# Bartels v. Saber Healthcare Group, LLC

> District Court, E.D. North Carolina · October 21, 2020

URL: https://www.frixlaw.com/law-library/cases/10251253

## Case

- **Court:** District Court, E.D. North Carolina
- **Decided:** October 21, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:16-CV-283-BO

WILLIAM H. BARTELS, Executor of the □ )
ESTATE OF JEANNE T. BARTELS, and _ )
JOSEPH J. PFOHL, on behalf of )
themselves and all others similarly situated, )
)
Plaintiffs, )
)
v. ) ORDER
)
SABER HEALTHCARE: GROUP, LLC. _ )
SABER HEALTHCARE HOLDINGS, )
LLC, FRANKLIN OPERATIONS LLC )
d/b/a FRANKLIN MANOR ASSISTED )
LIVING CENTER. SMITHFIELD EAST _ )
HEALTH! HOLDINGS, LLC d/b/a )
GABRIEL MANOR ASSISTED LIVING _ )
CENTER, and QUEEN CITY AL )
HOLDINGS, LLC d/b/a THE CROSSINGS )
AT STEELE CREEKE, )
)
Defendants. )

This cause comes before the Court on the parties’ consent motion for modification of
scheduling order. defendants’ motion to seal, defendants” partial motions to dismiss under Rule
12(b)(1) and for judgment on the pleadings under Rule 12(c), and plaintiffs” motion for class
certification. The matters are ripe for disposition. For the reasons discussed below, the parties”
consent motion for modification of scheduling order is granted, defendants’ motion to seal and
motions to dismiss under Rule 12(b)(1) and for judgrnenit on the pleadings under Rule [2(c) are
granted, and plaintiffs” motion for class certification 1s denied.

BACKGROUND
In April 2016, plaintiffs filed this action in Franklin County Superior Court as a putative
class action alleging claims arising from defendants’ failure to comply with their contractual and
statutory obligations to provide assisted living services that meet the needs of the residents. The
plaintiffs that remain in the case are Joseph Pfohl, executor of the estate of Bernice Pfohl. and
Edward Bartels. executor of the estate of Jeanne Bartels. Ms. Pfohl and Ms. Bartels were
residents of Franklin Manor.
Plaintiffs named five defendants: (1) Saber Healthcare Group. LLC (“SHG”), (2) Saber
Healthcare Holdings, LLC (“SHH”), (3) Franklin Operations, LLC, d/b/a Franklin Manor
Assisted Living Center (“Franklin Manor’). (4) Smithfield East Health Holdings, LLC, d/b/a
Gabriel Manor Assisted Living Center (“Gabriel Manor’), (5) Queen City Al Holdings, LLC,
d/b/a The Crossings at Steele Creek (“The Crossings”). The latter three defendants are the adult
care homes, collectively referred to in the complaint as the North Caro ina Care Centers. The
relationship between the defendants, including the amount of ownership and control exercised by
SHH and SHG over the North Carolina Care Centers. 1s disputed. Defendants removed the case
to this Court based on diversity of parties and the Class Action Fairness Act.
According to plaintiffs’ amended complaint, plaintiffs each entered into a written contract
with defendants called the Assisted Living Residency Agreement (Residency Agreement) under
which defendant will provide “basic services” in exchange for consideration ranging from $4,100
or $5,000 per month based on whether a resident elected a small companion suite, large companion
suite. or a private studio. Amd. Compl. {* 47-48. The agreement defimed basic services as the
provision of “room, board. and such services as may be required for the . . . safety, good grooming,

