Puerto Rico Medical Emergency Group, Inc. v. Iglesia Episcopal Puertorriquena, Inc. et al

Filing 192

OPINION AND ORDER re 146 Motion to Dismiss: DENIED WITHOUT PREJUDICE. The parties are ORDERED to present the Court memoranda showing why Saint Lukes is not a joined party no later than July 14, 2017. No extensions will be granted. Signed by Judge Francisco A. Besosa on 07/05/2017. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
PUERTO RICO MEDICAL EMERGENCY
GROUP, INC.
Plaintiff,
v.

Civil No. 14-1616 (FAB)

IGLESIA EPISCOPAL
PUERTORRIQUEÑA, INC., et al.,
Defendants.

OPINION AND ORDER 1
BESOSA, District Judge.
Before the Court is Iglesia Episcopal Puertorriqueña, Inc.,
Hospital

Episcopal

Episcopales,

Inc.,

San
and

Lucas,

Inc.,

Servicios

de

Servicios
Salud

Generales

Episcopales’

(collectively, “defendants”) motion to dismiss the second amended
complaint for failure to join an indispensable party pursuant to
Federal Rule of Civil Procedure 12(b)(7) (“Rule (12)(b)(7)”).
(Docket No. 146.)

For the reasons set forth below, the Court

DENIES defendants’ motion to dismiss.

Both parties, however, are

required to SHOW CAUSE as to whether Saint Lukes Memorial Hospital
Inc. is not already a party to this litigation.

1

Ian Joyce, a second-year student at the Vanderbilt School of Law,
assisted in the preparation of this Opinion and Order.

Civil No. 14-1616 (FAB)
I.

2

FACTUAL BACKGROUND
The situation presented to the Court is, frankly, unique.

To

clarify the sole issue in dispute – the proposed joinder of a nonparty – the Court will omit portions of the factual and procedural
background, instead focusing only on the pertinent information
regarding defendant’s motion to dismiss pursuant to Rule 12(b)(7).
Furthermore, the Court ORDERS the parties to use the abbreviations
used in this Opinion and Order in their pleadings moving forward.
A.

The General Corporate Structure
Iglesia Episcopal Puertorriqueña (“IEP”) is a non-profit

organization existing pursuant to the laws of Puerto Rico. (Docket
No. 146-2 at p. 6.)

IEP operates the Episcopal Church of Puerto

Rico and a number of health care providers.
network,

IEP

(“Servicios

de

controls
Salud”),

Servicios
Servicios

de

Id.

Salud

Generales

As part of its

Episcopales,

Inc.

Episcopales,

Inc.

(“Servicios Generales”), and Saint Lukes Memorial Hospital, Inc.
(“Saint Lukes”). 1
B.

Id.

“Hospital Episcopal San Lucas”
In 1999 IEP created “Hospital Episcopal San Lucas Inc.”

(“HESL

Inc.”),

a

non-profit

designed

to

provide

healthcare

1 The entity the Court refers to as “Saint Lukes” is sometimes spelled with an
apostrophe (ie, “Saint Luke’s Inc.”) (See Docket No. 146-3 at p. 5.) The Court
will omit the apostrophe to be more consistent with the pleadings of this case
and to reflect the name used in the certificate of incorporation.
(Docket
No. 146-3 at p. 53.)

Civil No. 14-1616 (FAB)

3

services to the Ponce community through operation of an acute-care
hospice facility (“Hospital Episcopal San Lucas I”).
No. 146 at p. 3.)

The plans for HESL Inc. to operate Hospital

Episcopal San Lucas I never materialized.
In

(Docket

September

2000,

(Docket No. 146-3 at p. 53.)
corporate member of Saint Lukes.

IEP

Id.

incorporated

Saint

Lukes.

Servicios de Salud is the sole
(Docket No. 146-3 at p. 1, 57.)

Saint Lukes frequently does business as “Hospital Episcopal San
(Docket No. 146 at p. 4, 146-3 at p. 1.)

Lucas” and related names.

