ABILENE, Texas (KTAB/KRBC) – McMurry University has filed a lawsuit against fellow Abilene college Hardin-Simmons University, seeking more than $1 million for what they’re calling a ‘breach of contract’ over a nursing school.
KTAB and KRBC reviewed all 20 pages of the lawsuit, which McMurry (MCM) filed against Hardin-Simmons (HSU) in Taylor County’s 350th District Court Tuesday. In the lawsuit, MCM claims HSU is not honoring a contract for HSU to sell their interests in the Patty Hanks Shelton School of Nursing (PHSSN) to MCM.
Currently, PHSSN is co-operated by MCM and HSU. MCM claims they are trying to save PHSSN while HSU is trying to dissolve the school and build their own, competing program.
A timeline of events leading up to the lawsuit was detailed in court documents as follows:
1979 – ACU, HSU, and MCM all enter into an agreement to form the Abilene Intercollegiate School of Nursing (AISN), which is a “nonprofit corporation for the purpose of providing a nursing education program to ensure that Abilene area health care providers had a reliable stream of nurses to provide quality health care to the citizens of Abilene region.”
1979-2002 – All 3 universities had separate undergraduate nursing programs that then went to clinical training at AISN, and all 3 recognized coursework from AISN and allowed it to count toward bachelor’s degrees. During this time, ACU, HSU, and MCM all shared the administrative costs and faculty salaries.
2002 – AISN works to change from a nonprofit corporation to an unincorporated association because all 3 colleges were awarding degrees based on coursework at AISN, but AISN was not separately accredited through the Southern Associated of Colleges and Schools Commission of Colleges. This change from a non-profit allowed AISN to become an academic program co-managed by the 3 universities.
June 1, 2003 – AISN officially becomes an unincorporated association comprised of MCM, ACU, and HSU. These 3 universities entered into a 2003 Consortium Agreement, which designated HSU as the “coordinating institution”, allowing them to serve as the administrator for matters such as fiscal, business, and accounting, as well as employee relations, lease and property transactions, acquisition of supplies, and other duties related to administrative management.
December 31, 2005 – Name of AISN changed to Patty Hanks Shelton School of Nursing. PHSSN worked under that name to serve and educate the local community for years, but now MCM says HSU, “apparently has been secretly planning for years to usurp sole ownership and all benefits of the join program and if unable to doso, HSU now appears willing to eventually dissolve the program.” MCM says this would be a violation of their contractual duties.
HSU is trying to end the program while McMurry is trying to maintain, enhance and protect it. The program has been going for 42 years.
October 31, 2010 – ACU announces 3-year intent to withdraw from the PHSSN, which they were allowed to do under the contract signed by all 3 universities.
June 1, 2012 – ACU officially leaves the PHSSN and receives a $1 million payout for their contribution to the program over time. Since this time, MCM and HSU have been operating PHSSN together.
2013 – HSU approaches MCM and asks to buy MCM share of PHSSN. MCM says no because MCM wanted to continue the nursing education program as a joint program with HSU.
November 16, 2015 – MCM and HSU enter into a Consortium Agreement that establishes HSU as a coordinating institution and administrative manager of daily and financial operations. This contract was amended and restated in 2018. HSU has served as the administrative and servicing agent for all of PHSSN activities since 2002. During this time, MCM says they have “played an active role” in PHSSN, participating in boards and committees and supporting PHSSN operations financially and operationally. The program was a joint effort between HSU and MCM, operating smoothly for years until 2021.
October 2021 – HSU Board of Trustees directs HSU president to attempt negotiations with MCM to fully acquire the PHSSN or to start its own nursing program that would begin in the 2023-2024 school year, operating in direct competition with the PHSSN. During this time, the nursing program accounted for 8% of MCM undergrad enrollment. Losing PHSSN would be a big financial hit for the university. It would be difficult for MCM to sustain its nursing program without clinical enducation from PHSSN.
November 18, 2021 – President of HSU met with President of MCM for lunch, advised MCM of the HSU board’s directive in October.
December 3, 2021 – HSU called MCM “to inquire as to the status of McMurry’s response to their November 18 discussion”. During this convo, MCM asked HSU why they wanted to sever ties, HSU said 1. Nursing was HSU’s best program for attendance but worst for graduation rates 2. Disconnect between HSU campus and PHSSN 3. Wanted PHSSN scrubs to be HSU school colors 4. Hard with two presidents overseeing one dean 5. HSU wanted to brand their nursing program as a HSU program.
December 16, 2021 – MCM declined HSU’s request to dissolve PHSSN because they think having one center is better than having two competing programs in addition to ACU’s program.
