Court Opinion

ID: 9839135
Source: CourtListenerOpinion
Date Created: 2023-09-11 20:05:53.027913+00
Date Added: 2024-06-11T09:12:28.275681
License: Public Domain

Filed 9/11/23 Worldwide Aircraft Services v. Fresno Unified School Dist. CA5

                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                       FIFTH APPELLATE DISTRICT

 WORLDWIDE AIRCRAFT SERVICES, INC.,
                                                                                             F084741
           Plaintiff and Appellant,
                                                                             (Super. Ct. No. 20CECG00607)
                    v.

 FRESNO UNIFIED SCHOOL DISTRICT,                                                          OPINION
           Defendant and Respondent.

         APPEAL from a judgment of the Superior Court of Fresno County. D. Tyler
Tharpe, Judge.
         Law Office of Robert F. Keehn, Robert F. Keehn; Law Office of Josiah Young,
Josiah Young and Michael D. McClelland, for Plaintiff and Appellant.
         Klein, Hockel, Iezza & Patel, Jonathan Allan Klein and Sweta H. Patel, for
Defendant and Respondent.
                                                        -ooOoo-
         Fresno Unified School District (“FUSD”) operates an employee healthcare plan
(“the Plan”). While C.H.—an enrollee in the Plan—was traveling abroad, she fell
critically ill. Her husband arranged an emergency medical flight back to California
through Worldwide Aircraft Services, Inc. (“Worldwide”).
       The Plan authorized the flight and agreed it was medically necessary.1 After
Worldwide completed its service, it billed the Plan approximately $1.3 million for the
flight. The Plan paid Worldwide approximately $115,000, an amount Worldwide found
unsatisfactory.
       Worldwide sued the Plan, alleging claims for breaching an implied contract,
quantum meruit, and unjust enrichment. FUSD appeared on the Plan’s behalf and
demurred to the complaint.
       Ultimately, the trial court sustained the demurrer, finding FUSD and the Plan were
separate entities, but the Plan was nonetheless immune under the Government Claims
Act. (Gov. Code, § 810 et seq.) The court alternatively concluded Worldwide otherwise
failed to state a proper claim, and judgment was entered in the Plan’s favor.
       On appeal, Worldwide argues (1) it properly asserted claims and (2) the Plan is not
entitled to immunity because it is not a government entity as defined by statute. For
purposes of demurrer only, we agree and reverse the judgment.
                                     BACKGROUND
       The following pertinent facts and claims are based on the complaint2 Worldwide
filed against the Plan and reflect the fact that, “[b]ecause this case comes to us on
demurrer, we have assumed the facts pleaded as true ….” (Mathews v. Becerra (2019)
8 Cal.5th 756, 787 (Mathews).) Our summary also includes some facts gleaned from the
Plan’s comprehensive booklet, of which the trial court took judicial notice.

       1 “This case comes to us at the demurrer stage, so for present purposes we” have
assumed the truth of Worldwide’s factual allegations. (Brown v. USA Taekwondo (2021)
11 Cal.5th 204, 209.)
       2 Technically, the facts are taken from the third amended complaint. The trial
court separately sustained a demurrer to all three complaints, and its written rulings each
time focused largely on the specific amendments at issue. For simplicity, we refer to the
court’s ruling as a single document.

