Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-00726/USCOURTS-azd-2_09-cv-00726-3/pdf.json

Nature of Suit Code: 362
Nature of Suit: Medical Malpractice
Cause of Action: 28:1332 Diversity-Medical Malpractice

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Bickler, et al., 

Plaintiffs, 

vs.

Senior Lifestyle Corp., 

Defendant.

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No. CV-09-00726-PHX-DGC

ORDER

Trial in this case will begin on October 26, 2010. The Court held a final conference

call with the parties on October 20, 2010. Counsel for Plaintiffs and Defendants participated

in the call. The purpose of the call was to discuss any remaining issues in advance of trial.

A few hours before the conference, counsel for Defendants filed a document titled

Declaration of Stephen M. Garcia Regarding Trial Readiness. Doc. 246. The declaration

noted that SL Fountain View Village, LLC had been added as a Defendant pursuant to the

Court’s order of October 1, 2010. Doc. 285. The declaration also suggested, however, that

the addition of this Defendant had created a conflict of interest for Mr. Garcia and that no

Defendant should be required to go to trial on two weeks’ notice. This declaration prompted

an extended discussion on the record during the final conference. This order will explain the

Court’s decisions following reflection on that discussion. In order to understand the Court’s

decisions, some detailed history is required.

I. Relevant Facts.

When Plaintiffs filed their initial complaint in this case, they apparently failed to name

the correct licensee of Fountain View Village – the nursing facility where Plaintiffs were

Case 2:09-cv-00726-DGC Document 254 Filed 10/22/10 Page 1 of 8
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injured. Plaintiffs named Senior Lifestyle Corporation (“SLC”) as Defendant and alleged

that it did business as Fountain View Village. Doc. 1. In answering the complaint, SLC

admitted that it operated Fountain View Village, “that its facility is licensed by the state of

Arizona,” and that the services offered by the facility fall within the scope of Arizona’s

medical malpractice statute. Doc. 7. Plaintiffs reasonably relied on this admission to

conclude that they had named the proper defendant in this case. See Doc. 190 at 2-3. 

Later in discovery, Plaintiffs deposed the executive director of Fountain View Village.

When asked who held the license for the nursing facility, the executive director responded:

“Senior Lifestyle Corporation holds the license.” Doc. 187-1 at 19-20. This testimony

confirmed that SLC was the proper Defendant in this case. 

During the remainder of the discovery period, which was extended at the request of

the parties, Defendant SLC never withdrew or modified these admissions. To the contrary,

SLC’s filings in this Court, including its summary judgment motion, continued to make this

representation, stating that the filings were made on behalf of “Defendant Senior Lifestyle

Corporation d/b/a Fountain View Village.” See, e.g., Docs. 92, 133. SLC’s extensive motion

for summary judgment never argued that Plaintiffs had named the wrong Defendant. 

After the Court denied summary judgment, SLC retained Mr. Garcia and his firm as

new counsel. New counsel filed a motion for substitution on June 11, 2010. Doc. 163. The

motion stated that new counsel were in possession of the full case file and would assume

day-to-day responsibility for the lawsuit. Plaintiffs’ counsel promptly started copying new

counsel on all pleadings. See Doc. 164 et seq.

In preparation for the final pretrial conference to be held on August 11, 2010, SLC

filed a motion in limine which asserted, for the first time, that it was not the licensee of

Fountain View Village. Doc. 179. The motion essentially asked the Court to grant victory

to SLC by precluding Plaintiffs from presenting any evidence or argument that SLC was the

licensee. Id. Because SLC had admitted months earlier that it was the licensee and had

persisted in the admission throughout this case, the Court concluded that it would be

manifestly unfair to pull the rug out from under Plaintiffs at the final pretrial conference and

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preclude them from recovering against the only Defendant they had sued. Nor was the Court

willing to reopen discovery. The case already had been pending for 16 months and had

undergone extensive discovery and motion practice. Plaintiffs are elderly women in poor

health. Indeed, Plaintiffs’ counsel had urged at the initial case management conference that

trial be held as quickly as possible given the advanced ages and precarious condition of

Plaintiffs. The Court was not willing to extend the litigation because SLC had led plaintiffs

to believe that it was the responsible party and now wanted to change its story. The Court

instructed the parties to work out an arrangement whereby the proper Defendants would be

present at trial. See Doc. 190 at 2-3. Trial was set for September 21, 2010. Id.

Almost one month after the final pretrial conference, the parties filed a stipulation to

continue the trial date to October 25, 2010. Doc. 203. The extension was sought to

accommodate the schedule of lead defense counsel and to permit additional settlement

discussions. Id.; Doc. 193. The Court granted the parties’ request and rescheduled the trial

to begin on October 26, 2010. Doc. 213. 

