Allison v. HCP, Inc
Filed 1/15/13
Allison v. HCP, Inc. CA6
OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits
courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
RONALD ALLISON
et al.,
Plaintiffs and Appellants,
v.
HCP, INC., et
al.,
Defendants and Respondents.
H036410
(Santa Clara County
Super. Ct. No.
CV145956)
RONALD ALLISON
et al.,
Plaintiffs and Appellants,
v.
TENET
HEALTHCARE CORPORATION et al.,
Defendants and Respondents.
H037045
(Santa Clara County
Super. Ct. No.
CV145956)
Appellants
Ronald Allison and some of the other limited partners in a California limited
partnership called Litho I appeal from judgments of dismissal after the
superior court sustained without leave to amend demurrers to causes of action
against four of seven defendants in appellants’ action. One appeal concerns interference with
contract and unjust enrichment/constructive trust causes of action against
respondents HCP, Inc. (HCP) and Health Care Property Partners (HCPP).
enrichment/constructive trust, and breach of contract causes of action against
respondents Community Hospital of Los Gatos (CHLG) and Tenet Healthcare
Corporation (THC). We conclude that the
superior court did not err in sustaining the demurrers without leave to amend
and entering judgments of dismissal in favor of these four defendants.
I. Standard of
Review
“ ‘We treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions or conclusions
of fact or law. [Citation.] We also consider matters which may be
judicially noticed.’ [Citation.] Further, we give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context. [Citation.]
When a demurrer is sustained, we determine whether the complaint states
facts sufficient to constitute a cause of action. [Citation.]
And when it is sustained without leave to amend, we decide whether there
is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we
affirm. [Citations.] The burden of proving such reasonable
possibility is squarely on the plaintiff.â€
(Blank v. Kirwan (1985) 39
Cal.3d 311, 318.)
“[W]e
disregard allegations that are . . . contradicted by the
express terms of an exhibit [such as a contract] incorporated into the
complaint.†(Freeman v. San Diego Assn. of Realtors (1999) 77 Cal.App.4th 171,
178, fn. 3; Peak v. Republic Truck Sales
Corp. (1924) 194 Cal. 782, 790; Stoddard
v. Treadwell (1864) 26 Cal. 294, 303.)
â€Indeed, the contents of an incorporated
document . . . will take precedence over and supercede any
inconsistent or contrary allegations set out in the pleading. In the case of such a conflict, we will look
solely to the attached exhibit.†(
(2004) 122 Cal.App.4th 1400, 1409.)
II. General
Background
Appellants
were some of the limited partners in Litho I.
Litho I was created in 1985 by National Medical Ventures (NMV) and
appellant Manzone. NMV was the sole
general partner of Litho I and held 60 percent of the ownership units in Litho
I. Sixty‑three physician limited
partners held the remaining ownership units.
Litho I had four or five non-physician employees. It possessed no tangible property. Litho I’s only property consisted of bank
accounts, accounts receivable, and “customer goodwill.â€
Litho
I’s business was providing lithotripsy services. Lithotripsy involves the use of a piece of
equipment called a lithotripter to dissolve kidney stones. Litho I did not own the equipment for
providing these services or the premises upon which they were provided. Instead, Litho I leased a lithotripter and
other associated equipment from Tenet Healthsystems Hospitals, Inc. (THH) and
used this equipment to provide lithotripsy services pursuant to a services
agreement between THH, NMV, and Litho I.
These services were provided in a portion of a hospital operated by CHLG
that THH leased from HCPP. HCPP was the
“master lessor†of the hospital’s land and buildings, while THH was the “master
lessee.†THH assigned the master lease
to CHLG in 2002. The services agreement
provided that its term would be “concurrent with that of the Center Use
Agreement.†The Center Use Agreement
(CUA) was an agreement between Litho I and THH that provided for Litho I’s
lease of the equipment and sublease of the portion of the hospital that it used
to provide lithotripsy services. The CUA
provided that the CUA would terminate upon the dissolution of Litho I. It also provided that “[t]his Agreement is
subject and subordinate to all of the terms and provisions of the Master Lease
and the rights of the lessor under the Master Lease.â€
In
June 2008, CHLG notified HCPP that it would not be renewing the master
lease. That same month, THH, THC, HCP,
and HCPP resolved litigation amongst themselves by means of a settlement
agreement. The settlement agreement
acknowledged that the master lease on the hospital would not be renewed when it
expired in May 2009. Thereafter, CHLG
and HCPP amended the master lease to provide HCPP with an option to purchase
CHLG’s personal property on the hospital’s premises, which included the
equipment Litho I had leased from THH to provide lithotripsy services.
