Judge: Monica Bachner, Case: BC681033, Date: 2022-12-20 Tentative Ruling
Case Number: BC681033 Hearing Date: December 20, 2022 Dept: 71
Superior Court of California
County of Los Angeles
DEPARTMENT 71
TENTATIVE RULING
|
PIPER CARE MANAGEMENT, et al.,
vs.
PAMC, LTD., et al. |
Case No.: BC681033
Hearing Date: December 20, 2022 |
Defendants’ motion for summary adjudication is granted as to the 2nd, 6th and 7th causes of action.
Defendants Pacific Alliance Medical Center, Inc. (“PAMC”) and PAMC, Ltd. (“PAMC, Ltd.”) (collectively, “PAMC Defendants”) move for summary adjudication against Plaintiffs Piper Care Management aka Piper Care Management and Consulting, Inc. (“Piper”) and Geraldine Beutler (“Beutler”) (collectively, “Plaintiffs”) on their fourth amended complaint (“4AC”) on the grounds that the Plaintiffs cannot establish the essential elements of proximate causation and justifiable reliance with respect to their second cause of action for fraud, as well as their related sixth and seventh causes of action for negligent and intentional misrepresentation; and on the grounds that Plaintiff Beutler cannot establish her second cause of action for fraud. (Notice of Motion, pg. 2; C.C.P. §437c(f).)
Requests for Judicial Notice
Plaintiffs’ 12/5/22 request for judicial notice of PAMC Defendants’ Opposition to Plaintiffs’ 12/19/17 Ex Parte Application for TRO and OSC re Preliminary Injunction is denied, as there is no need to take judicial notice since the Court can review the records of the case at hand.
Evidentiary Objections
Plaintiffs filed a separate statement in opposition to the motion for summary adjudication in violation of C.R.C. Rule 3.1354(b) and 3.1350(h). Rule 3.1354(b) 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), 3.1350(h).) 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. Moreover, as to one dispute fact, No. 31, Plaintiffs responded “disputed,” but provided not evidence to support this dispute, contrary to Rule 3.1350(h).
Defendant’s 12/15/2022 evidentiary objections to the Declaration of Geraldine Beutler (“Beutler”) are sustained as to Nos. 1, 2, 3, and 4.
Procedural Background
On October 24, 2017, Plaintiffs filed their initial complaint. On June 20, 2022, Plaintiffs filed their 4AC alleging ten causes of action against Defendants: (1) breach of contract, (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, arising from executed written agreements effective July 1, 2008 between Plaintiff Piper and PAMC Defendants. (4AC ¶1.) On October 28, 2022, this Court sustained PAMC Defendants’ demurrer to the 8th and 10th causes of action in the 4AC for supersession under CUTSA without leave to amend. (10/28/22 Ruling.) On October 4, 2022, PAMC Defendants filed the instant motion. Plaintiffs filed their opposition on December 5, 2022. PAMC Defendants filed their reply on December 15, 2022.
Summary of Allegations
Plaintiffs allege Defendant PAMC violated written agreements it executed with Plaintiff Piper by and through Plaintiffs’ principal, Plaintiff 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 non-moving Defendant Shuo Steven Wang, M.D. (“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 Defendant PAMC informed Plaintiffs on or about December 19, 2016, of an ongoing Department of Justice (“DOJ”) investigation of Plaintiff Piper and that Defendant PAMC’s contract with Plaintiff 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.) Plaintiffs allege that Defendant PAMC informed Plaintiffs that their written agreements would terminate effective July 31, 2017, and Defendant PAMC intended to negotiate a new agreement with Plaintiff 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, non-moving Defendant Premier Wound Care (“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 Defendant 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 Defendant 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.)
Fraud and Deceit, Negligent Misrepresentation, & Intentional Misrepresentation (2nd, 6th, & 7th COAs)
“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.)
“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)
Plaintiffs allege PAMC Defendants’ representative, Patricia Suarez, statement to Plaintiffs in the June 29, 2017, meeting that Defendant PAMC intended to negotiate a new agreement within 30 days, and Defendant PAMC’s statement in its subsequent June 30, 2017, written termination notice that “PAMC’s current intent is to negotiate a new agreement within 30 days,” were false. (4AC ¶¶9, 38, 42.) Plaintiffs allege PAMC Defendants knew that the hospital would be closing, “but failed to inform Plaintiffs” of this fact. (4AC ¶38.) Plaintiffs allege that during the 30-day notice period between June 30 and July 31, 2017, Plaintiff Beutler was informed that PAMC’s other representative, Steve Canyon, “was working on re-negotiating the contract and she would be contacted.” (4AC ¶39.) However, Plaintiff Beutler was never contacted thereafter. (4AC ¶40.) Plaintiffs claim that “[i]n reliance” on the “assurances” made by the PAMC Defendants “on June 29 and 30, 2017 that a new contract would be negotiated, Plaintiff allowed its property to remain in the possession of PAMC.” (4AC ¶42.) Plaintiffs allege that “[i]n reliance on PAMC’s statements” up through July 2017, Piper “has waited to re-negotiate the Contract while PAMC continued operating [Piper’s] wound care and hyperbaric program without [Piper’s] consent.” (4AC ¶40.) Plaintiffs allege PAMC Defendants’ statement that they “intended to negotiate a new contract was false,” and that they failed to disclose the material fact that the hospital was closing. (4AC ¶¶71-72, 76-77.) Plaintiffs allege they “could have immediately taken possession of their property and take steps to move and relocate its business” had they not relied on Defendants’ promise. (4AC ¶¶74, 79.)
