Hales v. Timberline Knolls et al.,
Filing
107
MEMORANDUM Opinion and Order: For the foregoing reasons, Dr. West and the Timberline Knolls Defendants' motion to dismiss 91 is granted in part and denied in part with respect to Count I, denied with respect to Counts II-V, and granted with respect to Count VI. The Corporate Defendants' motion to dismiss is granted. 83 Signed by the Honorable Thomas M. Durkin on 1/3/2017:Mailed notice(srn, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LAUREN H. HALES,
PLAINTIFF,
v.
TIMBERLINE KNOLLS, LLC, now known
as R.M. BROWN ENTERPRISES, LLC,
SEMONE M. WEST, M.D., THOMAS DATTALO
MARK DEDONATO, TIMBERLINE KNOLLS
HOLDING, LP, and TIMBERLINE KNOLLS
MANAGEMENT, LLC,
DEFENDANTS.
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No. 15 C 2622
Judge Thomas M. Durkin
MEMORANDUM OPINION AND ORDER
Plaintiff Lauren H. Hales, an Iowa resident, and former patient at
Timberline Knolls residential treatment center, brings this suit alleging breach of
statutory duty (Count I), breach of fiduciary duty and aiding and abetting breach of
fiduciary duty (Counts II and III), tortious interference with physician-patient
relationship (Count IV), intentional infliction of emotional distress (Count V), and
breach of contract (Count VI). R. 54 (Second Amended Complaint). This Court has
diversity jurisdiction1 over Hales’ claims pursuant to 28 U.S.C. § 1332. 2 See R. 54
The Court is uncertain whether Timberline Knolls Management, LLC and
Timberline Knolls Holding, LP, are completely diverse from Plaintiff because the
citizenship of their members and partners, respectively, has not been plead in the
operative complaint or otherwise set forth in the record. However, because the
Court finds below that it lacks personal jurisdiction over either of these defendants,
they are dismissed from the case without prejudice. The complete diversity of the
remaining defendants is sufficient to establish jurisdiction.
1
¶¶ 3-20; R. 84-2 at 37. Defendants Timberline Knolls, LLC, Thomas Dattalo
(President and Administrator of Timberline Knolls), and Mark DeDonato
(Timberline Knolls’ Director of Continuing Care) (collectively, the “Timberline
Knolls Defendants”) move along with Dr. Semone M. West (Hales’ treating
psychiatrist at Timberline Knolls) to dismiss each of the six counts alleged against
them, whether individually or collectively, for failure to state a claim. R. 91.
Defendants Timberline Knolls Holding, LP (“TK Holding”) and Timberline Knolls
Management, LLC (“TK Management”) (collectively, the “Corporate Defendants”)
move to dismiss for lack of personal jurisdiction and for failure to state a claim. R.
83. For the reasons that follow, the Timberline Knolls Defendants’ motion is denied
with respect to Counts I-V and granted with respect to Count VI, and the Corporate
Defendants’ motion is granted.
Standard
A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g.,
Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.
2009). A complaint must provide “a short and plain statement of the claim showing
that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to provide
Plaintiff also alleges federal question jurisdiction in the Complaint, citing
The Protection and Advocacy for Individuals with Mental Illness Act of 1986, 42
U.S.C. § 10801, et seq. Plaintiff does not seek damages under the Act, however, but
rather invokes it to establish the standard of care, the alleged breach of which forms
the basis to support her state law tort claims. The Court therefore does not consider
this case to present a federal question under 28 U.S.C. § 1331. See Merrell Dow
Pharm. Inc. v. Thompson, 478 U.S. 804, 817 (1986) (“We conclude that a complaint
alleging a violation of a federal statute as an element of a state cause of action . . .
does not state a claim ‘arising under the Constitution, laws, or treaties of the
United States.’”)
2
2
defendant with “fair notice” of the claim and the basis for it. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). This standard “demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). While “detailed factual allegations” are not required, “labels
and conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Twombly, 550 U.S. at 555. The complaint must “contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “‘A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.’”
Mann v. Vogel, 707 F.3d 872, 877 (7th Cir. 2013) (quoting Iqbal, 556 U.S. at 678). In
applying this standard, the Court accepts all well-pleaded facts as true and draws
all reasonable inferences in favor of the non-moving party. Mann, 707 F.3d at 877.
Background
Hales was admitted to Timberline Knolls residential treatment center on
September 18, 2010. 3 R. 54 at ¶ 27. Her admission was precipitated by a suicide
attempt—the culmination of years of mental illness, frequent suicidal ideation, an
extensive history of self-harm, and a recent episode of cocaine use and acute alcohol
poisoning. Id. ¶ 29. Timberline Knolls was aware of Hales’ mental health and
Hales reached the age of majority on March 28, 2013, at which time the
applicable statute(s) of limitations on her state law claims began to run. See 735
ILCS 5/13-211 (“If the person entitled to bring an action . . . at the time the cause of
accrued, is under the age of 18 years . . . then he or she may bring the action within
two years after person attains the age of 18 years.”). This suit was filed on March
27, 2015.
