Judge: Mel Red Recana, Case: 19STCV35617, Date: 2024-06-20 Tentative Ruling
All rulings shown here are TENTATIVE ONLY, and thus oral argument WILL be heard. All Counsel are still required to attend.
Case Number: 19STCV35617 Hearing Date: June 20, 2024 Dept: 45
Hearing date: June 20, 2024
Moving Party: (1)
Defendant Kindred Healthcare Operating, LLC
(2)
Defendant Sarthi Shah, M.D.
Responding Party: (1)
& (2) Plaintiffs Lillian Lloyd and David Lloyd, individually; as surviving
heirs, personal representatives, and successors in interest of decedent Mary
Lloyd; and as administrators and executors of the Estate of Mary Lloyd
Motions for Summary Judgment or, in the Alternative,
Summary Adjudication
The court
considered the moving, opposition, and reply papers.
The court DENIES
Defendant KHO’s motion for summary judgment with respect to the Fourth
Amended Complaint.
The court DENIES
Defendant KHO’s motion for summary adjudication as to the first, second, third,
and fourth causes of action of the Fourth Amended Complaint.
The court GRANTS
Defendant Shah’s motion for summary judgment.
Background
This
is a medical negligence and elder abuse action. Plaintiffs Mary Lloyd, by and
through her Guardian ad Litem, Lillian Lloyd, David Lloyd, and Lillian Lloyd
filed this action on October 4, 2019. Plaintiffs filed a Second Amended
Complaint on May 1, 2020 and a Third Amended Complaint on May 5, 2021.
Plaintiff Mary Lloyd died on November 23, 2021.
On April 20,
2022, plaintiffs Lillian Lloyd and David Lloyd, individually; as surviving
heirs, personal representatives, and successors in interest of decedent Mary
Lloyd; and as administrators and executors of the Estate of Mary Lloyd, filed a
Fourth Amended Complaint (“4AC”) against Providence Health System Southern
California dba Providence Holy Cross Medical Center; Kindred Hospital – Los
Angeles; THC – Orange County, LLC; Kindred Healthcare Operating, LLC; Douglas
Prisco, M.D.; Sarthi Shah, M.D.; Robin Gooding, R.N.; Jameel Hourani, M.D.;
Ellie Goldstein, M.D.; Harvey Deutsch, M.D.; Behnoush Zarrini, M.D.; Neil
Katchman, D.O.; Mike Mirahmadi, M.D.; and Gilat Englanoff, M.D. Plaintiffs
allege causes of action for (1) Professional Medical Negligence; (2) Elder
Abuse/Defendant Abuse; (3) Wrongful Death; and (4) Survival.
Defendant Kindred
Healthcare Operating, LLC (“KHO”) filed this motion for summary judgment or,
alternatively, summary adjudication on January 6, 2023. Plaintiffs filed an
opposition on June 6, 2024. Defendant KHO replied on June 14, 2024.
Defendant Sarthi
Shah, M.D. (“Shah”) filed this motion for summary judgment or, alternatively,
summary adjudication on March 28, 2024. Plaintiffs filed a notice of
non-opposition on June 6, 2024.
Legal
Standard
The function of a motion for summary
judgment or adjudication is to allow a determination as to whether an opposing
party cannot show evidentiary support for a pleading or claim and to enable an
order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) In
analyzing motions for summary judgment, courts must apply a three-step
analysis: “(1) identify the issues framed by the pleadings; (2) determine
whether the moving party has negated the opponent's claims; and (3) determine
whether the opposition has demonstrated the existence of a triable, material
factual issue.” (Hinesley v. Oakshade
Town Center (2005) 135 Cal.App.4th 289, 294.)
As
to each claim as framed by the complaint, the defendant moving for summary
judgment must satisfy the initial burden of proof by presenting facts to negate
an essential element, or to establish a defense. (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.)
Courts “liberally construe the evidence in support of the party opposing
summary judgment and resolve doubts concerning the evidence in favor of that
party.” (Dore v. Arnold Worldwide, Inc. (2006)
39 Cal.4th 384, 389.) A motion for summary judgment must be denied where the
moving party's evidence does not prove all material facts, even in the absence
of any opposition (Leyva v. Sup. Ct. (1985)
164 Cal.App.3d 462, 475) or where the opposition is weak (Salesguevara v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384,
387).
Discussion
(1)
Defendant KHO’s
MSJ/MSA
Defendant’s
request for judicial notice is GRANTED.
The parties’
evidentiary objections are OVERRULED.
Defendant KHO moves
for summary judgment with respect to the Fourth Amended Complaint.
Alternatively,
Defendant moves for summary adjudication as follows:
1. Plaintiffs’
first cause of action for professional negligence lacks merit.
2. Plaintiffs’
second cause of action for dependent adult abuse lacks merit.
3. Plaintiffs’
third cause of action for wrongful death lacks merit.