Indeed, the District of Puerto Rico has used the names “Saint
Luke’s

Memorial

Hospital”

and

“Hospital

Episcopal

San

Lucas”

interchangeably in other litigation involving Saint Lukes.

Id.;

see Maldonado-Rodriguez v. Saint Luke’s Memorial Hospital, Inc.,
940

F.Supp.2d

30,

32

(D.P.R.

2013)

(Perez-Gimenez,

J.)

(“On

April 30, 2010, plaintiffs [. . .] filed the above-captioned claim
against

defendants

St.

Luke’s

Memorial

Hospital,

Inc.,

d/b/a

Hospital Episcopal San Lucas (‘HESL’ or ‘the Hospital’ or ‘the
Defendant.’”).
On November 6, 2000 Saint Lukes, with Servicios de Salud
as

a

guarantor,

purchased

Ponce

Regional

Hospital

from

the

Commonwealth of Puerto Rico (“Hospital Episcopal San Lucas II”).
(Docket Nos. 146 at p. 4, 146-3 at pp. 5, 9.)

HESL Inc. entered

into a 25-year management plan with Saint Lukes to manage Hospital

Civil No. 14-1616 (FAB)
Episcopal San Lucas II.

4
(Docket No. 146-2 at p. 6.)

The agreement

was terminated on January 1, 2007, however, at which point Saint
Lukes took control of management. 2

(Docket No. 146-2 at p. 6.)

Subsequently, the majority of HESL Inc.’s assets were liquidated
and transferred to Saint Lukes and HESL Inc. has not operated as
a business entity since the transfer.

(Docket Nos. 99 at p. 4,

146-2, and 146-3 at pp. 3, 155-169.)
C.

“Hospital Episcopal
service contract

San

Lucas”

in

the

professional

On September 25, 2007, nearly nine months after Saint
Lukes took over management of Hospital Episcopal San Lucas II,
Puerto Rico Medical Emergency Group (“PRMEG”) entered into a
professional service contract (“PS Contract”) with an organization
identified interchangeably in the agreement as “Hospital Episcopal
San Lucas” and “HESL.”
Contract

identified

(Docket No. 146-3 at p. 102.)

“Hospital

Episcopal

San

Lucas”

The PS
as

the

“operator of the facilities known as Hospital Episcopal San Lucas.”
(Docket No. 146-3 at p. 102.)
The

contract

provided

that

“Hospital

Episcopal

San

Lucas” would pay PRMEG $155,000 per month for the first three

2

Defendants’ aver, through citation to Julio Ruiz’s (The Chief Executive Officer
of Servicios de Salud) declaration that HESL Inc. has “never operated.” (Docket
No. 146 at p. 3.) The Court notes that Ruiz’s declaration merely states that
HESL Inc. has not operated “[d]uring times relevant to the complaint.” (Docket
No. 146-3 at p. 3.)

Civil No. 14-1616 (FAB)

5

months of the PS Contract and $133,000 per month thereafter.
(Docket No. 69 at p. 8.)

In turn, PRMEG agreed to operate Hospital

Episcopal San Lucas II’s emergency room.
p. 102-116.)
Lukes.

(Docket No. 146-3 at

The payments made to PRMEG were issued by Saint

(Docket No. 146-3 at p. 3.)
The basis of the litigation between PRMEG and defendants

is an alleged breach of the PS Contract.
D.

(Docket No. 69 at p. 2.)

The Served Codefendant “Hospital Episcopal San Lucas
Inc.”
Upon

filing

its

complaint,

PRMEG

served

process

on

“Hospital Episcopal San Lucas, Inc.,” IEP, Servicios de Salud, and
Servicios Generales.

(Docket No. 3.)

“Hospital Episcopal San

Lucas Inc.,” Servicios de Salud, and Servicios Generales were all
served at the same location and retain the same legal counsel.
(Docket Nos. 3 and 8.)
Early in this litigation, defendants appeared to admit
in their answer to the second amended complaint that the served
co-defendant “Hospital Episcopal San Lucas Inc.” was, in fact, the
entity that signed the PS Contract:
“COMES NOW Iglesia Episcopal Puertorriqueña,
Inc. (“IEP”), Hospital Episcopal San Lucas,
Inc. (“HESL”), Services de Salud Episcopales,
Inc.
(“SSE”)
and
Servicios
Generales
Episcopales,
Inc.
(“SGE”)
(collectively
“Defendants”) . . .

