Cmty. Health & Counseling Servs. v. Affiliated Healthcare Sys.

CourtSuperior Court of Maine
DecidedMarch 16, 2005
DocketPENcv-03-222
StatusUnpublished

This text of Cmty. Health & Counseling Servs. v. Affiliated Healthcare Sys. (Cmty. Health & Counseling Servs. v. Affiliated Healthcare Sys.) is published on Counsel Stack Legal Research, covering Superior Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cmty. Health & Counseling Servs. v. Affiliated Healthcare Sys., (Me. Super. Ct. 2005).

Opinion

STATE OF MAINE SUPERIOR COURT

PENOBSCOT, SS. Docket No. CV-03-222 COMMUNITY HEALTH AND ) 4 COUNSELING SERVICES, _) Plaintiff) ) APR 2c 20 ) v. ) ORDER Do ) os ap wate ) met 16 du AFFILIATED HEALTHCARE __) | SYSTEMS, et als. , PENOSSCOT COUNTY | Defendants. )

Plaintiff CHCS' has filed a motion pursuant to Rule 56(f) of the Maine Rules of Civil Procedure styled as a “Supplemental Motion for Consolidation and Extension of Time within which to Respond to Motions for Summary Judgment.” While it is unclear to the court precisely what CHCS seeks to consolidate, the motion for extension is clearly in response to this court’s Order of December 3, 2004, which allowed an opportunity for such. CHCS has identified the areas which it seeks to address in discovery if the motion is granted.* The Defendants oppose the motion and assert that the proposed areas of discovery do little to illuminate the issues raised by the motions for summary judgment.

The standards for a Rule 56(f) motion are established in Bay View Bank, N.A. v. The Highland Golf Mortgagees Realty Trust, 2002 ME 178, 814; 814 A.2d 449 (Me. 2002). The fourth of these standards’ requires the movant to ”...set forth a plausible basis for believing that the specified facts, susceptible of collection within a reasonable time frame, probably exist, and indicate how the emergent facts, if adduced, will influence the outcome of the pending summary judgment motion...”. While a party obviously cannot know the details of facts within the exclusive knowledge and control of the other party, the rule requires the party seeking the extension and discovery to offer up a good faith suggestion of the type of facts believed to be in the possession of the other which would impact upon the summary judgment issues. If such facts are sufficiently identified, the extension (and opportunity for discovery) will be allowed.

The Defendants’ motions for summary judgment raise the issue of standing (i.e.- whether CHCS must assert this claim as a stockholder derivative suit). At the heart of

' Abbreviations of the parties’ names as established in prior Orders of the court and the parties’ submissions will be used herein.

* See affidavit of Kevin M. Cuddy (attached to the pending motion).

> Defendants argue that Mr. Cuddy’s affidavit is deficient under the other Bay View Bank standards. The court declines to reach these arguments in this context. this motion is the question of whether CHCS suffered a greater harm than the other stockholder in NEHHC.* While there are other issues which may affect the final

La ee: a te thee dinccwctes outcome of this claim, the standing issue is a threshold and potentially dispositive

question. It hinges upon the issue of disparate harm.

After review of the putative facts contained in Mr. Cuddy’s affidavit, the court concludes that only item 6(k) may arguably illuminate the issue of disparate harm to CHCS.

NEHHC has two equal stockholders. If it has sustained any loss or damage by virtue of competition from ProHealth, that loss would be passed equally to CHCS and EMC. Accordingly, no disparate harm is demonstrated at this level of analysis.

CHCS urges the court to take the analysis further. The parties’ submissions suggest - and the court accepts as proven for the purposes of this motion - that EMC derives funding from contributions from EMH. CHCS reasons as follows: If ProHealth turns a profit, that profit would filter upward to AHS and ultimately to EMH which would then have those additional funds to tap into as it grants funding to EMC: Stated otherwise, EMC has a source of funding which is unavailable to CHCS which would be funded in part by income from the allegedly improper competition. CHCS argues that this results in disparate harm such that a stockholder derivative suit is not the exclusive vehicle for redress.

