2017-00220058-CU-NP

Gloria Single vs. Congregational Church Retirement Community

Nature of Proceeding: Hearing on Demurrer to Plaintiffs’ Complaint

Filed By: Westhoff, Michele

** 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 cause(s) of action or issue(s) on which oral argument is sought. **

The demurrer of Defendants Cathedral Pioneer Church Homes II (Pioneer House); Congregational Church Retirement Community; Bixby Knolls Towers, Inc.; Gold Country Health Center; Mayflower Gardens Health Facilities, Inc.; Stockton Congregational Homes, Inc.; Foundation Property Management, Inc. (FPMI); RHF Management, Inc. (RHF Management) and RHF Foundation (RHF Foundation) (collectively “Defendants”) is OVERRULED in part and SUSTAINED in part with leave to amend.

Plaintiffs’ request for judicial notice of court records is GRANTED. In taking judicial notice of these records, however, the court only accepts the fact of their existence and the fact of their contents, not the truth of the contents. (See Professional Engineers v. Dep’t of Transp. (1997) 15 Cal.4th 543, 590 [judicial notice of findings of fact does not mean that those findings of fact are true], superseded by statute on another point as stated in Consulting Engineers & Land Surveyors of California v. Dep’t of Transp. (2008) 167 Cal.App.4th 1457; see also Steed v. Department of Consumer Affairs

(2012) 204 Cal.App.4th 112, 120-121.)

Overview

The plaintiffs in this case are Gloria Single (Single) and Long Term Care Ombudsman Association (Association) (collectively “Plaintiffs”). The Association consists of local long-term care ombudsman programs, staff, volunteers and supporters. The Association advocates for long-term care recipients such as Single. Single is in her 80s.

Plaintiffs allege that Defendants engage in the “practice of dumping vulnerable nursing facility residents into hospitals.” (Compl., ¶ 1.) According to Plaintiffs, Defendants “dump” their neediest residents and, to maximize profits, refuse to readmit them. With respect to Single, Plaintiffs allege the California Department of Health Care Services (DHCS) ordered Pioneer House to readmit her, but she was not readmitted. Although Single allegedly was a resident of Pioneer House, Plaintiffs characterize all the Defendants as “part of the same commonly owned and operated chain of assisted

living and skilled nursing facilities that is held in an impenetrable labyrinth of legal entities designed to hide money and evade legal and tax obligations.” (Compl., ¶ 12.) Single’s husband allegedly resides at Pioneer House, but Single is unable to see him given Defendants’ refusal to readmit her. Single alleges that her lack of human interaction after being placed in the hospital caused her to stop talking.

The complaint contains causes of action for Violation of California Health & Safety Code § 1430(b), Violation of Business & Professions Code §§ 17200 et seq., and Declaratory ReIief. Defendants demur on grounds the Association is not a proper party and lacks standing. They also demur on grounds the allegations fail to state facts sufficient to state a valid cause of action. Plaintiffs oppose.

Discussion

Whether the Association is a Proper Party with Standing to Sue

The demurrers for misjoinder and failure to state a cause of action on grounds the Association lacks standing are SUSTAINED with leave to amend.

The only substantive allegation in relation to the Association appears in paragraph 31 of the complaint, which reads:

By discharging Ms. Single in this manner, Defendants circumvented the legal process for evicting nursing home residents, which would have accorded Ms. Single numerous substantive and procedural rights, including the right to remain at home while she challenged any decision to discharge her, and the right to have an ombudsman from CLTCOA advocate for her and help explain her rights and choices. (Emphasis added.)

Defendants argue that these allegations can only be construed to establish an injury that Single suffered, not one on the Association’s part. Thus, they argue the Association lacks standing and is not a proper party. (See Coldren v. Hart, King & Coldren, Inc. (2015) 239 Cal.App.4th 237, 245 [“’Standing generally requires that the plaintiff be able to allege injury, that is, an invasion of a legally protected interest’”].)

Plaintiffs counter that federal–not California–legislation authorizing the designation of local ombudsman entities like the Association’s members somehow confers standing on the Association. (See 42 USC § 3058g [requiring states that accept federal funding to create state ombudsmen who, in turn, may designate local entities as local ombudsmen].) Plaintiffs also invoke the doctrine of associational standing.

The court agrees with Defendants. First, the Association does not appear to be the product of any federal statute. Perhaps the Association’s members were created by statute, but the Association appears to be a voluntary association designed to assist its members in various ways. Hence, the court rejects the argument that the Association’s standing in this case has a basis in federal legislation. And, perhaps more fundamentally, the allegations do not establish that the Association has suffered any injury of its own.