4. Plaintiffs’ fourth cause of action for survival
lacks merit.
Entire Complaint
Defendant KHO contends that it has
no liability because it is a distinct and separate entity from the Orange
County, LLC.
Generally, a parent corporation
cannot be liable for the acts of its subsidiaries. (See U.S. v. Bestfoods
(1998) 524 U.S. 51, 61.) However, a parent corporation may be held liable as an
alter ego when (1) there is such a unity of interest and ownership that the
separate personalities of the subsidiary corporation and the parent corporation
no longer exist and (2) an inequitable result will follow if the acts are
treated as those of the subsidiary alone. (See Las Palmas Associates v. Las
Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1249.) The corporate
entity is disregarded where the corporation is “‘so organized and controlled,
and its affairs are so conducted, as to make it merely an instrumentality,
agency, conduit, or adjunct of another corporation.’” (Ibid. (quoting
McLoughlin v. L. Bloom Sons Co., Inc. (1962) 206 Cal.App.2d 848, 851-52)
(emphasis in original).) Additionally, “[u]nder the single-enterprise rule,
liability can be found between sister companies.” (Ibid.) “‘In effect
what happens is that the court, for sufficient reason, has determined that
though there are two or more personalities, there is but one enterprise; and
that this enterprise has been so handled that it should respond, as a whole,
for the debts of certain component elements of it.” (Id. at 1249-50.)
Alter ego and agency are two
different concepts and must be evaluated independently. (Northern Natural
Gas Co. v. Superior Court (1976) 64 Cal.App.3d 983, 994.) The significant
difference between the concepts is that “agency” does not require the
misconduct or wrongdoing that is required in the “alter ego” analysis. (Sonora
Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 540-542). If a
parent corporation exercises such a degree of control over its subsidiary that
the subsidiary can legitimately be described as only a means through which the
parent acts, or nothing more than an incorporated department of the parent, the
subsidiary will be deemed to be the agent. (Rollins Burdick Hunter of So.
Cal., Inc. v. Alexander & Alexander Services, Inc. (1988) 206
Cal.App.3d 1, 9.) The nature of the control exercised by the parent over the
subsidiary that is necessary to put the subsidiary in an agency relationship
with the parent must be over and above that to be expected as incident to the
parent’s ownership of the subsidiary and must reflect the parent’s purposeful
disregard of the subsidiary’s independent corporate existence. (Id. at
9.) It is not enough to demonstrate that the parent has general executive
control over its subsidiary; rather there must be a strong showing beyond
simple facts evidencing “the broad oversight typically indicated by the common
ownership and common dictatorship” present in a normal parent-subsidiary
relationship. (Sonora Diamond, supra, 83 Cal.App.4th at 541.
Importantly, in establishing whether an agency relationship exists, the
question is not whether there exists justification to disregard the
subsidiary’s corporate identity, which is the point of the alter ego analysis,
but instead whether the degree of control exerted over the subsidiary by the
parent is enough to reasonably deem the subsidiary an agent of the parent under
traditional agency principles. (Sonora Diamond, supra, 83
Cal.App.4th at 542.) In other words, the parent must be shown to have moved
beyond the establishment of general policy and direction for the subsidiary,
and in effect taken over performance of the subsidiary’s day-to-day operations
in carrying out that policy. (See Rollins, supra, 206 Cal.App.3d
at 99.)
A joint venture exists where there
is an agreement between the parties under which they have a community interest,
that is, a joint interest, in a common business undertaking, an understanding
as to the sharing of profits and losses, and a right of joint control. (Bank
of California v. Connolly (1973) 36 Cal.App.3d 350, 364.) An essential
element of a joint venture is the right of joint participation in the
management and control of the business. (Kaljian v. Menezes (1995) 26
Cal.App.4th 573, 586.) Absent such right, the mere fact that one party is to
receive benefits in consideration of services rendered for capital contribution
does not, as a matter of law, make him a partner or joint venture. (Id.
at 586.)
Defendant contends that it did not
own, operate, or provide clinical services or employees to Kindred Los Angeles
during the period of Decedent’s hospitalization; thus, Plaintiffs’ sole means
of imposing liability on KHO is through invocation of the agent or alter ego
doctrine to pierce the corporate veil, and there are no facts to impute such
liability. KHO relies primarily on the Administrative and Support Services
Agreement attached to the Compendium of Exhibits as Exhibit 54. (Teague Decl.,
¶4, Exh. 54.) KHO contends the agreement outlines the full extent of the
business relationship between KHO and co-defendant Kindred Los Angeles. As a
parent company, KHO provided THC Orange County, its subsidiary, with only those
administrative and support services outlined in Section 1.1 of the
“Administrative and Support Services Agreement,” which existed between the two
entities at the time of Decedent’s hospitalization at Kindred Los Angeles. (Defendant’s
UMF (“DUMF”) 5.) Under the Administrative and Support Services Agreement, THC
Orange County remained the sole legal entity exercising management and
operational control over the day-to-day operations of Kindred Los Angeles. (DUMF
6.) Consequently, KHO did not itself operate, manage or participate in the
day-to-day operations of Kindred Los Angeles during the period of Decedent’s
hospitalization. (DUMF 7.) KHO did not hold the operating license for Kindred
Los Angeles or employ any individual at that hospital. (DUMF 9.)