                                              2.
Factual Allegations
       The Plan is “a self-insured, non-federal governmental plan providing certain
benefits to eligible employees (current and retired) of the Fresno Unified School District
and their dependents.” It is “contracted with Anthem Blue Cross, an organization
providing [a] [n]etwork of health care providers.” The Plan “expressly contemplates that
legal action may be commenced against the” Plan. It is “neither a ‘public entity’ nor a
‘local public entity,’ ” as defined in the Government Code.
       C.H., a beneficiary under the Plan, “was afflicted with a life-threatening infection
while visiting Switzerland” and “required immediate air medical transportation.” The
Plan “issued [a] written pre-authorization” to Worldwide “for air medical transportation,”
“acknowledg[ing] that such transport was medically necessary.” Worldwide “did not
have a pre-negotiated contract with” the Plan “and was not part of [its] provider
network.” The Plan “knew or should have known” Worldwide “would charge its usual
and customary rate for [air-medical-transportation] services ….”
       When Worldwide billed the Plan, the Plan “proceeded to assess, process,
negotiate, and remit partial payment”—“a fraction of the amount billed ….” The partial
payment did not satisfy either Worldwide’s “own usual and customary rate or ‘100% of
Usual, Customary and Reasonable Charges’ ” under the Plan. The Plan’s “ ‘Usual,
Customary and Reasonable Charges’ ” include the fact “[t]he amount … shall be
determined by the Plan.”
       The Plan “benefitted” from Worldwide’s transportation by “effectively fulfill[ing]
[its] obligation to provide medically necessary care ….” The Plan, however, “grossly
underpaid … for the services rendered.”
Causes of Action
       Worldwide alleged three causes of action. First, it claimed “damages pursuant to
breach of an implied-in-fact contract inferred from” the parties’ conduct. It asserted the

                                             3.
Plan was “obligated … to pay ‘100% of Usual, Customary and Reasonable Charges’ ”
“for air ambulance transportation.”
       “In consideration for [Worldwide’s] agreement to provide air medical
transportation …, [the Plan] agreed to reimburse [Worldwide] for the expenses [it]
incurred for transport ….” “[T]he appropriate level of reimbursement could be less than,
equivalent to, or even more than [Worldwide’s] own usual and customary rate.” Both
Worldwide and the Plan “intended and assented” to receive and pay, respectively,
compensation “for the services rendered.” The Plan “breached the implied-in-fact
contract … by remitting only a fraction of the billed charges ….”
       Second, Worldwide alleged it was entitled to recover in quantum meruit. It
claimed it expected to receive compensation and its services benefited the Plan by
“fulfill[ing]” an “obligation[] to provide medically necessary care to” an enrollee. But
the Plan “failed and refused” to properly compensate Worldwide.
       Last, Worldwide believed the Plan “would be unjustly enriched by failing to pay
[Worldwide] the difference between the[] partial payment … and ‘100% of Usual,
Customary and Reasonable charges’ for the benefit conferred upon” the Plan. All told,
Worldwide sought “$1,348,247.12 or … an amount determined by [a] trier of fact ….”
Demurrer
       FUSD, appearing on the Plan’s behalf, demurred to the complaint. The trial court
sustained the demurrer, ruling the Plan was immune under the Government Claims Act.
The court held “the Plan may be sued in its own right and is … a proper defendant,” but
“[g]iven the extensive control and involvement of … FUSD in the Plan’s administration
and affairs, and the Plan’s inseparable affiliation with … FUSD, it is imbued with the
character of a public entity.”
       Alternatively, the court held Worldwide failed to adequately state a claim.
Judgment was subsequently entered on the Plan’s behalf.

                                            4.
                                       DISCUSSION
       This appeal presents a deceptively simple question: did Worldwide state a claim
sufficient to survive a demurrer? We hold that it did.
       Worldwide adequately alleged the Plan was both its own entity and not a public
entity as defined by the Government Code. It also properly pleaded both entitlement to
reasonable compensation in quantum meruit and an unreasonable payment. Accordingly,
we reverse the judgment.
I. Standard of Review
       “[T]he standard of review is well settled. We give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we
treat the demurrer as admitting all material facts properly pleaded, but do not assume the
truth of contentions, deductions or conclusions of law. [Citations.] When a demurrer is
sustained, we determine whether the complaint states facts sufficient to constitute a cause
of action.” (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) “ ‘ “[A]
complaint otherwise good on its face is subject to demurrer when facts judicially noticed
render it defective.” ’ ” (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)
       “[T]he complaint ordinarily is sufficient if it alleges ultimate rather than
evidentiary facts.” (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550 (Doe).)
“ ‘ “While it is true that pleading conclusions of law does not fulfill this requirement, it
has long been recognized that ‘[t]he distinction between conclusions of law and ultimate
facts is not at all clear and involves at most a matter of degree. [Citations.] For example,
the courts have permitted allegations which obviously included conclusions of law and
have termed them “ultimate facts” or “conclusions of fact.” ’ [Citations.] What is
important is that the complaint as a whole contain sufficient facts to apprise the
defendant of the basis upon which the plaintiff is seeking relief.” ’ ” (Thompson v. Spitzer
(2023) 90 Cal.App.5th 436, 452 (Thompson).)