On
December 31, 2008, NMV caused Litho I to be dissolved over the objections of
the physician limited partners.
Nevertheless, lithotripsy services continued to be provided at the
hospital using the same equipment and Litho I’s former employees and telephone
number. In April 2009, El Camino
Hospitals purchased the hospital and the equipment from HCPP. It hired Litho I’s former employees and
thereafter provided lithotripsy services at that location using that equipment.
Appellants
filed their original complaint against NMV, CHLG, THH, THC, and Litho I in
2009. After demurrers to some causes of
action were sustained without leave to amend, appellants subsequently filed a
first amended complaint adding HCP and HCPP as defendants. Demurrers to some of the causes of action in
the first amended complaint were sustained without leave to amend, and
appellants filed a second amended complaint.
Demurrers were also sustained to some of the causes of action in the
second amended complaint.
name="_ftnref3" title="">[3] The court entered judgments of dismissal for
THC, CHLG, HCP and HCPP, and appellants timely filed
The
first appeal (H036410) concerns only the unjust enrichment/constructive trust
and interference with contract causes of action against HCP and HCPP. The trial court sustained demurrers to these
causes of action without leave to amend on the ground that they failed to state
a cause of action.
title="">[4]
A. Unjust
Enrichment/Constructive Trust
Appellants
alleged that HCP and HCPP had been unjustly enriched, and a constructive trust
should be imposed, because HCPP acquired the “goodwill†of Litho I and then
sold it to El Camino Hospitals.
Appellants alleged that, because HCP and HCPP knew that appellants owned
40 percent of Litho I, HCP and HCPP were obligated to pay to them their share
of the amount HCP and HCPP allegedly received from El Camino Hospitals for
Litho I’s goodwill.
“The
elements of an unjust enrichment claim are the ‘receipt of a benefit and [the]
unjust retention of the benefit at the expense of another.’ â€
(Peterson v. Cellco Partnership
(2008) 164 Cal.App.4th 1583, 1593.) The
problem with appellants’ allegations is that, even if all of their allegations
are credited, they do not establish that HCP or HCPP unjustly retained any benefit belonging to appellants as a result
of these transactions. Appellants
alleged that NMV took Litho I’s goodwill, that it was somehow transferred to
THH or CHLG, from THH or CHLG to HCP or HCPP, and from HCP or HCPP to El Camino
Hospitals. This chain of events does
nothing to establish that HCP or HCPP, entities with no obligations to
appellants, were the entities that retained a benefit belonging to Litho I as a
result of these transactions. Instead,
this reflects that any such benefit remained in the hands of NMV and THH, the
entities with obligations to appellants, or ended up in the hands of El Camino
Hospitals.
Other
than reiterating that HCP and HCPP knew of Litho I’s goodwill, appellants make
no attempt to explain how HCP and HCPP acted wrongfully. Instead,
appellants maintain that this cause of action was properly based on a theory of
liability that they describe as follows:
“When a third party participates in a fiduciary’s breach of trust, that
third party is liable to the cestuis.
Restatement of Trusts 201; Scott
v. Symons (1923) 191 Cal.441; Lantz
v. Stribling (1955) 130 C.A.2d 476; Probate Code 15003. Participation requires knowledge of the
breach and receipt of trust property.†They do not discuss the authorities they cite
at all or provide any further legal argument, but merely argue that their
allegations established that NMV had
a fiduciary duty to them.
Appellants’
assertion lacks merit. The only
fiduciary that they identify is NMV, and they do not allege that HCP or HCPP
engaged in any transactions with NMV. The involvement of HCP and HCPP was limited
to transactions with THH and
Hence, even if their theory were legally viable, it would not apply
here. Moreover, none of the cited
authorities supports appellants’ claim that a “third party†is “liable†simply
because it has “participate[d]†in a “fiduciary’s breach of trust.†Restatement of Trusts, section 201 states: “A breach of trust is a violation
trustee he owes to the beneficiary.â€
(Italics added.) No mention is
made of third parties.
paid money belonging to Scott instead to Symons. Symons knew that he was not entitled to the
money. Scott successfully sued Symons
for the return of the money. The court
held that Symons was an involuntary trustee of the money he had wrongfully come
to possess and could be required to return it to Scott. (Scott,
at pp. 453-456.) Scott is inapposite here.