The Defendants have alleged that ProHealth ran at a loss and, as such, EMC derived no benefit. Accordingly, they argue, there has been no disparate harm.® These facts are not clearly a matter of record and may be a subject of interpretation. CHCS is entitled to explore this critical issue. Accordingly the court grants CHCS’s motion as follows:

CHCS is allowed until May 31, 2005, to respond to the Defendant’s motions for summary judgment. Discovery shall be limited to the issues noted in the preceding paragraph (i.e.- Did EMC reap a tangible and demonstrable financial benefit from ProHealth’s operation during the periods alleged in the Amended Complaint?) and shall be completed by May 15, 2005.

The Clerk may incorporate this Order upon the docket by reference.

Dated: March 16, 2005 |

JUSTICE, MAINE SUPERIOR COURT

myer M. Mgad NX

* Many of the points raised in Mr. Cuddy’s affidavit relate to the ownership relationships between the parties. To a very large degree, these relationships are undisputed, and the court is prepared (for the purposes of this motion) to accept them at face value. See items 6(a-f) of Mr. Cuddy’s affidavit. > The court acknowledges that this may be an oversimplification of CHCS’s position.

° Indeed, EMC may arguably have suffered a greater harm under this scenario. Q3/18/2805 MAINE JUDICIAL INFORMATION SYSTEM ksmith PENOBSCOT COUNTY SUPERIOR COURT mjxx1048 CASE PARTY ADDRESS BOOK COMMUNITY HEALTH AND COUNSELING SERVICES VS AFFILIATED HEALTHCARE SYSTEMS ET AL UTN:AOCSsr -2003-0124905 CASE #:BANSC-CV-2003-00222

COMMUNITY HEALTH AND COUNSELING SERVICES PL ATTY CUDDY, KEVIN Tel# (207) 942-2898

ATTY ADDR:47@ EVERGREEN WOODS BANGOR ME 04401

ATTY LANHAM, SAMUEL W. JR Tel# (207) 942-2898

1 De he , Se ae Pethern Cig VO Se Ay Bassa Geo ASL Soho, 734

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Select the EXIT KEY for page selection line. STATE OF MAINE SUPERIOR COURT PENOBSCOT, ss CIVIL ACTION

DOCKET # cv-2003-222__. PIN) PEN Tey (pene Oo

COMMUNITY HEALTH AND COUNSEING SERVICES,

Plaintiff

v. PENOBSCOT COUNTY

AFFILIATED HEALTHCARE SYSTEMS,

AFFILIATED HEALTHCARE MANAGEMENT,

EASTERN MAINE HEALTHCARE, EASTERN MANE HEALTHCARE SYSTEMS, EASTERN MAINE CHARITIES, KENNETH HEWS, DANIEL B. COFFEY,

DECISION AND ORDER

Defendants

New New Nee ee ee ee ee ee ee ee eee es es ee

This matter is before the Court on Defendants’, Kenneth Hews, and Daniel B. Coffey, Motion for Summary J udgment, pursuant to Maine Rule of Civil Procedure 56; Defendants’, Affiliated Healthcare Systems (herein “AHS”), Affiliated Healthcare Management (herein “AHM”), Eastern Maine Healthcare (herein “EMH” ), Eastern Maine Healthcare Systems (herein “EMHS”’), and Eastern Maine Charities (herein “EMC”’) (herein ‘Corporate Defendants’’), Motion for Summary Judgment, pursuant to Maine Rule of Civil Procedure 56; Coffey and Hews’ Alternative Motion for Summary Judgment, pursuant to Maine Rule of Civil Procedure 56; the Corporate Defendants’ Alternative Motion for Summary Judgment, pursuant to Maine Rule of Civil Procedure 56 and Plaintiff *s, Community Health and Counseling

Services’ (herein “CHCS’’), Motion to file First Amended Complaint. Background

CHCS is a Maine corporation doing business in Bangor, Maine. New England Home Healthcare (herein “NEHHC”) is a Maine corporation and provides health staffing services out of Bangor, Maine. EMC and Fleet Bank as Successor Trustee to Maine National Bank Trustee of the Endowment Fund of Community Health and Counseling Services (of which CHCS is the single trust beneficiary) each hold a fifty percent share of NEHHC. On November 6, 1984 CHCS executed a revocable trust with Maine National Bank! and placed shares representing its one-half interest in NEHHC into the trust.

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