Tentative Ruling

Judge Donna Geck
Department 4 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION
Allied Health Resources, Inc. vs Alan E Malki, MD
Case No: 19CV03177
Hearing Date: Fri Feb 21, 2020 9:30

Nature of Proceedings: Demurrer

Tentative Ruling: The court sustains defendant Alan E. Malki, M.D.’s demurrer to plaintiff Allied Health Resources, Inc.’s first amended complaint without leave to amend.

Background: Plaintiff Allied Health Resources, Inc. filed its complaint against defendant Alan E. Malki, M.D., asserting seven causes of action. On November 22, 2019, the court sustained Malki’s demurrer to the complaint with leave to amend. On December 6, 2019, Allied filed a first amended complaint (FAC) asserting a single cause of action for trade libel. Allied alleges:

On October 7, 2015, Allied entered into an Agreement for Cardiovascular Perfusion Services with Santa Barbara Cottage Hospital, under which Allied would furnish perfusion personnel and perform perfusion services for Cottage as an independent contractor for a five-year term.[FAC ¶¶9, 10] Malki is a thoracic and cardiac surgeon affiliated with Cottage, as an independent contractor. [FAC ¶¶11-13] Malki was aware of Allied’s contract with Cottage to perform perfusion services. [FAC ¶15]

After becoming affiliated with Cottage, Malki mistreated, berated, and made false allegations against Allied and its subcontractors, causing at least one subcontractor, Nicholas Miller, to terminate his relationship with Allied. [FAC ¶16] Malki made the following factual misrepresentations regarding Allied’s services: Malki informed Cottage staff that Allied contractor Onkar Singh failed to perform his duties by not monitoring a patient, specifically that Singh failed to notify Malki of a heart arrhythmia, which notification is not within a perfusionist’s responsibilities. [FAC ¶17.a.] Malki accused Kevin Saiki of compromising a patient’s safety because Saiki warned of a potential coagulopathy and ordered a standard blood product (plasma) be prepared per Malki’s order. In the interim, Saiki tested the patient, the patient tested negative for coagulopathy, Malki was informed and the order subsequently cancelled. Malki informed Cottage personnel that Saiki’s actions threatened the patient’s safety, even though at no time was the patient’s care compromised or threatened by Saiki’s actions. [FAC ¶17.b.] During a procedure, Malki instructed Allied perfusionist Nicholas Miller to give antegrade cardioplegia and asked Miller what the “flow” was. Miller responded by informing Malki as to the cardioplegia flow. Malki admonished Miller for not giving him the pump flow, despite not having asked for that information. Malki informed Cottage’s director, Dr. West, and other Cottage staff that Miller was incompetent as a result of this episode. [FAC ¶17.c.] Malki informed West and other Cottage staff that Miller did not have any understanding of physiology. Miller has a PhD in physiology and 23 years experience as a perfusionist and no claims of disciplinary action against him. Malki contacted doctors outside Cottage, including Dr. Harold Tabaie, to discuss accusations of incompetency against Miller. [FAC ¶17.2.]

On November 7, 2017, Cottage gave Allied written notice that it was terminating the agreement with Allied early, with a termination date of May 6, 2018. [FAC ¶18] The termination was driven by Malki and his false statements were a primary factor in the termination. [FAC ¶19]

Demurrer: Malki demurs to the FAC on the ground that Allied fails to state facts sufficient to constitute the case of action. Malki contends the four alleged statements are protected by the common interest privilege and they constitute his opinion of Allied’s personnel and statements of opinion are not actionable. Allied opposes the demurrer. (The opposition was filed and served late. It was due nine court days before the hearing. CCP § 1005(b). Because of two intervening court holidays, that was February 6. The opposition was filed and served February 7.)

