Vargas-Colón v. Fundación Damas, Inc.

• Decision Date: 19 January 2016
• Docket Number: CIVIL NO. 14-1909 (GAG)
• Citation: 157 F.Supp.3d 106
• Parties: Lizbeth Vargas-Colón, et al., Plaintiffs, v. Fundación Damas, Inc., Banco Popular De Puerto Rico, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

157 F.Supp.3d 106

Lizbeth Vargas-Colón, et al., Plaintiffs,

v.Fundación Damas, Inc., Banco Popular De Puerto Rico, et al., Defendants.

CIVIL NO. 14-1909 (GAG)

United States District Court, D. Puerto Rico.

Signed January 19, 2016

David Efron, for Plaintiff or Petitioner.

Freddie Perez-Gonzalez ; Jose Julian Blanco-Dalmau; Alejandro J. Cepeda-Diaz ; Luis E. Padron-Rosado, for Defendant or Respondent.

OPINION AND ORDER

GUSTAVO A. GELPI, United States District Judge

In what appears to be a concerted tautological strategy to resuscitate claims in light of a medical malpractice settlement's interruption by a bankruptcy proceeding, Lizbeth Vargas Colón (“Vargas Colón”), in representation of her minor daughter L.C.V. (“Minor L.C.V.”), and her sons Jaime Manuel Cedeño Vargas and Jaime Alexander Cedeño Vargas (“sibling plaintiffs”) (collectively “Plaintiffs”) filed this action under diversity jurisdiction against Fundación Damas, Inc. (hereinafter “Fundación”), Banco Popular de Puerto Rico (hereinafter “BPPR”), and any unknown insurance companies liable for the actions of Fundación and BPPR (“Insurance Companies”) (collectively “Defendants”).¹ (See Docket No. 9)

Plaintiffs bring a direct and vicarious liability claim of medical malpractice against Fundación; pursuant to Articles 1802 and 1803 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, §§ 5141

, 5142, for negligent acts and omissions committed by Hospital Damas, a subsidiary of Fundación and its agents; a direct action against any of Defendants' insurers pursuant to P.R. Laws Ann. tit. 26, § 2003 ; and a negligence action against BPPR, as Trustee of the Hospital Damas Self Insurance Trust Fund (“Damas Trust”), a trust established pursuant to Puerto Rico's Insurance Code, P.R. Laws Ann. tit. 26, § 4105 (“Section 4105 ”) that requires healthcare professionals and institutions maintain a minimum threshold of financial solvency to be able to meet potential malpractice claims and in order to be licensed to provide medical care. (Docket No. 9.)

Pending before this Court are Fundación's motion for summary judgment, (Docket Nos. 48 and 49), and BPPR's motion to dismiss, (Docket No. 50.) For the foregoing reasons, after reviewing the parties' submissions and pertinent law, Fundación's motion for summary judgment is GRANTED and BPPR's motion to dismiss is GRANTED .

I. Relevant Facts and Procedural Background

The facts that give rise to the instant and prior judicial proceedings date back to 2000, when Vargas Colón gave birth to Minor L.C.V. at Hospital Damas in Ponce, Puerto Rico. (Docket No. 9 ¶¶ 15-21.) On November 29, 2000, Minor L.C.V. was delivered by caesarean section

. Id. Vargas Colón was attended by Doctor Nelson Velez (“Dr. Velez”) and assisting staff at Hospital Damas. (Docket No. 9 ¶¶ 15, 17.) Plaintiffs posit that Minor L.C.V. suffered severe and permanent injuries at childbirth while under the care of Dr. Velez and the staff at Hospital Damas. Id. ¶ 19. They contend that, as a result of Fundación's negligent care, Minor L.C.V. suffered multiple severe neurological defects, among them: mental retardation

, microcephaly, and brain cell death and brain atrophy.² Id. ¶ 18. Plaintiffs argue Fundación departed from the standard of care of the medical profession when treating Vargas Colón during the delivery of Minor L.C.V., it is liable under Article 1802 of the Puerto Rico Civil Code. (Docket No. 9 ¶ 23.) Moreover, Plaintiffs contend that Fundación is vicariously liable, under Article 1803 of the Puerto Rico Civil Code, for the negligent acts and omissions of the other defendants and medical staff, “in monitoring, supervising and granting privileges to said nurses and doctors.” (Docket No. ¶ 25.)

a. Prior judicial proceedings

In January 2007, Minor L.C.V., a minor represented by her mother, Vargas Colón filed suit before this Court, Case No. 07–1032 (JAG), invoking Articles 1802 and 1803 of the Puerto Rico Civil Code holding Hospital Damas directly and vicariously liable for the injuries that Minor L.C.V. endured as a result of the negligent care afforded to Vargas-Colón by the medical staff at Hospital Damas during the delivery of Minor L.C.V. (“2007 Complaint”). (Docket No. 49 ¶ 2.) Said case included as defendants “Hospital Damas” and “John Doe Corporation”, as the “owner and operator of a hospital of the same name, located in Ponce, Puerto Rico,” Dr. Nelson Vélez Martínez and Sindicato de Aseguradores (“SIMED”), and claimed damages in excess of $10,000,000 against the defendants. Id. ¶¶ 2-4.

