Defendant's Attorney: Douglas C. Hart and Anthony C. Sunseri

Description: Charleston, West Virginia personal injury lawyer represented Plaintiff, who sued defendant on a medical malpractice wrongful death theory claiming that Thelma Marie Sturgeon died as a result of substandard nursing home care.

Appeal from the Circuit Court of Cabell County The Honorable Christopher D. Chiles, Judge Civil Action No. 19-C-370.


Plaintiff below, Toni Milmoe ("Ms. Milmoe"), as executrix of the estate of Thelma Marie Sturgeon ("Ms. Sturgeon"), her mother, appeals an order of the Circuit Court of Cabell County that granted summary judgment in favor of the defendant below, Paramount Senior Living at Ona, LLC ("Paramount"). In its summary judgment order, the circuit court concluded that Paramount, who operates a senior-care home, was not responsible as a successor corporation for alleged wrongful conduct by Passage Midland Meadows Operations, LLC ("Passage"), a limited liability company that previously operated the home when Ms. Sturgeon was a resident there. In this appeal, Ms. Milmoe alleges that the circuit court improperly applied and expanded the general rule that "the purchaser of all the assets of a corporation [is] not liable for the debts or liabilities of the corporation purchased" in reaching its determination that Paramount was not liable as a successor corporation. Syl. Pt. 2, in part, Davis v. Celotex Corp., 187 W.Va. 566, 420 S.E.2d 557 (1992). In addition, she claims that the circuit court erred in failing to find Paramount could be held liable under two exceptions to that general rule. Finally, Ms. Milmoe contends that the circuit court erred because the case was not ripe for summary judgment. After reviewing the briefs and oral arguments of the parties, the appellate record, and relevant law, we conclude that, on the record presented in this case, Ms. Milmoe has failed to produce evidence that Paramount is the corporate successor of Passage. We also find no merit in Ms. Milmoe's claim that the case was not ripe for summary judgment because the discovery deadline had not yet passed. Contrary to her assertions on appeal, during the summary judgment hearing before the circuit court her counsel acknowledged that the evidence was sufficient for a summary judgment ruling. Accordingly, we affirm the circuit court's summary judgment order.

I.

FACTUAL AND PROCEDURAL HISTORY

The basic facts of this case do not appear in dispute. Petitioner's decedent, Ms. Sturgeon, became a resident of a nursing home and/or assisted living facility ("senior-care home") in Ona, West Virginia, on August 20, 2016. At the time Ms. Sturgeon moved into the senior-care home, and throughout her residency there, the facility was operated by Passage, a Delaware limited liability company owned by Andrew Turner and William Lasky. Passage did not own the senior-care home facility. The senior-care home was instead owned by Welltower, Inc. ("Welltower"), who is not a party to this action. Passage operated the senior-care home pursuant to a sublease agreement.[1]



Ms. Milmoe alleges that, during Ms. Sturgeon's time at the senior-care home, she was the victim of negligence, including the fact that she repeatedly suffered slip and fall accidents as well as "eloping" incidents in which she left the facility. One "eloping" incident resulted in Ms. Sturgeon being found lying on the ground on the side of a nearby road. Ms. Milmoe contends that this continuous course of negligence caused serious personal injury to Ms. Sturgeon, which resulted in medical expenses, pain, suffering, and ultimately proximately caused her death on November 13, 2017.

In March 2017, about midway through the period during which Ms. Sturgeon resided at the senior-care home, Passage, along with three affiliated companies (collectively "the Passage Companies"), [2] filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of West Virginia. Thereafter, in December 2017, after Ms. Sturgeon's death, the Passage Companies filed an "Emergency Motion for Authorization to Enter into Operations Transfer Agreement and Related Transactions," in which they, inter alia, sought authority to enter into an Operations



Transfer Agreement ("OTA") with Paramount. The Passage Companies also sought permission to "turn over and release to Welltower, Inc. (or its designee)," as the accounts lienholder, certain of the Passage Companies' cash collateral consisting of cash and the proceeds of accounts receivable that pre-dated the closing of the OTA.[3]

By order entered on December 29, 2017, the bankruptcy court granted the Passage Companies' motion, expressly finding that "good cause exist[ed] to grant the Motion and that the relief requested in the Motion [was] in the best interests of the Debtors, their estates, creditors, residents and employees." The bankruptcy court authorized the Passage Companies to "enter into and implement the OTA with Paramount," and also granted relief from the bankruptcy stay "to the extent necessary to permit the Debtors to promptly turn over and release to the Accounts Lienholder [Welltower] or its designee the Closing Date Cash and the proceeds of the Pre-Closing AR [accounts receivable] received
on or after the Closing Date." In the bankruptcy court's order, the Passage Companies were "authorized and directed to turn over and release such Pre-Closing AR."

