Documents filed on Friday show movement in the lawsuit between a hospital and the sports research clinic spearheaded by local football greats.
Lawyers for Earl Campbell and Gary Baxter’s Project Rose may be allowed to conduct limited discovery in their third party lawsuit against Baylor, Scott and White Health before the healthcare organization’s motion to dismiss is considered.
Campbell and Baxter are seeking compensation after they say Texas Spine and Joint Hospital ousted them from their deal when the hospital was sold to BSW. They allege that the hospital used their work, public influence and consulting services to build a world class sports science clinic, which was then used to make the hospital more attractive to buyers.
BSW bought 50.25% of the hospital for about $80 million, and effectively terminated their partnership with Project Rose. The clinic itself is still in operation.
Their lawyers filed a counter suit against the hospital seeking compensation, and added BSW as a third party. BSW filed a motion to dismiss with prejudice in June. Project Rose has requested the ability to conduct limited discovery to ascertain what Project Rose and Touchdown LLC would be owed from the sale of the hospital.
An order is pending in 7th District Judge Kerry Russell’s court, which still needs to be signed as of Tuesday, that will allow Project Rose’s representation to seek discovery from BSW’s corporate representative, before BSW’s motion to dismiss is considered.
The Project Rose lawsuit came in response to a suit filed by Texas Spine and Joint Hospital over a rent and consultation agreement dispute. TSJH’s lawsuit claims Baxter and Earl Campbell did “little to actually build a sports science and medicine facility.” The document alleges the institute hosted a few programs, put up a website, got some equipment and made occasional press statements about its “purported charitable endeavors.”
An attorney for Campbell and Baxter said their organizations were fraudulently misled and used to promote and bolster the reputation of the hospital, but enjoyed no share of the profits when it was sold.
The counter lawsuit stated that, “When TSJH sucked everything it could from the relationship with the counter plaintiffs, and used Baxter and Campbell, to sell 50.25% of the hospital for in excess of $81,000,000, Tony Wahl told Mr. Baxter that ‘the hospital is giving notice to terminate the Project Rose license agreement as well as the consulting and lease agreement. Sometimes, despite everyone’s best efforts, agreements like this do not work out,’ and attempted to end the relationship without paying counter plaintiffs and Mr. Campbell and Mr. Baxter a red cent for all of their trade secrets, expertise, service and effort.”
The Tyler Morning Telegraph has obtained court documents in which Texas Spine and Joint Hospital claims Project Rose did not pay $200,000 in rent, and attempted to terminate the lease in August 2019. The hospital alleges that after paying the back rent, Project Rose attempted to invoice the hospital more than $4 million for 349 hours of consulting services per month dating from August 2017 through August 2019, which the hospital said are untrue, excessive and presented in contravention of their contractual obligations. The lawsuit states that these consulting invoices constituted a contract-violating demand.
When the hospital refused to pay Project Rose’s demand, TSJH claims Baxter threatened to have a news conference announcing a lawsuit against TSJH but he never followed through.
The Project Rose Research Institute for Sports Science is a sports science institute located on the second floor of the Tyler hospital, unveiled in 2017 as a partnership between Campbell, Baxter and Texas Spine and Joint Hospital before the hospital sold a majority stake to Baylor, Scott and White. Three contracts were entered — the first was a lease agreement between TSJH and Project Rose, the second a license agreement between PR Goal Line, owned by Baxter and Campbell, and TSJH and the third a consultant agreement between Project Rose and TSJH, at an hourly rate of $500.
The goal of the facility was to provide sports medicine research to create safer playing environments for athletes from grade school to professional sports.
That lawsuit was filed by the hospital on Feb. 24. A counter suit was filed on behalf of Project Rose and Touchdown Interception on April 17, adding Baylor, Scott and White as third party defendants. Baylor Scott and White Health is handling its filings separately from TSJH.
The counter suit states Project Rose MSO was persuaded to make a verbal agreement to postpone invoices and TSJH would postpone the rental obligations, at the request of TSJH CEO Tony Wahl. The document states that upon notification of the alleged unpaid rent, Project Rose paid the full $197,000 within 30 days and remains current on its rental obligations, even though TSJH removed their signage from the facility.
The countersuit accuses Baylor, Scott and White of theft of trade secrets and intellectual property, fraudulent inducement and fraud, tortious interference with existing contract, unfair competition, common law misappropriation, promissory estoppel and detrimental reliance, quantum meruit (a legal term for recovering value of services), unjust enrichment, civil conspiracy, aiding and abetting and knowingly participating in TSJH’s breaches of fiduciary duties and other wrongful conduct.
On June 26, the Baylor Scott and White Hospital system filed a motion to dismiss under the Texas anti-SLAAP statute, denying all claims. McClure said the motion has effectively put the lawsuit in a stay until that is resolved, which can take up to 120 days. Anti-SLAPP, or anti-Strategic Lawsuit Against Public Participation, laws are designed to provide for early dismissal of meritless lawsuits filed against people for the exercise of First Amendment rights, according to medialaw.org.
The most recent filings came on Friday, July 10.