COLUMBIA HCA OF HOUSTON INC v. FONDREN ORTHOPEDIC LTD (2026)

OPINION

The jury was asked whether the defendant breached a non-compete provision in a partnership agreement. It answered yes. But the defendant says it is governed by a different non-compete provision in the partnership agreement, not the one given to the jury. We agree, reverse the trial court's final judgment, and render a take nothing judgment.

BACKGROUND

I. The parties and their relationship

This case revolves around a partnership agreement for the creation and management of Texas Orthopedic Hospital. Columbia Healthcare Corporation owned a 60% interest in the hospital through two affiliates: CHC Holdings owned 59% as a Class B Limited Partner; Columbia Hospital Corporation owned 1% and acted as general partner. Fondren Orthopedic Group staffed the hospital and owned a 40% interest in the hospital as a Class A Limited Partner through a new affiliate: Fondren Orthopedic Ltd.

Columbia Healthcare Corporation merged with Hospital Corporation of America shortly thereafter and Columbia/HCA of Houston, Inc. became the Class B Limited Partner. The hospital's current ownership is therefore:

General Partner Class A Limited Partner Class B Limited Partner Columbia Hospital Corporation Fondren Orthopedic Ltd. Columbia/HCA

II. The partnership agreement's provisions governing competition

The partnership agreement contains three provisions governing competition that are at the heart of this dispute. The first is section 6.6, which gives both the general partner and its affiliates—defined in a way that includes limited partner Columbia/HCA ¹ —broad rights to engage in competitive enterprises “of every nature and description”:

6.6. Independent Activities. Except as otherwise provided in this Section 6.6 or in Section 8.4(b) or (d) hereof, the General Partner and its Affiliates may engage in or possess interests in other business ventures of every nature and description, independently, and with others, whether such activities are competitive with the Partnership or otherwise without having or incurring any obligation to offer any interest in such activities to the Partnership or any Partner. Neither this Agreement nor any activity undertaken hereunder shall prevent the General Partner or any of its Affiliates from engaging in such other activities or require the General Partner or any of its Affiliates to permit the Partnership or any Limited Partner to participate in any such activities. Furthermore, as a material part of the consideration for the General Partner executing this Agreement and admitting the Limited Partners to the Partnership, the Limited Partners herein waive, relinquish and renounce any right or claim of participation in any such activities.

(emphasis added).

Section 6.6's broad rights to compete apply to the general partner and its affiliates except as “otherwise provided” by several subsections. Relevant here is section 8.4(b), which prohibits the general partner and its affiliates from owning a controlling interest in a facility that derives more than 50% of its gross revenues from orthopedic specialty and surgery services within a 150 mile radius of Texas Orthopedic Hospital:

(b) During the term of this Agreement and so long as there is an outstanding balance on any note issued to purchase the Class A Limited Partner's interest in the Partnership pursuant to Section 11.3(c) or (d) hereof or the FOG Lease is in effect, neither the General Partner or any of its Affiliates, including Columbia, shall own, directly or indirectly, a controlling interest in, or manage, a facility which provides orthopedic specialty and surgery services and derives more than 50% of its gross revenues from providing such services within a one hundred and fifty (150) mile radius of the Hospital.

(emphasis added). Fondren Orthopedic didn't sue under either section 6.6 or section 8.4(b).

Fondren Orthopedic's claims are instead based on a third provision governing competition, section 8.2, in which the limited partners—including Columbia/HCA—and their affiliates agree not to own an interest in facilities that provide substantial orthopedic surgery services in a certain geographical area without the prior written consent of the general partner:

8.2. Covenant Not to Compete. Except as otherwise provided in this Section 8, each Limited Partner agrees that while he is a Limited Partner and for two (2) years thereafter, neither he nor any of his Affiliates (including, without limitation with respect to the Class A Limited Partner, each of its partners) shall, directly or indirectly, hold an ownership interest in, or be actively involved in the management of, an acute care hospital, specialty hospital, comprehensive rehabilitation facility, rehabilitation agency, diagnostic center, inpatient or outpatient physical therapy, psychiatric or substance abuse facility, or ambulatory or other type of surgery center, any of which facilities provides substantial orthopedic surgery services within the Houston Primary Metropolitan Statistical Area, without the prior written consent of the General Partner. Each Limited Partner expressly agrees that neither it nor any of its Affiliates (and with respect to the Class A Limited Partner, each of its partners) shall violate the terms of this Section 8.2 while such Limited Partner is a limited partner of the Partnership and for a period of two (2) years thereafter. Notwithstanding the foregoing, no partner of the Class A Limited Partner shall be prohibited from owning up to 5% of the outstanding voting securities or other securities issued by any corporation having securities listed on a national stock exchange.

(emphasis added). The broad competitive rights granted in section 6.6 are not explicitly limited by section 8.2.

Columbia/HCA argues that the parties operated for years as if sections 6.6 and 8.4(b) applied to the Columbia affiliates, whereas section 8.2 applied only to Fondren Orthopedic. Under this interpretation, Fondren Orthopedic's competitive limitations were more stringent—it couldn't own any interest in a facility providing an undefined “substantial” orthopedic surgery services—although they applied to a smaller area; Columbia/HCA and its affiliates, on the other hand, were subject to more lenient limitations—they were only prevented from owning a controlling interest in a facility and only if that facility derived more than 50% of its gross revenues from providing orthopedic specialty and surgery services.

III. Trial court proceedings

Fondren Orthopedic originally sued both the general partner, Columbia Hospital Corporation, and the limited partner, Columbia/HCA. By the time this case went to trial, however, Fondren Orthopedic was pursuing claims only against the limited partner Columbia/HCA, asserting that it violated section 8.2 by owning various healthcare facilities. The parties filed competing rule 166(g) motions asking the trial court to determine whether section 8.2 applied to Columbia/HCA. See Tex. R. Civ. P. 166(g).

The trial court granted Fondren Orthopedic's rule 166(g) motion and ruled that section 8.2 applies to Columbia/HCA. The jury was therefore asked whether Columbia/HCA breached section 8.2 by providing “substantial orthopedic surgery services” through the challenged facilities; it was not asked about or instructed on either section 6.6 or section 8.4(b). The jury found in Fondren Orthopedic's favor and adopted its damages model in full, awarding $25,959,141 in damages, $3,318,275.25 in attorney's fees, and $7,242,149.92 in prejudgment interest.

ANALYSIS

Columbia/HCA asserts that the trial court misinterpreted the parties' partnership agreement to apply section 8.2 to Columbia/HCA. We agree.

The construction of an unambiguous contract is a question of law we review de novo. Equinor Energy LP v. Lindale Pipeline, LLC, 731 S.W.3d 324, 327 (Tex. 2026). A contract is unambiguous if it can be given one certain or definite legal interpretation. Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 479 (Tex. 2019). We give contract terms their plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). We examine and consider the entire writing in an effort to harmonize and give effect to all provisions so that none will be rendered meaningless. Id.

The partnership agreement's non-compete provisions are unambiguous. Sections 6.6 and 8.4(b) both apply to the general partner (Columbia Hospital Corporation) and its affiliates (one of which is Columbia/HCA). Section 6.6 therefore grants Columbia/HCA broad rights to engage in business ventures “of every nature and description” even if they “are competitive with the Partnership.” There is only one exception: section 8.4(b), which prohibits the general partner and its affiliates—including Columbia/HCA—from owning a controlling interest in facilities that meet certain criteria. There are no further restrictions on section 6.6's applicability; in fact, section 6.6 explicitly states that nothing else in “this Agreement” limits “the General Partner or any of its Affiliates” from the competitive activities allowed by section 6.6.

The question is whether Columbia/HCA is also bound by section 8.2—which binds “each Limited Partner” and its affiliates—because it is a limited partner in addition to being an affiliate of the general partner governed by section 8.4(b). At first blush this argument seems persuasive: the plain language of section 8.2 applies its restriction to “each Limited Partner,” and it is undisputed that Columbia/HCA is a class B limited partner. But we reject this interpretation for four reasons.

First, section 8.2 only applies “[e]xcept as otherwise provided in this Section 8[.]” The general partner and its affiliates are “otherwise provided” for in section 8: section 8.4(b) specifically prohibits them from owning a facility that derives more than 50% of its gross revenue from orthopedic specialty and surgery services. The general partner and its affiliates (i.e., Columbia Hospital Corporation and its affiliate Columbia/HCA) are therefore “[e]xcept[ed]” from section 8.2's application. Fondren Orthopedic's proposed interpretation would render this qualifying language meaningless, which we cannot do.

Second, section 8.2's reference to “each Limited Partner” does not overcome its “otherwise provided” language. It is true that Fondren Orthopedic and Columbia/HCA were the only two limited partners at the time of the agreement. But we don't think that means the parties necessarily intended to bind Columbia/HCA to its terms, as Fondren Orthopedic argues. Rather, the agreement contemplates that additional class C limited partners may be admitted into the partnership in the future. Each of those limited partners would be bound by section 8.2 once they were admitted, unless they were otherwise provided for in section 8.

Third, applying section 8.2 to limited partner Columbia/HCA would mean it also applies to its affiliate, general partner Columbia Hospital Corporation. But this would make no sense. Section 8.2's restriction may be waived with “the prior written consent of the General Partner.” So, under Fondren Orthopedic's interpretation, general partner Columbia Hospital would be bound by section 8.2's restrictions unless it granted itself prior written consent to engage in the prohibited activities. This is not a reasonable reading of the partnership agreement.

Fourth, the specific-over-the-general canon does not dictate the result here. Namely, Fondren Orthopedic argues that section 8.2 should control because it applies specifically to limited partners, whereas section 8.4(b) only applies to Columbia/HCA as an affiliate of a general partner. But this canon of construction only applies “[t]o the extent of any conflict” in the agreement. NuStar Energy, L.P. v. Diamond Offshore Co., 402 S.W.3d 461, 466 (Tex. App.—Houston [14th Dist.] 2013, no pet.). Here, however, there is no conflict. The contract's plain language yields one reasonable interpretation: Columbia/HCA, as an affiliate of general partner Columbia Hospital Corporation, is free to compete as provided by section 6.6 bound only by the non-compete restriction in section 8.4(d)—not section 8.2. See Bd. of Regents of Univ. of Tex. Sys. v. IDEXX Labs., Inc., 691 S.W.3d 438, 440 (Tex. 2024) (recognizing that parties must have intended that different provisions “would apply in different and mutually exclusive situations”). The trial court erred in concluding otherwise.

CONCLUSION

We reverse the trial court's final judgment and render a take nothing judgment against Fondren Orthopedic Ltd.

FOOTNOTES

1.   “Affiliate” is defined to include “any Person or entity that directly or indirectly controls, is controlled by, or is under common control with a Partner.”

Katy Boatman Justice