Appellants did not allege that HCPP or HCP wrongfully acquired anything
from a trustee. If any entity was a
trustee, it was NMV, and HCPP and HCP had no transactions with NMV. Lantz
v. Stribling (1955) 130 Cal.App.2d 476 (Lantz)
is similarly unhelpful. Presumably
appellants wish to rely on the statement in Lantz
that “[o]ne who takes property from a trustee in violation of the trust with
knowledge of the trust holds the property subject to the trust as a constructive
trustee.†(Lantz, at p. 481.)
Appellants did not allege that HCPP or HCP took property from a trustee
in violation of a trust. Probate Code
section 15003 also concerns trusts, but appellants have failed to allege any
basis for a finding that HCPP or HCP were trustees or dealt with a trustee.
Appellants
also claim on appeal that their unjust enrichment/constructive trust cause of
action, when read with other causes of action involving different defendants,
should be construed as, or could be amended to allege, a cause of action
against HCP and HCPP for conversion.
However, conversion, like unjust enrichment, requires that the defendant
do something wrong. (Hernandez
v. Lopez (2009) 180 Cal.App.4th 932, 939.)
Appellants have not alleged any such act by HCP or HCPP, and they do not
purport that they could do so as they admit that any conversion was perpetrated
by NMV, not HCPP or HCP, and that NMV did not engage in any transactions with
HCP or HCPP. Under these circumstances,
there is no possibility that appellants could amend their unjust
enrichment/constructive trust cause of action to state a viable cause of action
of any kind against HCP or HCPP. The
trial court did not err in sustaining the demurrer to this cause of action
without leave to amend.
B. Interference
With Contract
The
interference with contract cause of action alleged that HCP and HCPP were
liable because they “persuaded and induced the Tenet affiliates†to breach the
CUA knowing that Litho I was partially owned by persons other than “Tenet
affiliates†and that “a Tenet affiliate had promised Litho I that Tenet would
not give up its lease at [the hospital] or close [the hospital].†Appellants concede on appeal that this cause
of action is based solely on the June 2008 settlement and the option that HCPP
obtained to purchase the equipment. The
exhibits establish that the settlement
did not require that the lease not be renewed, but merely acknowledged that
CHLG had decided not to renew the lease.
HCPP did nothing more regarding the equipment than to obtain an option
to purchase it and thereafter exercise that option. The settlement did not obligate CHLG to
terminate the master lease nor did the option require HCPP to purchase the
equipment.
“ ‘The elements which a plaintiff must
plead to state the cause of action for intentional interference with
contractual relations are (1) a valid contract between plaintiff and a third
party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional
acts designed to induce a breach or disruption of the contractual relationship;
(4) actual breach or disruption of the contractual relationship; and (5)
resulting damage.’ †(Quelimane
Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55.) “[I]t is not necessary that the defendant’s
conduct be wrongful apart from the interference with the contract itself.†(Ibid.)
Appellants
argue on appeal that HCP and HCPP were liable for interference with contract
because HCP and HCPP “knew or should have known†that THH would breach the CUA if CHLG failed to renew the master lease and
the equipment was sold.
name="_ftnref5" title="">[5] While appellants’ allegations satisfy the
first two elements of the cause of action, the missing element was the third
one. Appellants failed to allege that
HCP and HCPP engaged in intentional acts
that were designed to induce THH’s
breach. Even if the failure to renew the
lease was sure to result in a breach of CUA, HCP and HCPP’s acceptance of
CHLG’s exercise of its right not to renew could hardly constitute an
intentional act of HCP and HCPP designed to induce THH’s breach of the
CUA. After all, HCP and HCPP lacked the
power to force CHLG to renew the master lease.
Although this cause of action purported
to allege that HCP and HCPP induced
THH to breach the CUA, the exhibits rebutted this allegation and demonstrated
that HCPP merely accepted CHLG’s
failure to renew the master lease and agreed to an option to purchase the
equipment. Without contradicting the
exhibits, appellants could not allege that HCPP’s acceptance of CHLG’s failure
to renew and agreement to an option were intentional acts designed to
CUA could not be performed, and HCPP’s purchase of the equipment could not
induce the CUA’s breach. In light of the
exhibits, it is not reasonably possible that appellants could amend their
allegations to state an interference with contract cause of action against HCP
and HCPP. The trial court did not err in
sustaining the demurrer to this cause of action without leave to amend.
IV. Liability
of THC and CHLG
The
second appeal concerns causes of action against THC and CHLG in all three
iterations of the complaint. THC is a
holding company that has no operations.
CHLG is THC’s wholly owned subsidiary.
On appeal, appellants contend that they should be permitted to amend
their second amended complaint to allege that CHLG was the alter ego of THC.
A.