Based on the Administrative and
Support Services Agreement, and the operating license, Defendant has satisfied
its initial burden that it is a separate entity and did not at least contract
to operate, manage, or participate in the day-to-day activities of Kindred Los
Angeles.
In opposition, Plaintiffs argue that
there are facts showing that KHO and Kindred Hospital had an agency
relationship and/or joint venture. Plaintiffs provide evidence that the
operations of Kindred Hospital and KHO are so intwined that the current COO and
former CEO of Kindred Hospital, Jason Perez – PMQ for Kindred Hospital, “didn’t
have any disassociation between Kindred Hospital and KHO.” (Plaintiffs’ UMF (“PUMF”)
58.) The PMQ for KHO and who was working at KHO at the time of Kindred
Hospital’s care of Decedent, was not surprised to learn of this confusion. (PUMF59.)
From February 2019 through April 2019 Defendant KHO owned, oversaw and provided
operational structure to Kindred Hospital for the purpose of the hospital
operating and functioning at an optimal level. (PUMF 60.) From February 2019
through April 2019 Defendant KHO was the sole owner of Kindred Hospital who
each had ownership interest and interest in the profits in Kindred Hospital Los
Angeles. (PUMF 61.) From February 2019 through April 2019 Defendant KHO and
Kindred Hospital each had control over the operation of the hospital Kindred
Hospital Los Angeles. (UMF 62.) Kindred Hospital was required to meet the
standards and metrics of KHO, which covered the areas of nursing services,
wound care, and case management. (PUMF No. 63.) KHO created policies and
procedures related to ensuring proper patient staff ratios were maintained and
expected its hospitals like Kindred Hospital to follow those policies and
procedures. (PUMF No. 64.) In 2019 KHO provided training and onboarding
assistance, both remotely and in person, as well as training materials and
guidelines for Kindred Hospital staff. KHO expected Kindred Hospital to follow
these KHO standards and practices. (PUMF No. 65.) In 2019, KHO’s leadership
team engaged regularly with Kindred Hospital on various matters, including
pharmacy, clinical operations, wound care, and respiratory therapy. These
leadership individuals would regularly interact with Kindred Hospital to assess
day-to-day compliance with KHO policies and fill in any needs based on requests
or their own observations. (PUMF No. 66.) In 2019 KHO set out the policies for
wound care, acuity assessment and staffing ratios, budget and budgeting of
staffing expenditures at Kindred Los Angeles. (PUMF No. 67-69.) In 2019, KHO
could change the policies that Kindred Hospital was required to follow, but Kindred
Hospital could not do so without input from KHO. (PUMF No. 71.) In 2019, KHO
trained Kindred Hospital staff on adherence to KHO policies, emphasizing that failure
to comply would lead to disciplinary action. (PUMF No. 70.) Further, in 2019
KHO was informed of any complaints submitted to the California Department of
Public Health related to Kindred Hospital, including any substantiated claims
or deficiencies. (PUMF No. 72.) From 2018-2019 KHO would participate in union
negotiations for Kindred Hospital and acted as the primary negotiator and would
have the final say to any agreement reached. (PUMF No. 73.) The above facts are
supported by the testimony of the PMQ for KHO and Kindred Hospital.
Based on the foregoing evidence, the
Court finds that Plaintiffs have created a triable issue of material fact as to
the agency and/or joint venture relationship of KHO and Kindred Hospital based
on ownership and control.
Accordingly, KHO’s argument fails at
this point and KHO may be liable for the acts of Kindred Hospital.
The Court notes that it already denied Kindred Hospital’s MSJ/MSA which
was based upon essentially the same arguments and evidence. Plaintiffs point
this out in opposition, and Defendant does not appear to dispute this in reply
or make any substantive arguments as to the merits of the individual causes of
action other than reiterating its arguments regarding the distinction between
KHO and Kindred Hospital.
Accordingly, the KHO’s motion is DENIED in its entirety.
(2)
Defendant Shah’s
MSJ/MSA
Defendant
Shah moves for summary judgment, or in the laternative, summary adjudication.
Plaintiffs have filed a notice of non-opposition based upon discovery performed
to date. Based on the Plaintiffs’ notice of non-opposition, Plaintiffs have in
essence conceded the merits of Defendant’s motion and have not disputed any of
Defendant’s material facts.
Based
on the foregoing, Shah’s motion is GRANTED.
It is so
ordered.
Dated:
June 20, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court