A. Demurrer Standards: The court’s only task in ruling on a demurrer is to determine whether the complaint states a cause of action. Moore v. Regents of University of California, 51 Cal.3d 120, 125 (1990). The court treats “the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law”; considers “matters which may be judicially noticed”; and gives “the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” Evans v. City of Berkeley, 38 Cal.4th 1, 6 (2006) [internal quotation marks and citations omitted]. The court also considers the reasonable inferences that may be drawn from the properly pleaded material facts. Reynolds v. Bement, 36 Cal.4th 1075, 1083 (2005).

B. Common Interest Privilege: “A privileged publication or broadcast is one made … In a communication, without malice, to a person interested therein, (1) by one who is also interested….” Civil Code § 47(c). Allied does not argue that the communications among Malki and other staff of Cottage and physicians is not a common interest communication. But Allied argues the statements were made with malice. To do this, Allied relies on a combination of things it alleged in its original complaint and the declaration of Kevin Saiki, Allied’s president and sole shareholder.

Allied cannot rely on the allegations of its original complaint because an amended complaint supersedes all prior complaints and “the original complaint ceases to have any effect either as a pleading or as a basis for judgment.” State Comp. Ins. Fund v. Superior Court, 184 Cal.App.4th 1124, 1130-1131 (2010). The court will not consider a declaration in opposition to a demurrer. Any declaration submitted in support of or in opposition to a demurrer is “a nullity, of no purpose or effect” and “extraneous factual recitals” are not considered. Allred v. Bekins Wide World Van Services, 45 Cal.App.3d 984, 993 (1975).

The court will sustain the demurrer based on the common interest privilege. The issue is whether the court will permit an amendment to cure this defect in the pleading. The plaintiff has the burden “to show what facts he or she could plead to cure the existing defects in the complaint.” McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 792 (2008). “The assertion of an abstract right to amend does not satisfy this burden. The plaintiff must clearly and specifically set forth the ‘applicable substantive law’ and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, the plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action. Allegations must be factual and specific, not vague or conclusionary.” Rossberg v. Bank of America, N.A., 219 Cal.App.4th 1481, 1491 (2013) [internal quotations and citations omitted].

In Saiki’s declaration, Allied suggests facts that indicate Malki had ill will toward Allied. Saiki says that Malki told him that Malki did not like the way Allied does business and that Malki was going to do something about it. Saiki says that Malki followed through on this threat by making the alleged disparaging comments.

“The malice required to defeat the common interest privilege is actual malice.” Hicks v. Richard, 39 Cal.App.5th 1167, 1178 (2019). Evidence that tends to show a dislike for a plaintiff “is not sufficient by itself to show the statements … were made with malice.” Id. “A court may consider a defendant’s anger or hostility toward a plaintiff in determining the presence of malice only to the extent it impacts the defendant’s actual belief concerning the truthfulness of the publication. The focus is thus on the defendant’s attitude toward the truth or falsity of the material published … [not] the defendant’s attitude toward the plaintiff.” Christian Research Institute v. Alnor, 148 Cal.App.4th 71, 92 (2007) [internal quotations and citations omitted].

“[T]he issue is not the truth or falsity of the statements but whether they were made recklessly without reasonable belief in their truth.” Cuenca v. Safeway San Francisco Employees Fed. Credit Union, 180 Cal.App.3d 985, 999 (1986). It is up to the trier of fact to ascertain what a defendant “subjectively knew and believed about the topic at the time he spoke.” McGrory v. Applied Signal Technology, Inc., 212 Cal.App.4th 1510, 1540 (2013).

Malki takes the position that Allied has not proposed allegations that Malki knew or believed the statements were not true. It is Malki’s obligation to state what specific amendments it could make. Even if the court believed Allied could make sufficient allegations of malice, Allied would have to overcome the next deficiency in its complaint in order to state a cause of action for trade libel.

C. Opinion: Malki argues that the alleged statements are not actionable because they are opinion, not provably false facts. “The question whether a statement is defamatory can be reached on a demurrer as a matter of law.” Polygram Records, Inc. v. Superior Court, 170 Cal.App.3d 543, 551 (1985).