December 16, 2021 – March 21, 2022 – No contact regarding the program
March 21, 2022 – HSU gives MCM a letter with a “buy-sell proposal” officering to buy MCM out.
April 12, 2022 – MCM gives letter to HSU, saying that MCM accepts HSU’s offer to sell the program to MCM, saying, “MCM hereby accepts your offer contained on page two of the proposal for MCM to purchase HSU’s interested in PHSSN based upon terms. . . “. HSU offered no objections. HSU refuses to sell to MCM.
May 4, 2022 – HSU emails a “first draft” Asset Purchase and Sale Agreement of MCM, which no one at MCM requested.
March 21, 2022 – HSU offered to buy MCM interested in PHSSN or alternatively to sell its interest in PHSSN, and April 12, MCM elected to purchase HSU’s interest
May 5, 2022 – Both MCM and HSU met with the SACSCOC, so MCM’s interest to by program can be evaluated. There were some legal hangups but. . .
May 18, 2022 – MCM submitted form SACSCOC to assess the policy
May 24 – HSU delivers second draft of Asset Purchase and Sale Agreement to MCM, which no one at MCM requested. This draft contained the same language as the first draft, stating that in the letter dated March 21, 2022, HSU offered to buy MCM’s interest in PHSSN or to sell its interest in PHSSN, and in the letter dated April 12, 2022, HSU elected to purchase MCM’s interest in PHSSN.
May 31 – MCM and HSU participated in a zoom conference to discuss the agreement. Prior to this call, MCM had no indication that HSU had a dispute with the agreement. However, early into the call, an HSU official “admitted that HSU had not expected McMurry to accept the HSU offer set forth in the Buy-Sell Proposal”. HSU then denied the existence of a contract between MCM and HSU by which MCM could buy PHSSN.
June 2 – SACSOC advised MCM that in order for the Merger/Acquisition to come through, both MCM and HSU would have to submit jointly-authorized written notification of the proposed chance in the status of PHSSN. MCM contacted HSU to arrange to send the notification and HSU declined. HSU then sent MCM a letter invoking the same Termination Clause that allowed ACU to sever ties with the nursing school in 2012. HSU announced intent to leave the agreement with MCM in 3 years. This letter also said that, “HSU would immediately begin the process of establishing its own competing nursing program.”
MCM says that HSU is doing this to try and force MCM to form a nursing school independent of PHSSN, but MCM says that even if HSU sells its interest in PHSSN or withdraws, they cannot dictate what MCM does with their share.
June 6 – MCM emailed HSU and requested HSU withdraw their June 2 letter and asked for a meeting to discuss how to proceed amicably.
June 7 – HSU responded with a brief email
June 9 – MCM emailed HSU requesting a meeting, and MCM sent HSU a letter detailing MCM’s position with respect to various legal issues
June 13 – HSU sent a letter to MCM
MCM says that HSU is, “attempting to unilaterally wind down PHSSN. . . while it establishes a separate competing nursing program, all while attempting to remain in the role of Coordinating Institution and agent for PHSSN”.
MCM also alleges HSU has begun recruiting PHSSN staff for their future nursing program, which will be in direct competition with PHSSN.
To recap…MCM says that the March 21 letter, coupled with the Buy-Sell Proposal from HSU, constituted an offer from HSU to sell PHSSN to MCM. MCM accepted this offer April 12, forming a contract where MCM is now entitled to acquire HSU’s interest in PHSSN. HSU reaffirmed this in their Asset Purchase and Sale Agreement May 4 and again via zoom May 5. This was also reaffirmed by HSU May 24. MCM is asking the court to declare MCM’s rights to purchase HSU’s interest in PHSSN. MCM is also seeing recovery of attorney’s fees.
MCM is alleging HSU’s actions constitutes a breach of contract because the correspondence and documents between MCM and HSU have created a valid and enforceable Purchase Contract. MCM says HSU owes MCM “an implied duty of good faith and fair dealing” to honor this contract.
Hardin-Simmons University released the following statement in response to the allegations:
“Hardin-Simmons deeply appreciates the long history of working with the other local universities in the Patty Hanks Shelton School of Nursing. We have been in discussions with McMurry about how each university could continue to provide nursing education in Abilene, and unfortunately, we have not been able to agree on the best path forward. We are disappointed that McMurry has chosen to take this matter into court, instead of working together cooperatively, and we will respond to the lawsuit to accurately set forth HSU’s position. HSU’s desire is to continue to provide excellent training and education to accommodate the need for quality nursing professionals in our community.”