Gross v. GGNSC Southaven, LLC et al

Filing 50

ORDER granting 8 Motion to Dismiss for Lack of Jurisdiction as to Defendants Drumm Corp., Pearl Senior Care LLC, and Geary Property Holdings. Signed by District Judge Michael P. Mills on 9/8/2014. (lpm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
SAMMY GROSS, AS THE ADMINISTRATOR
OF THE ESTATE OF PAULINE TILLMAN WAGNER,
DECEASED AND ON BEHALF OF HER
WRONGFUL DEATH BENEFICIARIES

VS.

PLAINTIFFS

NO. 3:14CV00037-M-A

GGNSC SOUTHAVEN, LLC D/B/A GOLDEN LIVING
SOUTHAVEN, GOLDEN GATE NATIONAL SENIOR
CARE, LLC, GGNSC EQUITY HOLDINGS, LLC,
GGNSC CLINICAL SERVICES, LLC, GPH SOUTHAVEN, LLC,
GGNSC HOLDINGS, LLC, GGNSC ADMINISTRATIVE SERVICES, LLC,
GEARY PROPERTY HOLDINGS, LLC, BEVERLY ENTERPRISES,
INC., PEARL SENIOR CARE, LLC AND DRUMM CORP., LLC
DEFENDANTS

ORDER
This cause comes before the court on Defendants Drumm Corp. (Drumm), Pearl Senior
Care LLC (Pearl), and Geary Property Holding’s (Geary) (collectively the “Moving
Defendants”) motion to dismiss [Doc. 15] pursuant Rule 12(b)(2) of the Federal Rules of Civil
Procedure. Plaintiff Sammy Gross, as the Administrator of the Estate of Pauline Tillman
Wagner, deceased and on behalf of her heirs and wrongful death beneficiaries, has responded in
opposition to the motion. Upon due consideration of the memoranda and relevant law, the court
is now prepared to rule.
Pauline Tillman Wagner was admitted to GGNSC Southaven on or about February 2,
2009 and continued to reside there until her death on July 12, 2012. On October 10, 2013,
plaintiff sued GGNSC Southaven, licensee of Golden Living Center-Southaven, and several
affiliated entities alleging negligence, medical malpractice, and wrongful death. Plaintiff bases

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his claims on the contention that Wagner’s death was a direct result of Golden LivingCenterSouthaven’s failure to provide adequate care. Moving Defendants are among the affiliated
entities named in the suit. However, Moving Defendants contend that this court lacks personal
jurisdiction over them, and should, therefore, dismiss them from this suit.1
When a district court rules on a motion to dismiss for lack of personal jurisdiction
without an evidentiary hearing, the plaintiff must only make a prima facie case that jurisdiction
is proper. Quick Techs., Inc. v. Sage Group, PLC, 313 F.3d 338, 343 (5th Cir. 2002). In
determining whether a prima facie case for personal jurisdiction exists, a court must accept the
uncontroverted allegations in the plaintiff's complaint as true, and all factual conflicts contained
in the parties' affidavits must be resolved in favor of the plaintiff. Bullion v. Gillespie, 895 F.2d
213, 217 (5th Cir. 1990).
“A federal district court sitting in diversity may exercise personal jurisdiction only to the
extent permitted a state court under applicable state law.” Allred v. Moore & Peterson, 117 F.3d
278, 281 (5th Cir. 1997), cert. denied, 522 U.S. 1048, 118 S. Ct. 691, 139 L.Ed.2d 637 (1998)
(internal citation omitted). “A state court or a federal court sitting in diversity may assert
jurisdiction if: (1) the state's long-arm statute applies, as interpreted by the state's courts; and (2)
if due process is satisfied under the Fourteenth Amendment to the United States Constitution.”
Allred, 117 F.3d at 281 (quoting Cycles, Ltd. v. W.J. Digby, Inc., 889 F.2d 612, 616 (5th Cir.
1989)). However, if Mississippi law does not provide for the assertion of personal jurisdiction
over the defendants, we need not consider the due process issue. Cycles, 889 F.2d at 616.