On January 1, 2018, in accordance with the authority granted by the bankruptcy court, Passage and Passage Healthcare, LLC, [4] entered into the OTA with Paramount, a company owned solely by James Cox.[5] Paramount assumed the operation of the senior-care home on the same day, as that was the purpose for which Paramount had been formed. The OTA was not a purchase agreement, though some of Passage's consumable goods, which are described in more detail below, did transfer to Paramount as part of the OTA transaction.[6] Furthermore, Welltower remains the owner of the senior-care home facility, and Paramount occupies and operates the facility in its capacity as a subtenant.[7]

On January 2, 2018, immediately after Paramount assumed operation of the senior-care facility, the Bankruptcy Trustee filed a motion to dismiss the Passage Companies' bankruptcy proceedings. In support thereof, the Trustee explained that the debtors'

sole source of income [had been] from the operation of the Senior-Care Facilities. Effective January 1, 2018, the debtors' [sic] no longer operate the Senior-Care Facilities and will receive no further income. The debtors have no ability to fund a Chapter 11 plan and, as reported to the Court, are administratively insolvent.

The Trustee further advised the bankruptcy court that there were insufficient funds to convert the case to a Chapter 7 bankruptcy proceeding "as all of the debtors['] assets are secured by Welltower," and that "based on Welltower's secured claims[, ] there [were] not sufficient assets to pay outstanding administrative claims, priority claims or general unsecured claims." It appears that the bankruptcy court granted the Trustee's motion and closed the bankruptcy case on or about January 25, 2018, but the order itself is not included in the record on appeal.

On August 21, 2019, Ms. Milmoe filed her complaint against both Paramount, (as an alleged successor in interest to Passage), and Midland Meadows Senior Living, LLC, [8] asserting claims of negligence and wrongful death. After Paramount filed its answer and affirmative defenses, the parties apparently reached an agreement to conduct discovery in phases, with the first phase focusing on whether Paramount could be held accountable for the actions of Passage under Ms. Milmoe's successor liability theory. The parties further agreed to a deadline for dispositive motions. Following a period of discovery, and within the established deadline for dispositive motions, Paramount filed a motion for summary judgment in which it argued that, because it did not purchase all, or even a substantial portion of, Passage's assets, it was not liable as a successor to Passage and, thus, Ms. Milmoe could not rely on exceptions to the general rule that "the purchaser of all the assets of a corporation [is] not liable for the debts or liabilities of the corporation purchased" to establish liability on the part of Paramount. Syl. Pt. 2, in part, Davis, 187 W.Va. 566, 420 S.E.2d 557. Ms. Milmoe filed her response to Paramount's motion, and the circuit court held a hearing at which the parties orally presented their summary judgment arguments. Following the hearing, the circuit court entered an order on February 10, 2021, in which it granted Paramount's motion for summary judgment and dismissed Ms. Milmoe's complaint in its entirety. Thereafter, the circuit court entered an amended order on March 11, 2021, that granted Paramount's motion for summary judgment and dismissed Ms. Milmoe's complaint only as to Paramount. The amended order noted that Ms. Milmoe's complaint as to defendant Midland Meadows Senior Living, LLC, is not dismissed and remains on the circuit court's active civil docket. This appeal by Ms. Milmoe followed.

Outcome:
For the reasons explained above, and based on the alternative grounds set forth herein, we affirm the Circuit Court of Cabell County's grant of summary judgment in favor of Paramount as ordered in the circuit court's amended order of March 11, 2021.

Affirmed.

Plaintiff's Experts:

Defendant's Experts:

Comments: