Jackam v. Hospital Corp. of America Mideast, Ltd.

• Decision Date: 08 October 1986
• Docket Number: No. 85-8485,85-8485
• Citation: 800 F.2d 1577
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: David C. JACKAM and Susanne Jackam, Plaintiffs-Appellants, v. HOSPITAL CORPORATION OF AMERICA MIDEAST, LTD. and Hospital Corporation of America, Defendants-Appellees.

Page 1577

800 F.2d 1577

David C. JACKAM and Susanne Jackam, Plaintiffs-Appellants, v. HOSPITAL CORPORATION OF AMERICA MIDEAST, LTD. and Hospital

Corporation of America, Defendants-Appellees.

No. 85-8485.

United States Court of Appeals, Eleventh Circuit.

Oct. 8, 1986.

W. Dennis Summers, Ezra B. Jones, III, Atlanta, Ga., for plaintiffs-appellants.

Jefferson D. Kirby, III, Atlanta, Ga., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Georgia.

Before GODBOLD and CLARK, Circuit Judges, and ATKINS ^*, Senior District Judge.

ATKINS, Senior District Judge:

Appellants Jackam appeal from an order dismissing their first amended complaint (1) because there was no basis for the exercise of personal jurisdiction over HCA Mideast, Ltd. (HCAME), and (2) on the merits for failure to state a claim against Hospital Corporation of America (HCA).

Jackam sued for breach of an employment contract to be performed in Saudi Arabia. The contract was executed by HCAME, a subsidiary and agent of HCA. HCAME executes personnel and labor relations policy for HCA (its parent). The termination (at the direction of Saudi Arabia National Guard (SANG) as permitted by the contract) was within 40 days after its execution. We find that (a) the Jackams should have been permitted an opportunity to prove the allegations of agency, intermingling of key employees, dominion and control and affiliation by and between HCA and HCAME, and (b) because paragraph No. 12 of the employment contract is ambiguous the Jackams should be permitted to introduce parole evidence to support their contention that it represents HCAME's consent to the personal jurisdiction of a court situated in Georgia. Accordingly,

WE REVERSE.

THE ALLEGATIONS OF THE FIRST AMENDED COMPLAINT

In their First Amended Complaint, the Jackams alleged:

1. HCA approved, condoned, and had full knowledge of the decision to terminate David Jackam. HCA participated in and bears responsibility for Mr. Jackam's termination.

2. Defendants HCA and HCAME are each agents of the other. HCAME, as a subsidiary of HCA, is an agent of HCA which executes personnel and labor relations policy established by the parent corporation. With regard to the termination 3. Defendant HCA is a joint employer with defendant HCAME. Due to its status as a joint employer of plaintiff Jackam, defendant HCA is liable for all damages arising out of the improper termination of Mr. Jackam's employment.

of plaintiff David Jackam, HCAME acted in its capacity as agent of HCA.

4. Defendant HCA exercised dominion and control over defendant HCAME, and as the parent corporation, controlled the actions and decisions of its subsidiary HCAME. To this end, Thomas O'Neill, Director of Administrative Placement for HCA, established the Human Resources Department for HCAME and drafted the Employee Relations manual for HCAME. In addition, Dean Inman, of the HCA corporate staff, created the salary and benefit package for HCAME's project in Saudi Arabia.

5. Defendants HCA and HCAME have exchanged and intermingled key personnel in connection with the Saudi Arabian project. During a dispute between the Saudi Arabian National Guard and the project management ... HCA personnel participated in an investigation and resolution of the dispute in May or June, 1984. In addition, as indicated above, Mr. C. Thomas O'Neill and Mr. Dean Inman of the HCA corporate staff both worked on the HCAME project and created personnel and labor relations policies for HCAME. HCA, through its corporate staff, recruited large numbers of employees from other HCA hospitals to work on HCAME's King Fahad hospital project in Saudi Arabia. As a result of the exchange and intermingling of personnel, HCA is an alter-ego of HCAME and is responsible for David Jackam's termination and the consequences following therefrom.

THE DISTRICT COURT ORDER

In its order, denying further leave to amend the first amended complaint, the district court held (1) HCA was only the parent of HCAME, not a party to the contract, and that the other allegations "would not warrant a 'piercing of the corporate veil' "; (2) paragraph 12 of the contract was a choice of law provision--not a forum selection clause--and therefore HCAME did not consent to the district court's jurisdiction.

STANDARD OF REVIEW

The trial court's granting of HCAME's Motion to Dismiss for Lack of Personal Jurisdiction must be consistent with the standard that such a motion should be denied if plaintiff alleges sufficient facts to support a reasonable inference that defendant can be subjected to jurisdiction of the court. Bracewell v. Nicholson Air Services, Inc., 680 F.2d 103 (11th Cir.1982).

The standard by which a motion to dismiss for failure to state a claim is decided is well established. As this court held in Bracewell v. Nicholson Air Services, Inc., 680 F.2d at 104, "[m]otions to dismiss for failure to state a claim should be denied unless it appears beyond doubt that the Plaintiff can prove no set of facts in support of its claims." (emphasis added) A complaint must not be dismissed unless it is shown that plaintiff can prove no set of facts in support of this claim, which would entitle him to relief. Thus the movant sustains a very high burden. Curry v. Cayman Resources Corp., 595 F.Supp. 1364, 1370 (N.D.Ga.1984), citing Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

Although the district court acknowledged that "Plaintiff's allegations must be accepted as true for purposes of this Motion to Dismiss," it completely ignored both established principles of law on this issue and the Jackams' amended complaint and briefs as to the various theories of liability asserted by them against HCA. Instead, the court based its order solely on the fact that, in its opinion, the Jackams failed to "pierce the corporate veil" of HCA. In effect, this was a decision on the merits. In doing so, the court misapplied the 12(b)(6) standard of review. The issue is not whether Jackams may ultimately prevail

on the "piercing the corporate veil" theory, but whether the allegations are sufficient to allow them to conduct discovery in an attempt to prove their allegations.

OTHER THEORIES ALLEGED CREATED ISSUES OF FACT

The Jackams, however, have shown that even if they are unable to ascertain facts through discovery which would support a piercing the corporate veil theory, they have nevertheless alleged other theories which would make HCA directly liable for HCAME's actions in breaching its Employment Agreement with Jackam, including theories of agency and joint employers.

The Jackams, in paragraph 13 of their First Amended Complaint, allege "HCAME, as a subsidiary of HCA, is an agent of HCA which executes personnel and labor relations policy established by the parent corporation." Thus, HCA established the labor and personnel policies and HCAME, acting as the agent of HCA for this purpose, executed these policies. Under Georgia law a principal is bound to the extent of the apparent authority he has conferred upon his agent. Gilmore v. Royal Indemnity Co., 240 F.2d 101 (5th Cir.1957). As Jackam stated in paragraph 14 of his Affidavit, "during my employment in Saudi Arabia and involvement with HCA and HCAME, it became apparent to me that HCA maintained a degree of control over HCAME and the operation of the King Fahad project. HCA was actively recruiting individuals from HCA hospitals in the United States to work in Saudi Arabia. The Human Resources offices of HCA drafted the employee relations manual for HCAME. The Human Resources Department was initially headed by Tom O'Neill who was and is, a Vice President of Human Resources for HCA." Whether or not these actions created a relationship between HCA and HCAME such that HCAME, in terminating Jackam, was acting within the scope of its apparent authority as agent for executing personnel and employee policies for HCA is a question of fact. Boque Elect. Manuf. Co. v. Coconut Grove Bank, 269 F.2d 1, 4 (5th Cir.1959).

We hold it was error for the trial court to dismiss this action as failing to state a claim. The liability of HCA, as principal for HCAME, is a question that the Jackams are entitled to explore through discovery.

Additionally, the degree of participation of HCA in the employee relations of HCAME is demonstrated by the actions of Jackam himself. When Jackam was concerned about certain employee benefits not set forth in the written Employment Agreement, he contacted Mr. Dean Inman at HCA in Nashville, Tennessee. Thus, Jackam was aware of and participated in HCA's integral role in establishing contractual and personnel policies even before he entered into the contract with HCAME.

The Jackams also allege that HCA is directly responsible for the termination of Jackam. Although HCA attempts to refute appellants' "piercing the corporate veil theory," HCA does little to negate the direct liability of HCA. The district court fails to address this point other than citing a brief line of cases that HCA cannot be liable as the latter was not a party to the contract.

It is not necessary, however, that there be a direct contractual relationship between Jackam and HCA for the latter to be liable for the wrongful breach of contract. In Sagers v. Yellow Freight Systems, Inc., 58 F.R.D. 54 (N.D.Ga.1972), the court, also faced with a motion to dismiss, found that there was a "sufficient connection" between the parent organization and the contracts in question to maintain the parent organization as a party. As in Sagers, the Jackams have shown, as previously indicated, a "sufficient connection" between the Employment Agreement and HCA. The stationery by HCAME recited "Affiliated with HCA--Hospital Corporation of America." HCA established labor relations and personnel policies for HCAME. An HCA employee created the salary and benefit programs for HCAME's project in The Jackams have alleged that HCA exercised dominion and...