Court Opinion

ID: 9730981
Source: CourtListenerOpinion
Date Created: 2023-08-26 15:29:44.776506+00
Date Added: 2024-06-11T18:26:11.866554
License: Public Domain

WOLFF, Judge,
concurring in part and dissenting in part.
I agree with the analysis of the principal opinion, but come to a different result. Chapter 198 RSMo gives priority, in every sense, to the health and safety of the nursing home residents. Consistent with Chapter 198, this Court should affirm the trial court’s order reimbursing the amount of wages that the subsequent operator paid to the nursing home employees.
The statute and the trial judge’s order appointing the receiver give the receiver broad powers to provide for the health and safety of the residents in just this kind of situation. The receivership was ordered when the nursing home operators failed to pay their employees. According to the division of aging, the failure to meet payroll created a “substantial risk that there will not be sufficient trained staff’ to care for the residents. The situation, according to the judge’s order, was an emergency, and no one disputes this.
The trial court appointed the receiver on August 4, 1998, and gave him broad powers to receive and expend the funds of the facility for the benefit of the residents. As I read the principal opinion, the receiver could have used the receivables, as they *279were paid to him, to pay the staff wages, even though the wages had been earned and were payable before the receivership. This certainly would have been within the receiver’s statutory power, cited by the principal opinion, to do “all acts necessary or appropriate to conserve the property and promote the health, safety or care of the residents of the facility.” Section 198.112(9).
Under the statute, as interpreted by the principal opinion, the receiver probably could have gone to a bank and borrowed money to pay the wages of the residents’ caregivers. That would have passed the test of reasonableness, and payments to the bank would presumably have trumped the security interests in receivables protected by section WS.l^llO).1
Instead, the receiver — or the state division of aging — arranged for a nursing home operator, N & R of Sweet Springs, Inc., to take charge of the facilities. Section 198.Í12(2)(b).2 N & R paid the back wages and kept the facilities operating for their residents. Because N & R was ready, willing and able to care for the residents, the trial court terminated the receivership effective August 15, 1998 — a period of less than two weeks.
The receiver requested that the trial court pay N & R the amounts paid for back wages from the Medicaid reimbursements that were part of the receivables. The request was made in January 1999, months after the receivership had been terminated. At that point, N & R was providing care, and there was no emergency-
The majority seems to imply that it is improper for N & R, appointed by the receiver, to pay the unpaid payroll and then get reimbursed. But the majority seems to ignore the fact that the receiver expected N & R to operate the home during the receivership, which included paying the employees so they would stay and care for the residents.
The crucial fact for the principal opinion simply is timing. If the receiver had paid the wages during the receivership in August 1998, that clearly would have been a reasonable expenditure to head off or to end an emergency affecting the health or safety of the residents. If the receiver had gone to a bank, presumably the same result would have been reached. But here the receiver went to the subsequent operator, which advanced the funds in order to pay and to keep the employees. Thus the emergency was abated by the money advanced by N & R.
According to the principal opinion, now it is “reasonable” to honor the security interest that Healthcare Financial Partners Funding, Inc., held before the receivership. The only exception, now that the emergency is abated, is based on uncon-scionability, as that term is used in section 198.115.1.3 While unconscionability usual*280ly is viewed at the time of formation of an agreement, in cases such as this it can only be determined after the fact. Miles v. Werle, 977 S.W.2d 297, 304 (Mo.App.1998); Dorr v. Darr, 950 S.W.2d 867, 872 (Mo.App.1997). As between the creditor with a security interest in receivables and a creditor-operator that advanced funds to keep the homes in operation for the benefit of the residents, a decision favoring the former is unconscionable.
Under the result reached by the principal opinion, the nursing home residents must be held as hostages in order to get the staff its pay. If the receiver makes the staff wait until the Medicaid or other reimbursements arrive, some staff — especially those paid barely above minimum wage — may quit. This in turn would frustrate the purposes of the act because it is necessary to retain qualified staff in order to promote the residents’ health, care, or safety. So it is puzzling as to why the receiver cannot engage an operator to manage the facilities during the receivership, pay the employees and avert a crisis — and, then, to expect repayment from the incoming receivables.4 For what are accounts receivables? Nothing more than a balance sheet term used to identify the money owed to a business for services rendered or goods sold. Businesses pay their expenses, including payroll, from these funds. An interest in accounts receivable does not supersede the interests of wage-earners whose pay is necessary to keep the business going.
If the receiver cannot obligate the incoming receivables to repay this loan to cover employees’ back wages, it is difficult to see how a receiver in the future is going to be able to make this kind of arrangement with an interim manager or a new operator. It seems obvious that the receiver not only expects, as here with N & R, but also requires the manager or successor-operator he hires to manage the home throughout the receivership. Such management may include advancing payrolls so employees will continue to work, and the residents will continue to be cared for and protected.
However, based on language of the principal opinion, the receiver will have to keep the facility in crisis — and hold open the receivership — in order to get priority as to the funds to keep the facility operating for the benefit of the residents. This runs contrary to the policy of the act. Steve Vossmeyer & Diane Felix, The Missouri Omnibus Nursing Home Act of 1979: A Legislative History, 24 St. Louis U. L.J. 617, 649 (1981). By continuing to keep the facility in receivership and, thus, in perceived crisis, the residents will run the risk of being in danger, as employees may decide to leave the sinking ship.
The majority apparently finds significance in the distinction between the receiver requesting funds to pay for missed payrolls verses reimbursing a subsequent *281operator for advances it has made to pay for wages that were due. It does give guidance on how to accomplish getting priority for such funds in the future by keeping the receivership open, but I find it impossible to discern a principled difference between paying the employees in August 1998 and reimbursing the operator in February 1999 for having paid them. The emergency was, thankfully, short-lived because of the subsequent operator’s funds. But is this the thanks the subsequent operator gets for abating the emergency?
On the result reached by the principal opinion, I respectfully dissent.

. Section 198.112(10) provides:
Except as hereinafter specified in section 198.115, [the receiver] shall honor all leases, mortgages, secured transactions or other wholly or partially executory contracts entered into by the facility’s operator or administrator while acting in that capacity, but only to the extent of payments which become due or are for the use of the property during the period of the receivership;

. Section 198.112(2) provides that the receiver:
(2) May, in his discretion, either:
(a) Assume the role of administrator or manager and take control of all day-to-day operations; or
(b) Name an administrator or manager to conduct the day-to-day operations of the facility subject to the supervision and direction of the receiver;

.Section 198.115.1 states in part:
1. A receiver may not be required to hon- or any lease, mortgage, secured transaction *280or other wholly or partially executory contract entered into by the facility’s operator or administrator while acting in that capacity, if the agreement is unconscionable. Factors which shall be considered in determining the unconscionability include, but are not limited to, the following:
(1) The person seeking payment under the agreement was an affiliate of the operator or owner at the time the agreement was made;
(2) The rental, price, or rate of interest required to be paid, under the agreement was substantially in excess of a reasonable rental, price or rate of interest at the time the agreement was entered into.

. Such expenditures should be deemed to come within the purview of the receiver’s duties as they are both "reasonable” and necessary "to conserve the property and promote the health, safety or care of the residents of the facility.” Section 198.112(8) and (9).