Marla B. Whittington VS Hospice Care Services of Louisiana, LLC

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NOT DESIGNATED FOR PUBLICATION STATE'.OF LOUISIANA COUP;I"OF APPE=AL FIRST CIRCUIT NO, 2014 CA 0: 12 MARLA B. WHITTINGTON VERSUS HOSPICE CARE SERVICES OF LOUISIANA, L. L.C. AND NO. 2013 CW 1.690 MARLA B. WHITTINGTON VERSUS HOSPICE CARE SERVICES OF LOUISIANA, L. L. C. AND LIFE HOSPICE, LLC Judgment rendered r 2014 Appealed frorn the 19' h Judicial District Court in and for the Parish of East Baton Rouge, Louisiana Trial Court No. C559169 Honorable R. Michael Caldwell, Judge DONNA U. GRODNER ATTORNEYS FOR BLAKE S. LEGER PLAINTIFF- APPELLANT BATON ROUGE, LA MARLA B. WHITTINGTON JOSHUA D. ROY ATTORNEYS FOR ROY H. MAUGHAN, JR. DEFENDANTS- APPELLEES NAMISHA D. PATEL LIFE HOSPICE, CLC, DYNAFAB USA, BATON ROUGE, LA LLC& BEFORE: RANDALL A. GOMEZ KUHN, PETTIGREW, AND WELCH, 3.7. t r po", L1 7 r PETTIGREW, J. This matter was initiated by a petition for— damages based on a whistleblower claim filed in September 2007, and is now before . qua on . appeal and a supervisory writ application that challenge several trial court rulings that ultimately decided, in a judgment dated September 17, 2013, that the plalntiff cannot collect on a money judgment, rendered in her favor and against her employer, from the employer's successor entities. Specifically, this appeal is by the plaintiff, Marla B.* Whittington, of a judgment rendered in open court on September 3, 2013, and. signed on September 17, 2013, that granted the motion for summary judgment filed by defendants Randall A. Dynafab USA, LLC, Gomez, and Life Hospice, LLC, and. dismissed Ms. . Whittington' s claims attempting to enforce her money judgment against them, at her costs. Also before us is a writ application by Ms, Whittington, as relator, challenging the trial court's denial of her motion for summary judgment on the issue of in so/ido/successor liability, and of her motion for entry of final judgment." Aft,, r a thorough review of the record and the arguments presented on appeal and in the. writ application, we affirm the trial court's judgment. BACKGROUND FACTS AND PROCEDURAL HISTORY Ms. Whittington initiated this whistleblower action in September 2007 after she was fired by her employer, defendant Hospice Care Services of Louisiana, LLC ( Hospice Care). In her petition, Ms. Whittington alleged that she was fired from her job as Hospice Care' s administrator because she had exposed Hospice Care' s violations of the Department of Health and Hospitais ( DHH) regulations to DHH. The trial court initially rendered. .summa.ry judgment in favor of Hospice Care, dismissing Ms. Whittington' s claim under the Whistleblower Statute,' but this court 1 Specifically, Ms. Whittington asserted that Hospice Care had violated DHH regulations by hiring a director of nursing who was unqualified because she lacked one year of full-time experience in providing direct patient care in a hospice, home health, or oncology setting, and because she was simultaneously employed on a PRN ( as needed) basis by another licensed health care agency. z The Whistleblower Statute, La. R. S. 23: 967, provides protection to employees against reprisal from employers for reporting or refusing to participate in illegal workplace practices. 2 reversed that judgment on September 10,. 2010, and remanded the case to the trial court for further proceedings. L. L. C., Whittington v. Hospice Care Services of Louisiana, 2010- 0206 ( La. App. 1. Cir. 9/ 10/ 10) I.unpublished), On December 31, 2009, during the. pendency of that appeal, hospice Care' s only members, Right" Richard and Linda an "' Assignment of LLC Membership that transferred 100 percent of their membership interest in Hospice Care to Dynafab, USA, LLC ( Dynafab). Randall A. Gomez. Dynafab consisted of a sole. member and manager, Mr. Gomez was also the managing member of Life Hospice, LLC Life Hospice), which he co- owned with Mr.' David E. Roberts. On June 12010, Mr. Gomez executed ani" Asset' Sale Agreement with Assumption of Certain Liabilities," wherein Hospice Care, through Mr. Gomez, as its managing member, transferred to Life Hospice, through Mr. Gomez, as its managing member, the following: 1. Hospice Care' s DHH License; 2. All furniture, fixtures, equipment, ' inventory, located at Hospice Care; 3. All of Hospice Care' s patient records, software, and records and supplies for billing; and 4. Hospice Care' s right t® re( .e.i', ie all outstanding payments due r c from Medicare. The sale agreement further stated that "YLAF lio_ pice] shall not be deemed to have assumed any obllgation or liability of lHospice (. are] Overpayment described above." .