PAMC Defendants argue Plaintiffs cannot establish the essential elements of proximate causation and justifiable reliance because there is no cause-and-effect relationship between the alleged fraud and the damages sought. (Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1269; cf. Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818.) PAMC Defendants argue the alleged harm—PAMC Defendants’ alleged continuous use of Plaintiff Piper’s “Confidential Information” past the July 31, 2017 expiration date to continue to operate Defendant PAMC’s wound care and HBO program and allegedly providing these materials to Wang—results from PAMC Defendants’ alleged breach of their confidentiality and non-compete obligations of Sections 6.1 and 6.2 of the contract and not from their alleged false representations to Plaintiffs at the end of June 2017 about Defendant PAMC’s intent to negotiate a new contract within 30 days. (Memorandum, pg. 13.) Further, PAMC Defendants argue Plaintiffs are unable to establish that PAMC Defendants’ alleged misrepresentations were the proximate cause of their harm and therefore cannot establish the element of justifiable reliance. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal. 4th 1226, 1239.)
PAMC Defendants submitted evidence that Plaintiffs cannot establish the element of proximate causation and had the alleged false statements not been made, the harm to Plaintiffs would have been no different. Specifically, PAMC Defendants submitted evidence that the term of the contract continued up through the July 31 termination date, and Plaintiffs could not have demanded on June 30, the immediate return of confidential information. (Undisputed Separate Statement of Fact [“USSF”] 27, 33; D-COE Exhs. 1 at ¶14; 3; 7 at ¶¶12, 14.) PAMC Defendants submitted evidence that Plaintiffs could not have demanded the return of the alleged confidential information immediately after the term expired because the contract contains no provision that entitles Plaintiff to a return of such documents, and at most only prohibits Defendant PAMC from using such materials for one year after the effective date of termination. (USSF 16-19; D-COE Exh. 2, §§ 5.1 & 5.2 at pg. 7.)
PAMC also Defendants submitted evidence that Plaintiffs cannot establish the element of justifiable reliance. Specifically, PAMC Defendants submitted evidence that the June 30, 2017, written termination notice stated only that “PAMC’s current intent is to negotiate a new agreement within 30 days.” (USSF 28; D-COE Exhs. 3, 7 at ¶12.) PAMC Defendants submitted evidence that the June 30 letter stated that its function was “to formally terminate the agreement, including the HBO amendment[,] effective July 31, 2017.” (USSF 26; D-COE Exh. 3.) PAMC Defendants submitted evidence that the statements were made in the context of an agreement that contained a standard integration clause and a no-oral-modification clause that put both parties on notice that “[n]o amendments or modifications of this Agreement will be binding unless in writing and signed by both parties.” (USSF 20-21; D-COE Exh. 2, § 7.5 at pgs. 8-9.) PAMC Defendants submitted evidence that about a week or 10 days after the June 29 meeting, Steve Canyon never got back to Beutler substantively, and these discussions “led Piper to believe that the contract may, in fact, not be renegotiated, but be allowed to terminate.” (USSF 29-30; D-COE Exhs. 5 at 66:2-14, 68:5-8, 70:1-71:11; Exh. 7 at ¶¶13, 14; Disputed Separate Statement of Fact [“DSSF’] 31; D-COE Exh. 4 at pg. 1.) PAMC Defendants submitted evidence that there was no justifiable reliance after July 31 because it is undisputed the term of the contract was allowed to expire and no new contract had been signed by the parties. (USSF 32-33; D-COE Exhs. 4; 7 at ¶14.) PAMC Defendants submitted evidence that Plaintiffs send a “cease and desist” letter to Defendant PAMC on July 31. (USSF 34; D-COE Exh. 4 at pg. 2.) Accordingly, Defendant met its burden on the second cause of action for the elements of proximate causation and justifiable reliance, shifting the burden to Plaintiffs to create a triable issues of material fact.
“It is fundamental that to defeat summary judgment a plaintiff must show ‘specific facts’ and cannot rely on allegations of the complaint.” (Roman v. BRE Properties (2015) 237 Cal App. 4th 1040, 1054.) Nothing in Buetler’s Declaration, submitted in opposition created a material issue as to proximate cause or justifiable reliance. The evidence cited by Plaintiffs basically addressed other elements of fraud which were not a basis of the summary adjudication. Plaintiffs failed to submit evidence creating triable issues of material fact as to the elements of proximate causation and justifiable reliance. Plaintiffs failed to meet their burden.
Accordingly, PAMC Defendants’ summary adjudication to the 2nd, 6th, and 7th causes of action are granted.
Dated: December _____, 2022
Hon. Monica Bachner
Judge of the Superior Court