Corley v. Rosewood Care Center, Inc. of Peoria

• Decision Date: 13 October 2004
• Docket Number: No. 01-3642.,No. 01-3625.,01-3625.,01-3642.
• Citation: 388 F.3d 990
• Parties: Robert N. CORLEY, individually, and as executor of the Estate of Vera M. Corley, Deceased, Plaintiff-Appellant, Cross-Appellee, and Richard L. Steagall, John P. Nicoara, The Law Firm of Nicoara & Steagall, and Sherman Cohn, Cross-Appellees, v. ROSEWOOD CARE CENTER, INCORPORATED OF PEORIA, an Illinois Corporation, Darrell Hoefling, individually and as Trustee of the Darrell Hoefling Revocable Trust, Larry Vander Maten, individually and as Trustee of the Larry Vander Maten Revocable Trust and as General Partner of the Vander Maten Family Limited Partnership, et al., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

388 F.3d 990

Robert N. CORLEY, individually, and as executor of the Estate of Vera M. Corley, Deceased, Plaintiff-Appellant, Cross-Appellee, and Richard L. Steagall, John P. Nicoara, The Law Firm of Nicoara & Steagall, and Sherman Cohn, Cross-Appellees, v. ROSEWOOD CARE CENTER, INCORPORATED OF PEORIA, an Illinois Corporation, Darrell Hoefling, individually and as Trustee of the Darrell Hoefling Revocable Trust, Larry Vander Maten, individually and as Trustee of the Larry Vander Maten Revocable Trust and as General Partner of the Vander Maten Family Limited Partnership, et al., Defendants-Appellees, Cross-Appellants.

No. 01-3625.

No. 01-3642.

United States Court of Appeals, Seventh Circuit.

Argued January 9, 2003.

Decided October 13, 2004.

Appeal from the District Court, Michael M. Mihm and Richard Mills, JJ.

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Sherman L. Cohn (argued), Washington, DC, for Plaintiff-Appellant.

Richard L. Steagall, Nicoara & Steagall, Peoria, IL, Appellee/Plaintiff-Appellee.

Steven M. Hamburg (argued), Summers, Compton, Wells & Hamburg, St. Louis, MO, for Defendants-Appellees.

Before RIPPLE, ROVNER and EVANS, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Placing an elderly parent in a nursing home is a trying experience under the best of circumstances. Running a nursing home can also be challenging; the industry is highly regulated and the customers are often anxious and unhappy about the need for nursing home services. Needless to say, when a customer believes he has been defrauded and the proprietors of the establishment have been accused not just of fraud but racketeering, emotions can be expected to run high. One would hope their respective attorneys would be able to defuse the situation and litigate the case in a dispassionate manner. No such luck here: the parties and their attorneys have chosen the scorched earth model of litigation. This relatively simple case has generated more than one thousand entries in the district court docket. The record fills a back-breaking seven bankers boxes stuffed to bursting, and the briefs on appeal do little to untangle the mess the parties have made of the case. This is the second time we have reviewed a district court's grant of summary judgment against the plaintiff in this civil RICO action. We previously reversed and remanded a grant of summary judgment because the district court halted discovery before the plaintiff had a full opportunity to prove his case. Now that the plaintiff has been given every opportunity to make his case, we affirm the district court's grant of summary judgment because the plaintiff is still unable to produce enough evidence to demonstrate a viable RICO claim against the defendants here. The defendants have cross-appealed, arguing that the district court abused its discretion in declining to sanction the plaintiff for multiplying the proceedings in an unreasonable and vexatious manner. Finding no abuse of discretion, we affirm the district court's judgment in all respects.

I.

We will assume familiarity with our first opinion in this matter and repeat only what is necessary to the resolution of this appeal. See Corley v. Rosewood Care Center, Inc. of Peoria, 142 F.3d 1041 (7th Cir.1998) (hereafter "Corley I"). The cast of characters remains unchanged: Larry Vander Maten and Darrell Hoefling own and operate corporations and other entities that, in turn, own and operate a string of nursing homes. There are fourteen homes in this chain of ownership, each using the name "Rosewood Care Center." A holding company owns each nursing home's individual operating corporation. Each home uses the same management company, and each home's ownership and operation are organized through the same system of leases, management contracts and other agreements. Each home transfers revenues to the same central bank account. All of the homes use the same advertising brochure and all advertising is purchased centrally by a single management company. The nursing home at issue in this case is a Rosewood facility in Peoria, Illinois and we will refer to that home and the other defendants collectively as "Rosewood." That describes the universe of defendants in the case. The plaintiff is Robert Corley, who placed his mother, Vera Corley, in Rosewood and later came to regret his selection. Vera Corley's health precluded her from participating in decisions related to her care. Rosewood thus dealt directly with Robert Corley in all communications relevant to this lawsuit. Vera Corley was initially a plaintiff in the case, but when she died in 1999, the district court entered an order substituting Robert Corley as Executor of his mother's estate as a party plaintiff. Henceforth, we will refer to Robert Corley as "Corley" and to Vera Corley as "Vera" to avoid confusion.