Civil No. 14-1616 (FAB)

6

4.18: Allegations contained on [sic] paragraph
4.18 of the Second Amended Complaint are
admitted to the extent that HESL and PRMEG
entered into an agreement on September 25,
2007 . . .
4.21: Allegations contained on [sic] paragraph
4.21 of the Second Amended Complaint are
admitted as to the fact that the contract
between Plaintiff and HESL concluded on
September 24th, 2010 . . .
4.54: Allegations contained on [sic] paragraph
4.54 are admitted as to the fact that once the
contractual relationship between Plaintiff
and HESL elapsed, a new relationship emerged
. . .
5.2: Allegations contained on [sic] paragraph
5.2 are denied.
As per Plaintiff’s own
Complaint the alleged fraudulent act and
conspiratorial actions depend on an alleged
breach of contract by HESL. Furthermore, and
for argumentative purposes only, if there ever
was a breach of contract, such agreement
ceased on September, 2010 . . .”
(Docket No. 83.) (emphasis added).

After two motions to dismiss

and a Rule 26 conference, defendants first mentioned a “third
party” in response to a motion to compel discovery. (Docket No. 93
at p. 2.)

Defendants averred they could not produce various

financial documents because “[t]he documents requested, may be in
possession or control of another entity which is not a party to
the instant case.”

Id.

PRMEG responded, making the first explicit reference to
Saint Lukes:

Civil No. 14-1616 (FAB)

7

“While we are left to speculate which
mysterious entity is the one that possesses
the damaging information, from Defendants’
recent disclosures it may be inferred that
they are referring to Saint Lukes Memorial
Hospital, Inc. This entity is also controlled
by Iglesia Episcopal Puertoriqueña (sic) and
has the same Board of Directors as the RICO
Enterprise
Defendants.
Also,
Iglesia
Episcopal’s Bishop, controls the board, as he
does with the RICO Enterprise Defendants . . .
PRMEG has recently learned that at the same
time San Lucas Hospital, Inc. was signing the
services contract with it, Iglesia Episcopal
Puertorriqueña
was
in
the
process
of
liquidating such corporate entity and passing
most of its assets to Saint Luke’s Memorial
Hospital, Inc. Thus, this “other entity” that
presumably
possesses
the
information
requested by PRMEG is the surviving entity of
the proposed liquidation of Hospital San
Lucas, Inc.”
(Docket No. 99 at pp. 3-4.) (emphasis added).
its

approach,

describing

Saint

Lukes

as

PRMEG later changed
a

non-party

to

the

litigation that was, nonetheless, “part and parcel of the RICO
Enterprise Defendants.” 3

(Docket No. 114 at p. 2.)

Notably, when

PRMEG took the deposition of Pedro Barez, the Chief Operating
Officer of Saint Lukes, PRMEG’s attorney stated, “I will be making
questions regarding a non-party to this case, Saint Luke’s Memorial
Hospital . . .”

3

(Docket No 146-7 at pp. 10, 16.) (emphasis added).

The Court notes that when PRMEG references Saint Lukes in the pleadings it
takes pains to distinguish the entity from the defendants. See e.g., Docket
No. 109 at p. 11 (“At present the Rico Enterprise Defendants and St. Lukes
Memorial Hospital have not produced any person who could testify . . .”)

Civil No. 14-1616 (FAB)

8

The Court first addressed Saint Lukes in an Opinion and
Order concerning a motion to compel discovery filed by PRMEG.
(Docket No. 121 at 15-16.)

The Court denied PRMEG’s motion to

compel Saint Lukes to produce discovery because Saint Lukes was,
at that time, indisputably a non-party.

Id.

