Medhealth Nursing et al v. California Department of Public Health et al

Filing 81

ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT by Judge Claudia Wilken. Pretrial Conference set for 5/15/2018 02:30 PM. (Attachments: # 1 Certificate/Proof of Service) (dtmS, COURT STAFF) (Filed on 3/6/2018)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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DANILO MALLARI,

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Plaintiff,

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Case No. 13-cv-04038-CW
ORDER ON DEFENDANTS' MOTION
FOR SUMMARY JUDGMENT

v.
TRACY VESSIGAULT, et al.,

(Dkt. No. 73)
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Defendants.

United States District Court
Northern District of California

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Plaintiff Danilo Mallari sues under 42 U.S.C. § 1983.

On

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December 4, 2017, Defendants Tracy Vessigault, Diana Marana,

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Doris Jordan, and Collene Traynor brought this motion for summary

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judgment on Mallari’s claims.

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Defendants filed a reply.

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Defendants’ motion for summary judgment and ORDERS supplemental

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briefing.

Mallari filed an opposition and

The Court hereby DEFERS RULING on

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FACTUAL BACKGROUND

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On April 7, 2003, Mallari established Medhealth Nursing,

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LLC, with himself as the sole member.

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(SAC) at 9.

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from the California Department of Public Health (CDPH) to operate

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a home health agency and to be accredited as a Medicare provider

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of medical services.

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account and rented an office in San Leandro on behalf of

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Medhealth.

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Second Amended Complaint

The purpose of Medhealth was to obtain a license

Id.

Mallari opened a Citibank checking

Id.

On May 1, 2008, Mallari applied on behalf of Medhealth for a

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license to operate a home health agency (HHA license).

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A.

Mallari made the required payment of $3,867.14.

SAC, Ex.

Id.

On

April 5, 2009, the CDPH denied his application.

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the denial.

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letter to the CDPH requesting a hearing to contest the denial;

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the CDPH never held a hearing or resolved his appeal.

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February 17, 2010, Mallari sent another letter to CDPH asking it

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to either reverse the denial decision or to affirm it and refund

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the $3,867.14 application fee.

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9, 2010, Mallari reapplied and paid an additional $5,021.86 as a

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United States District Court
Northern District of California

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license fee.

SAC, Ex. B.

SAC at 3-4.

Mallari appealed

On April 30, 2009, Mallari sent a

SAC, Ex. C.

Id.

On

Eventually, on July

The CDPH issued Medhealth an HHA

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license to operate at 318 Westlake Center, Suite 220, Daly City,

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California 94015 from March 9, 2011 to September 8, 2011.

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Ex. E at 1; Declaration of Collen Traynor (Traynor Decl.) ¶ 3.

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Medhealth appears to have received another HHA license effective

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September 9, 2011 to March 8, 2012.

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February 16, 2012, Mallari sent a letter to the CDPH stating that

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Medhealth’s license would expire on March 9, 2012 and requesting

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assistance with the renewal of the license.

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claims that he received no response to his letter.

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Apparently, the CDPH changed its office location during this

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time.

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change in office location, nor did he receive forty-five days’

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notice of the expiration of his license and an application for

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renewal, as required by 22 C.C.R. § 74671(d).

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Medhealth’s HHA license expired on March 8, 2012 and Medhealth

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closed shop.

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Id.

SAC, Ex. E at 2.

SAC,

On

SAC, Ex. F.

Mallari

SAC at 4.

Mallari claims he never received notice of the CDPH’s

Id.

As a result,

Id. at 4-5.

On May 3, 2012, Mallari sent another letter to CDPH stating

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that Medhealth had moved to 433 Callan Avenue, Suite 206, San

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Leandro.

Traynor Decl. ¶ 4; Mallari and his wife Carmelita (Ms.
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Mallari), Director of Patient Care Services for Medhealth, went

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to the office in an attempt to resolve the issue.

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also Declaration of Carmelita Mallari (Mallari Decl.) ¶ 5.

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Mallari asserts that Defendants showed dislike and arrogance

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towards the Mallaris and that they engaged in a “heated exchange

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of unsavory remarks.”

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license renewal fee of $4996.86 plus a fee of twenty-five dollars

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for the location change.

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United States District Court
Northern District of California

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and D-2.

Mallari Decl. ¶ 5.

Id. at 11; see
Ms.

Ms. Mallari paid a

Id.; see also Docket No. 76, Exs. D-1

Ms. Mallari asserts she provided the necessary

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documentation and answered all of Defendants’ questions regarding

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Medhealth’s operations.

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Mallari Decl. ¶ 6.

On August 7, 2012, the CDPH notified Medhealth that its HHA

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license was revoked.

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Medhealth’s license was revoked because it was out of compliance

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with multiple regulations related to the operation of an HHA.

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Id. ¶ 7.

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CDPH called her on August 28, 2012 to tell her to submit a plan

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of corrections for the issuance of Medhealth’s HHA license.

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Mallari Decl. ¶ 7.

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however, Medhealth did not hear anything back from the CDPH.

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Traynor Decl. ¶ 8.

Defendants assert that

Ms. Mallari alleges that Defendant Diana Marana of the

Ms. Mallari did so on September 4, 2012;
Id.

On May 23, 2013, Medhealth and Mallari filed this case in

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Alameda County superior court.

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2013, Defendants removed the case to federal court.

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September 9, 2013, Defendants brought a motion to dismiss the

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First Amended Complaint (FAC).

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2014, the Court granted Defendants’ motion, dismissing all of

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Mallari’s claims for failure to identify a specific civil rights

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injury and Medhealth’s claim for failure to identify any

Docket No. 1.

Docket No. 8.

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On August 30,
Id.

On

On February 26,

violation of its federal rights.

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amend.

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Medhealth may only file a Second Amended Complaint (SAC) through

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licensed counsel.

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SAC asserting claims for a violation of § 1983, intentional

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infliction of emotional distress, negligence, and a violation of

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title 22, section 74669 of the California Code of Regulations.

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Docket No. 32.

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United States District Court
Northern District of California

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34.

Docket No. 28 at 7-8.

Id. at 8.

The Court granted leave to

The Court also ruled that

On March 17, 2014, Mallari filed a

Defendants again moved to dismiss.

Docket No.

The Court dismissed Mallari’s § 1983 claim for failure to

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allege that he was “injured directly and independently of

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Medhealth.”

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claims for intentional infliction of emotional distress and

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negligence for failure to allege sufficient facts to state a

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claim.

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violation of section 74669 because he did not establish that the

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section provides for a private cause of action.

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Because Mallari failed to correct the deficiencies of his

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complaint after being granted leave to amend, the Court dismissed

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his complaint with prejudice.

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Docket No. 43 at 7.

Id. at 8.

The Court dismissed Mallari’s

The Court dismissed Mallari’s claim for a

Id. at 10.

Id. at 9.

Mallari appealed.

The Ninth Circuit affirmed this Court’s dismissal of

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Mallari’s negligence and intentional infliction of emotional

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distress claims.

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Court’s dismissal of Mallari’s § 1983 claim for lack of standing,

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however, the Ninth Circuit reversed, holding that Mallari

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adequately alleged that “defendants’ conduct violated his own

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Fourteenth Amendment rights.”

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and remanded with respect to Mallari’s § 1983 claim only.

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3.

Docket No. 51 at 2.

Id.

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With respect to this

The Ninth Circuit reversed
Id. at

In the operative SAC, Mallari asserts a claim under 42

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U.S.C. § 1983 alleging that Defendants violated his rights to due

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process and equal protection guaranteed by the Fourteenth

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Amendment.

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did not follow the required procedure for reviewing and granting

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licenses.

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renewal fees, as well as additional alleged actual and

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compensatory damages, expectation and consequential damages,

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United States District Court
Northern District of California

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punitive damages, and attorneys’ fees and costs.

His claim is based on the allegation that Defendants

Mallari seeks the return of his application and

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LEGAL STANDARD

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Summary judgment is appropriate only where the moving party

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demonstrates there is no genuine dispute as to any material fact

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such that judgment as a matter of law is warranted.

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P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

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Material facts are those that might affect the outcome of the

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case, as defined by the framework of the underlying substantive

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law.

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A dispute is genuine if the evidence is such that a reasonable

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jury could return a verdict for either party.

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Fed. R. Civ.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Id.

The moving party bears the initial burden of informing the

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district court of the basis for its motion and identifying those

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portions of the pleadings, discovery, and affidavits that

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demonstrate the absence of a disputed issue of material fact.

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Celotex, 477 U.S. at 323.

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party may not rely merely on the allegations or denials in its

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pleadings, but must set forth “specific facts showing that there

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is a genuine issue for trial.”

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Fed. R. Civ. P. 56(e)).

In opposing the motion, the non-moving

Anderson, 477 U.S. at 248 (citing

The court must construe the evidence in
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the light most favorable to the non-moving party, making all

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reasonable inferences that can be drawn.

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Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Intel

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Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th

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Cir. 1991); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1289

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(9th Cir. 1987).

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United States District Court
Northern District of California

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Matsushita Elec. Indus.

DISCUSSION
I.

Standing
Defendants contend that Mallari lacks standing to bring his

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§ 1983 claim.

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Specifically, the Ninth Circuit reversed this Court’s dismissal

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of Mallari’s § 1983 claim for failure to allege that he was

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injured directly and independently of Medhealth.

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Circuit noted:

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The Ninth Circuit addressed this issue.

The Ninth

However, in the Second Amended Complaint, Mallari
alleged that defendants' conduct violated his own
Fourteenth Amendment rights. RK Ventures, Inc. v. City
of Seattle, 307 F.3d 1045, 1057 (9th Cir. 2002)
(shareholders of corporation alleged personal injury
sufficient to confer § 1983 standing because they
alleged violations of their own Fourteenth Amendment
rights); Soranno's Gasco, Inc. v. Morgan, 874 F.2d
1310, 1318-19 (9th Cir. 1989) (shareholder of
corporation had § 1983 standing to bring First
Amendment claim because the right that was allegedly
violated belonged to the shareholder).
In RK Ventures, Inc., the Ninth Circuit provided the rule

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for shareholders’ standing for § 1983 claims involving their
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corporations.

307 F.3d at 1057.

Generally, “shareholders lack

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standing to assert an individual § 1983 claim based on harm to
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the corporation in which they own shares.”

Id.

“A shareholder

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does have standing, however, when he or she has been ‘injured
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directly and independently from the corporation.’”
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Id.

The

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shareholder must suffer injuries that are personal and distinct

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from those suffered by the corporation.

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Id.

In RK Ventures, Inc., the two principal owners of a
nightclub asserted that a Seattle ordinance restricted their

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personal ability to play rap and hip hop music and to associate

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with African-Americans, as well as the nightclub’s ability to do

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the same.

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was sufficient to show they had personal standing to claim that

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United States District Court
Northern District of California

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the ordinance violated their First and Fourteenth Amendment

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rights.

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Id. at 1054, 1057.

The Ninth Circuit held that this

Id. at 1057.

Soranno’s Gasco, Inc. v. Morgan, 874 F.2d 1310 (9th Cir.

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1989) presents another example of how § 1983 standing is applied

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to owners of a company.

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and officers of Soranno’s Gasco, Inc. (Gasco).

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They alleged that the Air Pollution Control District violated

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their First Amendment rights when it suspended Gasco’s petroleum

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bulk plant permits and discouraged customers from doing business

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with Gasco in retaliation for Mr. Soranno’s public criticism of

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the district’s policies.

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plaintiffs’ argument that the defendants’ actions were taken in

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retaliation for Soranno's exercise of first amendment rights

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clearly alleges a direct and independent personal wrong.”

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1318.

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those rights.”

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The Sorannos were the sole shareholders

Id.

Id. at 1312.

The Ninth Circuit held that “the

Id. at

Mr. Soranno had standing “to contest the deprivation of
Id. at 1319.

The thrust of Defendants’ argument is that it was Medhealth

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and not Mallari which applied for the license and paid all the

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application fees.

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suffered a due process violation and not Mallari.

Motion at 6.

Thus, it was Medhealth who

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As a result,

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Defendants state that “it is difficult to imagine any claim for

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damages except for those suffered by Medhealth, if any.”

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Id.

As the Ninth Circuit stated, however, this is not the only
injury that Mallari alleges to have suffered.

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at 2-3.

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neutral laws regarding the issuance of an HHA license in a

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discriminatory manner against him.

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he alleges that he was singled out by Defendants who “cancel[led]

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United States District Court
Northern District of California

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his business license without valid reasons.”

See Docket No. 51

Mallari contends that Defendants applied facially

Opp. at 9-10.

Specifically,

SAC at 7.

Mallari

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posits several reasons for Defendants’ unfair treatment.

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For example, he states that Defendants discriminated against him

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because of “his candidness to argue his points whenever he is

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right,” which could be construed to allege a violation of the

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First Amendment.

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Defendants discriminated against him based on the basis of “race,

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national origin, or alienage,” which would constitute a violation

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of the Fourteenth Amendment.

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arrived from the Philippines in 2006.

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Id.

Id.

Additionally, his complaint suggests that

Id. at 6-7. Mallari and his family
Id. at 7.

As the Ninth Circuit noted, if Mallari can prove that the

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above allegations are true, then Mallari may have suffered a

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“direct and independent personal wrong,” giving him standing to

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pursue his claims.