The doctrine of associational standing does not assist the Association either. “’An association has standing to bring suit on behalf of its members when: (a) its members

would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.’” (Bhd. of Teamsters & Auto Truck Drivers v. Unemployment Ins. Appeals Bd. (1987) 190 Cal.App.3d 1515, 1522, emphasis added.) All the causes of action in the complaint, however, require Single’s participation. Each cause of action is predicated on allegations that Single was injured because Defendants violated her rights as a nursing home resident. The Association cannot prove up such claims without Single.

Even the third cause of action for declaratory relief requires Single’s participation. The third cause of action incorporates by reference all the preceding allegations, which are trained on Defendants’ alleged mistreatment of Single. In addition, one of the declarations sought is “whether Defendants’ violated Ms. Single’s other rights as identified above.” (Compl., ¶ 58.) Hence, Single’s participation is required.

The Association cites Oregon Advocacy Center v. Mink (9th Cir. 2003) 322 F.3d 1101 as further support for its position on standing in this matter. Mink involved procedures for evaluating and treating mentally incapacitated criminal defendants. The plaintiffs sought to enjoin the defending state hospital to admit such defendants on a timely basis.

One of the plaintiffs in Mink was a nonprofit organization that represented mentally incapacitated defendants. The defending state hospital argued the nonprofit lacked associational standing because the participation of incapacitated individuals was required. The Court of Appeals disagreed because federal legislation authorized the nonprofit to pursue legal remedies for its incapacitated constituents. (See 322 F.3d, p. 1113.) Hence, Congress untethered the nonprofit’s standing from any determination that constituent participation was unnecessary. (Id.)

The Association argues federal legislation codified in 42 USC §§ 3058 et seq. similarly untethers its standing from Single’s need to participate vel non in the lawsuit. The statutory provisions cited, however, apply to entities other than the Association. Subdivision (a)(3) of 42 USC § 3058g requires the State Ombudsman to seek legal remedies and take other actions on behalf of long-term care residents. The Association is not the Ombudsman. Likewise, subd. (a)(5) directs individual representatives of local ombudsmen to represent residents’ legal interests. The Association, however, is not such an individual. The Association characterizes itself as part of the overall State Long-Term Care Ombudsman program envisioned in 42 USC § 3058g(a)(1)(B). Assuming the Association is correct, the court does not read § 3058g as conferring upon the “program” authority to seek legal remedies on behalf of long-term care residents. That authority is reserved for the State Ombudsman and designated local ombudsmen. Mink is therefore distinguishable. It does not alter the conclusion that the Association has failed to allege facts establishing associational standing. The same may be said of Plaintiffs’ other federal cases, which assess standing in light of legislation that does not apply to this case. (See Opp. at 19-23.)

Finally, the court is aware of the Association’s position that it at least has standing to seek an injunction barring Defendants from dumping residents in the future and refusing to comply with DHCS orders. In other words, the Association argues that some of the relief requested in the prayer does not require Single’s participation. Associational standing, however, is only available where individual participation is not required to obtain relief or prove the underlying legal claims. Because each of the

causes of action in the complaint requires Single’s participation, the Association’s focus on injunctive relief is misplaced.

Because this is Defendants’ first objection to the allegations, the court grants the Association leave to amend.

The First Cause of Action for Violation of H&S Code § 1430(b)

The demurrer for failure to state a cause of action on grounds other than standing is SUSTAINED with leave to amend.

Section 1430(b) reads, in relevant part:

A current or former resident or patient of a skilled nursing facility…may bring a civil action against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients Bill of Rights…or any other right provided for by federal or state law or regulation. […] The licensee shall be liable for the acts of the licensee’s employees. The licensee shall be liable for up to five hundred dollars ($500), and for costs and attorney fees, and may be enjoined from permitting the violation to continue. (Emphasis added.)

Because Plaintiffs allege Single only resided at Pioneer House, they argue the allegations do not establish that any other Defendant is a licensee subject to liability. There are no specific allegations that Single was a resident or patient of any facility other than Pioneer House.

Plaintiffs counter that the demurrer is improper for only seeking to dispose of part of a cause of action. Plaintiffs reason that, because Defendants do not demur to the cause of action against Pioneer House, the other Defendants are somehow barred from demurring. The court rejects this argument. The Defendants other than Pioneer House may demur to the entire cause of action against them.

