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Grano v. Pinnacle Health Facilities XXXIII, LP

United States District Court, D. New Mexico

October 18, 2017

MARC GRANO, as Wrongful Death Personal representative of the Estate of FRANCISCA MARMOLEJO, Deceased, Plaintiff,


         Plaintiff Marc Grano, personal representative of the Estate of Francisca Marmolejo (Plaintiff), brings this lawsuit against the operator of the Sagecrest Nursing and Rehabilitation Center (the Sagecrest Center) and other related entities.[1] Plaintiff alleges that Ms. Marmolejo suffered injuries from a fall at the Sagecrest Center and that those blunt hip trauma injuries led to her death on June 4, 2014. (FAC ¶ 12; Resp. Ex. A.) Defendant Preferred Care, Inc. (PCI) asks the Court to dismiss all claims against it under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction.[2] Plaintiff responds that this Court has personal jurisdiction over PCI because PCI participated in the operation of the Sagecrest Center.[3] PCI replies that even though it is related by common ownership to the entity that operates the Sagecrest Center, Plaintiff has not met his burden to show that PCI has the requisite minimum contacts with New Mexico.[4] Because Plaintiff has presented sufficient prima facie evidence PCI has the required minimum contacts with the State of New Mexico, the Court will deny the Motion.

         I. BACKGROUND

         On December 2, 2016, Plaintiff initiated this lawsuit against Defendant Pinnacle Health Facilities XXXIII, LP d/b/a Sagecrest Nursing and Rehabilitation Center in the Fourth Judicial District Court, San Miguel County, New Mexico.[5] Defendant Pinnacle Health Facilities XXXIII, LP removed the case to this Court under federal diversity jurisdiction. 28 U.S.C. § 1332. Plaintiff added several related entities as Defendants. (FAC) Plaintiff and all of the named Defendants, except PCI, have agreed to arbitrate Plaintiff's claims.[6]

         Defendant Pinnacle Health Facilities XXXIII, L.P. d/b/a Sagecrest Nursing and Rehabilitation Center (the Licensed Operator), a Texas limited partnership, is the certified provider under Medicare and Medicaid that is licensed to operate the Sagecrest Center. Thomas Scott (Scott) is the sole limited partner of the Licensed Operator. Defendant Pinnacle Health Facilities GP V, LLC (GP V) (the General Partner), a Texas limited liability company, is the general partner of the Licensed Operator. Scott is the sole owner or member of the General Partner. See JOINT RESPONSE REGARDING CITIZENSHIP FOR DIVERSITY (Doc. No. 36) (Joint Resp.) at ¶¶ 6-8. Robert Riek (Riek) is the managing non-member of the General Partner. (Reply at 6.)

         Defendant Preferred Care Partners Management Group, L.P. (the Management Company), a Texas limited partnership, provides administrative services to the Licensed Operator. (Mot. Ex. A, Riek Aff. ¶ 6.) The Management Company is comprised of a general partner, Defendant PCPMG, LLC, a Texas limited liability company and four limited partners, Mindy Provence, Gary Anderson, Gene Lunceford, and Mike Tennyson, who are Texas residents. (Joint Resp. ¶¶ 3-5.) These individuals are also members of PCPMG, LLC.

         Defendant PCI is a Delaware corporation with its principal place of business in Texas. (Id. ¶ 10.) Scott owns 100% of the stock in PCI. Riek is the Vice President and general counsel of PCI. (Mot. Ex. A, Riek Aff. ¶ 3.) Riek reports directly to Scott. (Resp. Ex. D, Riek Dep. 15:11-15.) Therefore, PCI is related to the Sagecrest Center through a common owner, Scott, who owns and/or controls PCI and the Licensed Operator. According to Riek, PCI provides “nominal” legal services to the Licensed Operator and does not participate in the day to day operation of the Sagecrest Center. PCI asks the Court to dismiss it from this lawsuit because it had no role in the alleged negligent treatment of Ms. Marmolejo at the Sagecrest Center.


         A. Burden of Proof

         When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden to prove jurisdiction. Fed.R.Civ.P. 12(b)(2); Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). However, if a court considers a pretrial motion to dismiss for lack of personal jurisdiction without an evidentiary hearing, the plaintiff must make only a prima facie showing of personal jurisdiction by demonstrating facts, with affidavits or other documentary evidence. Id. When evaluating the evidence, the court must resolve all factual disputes in favor of the plaintiff. Id.

         B. Choice of Law

         In a diversity action, the court applies the law of the forum state to determine personal jurisdiction. Rambo v. American Southern Ins. Co., 839 F.2d 1415, 1416 (10th Cir. 1988). New Mexico has outlined a three-part test for personal jurisdiction over a nonresident defendant: (1)

         the defendant's acts must be enumerated in the New Mexico long-arm statute; (2) the plaintiff's cause of action must arise from the defendant's acts; and (3) the defendant's acts must establish minimum contacts to satisfy constitutional due process concerns. Santa Fe Techs., Inc. v. Argus Networks, Inc., 2002-NMCA-030, ¶ 13, 131 N.M. 772, 42 P.3d 1221 (2001). The New Mexico long-arm statute provides in relevant part:

Any person, whether or not a citizen or resident of this state, who in person or through an agent does any of the acts enumerated . . . thereby submits himself or his personal representative to the jurisdiction of the courts of this state as to any cause of action arising from: . . . (1) the transaction of any business; [or] . . . (3) the commission of a tortious act within this state.

NMSA 1978 § 38-1-16 (A)(1), (3). However, New Mexico courts do not require a technical determination that a defendant committed one of the enumerated acts. Sproul v. Rob & Charlies, Inc., 2013-NMCA-072, 304 P.3d 18, 22 (N.M. Ct. App. 2012) (citing Zavala v. El Paso Cnty. Hosp. Dist., 2007-NMCA-149, ¶ 10, 143 N.M. 36, 172 P.3d 173). Instead, New Mexico courts “have construed the state long-arm statute as being coextensive with the requirements of due process, [thus, the] analysis collapses into a single search for the outer limits of what due process permits.” Id. (quoting F.D.I.C. v. Hiatt, 117 N.M. 461, 463, 872 P.2d 879, 881 (1994) (internal quotation marks and citation omitted)). Fundamentally, a plaintiff must show that a defendant “purposefully avail[ed] itself of the privilege of conducting activities within the forum [s]tate” and, thereby, “invoke[ed] the benefits and protections of its laws.” Id. (citing Hanson v. Denckla, 357 U.S. 235, 253(1958)).

         C. Requirements of Due Process: Minimum Contacts

         Personal jurisdiction over a nonresident civil defendant depends on the nature and quality of the defendant's contacts with the forum. In that regard, personal jurisdiction has been described as being either “general” or “specific.” See Sproul, 2013-NMCA-072, ¶ 17 (stating “for the state to assert personal jurisdiction over a defendant depends on whether the jurisdiction asserted is general (all-purpose) or specific (case-linked).”).

         1. Specific Jurisdiction

         Courts may exercise specific jurisdiction when the claims “deriv[e] from, or [are] connected with” the defendant's contacts. Goodyear Dunlop Tires Operation, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal quotation marks and citation omitted). Accordingly, “to assert specific jurisdiction over a nonresident defendant, the plaintiff's claim must ‘lie in the wake' of the defendant's commercial activities in New Mexico.” Sproul, 2013-NMCA-072, ¶ 17. In sum, a court may assert specific jurisdiction over a nonresident defendant “if the defendant has “purposefully directed his activities at residents of the forum, ” and if the plaintiff's injuries “arise out of” defendant's forum-related activities. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1071 (10th Cir. 2008) (citation omitted). In the tort context, a defendant has “purposefully directed” his activities at New Mexico or its residents when a defendant has: (i) taken intentional action; (ii) the action was “expressly aimed” at New Mexico; and (iii) the action was taken with the knowledge that “the brunt of th[e] injury” would be felt in New Mexico. Dudnikov, 514 F.3d at 1072 (quoting Calder v. Jones, 465 U.S. 783, 789-90 (1984)).

