Pantego Creek, LLC: The Trial | Eastern North Carolina Now

The old Pungo District Hospital has been razed. As of today, December 30, 2016, it is no more: Above.
    On Wednesday December 21, 2016 Judge Gregory McGuire heard the complaints filed by some of the stock holders against the Pantego Creek, LLC managers. The managers are Brantley Tillman, Lynn Dilday Ross, Debra Sparrow and Darren Armstrong.

    Plaintiff's Mildred Bowman, Albert and Bertha Baker, Ronnie Clark, Julian Goff, O. C. Jones Jr., Sonya Y. Jones and W. Axon Smith requested a Temporary Restraining Order until their complaints regarding the managers, failing to truthfully and accurately inform all of the members of the LLC about the financial status and the status of various offers made to purchase the hospital property. Albert and Bertha Baker along with Sonya Y. Jones have pulled out of the suit. A temporary restraining order was signed by Judge Grant in Williamston on the 28th of November. The restraining order stopped demolition of the hospital until issues in the lawsuit could be decided. The Managers through their Attorney John M. Martin with Ward and Smith petitioned to have the case moved from Superior Court to Business Court in Raleigh. Business Court is a special court designed to handle business cases.

    Judge Gregory McGuire opened the summary (without a jury) hearing by stating that he had read all of the more than 250 pages submitted by the parties. He allowed two hours to hear arguments.

    Rather than give a blow by blow description of what happened during the trial, I will give you my impressions of what I heard and saw. There were about 50 spectators. About 40 were from Belhaven with about 10 other people who were friendly to one side or the other

    One of the Attorneys of Record was removed from the case on the petition of the Plaintiffs because of conflicts of interest. John M. Martin and attorney with Ward and Smith was allowed to remain behind the bar but was admonished by Judge McGuire not to participate in the case or to have communication with his former co-council, Michael J. Parrish during the hearing.

    I got the impression Judge McGuire had made up his mind before he got to court. He displayed some glaring examples of mis-information. The Judge congratulated the four Managers on their business skill and on their fore thought. He believed they had a business plan done early on so they knew that a hospital could not be successful in Belhaven. This conclusion is totally false. It was the Town of Belhaven that had not one but as many as three financial and marketing studies done. All showed a hospital could be successful in Belhaven. That is how it became known that the hospital had two employees for every one they needed. Those studies are the basis for the loan commitment made by the USDA. The USDA finances many hospitals. They have a lot of experience in this area. Judge McGuire made these statements during the time allotted to Ward and Smith. Not once did Michael J. Parrish, Attorney with Ward and Smith try to correct the record.

    The "so called condemnation" of the hospital building by the Beaufort County Building inspector was a big hit with the Judge. He mentioned it as many as ten times. He was totally insensitive to any argument that the letter signed by Brandon Hayes was anything but a condemnation. Hayes asserted the roof and floors are caving in and the place is a fire trap. The judge believed all of this. He even talked about the good deed Hayes did in trying to save the houses surrounding the hospital building. We all know better. Two sides of the hospital are on the water, it is about 100 feet on one side to a building and the other side is a town street. This was a political move by Beaufort County. Hayes had already issued the necessary documents to demolish the building, so why does anyone need a building inspection. The County does building inspections only when new construction is going on. Every approach make by the members attorney, Geeta Kapur, to clear this up was met with a rebuff.

    The judge was in a hurry and on one occasion sort of giggled or maybe even laughed at the members Attorney, Geeta Kapur. Attorney Kapur made the argument that the Managers were derelict in their fiduciary duty because they did not make the membership aware of all the offers to purchase the building. He cut her off and allowed that she did not understand the law and he would set her straight. He allowed that Pantego Creek, LLC managers were not obligated to make the members aware of these offers because they decided the offers were not good offers. The Judge missed the big points. Number one, the Managers do have a fiduciary responsibility to the members. The big deal that he missed and failed to understand was that Attorney Kapur was arguing that all of these offers were in the range to be considered. Should offers for $500,000 on a property that the LLC's own appraiser says is worth about $650,000 be within the range of being responsible. Or would an offer for ten dollars of even one hundred thousand dollars be responsible offers.

    Because Judge McGuire did not bother to consider any of Attorney Kapur's arguments about fiduciary responsibility relevant and he did not hear other important arguments. One of these could have been, when does fiduciary responsibility become relevant. The LLC had a zero investment in the property. If there is a zero investment, does fiduciary responsibility become important when the offer is for even one dollar?

    Coupled with the above arguments is the fact that the LLC is a non profit whose only function is to provide medical care for the citizens of the Belhaven area. The Pantego Creek, LLC managers argue that the doctor's offices built by Vidant provide adequate medical care. There is a fiduciary argument that a full service hospital with an emergency room and acute care beds is not the same thing as a doctors office. Is the LLC carrying out it's fiduciary duties, considering the tax advantages given by the people to them as a non profit, when they deliberately provide a much lower level of service. The Judge, in is wisdom cut her off, snickered and sailed off into his sea of ignorance.

    At one point, Judge McGuire asked Michael J. Parrish, attorney for the LLC, "Why not just sell the property to those who want to operate the hospital and let them sink or swim on their own" (this is not a direct quote). One could feel things go tense in the room as Attorney Parish avoided answering the question by talking about the high costs to the LLC.

    Finally Judge McGuire landed hard on the 57 affidavits of stock holders (members) presented by the Pantego Creek, LLC managers. My opinion is these sworn statements say that there is nothing that has been with held or misrepresented that would have changed those who signed affidavits mind about voting to destroy the hospital. These are powerful statements on their face. Some could argue that these are irresponsible statements. However, examination of the list of names could show there are significant conflicts ranging from several people who are employed by or otherwise whose families receive benefits from Vidant, to those who within themselves or their families stand to benefit from the destruction of the hospital. Some past and present Vidant board members signed affidavits, is this a conflict? It is possible the number of conflicts would reduce the vote to less than 50 percent of the stock holders, who favor the destruction of the hospital.

    The Judge shut down the trial after about two hours, leaving many points not addressed. Of those court arguments that I have seen, when the judge was in hurry and failed to provide adequate time for argument, he usually had his mind made up before the trial began. This is law and not justice. Contrary to common sense, Law and justice are two different things. Justice is much more personal. All judges should be able to stand at the pivot point of a balance beam with law on one end and justice on the other. At the end of the day, after the decision is handed down, the beam should be perfectly balanced.

    Technocrats tend to hand down the law. This is very impersonal. It only requires the ability to mechanically assemble some facts that fit the opinion. Wise judges in these kinds of conflicts understand that in order to see through the smoke and mirrors offering to spit the baby brings out he truth.

    At this writing Judge Gregory McGuire has not rendered his opinion. The question remains, "How much Solomon is in him?"