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Harter v. SMSJ Tucson Holdings, LLC

United States District Court, D. Arizona

May 1, 2018

Carol Harter, et al., Plaintiffs,
SMSJ Tucson Holdings, LLC, et al., Defendants.


          Rosemary Marayez, United States District Jucfge

         Pending before the Court is Defendant Ascension Arizona's Motion to Dismiss Third Amended Complaint. (Doc. 111.) The Motion is fully briefed. (Docs. 124, 127.) Because the Motion cannot be resolved based solely on the Third Amended Complaint's allegations, the Court notified the parties of its intent to convert the Motion into a motion for summary judgment pursuant to Federal Rule of Civil Procedure 12(d). (Doc. 130.) The parties filed a Joint Report on April 16, 2018, notifying the Court that they believe the converted Motion is suitable for determination without further supplementation and without the need for separate and controverting statements of fact. (Doc. 133.) For the following reasons, the Motion will be denied.

         I. Background

         This action arises out of allegations that, at various times, Plaintiffs received inadequate accommodations for their disabilities at St. Mary's Hospital, St. Joseph's Hospital, and Carondelet Neurological Institute. Plaintiff Carol Harter allegedly received inadequate accommodations at St. Joseph's Hospital and Carondelet Neurological Institute in August 2013. (Doc. 97 at 10-16.) In August 2013, those medical facilities were owned by Carondelet Health Network n/k/a Ascension Arizona.[1] (Doc. 57-1, ¶ 8.) Plaintiff Gerald Brown allegedly received inadequate accommodations at St. Mary's Hospital in November 2015. (Doc. 97 at 16-23.) Plaintiffs Dennis and Julie Lotz allegedly received inadequate accommodations at St. Mary's Hospital in December 2015 and February, July, and September 2016. (Id. at 23-34.) During the times Plaintiffs Brown, Dennis Lotz, and Julie Lotz received treatment, St. Mary's Hospital was owned by SMSJ Tucson Holdings, LLC. (Doc. 57-1, ¶¶ 9, 10.) Ascension Arizona f/k/a Carondelet Health Network and SMSJ Tucson Holdings, LLC, were first named together as Defendants in the currently operative Third Amended Complaint. (Doc. 97.)

         On August 5, 2015, this lawsuit was filed by Plaintiff Harter against “Carondelet Health Network.” (Doc. 1.) On September 24, 2015, Carondelet Health Network changed its name to Ascension Arizona. (Doc. 72-1, ¶ 9.) The docket contains no indication that Plaintiff was notified of the name change. On March 18, 2016, the First Amended Complaint was filed, adding Plaintiffs Gerald Brown and Leticia Moran. (Doc. 15.) The First Amended Complaint was brought solely against “Carondelet Health Network.” (See id.)

         On May 1, 2017, Plaintiffs requested leave to file a second amended complaint, seeking to add Dennis and Julie Lotz as plaintiffs. (Doc. 45.) The proposed second amended complaint named “Carondelet Health Network” as the sole defendant. (See Doc. 45-1.) Carondelet Health Network opposed the request for leave to amend, arguing that a separate entity, SMSJ Tucson Holdings, LLC, owned the hospitals at the time the Lotzes were treated. (Doc. 49.) In reply, Plaintiffs argued that any deficiencies in the proposed second amended complaint could be remedied by changing the named defendants to clarify “that all entities who have owned and operated Carondelet Health Network during the various Plaintiffs' visits to its facilities are included as intended, named defendants.” (Doc. 52 at 1-2.) Plaintiffs submitted a modified, proposed second amended complaint, naming “Ascension Health d/b/a Carondelet Health Network” and “SMSJ Tucson Holdings, LLC d/b/a Carondelet Health Network” as defendants. (Doc. 52-1, Ex. A.)

         The Court ordered Carondelet Health Network to file a surreply clarifying which entities owned the hospitals at which times. (Doc. 53.) In an affidavit attached to its surreply, Carondelet Health Network explained that “Carondelet Health Network, n/k/a Ascension Arizona” owned the hospitals when Plaintiff Harter received treatment in August 2013, and that “SMSJ Tucson Holdings, LLC” owned the hospitals when Plaintiffs Brown, Dennis Lotz, and Julie Lotz received treatment in 2015 and 2016. (Doc. 57-1, ¶¶ 8, 9, 10.) Finding that the change in ownership did not foreclose Plaintiffs' theory of a policy or practice of discrimination, the Court granted leave to amend on August 8, 2017. (Doc. 60.) The Court directed the Clerk of Court to modify the case caption in accordance with the Second Amended Complaint, which named “Ascension Health d/b/a Carondelet Health Network” and “SMSJ Tucson Holdings, LLC d/b/a Carondelet Health Network” as Defendants.[2] (Id.; Doc. 69.)

         Plaintiffs alleged in the Second Amended Complaint that “Defendant Ascension Health d/b/a Carondelet Health Network . . . is an Arizona non-profit corporation registered and doing business in the State of Arizona . . . . with a principal place of business in Tucson, Arizona.” (Doc. 69, ¶ 9.) These allegations are incorrect; Ascension Health is a Missouri corporation with its principal place of business in St. Louis. (Doc. 84, Ex. A at 2, 4.) Ascension Health is the parent corporation of Carondelet Health Network n/k/a Ascension Arizona, the latter of which is an Arizona corporation. (Doc. 72-1, ¶¶ 6, 9.)

         Over the weeks following the amendment, counsel for Ascension Health (and former defendant Ascension Arizona) conferred with counsel for Plaintiffs regarding the naming of Ascension Health instead of Ascension Arizona. On August 22, 2017, defense counsel requested that the caption be amended so that Ascension Arizona be named as defendant instead of Ascension Health. (Doc. 111-1, Ex. 1, ¶ 3.) On the same date, Plaintiffs' counsel responded that she lacked “sufficient information” to determine the appropriateness of the amendment because “[b]oth Ascension Health and Ascension Arizona have existing corporate filings with the Arizona Corporation Commission, indicating they are currently both operating in Arizona.” (Id., Ex. 1(A) at 8.) Plaintiffs' counsel requested additional documentation “identify[ing] which corporation is the correct corporate Defendant and [showing] the distinction between Ascension Arizona and Ascension Health[.]” (Id.) Defense counsel responded, indicating her belief that the affidavit attached to its surreply was sufficient to show an amendment was appropriate. (Id.)

         On September 6, 2017, Ascension Health filed a motion to dismiss for lack of personal jurisdiction. (Doc. 72.) On September 8, 2017, Plaintiffs' counsel sent a letter to defense counsel. (Doc. 111-1, Ex. 1(B) at 13-20.) The letter requested that Ascension Health withdraw the motion to dismiss, setting forth the arguments that would later form the basis for Plaintiffs' response to the motion. (See id.) Specifically, the letter takes the position that Ascension Health was a proper defendant because, as the sole owner of Carondelet Health Network, it “would have actively managed, supervised, and involved itself in the Arizona operations of Carondelet Health Network.” (Id. at 15.)

         On January 22, 2018, the Court granted the motion to dismiss and dismissed Ascension Health without prejudice. (Doc. 95.) In its Order, the Court described the substitution of Ascension Health for Ascension Arizona in the caption as the “voluntary dismissal of Ascension Arizona.” (Id. at 3.) Because (as noted above) Plaintiffs' allegations regarding Ascension Health's domicile and principal place of business were clearly erroneous-but appear to be correct as it pertains to Ascension Arizona-the Court observed that “Plaintiffs may have intended that Ascension Arizona remain a defendant and that the substitution [of Ascension Health] was an error.” (Id. at 3 n.2.) The Court thus granted Plaintiffs leave to file a third amended complaint, amending only the parties and party allegations. (Id. at 13.)

         Plaintiffs filed the Third Amended Complaint on January 29, 2018, naming “Ascension Arizona, an Arizona non-profit corporation, f/k/a Carondelet Health Network” and “SMSJ Tucson Holdings, LLC” as Defendants. (Doc. 97.) On February 5, 2018, Ascension Health (no longer a defendant) filed a motion for reconsideration, asking that it be dismissed with prejudice instead of without prejudice. (Doc. 103.) In that motion, it was brought to the Court's attention for the first time that defense counsel had attempted to persuade Plaintiffs' counsel to substitute Ascension Arizona in place of Ascension Health and that Plaintiffs' counsel declined to do so. (Id. at 2-4.) However, Ascension Health's motion was denied because that information had no bearing on whether to dismiss with or without prejudice. (Doc. 110.)

         On February 20, 2018, Ascension Arizona filed the currently pending Motion to Dismiss Third Amended Complaint. Ascension Arizona argues that the statute of limitations ran on all of Plaintiffs' claims during the period it was no longer a party. Ascension Arizona also argues that the Third Amended Complaint does not relate back to the filing of the timely, original Complaint because Plaintiffs made a strategic decision to voluntarily dismiss it as defendant and pursue claims against Ascension Health. That decision, according to Ascension Arizona, precludes Plaintiffs from satisfying the third relation-back requirement, i.e., that Ascension Arizona “knew or should have known that the action would have been brought against it, but for a mistake concerning [its] identity.” Fed.R.Civ.P. 15(c)(1)(C)(ii). Plaintiffs argue in response that they were genuinely mistaken concerning the proper defendant's identity, demonstrated by their naming of “Carondelet Health Network” in some form in every version of the complaint. Therefore, they argue, the Court should find that Ascension Arizona was not dismissed because Plaintiffs never intended to dismiss the proper defendant. Alternatively, Plaintiffs argue their mistake is sufficient to establish that the Third Amended Complaint relates back.

         II. ...

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