

1. Admitted.

2. On information and belief, this paragraph is admitted.

3. Admitted.

4. Singing River MOB denies the allegations of this paragraph as stated and

demands strict proof thereof.

5. Admitted.

6. Singing River MOB admits that the matter involves a lease transaction as

described or referenced in resolutions of the Jackson County Board of

Supervisors, as set out below, and certain additional leases and subleases

contemplated thereby as referenced in written documents attached to the

Complaint. Except as stated, Singing River MOB denies the allegations

of this paragraph and demands strict proof thereof.

7. The March 16, 2009 resolution speaks for itself. Except as admitted by

the foregoing, Singing River MOB denies the allegations of the

paragraph and demands strict proof thereof.

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8. Admitted.

9. Admitted.

10. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

11. The April 6, 2009 resolution speaks for itself. Singing River MOB denies

that any such substitution was necessary. Except as otherwise admitted,

Singing River MOB denies the remaining allegations of this paragraph

and demands strict proof thereof.

12. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

13. Admitted.

14. Admitted.

15. Admitted.

16. Admitted.

17. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

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18. The March 16, 2009 and April 6, 2009 resolutions speak for themselves.

To the extent not admitted by the foregoing, Singing River MOB denies

the allegations of this paragraph and demands strict proof thereof.

19. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

20. The March 16, 2009 and April 6, 2009 resolutions speak for themselves.

To the extent not admitted by the foregoing, Singing River MOB denies

the remaining allegations of this paragraph and demands strict proof

thereof.

21. The March 16, 2009 and April 6, 2009 resolutions speak for themselves.

Singing River Health System (“SRHS”) entered into subleases with

Singing River MOB, an affiliate of Johnson Development Company. To

the extent not admitted by the foregoing, Singing River MOB denies the

allegations of this paragraph and demands strict proof thereof.

22. The March 16, 2009 and April 6, 2009 resolutions speak for themselves.

To the extent not admitted by the foregoing, Singing River MOB denies

the allegations of this paragraph and demands strict proof thereof.

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23. Singing River MOB is without information sufficient to admit or deny

the material allegations of this paragraph and therefore demands strict

proof thereof.

24. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

25. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

26. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

27. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

28. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

29. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

30. Under the March 16, 2009 and April 6, 2009 resolutions, the Jackson

County Board of Supervisors agreed to the duration of the term of the JC-

SRHS Lease. To the extent not admitted by the foregoing and the terms

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of the resolutions, Singing River MOB denies the allegations of this

paragraph and demands strict proof thereof.

31. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

32. Singing River MOB denies the allegations of this paragraph and demands

strict proof thereof.

Singing River MOB denies that Jackson County is entitled to any of the

relief requested in the prayer for relief, items 1-5 and demands strict proof thereof.

SECOND DEFENSE

Jackson County’s claims herein are barred by estoppel.

THIRD DEFENSE

Jackson County’s claims are barred by waiver.

FOURTH DEFENSE

Jackson County’s claims are barred by laches.

FIFTH DEFENSE

The Complaint fails to state a claim for which relief may be granted.

SIXTH DEFENSE

Jackson County’s claims are barred by a ratification.

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SEVENTH DEFENSE

Jackson County’s claims are barred by the failure to do equity.

EIGHTH DEFENSE

Each and every contract at issue in the complaint was duly authorized by

Jackson County or by SRHS under statutory and other authority.

NINTH DEFENSE

Defendant Singing River MOB reasonably relied upon representations by

SRHS and/or Jackson County in making improvements on the subject property and

undertaking obligations related to the office building project.

TENTH DEFENSE

Jackson County’s claims are barred by the doctrine of unjust enrichment.

ELEVENTH DEFENSE

Defendant Singing River MOB adopts and incorporates each and every

provision of its lease agreements entered into with SRHS to the extent those

provisions are defenses to the claims here.

TWELFTH DEFENSE

Jackson County’s claims are barred as an unconstitutional interference with

contract rights.

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THIRTEENTH DEFENSE

Defendant Singing River MOB reserves any and all rights under the

applicable contracts with SRHS for indemnity and attorneys’ fees.

FOURTEENTH DEFENSE

Defendant Singing River MOB reserves any and all rights to seek sanctions

and/or attorneys’ fees in this matter for claims not asserted in good faith and/or

without substantial justification, including without limitation rights under

Mississippi Code §11-55-5(1).

COUNTERCLAIM
Now, having answered the Complaint in this action, Singing River MOB

submits its counterclaim against Jackson County, Mississippi in this action, as

follows:

THE PARTIES

1. Singing River MOB is an Alabama limited liability company doing

business in Jackson County, Mississippi through its ownership of a

medical office building built pursuant to agreements with SRHS, a

community hospital owned by Jackson County, Mississippi, and which is

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a political subdivision of the State of Mississippi. Singing River MOB’s

members are citizens of the State of Alabama.

2. Jackson County is a political subdivision of the State of Mississippi.

JURISDICTION AND VENUE

3. This Court has subject matter jurisdiction in this action pursuant to 28

U.S.C. § 1332. Complete diversity exists between the parties because

Counterclaim Plaintiff Singing River MOB is an Alabama limited

liability company whose members are citizens of Alabama, and

Counterclaim Defendant Jackson County is a citizen of the state of

Mississippi. The amount in controversy, being the object of declaratory

relief sought herein, exceeds $75,000. Further, the Court has

supplemental jurisdiction over this matter pursuant to 28 U.S.C. § 1367

based upon the original claim in this action.

4. Venue is proper in the United States District Court for the Southern

District of Mississippi, Southern Division, because the leasehold interest

at issue is located in Jackson County, Mississippi.

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FACTS

5. In or about 2008, SRHS invited Johnson Development, LLC (“Johnson

Development”) to make a proposal to assist SRHS in connection with the

development of a medical office building. In connection therewith,

Johnson Development presented SRHS with proposals that would allow

for the development of the medical office building using advantageous

financing through the use of GoZone tax exempt bond financing and the

use of new market tax credits.

6. Singing River MOB was formed as an affiliate of Johnson Development

in reliance upon representations of SRHS regarding its verified authority

to enter into a series of transactions that included an initial ground lease

from Jackson County and a sub-ground lease to Singing River MOB,

followed by leasebacks of improved property to SRHS (the “SRHS Lease

Transactions”).

7. As an integral part of the SRHS Lease Transactions, on March 26, 2009

Jackson County and SRHS entered into that certain ground lease (the

“Ground Lease”) in which Jackson County leased unimproved real

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property to SRHS for the leasehold improvements contemplated by the

SRHS Lease Transactions.

8. On March 16, 2009, Jackson County gave its initial approval to the

SRHS Lease Transactions at a meeting of its Board of Supervisors.

9. On March 26, 2009, SRHS entered into the Ground Lease with Jackson

County that contained, among other terms, a 50 year term, a limited

termination provision, and an express provision allowing for SRHS to

enter into multiple subleases for medically related purposes. The Ground

Lease contained no restriction that any sublease would necessarily be

made with Johnson Development as opposed to an affiliate, or for that

matter with any other entity. A true and correct copy of the Ground Lease

is attached hereto as Exhibit A. See letter dated March 26, 2009 from

Jackson County Board Attorney Paula Yancey to Roy Williams, a true

and correct copy of which is attached as Exhibit B.

10. The Jackson County Board of Supervisors ratified and approved the

Ground Lease in its final form and spread it upon the minutes of the

Board on April 6, 2009. A true and correct copy of the April 6, 2009

Board Resolution is attached hereto as Exhibit C.

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11. SRHS proceeded to enter into subleases with Singing River MOB under

its express authority granted by Jackson County.

12. Singing River MOB, in reliance upon the agreements and express

representations made by SRHS and Jackson County, proceeded to enter

into binding financing agreements and proceeded with construction of the

medical office building for the benefit of SRHS and Jackson County.

13. In furtherance of the extensively documented financing transaction that

supported the development of the medical office building and the SRHS

Lease Transactions, Manley Barton, as President of the Jackson County

Board of Supervisors, executed that certain Estoppel Certificate

acknowledging the validity of the Ground Lease, a true and correct copy

of which is attached hereto as Exhibit D.

14. SRHS has experienced well-documented financial difficulties, beginning

at least as early as 2014.

15. In the fall of 2016, Jackson County first raised allegations that the

Ground Lease suffered from purported defects either for failing to

comply with a Board resolution of Jackson County or generally under

Mississippi law.

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16. In the fall of 2016, Jackson County’s attorney, William Guice, met with

counsel for Singing River MOB to discuss the allegations raised by

Jackson County. At that time, Singing River MOB’s attorneys responded

to the claims of alleged defects in authority for leases under the SRHS

Lease Transactions and confirmed Singing River MOB’s positions in a

letter dated December 1, 2016. The letter to Mr. Guice is attached hereto

as Exhibit E and incorporated herein by reference.

17. In sum, the allegations of defects in the Ground Lease or the SRHS Lease

Transaction generally were baseless and imposed to vex and harass

Singing River MOB, with a goal of depriving it of the benefit of the

bargain it had reached with SRHS and Jackson County and to interfere

with Singing River MOB’s business and contractual relations by, among

other things, placing its leasehold interest and financing at risk and

interfering with a potential sale of that leasehold interest.

18. Despite having received a rebuttal of each and every challenge to the

soundness and authority of the SRHS Lease Transaction, Jackson County

has brought the current action which seeks to impose further harm upon

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Singing River MOB without a good faith basis to challenge the SRHS

Lease Transaction and without substantial justification.

PRAYER FOR RELIEF

WHEREFORE, Singing River MOB prays that the Court will declare the rights

of the parties, including the following:

1. The Ground Lease complies with Miss. Code § 41-13-15(7)(a), which

authorizes leases of real property by a board of supervisors related to a

community hospital for a period of up to 50 years.

2. The Ground Lease, as ratified and approved the Jackson County Board of

Supervisors, expressly limits the right of Lessor to terminate the Lease.

3. The Ground Lease as ratified and approved by the Jackson County Board

of Supervisors specifically permitted multiple subleases “as is deemed

necessary by the Board of Trustees [of SRHS] for the Lessee for the term

of this Lease.” See Exhibit C at 3.

4. Jackson County is estopped from challenging the authorization for and

validity of the Ground Lease and the SRHS Lease Transactions by virtue

of its actions on which Singing River MOB relied to its detriment,

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including without limitation, by providing that certain Estoppel

Certificate attached as Exhibit D.

5. Jackson County has waived its right to challenge the authorization for

and validity of the Ground Lease and the SRHS Lease Transactions by

virtue of its actions on which Singing River MOB relied to its detriment,

including without limitation, by providing that certain Estoppel

Certificate attached as Exhibit D.

6. Jackson County’s April 6, 2009 Board action constituted a ratification

and approval of the Ground Lease, which had a fifty (50) year term and

contained language which allows termination of the Ground Lease by the

County in very limited circumstances, abrogating any requirement for a

broader termination right by the County.

7. Such other and further relief in favor of Singing River MOB as may be

warranted under the existing facts.

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Respectfully submitted this 23rd day of July, 2018.

/s/ John N. Bolus


John N. Bolus (MSB100585)
Maynard Cooper & Gale, P.C.
1901 Sixth Avenue North
Suite 2400 Regions/Harbert Plaza
Birmingham, AL 35203
Telephone: (205) 254-1000
Facsimile: (205) 254-1999

Peter C. Abide (MSB1026)


Currie Johnson & Myers, P.A.
925 Tommy Munro Drive
Suite H
Biloxi, MS 39532
Telephone: (228) 385-1010
Facsimile: (228) 385-1011

Attorneys for Defendant Singing River


MOB, LLC

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CERTIFICATE OF SERVICE
I hereby certify that I have served a copy of the foregoing document by
Notice of Electronic Filing, or, if the party served does not participate in Notice of
Electronic Filing, by U.S. First Class Mail, hand delivery, fax or email on this the
23rd day of July, 2018.

William Lee Guice


Maria Martinez
Rushing & Guice, P.L.L.C.
P.O. Box 1925
Biloxi, MS 39533
Telephone: (228) 374-2313
Fax: (228) 875-5987
bguice@rushingguice.com
mmartinez@rushingguice.com

/s/ John N. Bolus


OF COUNSEL

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EXHIBIT A
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EXHIBIT B
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EXHIBIT C
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EXHIBIT D
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EXHIBIT E
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