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Plaintiff’s response to the motion to dismiss in this case is identical to the one which the same
counsel filed before this court in Hanback v. GGNSC, et al., No: 3:13cv288, in response to an
almost identical motion filed by the same Moving Defendants. This court concluded that it
lacked personal jurisdiction over those Moving Defendants in Hanback, and it can discern no
reason as to why a differing result should be reached in this case.
2

Mississippi's long-arm statute provides:
Any nonresident person, firm, general or limited partnership, or any
foreign or other corporation not qualified under the Constitution and laws
of this state as to doing business herein, who shall make a contract with a
resident of this state to be performed in whole or in part by any party in
this state, or who shall commit a tort in whole or in part in this state
against a resident or nonresident of this state, or who shall do any business
or perform any character of work or service In this state, shall by such act
or acts be deemed to be doing business in Mississippi and shall thereby be
subjected to the jurisdiction of the courts of this state.
Miss. Code Ann. § 13–3–57. Thus, in order to exercise jurisdiction over the defendants, the court
must find that (1) the defendants entered into a contract with plaintiff to be performed in whole
or in part in Mississippi; or (2) the defendants committed a tort, in whole or in part, against a
plaintiff in Mississippi; or (3) the defendants were “doing business” in Mississippi. See Roxco,
Ltd. v. Harris Specialty Chem., Inc., 133 F. Supp. 2d 911, 915 (S.D. Miss. 2000).
Due process is satisfied under the Fourteenth Amendment to the United States
Constitution when the minimum contacts test is met. The minimum contacts standard may be
met in two ways. Specific jurisdiction exists when the defendant “purposefully avails itself of the
privilege of conducting activities within the forum State, thus invoking the benefits and
protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d
1283 (1958) (internal citation omitted). The minimum contacts necessary for specific personal
jurisdiction are established “if the defendant has ‘purposefully directed’ his activities at residents
of the forum, and the litigation results from alleged injuries that ‘arise out of or relate to’ those
activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-472, 105 S. Ct. 2174, 85 L. Ed.
2d 528 (1985). General jurisdiction, on the other hand, lies when the defendant's contacts with
the forum state are so “continuous and systematic” that the state may exercise personal
jurisdiction over the defendant even if the suit is unrelated to the defendant's contacts with the

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state. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16, n. 9, 104 S.
Ct. 1868, 80 L. Ed. 2d 404 (1984). In either case, the court must confirm that the exercise of
jurisdiction “does not offend traditional notions of fair play and substantial justice.” World–Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 62 L.Ed.2d 490 (1980). This
determination is made by balancing five factors: (i) the burden on the defendant; (ii) the forum's
interest; (iii) the plaintiff's interest; (iv) the interest in an efficient judicial system; and (v) the
interest in promoting public policy. See Burger King Corp. v. Rudzewicz, 471 U.S. at 467–77.
In support of their motion, Moving Defendants assert that the entities have never
purposely availed themselves of the laws and privileges of Mississippi to warrant this court
exercising personal jurisdiction over them. According to Moving Defendants, they are nonresidential entities that took no part in the incidents alleged in Plaintiff’s complaint because
Moving Defendants do not operate Golden LivingCenter-Southaven, do not control GGNSC
Southaven LLC, and have no contacts in Mississippi.
In opposition to Moving Defendants’ motion, Plaintiff asserts that all of the defendants
are involved in a joint venture in Mississippi and therefore, are jointly liable and subject to
personal jurisdiction in Mississippi. Plaintiff bases this contention on allegations, albeit
conclusory, that all defendants had a mutual understanding for the common purpose of operating
Golden LivingCenter-Southaven; had a right to a voice in the direction and control of the means
to carry out this common purpose; and combined their property, money, skill, and knowledge to
operate Golden LivingCenter-Southaven. In addition, Plaintiff purports that defendants
established multiple corporations in order to divert resources and profits that would otherwise
have been available for resident care and to limit liability. As such, Plaintiff argues that all
defendants should be held jointly liable for the damages caused in pursuit of their joint venture.