( Emphasis added.) other than the Medicare As a result of the: assignment and subsequent sale, Hospice Care remained a. limited liability company in good standing, but without any assets. Upon learning of the assignment and asset sale, Ms. Whittington supplemented and amended her petition to add Dynafab, .Life Hospice, and Mr. Gomez as additional defendants in her suit, alleging they had conspired to defraud her. Life Hospice filed an exception raising the objection of no right of action, and Dynafab and Mr. Gomez fled exceptions raising the objections of no right of . action, 3 no cause of action, and vagueness. and % trial on the merits were he The hearing ors the held the same day. of no right of action raised by Prior to the triai, the court su std r.e0 ',1,he i Dynafab, Mr. Gornez, and Lift: Hospb ant,',,dun.::,Q ri.ie + xceptior:s of rio cause of action and vagueness. 3t Since the triad ; aurt ,,.,. t.;$' ;, tae e,,ceptions of no right of action i raised by the three newly- added defendants, the trial on the merits proceeded by Ms. Whittington solely against Hospice Care, which was not represented by counsel at trial. At the conclusion of the trial, the trial, court. rendered judgment in favor of Ms. Whittington on the merits of her whistlebiower .( wrongful termination) claim 151, 265..00 against Hospice Care. awarded her damages in the amount of .$ and That judgment was signed on July 26, 2011, and neither Ms. Whittington nor Hospice Care appealed. Thus, it is now a final judgment. Ms. Whittington, _ however, did appal: the. 'trial court' s judgment sustaining the ' newly-added defendants' exceptions of no. right of action. On appeal, this court reversed the trial court, denied the exReptio0s of-no right of action, and remanded the case to the trial court, thereby reinstating Hospice Life, Dynafab, and Mr. Gomez as defendants in this action. L. L. C., 2012- 0540 ( La. stated, "[ Whittington v. Hospice Care Services of Louisiana, App. 1 Cir. 2/ 25/ 13) ( unpublished). In so doing, this court a] s a person wrongfully terminated, there is no question that [ Ms. Whittington] e., belongs to the class that has a legal interest in the subject matter of the litigation ( i, to pursue a judgment for damages she herself sustained.)" On remand, Ms. Whittington filed a " Motion for Summary Judgment on the Issue of In Solido/ Successor Liability" and Entry o3 Final Judgment," the denials of which are at issue before us now. The motlor`,s" sought a judgment finding Dynafab, Mr. Gomez, and Life Hospice solidariiy liable for the- judgment issued ,against Hospice Care on the bases of several allegations; ( 1) that Dynafab was not made a member of Hospice Care and therefore Dynafab lacked the power or authority to transfer assets of Hospice Care to Life Hospice; ( 2) that the continuation doctrine should apply in this 4 case, thereby transferring all liabilities a& Hco-'spice C'ar , to Ufe hospice; and ( 3) that Life Hospice should be held liable as a successor in nnteresi:.' Dynafab, judgment Mr. Gomez, asserting; and Life HC.spice filed their own motion for summary that the assigmment of interest by the Mahoneys to Dynafab effectively transferred all membership in Hospice ` arc;, t-, IDyn.afab; t hat Ms. Whittington could not prove that Life Hospice assumed laab ilty for the judgment in this case; that Ms. Whittington could not prove that. Mr. .Go rqe- or Dvfiafab intended to commit any fraud; that Ms. Whittington could not pic r. e the veil of Hospice CarQ or Dynafab; and c that Life Hospice. and Dynafab were ni,.gl l a ..le raa.: l r. hitt!ngton .under. the theory of successor liability, the continuation doci.ri0ef, or, as a- successor in interest, ( Dynafab, Mr. Gomez, and Life Hospice made these saMe..argun. ents in their opposition to the plaintiff's motions.) ACTION BY THE-TRIAL COURT The trial court, after hearing arguments and accepting evidence ( which consisted of Mr. Gomez's deposition and attached exhibits a6d a- jointly submitted affidavit by Mr. Gomez), very succinctly stated the purpose of Ms, VVhitti.ngton' s: rnotions, i.e., that she was " trying to obtain judgment against Dynafab and Mr. Gomez on the theory that Life Hospice Services is a successor of limited Louisiana, and, corpdretion to Hospice Services of therefore, the judgimenti recidered by this court against Hospice Care Services is enforceable against Lifc Hospice, Dyr'afab, and Mr. G€ t-nez individually." ' The trial court also noted that