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briefing does not address whether Mallari has evidence supporting

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his allegations of intentional discrimination in violation of the

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First Amendment or Fourteenth Amendment.

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from additional briefing on this issue before this case proceeds

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to trial.

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briefing according to the schedule at the conclusion of this

See Docket No. 51 at 2-3.

Defendants’

The Court might benefit

Accordingly, the parties shall submit supplemental

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order.

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II.

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California Code of Regulations, title 22, section 74669
Defendants’ motion for summary judgment also challenges

Mallari’s claim for a violation of section 74669.

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already addressed this issue in its order granting Defendants’

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second motion to dismiss.

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not shown that section 74669 gives rise to a private cause of

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action.

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United States District Court
Northern District of California

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remanded only with respect to Mallari’s § 1983 claim, and so

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The Court

As stated in that order, Mallari has

See Docket No. 43 at 9.

The Ninth Circuit reversed and

Mallari’s section 74669 claim is no longer in play.

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CONCLUSION

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Within fourteen days of this order, Defendants shall file a

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brief not exceeding fifteen pages addressing whether Mallari has

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sufficient evidence to support his allegations of standing based

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on Defendants’ intentional discrimination violating his

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Fourteenth Amendment rights.

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this brief, Mallari shall file a brief not exceeding fifteen

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pages addressing the same issue and responding to Defendants’

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allegations.

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thereafter.

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related matters at the JDC Legal Help Center, which provides free

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information and limited-scope legal assistance to pro se

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litigants.

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be found at http://www.cand.uscourts.gov/legal-help.

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Within fourteen days of the filing

Defendants may file a five-page reply seven days
Mallari may seek assistance with his brief and

More information about the JDC Legal Help Center can

The Court provides the following warning to Mallari, which

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is similar to the one that was previously provided to him in the

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Court’s January 3, 2018 order:

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The defendants have made a motion for summary judgment by
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which they seek to have your case dismissed.

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summary judgment under Rule 56 of the Federal Rules of Civil

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Procedure will, if granted, end your case.

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what you must do in order to oppose a motion for summary

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judgment.

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is no genuine issue of material fact—that is, if there is no real

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dispute about any fact that would affect the result of your case,

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the party who asked for summary judgment is entitled to judgment

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United States District Court
Northern District of California

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as a matter of law, which will end your case.

A motion for

Rule 56 tells you

Generally, summary judgment must be granted when there

When a party you

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are suing makes a motion for summary judgment that is properly

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supported by declarations (or other sworn testimony), you cannot

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simply rely on what your complaint says.

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out specific facts in declarations, depositions, answers to

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interrogatories, or authenticated documents, as provided in Rule

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[56(c)], that contradict the facts shown in the defendant’s

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declarations and documents and show that there is a genuine issue

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of material fact for trial.

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evidence in opposition, summary judgment, if appropriate, may be

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entered against you. If summary judgment is granted, your case

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will be dismissed and there will be no trial.

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154 F.3d 952, 962-63 (9th Cir. 1998).

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Instead, you must set

If you do not submit your own

Rand v. Rowland,

Mallari also must comply with the Civil Local Rules of this

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Court.

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5(a) requires that factual contentions be supported by an

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affidavit or declaration and by appropriate references to the

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record.

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requests for admission and other evidentiary matters must be

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appropriately authenticated by an affidavit or declaration.

When opposing summary judgment, Civil Local Rule 7-

Extracts from depositions, interrogatory answers,

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An

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affidavit or declaration may contain only facts, must conform as

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much as possible to the requirements of Federal Rule of Civil

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Procedure 56 and must avoid conclusions and argument.

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7-5(b).

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specify the basis for that information or belief.

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Local Rule 7-5(b) warns that an affidavit or declaration not in

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compliance with this rule may be stricken in whole or in part.

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United States District Court
Northern District of California

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Civil L.R.

Any statement made upon information or belief must
Id.

Civil

The pretrial conference is continued to May 15, 2018 at 2:30
pm.

All other dates will remain the same.
The Clerk of the Court shall serve a copy of this order

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directly on Mallari at the following address: Danilo Mallari,

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1861 Camino Real Way, Roseville, CA 95747.

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The Clerk of the Court shall randomly assign this matter to

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a magistrate judge for a settlement conference, which should be

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completed no later than April 27, 2018.

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IT IS SO ORDERED.

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Dated: March 6, 2018
CLAUDIA WILKEN
United States District Judge

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