Patrick v. Avalon Health Care Incorporated et al

Filing 29

ORDER that Defendants' Motion to Deny Joinder (Doc. 7 ) is denied. IT IS FURTHER ORDERED that Plaintiff's Motion to Remand to State Court (Doc. 11 ) is granted. IT IS FINALLY ORDERED that all other pending motions remain pending before the state court. Signed by Judge James A Teilborg on 12/20/2012. (Attachments: # 1 Remand Letter)(KMG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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THE ESTATE OF DAVID HARMON, by)
and through JEANNIE PATRICK,)
Personal Representative; JEANNIE)
PATRICK, on behalf of herself and other)
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survivors of DAVID HARMON,
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Plaintiffs,
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vs.
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AVALON HEALTH CARE. INC., a Utah)
corporation doing business in Arizona as)
AVALON CARE CENTER-SHADOW)
MOUNTAIN; AVALON HOLDING)
INC.; AVALON HEALTH CARE)
C E N T E R S , L L C ; A V A L O N)
HEALTHCARE MANAGEMENT OF)
ARIZONA, LLC; AVALON CARE)
CENTER-SCOTTSDALE, LLC; GARY)
KOTZ and JANE DOE KOTZ, husband)
and wife; JOHN and JANE DOES I-X;)
ABC CORPORATIONS I-X; XYZ)
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PARTNERSHIPS I-X,
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Defendants.
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)

No. CV 12-01990-PHX-JAT
ORDER

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Pending before the Court are (1) Defendants’ Motion to Deny Joinder (Doc. 7) and

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(2) Plaintiff’s Motion to Remand to State Court (Doc. 11). In general, the Court undertakes

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an inquiry on joinder of a diversity-destroying defendant under 28 U.S.C. §1447(e) when

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presented with a motion for leave to amend a complaint. Given that an amended complaint

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has already been filed, and joinder has already occurred, the Court will treat Defendants’

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Motion to Deny Joinder as a Motion to Dismiss Defendant Gary Kotz. In the alternative,

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even if the Court were to apply the factors test for denial of joinder under 28 U.S.C.

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§1447(e), the outcome would not change. The Court now rules on the motions.

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I.

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David Harmon was a resident of a nursing home, operated by Defendant Avalon

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Health Care Center - Shadow Mountain, in Scottsdale, Arizona from January 2011 until

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March 8, 2011 (Doc. 6). On June 13, 2011 David Harmon died at the age of eighty-nine years

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old (Doc. 6). On July 31, 2012, after being appointed as Personal representative of Mr.

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Harmon’s estate, Jeannie Patrick filed a complaint in the Superior Court of Arizona on behalf

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of the Estate of David Harmon, alleging violations of Arizona Revised Statute section 12-561

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et seq. and the Adult Protective services Act (the “APSA”), Arizona Revised Statute section

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46-455, and an action on behalf of the survivors of Mr. Harmon under Arizona Revised

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Statute section 12-612 for wrongful death, with all claims resulting from alleged acts and

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omissions of the Defendants and their agents (Doc. 6). On August 29, 2012 Plaintiff filed

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an amended complaint in the Superior Court of Arizona (Doc. 7). Both Complaints named

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as defendants: Avalon Health Care, Inc; Avalon Care Center - Shadow Mountain; Avalon

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Holding, Inc.; Avalon Health Care Centers, L.L.C.; Avalon Health Care Management of

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Arizona, L.L.C.; and Avalon Care Center L.L.C. (collectively “Defendants”) (Doc. 7).

Factual and Procedural Background

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In the original complaint, Plaintiffs alleged that Defendants were acting in a joint

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venture and as an enterprise in the operation of Shadow Mountain, and were principals of all

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those employed at Shadow Mountain, and as such are jointly liable for the negligent acts and

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omissions that occur at Shadow Mountain. Plaintiffs alleged that Defendants owed a duty to

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Mr. Harmon, as a resident, to: sufficiently staff the nursing home, properly assess and

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diagnose his conditions, develop and implement appropriate care plans, communicate with

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his physicians, maintain accurate records of his treatment and progress, train and schedule

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sufficient staff, and supervise staff in performing their fulfillment of his care and safety

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needs. Plaintiffs alleged that Defendants held themselves out as “ready, willing, and able”

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to perform theses duties (Doc. 6). Plaintiffs further alleged that Defendants and their agents
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and employees, failed all of these duties and failed to exercise the degree of care, skill and

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learning expected of healthcare providers (Doc. 6). Plaintiffs alleged that these failures led

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to Mr. Harmon’s development of a large Stage IV pressure ulcer, malnutrition, dehydration,

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and multiple infections while at Shadow Mountain (Doc. 6). Plaintiffs alleged these failures

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constituted abuse and neglect that deteriorated Mr. Harmon’s health and eventually led to his

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untimely death (Doc. 6).