Nearly all of the following facts are hotly contested by the parties but on summary judgment, we view the facts in the light most favorable to the party opposing summary judgment, drawing all reasonable inferences in that party's favor. Ziliak v. AstraZeneca LP, 324 F.3d 518, 520 (7th Cir.2003). Hence our recitation of the facts is heavily slanted in Corley's favor. Corley placed his mother, Vera, in Rosewood after visiting the home in October 1989. During his visit, he met with Valerie Mushrush, a Rosewood employee who showed him the facility and explained what Rosewood had to offer. Mushrush told Corley he could choose a private suite, a private room or a semi-private room for his mother. The private suite was the largest room and cost $70 per day, which was $12 more per day than the semi-private room. Corley was led to believe that any increase in the cost of the private suite would stay in line with price increases for the other room types. Mushrush told Corley that Rosewood allowed residents to bring their own furniture from home, gave residents a choice of two entrees at every meal and provided a high quality of care for residents. Mushrush had been instructed to market private suites to potential residents. She believed the prices for all of the rooms would not increase for one year and communicated that belief to some customers but did not recall telling Corley specifically. Significantly, Corley does not present any evidence regarding whether he was told prices would remain constant for a year, but instead focuses on the representation that when prices increased, they would increase proportionately for the private suites, private rooms and semi-private rooms. Rosewood's advertising at that time also included a guarantee of continuing care for residents whose assets were depleted. Under this guarantee, if a resident's money ran out, Rosewood represented that the resident could continue to live at the facility with the same level of care which would then be paid for by Medicaid.

Some of these representations were irrelevant to Corley and some were very important to his decision to place his mother in Rosewood. For example, his mother had sufficient assets to ensure that she would never need to use Medicaid to pay for her nursing home expenses, and thus the guarantee of continuing care was irrelevant to Corley. On the other hand, it was important to Corley that his mother be able to stay in a private suite. He relied on Mushrush's representations about the cost keeping pace with the other room options when he decided to place his mother in a private suite, carpet it at his mother's expense, install a private phone line and move in her furniture from home. In reliance on this and other representations that we will discuss shortly, Corley signed a contract for a private suite at a base rate of $70 per day. The contract specified, "We do not guarantee your accommodations will remain private throughout your stay with us."¹ R. 3, Ex. 1. But Corley and Mushrush struck out a line that read "For administrative or other reasons, we may convert any private room to a semi-private room upon ____ days prior written notice, with an appropriate adjustment in your base rate." R. 3, Ex. 1. The contract permitted Rosewood to raise the base rate of any room at any time on 30 days notice. R. 3, ¶ XI.H. Contrary to the advertising regarding continuing care, the contract provided that Rosewood was not qualified to accept Medicaid patients and there was no guarantee that it would be qualified in the future.

Vera moved into Rosewood on October 25, 1989. About fifty days later, on December 14, 1989, Rosewood's administrator wrote a letter to Corley, suggesting that he move his mother to a regular private or semi-private room. According to the letter, the base rate on private suites was scheduled to increase from $70 per day to $84 per day in January 1990. This was a 20% increase. Corley objected to the increase by a letter dated December 31, 1989. He complained that he was the victim of a classic "bait and switch" scheme. As a result of his complaint, Rosewood deferred the rate increase for Vera's room until March 1, 1990. On March 30, 1990, the base rate for all rooms rose an additional $4, increasing Vera's rate to $88. On October 24, 1990, the private suite base rate increased again to $122, a whopping 74% increase in one year. During the same time period, the base rate for semi-private rooms increased 13.7%, from $58 per day to $66 per day.

Corley complained to the Illinois Attorney General. Rosewood's attorney, Stephen Ukman, responded to the complaint on behalf of Rosewood in a December 18, 1990 letter (the "Ukman Letter") that was approved by Vander Maten. R. 1036, Ex. 12. Ukman explained that private suites were actually semi-private rooms equipped with only one bed. He claimed that at the time Vera Corley moved into Rosewood, management of the facility had advised Corley that "the availability and price of private suites was unique to the period when the facility was filling up, and were subject to change." Id. at 5. In other words, Rosewood admitted, consistent...