Estate of Ayers ex rel. Strugnell v. Beaver

• Decision Date: 19 May 1999
• Docket Number: No. 98-2240-CIV-T-17C.,98-2240-CIV-T-17C.
• Citation: 48 F.Supp.2d 1335
• Parties: The ESTATE OF Carey B. AYRES, By and Through Barry STRUGNELL as Executor De son tort, and Hazel Garrison, individually, and on behalf of a class of persons similarly situated, Plaintiffs, v. Donald C. BEAVER, a Florida Resident; Brian Center Management Corporation, a North Carolina corporation; Living Centers of America, Inc., a Delaware corporation; LCA Operational Holding Company, a Delaware corporation (f/k/a Living Centers Holding Company and Living Centers/Brian Care Company, a Delaware corporations), Defendants.
• Court: U.S. District Court — Middle District of Florida

48 F.Supp.2d 1335

The ESTATE OF Carey B. AYRES, By and Through Barry STRUGNELL as Executor De son tort, and Hazel Garrison, individually, and on behalf of a class of persons similarly situated, Plaintiffs, v. Donald C. BEAVER, a Florida Resident; Brian Center Management Corporation, a North Carolina corporation; Living Centers of America, Inc., a Delaware corporation; LCA Operational Holding Company, a Delaware corporation (f/k/a Living Centers Holding Company and Living Centers/Brian Care Company, a Delaware corporations), Defendants.

No. 98-2240-CIV-T-17C.

United States District Court, M.D. Florida, Tampa Division.

May 19, 1999.

Bennie Lazzara, Jr., James L. Wilkes, II, Mary J. Perry, Wilkes & McHugh, Tampa, FL, for plaintiffs.

David Christopher Banker, James B. Murphy, Jr., Shackleford, Farrior, Stallings, Tampa, FL, for Donald C. Beaver, defendant.

Charles Alvin Wachter, Edward Martin Waller, Jr., Elizabeth Ann Boland, Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, FL, Paul G. Preston, Preston & Cowan, LLP, New Orleans, LA, for

Brian Center Corp., Brian Center Management Corp., Living Centers of America, Inc., LCA Operational Holding Co., defendants.

ORDER ON PLAINTIFFS' MOTION TO REMAND CASE TO STATE CIRCUIT COURT

KOVACHEVICH, District Judge.

This is before the Court on Plaintiffs', Estate of Carey B. Ayres and Hazel Garrison, Motion to Remand Case to State Circuit Court, (Dkt.13), and Defendants', Donald C. Beaver, Brian Center Corporation, Brian Center Management Corporation, Living Centers of America, Inc., LCA Operational Holding Company, Response, (Dkt.22), and Memorandum in Opposition to Plaintiffs' Motion to Remand. (Dkt.21).

I. FACTS

Plaintiffs, who are or were residents of Defendants' nursing homes, brought this action individually and on behalf of a class of individuals who are or were residents of Defendants' nursing homes. (Dkt.2).

Plaintiffs allege that Defendant Beaver sought and obtained, from the State of Florida and other states, licenses to operate forty-nine (49) nursing homes. (Dkt.2). Plaintiffs and all putative Class members [hereinafter Class members] were required to, as a condition of admission to the nursing homes, execute form contracts for their care, services, and supplies. (Dkt.2). By signing the Admission Contracts, Plaintiffs became obligated to pay, or guaranteed payment, for the care, services, and supplies provided by Defendants. (Dkt.2). Also pursuant to the Admission Contracts, Plaintiffs and each Class member were entitled to receive the level of care, services, and supplies required by the law of Florida and all other states where the nursing homes were located. (Dkt.2). Plaintiffs allege that because of the care, services, and supplies provided to Plaintiffs and Class members and because such nursing home residents were particularly vulnerable and dependent upon Defendants to provide their daily care and health needs, by operation of law, Defendants owed fiduciary duties to Plaintiffs and Class members. (Dkt.2).

Plaintiffs allege that Defendant Beaver developed a plan to maximize profitability of the nursing homes at the expense of Plaintiffs and Class members. (Dkt.2). Defendant Beaver's plan to maximize the profitability of the nursing homes caused the nursing homes to cut back on staffing, basic care, services, and supplies provided to Plaintiffs and Class members. (Dkt.2). Defendant Beaver caused the nursing homes to continue to charge the same or even higher prices although the care, services, and supplies charged for were not being adequately provided to Plaintiffs and Class members. (Dkt.2). As part of Defendant Beaver's profit maximization scheme, Defendant Beaver caused the nursing homes and those corporations that controlled the nursing homes to repeatedly breach the fiduciary duties owed to the nursing home residents, including Plaintiffs and Class members. (Dkt.2).

Plaintiffs also allege that Defendants committed civil conspiracy against Plaintiffs and Class members. (Dkt.2). Plaintiffs state that the conspiracy results from actual knowledge of, and acts taken to join in, the "scheme and conspiracy" to breach the fiduciary duties owed to Plaintiffs and Class members. (Dkt.2). The conspiracy was allegedly furthered by failing to notify the proper parties of its existence, by failing to provide care, services, and supplies as required, by falsely documenting care and services which were not provided, and by receiving payment for their participation in such conspiracy. (Dkt.2).

As to jurisdiction, Plaintiffs allege that Defendant Beaver is the sole shareholder, owner, director, and officer of a number of corporations, through which he owned, operated, controlled, and managed over forty-nine (49) nursing homes in the states of Florida, North Carolina, Georgia, Virginia, and South Carolina. (Dkt.2). Plaintiffs also allege that Defendant Beaver controlled and directed the activities of all corporations having responsibility for the operation of the forty-nine (49) nursing homes and received all profits and benefits flowing therefrom. (Dkt.2). Plaintiffs assert that all of Defendant Beaver's corporations, used in the ownership, management, and operation of the forty-nine (49) nursing homes, were "mere shells" incorporated to insulate Defendant Beaver from his wrongful actions and were used as Defendant Beaver's "instrumentalities" to defraud creditors and to accomplish the wrongful acts alleged in the Complaint. (Dkt.2). Plaintiffs allege that Defendants have sufficient contacts with the State of Florida to subject Defendants to personal jurisdiction in the State of Florida, pursuant to § 48.193, Fla.Stat. (Dkt.2). The Complaint alleges that each of the claims asserted by Plaintiffs and Class members involves a dollar amount in excess of $15,000.00, exclusive of costs and attorney's fees. (Dkt.2).

On November 2, 1998, Defendants filed a Notice of Removal to the United States District Court, Middle District of Florida, Tampa Division, pursuant to 28 U.S.C. §§ 1441, 1446. (Dkt.1) Defendants' Notice of Removal states, in part, that the cause of action was originally commenced in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, Hillsborough County, that removal is timely, pursuant to 28 U.S.C. § 1446(b), and that removal is proper on the basis of federal question jurisdiction, 28 U.S.C. § 1331, and federal diversity jurisdiction, 28 U.S.C. § 1332. (Dkt.1).

The Notice of Removal states that removal is warranted due to the presence of federal question jurisdiction, because Plaintiffs' claims arise under 42 U.S.C §§ 1395-96. (Dkt.1). Defendants, more specifically, state that, because 42 U.S.C. §§ 1395-96 establishes procedures for regulating virtually all aspects of care to Medicare or Medicaid beneficiaries, Plaintiffs' claims arise under the federal Medicare and Medicaid statutes. (Dkt.1).

As to federal diversity jurisdiction, the Notice of Removal states that the controversy in this suit is between citizens of different states, even though Defendant Beaver is a resident of the State of Florida. (Dkt.1). Defendants claim that, even though, facially, diversity is not established, removal is warranted because Defendant Beaver was fraudulently joined by Plaintiffs. (Dkt.1). Defendants also assert that federal diversity jurisdiction is warranted because, along with complete diversity, Plaintiffs' claims, constituting the matter in controversy, exceed the sum or value of $75,000.00, exclusive of interest and costs. (Dkt.1).

II. STANDARD OF REVIEW

Federal jurisdiction can be based on either: (1) a federal question or (2) diversity of citizenship and an amount in controversy exceeding $75,000.00. See 28 U.S.C. § 1331 (1993); 28 U.S.C. § 1332 (1993). A federal court determines whether or not jurisdiction exists by analyzing the allegations in the complaint. See Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 805, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); Campos v. Sociedad Aeronautica De Medellin Consolidada, S.A., 882 F.Supp. 1056, 1057 (S.D.Fla.1994); Woods v. Firestone Tire & Rubber Co., 560 F.Supp. 588, 590 (S.D.Fla.1983).

"The presence or absence of federal question jurisdiction is governed by the `well pleaded complaint rule,' which provides that federal jurisdiction exists only when (a) federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). In analyzing the complaint, the court must "determine whether a federal claim is `necessarily presented by [the] plaintiff, even if [the] plaintiff has couched his pleadings exclusively in terms of state law.'" Dean Witter Reynolds, Inc. v. Schwartz, 550 F.Supp. 1312, 1313 (S.D.Fla.1982) (quoting Schultz v. Coral Gables Fed. Sav. & Loan Ass'n, 505 F.Supp. 1003, 1008 (S.D.Fla.1981)).

Diversity jurisdiction requires every plaintiff to be diverse from every defendant. See Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1355 (11th Cir. 1996). A lack of complete diversity precludes removal of a case to federal court. See Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1286 (11th Cir.1998). Once it is established that all parties are diverse from one another, it must be established that the amount in controversy exceeds $75,000.00. See 28 U.S.C. § 1332 (1993).

"A federal district court must remand to the state court any case that was removed improvidently or without the necessary jurisdiction." Campos, 882 F.Supp. at 1057 (S.D.Fla.1994) (citing Glaziers, Glass Workers, Etc. v. Florida Glass & Mirror, 409 F.Supp. 225, 226 (M.D.Fla. 1976)). Removal jurisdiction is limited through strict construction of the removal statutes. See Campos, 882 F.Supp. at 1057. "Where there is any doubt concerning jurisdiction of the federal court on removal, the case should be remanded." Woods, 560 F.Supp. at 590 (S.D.Fla.1983).

III. DISCUSSION

A. ...