Gitter v. Cardiac & Thoracic Surgical Associates, Ltd.

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 10-1235

RICHARD GITTER,

Plaintiff - Appellant,

v.

CARDIAC & THORACIC SURGICAL ASSOCIATES, LTD.; ROCKINGHAM
MEMORIAL HOSPITAL,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. Richard L. Williams, Senior
District Judge. (3:07-cv-00546-RLW)

Argued: January 25, 2011 Decided: March 23, 2011

Before TRAXLER, Chief Judge, and WILKINSON and GREGORY, Circuit
Judges.

Vacated and remanded by unpublished opinion. Judge Gregory
wrote the majority opinion, in which Chief Judge Traxler joined.
Judge Wilkinson wrote a dissenting opinion.

ARGUED: Victor Lee Hayslip, BURR & FORMAN, LLP, Birmingham,
Alabama, for Appellant. Marshall Howard Ross, WHARTON ALDHIZER
& WEAVER, PLC, Harrisonburg, Virginia; Charles Manley Allen,
GOODMAN, ALLEN & FILETTI, Glen Allen, Virginia, for Appellees.
ON BRIEF: Walker S. Stewart, BURR & FORMAN, LLP, Birmingham,
Alabama, for Appellant.
Unpublished opinions are not binding precedent in this circuit.

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GREGORY, Circuit Judge:

This is a diversity jurisdiction case regarding a claim of

equitable estoppel in a breach of contract suit. After a hiring

search, Appellees Cardiac & Thoracic Surgical Associates

(“CTSA”) and Rockingham Memorial Hospital (“RMH”) chose

Appellant Dr. Richard Gitter as their new chief cardiac surgeon.

The parties failed to complete a signed contract memorializing

the agreement, but Gitter closed his medical practice in Alabama

and prepared to move to Virginia to begin working at RMH. When

Appellees informed Gitter he was no longer their choice for the

position, Gitter brought suit claiming that he had relied on

their assurances of an agreement, and asking that they be

equitably estopped from asserting a Statute of Frauds defense.

Because there is a genuine issue of material fact as to the

reasonableness of Gitter’s reliance on Appellees’ promises, the

case should have survived summary judgment. Therefore, we

vacate the order of summary judgment and remand to the district

court for further proceedings.

I.

In the summer of 2006, CTSA and RMH initiated a hiring

search to find a director for their new cardiac surgery program.

Gitter submitted his name as a candidate for the position, and

was first interviewed on or around December 6, 2006. A series

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of interviews ensued, and Gitter was informed on February 12,

2007 that the panel conducting the search had recommended

offering him the position. Sometime before March 14, 2007,

Gitter completed a credentialing application as part of the

hiring process. * One of the questions on the application asked:

Whether voluntarily or involuntarily, has any Hospital
. . . ever restricted (including probation), reduced,
suspended, revoked, surrendered, or refused your
participation and/or privileges, invoked probation or
taken any disciplinary action against you for any
reason other than incomplete medical records?

Joint Appendix (“J.A.”) at 56. Gitter answered “no” to this

question. This was in spite of the fact that he had been

suspended by St. Vincent’s Medical Center East in Alabama after

failing to find coverage for an on-call shift he missed while

traveling to Virginia to interview with RMH. On February 21,

2007, nine days after the suspension was issued, St. Vincent’s

rescinded the suspension and placed Gitter on probation. Gitter

stated in his deposition that he considered this to be a return

to the probationary status of all first-year medical staff, and

not a disciplinary action. When asked in the deposition whether

his answer to the above question was accurate, he responded,

*
There is some confusion as to the exact date Gitter
completed the application. The signed document is dated
February 5, 2007, but Gitter acknowledged in his deposition that
it should have read March 5, 2007. The returned application was
stamped as received by the hospital on March 14, 2007. J.A.
231, 51.

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“[p]erhaps not, in light of what we discussed today. But at the

time, I did feel it was accurate because of the issues we’ve

discussed.” J.A. 220-22.

On March 26, 2007, RMH received a completed form from St.

Vincent’s stating that there were no restrictions on Gitter’s

privileges, and recommending him without reservation. St.

Vincent’s also submitted a form to the Iowa Board of Medical

Examiners stating that disciplinary action had never been taken

against Gitter. Id. Gitter concedes that his answers to the

questions were incorrect, but maintains that he was not

attempting to mislead RMH or CTSA and that he believed his

answers were justified.

Negotiations on an employment contract had been ongoing,

and the two parties came to an agreement on March 28, 2007.

