PROCHAZKA et al v. SUNRISE SENIOR LIVING, INC. et al
Filing
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OPINION. Signed by Judge Claire C. Cecchi on 3/26/13. (jd, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ROBERT A. PROCHAZKA by and
through his Co-Attorneys-In-Fact
CAROL A. SPENCER and R. ALAN
PROCHAZKA and HENRY A.
GLOWACK1 by and through his
Attorney-In-Fact VINCENT RAGUSEO
Plaintiffs,
:
Civil Action No. 2:12-cv-04415-CCC-JAD
SUNRISE SENIOR LIVING, INC. (a
Virginia Corporation incorporated in
Delaware); SUNRISE SENIOR LIVING
MANAGEMENT, INC. (A Virginia
Corporation f/k/a SUNRISE ASSISTED
LIVING MANAGEMENT, INC.);
SUNRISE MORRIS PLAINS ASSISTED
LIVING, LLC (A New Jersey Limited
Liability Company); JOHN DOES 1-10,
(Being the persons and/or entities
Responsible for the injuries suffered by
plaintiffs),
Defendants.
CECCHI, District Judge.
I,
INTRODUCTION
This matter comes before the Court on Defendant Sunrise Senior Living, Inc.’s
(“Defendanf’) Motion to Dismiss Plaintiffs Robert A. Prochazka’s and Henry A. Glowacki’s
(“Plaintiffs”) Complaint pursuant to Fed. R. Civ. P. 12(b)(6). The Court has given careful
consideration to the submissions of the parties. No oral argument was heard pursuant to Rule 78
of the Federal Rules of Civil Procedure, For the reasons outlined herein, the Court grants
Defendant’s Motion to Dismiss without prejudice.’
IL
BACKGROUND
Plaintiffs filed their original Complaint on July 16, 2012. The Complaint alleges that
Plaintiffs were abused at a senior living community known as Sunrise of Morris Plains (the
“Community”). In particular, Plaintiffs’ claims include allegations of assault, negligence,
negligent hiring, breach of fiduciary duty and respondeat superior. (Compl. First Count ¶j 65-
73, Second Count ¶J 74-79, Fourth Count ¶J 43-50, Eighth Count ¶J 67-75, Ninth Count ¶J 7682.)
The Community is owned by Sunrise Morris Plains Assisted Living, LLC (the “Owner”)
and managed by Sunrise Senior Living Management, Inc. (the “Management”), formerly known
as Sunrise Assisted Living Management, Inc. Sunrise Senior Living, Inc. (“SSLI”), the parent
company of the Management, was also named as a Defendant in the action. SSLI now moves to
dismiss the claims against it.
III, DEFENDANT’S MOTION TO DISMISS PURSUANT TO RULE 12(b)(6)
A, Legal Standard
For a complaint to survive dismissal pursuant to Fed. R. Civ. P. 12(b)(6), it “must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell AtI. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, the Court must accept all
well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in
Brenner v. Local
‘The Court considers arguments not presented by the parties to be waived.
514, United Bhd. of Carpenters & Joiners, 927 F.2d 1283, 1298 (3d Cir. 1991) (“It is well
established that failure to raise an issue in the district court constitutes a waiver of the
argument.”).
favor of the non-moving party. çç Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir.
2 008). “Factual allegations must be enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555. Furthermore, “[a] pleading that offers ‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action will not do.’ Nor does a complaint
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.” Ashcroft, 556
U.S. at 678 (citations omitted).
The burden of proof for showing that no claim has been stated is on the moving party.
Hedges v. U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc.,
926 F.2d 1406, 1409 (3d Cir. 1991)). During a court’s threshold review, “[t]he issue is not
whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to
support the claims.” Maio v. Aetna, 221 F.3d 472, 482 (3d Cir. 2000) (quoting Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974)). If a claim is dismissed pursuant to Rule 12(b)(6), the
plaintiff may be granted leave to amend or re-assert the claim. In re Burlington Coat Factory
Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). However, leave to amend is not warranted if
“the complaint, as amended, would fail to state a claim upon which relief could be granted.” Id.