“Participation in Breach of Fiduciary Dutyâ€
The
11th and 13th causes of action in the original complaint alleged that THC and
CHLG breached a fiduciary duty to appellants even though the complaint
acknowledged that neither entity “itself owe[d] a fiduciary duty toâ€
appellants. Appellants alleged that THC
and CHLG were nevertheless liable for breach of fiduciary duty because they
fiduciary duty†to appellants and they “accepted†Litho I’s “funds†and
“goodwill.†(Italics added.)
THC
and CHLG demurred to the 11th and 13th causes of action on the ground that they
owed no fiduciary duty to Litho I or appellants. Appellants contended that the demurrer should
be overruled because THC and CHLG were liable as “third part[ies]†who had
“participat[ed] in a fiduciary’s breach of trust.†The court sustained the demurrers without
leave to amend on the ground that appellants had failed to allege that THC or
CHLG had a fiduciary duty to them.
Appellants
concede on appeal that THC “had no fiduciary relationship†with Litho I or its
partners. Nevertheless, they claim that
they could have amended their cause of action against THC to state a cause of
action for “participation in breach of fiduciary duty against [THC]†because
THC “directed†NMV to breach its fiduciary duty and to transfer Litho I’s
goodwill to CHLG for no value.
Similarly,
although they conceded in their complaint that CHLG had no fiduciary duty to
appellants or Litho I, on appeal they contend that CHLG was liable for
“Participation in Breach of Fiduciary Duty†because CHLG had access to a THC
bank account in which Litho I’s funds were temporarily kept from 2004 to 2008,
and because CHLG operated Litho I’s former business for 100 days after Litho I
was dissolved. Appellants concede that
the funds in the bank account were handled in this manner with the consent of
NMV, which was the general partner of Litho I and obviously had the authority
to authorize such actions. NMV was also
the entity that apparently gave CHLG authority to operate Litho I’s former
business during this period. Clearly NMV
was a fiduciary to appellants whom appellants could seek to hold liable for
breach of fiduciary duty in these respects.
The question was whether CHLG could be held liable for breach of
fiduciary duty notwithstanding its lack of any such duty.
As
we noted earlier, appellants have provided no authority for their theory that
any third party who “participates†in a fiduciary’s breach of trust is liable
for breach of fiduciary duty. Breach of
fiduciary duty applies only where there is a fiduciary duty, which THC and CHLG
indisputably lacked. Even if a third
party conspires with a fiduciary for
the fiduciary to breach its duty, the third party is not liable for breach of
fiduciary duty or even conspiracy because a civil conspiracy cause of action is
not an “independent tort;†it allows tort recovery only where the conspirator
“is legally capable of committing the tort, i.e., that he or she owes a duty to
plaintiff recognized by law and is potentially subject to liability for breach
of that duty.†(Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7
Cal.4th 503, 510-511, 514.) Here,
appellants claim that even in the absence of a conspiracy a non-fiduciary with
no legal obligation to appellants is somehow liable for breach of fiduciary
duty. As they are unable to muster any
legal authority for their theory, we reject it.
The trial court did not err in sustaining without leave to amend the
demurrers to the breach of fiduciary duty causes of action against THC and
CHLG.
B. Unjust
Enrichment Regarding Bank Account
Two
causes of action against THC and CHLG in the first amended complaint concerned
a bank account. Between November 2004
and March 2008, Litho I did not have its own bank account. Instead, THC deposited Litho I’s revenue into
an account associated with CHLG, and Litho I’s expenses and distributions were
paid out of that account. In March 2008,
THC conveyed all of Litho I’s principal and interest from this account to Litho
I.
Cause
of action 10a alleged that THC had been unjustly enriched by its temporary
possession of Litho I’s funds in that bank account even though those funds had
been returned to Litho I with interest.
The 12th cause of action, based on the same factual allegations, alleged
that CHLG had been unjustly enriched by the temporary presence of those funds
in that bank account because CHLG had access to those funds. CHLG and THC demurred on the ground that
these allegations failed to state causes of action. The trial court sustained these demurrers
without leave to amend on the ground that they did not state causes of action.
These
allegations do not state causes of action against THC or CHLG. As we noted earlier, one of the elements of
an unjust enrichment claim, which is really a claim for restitution, is “ ‘[the] unjust retention of the benefit at the expense of another.’ â€
(Peterson v. Cellco Partnership,
supra, 164 Cal.App.4th at p. 1593,
italics added; McBride v. Boughton
(2004) 123 Cal.App.4th 379, 387-388 [unjust enrichment is not really a cause of
action but rather a basis for restitution].)