                                              5.
       “Likewise, ‘ “[t]he particularity required in pleading facts depends on the extent to
which the defendant in fairness needs detailed information that can be conveniently
provided by the plaintiff; less particularity is required where the defendant may be
assumed to have knowledge of the facts equal to that possessed by the plaintiff.
[Citation.]” [Citation.] There is no need to require specificity in the pleadings because
“modern discovery procedures necessarily affect the amount of detail that should be
required in a pleading.” ’ ” (Thompson, supra, 90 Cal.App.5th at p. 452.)
II. Public Entity
       Worldwide argues the trial court incorrectly ruled the Plan was a public entity.
FUSD argues the Plan is “indisputabl[y] … a public entity” because school districts are
public entities. We conclude Worldwide, under the prevailing standards of review, has
the better argument.
       In the complaint, Worldwide alleged the Plan was its own entity, “contemplat[ing]
that legal action may be commenced [directly] against” itself. Worldwide also alleged
the Plan was “neither a ‘public entity’ nor a ‘local public entity’ ” under the Government
Code. This is an ultimate fact, not a legal conclusion. (Esparza v. Kaweah Delta Dist.
Hospital (2016) 3 Cal.App.5th 547, 552, fn. 4 [pleading compliance with the “claims
statute” is “an ultimate fact,” “not a conclusion of law.”]; Code Civ. Proc., § 452
[complaint’s “allegations must be liberally construed, with a view to substantial justice
between the parties”]; see Doe, supra, 42 Cal.4th at p. 550 [complaint need not allege
“evidentiary facts”].)
       The trial court agreed the Plan—not FUSD—was the proper defendant. But the
court erred in further concluding the Plan was “imbued with the character of a public
entity.” In our view, that conclusion assumes too much. Liberally construing the
complaint “means that the [we] draw[] inferences favorable to the plaintiff, not the
defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

                                             6.
       The record did not contain sufficient information to conclusively establish the Plan
is a public entity under the Government Claims Act. It appears further evidence is
necessary to clarify FUSD’s involvement with the Plan, the Plan’s involvement with
Anthem Blue Cross, and the Plan’s status or lack thereof as a distinct legal entity. The
record is largely silent on these facts.3
       In arguing otherwise, FUSD cites Sheppard v. North Orange County Regional
Occupational Program (2010) 191 Cal.App.4th 289 (Sheppard). FUSD claims Sheppard
held “a regional occupational program established by four public school districts[] was a
public entity even though the defendant was not the school district itself.”
       However, Sheppard “conclude[d] the … complaint alleged [the plaintiff] was
directly employed by a political subdivision of the state” because a “public school district
is a political subdivision of the State of California.” (Sheppard, supra, 191 Cal.App.4th
at p. 301.) The conclusion was based on the fact the employer—“a regional occupational
program”—is “established by one or more public school districts under Education Code
[section] 52301.” (Ibid.) More importantly, the Court of Appeal held only that it was
“satisfied [plaintiff] … pleaded sufficient facts to show … employment as an instructor
by a regional occupational program constituted direct employment by a political
subdivision of the state.” (Ibid., emphasis added.)
       In other words, Sheppard’s public-entity discussion related solely to pleading—it
did not establish law. (See County of Santa Clara v. Superior Court of Santa Clara
(2023) 14 Cal.5th 1034, 1055-1056 (Santa Clara) [“Sheppard …, to the extent it relied
on the Government Claims Act, … failed to undertake a careful review of the claim
before it …. To the extent it held that a quantum meruit claim against the public agency
was unavailable more generally, Sheppard is plainly distinguishable because an express

       3 At best, the Plan’s booklet establishes FUSD’s “Joint Health Management
Board” is “the sponsor of the Fresno Unified School District Health Care Plan ….” The
board’s composition includes many nonpublic members—at least “as of July 1, 2012[.]”