B. Discussion
In support of its Motion to Dismiss, SSLI argues that as a corporate parent of the
Management, it is not responsible for the actions of the Community, Owner or Management and
thus is not a proper Defendant in this case. Specifically, SSLI argues that there is no basis to
pierce the corporate veil in order to hold SSLI liable for the actions of others, that Plaintiffs have
failed to make any specific allegations against SSLI, and that the Management, a viable entity
that is adequately capitalized and insured, is the appropriate Defendant to this action.
1. Piercing the Corporate Veil
SSLI contends that “[t]he only connection between SSLI and this litigation is that SSLI is
the corporate parent of the
[]
Management. the manager and operator of the Community”
(SSLI’s Br, 5.) SSLI points to the long standing principle that a parent corporation is insulated
from the liabilities of its subsidiaries. (Id.) SSLI further argues that Plaintiffs have not met the
“heavy burden of pleading sufficient facts” to pierce the corporate veil in order hold SSLI liable
for the actions of its subsidiary. (jd. 9.) Plaintiffs respond that SSLI’s arguments should be
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resolved on summary judgment rather than on a motion to dismiss. (Pl.s’ Br. 9.) They contend
that insufficient facts have surfaced from discovery to determine whether piercing the corporate
veil is appropriate.
(Id)
Under New Jersey law, “piercing the corporate veil is an equitable remedy through which
the Court may impose liability on an individual or an entity normally subject to the limited
liability protections of the corporate form.” Mall at IV Grp. Props., L.L.C. v. Roberts, No. 024692, 2005 U.S. Dist. LEXIS 31860, at *7..8 (D.N.J. Dec. 8, 2005). In order to pierce the
corporate veil, a plaintiff must show two elements: “First, there must be such unity of interest
and ownership that the separate personalities of the corporation and the individual no longer
exist. Second, the circumstances must indicate that adherence to the fiction of separate corporate
existence would sanction a fraud or promote injustice.”
j4 at *8.
In the present case, SSLI is the sole shareholder of Management. Thus, it enjoys limited
liability which “normally will not be abrogated:” the corporate veil will only be pierced “in cases
of fraud, injustice, or the like.” State Dep’t of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 500
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Plaintiffs further object to SSLI’s use of Exhibit 2, the Declaration of Susan Timoner
arguing that “[tjo decide a motion to dismiss, courts generally consider only the allegations
contained in the complaint, exhibits attached to the complaint and matters of public record.”
Pension Benefit Guar. Corp. v. White Consol. Indus.. Inc., 998 F.2d 1192. 1196 (3d Cir. 1993).
Because the Court did not rely on this document in reaching its decision, it need not convert
Defendant’s Motion to Dismiss into one for summary judgment.
—
zl
—
(1983) (citations omitted). Importantly, because piercing the corporate veil is an extraordinary
measure, the Court has explained that it will only be permitted where the elements have been
adequately pled. çc Wrist Worldwide Trading GMBH v. MV Auto Baer, No. 10-2326, 2011
U.S. Dist. LEXIS 127655, at *16 (D.N.J. Nov. 4, 2011) (“[P]arroting of the alter ego factors
alone is insufficient to satisfy the required pleading standards.”)
The Court finds that Plaintiffs have not pleaded sufficient facts to warrant a finding of
liability for SSLI. For example, in Flores v. HSBC, No. 1 1-cv-05525, 2012 U.S. Dist. LEXIS
90673 (D.N.J. June 29, 2012), the plaintiffs filed suit against several lenders and residential
mortgage-lending operations based on their alleged predatory lending practices. Plaintiffs also
named as a defendant HSBC, a mortgage loan originator and a parent company of the lenders or
residential mortgage-lending operations. The Court held that the factual deficiencies of the
plaintiffs’ complaint rendered it unable to hold HSBC liable as parent company for any alleged
wrongs committed by its subsidiaries. In particular, the plaintiffs’ allegations “fail[edj to allege
any facts to establish a unity of interest and ownership between HSBC and its subsidiaries.”
at *18 See also Wrist Worldwide, 2011 U.S. Dist. LEXIS 127655, at * 15 (denying the
plaintiffs proposed alter-ego allegation without prejudice because its “bare-boned allegations of
undercapitalization and common control andIor management, standing alone, do not rise to the
level of plausibility required to survive a 12(b)(6) motion”).
