Judge: Monica Bachner, Case: BC681033, Date: 2022-10-14 Tentative Ruling

Case Number: BC681033    Hearing Date: October 14, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Defendants Shuo Steven Wang, M.D.’s and Premier Wound Care of Los Angeles, Inc.’s motion for summary judgment is denied. 

Defendants Shuo Steven Wang, M.D. (“Wang”) and Premier Wound Care of Los Angeles (“PWC”) (collectively, “Wang Defendants”) move for summary judgment against Plaintiffs Piper Care Management aka Piper Case Management and Consulting, Inc. (“Piper”) and Geraldine Beutler (“Beutler”) (collectively, “Plaintiffs”) on the fourth amended complaint (“4AC”).

          CRC Violations

Plaintiffs filed a separate statement in opposition to the motion for summary judgment in violation of C.R.C. Rule 3.1354(b) and 3.150(h), which provides

All written objections to evidence must be served and filed separately from the other papers in support of or in opposition to the motion. Objections to specific evidence must be referenced by the objection number in the right column of a separate statement in opposition or reply to a motion, but the objections must not be restated or reargued in the separate statement.

(C.R.C., Rules 3.1354(b), 3.150(h).)  Plaintiffs’ separate statement in opposition to the motion for summary judgment raises objections and is replete with arguments. The Court will not rule on the objections improperly raised. Plaintiffs have not filed evidentiary objections in opposition in accordance with C.R.C. Rule 3.1354.

Evidentiary Objections

Defendants’ 10/5/22 evidentiary objections to the declaration of Geraldine Beutler (“Beutler”) are overruled as to Nos. 1, 2, and 4 and sustained as to Nos. 3, 5, 6, 7, 8, 9, 10, 11, and 12.

Defendants’ 10/5/22 evidentiary objections to the declaration of Doreen Mercado (“Mercado”) are overruled as to Nos. 13, 15, 16, and 18 and sustained as to Nos. 14 and 17.

Background

On October 24, 2017, Plaintiffs filed their contract-related complaint in the instant action against Defendants Pacific Alliance Medical Center and Steve Canyon (“Canyon”) alleging five causes of action for breach of contract, fraud and deceit, unjust enrichment, defamation, and unfair business acts and practices.  Plaintiffs filed their first amended complaint (“FAC”) on December 13, 2017. Plaintiffs filed their second amended complaint (“SAC”) on June 29, 2020.  Plaintiffs filed their third amended complaint (“3AC”) on March 4, 2022. Plaintiffs filed the operative 4AC on June 20, 2022, against non-moving Defendants PAMC, Ltd., Pacific Alliance Medical Center, Inc. (collectively, “PAMC”), and moving Defendants Wang and PWC.  The 4AC alleges ten causes of action: (1) breach of contract (non-compete and confidentiality clauses); (2) fraud and deceit; (3) unjust enrichment; (4) defamation; (5) unfair business acts and practices; (6) negligent misrepresentation; (7) intentional misrepresentation; (8) misuse and misappropriation of trade secrets and confidential information; (9) California Uniform Trade Secrets Act (“CUTSA”); and (10) conversion.  (4AC.)  The Court notes Plaintiffs only allege the 3rd, 5th, 8th, 9th, and 10th causes of action against Wang Defendants.

Plaintiffs allege PAMC violated written agreements it executed with Piper by and through Plaintiffs’ principal, Beutler, agreeing that wound care services created by Piper would be provided to PAMC’s patients, including hyperbaric oxygen therapy program (“HBO”) treatments.  (4AC ¶¶1-4.)  Inpatient wound care was performed at PAMC hospital at 531 W. College St., Los Angeles, California, and HBO services and surgical outreach were performed at PAMC’s facility at 711 West College St., Medical Office Building, Suite 188, Los Angeles, California, 90012 (“Suite 188”) since 2006 under the supervision of Wang, who supervised the HBO dives and where Plaintiffs maintained their property in 10 file cabinets and 4 computer towers, as well as 6 file cabinets in separate office on the fourth floor.  (4AC ¶1.) Plaintiffs allege both the wound care and HBO therapy programs were developed solely by Plaintiffs.  (4AC ¶1.) 

Plaintiffs allege PAMC informed Plaintiffs on or about December 19, 2016, of an ongoing Department of Justice (“DOJ”) investigation of Piper and that PAMC’s contract with Piper would need to be renegotiated because Plaintiffs were being accused of compliance issues; to date, a DOJ investigation involving Piper had never taken place.  (4AC ¶¶8-10.)  PAMC allegedly informed Plaintiffs that their written agreements would terminate effective July 31, 2017, and PAMC intended to negotiate a new agreement with Piper within 30 days.  (4AC ¶12.)  Plaintiffs allege after Plaintiffs’ contract with PAMC was not renegotiated or renewed, PAMC continued operating Plaintiffs’ wound care and HBO program, and continued to use of Plaintiffs’ property without its consent or payment to Piper.  (4AC ¶14.)  Plaintiffs allege beginning December 1, 2017, after leasing Suite 188 and purchasing equipment and materials in 10 file cabinets and 4 computer towers, PWC and Wang continued operating Plaintiffs’ wound care and HBO program for its own financial gain at the same location, which continues to date.  (4AC ¶14.)  Plaintiffs allege PAMC informed Wang the official closure of PAMC hospital would take place on December 11, 2017, and that PAMC did not give public and official notice that PAMC hospital was closing on November 30, 2017, until on or about October 30, 2017.  (4AC ¶¶14-15.)  

Plaintiffs allege Wang began negotiations with PAMC on or about October 26, 2017, to convert Plaintiffs’ hospital-based program into a physician-based program and Wang entered into a contract for sale of Plaintiffs’ property, both hard copy and electronic materials, including Plaintiffs’ policies and procedures and trade secrets maintained at Suite 188.  (4AC ¶15.)  Plaintiffs allege Wang began to incorporate PWC, which assumed operation of Plaintiffs’ business on December 1, 2017, in Suite 188, whereby PWC purchased from PAMC all Plaintiffs’ physical equipment maintained in Suite 188 for 9 years.  (4AC ¶15.)  Plaintiffs allege PAMC and PWC have acted in concert since on or about December 20, 2017, to prevent the return of Plaintiffs’ property by opposing Plaintiffs’ Temporary Restraining Order on December 20, 2022 (sic), and to date, most of Plaintiffs’ materials in Suite 188 have not been returned.  (4AC ¶15.)  On July 27, 2022, moving Defendants filed the instant motion.  On September 28, 2022, Plaintiffs filed their opposition.  On October 5, 2022, moving Defendants filed their reply.

Wang Defendants argue Plaintiffs cannot establish any of their causes of action against Wang Defendants because each cause of action requires the element that Wang Defendants unlawfully possessed, purchased, or used Plaintiffs’ trade secret policies and procedures for the operation of hospital-based hyperbaric oxygen (“HBO”) and wound care programs (the “Policies and Procedures”).  (Motion pg. 5; Separate Statement [“SS”] 15; Decl. of Freeburg ¶¶2-3, Exh. A.)

          Wang Defendants argue Plaintiffs cannot establish any of its causes of action because Wang Defendants never took possession of, purchased, or used any of Plaintiffs’ trade secret policies and procedures for the operation of hospital-based hyperbaric oxygen (“HBO”) and wound care programs (the “Policies and Procedures”) to operate PWC in December 2017.  (Motion pgs. 5-6