Given these developments, the Court was surprised when defense counsel claimed,

on September 28, 2010, that an additional four to six months were needed for discovery if

the true licensee – SL Fountain View Village, LLC – was brought into the case. Doc. 222.

That position had not been taken at the final pretrial conference or in the parties’ stipulation

to begin trial in late October. During a conference call on September 30, defense counsel

asserted that unique issues would be presented by SL Fountain View Village, LLC’s

presence as a Defendant in the case – issues not presented by SLC. When the Court asked

defense counsel to describe these unique issues, counsel responded as follows:

The licensee has a nondelegable duty. For example, there’s a morass of

federal regulations. This is the second most regulated field to nuclear power.

They have regulations how hot the water is supposed to be in the kitchen and

how hot it is supposed to be in the shower. And their defenses as to those

regulations would be different than someone who wasn’t responsible, only to

the extent an expert issue would be – they would be minimal. I mean – now

that I’m hearing myself talk, your honor, forget it. I’m sorry. Now that I

talked it out in my own brain I cleared it up in my own brain. If the court

follows the second of its suggested patterns [adding SL Fountain View

Village, LLC as a Defendant], I’ll get it done on our side. We’ll be ready on

the 26th.

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Court’s Livenote Transcript, 9-30-10. Defense counsel then added: “we’ll be there with both

defendants and me and prepared to go to trial, your honor.” Id.

The Court accordingly entered an order requiring that SL Fountain View Village, LLC

be added as a Defendant along with SLC. Doc. 225. The Court was operating with the

understanding that SL Fountain View Village, LLC was the owner and licensee of Fountain

View Village and that SLC operated the facility under a management agreement. This

relationship had been described by defense counsel at the final pretrial conference (Doc. 219

at 32) and was confirmed in the Declaration of Stephen Levy, Senior Vice President and

General Counsel of SLC (Doc. 222-2). Mr. Levy declared to the Court under penalty of

perjury that “the named defendant [SLC] does provide management services to SL Fountain

View Village, LLC pursuant to a management agreement[.]” Id. ¶ 7. 

Given these events, the Court was confused and concerned when, on

October 20, 2010, it received the Declaration of Stephen M. Garcia Regarding Trial

Readiness. Doc. 246. As noted, the declaration confirmed that SL Fountain View Village,

LLC had been added as a Defendant pursuant to the Court’s order, but suggested that the

addition of this Defendant had created a conflict of interest for Mr. Garcia. The Court did

not understand how the two entities – SLC and SL Fountain View Village, LLC – would

have differing interests at trial, particularly in light of the statement of Mr. Garcia quoted

above. The Court accordingly sent out a text-only order that required defense counsel to be

prepared at the final conference that afternoon to describe in detail the relationship between

SLC and SL Fountain View Village, LLC. Doc. 249.

What the Court heard at the final conference was even more surprising. Contrary to

prior representations and the statement given under penalty of perjury by SLC’s general

counsel, defense counsel asserted at the conference that SLC does not have a management

agreement with SL Fountain View Village, LLC and, in fact, has no relationship with the

nursing facility at all. Indeed, counsel stated that SLC is nothing more than a shell

corporation and that the management agreement for the facility was with Senior Lifestyle

Management, LLC, a previously unnamed entity in this litigation. Counsel said Senior

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Lifestyle Management, LLC is the parent of SL Fountain View Village, LLC and SLC.

Counsel further changed the facts by stating that SL Fountain View Village, LLC does not

own the nursing facility – it is owned by WSL Fountain View Investors V, LLC, another

previously unnamed entity within this ever growing family of companies. Counsel said that

WSL leases the facility to SL Fountain View Village, LLC. Counsel said that all of these

companies are for the most part owned by the same group of investors, that Mr. Levy is one

of the owners, and that Mr. Levy is general counsel for SLC, SL Fountain View Village,

LLC, and Senior Lifestyle Management, LLC.

The Court asked defense counsel several times during the conference how the defense

of these entities would be any different at trial than the defense prepared by SLC. The only

explanation counsel could provide was that the other entities would have handled the

discovery and litigation strategy differently than did SLC, an explanation that made no sense

given that Mr. Levy is the general counsel of all these entities, including SLC, the Defendant

that did litigate this case. Moreover, counsel said that the nursing facility, Fountain View

Village, was covered by a $1 million insurance policy and that the insurance company had

selected the initial counsel. When asked who were the beneficiaries of the policy, counsel

said all of these entities were. Thus, even if Plaintiffs had named SL Fountain View Village,

LLC and Senior Lifestyle Management, LLC in the original complaint, the defense

presumably still would have been provided under the insurance policy and defense counsel

still would have been selected by the insurer. In any event, general counsel for the

beneficiaries of the policy surely had the right and at least $1 million worth of incentive to

watch the defense of this case closely and approve representations made by counsel,

including the admission that SLC was the licensee and operator of the facility. 