Mr:: Gomez' s affldav1v e.stabiished, without contradicbon, that he had no knowledge, from the Mahoney Or othr rwise, of the suit against Hospice Care by Ms. Whittington ( which by then, tiad been dismissed and was 3 In the unique pleading styled " Motion for Entry of Final Judgment," Ms. Whittington argued that this court's prior opinion ( that reversed the grant of the exception raising the objection of no right of action) warranted the rendering of a judgment declaring Hospice fare, Dynafab, Mr. Gomez, and Life Hospice liable in soiido to the plaintiff for violating the whistleblower statute and for causing damages to the plaintiff as a result of this violation. We disagree, because Ms. Whittington mischarocterizes this court's prior opinion, which as stated earlier, simply ruled that Ms. WNttingtton, as a person wrongfully terminated from her job, was among the class with a legal right to pursue a claim for damages she sustained as a result thereof. That opinion in no way addressed or decided the merits of that claim, particularly, Ms. Whittington' s attempts to execute her money judgment on the current named defendants. on appeal) until the case was rernarided 4ftE: , appeal a.n.d Iii•.Gomez, Dynafab, and Life Hospice were added as defendants, . Based , pry thy, . Vj d.ence ip the trial court denied Ms V' hittington' s and arguments presented, and gr.anveld the defendants' motion for summary judgment, Our de novo review of the summary..udgrr ent: granted, in this matter in favor of j the defendants, which is a final audgii snit` i, d.:ta.rak:` s ,`prerrI y review for manifest error on the trial court's interlocutory, rulings o Ms.', VVhitti,ngton' s motions, leads us to the conclusion that the trial court was correct in ail: of its ruling$. We also find that the oral reasons given by the trial court when . rendedng judgment adequately address the assignments of error presented by Ms. Whittiegtah in her appeal and the issues raised in her supervisory writ application. Moreover, the trial ' c: urt's roasons are thorough, o succinct, and as well put as we could do if w hereby repeat and adopt the reasons give; i, F ere' to.:draf- our oven. y tFie trla. Therefore, we c u t as OUr own. It is the argument df the' pl,,,'krztiffthat wince Mr. Gomez was lynafiat, A,tC the sole member or tha, r : s aga d: rr, sxta r, and became the rnanaging. np6m6e.r or e..of the i aanaging members and owners of Life, :i( s line that:, hils. wa.s'.ali being o' done and manipulated by i9r P3 Lim"Ied liability corporations are esta'bsi hed, ` For established and are required tQ fc.416 rea's'On. They are tox'-p rate procedures. The law is very clean that there s no individual liability on members of a limited flabifty corporation except I. n very [T] here limited circumstances which would include. fraud.. has been no evidence of fraud in this case. There were business transactions that were dune Wherein the Mahoneys transferred their membership h! Hospice Care Services to Dynafab USA, LLC. Later; Hospice Care Services of Louisiana transferred its assets to Life Hospice in consideration far Life Hospice. agR;eeing..to pay a [ overpayment transferring owed the by assets The specificaily. limited Mjedicare c ocurnaent the' liability, assumed by Life Hospice to tYici [ JA e'd*ica e overpayrnent. Plaintiff tries to categorize this. as merely a name change. There is no evidence that that's what' uvas done. [ Piaintiff] t]ries to char-acterize thss - as an, atter,Ppt, to defraud Ms. Whittington. There is no evidence that that .Incas done. Rather, the evidence is that the il laho.neys did not disclose. to Mr. Gomez, to Dynafab USA,. or to Life, Hospice that there was a pending lawsuit_ As Indicated in argument, when this matter came up for hearing, I denied the exception oi" no cause of action and sustained the exception of, no. right of action. Those defendants, that" 5: Life Hospice, Mr. Gornez, and Dynafab and their representatives ,` ft the courtroom. e against Hospice ' Ms. Whittington proceeded* witr t,jY) r of a ' default. because there was no one pro- ent. I rendered judgment in s l Ft Care Services of Louisiana her favor against Hospice Car., Services` of l_.ouisiana. There can be no entry of a. Judgrnent ,against those`' defendants without them having been present and jo;ned. at the trial and participating in the. triai.. - So. the motion for entry of judgment against them is denied. Vith regard to the motion for summary judgment,, there has been no evidence introduced to show that this was done in any way to defraud Ms. Whittington. There has been. no evidence that these parties were merely affecting ' a - name change or that somehow Life Hospice' continued lon. the business of Hospice Care. They took over the. assets, which did include the client list and so forth, but that does not mean that they continued to operate that business as such. There has been no evidence to support the plaintiff's motion for summary judgment, and that motion is denied.' What the plaintiff has allFg6u, against tose`defendants is that Hospice Services of they are somehow successar s - to .