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substance abuse history, as well as relevant risk-factors in her family history, at the
time of her admission. Id. ¶¶ 30-34.
Hales was housed in the Oak Lodge adolescent treatment building. Id. ¶ 35.
In early November 2010, Hales experienced and received counseling regarding
delusions of her own death. Id. ¶ 90. On November 23, 2010, another adolescent
patient who had been on furlough with a parent returned to the facility with a
“substantial amount” of unauthorized prescription medication. Id. ¶ 40-42. This
patient was not searched by anyone at Timberline Knolls upon her arrival, and she
was permitted to return the Oak Lodge building, where she proceeded to distribute
the medication to Hales and others. Id. ¶¶ 43-44. Hales and five other patients
ingested dangerous and potentially lethal doses of the medication; she and the
others were transported by ambulance to local emergency rooms. Id. ¶¶ 45, 49-56.
Timberline Knolls did not voluntarily disclose this incident to state regulators or
industry accreditors. Id. ¶¶ 102-103.
After Hales was physically stabilized, she was admitted to the Department of
Adolescent Psychiatry at a local hospital for further treatment, “suicide
precautions” and “close observation.” Id. ¶¶ 76, 84. During the period of her
hospitalization, Hales “express[ed] and exhibit[ed] severe emotional distress,
mental anguish, anxiety and humiliation,” in part because of the restrictive and
aggressively monitored nature of her confinement to what she referred to as “the
psych ward.” Id. ¶ 78. Dr. West, Hales’ treating psychiatrist at Timberline Knolls,
did not call to check on Hales, visit her while she was hospitalized, or return phone
4
calls (or pages) from the hospital or Hales’ parents seeking input related to Hales’
care. Id. ¶¶ 138-49.
On November 27, 2010, hospital personnel informed Hales that she was
stable enough to be transferred back to Timberline Knolls. Id. ¶ 150. The hospital
and Hales’ father made numerous attempts to reach Dr. West, because before Hales
could be released, Dr. West, as Hales’ treating physician at Timberline Knolls,
needed to be briefed on Hales’ hospitalization and medical status. Id. ¶¶ 150-55. Dr.
West’s failure to respond to these calls and pages unnecessarily prolonged Hales’
hospital stay. Id. Eventually, the hospital was directed to a different psychiatrist at
Timberline Knolls. Id. at 156. Hales was discharged from the hospital as a
“moderate” suicide risk on November 29, 2010, and transferred back to Timberline
Knolls to complete her rehabilitation program. Id. ¶ 89.
Discussion
I.
The Timberline Knolls Defendants and Dr. West
A.
Count I: Breach of Statutory Duty
Count I of the complaint alleges a breach of statutory duty against the
Timberline Knolls Defendants, citing The Protection and Advocacy for Individuals
with Mental Illness Act of 1986 (“Protection and Advocacy Act”), 42 U.S.C. § 10801,
et seq., two state mental health laws (the Mental Health and Developmental
Disabilities Code (“Illinois Mental Health Code”), 405 Ill. Comp. Stat. Ann. 5/1-101,
et seq., and the Protection and Advocacy for Mentally Ill Persons Act (“Illinois
Protection and Advocacy Act”), 405 Ill. Comp. Stat. Ann. 45/1, et. seq.)), and
5
generally identified “rules and regulations promulgated by the Illinois Department
of Human Services” as the basis of the alleged breach. Id. (Count I). The claim
catalogues various purported violations and consequent harms suffered, which fall,
essentially, into three categories. First, the Timberline Knolls Defendants breached
their statutory duty by failing to report the overdose incident. Id. ¶¶ 106-07.
Second, the Timberline Knolls Defendants “failed to design, implement and
maintain adequate security measures with respect to preventing the introduction of
unauthorized control substances onto the Oak Lodge premises.” Id. ¶¶ 114-16.
Third, the Timberline Knolls Defendants subjected Hale to abuse and/or neglect,
either intentionally or negligently, in derogation of their statutory duties. Id.
¶¶ 117-122. 4 The Court addresses each aspect of Count I in turn.
1.
Rules and Regulations Promulgated by the Illinois Department
of Human Services.
Hales vaguely alleges that Timberline Knolls was required to report the
overdose incident pursuant to unspecified rules and regulations and that it failed to
do so. Not only are these allegations threadbare at best, the duty they reference is
one that would be owed to state regulators, not to Hales. To the extent Count I is
based on Timberline Knolls’ alleged duty to report, it is dismissed with prejudice.
2.
Illinois Mental Health Code
The Timberline Knolls Defendants argue that Hales’ claims under the Illinois
Mental Health Code fail because the Code does not “expressly provide for” a private
The remaining allegations in Count I refer solely to Dr. West, and are
duplicative of the allegations set forth in Count II, which are addressed later in this
opinion.