Appellants’ allegations do not describe how it was unjust for THC or
CHLG to manage Litho I’s account for four years and then remit all of Litho I’s
principal and interest in the account
to Litho I. Appellants have not alleged
that these funds were ever withheld
from Litho I or that the management of this account by THC and CHLG was
undertaken without Litho I’s consent.
Indeed, they concede on appeal that NMV, Litho I’s general partner,
which had authority to manage Litho I’s affairs, consented to this arrangement. Their claim that they are entitled to
“statutory interest†for this period, rather than the actual interest, is
devoid of legal merit.
name="_ftnref7" title="">[7] Since THC and CHLG never received “statutory
interest,†no basis for restitution of it can possibly be alleged. The trial court did not err in sustaining the
demurrers to these causes of action without leave to amend.
C. Unjust
Enrichment Regarding Goodwill
Cause
of action 10b alleged that THC had been unjustly enriched by its alleged
transfer to HCPP and HCP of Litho I’s goodwill as part of the June 2008
settlement. Appellants sought a
constructive trust on the value of Litho I’s goodwill. On appeal, appellants contend that THC and
CHLG also were unjustly enriched because they profited from CHLG’s provision of
lithotripsy services during the 100 days between the dissolution of Litho I and
El Camino Hospitals’ undertaking of the provision of those services after it
acquired the premises and equipment from HCPP.
They suggest that THC’s wrongful act was a conspiracy with NMV or
THH. THC demurred to this cause of
action, and the court sustained the demurrer on the ground that there were
inadequate allegations that THC had been enriched or that any enrichment was
unjust.
THC
had no contractual obligations to appellants or Litho I that were breached as a
result of the June 2008 settlement. THH
was the entity that contracted with Litho I.
CHLG was the entity that decided not to renew the master lease and to
give HCPP an option to purchase the equipment.
The fact that THC may have maintained THH’s bank accounts did not create
any underlying duties of THC to Litho I.
Nor were there any allegations that THC, as opposed to THH, profited
from THH’s alleged breach of its obligations to Litho I and appellants. As THC had no underlying duty to appellants,
appellants’ conspiracy theory was not viable, as we have already
explained. Nor have there been any
allegations aimed at showing that it was unjust for CHLG to retain the profits
from the services that it provided during the period after Litho I’s
dissolution and before the transfer to El Camino Hospitals. If anyone other than El Camino Hospitals
retains Litho I’s former goodwill or the value thereof, it could not be THC, as
THC never had possession of this goodwill in the first place. The trial court did not err in sustaining
without leave to amend the demurrer to this cause of action.
D. Breach of
Contract
The
20th cause of action in the second amended complaint alleged that THH “and its
successor in interest†had breached the CUA by deciding not to renew the master
lease. This cause of action did not
explicitly name CHLG as a defendant.
Although the pleadings on the demurrer never suggested that this cause
of action was against any defendant other than THH, on appeal appellants assert
that the “successor in interest†was CHLG.
THH and CHLG demurred to this cause of action on the ground that they
had not terminated the master lease or closed the hospital so they were not in
breach of the CUA, and, in any case, the CUA itself had terminated before the
lease term ended because Litho I was dissolved in December 2008, but the master
lease did not terminate until April 2009.
The court sustained the demurrer without leave to amend.
Appellants’
allegations in support of this cause of action fail in two respects. One, they claim a breach of the CUA, but CHLG
was not a party to the CUA. While CHLG
was assigned the master lease, appellants have not alleged that CHLG was
assigned the CUA or by any other means became a party to the CUA. In fact, appellants concede that CHLG was not
a party to the CUA and never was assigned the CUA in writing as the CUA
required for assignments. Two, the CUA
provided that it would terminate upon Litho I’s dissolution. Since this dissolution occurred prior to the
expiration of the master lease or the sale of the equipment, the CUA was no
longer in force at the time of the alleged breaches of the CUA. While appellants maintain that the earlier
decision by CHLG to not renew the master lease and the granting of an option to
HCPP to purchase the equipment was an anticipatory breach, it has failed to
allege a connection between those earlier decisions and Litho I’s dissolution,
which precluded an actual breach from occurring. The trial court did not err in sustaining the
demurrer without leave to amend.
V. Disposition
The
judgments are affirmed.
_______________________________
Mihara,
J.
WE CONCUR:
_____________________________
Bamattre-Manoukian, Acting P. J.
_____________________________
Duffy, J.
name="_ftn1" title="">[1] HCP is apparently
the general partner of HCPP.
name="_ftn2" title="">[2] It is not entirely
clear whether it was THH or CHLG that owned the equipment or whether it was
transferred from one entity to the other at some point.