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All named Defendants were either Utah Corporations or Utah Limited Liability

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Companies doing business in Arizona as Shadow Mountain (Doc. 6). At the time the original

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complaint was filed, all parties to the action were diverse. On September 18, 2012, pursuant

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to 28 U.S.C. § 1332(a), Defendants removed the action to this Court based on diversity

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jurisdiction (Doc. 1). On September 19, 2012, Plaintiffs filed a first amended complaint1

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adding a non-diverse defendant, Defendant Gary Kotz (“Defendant Kotz”), alleging claims

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against him in his capacity as administrator of Shadow Mountain (Doc. 6).

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In Plaintiffs’ amended complaint, they re-allege the claims against Defendants from

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the original complaint in addition to the new claims against Defendant Kotz. Plaintiffs allege

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that as an administrator, Defendant Kotz owed a variety of duties to Mr. Harmon under

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Federal and State statutes and regulations, as well as the common law (Doc. 6). Plaintiffs

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allege that as administrator of Shadow Mountain, Defendant Kotz owed a duty to Mr.

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Harmon to, among other things: employ, train, and schedule sufficient staff, ensure Shadow

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Mountain was in compliance with Federal and State Regulations, correct deficiencies within

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the facility, and supervise the care given to Mr. Harmon (Doc. 6). Plaintiffs allege Mr. Kotz

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failed to adequately fulfill these duties and as a result Mr. Harmon suffered the above

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mentioned medical complications and eventually an untimely death (Doc. 6). All requests

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for relief are stated jointly and severally against all Defendants (Doc. 6).

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Following the filing of Plaintiffs’ first amended complaint with this Court, Defendants

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Defendants note that although Plaintiffs call this a first amended complaint, it is
actually a second amended complaint.
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filed their Motion to Deny Joinder (Doc. 7). In response, Plaintiffs filed a Response to

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Motion to Deny Joinder and a Motion to Remand to State Court (Doc 11).

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II.

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Defendants argue that their Motion to Deny Joinder should be decided under a six

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factor test, used by courts within the Ninth Circuit, to determine whether the court should

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exercise its discretion in allowing joinder under 28 U.S.C. §1447(e). Because this Court sees

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the Motion to Deny Joinder as a Motion to Dismiss Defendant Kotz, the Court will analyze

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it as such under Federal Rule of Civil Procedure 12(b)(6). However, even under the six factor

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test presented by Defendants, the Court would be justified in exercising its discretion to

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Defendant Kotz

allow joinder and remand the case to State court.

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A.

Motion to Dismiss

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To survive a motion to dismiss, a complaint must meet the requirements of Federal

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Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a "short and plain statement of the

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claim showing that the pleader is entitled to relief," so that the defendant has "fair notice of

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what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly,

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550 U.S. 544, 555 (2007)(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

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In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts

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alleged in the complaint in the light most favorable to the drafter of the complaint and the

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Court must accept all well-pleaded factual allegations as true. See Shwarz v. United States,

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234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, the Court does not have to accept as true

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a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286

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(1986). Thus, if Plaintiffs have stated a claim against Defendant Kotz, then joinder will be

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permitted.

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Plaintiffs argue that they stated a claim against Defendant Kotz for abuse and neglect

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of a vulnerable adult and wrongful death in violation of the APSA, Arizona Revised Statute

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section 46-455. Defendants argue that Plaintiffs have not stated a claim against Defendant

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Kotz.

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An action exists under Arizona Revised Statute section 46-455 when any person or
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enterprise that has been employed to provide care and has assumed a legal duty to provide

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care, has caused or permitted a vulnerable adult’s life or health to be endangered or injured

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by neglect, abuse, or exploitation. Ariz. Rev. Stat. § 46-455.

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In the complaint, Plaintiff alleges that Defendant Kotz, in his capacity as an

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administrator, was employed to provide care to Mr. Harmon. A claim under the APSA is not

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limited to a direct care-giver relationship and can be asserted against anyone who has

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“caused or permitted” the neglect or abuse of an incapacitated or vulnerable person. Ariz.