                                             7.
contract existed between the parties.”].) This case is quite the opposite. There is no
similar statute authorizing or enabling a school district to establish a healthcare plan. (Cf.
Orthopedic Specialists of Southern California v. Public Employees’ Retirement System
(2014) 228 Cal.App.4th 644, 646 (Orthopedic) [“CalPERS is a unit of the Government
Operations Agency. (Gov. Code, § 20002.)”]; United Nat. Maintenance, Inc. v. San
Diego Convention Center, Inc. (9th Cir. 2014) 766 F.3d 1002, 1006, 1012 [convention
center a public entity because “it [was] a wholly owned subsidiary and instrumentality
of” city and “California has granted cities the statutory authority to construct public
assembly or convention halls”].)
       Although FUSD cites to federal statutes, those laws are definitional, and do not
authorize or enable school-district plan establishment. (See, e.g., 29 U.S.C. § 1002(32)
[“ ‘governmental plan’ means a plan established or maintained for its employees by the
Government of the United States, by the government of any State or political subdivision
thereof”]. Most importantly, Worldwide sufficiently pleaded the Plan was both its own
entity and not a governmental entity under the Government Claims Act. We must accept
these factual allegations as true. (See Silguero v. Creteguard, Inc. (2010)
187 Cal.App.4th 60, 64 [“ ‘One of the dangers of winning on demurrer is that you are
stuck, on appeal, with your opponent’s version of the facts[.]’ ”].) The trial court erred in
sustaining the demurrer based on the Plan’s status as a government entity.4

       4 Our conclusion rests solely on the pleadings and judicially noticed facts. We do
not foreclose the possibility the Plan can establish governmental status under the
Government Claims Act during the course of the litigation.

                                              8.
III. Quantum Meruit
       FUSD argues Worldwide, by focusing instead on other aspects of the court’s
ruling, has failed “to establish [its] quasi-contract claims were properly pled.”5 We
disagree and find Worldwide properly alleged a claim in quantum meruit.
       “Quantum meruit refers to the well-established principle that ‘the law implies a
promise to pay for services performed under circumstances disclosing that they were not
gratuitously rendered.’ [Citation.] To recover in quantum meruit, a party need not prove
the existence of a contract [citations], but it must show the circumstances were such that
‘the services were rendered under some understanding or expectation of both parties that
compensation therefor was to be made ….’ ” (Huskinson & Brown v. Wolf (2004)
32 Cal.4th 453, 458 (Huskinson).)
       Quantum meruit “manifests ‘ “ ‘a general principle, underlying various legal
doctrines and remedies, that one person should not be permitted unjustly to enrich
himself at the expense of another, but should be required to make restitution of or for
property or benefits received, retained, or appropriated, where it is just and equitable that
such restitution be made, where such action involves no violation or frustration of law or
opposition to public policy, either directly or indirectly.’ ” ’ ” (Santa Clara, supra,
14 Cal.5th at p. 1050.) “ ‘The idea that one must be benefited by the goods and services
bestowed is … integral to recovery in quantum meruit; hence courts have always required
that the plaintiff have bestowed some benefit on the defendant as a prerequisite to
recovery.’ ” (Chodos v. Borman (2014) 227 Cal.App.4th 76, 97.)

       5 FUSD presents this point as Worldwide forfeiting the opportunity to claim it
properly pleaded a cause of action. Even if we agreed, “an appellate court may review a
forfeited claim—and ‘[w]hether or not it should do so is entrusted to its discretion.’ ” (In
re Sheena K. (2007) 40 Cal.4th 875, 887, fn. 7.) Because we review de novo a trial court
ruling sustaining a demurrer, and the law demands liberal construction, we would
exercise our discretion to decide whether the complaint properly alleged a claim. (Shetty
v. HSBC Bank USA, N.A. (2023) 91 Cal.App.5th 796, 800; Code Civ. Proc., § 452.)