Next, Plaintiffs argue that Defendants other than Pioneer House may be liable because all the Defendants comprise a unified business with interlocking directors and officers. The “single business enterprise doctrine” is an application of alter ego principles to multiple corporate entities, as opposed to a single corporation and its shareholders. (See Toho-Towa Co. Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1106-1109.) Neither the single business enterprise doctrine nor the alter ego doctrine more generally applies unless necessary to avoid an inequitable result. (See id., p. 1109; Leek v. Cooper (2011) 194 Cal.App.4th 399, 417.)

In an attempt to establish the requisite inequitable result, Plaintiffs allege that all nine of the Defendants are part of a chain of “assisted living and skilled nursing facilities that is held in an impenetrable labyrinth of legal entities designed to hide money and evade legal and tax obligations.” This allegation is too conclusory to support an alter ego theory of liability.

With respect to Defendants FPMI, RHF Management and RHF Foundation, Plaintiffs allege that these entities are Pioneer House’s landlord, manager and parent company, respectively. And Plaintiffs allege interlocking directors and officers. Notwithstanding these allegations, it is still unapparent that a judgment solely against Pioneer House

would somehow yield an inequitable result.

Finally, even though Plaintiffs do not allege that Single was a resident or patient of any defendant other than Pioneer House, they argue the demurrer to the first cause of action should be overruled because all the Defendants are each other’s agents. H&S Code § 1430(b), however, only imposes liability against “licensees” of the “facilities” that violated “patients” or “residents” rights. Plaintiffs do not explain how agency relationships somehow convert Defendants other than Pioneer House into such facilities or licensees, and the court is not persuaded.

Leave to amend the first cause of action is granted.

The Second Cause of Action for Violation of B&P Code §§ 17200 et Seq.

Pioneer House’s demurrer for failure to state a cause of action is OVERRULED.

The other Defendants’ demurrers for failure to state a cause of action are SUSTAINED with leave to amend.

Defendants argue the second cause of action does not allege with sufficient specificity any wrongful business practice. Because the second cause of action incorporates by reference all the allegations under first cause of action for violation of H&S Code § 1430(b), the argument lacks merit.

Next, the Defendants other than Pioneer House argue Single has failed to allege that they caused her to suffer an economic injury conferring standing to sue them. (See B&P Code § 17024.) For the reasons stated above, the court agrees Single has failed adequately to allege any basis to proceed against Defendants other than Pioneer House.

Leave to amend is granted.

The Third Cause of Action for Declaratory Relief

The demurrer is SUSTAINED with leave to amend.

“Any person . . . who desires a declaration of his rights or duties with respect to another . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action in the superior court . . . .” (Code Civ. Proc., § 1060.) Thus, declaratory relief is appropriate only where there is an actual controversy, not simply an abstract or academic dispute. [Citations.] For purposes of declaratory relief, an “actual controversy” is one which “. . . ‘admits of definitive and conclusive relief by judgment within the field of judicial administration, as distinguished from an advisory opinion upon a particular or hypothetical state of facts. The judgment must decree, not suggest, what the parties may or may not do.’ [Citations.]”

(Newland v. Kizer (1989) 209 Cal.App.3d 647, 657.)

Plaintiffs propose declaratory relief in relation to the issues “whether failure to follow a lawful readmission order by DHCS violates a resident’s rights, whether any time a

facility fails to follow the bed hold requirements, it violates a resident’s rights, and whether Defendants violated Ms. Single’s other rights as identified above.” (Compl., ¶ 58.) Because any declaration about past violations is not a proper subject for declaratory relief, the last issue Plaintiffs posit is subject to demurrer. (See Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 618 [declaratory relief serves to guide relationships prospectively and is not a vehicle for redressing past wrongs].)

Plaintiffs argue the other issues tendered for declaratory relief could only yield impermissible advisory opinions. As currently phrased, these two issues are too abstract to warrant declaratory relief. Whether certain conduct violates a resident’s “rights” generally, without reference to any source of such rights, presents a largely academic question.

Leave to amend is granted.

Disposition

Pioneer House’s demurrer to Single’s second cause of action is overruled.

The balance of the demurrers are sustained with leave to amend.

No later than 1/22/18, and only to the extent leave to amend is granted, Plaintiffs may file and serve a first amended complaint (FAC); response(s) due within 30 days thereafter, 35 days if the FAC is served by mail. (See CCP § 430.41.)

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

If any defendant intends to demur to the FAC 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 FAC shall be included with the moving papers.