In short, defense counsel was unable to identify anything that would be different at

trial if the correct defendants were named. The trial would still focus on whether Plaintiffs

received proper care at the nursing facility, whether they were injured through the aggressive

actions of another resident who either should have been controlled by the facility staff or

should never have been admitted to the facility, the extent and nature of their injuries, and

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whether punitive damages are warranted. Defense counsel has not identified a credible

difference between the defense that has been prepared for SLC and the defense for the

correct owners and operators of Fountain View Village.

Defense counsel made another suggestion that is troubling. He said that SL Fountain

View Village, LLC intends to “point the finger” at SLC during the trial, knowing that any

judgment obtained against that shell corporation would be non-collectable. In other words,

Defendant SL Fountain View Village, LLC still hopes to win this case because Plaintiffs

reasonably relied on the admission that SLC was the correct Defendant. Defendant SL

Fountain View Village, LLC also intends to argue that SLC is the responsible entity despite

its representations to the Court on October 20, 2010, that SLC has nothing to do with the

nursing facility. Such disingenuous gamesmanship cannot be tolerated by courts of civil

justice.

The Court also has reason to doubt the representations made by counsel during the

hearing on October 20, 2010. As noted above, Stephen Levy stated under penalty of perjury

that SLC had a management agreement with SL Fountain View Village, LLC. In addition,

information available on the Internet suggests that SLC is not a mere shell corporation. The

website www.seniorlifestyle.com is copyrighted by SLC. It is an extensive website

concerning the business of SLC and states that the corporation has created premier residential

communities since 1985. See http://www.seniorlifestyle.com/ about-us/about-us-landing

(last visited 10/21/10). The website has a section titled “Management Services,” which states

that SLC “has built a proven record of operating retirement communities with sound fiscal

management and a capable, caring staff” – suggesting that SLC in fact is in the business of

managing entities like Fountain View Village. See http://www.seniorlifestyle.com/

management-services/management-services-landing-page (last visited 10/21/10). The

website contains information about SLC’s senior management, including a Chairman, CEO,

Executive Vice President, CFO, COO, General Counsel, four other Vice Presidents, and

other employees – hardly the description of an inactive shell corporation. This information

and the sworn declaration of Mr. Levy contradict counsel’s assertion that SLC is merely a

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shell that has no relationship with the nursing facility in this case.

All of these facts notwithstanding, the Court is also concerned about the due process

implications of requiring SL Fountain View Village, LLC and Senior Lifestyle Management,

LLC to go to trial on short notice. Counsel has been unable to articulate a difference between

their defense and the defense of SLC at trial, but a defendant typically is allowed to develop

its own defenses even if it is the same as another defendant’s.

II. Where do we go from here?

Trial starts in three business days. For reasons discussed above, the Court will not

postpone the trial. After considerable thought, the Court has settled on the following

approach to trial:

1. Plaintiffs will be permitted to amend the complaint before trial to add Senior

Lifestyle Management, LLC or any other related entity as a Defendant, provided Plaintiffs

have a Rule 11 basis for doing so. Service should be completed by normal procedures.

2. The claims against SL Fountain View Village, LLC and any other new

Defendant will be stayed. Trial will proceed against SLC. SLC will be held at trial to its

longstanding admission that it is the operator and licensee of Fountain View Village. SLC

will not be permitted to deny this admission at trial or present evidence or argument contrary

to this admission.

3. If Plaintiffs prevail at trial and conclude that they cannot collect against SLC,

the Court will entertain a post-trial motion for summary judgment against the stayed

Defendants based on res judicata or similar doctrines. If Plaintiffs do not prevail, the Court

will entertain a similar motion from the stayed Defendants. The Court has not decided how

it will rule on such motions, but they present the possibility that a second trial will not be

needed. If the Court denies such a motion, it will then address how to resolve the remaining

claims against the remaining parties.

4. Because SLC will be the only Defendant at trial, defense counsel’s conflict of

interest concerns will be allayed.

5. The Court is concerned about the contradictory representations made by

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defense counsel in the last few hearings, particularly the direct contradiction between defense

counsel’s adamant assertion that SLC is a shell corporation that does not have a management

agreement with SL Fountain View Village, LLC on one hand, and Mr. Levy’s declaration

under penalty of perjury that it does have such an agreement, along with the website’s clear

statement that SLC provides management services, on the other hand. The Court will

address these concerns after trial.

DATED this 22nd day of October, 2010.

Case 2:09-cv-00726-DGC Document 254 Filed 10/22/10 Page 8 of 8