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A Mississippi court has not specifically held that when the activities of one co-venturer in
the forum are sufficient to sustain the exercise of personal jurisdiction, jurisdiction will attach as
to all the participants in the venture. Likewise, Mississippi’s long-arm statute provides no clarity
as it only specifies a “nonresident person, firm, general or limited partnership, or any foreign or
other corporation.” Miss. Code Ann. § 13–3–57. However, multiple federal district courts
applying their respective state’s laws have reached the conclusion that they may exercise
personal jurisdiction over a non-resident co-venturer. See Wendt v. Handler, Thayer & Duggan,
LLC, 613 F. Supp. 2d 1021, 1030 (N.D. Ill. 2009) (“Where two or more companies enter a joint
venture, the minimum contacts of one co-venturer are attributable to other co-venturers such that
personal jurisdiction over one means personal jurisdiction over all.”); Nolan v. Boeing Company,
736 F. Supp. 120, 127 (E.D. La. 1990); Itel Containers Intern. v. Atlanttrafik Exp. Serv., 116
F.R.D. 477 (S.D.N.Y. 1987)); Aigner v. Bell Helicopters, Inc., 86 F.R.D. 532, 540 (N.D.
Ill.1980)); Fund v. Debio Holding, S.A., CIV. A. 99-2207, 2000 WL 877015 (E.D. La. June 29,
2000). This reasoning seems to be the logical extension of the Mississippi long-arm statute, and
because Mississippi courts view joint ventures as a type of partnership, the court finds that it may
exercise personal jurisdiction over a non-resident co-venturer in certain circumstances.
In Mississippi, a joint venture might be characterized as a “single shot partnership.” Hults
v. Tillman, 480 So.2d 1134, 1143 (Miss. 1985). “Indeed, the only purpose in distinguishing a
joint venture from a partnership is to define a business relationship which is limited to specified
undertakings for profit, rather than a general and continuing business of a particular kind.” Id. at
1141. “It exists when two or more persons combine in a joint business enterprise for their mutual
benefit with an understanding that they are to share in profits or losses and each to have a voice
in its management.” Id. at 1142. “A condition precedent for the existence of a joint venture is a

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joint proprietary interest in the enterprise and right of mutual control.” Id. In short, it is a
business relationship used for a specific undertaking for profit as opposed to a general, ongoing
business. Allied Steel Corp. v. Cooper, 607 So.2d 113, 117 (Miss. 1992).

Moreover, “an

agreement to share in profits and losses is not alone sufficient; there must be, in addition, an
intention of the parties to be associated together as general partners, or for the more limited
duration of a joint venture.” Hults, 480 So.2d at 1143 (emphasis added). A showing of “actual
intent to form a joint venture is essential.” Id.
Upon an examination of the evidence and applicable law, this court finds no justifiable
grounds for exercising personal jurisdiction over Moving Defendants, however. Once again,
Moving Defendants assert that they do not operate Golden LivingCenter-Southaven, do not
control GGNSC Southaven LLC, and have no contacts in Mississippi. Drumm’s Corporate
Disclosure Statement attests that it is a privately held LLC, the stock of which is solely held by
Fillmore Strategic Investors, LLC. Geary’s Corporate Disclosure Statement attests that it is a
privately held limited liability company and is an indirect and wholly owned subsidiary of
Drumm. Pearl’s Corporate Disclosure Statement attests that it is a privately held limited liability
company and is also an indirect and wholly owned subsidiary of Drumm. Moreover, the Moving
Defendants have submitted the affidavit of Holly Rasmussen, assistant secretary for Drumm,
who asserts that the moving defendants were formed and do business in various states, none of
which is Mississippi.
Plaintiff attempts to refute the aforementioned evidence with a recitation of Moving
Defendants’ corporate structure as provided by Kynda Almefty, a designated corporate
representative for Moving Defendants, in a deposition in front of an Arkansas Circuit Court.
Plaintiff argues that Moving Defendants should be subject to personal jurisdiction in Mississippi