“Since mere opinions cannot by definition be false statements of fact, opinions will not support a cause of action for trade libel.” ComputerXpress, Inc. v. Jackson, 93 Cal.App.4th 993, 1010-1011 (2001). In determining whether a statement implies a provably false factual assertion, the court must consider the context in which it was made. Franklin v. Dynamic Details, Inc., 116 Cal.App.4th 375, 389 (2004). “This contextual analysis demands that the courts look at the nature and full content of the communication and to the knowledge and understanding of the audience to whom the publication was directed.” Baker v. Los Angeles Herald Examiner, 42 Cal.3d 254, 261 (1986).

While Allied alleges that Malki stated false facts in support of his opinions, that alone does not make the statements actionable. “A statement of opinion based on fully disclosed facts can be punished only if the stated facts are themselves false and demeaning. The rationale for this rule is that [w]hen the facts underlying a statement of opinion are disclosed, readers will understand they are getting the author’s interpretation of the facts presented; they are therefore unlikely to construe the statement as insinuating the existence of additional, undisclosed facts. When the facts supporting an opinion are disclosed, readers are free to accept or reject the author’s opinion based on their own independent evaluation of the facts.” Franklin v. Dynamic Details, Inc., supra, 116 Cal.App.4th at 387 [internal quotations and citations omitted].

Malki is alleged to have said Onkar Singh failed to perform his duties by not monitoring a patient and failing to notify Malki of a heart arrhythmia, something allegedly not within a perfusionist’s responsibilities. [FAC ¶17.a.] Malki allegedly accused Kevin Saiki of compromising a patient’s safety because Saiki warned of a potential coagulopathy and ordered plasma be prepared but the patient tested negative for coagulopathy and the order was subsequently cancelled. [FAC ¶17.b.] Malki allegedly said that perfusionist Nicholas Miller was incompetent because he gave Malki cardioplegia flow information instead of pump flow. [FAC ¶17.c.] Malki allegedly informed West and other Cottage staff that Miller did not have any understanding of physiology. [FAC ¶17.d.]

The last statement is pure opinion. In the other three instances, Malki allegedly stated facts on which he based his opinion. The facts themselves are not false and demeaning. Their negative character flows solely from Malki’s alleged interpretation of those facts. The Cottage staff was free to accept or reject Malki’s opinion based on their own independent evaluation of those facts.

Allied argues that, for trade libel, an allegation of incompetency in one’s business or profession is actionable. Allied cites Jensen v. Hewlett-Packard Co., 14 Cal.App.4th 958 (1993). “Based on the facts here, we hold that unless an employer’s performance evaluation falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence or reprehensible personal characteristics or behavior [citation], it cannot support a cause of action for libel.” Id. at 965. From this, Allied concludes that when a statement does accuse one of incompetence, the statement supports a cause of action for trade libel.

But the statement in Jensen does not mean that a statement of opinion regarding incompetence in a trade alone is actionable. In Gould v. Maryland Sound Industries, Inc., 31 Cal.App.4th 1137 (1995), another case on which Allied relies, the defendant’s accusation that the plaintiff made a $100,000 mistake in estimating a bid was actionable because the statement would tend to injure the plaintiff by imputing to him incompetence in his trade and because it was a “statement of fact susceptible to proof or refutation by reference to concrete, provable data.” Id. at 1154.

The court concludes that the statements alleged in FAC ¶17 are statements of opinion that are not actionable in a suit for trade libel. When it sustained the demurrer to this cause of action in the original complaint, the court granted Allied leave to amend to specifically identify the words constituting the alleged libel. The FAC is the attempt to state this cause of action and the allegations are insufficient. Allied does not suggest that it can allege more. The court will sustain Malki’s demurrer to the trade libel cause of action without leave to amend.

D. Order: The court sustains defendant Alan E. Malki, M.D.’s demurrer to plaintiff Allied Health Resources, Inc.’s first amended complaint without leave to amend.