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Rev. Stat. § 46-455. See Corbett v. ManorCare of Am., Inc., 213 Ariz. 618, 629, 146 P.3d

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1027, 1038 (Ariz. Ct. App. 2006) (finding a director of a nursing facility who was

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responsible for overseeing staff education and patient care, and ensuring compliance with

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regulations, was subject to suit). Plaintiffs’ first amended complaint also states that

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Defendant Kotz had duties in his capacity as administrator, under 42 U.S.C. § 1395, Code

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of Federal Regulations section 483, and Arizona Administrative Code R9-10-90, to Mr.

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Harmon. Plaintiff alleges Defendant Kotz failed those duties. Plaintiff alleges that this

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failure by Defendant Kotz caused or permitted the abuse and neglect of Mr. Harmon,

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eventually leading to serious medical complications and death. All elements of an APSA

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claim have been alleged by Plaintiff against Defendant Kotz. Because the Court finds that

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Plaintiff has stated a claim against Defendant Kotz, the Court finds no reason why he should

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not be joined to this lawsuit.

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B.

Motion to Deny Joinder

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The decision of whether to permit or deny joinder of a diversity-destroying defendant

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is left to the discretion of the District Court. Newcombe v. Adolf Coors Co., 157 F.3d 686,

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691 (9th Cir. 1998). In deciding whether to deny joinder of a diversity-destroying party,

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courts in the Ninth Circuit have generally considered a variety of factors including: (1)

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whether the person sought to be joined is needed for just adjudication and would be a

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necessary party under Rule 19(a); (2) the plaintiff’s motive for seeking joinder and whether

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plaintiff is seeking to add a defendant solely to destroy diversity of citizenship; (3) the delay

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in seeking to add the new defendant; (4) whether, if joinder is denied, the statute of
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limitations would bar an action against the new defendant in state court; (5) the apparent

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validity of the claim; and (6) any prejudice to the plaintiff if the amendment is denied. See

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e.g., Clinco v. Roberts, 41 F. Supp.2d 1080, 1082 (C.D. Cal 2011); Ansley v. Metro. Life Ins.

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Co., 215 F.R.D. 575, 579-80 (D. Ariz. 2003) (internal citations omitted). The Court considers

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each of these factors in turn.

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1.

Rule 19(a)

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Under Rule 19(a), a party is required to be joined when that party’s absence interferes

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with the court’s ability to accord complete relief among the existing parties or the parties’

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absence will impede its ability to protect its interests or would subject any party to the risk

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of inconsistent results. Fed. R. Civ. P. 19(a).

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A party’s status as a necessary party is not based on “any prescribed formula, but

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instead ‘can only be determined in the context of particular litigation.’” CP Nat. Corp. v.

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Bonneville Power Admin., 928 F.2d 905, 912 (9th Cir. 1991) (quoting Provident Tradesmens

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Bank & Trust Co. v. Patterson, 390 U.S. 102, 118 (1968)). The standard under Rule 19(a)

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is met when a party has an interest in the controversy and should be joined so that the court

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may decide on, and finally determine the entire controversy. Id.

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Defendants argue that Defendant Kotz is not an indispensable party because there is

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no further relief granted to the Plaintiff by adding an agent such as Kotz, than by going after

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the principal entity as a whole. Plaintiffs argue that Defendant Kotz is a necessary party

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because he owed duties to Mr. Harmon that are separate and distinct from the facility.

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Plaintiffs allege Defendant Kotz can be held independently liable, for any breach of the

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specific duties imposed on him as an administrator by Federal statutes and regulations, as

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well as by State statutes and regulations.

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The Court finds that although Plaintiff has alleged claims against Defendant Kotz that

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are separate and distinct from those alleged against Defendants, because they all arise from

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the same transaction or occurrence, Defendant Kotz is a necessary party to afford complete

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relief of the entire controversy. Therefore, this factor weighs in favor of joinder.

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2.

Plaintiffs’ Motive

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The Ninth Circuit Court of Appeals has stated, that the motive of a plaintiff in adding

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an additional defendant is relevant to a court’s decision in granting leave to amend a

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complaint. Desert Empire Bank v. Ins. Co. of North America, 623 F.2d 1371, 1376 (9th Cir.

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1980).

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It is clear that Plaintiffs hope to have this action proceed to state court, as evidenced

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by her motion to remand and the language in the first amended complaint. However, it is not

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clear that this is the sole motive for Plaintiffs’ addition of Defendant Kotz. Plaintiffs argue

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that she always intended to add the administrator of Shadow Mountain to the complaint, and

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added Defendant Kotz once his identity as administrator was discovered. Defendants have

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not provided any convincing evidence to the contrary. Because it is not clear to the Court that

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the addition of Defendant Kotz was solely to destroy diversity jurisdiction, this factor weighs

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in favor of joinder.