The Court addressed

PRMEG’s allegations that Saint Lukes and the defendants were
intertwined

corporations,

cautioning

explicitly

that

“[i]f

defendants have possession, custody, or control of documents held
by [Saint Lukes] and those documents have previously been requested
by PRMEG, this part of the Court’s Opinion and Order will not
protect defendants from sanctions for failure to produce those
documents.” 4

Id. at p. 16.

Two years and three months after the commencement of
this litigation, defendants filed their third motion to dismiss,
this time invoking Rule 12(b)(7) to argue that Saint Lukes is an
indispensable

party.

(Docket

No.

146.)

In

their

motion,

defendants supplied the Court with over 400 pages of documentation
signifying that Saint Luke’s had been the true party to the PS
Contract.

This includes, inter alia:

the Ruiz declaration, an

4
The Court initially disregarded PRMEG’s accusations regarding the
“intertwined” relationship of IEP, Servicios de Salud and Saint Lukes because
these accusations had no factual basis. (Docket No. 121 at p. 16.) Defendants,
however, have since provided documentation demonstrating the business
relationship between the parties.
(Docket Nos. 146-2 at p. 7 and 146-3 at
p. 1.)

Civil No. 14-1616 (FAB)
asset

purchase

agreement

9
entered

into

between

“Saint

Luke’s

Memorial Hospital, Inc.” and the Commonwealth of Puerto Rico for
the sale of Hospital Episcopal San Lucas II, insurance contracts
entered into by Saint Lukes in which Saint Lukes operated under
various forms of the name “Hospital Episcopal San Lucas,” the PS
Contract, “Saint Lukes Memorial Hospital” checks delivered to
PRMEG, HESL Inc.’s liquidation basis financial statement, and the
previously mentioned Barez deposition.
PRMEG
Rule 12(b)(7).

opposed

the

motion

(Docket No. 156.)

(Docket No. 146-1 to 7.)
to

dismiss

pursuant

to

Defendants replied to PRMEG’s

opposition to the motion to dismiss, Docket No. 159, and PRMEG
replied, Docket No. 162.
II.

STANDARD
A party may move for dismissal of an action for failure to

join a party pursuant to Federal Rule of Civil Procedure 19
(“Rule 19”).

Fed. R. Civ. P. 12(b)(7).

Rule 19 governs the

joinder of parties. Courts employ a two-step approach to establish
whether an action should be dismissed pursuant to Rule 12(b)(7).
Fed. R. Civ. P. 19; see United States v. San Juan Bay Marina, 239
F.3d 400, 405 (1st Cir. 2009).

First, a court analyzes “whether

the person fits the definition of those who should ‘be joined if
feasible’ under rule 19(a).”.

Cruz-Gascot v. HIMA-San Pablo Hosp.

Bayamon, 728 F.Supp. 2d. 14, 26 (D.P.R. 2010) (Besosa, J.).

If

Civil No. 14-1616 (FAB)

10

the person is required, then the Court ascertains whether joinder
is feasible.
Rule

19

Id. at 27.
“calls

for

courts

to

make

pragmatic,

practical

judgments that are heavily influenced by the facts of each case.”
Bacardi Int’l. Ltd. v. V. Suarez & Co., 719 F.3d 1, 9 (1st Cir.
2013).

Courts “should keep in mind the policies that underlie

Rule 19, ‘including the public interest in preventing multiple and
repetitive litigation, the interest of the present parties in
obtaining complete and effective relief in a single action, and
the interest of absentees in avoiding the possible prejudicial
effect of deciding the case without them.’”

Picciotto v. Cont’l.

Cas. Co., 512 F.3d 9, 15-16 (1st Cir. 2008) (citing Acton Co. v.
Bachman Foods, Inc., 668 F.2d 76, 78 (1st Cir. 1982)).
III. DISCUSSION
Defendants argue that the “Hospital Episcopal San Lucas”
described in the PS Contract was in actuality Saint Lukes, doing
business as “Hospital Episcopal San Lucas”, and as such is a
necessary party to this action which has not been joined.
No. 146 at pp. 6, 21.)