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because Drumm created Pearl for the purpose of purchasing Beverly, which owned Golden
Living Center-Southaven. Moreover, Beverly is the sole member of Geary, Geary is the sole
member of GPH Southaven, GPH Southaven indirectly leases the property to GGNSC
Southaven, and the profits and losses flow upstream therefrom. According to Plaintiff, the fact
that Moving Defendants have no employees, create no profit independent of their subsidiaries,
and have board members and directors in common with other defendants evidences Moving
Defendants’ susceptibility to personal jurisdiction in Mississippi under a joint venture theory.2
However, Plaintiff’s argument is not persuasive in its attempt to force the round peg of
routine and formal corporate structure, i.e., comprised of separate parent, holding, and subsidiary
entities, into the square hole of joint venture. Plaintiff has not provided the court with any factual
support showing Moving Defendants’ actual intent to form an express or implied contract with
each other or the other defendants to operate Golden Living Center-Southaven. The court also
cannot impute to Moving Defendants mutual control over their respective subsidiaries merely
because the entities allegedly have board members and officers in common with the other
defendant. Decisions affecting healthcare operations made by shared corporate officers would be
attributable to their role as employees of the healthcare subsidiaries not the parent/holding
companies, i.e. Moving Defendants. All evidence indicates that Moving Defendants are merely
parent/holding companies that perform no independent business other than holding various
investments. Furthermore, it strikes the court that, if the capture of upstream profits constitutes a
joint venture, then nearly all formally organized non-resident parent/holding companies would be
considered part of a joint venture and could, therefore, be appropriately hailed into any court able
to exercise personal jurisdiction upon the resident subsidiary that earned the profit.
2

Plaintiff cites a deposition from an Arkansas Circuit Court case also involving Moving Defendants as
the source of this information. Kynda Almefty, a designated corporate representative for Moving
Defendants, was the person deposed in that matter.

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If this court were to find that Moving Defendants engaged in a joint venture despite their
lack of intent and adherence to corporate formalities, it would thwart many of the legitimate aims
of formal corporate structuring, namely: the maximization of profits, minimization of liabilities,
and minimization of exposure to litigation. As such, Moving Defendants have established that
they are not part of a joint venture with a resident entity and are, therefore, not subject to
personal jurisdiction in this court under that theory.
Plaintiff does not appear to have contended in the alternative that this court should
exercise personal jurisdiction over Moving Defendants by piercing the corporate veil. Because
the evidence necessary for such an argument is largely the same as that provided by Plaintiff for
a joint venture and Moving Defendants have included counterarguments for such a contention in
their pleadings, the court will address it at this time.
Mississippi Courts have not adopted the ten-factor test for piercing the veil applied by the
federal courts. The Mississippi Supreme Court has held that a three-part test applies when
piercing the corporate veil and imposing liability on corporate shareholders:
(a) some frustration of contractual expectations regarding the party to whom he
looked for performance; (b) the flagrant disregard of corporate formalities by the
defendant corporation and its principals; (c) a demonstration of fraud or other
equivalent misfeasance on the part of the corporate shareholder.
Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So.2d 969, 977 (Miss. 2007) (citing Gray v.
Edgewater Landing, Inc., 541 So.2d 1044, 1047 (Miss. 1989)). Mississippi case law generally
favors maintaining corporate entities and avoiding attempts to pierce the corporate veil. See
Buchanan, 957 So.2d at 977. “Ordinarily two or more corporations are separate and distinct
entities although the same individuals are the incorporators of, or own stock, in the several
corporations, and although such corporations may have the same persons as officers.” Murdock
Acceptance Corporation v. Adcox, 245 Miss. 151, 163, 138 So.2d 890, 896 (Miss. 1962). A
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corporation also retains a separate identify for corporation purposes when stock is owned wholly
or in part by another corporation or natural person. Buchanan, 957 So.2d at 958. “Ownership of
all the stock of a corporation coupled with common management and direction does not,
however, operate as a merger of the two corporations into a single entity.” Johnson & Higgins of
Mississippi, Inc. v. Comm'r of Ins. of Mississippi, 321 So.2d 281, 285 (Miss. 1975). The court
will not disregard corporate identity unless it is shown that one corporation is a “mere
instrumentality or agency or adjunct in that sense, or as a sham or is used in fraud, by the
dominant corporation.” Buchanan, 957 So.2d at 978 (emphasis in original) (internal citation
omitted).
Therefore, in order to sustain personal jurisdiction, Plaintiff is required to show that at
least one of the defendants in this matter is subject to the reach of the Mississippi long-arm
statute or a resident of Mississippi and that said defendant’s or defendants’ activities may be
properly imputed to any or all of the Moving Defendants by means of piercing the corporate veil.
Plaintiff has failed to make a showing that piercing the corporate veil is justified.
While making no conclusive or binding finding on the matter, this court assumes
arguendo that Golden Living Center-Southaven, GPH Southaven, GGNSC Equity, and GGNSC
Southaven are potentially the most likely of the defendants to have availed themselves of
personal jurisdiction in Mississippi. In addition, the court will assume that Plaintiff has fulfilled
parts one and two of Mississippi’s three-part test for piercing the corporate veil. Regardless of
those generous assumptions by the court, Plaintiff has still failed to show a “flagrant disregard of
corporate formalities” between any of the Moving Defendants and their subsidiaries. Plaintiff’s
argument for piercing the corporate veil suffers largely from the same essential flaws in his joint
venture contention as outlined by the court supra. Plaintiff has provided the court with no

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evidence indicating that Drumm, Pearl, or Geary have conducted business with their respective
subsidiaries or each other in such a dominating manner as to satisfy the lofty standard required to
merge Moving Defendants with any of the defendant corporations for jurisdictional purposes. To
the contrary, Moving Defendants have provided adequate evidence of their adherence to the
formalities of their corporate structure and a lack of operational control over their subsidiaries.
Finally, the Fifth Circuit Court of Appeals, multiple federal district courts, and multiple state
courts have declined to pierce the veil in factually similar cases. See generally Hargrave v.
Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983); Samples v. Vanguard Health Care, LLC,
2008 WL 4371371 (N.D. Miss. Sept. 18, 2008); Russell v. Indianola Health, 2007 WL 1746397
(N.D. Miss. June 15, 2007); Salley v. Heartland-Charleston of Hanahan, SC, LLC, 2:10-CV00791, 2010 WL 5136211 (D.S.C. Dec. 10, 2010); Schwartzbergh v. Knobloch, 98 So.3d 173
(Fla. Dist. Ct. App. 2012); Drumm Corp. v. Wright, 326 Ga. App. 41, 46, 755 S.E.2d 850, 855
(Ga. Ct. App. March 6, 2014).
Accordingly, the court finds no basis to pierce the corporate veil in order to impute to
Moving Defendants the alleged activities of their resident subsidiaries or any other subsidiary
that has availed itself of Mississippi’s long-arm statute. As such, the court finds no basis for
exercising personal jurisdiction over any Moving Defendant.
Apart from alleging the existence of a joint venture, Plaintiff seemingly attempts to argue
that Pearl is subject to personal jurisdiction in Mississippi because it was formed to purchase
Beverly in 2006, which at the time owned Golden Living Center-Southaven. However, Plaintiff
has failed to show that in 2009 when Wagner was admitted into Golden Living CenterSouthaven that Beverly, as a non-resident, was subject to Mississippi’s long-arm statute. All
evidence before the court indicates that upon Pearl’s purchase of Beverly in 2006 Golden

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LivingCenter-Southaven became operated by its licensee GGNSC Southaven (whose sole
member was GGNSC Equity, not Beverly), and thereby it was not Beverly who entered into a
contract with Wagner, or allegedly committed a tort against Wagner, or even continued to do
business in Mississippi. In short, Pearl’s purchase of Beverly would not have availed it to
Mississippi’s long-arm statute as it pertains to the circumstances of this case.
Regardless, because of the much-discussed structure of Pearl and its subsidiaries, the
court rejects the notion that Pearl’s acquisition of Beverly counts as purposefully directing its
activities at residents of this forum, and that the litigation results from alleged injuries that arise
out of or relate to that acquisition so as to establish specific jurisdiction over them. Likewise, the
evidence certainly indicates that Pearl does not have the systematic and continuous contacts in
Mississippi needed to substantiate this court’s exercise of general jurisdiction over them.
Plaintiff argues in the alternative that he has presented evidence that at least creates a
question of fact as to whether this court has jurisdiction and that this court, therefore, should
allow further discovery on that specific issue.
“The party seeking discovery bears the burden of showing its necessity.” Freeman v.
United States, 556 F.3d 326, 341 (5th Cir. 2009). “[D]iscovery on matters of personal
jurisdiction ... need not be permitted unless the motion to dismiss raises issues of fact. ” Kelly v.
Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 855 (5th Cir. 2000) (internal citation omitted).
“When the lack of personal jurisdiction is clear, discovery would serve no purpose and should
not be permitted.” Id. The Court possesses a substantial amount of discretion when addressing
requests for jurisdictional discovery. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 276–
77 (5th Cir. 2006)

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Plaintiff’s argument relies on evidence that actually bolsters Moving Defendant’s defense
that no question of fact exists regarding personal jurisdiction. First, Plaintiff cites to deposition
testimony given by Moving Defendants’ corporate representative, Kynda Almefty, in an
Arkansas Circuit Court case to support her argument that a question of fact exists. See supra note
2 and accompanying text. Not only does that evidence comport with Moving Defendants’
countervailing arguments of corporate individuality as previously discussed, the remainder of
Almefty’s deposition further removes any doubt from Moving Defendants’ proposition that no
question of fact exists. Almefty stated in her deposition that “To the extent that Drumm does
anything,… it manages investments…. It has no involvement in the day-to day operations of any
entity….” Almefty further corroborated Moving Defendants contentions when she stated, “Pearl
Senior Care LLC is essentially a holding company…. It was utilized in a merger…in 2006,” and
that “Geary Property Holdings LLC…holds real estate property.” As such, Plaintiff’s own
evidence lends credence and further substantiates all of Moving Defendant’s arguments and
evidence regarding personal jurisdiction.
Second, Plaintiff provides no reason why this court should allow further discovery other
than his belief that he has created a question of fact. In fact, Plaintiff’s counsel has admitted to
opposing counsel via email that he has deposed “most if not all of the designated corporate reps
of the defendants in this case.” Finally, Plaintiff has had ample time to present evidence to the
court that would create a question of fact regarding jurisdiction.
Because Plaintiff has failed to provide the court with a viable reason why further
discovery is a necessity or that the requested discovery is likely to produce the facts needed to
withstand the Rule 12(b)(2) motion in light of evidence already in the record, the court denies
Plaintiff’s request for further discovery.

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Moving Defendants’ motion to dismiss for lack of jurisdiction [8-1] is granted. The case
shall remain open as to all other defendants.
SO ORDERED this 8th day of September, 2014.

/s/ MICHAEL P. MILLS
UNITED STATES DISTRICT JUDGE
NORTHERN DISTRICT OF MISSISSIPPI

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