          Wang Defendants submitted evidence suggesting Plaintiffs cannot establish Wang Defendants received a benefit from Plaintiffs, but rather, Wang Defendants submitted evidence that Wang developed a concept for a standalone HBO and wound care clinic and is running PWC without using Plaintiffs’ Policies and Procedures. (Undisputed Separate Statement of Facts [“USSF”] 1, 5, 6, 7, 8, 9; Decl. of Wang ¶¶2, 8, 9, 10, 11, 12, 13, 14, D-COE Exhs. C, D, E, F; Disputed Separate Statement of Facts [“DSSF”] 2, 3, 4, 12; Decl. of Wang ¶¶2, 4, 5, 6, 7, 21, D-COE Exhs. A, B, F; Decl. of Beutler ¶9.) Wang declares he began working on a concept for an HBO and wound care clinic and he charted his thoughts into a notebook after being informed by Canyon that PAMC was closing.  (DSSF 3; Decl. of Wang ¶¶4, 5, D-COE Exh. A.)  Wang declares he personally obtained, created, and implemented the policies and procedures being used by PWC.  (USSF 9; Decl. of Wang ¶¶15, 16, D-COE Exh. F; DSSF 12; Decl. of Wang ¶21, D-COE Exh. F.)  Wang declares neither he or PWC ever took possession of, purchased, or used any of Plaintiffs’ Policies and Procedures for the operation of PWC.  (DSSF 13; Decl. of Wang ¶22.)  Accordingly, Wang Defendants met their burden on summary judgment, shifting the burden to Plaintiffs to create a triable issue of material fact. As discussed below, Plaintiffs met their burden.

          Plaintiffs submitted evidence creating a triable issue as to whether they can establish Wang Defendants received a benefit from Plaintiffs.  Specifically, Beutler declares that Wang’s notebook confirms his intention to take over Plaintiffs’ wound care business, which he operated as Medical Director for twelve years at PAMC in Suite 188.  (DSSF 3; Decl. of Beutler ¶9.)  Plaintiffs argue that none of the materials Wang proffered as the policies and procedures being used by PWC were authored by Wang.  (DSSF 12; Decl. of Wang, D-COE Exh. F pgs. 83, 150, 278, 306, 328, 343, 367, 398, 399, 406, 421, 427, 439, 449, 473, 487, 505, 513, 525, 534, 559, 567, 575, 580, 589, 594, 603, 610, 615, 622, 628, 652, 656, 660, 669, 671, 698.)  The Court notes only page 715-716 of Wang’s Exhibit F are attributable to him or PWC.  (DSSF 12, Decl. of Wang, D-COE Exh. F. pgs 715-716.)  Plaintiffs submitted evidence of PAMC and Wang’s agreement for PWC to lease Suite 188.  (Additional Material Facts [“AMF”] 22; Wang Exh. D.)  Plaintiffs submitted evidence in the bill of sale between PAMC and PWC that shows ten filing cabinets and four computers were sold to Wang on December 1, 2017.  (DSSF 13; Decl. of Wang, D-COE Exh. E pgs. 1-3, 5, 6, 7.)  Plaintiffs submitted evidence that PAMC CEO John Edwards stated in his deposition that he does not know if Plaintiffs’ property was ever moved from Suite 188, or what happened to the contents of the ten filing cabinets and four computers, and never received confirmation that it was purged.  (DSSF 13; P-COE Exh. K at 11:1-3, 58:16-60:6; Exh. L.)  Plaintiffs also submitted evidence that Mina Nadal (“Nadal”), Piper’s Director of wound care from 2006 until PAMC closed, confirmed all Plaintiffs’ physical books, policies, and manuals were physically maintained in Suite 188, and all policies and procedures authored by Beutler continued to be in use after July 31, 2017.  (Disputed Additional Material Facts [“DAMF”] 15; P-COE Exh. E at 85:19-23, 86:2-15, 91:10-14, 96:1-3.)  Plaintiffs submitted evidence of Nadal’s testimony that when Nadal stopped working in Suite 188 in December 2017, all policies and procedures for wound care and HBO were the same, the four computers were in the same position and were not moved, she never saw the computers shut down, and the wound care and HBO program Wang took over was the same program Beutler administered since 2004.  (DAMF 15; P-COE Exh. E at 97:6-25, 98:1-35, 99:6-10.)  Plaintiffs submitted evidence that Wang’s declaration in opposition to Plaintiffs’ December 20, 2017 request for a TRO for the return of Plaintiffs’ property included four “sample redacted policies” written by Beutler in 2016.  (Undisputed Additional Material Facts [“UAMF”] 26; P-COE Exh. M; Decl. of Mercado ¶9.)

          Accordingly, Wang Defendants’ motion for summary judgment is denied.

Dated:  October _____, 2022

Hon. Monica Bachner

Judge of the Superior Court