Hospital Damas' successor entity, Hospital Damas, Inc. (hereinafter “HDI”), entered into a confidential settlement agreement with Plaintiffs and jointly requested the dismissal of the case.³ Id. ¶ 5. This settlement agreement provided for a sum of money to the paid to Minor L.C.V. in eight separate installments over eight years. Id. This Court approved the settlement and entered judgment, dismissing all claims with prejudice. (Docket No. 49 ¶ 10.)

After making the first of the payments pursuant to the settlement agreement, HDI filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code. (Docket Nos. 49 ¶ 11; 67 ¶ 11.) Minor L.C.V. and her parents took part in HDI's bankruptcy proceeding as part of the class of malpractice claimants. (Docket Nos. 44 ¶ 12; 67 ¶ 11.) Plaintiffs, along with other malpractice claimants, moved to dismiss HDI's bankruptcy petition, arguing that said petition had been fraudulently filed in bad faith. (Docket Nos. 49 ¶ 14; 67 ¶ 14). Specifically, Plaintiffs, along with other creditors, argued that the owner of Hospital Damas' license was Fundación, and not HDI, thus the bankruptcy petition was fraud and the operation of Hospital Damas was illegal. (Docket Nos. 49 ¶ 15; 65 ¶ 15.)

The Bankruptcy Court held a hearing to consider the merits of this motion and subsequently issued a thorough and well-versed Opinion and Order denying the request for dismissal and reasoning that: “Fundación Damas, a not-for-profit corporation, owns the real property on which the hospital facility known as Hospital Damas is located” and “[i]n 1987, Fundación Damas incorporated the debtor and then leased the hospital facility to the debtor.”

See In re Hospital de Damas, Inc. , 2012 WL 1190651 at *5 (Bankr.D.P.R.2012)

. Furthermore, the Bankruptcy Court concluded that HDI had been operating Hospital Damas since 1987. (Id. at 6; Docket Nos. 48 ¶ 19; 67 ¶ 19.) At the conclusion of the bankruptcy proceeding, plaintiffs in the prior action received a pro-rata distribution of their proof of claim. (Docket Nos. 49 ¶ 25; 67 ¶ 25.)

Shortly thereafter, on June 6, 2012, the plaintiffs who had settled the 2007 case, moved to amend nunc pro tunc the judgment entered on the prior settlement to include Fundación, HDI's non-bankrupt parent entity, as a party to the settlement. (Docket Nos. 49 ¶ 20; 67 ¶ 20.) The Magistrate Judge recommended that the motion be denied because the motion was improperly filed, because Fundación's absence was not a harmless clerical error, and relief against Fundación was now precluded by the prior judgment. (Docket Nos. 49 ¶ 21; 67 ¶ 21.) Over plaintiffs objections, the District Court adopted the Magistrate Judge's recommendation. (Docket Nos. 49 ¶ 22; 67 ¶ 22.) In doing so, the Court stated that “[a]s explained by the magistrate judge, the Bankruptcy Court made the factual findings that, regardless of Fundación's ownership of the property comprising the hospital, Hospital Damas, Inc. was indeed the hospital's operator since 1987, and; thus, liable for the negligence that caused Plaintiff's injuries.” (Docket No. 49–6 at 2-3.) Nonetheless, the District Court stated that it was only deciding the issue of the motion to amend judgment, and not making any substantive findings on whether plaintiffs had a cognizable claim against Fundación. The denial was grounded on Plaintiffs request not being procedurally sound. Id.

The First Circuit affirmed the District Court's ruling and went further by echoing the Court's adoption of the Bankruptcy Court's findings.

Adding belt to suspenders, the district court also declared that it was ‘not persuaded by Plaintiff's argument that Fundaci[ó]n Damas, Inc. was and is the only lawful owner and operator of the Hospital Damas and, as such, liable for the settlement agreement that led to a judgment from this court. Rather, the district court determined, the bankruptcy court had conclusively adjudicated the fact that [HDI] was ... the hospital's operator ..., and, thus, liable for the negligence that caused Plaintiff's injuries.

Vargas–Colón v. Hosp. Damas, Inc., 561 Fed.Appx. 17, 21 (1st Cir.2014)

(emphasis added). Moreover, the First Circuit also characterized its ruling as focused solely on the procedural vehicle before it, and not on whether there was any cognizable claim Plaintiffs could lodge against Fundación. See Vargas–Colón, 561 Fed.Appx. at 22 (“These issues are, at best, for another day in another case.”).

On June 27, 2012, Minor L.C.V, Vargas-Colón and her husband filed a complaint against BPPR in the Puerto Rico Court of First Instance alleging, inter alia , that BPPR's mismanagement of the Damas Trust funds “impaired” the Plaintiffs' ability to collect on her settlement judgment “in violation of Puerto Rico's Code of Insurance.” (Docket No. 49 ¶ 29.) A parallel litigation involving similar claims, but a different defendant, made its way to the Puerto Rico Court of Appeals. That court ultimately held that the Insurance Commissioner had primary jurisdiction with respect to the Damas Trust. Id. at ¶¶ 31-32. On April 18, 2013, BPPR moved to dismiss this action for want of jurisdiction and Plaintiffs voluntarily dismissed their complaint “informing the court that they were going to continue their claim with the [Insurance Commissioner].” Id. at ¶ 34.

b. The case at bar

Plaintiffs bring direct negligence and vicarious liability medical malpractice claims against Fundación, pursuant to Articles 1802 and 1803 of the Puerto Rico Civil...