Minor v. Bethany Christian Serv.

• Decision Date: 25 February 2010
• Docket Number: Case No. 1:08-cv-104.
• Citation: 714 F.Supp.2d 751
• Parties: William G. and Julie A. HARSHAW, Husband and Wife, individually and as Guardian of Roman A. Harshaw, a minor, Plaintiffs, v. BETHANY CHRISTIAN SERVICES, A Michigan corporation, and Bethany Christian Services Int'l, Inc., a Michigan corporation, Defendants. 1
• Court: U.S. District Court — Western District of Michigan

714 F.Supp.2d 751

William G. and Julie A. HARSHAW, Husband and Wife, individually and as Guardian of Roman A. Harshaw, a minor, Plaintiffs,

v.BETHANY CHRISTIAN SERVICES, A Michigan corporation, and Bethany Christian Services Int'l, Inc., a Michigan corporation, Defendants. ¹

Case No. 1:08-cv-104.

United States District Court,

W.D. Michigan,

Southern Division.

Feb. 25, 2010.

COPYRIGHT MATERIAL OMITTED.

Kevin A. Rynbrandt, Rynbrandt & Associates, Grand Rapids, MI, Elissa B. Heinrichs, Samuel C. Totaro, Jr., Thomas E. Mellon, III, Thomas Edward Mellon, Mellon Webster & Shelly, Doylestown, PA, for Plaintiffs.

Cameron R. Getto, Mark J. Zausmer, Zausmer Kaufman August Caldwell & Tayler, PC, Farmington Hills, MI, Elizabeth J. Fossel, Gary J. Mouw, Perrin Rynders, Varnum Riddering Schmidt & Howlett LLP, Grand Rapids, MI, for Defendants.

OPINION and ORDER

“Harshaw 5”

PAUL L. MALONEY, Chief Judge.

Granting Defendants' Motion to Declare that Virginia Substantive Law Governs these Claims; Directing the Parties to Brief the Corporate Alter Ego Issue under Virginia Law; Scheduling Oral Argument on the Corporate Alter Ego Issue

This is a diversity tort case. Plaintiffs William and Julie Harshaw (“Harshaw”), a married couple proceeding individually and as guardians of their son Roman, are Virginia citizens; both defendants-Bethany Christian Services and Bethany Christian Services International, Inc. (together “BCS”) are Michigan corporations with unspecified principal places of business. See Complaint filed January 31, 2008 (“Comp”) ¶¶ 1-5. Defendant BCS has filed a motion to dismiss on several legal grounds, or in the alternative for summary judgment on more fact-intensive grounds, as to all four claims. The Harshaws have opposed the motion to dismiss and cross-moved for summary judgment on the negligence-based claims (counts 2-4). In the parties' dispositive-motion briefs, they vigorously argue the choice-of-law issue; the Harshaws contend that Michigan substantive law applies, while BCS contends that Virginia substantive law applies.

More recently, BCS followed up by filing a motion on January 26, 2010 to declare that these claims and motions will be adjudicated under Virginia substantive law. As directed by the court, see Doc. 210, the Harshaws filed an opposition brief on Friday, February 12, 2010. The Harshaws contend that BCS's motion to declare the applicable law is an inappropriate attempt to have a “second bite at the apple”, as the parties already had the opportunity to argue the choice-of-law issue, and did argue it, in their summary-judgment briefs. See P's Opp to Choice-of-Law at 3-4. The Harshaws also contend, less persuasively, that it is premature and inappropriate to decide the choice-of-law issue, which they wish to postpone “until all proofs have been entered into evidence at trial.” See P's Opp to Choice-of-Law at 6-7. It is neither efficient nor sensible to have the parties brief, and the court consider, numerous claims under two different States' substantive laws, all the way until trial; this is especially true given that one or the other State's law may call for the Harshaws or BCS to win summary judgment (or dismissal) of some claims without the need to submit them to a factfinder at all. The court has elected to consider BCS's motion to declare the applicable law, as well as, of course, the Harshaws' timely opposition. The additional briefs inform and expand the court's discussion.

For the reasons that follow, the court will grant BCS's motion and declare that under Michigan choice-of-law principles, these tort claims (and pending dispositive motions) are governed by Virginia law. ² The court also directs the parties to brief a potentially dispositive issue-whether the defendants are alter egos of non-party BCS-Hampton Roads-under Virginia law (the Harshaws' briefs thus far seriously discuss the issue only under Michigan law, which does not apply).

In response to a BCS advertisement, the Harshaws attended an informational meeting at BCS's regional office in Virginia Beach, Virginia on June 12, 2003, and the next day they submitted a preliminary application to adopt through BCS in Russia, China or Guatemala. The application stated that they would accept a child with “very minor medical problems and would not consider a child with moderate to severe medical problems.” They submitted an Application for International Adoption to BCS on June 18, 2003 which stated that they were “interested in parenting a child that has a positive prognosis for both mental and physical development.” Id. ¶¶ 11-15 and Exs A & B.

The Harshaws underwent a pre-adoption family assessment conducted by BCS's regional office in Virginia, during which they signed an International Adoption Services Agreement. Comp. ¶¶ 17-18 & Ex C. Relying on BCS's claimed experience and expertise in international adoption, the Harshaws understood that if the assessment was favorable, BCS would act as intermediary and/or fiduciary on their behalf to effectuate an adoption. Id. ¶¶ 16 & 19. On August 22, 2003, BCS issued an assessment stating that the Harshaws “feel equipped to parent a child who may have a minor, correctable problem with a good prognosis for normal development.” It approved them to adopt a Russian child aged 12 to 36 months who had (at most) a “minor, correctable problem with a good prognosis for normal development.” Id. ¶¶ 20-22 & Ex D. They paid BCS $16,000. Id. ¶ 24.

The first page of BCS-HR's pre-adoption family assessment for the Harshaws stated,

Mr. and Mrs. Harshaw have been advised of the risks of international adoption. They understand that children from overseas may arrive with previously undetected heath problems. They recognize that a child may arrive with a contagious condition (e.g., hepatitis, TB, AIDS) that could be contracted by others. They are aware that children from overseas have little or no background information (or inaccurate information) on the birth family, circumstances of the child's placement for adoption[,] or past medical care. They have further been advised that children from overseas may suffer from the effects of minimal care or institutionalization and may suffer from developmental delays or attachment problems.

Mr. and Mrs. Harshaw are aware that there are no guarantees or predictions for the future mental, social, or physical development of the child. They state that they understand and willingly accept these risks. They have been given examples of situations to exemplify potential problems.

Defs' Choice-of-Law Br, Ex L (Aug. 22, 2003 assessment) at 1-2; see also id. Ex M (Julie Harshaw deposition testimony that Harshaws had the assessment document before the adoption) at pp. 22-24.

After completion of the favorable pre-adoption family assessment, BCS-HR referred the Harshaws to Dr. Dubrovsky, who forwarded the assessment to Russia for translation and submission to the Russian federal Department of Education, which at that time was responsible for approving adoptions and orphanage visits by prospective adoptive parents. See Defs' Choice-of-Law Br, Ex O (Dubrovsky Dep) at pp. 57-58, 62 and 72.

BCS representative Jeannie Walton initially referred a Russian child for the Harshaws, but the child had been severely burned by his mother and suffered medical problems as a result. The Harshaws declined and emphasized to BCS that they could only accept a child with minor, correctable conditions and a prognosis for normal development. ³ In October 2003, BCS provided them with Roman's name, age, sex, and photograph; a two-page document said to be an English translation of Roman's medical records at his orphanage; and an untranslated videotape showing what appeared to be Roman interacting with his caregivers in Russia. See Comp. ¶¶ 25-29 and Ex E; see also Def's Choice-of-Law Br, Ex M (Julie Harshaw Dep) at pp. 26-27. Before deciding whether to adopt Roman, the Harshaws had his records and videotape reviewed by their pediatrician in Virginia, Dr. Holland. See id., Ex M (Julie Harshaw Dep) at pp. 26-27, and Ex Q (Dr. Holland Dep) at 10 and 14. The Harshaws' pediatrician, Dr. Holland, noted that there was little or no family history but that Roman had been diagnosed with “delay of psychomotor and speech development” and “perinatal impairment of the central nervous system.” Dr. Holland told the Harshaws that Roman's mother had conceived eight children but carried only two to term; he also noted that Roman's in utero exposure to alcohol, tobacco and other drugs was unknown and could be affecting him. Id. Ex Q (Dr. Holland Dep) at 14, 30 and 33-37. BCS also characterizes Holland as stating that Roman had been diagnosed with “hypotrophy.” Id. Ex Q (Dr. Holland Dep) at 42-44.

The Harshaws argue that it was in reliance on the video and the purported summary of Roman's medical records that they told BCS they were willing to adopt Roman so long as BCS first provided any additional medical information about the boy. See Comp. ¶ 30. BCS, in contrast, has pointed out that they did consult their own pediatrician before deciding whether to go forward with the adoption. At Walton's invitation, the Harshaws visited a BCS office to discuss the adoption. When they asked Walton whether Roman and the other Russian children they were considering were medically healthy, Walton responded that they were healthy,

and explained that a medical doctor associated with Bethany, referred to as “Dr. D,” had specific expertise in the evaluation of Russian children for the purposes of adoption and that Dr. D regularly examined the children in Russia on trips from his home in New York. Ms. Walton stated that Dr. D had examined Roman and that Roman was O.K. The Harshaws learned that the individual referred to as “Dr. D”, is Dr. Michael Dubrovsky.

Comp. ¶ 31. Relying on Walton's assurances regarding Dr. Dubrovsky's purported regular examination of Roman et al., the Harshaws traveled to the orphanage in Krasnoyarsk, Russia...