                                              9.
       Here, Worldwide alleged it contacted the Plan, the Plan “issued [a] written pre-
authorization” for “medically necessary” transportation, benefitted from the
transportation, but “grossly underpaid … for the services rendered ….” No further
allegation is required because there is no reasonable inference transportation was
gratuitous. Indeed, the fact the Plan actually paid is evidence highlighting the point.
       We also find public policy is not frustrated. If the Plan is not a public entity, then
public policy is not implicated. If it is a public entity, there is no reason to treat public
entities involved in health care differently than private entities. (Cf. Santa Clara, supra,
14 Cal.5th at p. 1051 [“ ‘nothing in the statutory scheme … suggests that state and other
government health [care service plans] should be treated differently than private [health
plans], nor [is there] any ‘ “significant public policy reason to exempt a state licensed
[health care service plan] from liability … under the [Knox-Keene] Act simply because it
is operated by a public rather than a private entity.” ’ ”].)6 “ ‘ “The prompt and
appropriate reimbursement of emergency providers ensures the continued financial
viability of California’s health care delivery system. ... [D]enying emergency providers
judicial recourse to challenge the fairness of a health plan’s reimbursement
determination[] allows a health plan to systematically underpay California’s safety-net
providers ….” ’ ”7 (Id. at p. 1052.)
       Finally, FUSD repeatedly argues its plan—the Plan’s booklet—makes clear it has
complete discretion to determine payment: “The Plan expressly provides that ‘[t]he

       6 “ ‘ “The Knox-Keene Act is a comprehensive system of licensing and regulation
under the jurisdiction of the Department of Managed Health Care.” ’ ” (Santa Clara,
supra, 14 Cal.5th at p. 1041; Health and Saf. Code, § 1340 et seq.) Although the parties
agree the Knox-Keene Act has no application in this case, the public policy concerns
relating to healthcare are nonetheless identical and pervasive.
       7 There is no reason to believe out-of-state emergency providers deserve less
recourse. This is true because we believe the overriding policy concerns focus not on the
provider, but rather on ensuring Californians receive appropriate healthcare services
without regard to their immediate location.

                                              10.
amount of Usual, Customary and Reasonable Charges … shall be determined by the
Plan.’ ” (Emphasis in original.) The argument misses the mark.
       When recovery is available, “the amount of []payment is governed either by
contract (when the parties have a preexisting contract) or by the quasi-contractual remedy
of quantum meruit (when they do not) ….” (Long Beach Memorial Medical Center v.
Kaiser Foundation Health Plan, Inc. (2021) 71 Cal.App.5th 323, 338.) There is no
contract between these parties. Put simply, the Plan’s ability to determine the amount it
pays controls only its responsibility to C.H., not a noncontracting third party like
Worldwide.8
       It is true, as FUSD points out, the courts in Orthopedic, supra, 228 Cal.App.4th
644 and Pacific Bay Recovery, Inc. v. California Physicians’ Services, Inc. (2017)
12 Cal.App.5th 200 (Pacific) both affirmed sustained demurrers involving medical
quantum meruit claims. We find those cases distinguishable and inapposite. Both cases
involved nonemergency services. (E.g., Orthopedic, supra, at p. 649; Pacific, at pp. 214-
215.) In Orthopedic, the court explicitly recognized nonemergency providers are “free to
pick and choose [their] patients and focus on those with the greatest ability to pay ….”
(Orthopedic, at p. 649.) Emergency providers are different: “the exigent circumstances
facing a patient in need of emergency services helps explain why emergency care
providers must provide emergency services without first questioning the patient's ability
to pay.” (Pacific, at p. 209.)
       Perhaps more importantly, both Orthopedic and Pacific relied on the Knox-Keene
Act in limiting potential compensation. (Orthopedic, supra, 228 Cal.App.4th at pp. 646,
648 [“evidence of coverage” “contract” “regulated by the Department of Managed Health

       8 We pause to note in the ordinary case, a third party like Worldwide generally
sues the insured to recover its losses when an insurer underpays on a claim. This case, as
FUSD notes, is somewhat unusual in that regard. But we see that as no reason to deny
relief on this appeal.