Although Appellees never signed the agreement, it is undisputed

that both parties believed a deal had been reached. Indeed,

congratulatory emails were exchanged making clear that Gitter

would be joining the staff at RMH. The following day, Gitter

resigned from Trinity Hospital in Birmingham and told friends he

would be moving to Virginia. Gitter also sold his house in

Birmingham sometime before March 28, 2007. On March 29, 2007,

Gitter was informed that his physician’s assistant had not been

hired by RMH. He responded negatively to this news, and the

next day, despite their previous assurances to the contrary, the

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selection committee decided not to hire Gitter. They feared

that, based on the acrimony that arose during the negotiations,

he would not be an easy person to work with.

On April 5, 2007, Gitter sued CTSA in the Circuit Court of

Jefferson County, Alabama. He amended his complaint to add RMH

as a defendant on April 17, 2007. The case was removed to the

United States District Court for the Northern District of

Alabama, and then transferred to the United States District

Court for the Eastern District of Virginia. Gitter alleged

(1) breach of contract; (2) fraud, misrepresentation, and

deceit; (3) fraudulent suppression; (4) fraudulent inducement to

enter a contract; and (5) conspiracy.

The case was referred to a magistrate judge, who on April

15, 2008, heard oral argument on Appellees’ motions for summary

judgment. On July 15, 2008, the magistrate judge issued a

Report and Recommendation (“2008 Report”) recommending that

Appellees’ motions be granted. The magistrate judge held that

the Statute of Frauds doctrine applied, and that the parties’

e-mails did not constitute a written agreement sufficient to

satisfy that doctrine. The court then denied Gitter equitable

relief with respect to both the fraud and breach of contract

claims. Finding that Alabama law governed the fraud claim, the

court determined that Gitter could not show that his reliance on

Appellees’ conduct was reasonable because, having knowingly

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omitted material on the credentialing application, he had come

to the matter with “unclean hands.” Virginia law governed the

breach of contract claim, and the court again ruled that Gitter

could not seek equitable estoppel because of his unclean hands.

The district court judge adopted the 2008 Report in full, and

Gitter appealed only the breach of contract claim to this Court.

On July 21, 2009, we affirmed in part, vacated in part, and

remanded the case to the district court. Gitter v. Cardiac &

Thoracic Surgical Assocs., Ltd., No. 08-2221, 338 F.App’x 348

(4th. Cir. July 21, 2009). In a per curiam opinion, we held

that the Statute of Frauds applied, and that the district court

had correctly determined that the parties’ e-mails did not

constitute a sufficient written agreement. Id. at 349.

However, we also held that the district court erred when it

concluded that the unclean hands doctrine barred Gitter from

claiming equitable estoppel. Id. at 349-50. Because the

credentialing application had not been relied on, nor even

reviewed by Appellees in their decision not to hire Gitter, his

equitable estoppel claim was not automatically barred by his

unclean hands. Id.

Finding that reasonable reliance is a necessary element of

Virginia’s equitable estoppel doctrine, Id. (citing T--- v.

T---, 216 Va. 867 (Va. 1976)), we held that the magistrate judge

did not conclusively determine whether Gitter could establish

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the necessary elements of Virginia’s equitable estoppel doctrine

based on his post-March 28, 2007 conduct (that is, whether

Gitter reasonably relied on Defendants’ March 28, 2007

assurances that the terms of his employment were agreed upon).

Gitter, 338 F.App’x at 350.

The matter was referred back to the magistrate judge, who

again decided in favor of Appellees at summary judgment. The

court found that its previous holding as to the fraud claim,

that Gitter knowingly submitted a credentialing application with

material omissions, was now the law of the case with respect to

the breach of contract claim. Using this holding as proof of

Gitter’s knowledge of his errors, the court determined that

Gitter’s mistakes rendered his reliance on Appellees’ assertions

unreasonable as a matter of law. The district court adopted the

new Report and Recommendation in full, and Gitter appeals its

decision.

II.

We review de novo the decision of the district court to

grant summary judgment. Hill v. Lockheed Martin Logistics

Mgmt., 354 F.3d 277, 283 (4th Cir. 2004). Summary judgment is

appropriate when “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to

8
any material fact and that the moving party is entitled to a

judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also

Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The facts

and inferences are to be drawn in the light most favorable to

the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 255 (1986).

In Virginia, the necessary elements of equitable estoppel

are “representation, reliance, a change of position, and

detriment.” Barry v. Donnelly, 781 F.2d 1040, 1042-43 (4th Cir.

1986) (quoting T--- v. T---, 224 S.E.2d at 152). Additionally,

a party’s reliance upon the other’s acts or assertions must be

reasonable. “[E]stoppel occurs where ‘the aggrieved party

reasonably relied on the words and conduct of the person to be

estopped.’” Barry, 781 F.2d at 1042 (quoting City of Bedford v.

James Leffel Co., 558 F.2d 216, 217-18 (4th Cir. 1977)).

III.

The district court incorrectly applied the law of the case

to Gitter’s breach of contract claim. “[T]he doctrine [of the

law of the case] posits that when a court decides upon a rule of

law, that decision should continue to govern the same issues in

subsequent stages of the same case.” United States v. Aramony,

166 F.3d 655, 661 (4th Cir. 1999) (quoting Christianson v. Colt

Indus. Operating Corp., 486 U.S. 800, 815-16 (1988) (alteration

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in original)). However, the district court erred when it stated

that we upheld its previous finding that Gitter knowingly

submitted a false application as the law of the case. We did

not leave “undisturbed [the district court’s] finding that

Gitter knew on March 28, 2007 that he had submitted a

credentialing application with material omissions, and that

therefore, any reliance on Appellees’ representation after March

28, 2007 was unreasonable.” Gitter v. Cardiac & Thoracic

Surgical Associates, No. 3:07CV546, 2010 WL 629843, at *7 (E.D.

Va. Feb. 19, 2010). Rather, that is the very issue for which

the case was remanded. Instead of making a full inquiry into

the facts surrounding Gitter’s reliance, the district court

misapplied this Court’s decision concerning Gitter’s alleged

omissions on the credentialing application, making of it a de

facto determination that his reliance was unreasonable.

Contrary to the district court’s order and Appellees’

arguments, this Court never conclusively determined that Gitter

knowingly or intentionally omitted material information on the

credentialing application. Instead, we stated that “Gitter’s

application, even if misleading, could not have encouraged,

invited, aided, compounded, or fraudulently induced Appellees.

. . .” Gitter, 338 F.App’x at 349-50 (emphasis added).

Likewise, we characterized Gitter’s omissions as “allegedly

incorrect responses.” Id. at 350 (emphasis added). Further,

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the original determination that Gitter was aware of his

omissions was found in the 2008 Report’s section discussing the

unclean hands doctrine; we expressly vacated this portion of the

district court’s decision, holding “we vacate the district

court’s order to the extent the court applied Virginia’s unclean

hands doctrine.” Id. We thus did not make a binding

determination about the nature of Gitter’s answers, and the

district court was incorrect when it adopted as the law of the

case its previous decision that Gitter knowingly misled

Appellees.

Moreover, the district court erred when it refused to

consider Gitter’s testimony that he was not attempting to

mislead Appellees with his answers, and then used its incorrect

interpretation of the law of the case to decide that Gitter’s

reliance was unreasonable as a matter of law. The district

court supported its decision by pointing to two unpublished

Virginia cases where reliance was deemed “per se unreasonable.”

Binhammer v. Reilly, No. 1907-01-2, 2003 WL 282381, at *4-5 (Va.

Ct. App. Feb 11, 2003); Schryer v. VBR, No. 101692, 1991 WL

835295, at *2 (Va. Cir. Ct. Nov. 13, 1991). In Binhammer, the

plaintiff claimed reliance on incorrect assumptions she made

about her father-in-law’s lack of financial interest in her

home. 2003 WL 282381, at *4-5. The father-in-law had provided

money for the down payment on the house, and had deducted the

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mortgage interest payments from his taxes. Id. at *1. This

interest passed to Binhammer’s ex-husband, Daniel Reilly,

against whom Binhammer initiated suit, seeking enforcement of a

previous settlement agreement that incorrectly purported that

the father-in-law had no interest in the home. Id. at *2. The

court found it “inconceivable that Binhammer would rely on the

assumption that her father-in-law possessed no ownership or

financial interest in the marital home when the evidence clearly

and overwhelmingly indicates the contrary.” Id. at *5. The

court held that Binhammer’s reliance on such an assumption was

“per se unreasonable.” Id.

In Schryer, an employee relied on oral assurances from

agents of his employer that his term of employment would be for

no less than five years. 1991 WL 835295, at *2. This was in

spite of a written agreement that clearly stated plaintiff

“could not rely” on statements made concerning his employment

which were not part of the written agreement. Id. at *2.

Plaintiff was fully aware of this condition, and thus his

reliance upon the oral statements was unreasonable as a matter

of law. Id.

However, both of these cases can be distinguished from the

case at bar and do not tend to show how Gitter’s reliance was

“per se unreasonable.” Unlike in Binhammer, Gitter was not

confronted with evidence that “clearly and overwhelmingly

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indicate[d]” Appellees’ assurances of employment would not be

upheld. Binhammer, 2003 WL 282381, at *5. Similarly, unlike

the plaintiff in Schryer, Gitter was not expressly told that he

“could not rely” on Appellees’ emails stating that there was an

agreement. Schryer, 1991 WL 835295, at *2. Instead, CTSA

informed Gitter that the negotiations were complete and mailed

him the employment agreement to sign. RMH and CTSA did nothing

to convey to Gitter that he could not rely on their assurances

of an agreement. Thus, the district court’s determination of

reasonableness as a matter of law was inappropriate in this

case.

As the district court conceded, “[r]eliance and

reasonableness ‘are preeminently factual issues for the trier of

fact’ because they go to the subjective state of mind of the

person asserting equitable estoppel.” Gitter, 2010 WL 629843,

at *5 (quoting Miller v. Premier Corp., 608 F.2d 973, 982 (4th

Cir. 1979)). Thus, the bar for deciding the reasonableness of a

party’s reliance at the summary judgment stage is high. See

Bank of Montreal v. Signet Bank, 193 F.3d 818, 834 (4th Cir.

1999) (“the reasonableness of reliance [is a] question to be

decided by the jury in light of . . . the nature of the parties

and the transaction, the representations, [and] omissions.

. . .”); Barry, 781 F.2d at 1043 (holding that issue of

reasonable reliance was question of fact requiring trial);

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Tidewater Equipment Co., Inc. v. Reliance Ins. Co., 650 F.2d

503, 506 (4th Cir. 1981) (“Whether or not an estoppel arises in

any case is ordinarily a question for the trier of fact to

determine.”) (applying Maryland law).

This high bar has not been reached here. Gitter’s belief

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.

In his deposition testimony, Gitter acknowledged that his

answers might have been factually wrong, but stated that “at the

time, I did feel it was accurate because of the issues we’ve

discussed.” J.A. 220.

Additionally, St. Vincent’s letters stating that it had not

taken disciplinary action against Gitter also creates an

inference that he was not unreasonable in thinking that his

answers on the credentialing application were justified.

Drawing all inferences in Gitter’s favor, as we must do, his

testimony, along with St. Vincent’s letters, supports a finding

that he reasonably believed his answers were correct, and that

his employment agreement with RHM and CTSA was not in jeopardy.

This is enough to raise a genuine issue of material fact as to

his reasonableness, and to survive summary judgment.

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 IV.

Accordingly, the order of the district court is vacated,

and the case is remanded for further proceedings as to whether

Gitter’s reliance on Appellees’ assurances was reasonable.

VACATED AND REMANDED

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WILKINSON, Circuit Judge, dissenting:

I would affirm the judgment for the reasons given by the

district court. As it noted:

Given Gitter’s knowledge that he had made material
misrepresentations or omissions in his Credentialing
Application that the Defendants had not yet reviewed,
where such misrepresentations or omissions would give
the Defendants cause to terminate negotiations and/or
any agreement, any reliance by Gitter on the
representations of the Defendants was unreasonable.
Gitter knew he had submitted an improper Credentialing
Application, and he cannot claim reasonable reliance.

J.A. 355.

I agree with this observation. As the majority notes, the

question asked of Gitter on the Credentialing Application was

whether any hospital had suspended him or had placed him on

probation. See Majority Opinion at 4. Gitter answered “no,”

despite the fact that he had actually been suspended “by St.

Vincent’s Medical Center East in Alabama after failing to find

coverage for an on-call shift he missed while traveling to

Virginia to interview with RMH.” Id. After the suspension was

rescinded, the hospital placed Gitter on probation. Id.

This answer would have concerned defendants for two

separate and independent reasons. The first is that any

hospital must be able to depend upon the availability of a

cardiac surgeon should someone in the community suffer a heart

attack or experience some other cardiac event. The second

reason is that physicians who possess staff privileges at

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hospitals or work together in smaller practice groups must enjoy

a sense of mutual respect and trust. Gitter’s erroneous

response drew both his medical professionalism and veracity into

some question, at least to such a degree that his reliance upon

defendants’ representations was not reasonable. For all I know,

Dr. Gitter may be a fine surgeon, but it was not reasonable for

him to expect, in light of his response, that defendants would

take a leap of faith that things would run smoothly between the

parties in their new and mutually dependent relationship.

With thanks to my colleagues for the thoughtful expression

of their differing views, I respectfully dissent.

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