         2. General Jurisdiction

         If a cause of action does not arise out of the defendant's forum-related activities, a court may nonetheless maintain general personal jurisdiction over the defendant based on the defendant's general business contacts with the forum state. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 415 (1984). See also Rambo, 839 F.2d at 1418 (courts recognize general jurisdiction when a suit does not arise from or relate to the defendant's contacts but is based on the defendant's presence or accumulated contacts with the forum). General jurisdiction exists when “a foreign corporation's continuous corporate operations within a state are so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” Kim v. Czerny, 16-CV-1362 MCA/LF, 2017 WL 3084466, at *6 (D.N.M. July 17, 2017) (citation omitted) (unreported). Because the Court can exercise specific personal jurisdiction over PCI, the Court will not address whether the requirements for general jurisdiction have been met in this case.


         Plaintiff contends that PCI provided important legal and regulatory compliance services to the Licensed Operator that affected the quality of care available at the Sagecrest Center. Specifically, Plaintiff alleges that PCI's legal control of the Licensed Operator led to “fail[ure] to provide sufficient numbers of staff to meet Francisca Marmolejo's fundamental care needs; fail[ure] to hire and train appropriate personnel to monitor, supervise, and/or treat Francisca Marmolejo; failure to provide a safe living environment for Francisca Marmolejo, failure to recognize significant environmental factors which posed a fall risk to Francisca Marmolejo and respond to the same, and fail[ure] to timely recognize significant changes in the condition of Francisca Marmolejo and respond to the same.” (Resp. at 4, citing FIRST AMENDED COMPLAINT (Doc. No. 23) (FAC) ¶¶ 12, 25.) In essence, Plaintiff argues that PCI's activities allowed the Sagecrest Center to operate without sufficient staff to meet the needs of residents; therefore, Ms. Marmolejo's injuries arose out of PCI's participation in the operation of the Sagecrest Center and, consequently, this Court can exercise specific personal jurisdiction over PCI in this case.

         PCI argues that Plaintiff has failed to show that PCI's provision of nominal legal services to the Licensed Operator affected the care provided at the Sagecrest Center; therefore, Plaintiff's claim does not “arise out of” PCI's forum-related activities. Reik states that at the time Ms. Marmolejo resided at the Sagecrest Center, PCI did not actively participate in the daily operation of the Sagecrest Center. (Mot. Ex. A, Riek Aff. ¶ 13.) Riek claims that PCI did not directly supervise the staff at the Sagecrest Center and did not create or control the budgets, staffing levels, staff training, or policies and procedures at the Sagecrest Center. (Id. ¶¶ 26, 28.) Thus, PCI contends that this Court cannot exercise specific jurisdiction over it. (Id. ¶ 38.)

         A. Legal Services

         PCI provides legal services to the Licensed Operator and 115 other nursing facilities in 12 states. (Mot. Ex. A Riek Aff. ¶¶ 33-34; Resp. Ex. D, Riek Dep. 70:20-22.)[7] Those services include reviewing contracts with third-party vendors and facilitating agreements with lenders to “ensure availability of sufficient financing and needed capitalizations for facility operations.” (Mot. Ex. A, Riek Aff ¶ 36; Resp. Ex. D, Riek Dep. 53:1-3; 108:14-20.) In addition, PCI examines lease agreements for the Licensed Operator. (Resp. Ex. D, Riek Dep. 57:9-22.) When the Licensed Operator is sued, PCI hires, oversees, and compensates local New Mexico counsel, and PCI acts as a “clearinghouse” for the production of documents in litigation. (Id. ¶ 36.) PCI hires, oversees, and compensates New Mexico counsel when needed for New Mexico regulatory or employment issues, which may include hiring and firing of employees. (Id. ΒΆ 36; Riek Dep. 51:5-12; 53:11-15; 111:20-23.) Riek could not remember whether he or any of his staff ...

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