2016-00200802-CU-OE

Ann Haas vs. Sutter Medical Foundation

Nature of Proceeding: Hearing on Demurrer to First Amended Complaint

Filed By: Davis, Jahmal T.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

The demurrer of Defendant Sutter Valley Medical Foundation, sued as Sutter Medical Foundation, (SMFoundation) is SUSTAINED in part with leave to amend and OVERRULED in part.

Overview

This case involves allegations that SMFoundation deprived one of its surgeons, plaintiff is Ann Haas (Haas), of full compensation. Haas describes SMFoundation as her joint employer along with Co-Defendant Sutter Medical Group (SMGroup). SMGroup pays her wages, but SMFoundation exercises control over her hours, compensation and working conditions. According to Haas, she is one of SMGroup’s

shareholders.

Haas alleges SMFoundation wrongfully informed SMGroup in 2010 that she and another surgeon could no longer receive full wages for a certain dermatological procedure, viz., the “Mohs surgery.” Haas had performed Mohs surgeries for many years at SMFoundation. After SMFoundation informed SMGroup full wages for the procedure were incompatible with federal law, SMGroup reduced her wages by 10%-15% for Mohs surgeries. Haas further alleges that SMFoundation did not require the same reduction for doctors performing Mohs surgeries for medical groups other than SMGroup. SMFoundation ultimately eliminated the reduction in compensation, but Haas’ wages for the Mohs surgery were at a reduced rate between January 2011 and January 2015.

Haas’ first amended complaint contains causes of action against SMFoundation that include unjust enrichment, breach of contract and breach of the implied covenant of good faith and fair dealing. The contracts alleged in the FAC are not attached as exhibits but are alleged to be the professional service agreements (PSA’s) between SMFoundation and SMGroup. SMFoundation demurs on grounds the allegations fail to state facts sufficient to state a valid cause of action.

Discussion

The Third Cause of Action Cause of Action for Unjust Enrichment

The demurrer is SUSTAINED with leave to amend.

Because Haas alleges elsewhere that SMFoundation breached the written PSA’s of which she is a third-party beneficiary, SMFoundation argues she is barred from seeking unjust enrichment as well. (See Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1389-1390 [although a plaintiff may seek contract damages by alleging an enforceable agreement and simultaneously seek restitution by alleging that the agreement is unenforceable, where the plaintiff only alleges the agreement’s enforceability, his/her inconsistent restitution cause of action is subject to demurrer].) SMFoundation argues the FAC cannot be construed to dispute the enforceability of any PSA, and the court does not read Haas’ opposition as contesting that argument. Instead, Haas appears to request leave to clarify that she does dispute the enforceability of at least portions of the PSA’s. She also seeks leave to add a quantum meruit claim. These requests for leave to amend are granted, but the demurrer to the third cause of action as currently alleged is sustained.

The Fourth Cause of Action for Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing, and the Fifth Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing and Unjust Enrichment

The demurrers are OVERRULED.

SMFoundation demurs to Haas’ contract causes of action on grounds Haas is neither a party to, nor a third-party beneficiary of, any PSA. The PSA’s are not attached to the FAC. Hence, SMFoundation tenders the PSA’s by way of a request for judicial notice. To the extent SMFoundation requests judicial notice of the existence and contents of the PSA’s, the request is granted. However, the court will not take judicial notice of the

proper interpretation of any PSA, and for that reason the demurrers must be overruled. (See C.R. v. Tenet Healthcare Corp. (2009) 169 Cal.App.4th 1094, 1104 [“the general rule is that the truthfulness and interpretation of a document’s contents are disputable”].)

SMFoundation cites provisions in the voluminous PSA’s to argue that Haas was not intended as a third-party beneficiary. But even if language in the PSA’s supports this interpretation, it would be error for the court to sustain the demurrers without affording Haas an opportunity to tender extrinsic evidence of a different intent. (See Fremont Indem. Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114-115.) Haas argues extrinsic evidence supports her third-party beneficiary status, but she correctly observes that she may not adduce such evidence on demurrer. At this point, the court cannot rule out a construction of the PSA’s contrary to the one SMFoundation tenders.

To the extent the fifth cause of action includes a claim of unjust enrichment, such a claim is not subject to demurrer. The court must overrule a demurrer if the allegations state a cause of action on any theory. If SMFoundation wished to attack less than the entire the fifth cause of action, it was required to proceed by motion to strike, not demurrer. (See Fremont Indemn. Co. v. Fremont Gen. Corp. (2007) 148 Cal.App.4th 97, 119.)

Disposition

The demurrer to the third cause of action is sustained with leave to amend. Leave to add a quantum meruit cause of action is granted. The demurrers to the fourth and fifth causes of action are overruled.

No later than 4/16/18, and only to the extent leave to amend is granted, Haas may file and serve a second amended complaint (SAC); response(s) due within 30 days thereafter, 35 days if the SAC is served by mail. (See CCP § 430.41.)

Although not required by any statute or rule of court, Haas is requested to attach a copy of the instant minute order to the SAC to facilitate the filing of the pleading.

If any defendant intends to demur to the SAC or move to strike, it shall determine if any other defendant who has appeared in this action also intends to demur or move to strike. If so, all such defendants shall coordinate a single hearing date for the demurrers and motions to strike. Additionally, a copy of the SAC shall be included with the moving papers.