4
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right of action. R. 91 at 2. Whether a statute expressly permits a private right of
action is not dispositive of whether a plaintiff can base a claim for relief on a
violation of statutory standards. In Threlkeld v. White Castle Sys., Inc., 127 F. Supp.
2d 986, (N.D. Ill. 2001), the court explained the rule as follows:
The [defendant] moves to dismiss the malpractice claim,
arguing that there is no private right of action under the
Mental Health Code. This is quite irrelevant. [The
plaintiff] does not argue that she has a private right of
action under the Code, but rather that the [defendants’]
violations of the Mental Health Code give rise to a cause
of action for negligence. Even where a statute does not
create an express or implied right of action, it may
establish a standard of care such that a plaintiff can make
a prima facie case for negligence based on a violation of
the statute.
Id. at 989 (citing Cuyler v. United States, 37 F. Supp. 2d 1099, 1103 (N.D. Ill. 1999)
(“[S]tatutes and ordinances designed to protect human life or property establish the
standard of conduct required of a reasonable person. In other words, they fix the
measure of legal duty.”)); see also Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547,
582 (7th Cir. 2012) (citing authority for the proposition that violations of federal
statutes and regulations are a common basis for negligence liability in tort
proceedings); see also Restatement (Third) of Torts § 38 (“When a statute requires
an actor to act for the protection of another, the court may rely on the statute to
decide that an affirmative duty exists and to determine the scope of the duty.”).
In order to state a negligence claim based on the violation of a statute, Hales
must establish that: (1) the statute is designed to protect human life or property;
(2) she is within the class of people protected by the statute; and (3) her injuries are
the kind against which the statute was intended to protect. See Threlkeld, 127 F.
7
Supp. 2d at 989. If she adequately alleges a violation of the Illinois Mental Health
Code, Hales may pursue a negligence claim arising therefrom if the violation
plausibly caused her injuries. Id. She has done so here.
There can be no doubt that the Mental Health Code is designed to protect
human life and that Hales, a patient at a mental health facility, is within the class
of persons protected by the statute. The Code entitles patients like Hales to be free
from “neglect,” which it defines as the failure to provide “adequate medical or
personal care or maintenance . . . which failure results in physical or mental injury
to a recipient or in the deterioration of a recipient’s physical or mental condition.”
405 ILCS § 5/2-112; 405 ILCS § 5/117.1. Under the Code, “adequate care” refers to
“services reasonably calculated to prevent further decline in the condition of a
recipient of services so that he or she does not present an imminent danger to self or
others.” 405 ILCS 5/1-101.2. Hales alleges that the security measures and patient
oversight at Timberline Knolls are inadequate to prevent the smuggling and
distribution of controlled substances onto the premises, where patients suffering
from mental illness are vulnerable to self-harm. This is sufficient to state a claim
for negligence.
3.
The Protection and Advocacy Acts (federal statute and state
implementing law)
The purpose of the Protection and Advocacy Acts is to protect individuals
with mental illness from abuse, neglect and serious injury. 42 U.S.C. § 10801; 405
8
ILCS 45/1 (using substantially identical language5). Under the Act, the term
“neglect” means, among other things, “the failure to provide a safe environment for
[an] individual with mental illness.” 42 U.S.C. § 10802(5); 405 ILCS 45/2(3). The Act
furthermore provides that “[p]rior to instituting any legal action . . . on behalf of
[an] individual with mental illness, an eligible system, or a State agency or nonprofit
organization which entered into a contract with an eligible system under section
10804(a) of this title, shall exhaust in a timely manner all administrative remedies
where appropriate.” 42 U.S.C. § 10807 (emphasis added); 405 ILCS 45/3(D)
(substantially identical language).
Defendants do not argue that Hales has failed to allege an “[un]safe
environment for [an] individual with a mental illness.” Rather, they argue that
Hales’ failure to exhaust administrative remedies is fatal to her claims based on
violations of these statutes. R. 91 at 5. Defendants do not cite any authority beyond
the statute itself, and entirely ignore the italicized language, which explicitly limits
the exhaustion requirement to entities with government contracts. See also 42
U.S.C.A. § 10804(a) (setting forth contract eligibility requirements). Defendants’
exhaustion argument is thus without merit.
The Illinois statute uses the phrase “mentally ill persons,” while the federal
statute uses the phrase “individuals with mental illness.” The mental health
community prefers to describe those living with mental health conditions using
“person-centered” language, e.g. “person living with bipolar disorder” instead of
“bipolar person.” See “Person-Centered Language,” Mental Health America,
available at http://www.mentalhealthamerica.net/person-centered-language (last
visited October 17, 2016).
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9
More importantly, however, Hales is not asserting a claim under the
Protection and Advocacy Acts in the sense that she is seeking statutory relief.
Rather, as articulated above, she asserts that the Timberline Knolls Defendants
were negligent on the basis of their failure to meet the standards of care set forth in
the statutes, which in turn, caused her harm.
4.