and well-being of the Resident.” Basic services were tasks such as assistance with walking,
toileting, housekeeping, grooming, eating. delivering medications, and overall supervision and
were performed by unlicensed care aides. /d. § 49. Residents could pay an additional $900 per
month to have the physical assistance of two people for care or dining and an additional $300 per
month for the administration of more than six medications. /d. 51. These additional services
required defendants to have additional staff members on hand. /d. § 52. Plaintiffs allege that
defendants consistently staffed its North Carolina Care Centers inadequately, such that they were
unable to provide the services that were required for the safety, good grooming, and well-being of
the plaintiffs and putative class members. Jd. § 54. The complaint further alleges that defendants
knew or should have known that they would not be able to comply with their obligations under the
Residency Agreements and that they never intended to comply with their obligations when they
entered into those agreements. /c/. □□ 104—05. Plaintiffs bring three claims for relief: (1) breach of
contract. (2) violation of the North Carolina Untair Trade Practices Act (UDTPA). N.C. Gen. Stat.
§ 71—1.1. and (3) injunctive relief to enforce provisions of N.C. Gen. Stat. § 131D-19 ef seg.
DISCUSSION
Motion for Modification of Scheduling Order
On September 14, 2020, the parties jointly filed a motion for modification of the
scheduling order to extend certain deadlines by approximately sixty days. On April 23, 2020, this
Court entered a scheduling order [DE 125] that adopted most of the joint Rule 26(f) report, but it
set some deadlines. The Court stated that the parties could request modification of the scheduling
order in conformity with Fed. R. Civ. P. 16(b)(4). For good cause shown, this Court grants the
parties’ motion for modification of the scheduling order. Fact discovery shall be concluded by

November 15, 2020; disclosure of expert witnesses and reports are due from plaintiffs by
December 15, 2020, rebuttable expert witnesses and reports are due from defendants by January
30, 2021, and all expert discovery shall be concluded by March 30, 2021; and all potentially
dispositive motions shall be filed by April 30, 2021.
Motion to Seal
On June 12, 2020. defendants moved to permanently seal (1) certain exhibits to the
Second Declaration of Dennis Toney dated June 10, 2020 [DE 132], (2) certain exhibits to the
Second Declaration of Pamela Mayo dated June 10, 2020 [DE 134], (3) certain exhibits to the
Declaration of Stephen Lynn dated June 11, 2020 [DE 136], and (4) certain exhibits [DE 130] to
defendants’ memorandum in opposition to plaintiffs’ motion for class certification and to appoint
counsel [DE 129]. Plaintiffs have not responded. For good cause shown, this Court grants the
defendants’ motion to seal.
Motion for Class Certification
Rule 23 of the Federal Rules of Civil Procedure provides that certification of a class is
appropriate if the following prerequisites are satisfied:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class:
(3) the claims or defenses of the representative parties are typical of the claims or
defenses of the class: and
(4) the representative parties will fairly and adequately protect the interests of the
class.
Fed R. Civ. P. 23(a). If the prerequisites have been satisfied, the parties seeking class
certification must also demonstrate that the action falls within a category of Rule 23(b).
See Haywood y. Barnes, 109 F.R.D. 568, 575 (E.D.N.C. 1986). Plaintiff asserts that the
claim is maintainable under Rule 23(b)(3).

Rule 23(b)(3) provides that a class action may be maintained if Rule 23(a) is satisfied and
if: “the court finds that the questions of law or fact common to class members predominate over
any questions affecting only individual members, and that a class action is superior to other
available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P.
23(b)(3). To be certified as a Rule 23(b)(3) class action. plaintiffs must satisfy both the
“predominance” and “superiority” components of the rule. Amchem Prods., Inc. v. Windsor. 521
U.S. 591, 615 (1997). The predominance inquiry “tests whether proposed classes are sufficiently
cohesive to warrant adjudication by representation” and “calls upon courts to give careful
scrutiny to the relation between common and individual questions in a case.” Tyson Foods, Inc.
v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016). If a question is individual, the evidence presented
will vary from member to member. /d.
Here, plaintiffs do not satisfy the Rule 23(b)(3) predominance inquiry, and individualized
issues outweigh any common issues that plaintiff identifies. Specifically, individualized issues
regarding injury predominate over any common questions because there is no reliable means of
providing class-wide injury. The staffing levels varied significantly across the class period, and
state regulators performing inspections found staffing levels to be appropriate except on three
occasions. Plaintiffs will have to determine what the staffing of the facility was during each shift
and on each day of each putative class member's residency. Individualized issues will further
abound. as plaintiffs must show what the needs of the residents were at any given time in order
to show that those needs were net met. The putative class members were subject to
individualized care plans, which changed frequently. The Court will need to individually assess
each care place for each resident of the facility to determine what the needs of the residents were