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3.

Delay

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Plaintiffs allege they discovered the identity of the non-diverse party in the days

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immediately preceding the removal of the case to this court, and were in the process of

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amending the complaint to add Defendant Kotz before removal by Defendants. Defendants

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have not offered any evidence contrary to this explanation. Therefore, this factor weighs in

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favor of joinder.

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4.

Statute of Limitations

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Under Arizona Revised Statute section 46-455(K) the statute of limitations on

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Plaintiffs’ claim requires suit to be brought within two years after the actual discovery of a

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cause of action. Ariz. Rev. Stat. § 46-455(K). It is unclear from the first amended complaint

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exactly when Plaintiffs discovered this cause of action; however, it appears that from the

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initial date of Mr. Harmon’s entry into the Shadow Mountain home in January of 2011, the

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earliest the statute of limitations would expire is in January of 2013. As for Plaintiffs’

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wrongful death claim, under Arizona Revised Statute section 12-542(2), the statute of

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limitations would continue until two years after the date of Mr. Harmon’s death, or until June
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13, 2013. Thus, it appears the statute of limitations on Plaintiffs’ claims against Defendant

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Kotz have not run, and Plaintiffs could bring a separate case against him. As a result, this

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factor weighs against joinder.

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5.

Validity of Claim

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The Court resolves any doubt about whether Plaintiffs have stated a valid cause of

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action against Defendant Kotz in favor of the case being litigated in the state court. Albi v.

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Street & Smith Publ'ns, 140 F.2d 310, 312 (9th Cir. 1944). As mentioned previously,

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Plaintiffs’ complaint against Defendant Gary Kotz would survive a motion to dismiss

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because Plaintiffs have alleged the elements of a claim under the APSA. Therefore, this

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factor weighs in favor of joinder.

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Prejudice to Plaintiff

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In a case of joint and several liability, if the principal is unable to afford the Plaintiff

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complete relief, the agent may be responsible for payment. Ariz. Rev. Stat. Ann. § 12-2506.

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Thus, Plaintiffs may have to seek a recovery from Defendant Kotz. Accordingly, the other

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Defendants’ potential liability for Defendant Kotz actions doe not mean Plaintiffs would

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suffer no prejudice if Defendant Kotz was not joined.

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Furthermore, there has been no evidence presented that Defendants would be

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prejudiced by the joinder of Defendant Kotz. Therefore, even if Plaintiffs were only slightly

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prejudiced, this factor would weigh in favor of joinder. Because the Court finds there is a

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potential prejudice to Plaintiffs, this factor weighs in favor of joinder.

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C.

Conclusion

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Because the Court finds Plaintiffs stated a claim against Defendant Kotz and to the

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extent the Court construed the motion to deny joinder as a motion to dismiss, the motion is

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denied. Alternatively, after consideration of the joinder factors, the Court exercises its

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discretion under 28 U.S.C. § 1447(e) and permits the joinder of Defendant Kotz.

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III.

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The Court has determined Defendant Kotz is properly named in this suit. Next, this

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Court has an ongoing obligation to ensure that subject matter jurisdiction exists. See

Motion to Remand

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Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). If at any

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time it appears that the district court lacks subject matter jurisdiction, the case must be

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remanded. 28 U.S.C. §1447(c). Although a district court’s decision to allow joinder of the

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non-diverse defendants is a discretionary decision, once the non-diverse defendants are

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joined, remand becomes mandatory. Stevens v. Brink’s Home Security, Inc., 378 F.3d 944,

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949 (9th Cir. 2004). Because the Court has permitted the joinder of Defendant Kotz, there

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is no longer complete diversity among the parties under 28 U.S.C. §1332, and the case must

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be remanded to State court.

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III.

Conclusion

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Based on the foregoing,

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IT IS ORDERED that Defendants’ Motion to Deny Joinder (Doc. 7) is denied.

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IT IS FURTHER ORDERED that Plaintiff’s Motion to Remand to State Court (Doc.

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IT IS FINALLY ORDERED that all other pending motions remain pending before
the state court.3
DATED this 20th day of December, 2012.

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Because the Court has determined remand is appropriate, the Court need not
consider the probate exception to federal subject matter jurisdiction.
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These motions include the Motion to Compel Arbitration (Doc. 8), the Motion for
Expedited Consideration (Doc. 16), and Motion to Declare Arbitration Agreement
Unenforceable (Doc. 22).
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