Negligence
Courts have permitted common law negligence claims on similar facts. In
Siklas v. Ecker Center for Mental Health, Inc., 617 N.E.2d 507 (Ill. App. Ct. 1993), a
plaintiff living with paranoid schizophrenia sought treatment from the defendant
mental health center (the “Center”). The Center was not a residential facility, but
did procure housing for a number of its patients, including the plaintiff and his
roommate, who was also receiving treatment for mental illness. While living under
the Center’s supervision and undergoing treatment, the plaintiff sustained a serious
knife injury inflicted by his roommate. Id. at 510. The plaintiff sued for damages in
Illinois state court on the basis of the Center’s failure to protect him. Id. The Center
moved for summary judgment, which was granted, arguing that it had no duty to
protect the plaintiff from the criminal acts of his roommate. Id. Reversing the order
of judgment for the Center, the appellate court explained:
Implicit in [the Center]’s undertakings [to procure
housing for the plaintiff and his roommate] was the
obligation to determine, insofar as possible, that plaintiff
remained safe in his housing, despite his illness. [The
Center] monitored both plaintiff’s and [his roommate’s]
mental conditions . . . In our view, the services which [the
Center] undertook to provide to plaintiff were the kind of
services which it should have recognized as necessary for
10
the protection of plaintiff’s person. Too, any failure on [the
Center]’s part to exercise reasonable care increased the
risk of harm to plaintiff . . . It is evident also that, due to
his illness, plaintiff relied on [the Center]’s assistance
and, ultimately, was injured in a situation substantially
created and maintained by [the Center] as part of its
services.
Id. at 513.
The parallels between Siklas and this case are obvious. Like the plaintiff in
Siklas, Hales was living under the supervision of her mental health care provider,
Timberline Knolls. Indeed, she was living in Timberline Knolls’ direct custody, on
the very premises where she received therapy and other treatment. Timberline
Knolls was acutely aware by virtue of its provision of mental health services to
Hales that she had history of depression, substance-abuse, self-harm, and suicidal
ideation. For the same reasons, Timberline Knolls was aware of the propensities
and vulnerabilities of other residents living on site. Therefore, Timberline Knolls
should have recognized its obligation to ensure, insofar as possible, that its patients
remained safe from themselves and from one another. In other words, Timberline
Knolls owed its residents a common law duty of care. See, e.g., Peterson v. Kings
Gate Partners-Omaha I, L.P., 861 N.W.2d 444, 449 (Neb. 2015) (sustaining a
common negligence law claim against the landlord of senior apartment building for
his alleged failure to protect a resident from assault by another resident’s son). The
Restatement (Third) of Torts is instructive:
An actor in a special relationship with another owes the
other a duty of reasonable care with regard to risks that
arise within the scope of the relationship. Special
relationships giving rise to the duty provided in
11
Subsection (a) include . . . a custodian with those in its
custody.
Restatement (Third) of Torts § 40. “[C]ustodial relationships that courts have
recognized as imposing an affirmative duty [of care] include day-care centers and
the children for whom they care, hospitals and their patients, nursing homes with
their residents.” Id. cmt. n. The special relationship between an in-patient
rehabilitation facility and its resident-patients is analogous. Timberline Knolls had
a duty to exercise reasonable care to keep Hales safe. Having alleged that the
Timberline Knolls Defendants were negligent in failing to prevent the smuggling of
contraband leading to the overdose incident, Hales has stated a plausible claim for
relief.
In summary, Hales has adequately alleged a negligence claim against the
Timberline Knolls Defendants based on breaches of both statutory and common law
duties of care. Except as to the claim for failure to report, Defendants’ motion to
dismiss Count I is denied.
B.
Counts II-IV: Breach of Fiduciary Duty and Tortious Interference with
and Aiding and Abetting Breach of Physician-Patient Relationship
Count II alleges breach of fiduciary duty against Dr. West. Id. ¶ 158. This
claim relates specifically to Dr. West’s failure to take or return any phone calls or
pages from the hospital following the overdose emergency, during the period of
Hales’ hospital admission, and in anticipation of Hales’ discharge. Id. ¶¶ 137-44.
Counts III and IV allege that the Timberline Knolls Defendants aided and abetted
Dr. West’s breach of fiduciary duty and/or tortiously interfered with the physicianpatient relationship by instructing Dr. West not to speak with Hales and by
12
refusing to transfer calls or deliver messages from the hospital to Dr. West. Id.
¶¶ 176-77. Hales alleges that in “abandoning” her after the suicide attempt, Dr.
West, of her own accord and at the behest of the Timberline Knolls Defendants,
placed the legal and financial concerns of Timberline Knolls above Hales’ medical
needs. Id. ¶¶ 166-67, 178.
The Timberline Knolls Defendants and Dr. West do not dispute that Dr. West
owed Hales a fiduciary duty. This is no surprise, since “it is well settled in Illinois
and, indeed, throughout the United States that there exists, between a patient and
his treating physician, a fiduciary relationship founded on trust and confidence.”
Petrillo v. Syntex Labs., Inc., 499 N.E.2d 952, 961 (1986) (internal citations
omitted); see also United States v. Vasquez-Ruiz, 2002 WL 1880127, at *2 (N.D. Ill.
Aug. 12, 2002), rev’d on other grounds, 502 F.3d 700 (7th Cir. 2007) (“A fiduciary
duty is implicit in the relationship between physician and patient.”). Rather, in
support of their argument for dismissal, the Timberline Knolls Defendants and Dr.
West contend that all claims premised on Dr. West’s fiduciary duty to Hales
implicate her medical judgment and therefore require an affidavit certifying review
by a medical expert under the Illinois Healing Arts Malpractice Act, 735 ILCS 5/2622. R. 91 at 5-6.
The Healing Arts and Malpractice Act provides that “[i]n any action, whether
in tort, contract or otherwise, in which the plaintiff seeks damages for injuries . . .
by reason of medical, hospital, or other healing art malpractice, the plaintiff’s
attorney . . . shall file an affidavit attached to the original . . . complaint” certifying
13
that the attorney has conferred with a qualified, knowledgeable healthcare
professional who, upon reviewing the medical record, concluded that the plaintiff
had a reasonable and meritorious cause for filing suit. 735 ILCS 5/2-622(a)(1). The
failure to file such a certificate is grounds for dismissal. 735 ILCS 5/2-622(g). Hales
did not file a 2-622 affidavit with her complaint. She argues that no affidavit was
necessary because her claims against Dr. West do not sound in malpractice.
Courts have given broad application to the phrase “healing art malpractice.”
Milos v. Hall, 757 N.E.2d 654, 657 (Ill. App. Ct. 2001) (citing Lyon v. Hasbro Indus.,
Inc., 509 N.E.2d 702, 705-06 (Ill. App. Ct. 1987)). Even so, “not every act or omission
committed by a physician . . . constitutes healing art malpractice.” Id. (citing Cohen
v. Smith, 648 N.E.2d 329, 333–34 (Ill. Ct. App. 1995) (nonconsensual touching by
nurse not “healing art malpractice”); Edelin v. Westlake Cmty. Hosp., 510 N.E.2d
958, 961 (Ill. Ct. App. 1987) (failure to follow hospital policy requiring patients to be
escorted from the property in a wheelchair not “healing arts malpractice”)). Rather,
a claim for healing arts malpractice lies only “when a professional applies his expert
knowledge or skill in an unreasonably deficient way resulting in injury.” Awalt v.
Marketti, 2012 WL 1161500, at *4 (N.D. Ill. Apr. 9, 2012) (citing Purtill v. Hess, 489
N.E.2d 867, 871 (Ill. 1986)). The nature of the act alleged determines whether the
challenged activity constitutes healing art malpractice and falls within the ambit of
Section 2-622. Id.
The case of In re Odeh, 431 B.R. 807 (Bankr. N.D. Ill. 2010), is instructive. In
Odeh, a bankruptcy court considered a breach of fiduciary duty claim advanced by a
14
petitioner against her deceased-husband’s doctor. Id. The petitioner alleged that the
doctor altered or falsified her husband’s medical records to avoid malpractice
liability. Id. The doctor argued that the breach of fiduciary duty claim was
duplicative of the petitioner’s malpractice claim. Id. at 811. To decide the matter,
the court examined the “operative facts together with the injury,” concluding that
the breach of fiduciary duty claim was “qualitatively different from an action for
medical practice.” Id. at 812-13. This was so, the court explained, because “showing
that [the doctor] falsified [the patient’s] records will not establish that [the doctor]
failed to provide adequate medical services.” Id. at 813. Rather, [the doctor] abused
a position of power and confidence in a manner quite distinct from the quality of
medical services he rendered.” Id. Accordingly, the court found a non-dischargable
claim for breach of fiduciary duty because “[t]he complaint alleges that [the doctor]
altered [the husband]’s medical records to protect [his] personal financial interest in
avoiding malpractice liability at the expense of the patient’s interest, violating a
duty at the core of the fiduciary relationship.” Id. at 815 (citing Petrillo, 499 N.E.2d
at 961); see also Milos, 757 N.E.2d at 182 (finding that a pathologist’s failure to
include certain facts in an autopsy report “was not based upon medical judgment
but was based entirely upon a desire to protect [the hospital] from a potential civil
action.”).
So too, here. Hales does not make any allegations regarding the adequacy of
the mental health treatment she received from Dr. West. Indeed, from Hales’
decision to return to Timberline Knolls, one might conclude that she believed Dr.
15
West was at least a competent psychiatrist. Hales alleges, however, that in the days
following the overdose incident, when Hales was no longer under Dr. West’s care
and was instead receiving treatment at a local hospital, Dr. West put the
reputational and financial interests of Timberline Knolls above the immediate
medical needs of Hales, her patient, to whom she owed a fiduciary duty. This left
Hales without the ability to obtain critical medical information under emergent
circumstances and also to be expediently discharged to a less restrictive mental
health treatment facility.
Dr. West and the Timberline Knolls Defendants argue that Dr. West’s
determination regarding how frequently to communicate with the hospital was an
exercise of medical judgment. They furthermore argue that any duty Dr. West had
to return phone calls must be established by reference to expert testimony
regarding standards governing communication between health care providers under
circumstances like those alleged here. Neither argument convinces this Court that
Hales has alleged a healing arts malpractice claim. First, the Court disagrees that
returning phone calls regarding a patient’s medical history, treatment plan, and
logistics for her transfer from one facility to another requires an exercise of medical
judgment. More importantly, even if expert testimony is required to establish the
scope of Dr. West’s duty to communicate with Hales’ medical providers, it does not
convert Hales’ claim to one sounding in medical healing art malpractice; the breach
alleged here does not arise from the inadequate provision of care, but rather from
the Defendants’ decision to have Dr. West become incommunicado, which placed
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their interest in mitigating civil liability above Dr. West’s fiduciary obligation to
Hales, resulting in harm to Hales. See Milos, 757 N.E.2d 658. The motion to dismiss
the breach of fiduciary duty claim is therefore denied.
Because the Court finds that Hales has stated a claim for breach of fiduciary
duty against Dr. West, the claims for concerted action liability against The
Timberline Knolls Defendants are allowed. See Thornwood, Inc. v. Jenner & Block,
799 N.E.2d 756, 767-68 (2003) (citing Restatement (Second) of Torts § 876)
(explaining that under the theory of concert of action in Illinois, a party may be held
liable for substantially assisting or encouraging a breach of fiduciary duty).
C.
Count V: Intentional Infliction of Emotional Distress
Count V alleges intentional infliction of emotional distress for all of the
reasons set forth in Counts I-IV. Id. The Court considers Count V to assert two
separate claims—one arising from the circumstances leading to the overdose
incident (Count I), and another arising from Dr. West’s failure to return calls
regarding Plaintiff’s medical care and transfer back to Timberline Knolls (Counts
II-IV). To state a claim for intentional infliction of emotional distress, a plaintiff
must allege that (1) the defendant engaged in “extreme and outrageous” conduct
toward the plaintiff, (2) the defendant intended or recklessly disregarded the
probability that the conduct would cause the plaintiff to suffer emotional distress,
(3) the plaintiff endured “severe or extreme” emotional distress, and (4) the
defendant’s conduct actually and proximately caused the plaintiff's distress. Ulm v.
Mem’l Med. Ctr., 964 N.E.2d 632, 641 (Ill. App. Ct. 2012). To survive a motion to
dismiss, a plaintiff must allege that “the distress inflicted is so severe that no
17
reasonable [person] could be expected to endure it.” Duffy v. Orlan Brook Condo.
Owners’ Ass’n, 981 N.E.2d 1069, 1082 (Ill. App. Ct. 2012)
Hales has sufficiently alleged extreme emotional distress. After overdosing in
an attempt to commit suicide, which is extremely distressing in and of itself, Hales
found herself bound by restraints to a hospital gurney for hours while doctors
assessed her level of risk of self-harm. She was later committed to a hospital’s
psychiatric unit, where she remained days after being cleared for discharged
because Dr. West refused to return calls to facilitate her expedient return to
Timberline Knolls. Courts have permitted intentional infliction of emotional
distress claims where, as here, the tortious conduct alleged arises from a breach of
statutory duty. See Barrios v. Sherman Hosp., 2006 WL 3754922, at *2 (N.D. Ill.
Dec. 15, 2006) (citing Chadwick v. Al-Basha, 692 N.E.2d 390, 393 (Ill. App. Ct.
1998) (permitting an intentional infliction of emotional distress claim based on
alleged violations of the Emergency Medical Treatment and Active Labor Act)).
Hales may also proceed as to the second prong of her intentional infliction of
emotional distress claim because by virtue of their professional experience and
familiarity with Hales, the Dr. West and the Timberline Knolls Defendants
reasonably could have foreseen that their refusal to communicate with Hales’ care
providers at the hospital would unnecessarily prolong her hospital stay.
D.
Count VI: Breach of Contract
Finally, in Count VI, Hales asserts a breach of contract claim against
Timberline Knolls as the third party beneficiary of the contract for treatment
18
between the Timberline Knolls and Hales’ parents. R. 54 ¶¶ 208-213. Specifically,
Hales alleges in a conclusory fashion that “by engaging in the acts and omissions”
alleged in Counts I-IV, Timberline Knolls “breached [their] contract [with Hales’
parents] by failing to provide adequate mental health care to [Hales] in a safe
environment.” Id. ¶ 211. Hales does not attach the contract to the pleadings or
reference in Count VI (or anywhere else in the Complaint) the specific provisions
she claims were breached. Although Hales is not procedurally required to attach the
contract to state a claim for breach, see Liu v. Nw. Univ., 78 F. Supp. 3d 839, 846-47
(N.D. Ill. 2015), her failure to identify or set forth any particular provision or
contractual language is fatal to her claim. Claim VI is therefore dismissed. Because
this is Hales’ third pleading, and because discovery is already well underway, this
claim is dismissed with prejudice.
II.
The Corporate Defendants
The Corporate Defendants move separately to dismiss, arguing that
Plaintiff’s “threadbare” and “conclusory” allegations are insufficient to confer
personal jurisdiction on this Court or to sustain a claim for direct or vicarious
liability for the conduct alleged in the Complaint. R. 84. The Court first considers
the motion to dismiss for lack of personal jurisdiction. If the Court determines that
it lacks jurisdiction over the Corporate Defendants, it need not (and indeed, cannot)
consider the merits of the claims against them.
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A.
Personal Jurisdiction
An action against a party over whom the Court lacks personal jurisdiction
must be dismissed. Fed. R. Civ. P. 12(b)(2). A complaint need not include facts
alleging personal jurisdiction. Steel Warehouse of Wis., Inc. v. Leach, 154 F.3d 712,
715 (7th Cir. 1998). However, once a defendant moves to dismiss the complaint
under Rule 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of
establishing the existence of jurisdiction. See Purdue Research Found. v. Sanofi–
Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). If the defendant submits
affidavits or other evidence opposing the exercise of jurisdiction, “the plaintiff must
go beyond the pleadings and submit affirmative evidence supporting the exercise of
jurisdiction.” Id. “The Court resolves factual disputes in the pleadings and affidavits
in favor of the party asserting jurisdiction, but takes as true those facts contained in
the defendant’s affidavits that remain unrefuted by the plaintiff.” Chi. Reg’l Council
of Carpenters v. Joseph J. Sciamanna, Inc., 2009 WL 1543892, at *2 (N.D. Ill. June
3, 2009).
The basis implied in the Complaint for personal jurisdiction over the
Corporate Defendants is that they are alter egos of Timberline Knolls, which
conducts business in Illinois and is thus indisputably within the general jurisdiction
of the Court. See Council of Carpenters, 2009 WL 1543892, at *2. “Under Illinois
law, a corporation is a legal entity separate and distinct from its shareholders,
directors and officers, and, generally, from other corporations with which it may be
affiliated.” Id. at *2 (citing Van Dorn Co. v. Future Chem. and Oil Corp., 753 F.2d
20
565, 569 (7th Cir. 1985)). A court may disregard the separate corporate entity,
however, if it determines that two corporations are so interconnected in interest and
ownership that the separate corporations no longer exist and that recognition of the
separate existence would promote fraud or injustice. Id. To determine whether one
corporation maintains the requisite degree of control over another to justify an alter
ego finding, a court may consider several factors, including the failure to maintain
adequate corporate records or to comply with corporate formalities, the
commingling of funds or assets, undercapitalization, and whether one entity treats
the assets of the other as its own. Id. Courts may also consider whether the two
entities have “substantially identical management, business purpose, operation,
equipment, customers, supervision, and ownership.” Id. (citing Int’l Union of
Operating Eng’rs, Local 150, AFL–CIO v. Rabine, 161 F.3d 427, 433 (7th Cir. 1998)).
Plaintiff alleges, in summary, that TK Holding and TK Management are
general partners, that TK Holding holds a majority interest in Timberline Knolls,
that TK Management “provid[ed] management, administrative and supervisory
services to Timberline Knolls,” and that Timberline Knolls conducted its business
“at the direction of, at the behest of, or in concert with” TK Management. R. 54
¶¶ 21-24. Plaintiff alleges that for these reasons, and due to “a significant degree of
commonality and overlapping characteristics . . . with regard to the Members,
Managers, Partners, and Officers” of the entities, TK Holding and TK Management
“are inextricably intertwined with” Timberline Knolls and as such are alter egos
21
jointly subject to the jurisdiction of this Court and to liability for the harms alleged.
Id. ¶ 25.
Attached to the Corporate Defendants’ motion to dismiss for lack of subject
matter jurisdiction is the affidavit of O. Haynes Morris, Jr., a Manager of
Timberline Knolls and TK Management. See 84-1 (“Morris Aff.”). In it, Morris states
that TK Management holds a minority (46%) “passive membership” interest in
Timberline Knolls (Morris Aff. ¶ 9) and that neither of the Corporate Defendants
provides management, administrative or supervisory services to Timberline Knolls
(Morris Aff. ¶¶ 7-9, 10-11). Indeed, the limited liability agreement, attached as
Exhibit A to the affidavit, R. 84-2, reflects as much. See Section 4.13 (“The only
matters upon which Members shall vote are (i) whether to sell the Company or its
assets, (ii) whether to dissolve and windup the affairs of the Company, (iii) whether
to adopt any amendment to this Agreement, (iv) the election of Managers,” and
whether to admit or remove members or issue securities); Section 4.7 (“[N]o member
shall have any voice, nor take part in the conduct, control or management of the
business of the Company in its capacity as a Member”). Morris also states that the
Corporate Defendants keep separate books, tax returns, and financial statements
from Timberline Knolls (Morris Aff. ¶ 13). Finally, Morris states that “[o]ther than
the passive investment in Timberline Knolls, LLC, neither TK Holding nor TK
Management has any other contact with the State of Illinois” (Morris Aff. ¶ 15).
Far from proffering evidence refuting the Morris Affidavit, Plaintiff all but
concedes in her response that the Corporate Defendants are not Timberline Knoll’s
22
alter-egos. Instead, she shifts the argument to suggest that the Corporate
Defendants are subject to the Court’s specific personal jurisdiction because they
directly participated in the conduct that harmed her. See R. 99 at 4. (“While it is
true that commonality in ownership, management and control are not enough to
pierce the corporate veil or otherwise impose vicarious liability, the Illinois Court
has recently spoken loud and clear on the propriety of imposing that liability when
the affiliated company is also a direct participant.”). But the Complaint does not
allege the Corporate Defendants’ direct involvement, and Plaintiff’s response to the
Corporate Defendant’s motion to dismiss merely reiterates the general allegations
set forth in the Complaint. R. 99 at 3 (“TK Management was providing general
management, administrative and supervisory services to Timberline Knolls, LLC,
regarding oversight and maintenance of the patient residential facility”). These
general allegations of supervision and management are refuted by the Morris
affidavit and the Limited Liability Agreement attached thereto. 6 In summary,
Plaintiff suggests that she should be allowed to pursue the merits of her
alter-ego theory in discovery. Even if this Court had jurisdiction over the Corporate
Defendants, which it does not, it would nevertheless refuse to permit discovery on
the threadbare and incomplete allegations in the operative complaint. Plaintiff’s
allegations against the Corporate Defendants relate exclusively to common
ownership and leadership, shared corporate resources, and some level of control or
supervision by the Corporate Defendants over the operations of Timberline Knolls.
But to state a claim for alter-ego liability, a plaintiff must allege more than mere
commonality and overlap, it must allege that “(1) the corporation was so controlled
and manipulated that it had become a mere instrumentality . . . and (2) recognition
of a separate corporate identity would sanction a fraud or promote injustice.”
Rehabcare Grp. East, Inc. v. Certified Health Mgmt., Inc., 2007 WL 3334500, at *2
(N.D. Ill. Nov. 8, 2007) (internal punctuation and citation omitted) (dismissing on
the merits an alter-ego claim plead almost identically to the claim here); see also id.
at *2-3 (collecting cases granting motions to dismiss alter-ego claims where
6
23
Plaintiff failed to come forward with additional evidence in support her alter-ego
theory, and failed to make any concrete allegations of the Corporate Defendant’s
direct participation in the wrongful conduct alleged. 7
The Court lacks jurisdiction over TK Management and TK Holding. They are
dismissed from the case.
Conclusion
For the foregoing reasons, Dr. West and the Timberline Knolls Defendants’
motion to dismiss is granted in part and denied in part with respect to Count I,
plaintiffs failed to accomplish the “daunting” task of alleging the high level of
dominion, control and unfairness an alter-ego claim requires). Even if the Court
ignored the Morris Affidavit and took the allegations in the Complaint as true, they
still miss the mark.
Though it has not been briefed, it bears mention that there is one other way
the Corporate Defendants might be subject to the personal jurisdiction of this
Court. Where “a subsidiary corporation is acting as the parent corporation’s Illinois
agent in the sense of conducting the parent’s business rather than its own,” the
exercise of jurisdiction is proper. Alderson v. S. Co., 747 N.E.2d 926,, 944 (Ill. App.
Ct. 2001); see also Capgain Props. Inc. v. Landmaster Partners, LLC, 2016 WL
3035534, at *2 (N.D. Ill. May 29, 2016) (“Personal jurisdiction over an entity is
appropriate when minimum contacts are established through an agent of the
entity.”). Certainly the relationship between the Corporate Defendants and
Timberline Knolls raises a question of agency-based personal jurisdiction. After all,
the Morris affidavit attests that TK Holding, the limited partner of TK
Management, owns a substantial minority stake in Timberline Knolls. It also
alleges a degree of overlap in the membership and management of the TK
Management and Timberline Knolls. But “standing alone, the existence of common
officers or directors serving both corporations is not sufficient to confer jurisdiction
over a nonresident parent corporation.” Alderson, 747 N.E.2d at 944. Therefore, and
because the Morris affidavit and exhibits reflect a lack of substantial control by the
Corporate Defendants over the business of Timberline Knolls, the Court finds that
it cannot exercise personal jurisdiction over either of the Corporate Defendants by
way of the agency theory of minimum contacts. Plaintiff may request a
reconsideration of this determination at the next status hearing if she has adduced
new information tending to establish that Timberline Knolls is an agent of either or
both of the Corporate Defendants.
7
24
denied with respect to Counts II-V, and granted with respect to Count VI. The
Corporate Defendants’ motion to dismiss is granted.
ENTERED:
Honorable Thomas M. Durkin
United States District Judge
Dated: January 3, 2017
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