` Louisiana, LLC and that they hav'o somehow committed fraud upon Ms. Whittington by merely Offecting a, name change ... and the sole purpose of .the.-transfer: was to defraud Ms. Ifs also the, argument of the plaintiff that since Hospice Services was defending the appeal of the original granting of summary judgment that that Whittington out of her claim. somehow imputes knowledge of that appeal to Dynafab and thus to Mr. Gomez and thus to Life Hospice. ... There is no evidence that [ Hospice . Services' original attorney] communicated whatsoever with Mr. Gomez or Dynafab or Life Hospice Services. Her knowledge could be imputed to Hospice Services of Louisiana. .. But I don't think her knowledge can. be imputed beyond that. And even though Dynafab may have been the owner of and managing partner of that LLC [ Hospice Services of . Louisiana], there is no evidence that there was any actual knowledge on the part of Dynafab or Mr. Gomez of that appeal -and of its pendency at the time, of the transfer.. . Rather;- th. .'affdavit e refutes that point, of Mr;..Gomez So again, Olaintiff, has come forward with no evidence to show that this was .a fraudulent transaction, that this was done to depravi; l ls. Whittington of available assets or recovery on .. her ' case:, i-hese' were business transactions 'conducted by various. L*' LC?s. There has been no showing that. there was. anything p'noarha.nded or fraudulent about what was done., There is; therefore, no basis for liability on the part of Life Hospice'- Services; USA, LLC,, or Mr. Gomez individualiy. 7 Inc.. Dynafab CONCLUSION For all the foregoing reasons, the rulings by the trial court denying Ms. Whittington' s motion for summary judgment and moti©rr for entry cif a final judgment are affirmed and the writ application challeng4'), g: rul rigs i.s denied. Thy. judgment of the trial court granting summary judgment ir, favow kandali A. Gomez, Dynafab USA, LLC, and Life Hospice, LLC, affirmed. and dismissing Ms. Whittington' s claims against them is also Costs of this appeal are assessed to plaintiff, Marla B. Whittington. AFFIRMED° WRIT DENIED, FIRST CIRCUIT R> >_ wVflITTIIlIaI; TON i:A i. l 4 COURT OF AF'PE Aki: VERSUS ST? TF OF LOUISIANA S. HOSPICE CARL SEI Vi(= ES OF NO. : 014 CA 0312 LOUISIANA, ICI_c 3., concurring:. 1 can;"Ur . fo:• ciditional reasons emphas;_ g 0-le zin the plir; r, I',<: ; ' proper. burden of., goof on r, otion i'(.,)summary judgment. r In support. of their motion for sun-I iar - .judgment, defendants; who woui.( not bear the burden of proof at trial, r.ointed oat that plaintiff cannot meet her iil«-, liability on them. in parti.<; burden of proving at trial any basis for the affidavit of:Randa'tt A. Gomez., z iAi- tn1,!cr and manager of Dynafab, was i.ilerl V as a point exhibit 'at tl n hearing on the smarties' cross motions for summaj., ta.;<< sc;, t. st z. ted that he had no knowledge that the I31 1:±is affidavit, Mr. lawsuit filed by plaintiff against her former employer, Hospice Care, pending on appeal at the time of the transactions in question. was still He further attested tc the fact that the Mahoneys represented to Dynafab that the lawsuit filed by plaintiff had been dismissed. At that point, the burden shifted to plaintiff to cone forward with evidence t:o establish that she would be able d.: satisf, h. r evidentiary burden at trial th i e fondants entered into the transactions in question. in order to escape liability froi'ii her claim against her former employer, Hospice Care, and had knowledge of the pending claim. La. C. C. P. art. 966( C')( 2). " 31," an exhibit filed jointly by plaintiff and defendants, was the affidavit o-i" Mr. Gomez. that: '( 1) As stated above, it established. Mr. Gomez had no knowlc tig.e that the lawSIAit _iled against plaintitls f and. ( 2) the Mahoney's represented to Dynaf:ib iihaa the lawsuit had been dismissed. Consequently, former employer, Hospice Care, was still pending; plaintiffs own filings support the defendants' position on the motion for summary ii judgment. Accordingly, because plaintiff failed to present evidence demonstrating that she could meet her evidentiary burden at trial, no genuine issue of material fact existed, and the defendants were entitled to summary judgment in their favor. C. C. P. art. 966( C)( 2); La. Souza v. St. Tammany Parish, 11- 2198 ( La. App. 1st Cir. 6/ 8/ 12), 93 So. 3d 745, 747. 