at any given time and whether those needs were adequately met. Therefore, plaintiffs” motion for
class certification must be denied.
Motion to Dismiss
A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Papasan v. Allain, 478
265, 283 (1986). When acting on a motion to dismiss under Rule 12(b)(6), “the court should
accept as true all well-pleaded allegations and should view the complaint in a light most favorable
to the plaintiff.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). A complaint
must allege enough facts to state a claim for relief that is facially plausible. Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). Facial plausibility means that the facts pled “allow[] the court
to draw the reasonable inference that the defendant 1s liable for the misconduct alleged,” and mere
recitals of the elements of a cause of action supported by conclusory statements do not suffice.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must be dismissed if the factual
allegations do not nudge the plaintiff's claims “across the line trom conceivable to plausible.”
Twombly, 550 U.S. at 570.
Although the remaining plaintiffs were both residents of Franklin Manor, plaintiffs bring
complaints against all the North Carolina Care Centers. Amd. Compl. □□ 18-20, 23-25. Plaintiffs
allege that defendants are alter egos of cach other and argue that “defendants have created a
complex ownership and management structure in order to shield themselves from lability and to
carry out their single enterprise with financial impunity.” /d. § 27. Defendant Saber Group owns
the trademark “Saber Healthcare Group,” and defendants use this mark and the accompanying
brand for all its eighty-three skilled nursed and assisting living homes in six different U.S. states.
Id. § 32. Plaintiffs claim that defendants publicly portray themselves as a single enterprise, with

separate webpages within a single website rather than separates websites, and disregard corporate
formalities and commingle funds. /d. ۤ 33-34. Plaintiffs argue that Saber exercises complete
dominion and control over the North Carolina Care Centers, performing executive functions such
as determining the budget and staffing level of each facility, and exercises pervasive and continual
control over the North Carolina Care Centers such that they are mere instrumentalities of the Saber
Healthcare Group. /d. Ҥ 35-36. Plaintiffs argue that they have standing to bring claims against
Gabriel Manor and The Crossings not for breaching contracts the plaintiffs did execute, but instead
as alter egos of the defendants who breached the contracts the plaintiffs did execute. Bartels v.
Saber Healthcare Grp., LLC, 880, F.3d 668. 677 (4th Cir. 2018).
For an action to constitute a case or controversy under Article HI, a “plaintiff must have
(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant,
and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136
S. Ct. 1540, 1547 (2016). Plaintiffs attempt to create standing by alleging that all defendants are
alter egos of each other. This attempt fails. Piercing the corporate veil is not an independent cause
of action, but “rather is a means of imposing liability on an underlying cause of action.” Peacock
Thomas, 516 U.S. 349, 354 (1996). Therefore, plaintiffs cannot use this doctrine to create
standing where they do not have it. Even if plaintiffs were able to show that defendants are alter
egos of each other, plaintiffs” standing is limited only to alleged damages to plaintiffs. Plaintiffs
resided at Franklin, Manor, not at Gabriel Manor or The Crossings. and they have not shown that
they were harmed by anything alleged to have been done by any defendant in connection with
Gabriel Manor or The Crossings. Plaintiffs lack standing to allege claims premised ona contractual
breach against any of the defendants when no relationship exists between themselves and Gabriel

Manor or The Crossings. Therefore, the claims based against Gabriel Manor and The Crossings
are dismissed for lack of standing. To hold otherwise would violate the principle that “one who is
not a party to the contract may not maintain an action for its breach.” Matfernes v. City of Winston-
Salem, 286 N.C. 1, 12 (1974).
Motion for Judgment on the Pleadings
“After the pleadings are closed—but early enough not to delay trial—a party may move
for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “[F]or purposes of 12(c), ‘the pleadings are
closed upon the filing of a complaint and an answer (absent a court-ordered reply). unless a
counterclaim, crossclaim, or third-party claim is interposed.*” Mandujano v. City of Pharr, Texas,
786 F. App’x 434. 436 (Sth Cir. 2019) (quoting SC Charles Alan Wright et al., Federal Practice
and Procedure $ 1367 (3d ed. Apr. 2019 Update)): see also Burbach Broad. Co. of Delaware v.
Elkins Radio Corp., 278 F.3d 401, 405 (4th Cir. 2002) (pleadings closed after answer filed). In this
case. defendants filed on an answer on May 31, 2016 and an amended answer on June 21, 2016.
Accordingly, the pleadings are closed, and defendants’ motion is timely.
The Court reviews the Rule 12(c) motion under the same standard as a motion to dismiss
pursuant to Rule 12(b)(6)—assuming the facts in the complaint as true and drawing all reasonable
inferences in plaintiffs” favor. Burbach Broad, 278 F.3d at 406. Taking the allegations as true, the
Court concludes that plaintiffs have not adequately alleged their claim.
Under the UDTPA, it is illegal for a company to engage in “unfair or deceptive acts or
practices in or affecting commerce.” N.C. Gen. Stat. § 71-1.1. “In order to establish a prima
facie claim for unfair trade practices, a plaintiff must show: (1) [the] defendant committed an
unfair or deceptive act or practice, (2) the act in question was in or affecting commerce, and (3)

the act proximately caused injury to the plaintiff.” Dalton v. Camp, 548 S.E.2d 704, 711 (N.C.
2001) (citation omitted). Where a claim stems from an alleged misrepresentation, a plaintiff must
‘demonstrate reliance on the misrepresentation in order to show the necessary proximate cause.”
Bumpers vy. Comm. Bank of N. Va., 747 S.E.2d 220. 226 (N.C. 2013). This requires a plaintiff to
establish actual and reasonable reliance. /d/. at 227. “Actual reliance requires that the plaintiff
have affirmatively incorporated the alleged misrepresentation into his or her decision-making
process; if it were not for the misrepresentation, the plaintiff would likely have avoided the
injury altogether.” /c.
The general rule is that a breach of contract, even if intentional, does not support a UTDPA
claim. Broussard v. Meineke Disc. Muffler Shops, Inc. 155 F.3d 331, 347 (4th Cir. 1998). North
Carolina law does not allow plaintiffs to “multiply the damages for an ordinary breach of an
agreement by re-characterizing the breach as a violation of the UDTPA.” PCS Phosphate Co. v.
Norfolk s. Corp.. 59 F.3d 212, 224 (4th Cir. 2009). The allegations in plaintiffs’ complaint boil
down to the following: defendants failed to provide what they promised in the residency
agreement. The case against defendant lies in contract, not tort. Plaintiffs’ attempt to shoehorn
“substantial aggravating circumstances” into the complaint is unavailing and consists largely of
conclusory statements about fairness and defendants’ motivations. “Given the contractual center
of this dispute. [plaintiff's UTDPA claim is] out of place.” Broussard, 155 F.3d at 347.
Because the Court determines the plaintiffs UDTPA claim merely re-characterizes her
breach of contract claim and is properly subject to dismissal, the Court need not engage with
defendants’ remaining arguments. This Court grants defendants’ motion for judgment on the
pleading and plaintiffs’ UDTPA claim is dismissed.

CONCLUSION
For the foregoing reasons, plaintiffs” motion to certify class [DF 121] is DENIED.
Defendants’ partial motion to dismiss and for judgment on the pleadings [DE 127] is
GRANTED. The claims against Gabriel Manor and the Crossings are dismissed, and defendants
are entitled to entry of judgment in their favor on their UDTPA claim all defendants. Defendants’
motion to seal [DE 137] and the parties’ consent motion to amend the scheduling order [DE 144]
are GRANTED.

SO ORDERED, this Wf day of October 2020.

TERRENCE W. BOYLE i;
UNITED STATES DISTRICT JUDGE

10

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10251253. Public record. Not legal advice.