Similarly, here, Plaintiffs do not allege a special relationship between SSLI and the
Management such that the traditional parent-subsidiary relationship should be disturbed.
Specifically, Plaintiffs do not claim that SSLI and its subsidiary shared a unity of interest or
ownership. Given that piercing the corporate veil is an extraordinary measure and will only be
piercing the corporate veil should not be
allowed where the elements are adequately pleaded,
permitted in the instant case.
2. Allegations against SSLI
e allegations specific to SSLI. For
SSLI also contends that Plaintiffs have failed to mak
ific plausible allegation that SSLT’s
example, SSLI argues that “[t]here is not a single spec
responsible for the hiring of any employees at
employees were ever present at the Community or
plaint only “suggest[s] the existence of
the Community.” (SSLI’s Br. 10.) Instead, the Com
I ‘through its subsidiaries and affiliated
liability based entirely on the allegation that SSL
ng communities around the world.” (Id.)
companies operates more than 300 Sunrise Senior Livi
ations made directly against [SSLI]”
Plaintiffs argue that their pleading is “replete with alleg
s.
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(Pl.s’ Br. 10), but point to no specific facts or allegation
sufficient facts against SSLI. In
The Court finds that Plaintiffs have failed to allege
717 (D.N.J. 2011), the Court granted a
Snyder v. Famam Cos., Inc., 792 F. Supp. 2d 712,
parent corporation cannot be held liable for
12(b)(6) motion to dismiss because it held that “[a]
ership of those subsidiaries.” Id. at 717. The
the acts of its subsidiaries solely because of its own
on after finding that the “Plaintiffs...
Court dismissed the claim against the parent corporati
parent company],” Id.
failed to allege any facts imposing liability on [the
ts collectively as “SUNRISE” and
Here, the Complaint asserts claims against Defendan
the other Defendants. (Compl. Facts ¶ 10.)
therefore fails to distinguish the actions of SSLI from
Living of Morris Plains” Community as
Although the Complaint refers to “Sunrise Assisted
and/or maintained by defendant SUNRISE
being “owned/managedlleased/operatedlstaffed
a brochure from SSLI’s website and SSLI’s
Plaintiffs do, however, attach what appears to be
rol over the Community and its Owner. (PI.s’
SEC Form 10-K filings as evidence of SSLI’s cont
not attached to Plaintiffs’ Complaint, they
Br. 1 1-13 & Ex.) Given that these documents were
ion.
will not be considered in connection with this Mot
SENIOR LIVING, INC.” (Compi. Facts ¶ 16), the Complaint fails to provide factual support for
this allegation. As such, Plaintiffs have failed to provide sufficient facts indicating that SSLI
should be liable for the acts of the Community, Management or Owner based solely on its
ownership of any of those entities.
3) The Management as the Proper Party
Finally, SSLI argues that the claim against it must be dismissed because the proper party
to this case, the Management, “is a viable entity that is adequately capitalized and insured to
cover any potential judgment awarded” to Plaintiffs. (SSLI’s Br. 11.) Plaintiffs argue that SSLI
have offered insufficient facts to substantiate its assertions. (Pl,s’ Br. 14.) Because the Court
decides SSLI’s Motion based on the reasons set forth above, it need not address this argument.
IV. CONCLUSION
Based on the reasons set forth above, SSLI’s Motion to Dismiss is granted without
prejudice. To the extent the deficiencies in Plaintiffs’ claims against SSLI can be cured by way
of amendment, Plaintiffs are granted thirty (30) days to file an Amended Complaint solely for
purposes of amending such claims. An appropriate Order accompanies this Opinion.
CLAIRE C. CECCHI, U.S.D,J,
DATED:
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