2 NO. 2014 CA 0312 MARLA B. WHITTINGTON FIRST CIRCUIT VERSUS COURT OF APPEAL HOSPICE CARE SERVICES OF S'T' ATE OF LOUISIANA LOUISIANA, LLC WELCH, J., dissents in part. I agree that the trial court properly denied Ms. summary judgment; however, Whittington' s motion for I find that the trial court erred in granting defendants' motion for summary judgment. Accordingly, I respectfully dissent in part. Plaintiff asserts that defendants are liable to her for a judgment obtained against Hospice Care on a theory of successor liability. The basic principle of successor liability, developed in the context of corporations, is that when a corporation sells all of its assets to another, the successor is not liable for the seller' s debts or liabilities, except where: agrees to assume the obligation; ( ( 1) the purchase expressly or impliedly 2) the purchaser is merely a continuation of the selling corporation; or ( 3) the transaction is er tered into to escape liability. v. Asbestos Defendants, 2010- 0570 ( La. App. 4th Piehon Cir.. 11/ 17/ 10), 52 So. 3d 240, 243, writ denied, 2010- 2771 ( La. 2/ 4/ 11), 57 So. 3d 317. I believe that there is a genuine issue of fact as to whether the transactions in question were entered into in order to escape liability to Ms. Whittington in the event she obtained a judgment against Hospice Care. Mr. Gomez knew that Ms. Whittington had filed a lawsuit against Hospice Care before his company, Dynafab, purchased 100% of the Mahoney' s interest in Hospice Care. He claims he did not know her suit was still pending at the time of the purchase or at the time that he, acting as the managing member of both Hospice Care and Dynafab, transferred Hospice Care' s assets, including its right to receive all outstanding payments due from Medicare, to his newly formed LLC, Life Hospice. According to Mr. Gomez, because he did not know of the pendency of the lawsuit, he could not have entered Whittington. into the transactions in order to escape liability to Ms. The issue of whether Mr. Gomez knew or should have known that Ms. Whittington was a potential creditor of Hospice Care at the time of the transfers is a question of fact that can only be determined by assessing Mr. Gomez' s credibility and by determining whether his claim of lack of knowledge is reasonable under the circumstances of this case. However, a court may not make credibility decisions on a motion for summary judgment. Furthermore, summary judgment is seldom appropriate for determinations based on subjective facts of motive, intent, good faith, knowledge, or malice, and should only be granted on such subjective issues when no genuine issue of material fact exists concerning that issue. La. App. Monterrey Center, LLC v. Ed. ucation Partners, Inc., 1st 2008- 0734 Cir. 12/ 23/ 08, 5 So. 3d 225, 232. In this case, the circumstances surrounding the transactions themselves can provide a factual basis to support Ms. Whittington' s claim that the transactions were perfected to escape liability to her, including: ( 1) 100% Dynafab' s purchase of of the Mahoney' s membership interest in Hospice Care for $ 5, 000. 00, where for a ten month period ending October 31, 2009, Hospice Care had gross revenues in the amount of$ 474, 612.40; and ( 2) the timing of the formation of Mr. Gomez' s LLCs, the acquisitions, and transfers, all of which occurred during the pendency of the lawsuit, including the following: Mr. Gomez registered Dynafab as an LLC on March 16, 2009; on December 31, 2009, Dynafab acquired 100% of the Mahoney' s interest in Hospice Care; Life Hospice was registered as an LLC on March 12, 2010, and on June 1, 2010, Hospice Care and Dynafab, through Mr. Gomez as both entities' managing member, transferred its assets to Mr. Gomez' s 2 newly formed LLC, Life Hospice. Whether these transactions were part of a strategy to deprive Ms. Whittington of an-a recover,; in the event that a judgment was rendered against Hospice Care on her whistleblower claim is a question of fact that may not be decided on summany judgment. Therefore; I would reverse the summary judgment rendered in favor of defendants and remand the case to the trial court for further proceedings. 3

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