                                             11.
Care” and regulation “governed” compensation]; Pacific, supra, 12 Cal.App.5th at p. 215
“Pacific Bay is using quantum meruit to recover something to which it is not entitled
under the Knox-Keene Act or its applicable regulations.”]; see Santa Clara, supra,
14 Cal.5th at p. 1041 [“ ‘ “The Knox-Keene Act is a comprehensive system of licensing
and regulation under the jurisdiction of the Department of Managed Health Care.” ’ ”].)
The parties here agree the Knox-Keene Act is inapplicable. Accordingly, we do not find
these cases persuasive.9
       “ ‘[O]ur inquiry ends and reversal is required once we determine a complaint has
stated a cause of action under any legal theory.’ ” (Hernandez v. Lopez (2009)
180 Cal.App.4th 932, 938.) Reading the complaint liberally and as a whole, we conclude
Worldwide sufficiently pleaded an action in quantum meruit. Reversal is required.
IV. Remaining Claims—Implied-Contract Breach and Unjust Enrichment
       The remaining alleged actions—unjust enrichment and implied-contract breach—
do not survive. Unjust enrichment is inapplicable where other “common civil law and
statutes already provide[] a method to achieve justice for the wrongs allegedly
committed ….” (LeBrun v. CBS Television Studios, Inc. (2021) 68 Cal.App.5th 199, 211-
212.) The implied-contract claim falls short because there is no indication “the parties
reached any sort of agreement as to the rate [the Plan] would pay [Worldwide].”10
(Pacific, supra, 12 Cal.App.5th at p. 216.)

       9 We also find it dubious Orthopedic, to the extent it meant what it said in finding
quantum meruit improperly pled, stated, “The contract says what it says.” (Orthopedic,
supra, 228 Cal.App.4th at p. 648.) The entire point of quantum meruit is that there is no
governing contract. (Huskinson, supra, 32 Cal.4th at p. 458.)
       10 The complaint alleges the Plan “implicitly agreed to pay” Worldwide an amount
“that … could be less than, equivalent to, or even more than” the billed amount. Clearly,
there is no specific agreement.

                                              12.
                                       CONCLUSION
       This appeal resolves issues solely related to pleading and demurrer. “Whether
[Worldwide] will succeed on the merits after the development of an evidentiary record
remains to be seen ….” (Mathews, supra, 8 Cal.5th at p. 787; Roger v. County of
Riverside (2020) 44 Cal.App.5th 510, 533 [“ ‘Whether [Worldwide] can produce at trial,
or in response to a motion for summary judgment, evidence that will in fact support all or
any of [its] allegations ... is another matter.”].)
       We do not decide whether the Plan is its own legal entity, is or is not a
governmental entity defined by the Government Claims Act, or that it is not entitled to
governmental immunity. In sum, we conclude only (1) the record does not now justify a
finding as a matter of law that the Plan is a public entity entitled to immunity, and (2) that
Worldwide has properly alleged a claim in quantum meruit.
       On remand, it is likely the parties will continue to litigate the Plan’s status vis-à-
vis the Government Claims Act. If there is a determination the Plan falls under the
Government Claims Act—either itself or as FUSD—the trial court will still need to
decide whether governmental immunity is appropriate. (Santa Clara, supra, 14 Cal.5th
1034, 1056 [“we are not persuaded that the Legislature intended to foreclose all quantum
meruit claims against public entities when it drafted the Government Claims Act’s
immunity and liability provisions”].) We express no view on these issues, and neither the
trial court nor the parties should construe this opinion as expressing a particular view.

                                               13.
                                      DISPOSITION
       The judgment is reversed. The order sustaining the demurrer is vacated. The trial
court is directed to conduct proceedings consistent with this opinion. Each party to bear
its costs. (Cal. Rules of Court, rule 8.278(a)(5).)

                                                                           SNAUFFER, J.
WE CONCUR:

DETJEN, Acting P. J.

PEÑA, J.

                                             14.