(Docket

PRMEG counters that defendants admitted

the served party “Hospital Episcopal San Lucas Inc.” was a party
to the contract and are estopped from arguing that a different
entity signed the contract.

(Docket No. 156 at p. 5.)

Civil No. 14-1616 (FAB)

11

Generally, a pleading that admits an allegation is binding.
Harrington v. City of Nashua, 610 F.3d 24, 31 (1st Cir. 2010); AES
Puerto Rico, L.P. v. Trujillo-Panisse, 133 F.Supp.3d 409, 427
(D.P.R. 2015) (Besosa, J.)
a party can admit.

There are, of course, limits to what

Harrington, 610 F.3d at 31.

order to be binding, an admission must be clear.

Importantly, in
See id.

If there

is any doubt, pleadings must be “construed so as to do justice.”
Fed. R. Civ. P. 8(e); JJ Water Works, Inc. v. San Juan Towing and
Marine Services, Inc., 59 F.Supp.3d 380, 392 at n.10 (D.P.R. 2014)
(McGiverin, J.)
Defendants’ admission that the served “HESL” is a party to
the contract was clear and unequivocal.

Defendants themselves

used the acronym “HESL” as shorthand for the served party “Hospital
Episcopal San Lucas Inc.,” and then stated unambiguously that
“HESL” entered into a contract with PRMEG.
a “clear” admission.

Undisputedly, this is

That PRMEG used several different names to

refer to the party entering into the contract in the complaint,
and that multiple business entities use similar names, does not
undermine the clarity of defendants’ admission. This is especially
true given that the defendants are complex business entities
represented by counsel, and themselves own and control all relevant
parties.

Civil No. 14-1616 (FAB)

12

The Court, however, is satisfied by defendants’ evidence, the
authenticity of which PRMEG does not challenge, that the “Hospital
Episcopal San Lucas” described in the PS Contract may, in fact, be
Saint Lukes.

Parties to a contract are generally indispensable to

litigation arising from the contract.

See Blacksmith Invs., LLC.

v. Cives Steel Co., 228 F.R.D. 66, 74 (D. Mass. 2005) (“it is well
established that a party to a contract which is the subject of the
litigation is considered a necessary party.”) (citation omitted).
Joinder of an indispensable party may not be waived.
P.

12(h)(2).

Consequently,

defendants’

Fed. R. Civ.

admission

does

not

preclude the joinder of Saint Lukes.
The Court will not rule in an information vacuum. The parties
must elucidate whether Saint Lukes is already a party to the
litigation.

Saint

Lukes

is

a

non-profit

corporation

that

frequently conducts business under a variety of names, including:
“Hospital Episcopal San Lucas.”

See No. 146-3 at p. 94 (“Hospital

Episcopal San Lucas”), p. 75 (“Hospital San Lucas”) and p. 88
(“Hospital San Lucas-Ponce”); see generally, South Shore Hellenic
Church, Inc. v. Artech Church Interiors, Inc., Civil Action No. 1211663-Gao, 2015 WL 846533, at *7 (D. Mass. Feb. 26, 2015) (“A
corporation, including a religious corporation [. . . ] may adopt
names other than its incorporated name.”)

Here, a non-profit

corporation identified as “Hospital Episcopal San Lucas” entered

Civil No. 14-1616 (FAB)

13

into a contract with PRMEG.
Lucas

Episcopal

litigation.

Inc.”

An institution known as “Hospital San

was

(Docket No. 8.)

served

at

the

beginning

of

this

Defendants admitted that the served

“Hospital San Lucas Episcopal Inc.” was a party to the PS Contract.
Defendants later proved that the “Hospital Episcopal San Lucas” in
the PS Contract was Saint Lukes.

Therefore, it logically follows

that “Hospital Episcopal San Lucas Inc.” in this litigation is, in
fact,

Saint

Lukes,

operating

pursuant

to

the

name

“Hospital

Episcopal San Lucas.”
Alternatively, HESL Inc., which defendants recently argue is
not Saint Lukes, but is a separate entity that has been inactive
since at least 2008.

(Docket No. 146-3 at p. 3, 157-169.)

The

CEO of Servicios de Salud himself stated that “[d]uring times
relevant to the complaint, [HESL Inc.] has not operated.”
No. 146-3 at p. 3.)

(Docket

Indeed, while they have provided a plethora

of evidence proving Saint Lukes was the party to the PS Contract,
defendants have provided no evidence, outside of showing that a
corporation existed by the name of “Hospital Episcopal San Lucas
Inc.,” suggesting that HESL Inc. is the entity litigating this
case.

Indeed,

there

is

no

evidence

proving

HESL

Inc.

even

continues to exist. 5

5 The latest financial statement supplied to this Court regarding HESL Inc. is
an “Informe Anual” conducted in 2015, which shows $0.00 in assets and $0.00 in
liabilities. (Docket 146-3 at p. 168.)

Civil No. 14-1616 (FAB)
This

ambiguity

14
is

compounded

by

PRMEG’s

persistent

stipulations that Saint Lukes is, in fact, a non-party.

To that

point, in its opposition to motion to dismiss, PRMEG does not
factually challenge the notion that the served “Hospital Episcopal
San Lucas Inc.” was the party to the PS Contract.

Rather, PRMEG

relies on defendants’ admissions and, in the alternative, argues
that Saint Lukes is not an indispensable party.
In

sum,

four

separate

entities

identify

as

“Hospital

Episcopal San Lucas,” including Saint Luke’s Memorial Hospital.
Saint Lukes is intertwined with Servicios de Salud and IEP on the
corporate level. (Docket Nos. 146-2 at p. 6-7, 146-3 at p. 1, 5557.)

Saint Lukes entered into the PS Contract with PRMEG under

the name “Hospital Episcopal San Lucas.”
146-3 at p. 102.)

(Docket Nos. 146 at p. 2

Later, a “Hospital Episcopal San Lucas Inc.”

was served at the same location as Servicios de Salud — the sole
corporate member of Saint Lukes — and retained the same counsel as
Servicios de Salud.

For nearly two years the defendants litigated

as if “Hospital Episcopal San Lucas Inc.” was the party that
entered into the contract with PRMEG, and in fact, admitted as
much in responsive pleadings.

Now, years after the complaint was

filed, defendants argue that the served “Hospital Episcopal San
Lucas Inc.” is not the party to the PS Contract, and instead is a
corporation that has not operated since 2008.

In response, the

Civil No. 14-1616 (FAB)

15

plaintiff’s appear to admit that Saint Lukes is not a named party
to the dispute.
Frequently, “[t]he simplest way to decide a case is often the
best” Stor/Gard, Inc. v. Strathmore Ins. Co., 717 F.3d 242, 248
(1st Cir. 2013) (quoting Chambers v. Bowersox, 157 F.3d 560, 564
n.4 (8th Cir. 1998) (R. Arnold, J.)).

The Court will not dismiss

an action for failure to join a party that has already been joined.
See Jercich v. County of Merced, 1:06-CV-00232-0WW-DLB, 2006 U.S.
Dist. LEXIS 94030, at *26 (E.D.Cal. Dec. 19, 2006) (“As Ayers is
already a party to this action, Rule 19 does not apply to him.”)
This rule is particularly pertinent here, where a motion for
summary judgment has already been filed.

(Docket No. 177.)

A

finding that Saint Lukes is a non-joined indispensible party would
necessitate

PRMEG

defendant’s

to

motion

file

for

a

third

summary

amended

judgement

complaint,
moot

and

making

spurring

repeated litigation.
IV.

CONCLUSION
For

the

foregoing

WITHOUT PREJUDICE.

reasons,

defendants’

motion

is

DENIED

The parties are ORDERED to present the Court

memoranda showing why Saint Lukes is not a joined party no later
than July 14, 2017.

No extensions will be granted.

Civil No. 14-1616 (FAB)

16

IT IS SO ORDERED.
San Juan, Puerto Rico, July 5, 2017.

s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE