Central Valley General Hospital v. Smith

This appeal concerns a hospital’s proposed acquisition of rural health clinics from a medical group. The acquisition was not completed because disputes arose prior to the closing. The hospital terminated the agreement and sued for the return of a $250,000 payment, alleging an anticipatory breach of contract resulted from the medical group’s inability to make certain representations and warranties required by the agreement. The medical group cross-complained for an injunction to protect the confidential information it disclosed to the hospital during the due diligence period.

After a voluntary general reference, a referee issued a statement of decision that determined (1) the hospital had not taken the proper steps to assert a claim for anticipatory breach of contract and (2) the medical group was entitled to an injunction that (a) prohibited the hospital from using the confidential information and (b) required the hospital to return certain confidential materials.

We conclude the judgment and injunction must be reversed and the matter remanded for further proceedings.

We publish the portions of this opinion that address the questions (1) whether a nonrepudiating party…