Monticello Healthcare Center, LLC v. Goodman

2010 Ark. 339, 373 S.W.3d 256, 2010 Ark. LEXIS 432
CourtSupreme Court of Arkansas
DecidedSeptember 23, 2010
DocketNo. 10-649
StatusPublished
Cited by9 cases

This text of 2010 Ark. 339 (Monticello Healthcare Center, LLC v. Goodman) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Monticello Healthcare Center, LLC v. Goodman, 2010 Ark. 339, 373 S.W.3d 256, 2010 Ark. LEXIS 432 (Ark. 2010).

Opinion

PAUL E. DANIELSON, Justice.

[¡Appellants Monticello Healthcare Center, LLC d/b/a Monticello Healthcare Center; Perennial Healthcare Management, LLC; Perennial Leaseholdings 6, LLC; Perennial Health Care Holdings, LLC; V. James Santarsiero; Sharon Drake, in her capacity as administrator of Monticello Healthcare Center; John Doe I; John Doe II; John Doe III; John Doe IV; and | John Doe V (hereinafter collectively “MHC”) interlocutorily appeal three separate orders of the circuit court in a medical-malpractice action brought by appellee Jerry Goodman, as special administrator of the Estate of Leona Goodman and on behalf of the wrongful-death beneficiaries of Leona Goodman. MHC asserts three points on appeal: (1) that the circuit court abused its discretion when it enjoined MHC from transferring assets; (2) that the circuit court abused its discretion when it enjoined MHC and its insurers from paying attorneys’ fees for the defense of this case; and (3) that the circuit court lacked authority to order MHC to produce a complete history of attorneys’ fees paid. We hold that MHC’s appeal of the first order is moot; we reverse the circuit court’s order prohibiting the payment of fees; and we dismiss that portion of MHC’s appeal challenging the circuit court’s order to produce a history of fees paid.

The relevant facts are these. On July 11, 2008, Goodman filed a complaint alleging twelve claims against MHC relating to the death of Leona Goodman, who was a resident of Monticello Healthcare in Monticello, Arkansas. On May 28, 2010, Goodman moved for an injunction or temporary restraining order, asking the circuit court to “immediately enter an injunction or temporary restraining order preventing Defendants or their agents and counsel from taking any action associated with any sale or attempted sale of any entity or asset of any Defendant pending further order of the Court.” Alternatively, Goodman sought a discovery bond or other bond of sufficient sum to prevent the possibility of irreparable harm from the sales. Attached to the motion was an affidavit from Bruce Engstrom, a certified public ^accountant, who was engaged by Goodman to review certain financial and organizational information relating to MHC. In his affidavit, Mr. Engstrom opined that if a sale were permitted to proceed,

there is the ability and demonstrated willingness to extensively fragment the resulting liquid assets [Mr. Santarsiero, the owner of Monticello Healthcare] receives in consideration. Because cash is a liquid asset, tracking and determining the extent of any fragmentation upon consummation of the proposed transaction would be onerous for the plaintiffs in the above captioned case.
F. Based on the letter sent to the Arkansas Department of Human Services by Mr. Santarsiero, it is my belief that the proposed sale is to be consummated as an asset sale. If this is the case, Mr. Santarsiero’s stated intent is to then cease the operations of the entities to be sold. This structure could potentially result in a corporate shell with unfunded liabilities, either perfected or asserted, and no future cash flows to repay these liabilities over time. Therefore, this action will or may cause irreparable harm to the plaintiffs in the above captioned case and other plaintiffs embroiled in similar litigation against these defendants.

A hearing was held on the motion on June 2, 2010, and, five days later, on June 7, 2010, the circuit court filed a restraining order (“Order No. 1”). In that order, the circuit court enjoined all defendants

from transferring any interest in or asset of any defendant including but not limited to licenses unless and until defendants post a bond in the sum of $300,000.00 to assure at least partial collection of any settlement or judgment in favor of Plaintiff. This bond represents an option available to defendants to lift this Court’s restraining order. The bond may not be used to satisfy any obligations of defendants to anyone other than Plaintiff. This restraining order is not intended to prevent administration of food, prescription drugs, supplies, and other things necessary for the care of nursing home residents in the ordinary course of defendants’ nursing home operations.

On June 9, 2010, Goodman filed an amendment to his complaint, asserting that MHC’s wasting insurance-policy provision was void and requesting an injunction against 14MHC and its insurance company prohibiting them from attempting to limit Goodman’s right to recover anything less than the full, originally stated amount of the insurance policy. That same day, the circuit court issued an order:

Defendants are ordered to provide immediately to this Court the remaining balance available on any policy to pay any of the Plaintiffs judgments. Since these policies have been described as “wasting” policies, the Court orders Defendants to also provide the original limits and how much of these limits have been reduced by attorneys’ fees as well as any unpaid and outstanding attorney fees to be charged against the remaining balance.
The Court orders this information to be furnished to the Court and opposing counsel by 4:00 p.m. tomorrow, June 10, 2010.

An additional amendment to the complaint was filed on June 11, 2010, in which Goodman asserted that MHC was attempting to transfer assets contrary to the provisions of the fraudulent-transfer statutes of Arkansas, and on June 15, 2010, a telephone conference was had, which was recorded.

On June 21 and 22, 2010, the MHC defendants filed motions to reconsider or, in the alternative, responses to the motion for injunction or temporary restraining order. In the motions, MHC asserted that the “broad nature” of the circuit court’s order of June 7

would proscribe paying employees, meeting contractual obligations, and paying other related business expenses not directly tied to patient care (i.e., taxes, utilities, etc.) The order is both too broad and too vague such that defendants have no way of knowing what business they can continue to conduct.

It averred that the restraining order would cause substantial damages and that Goodman should be required to file a bond.

On the afternoon of June 22, the circuit court filed a second restraining order (“Order No. 2”), based on the telephone conference of June 15. In Order No. 2, the circuit court |fi“on the Motion of the Court,” joined “certain third parties,” including the State of Arkansas, Arkansas Department of Health and Human Services (ADHHS), and the Office of Long Term Care (OLTC). It then, “[u]pon the Motion of the Court,” ordered and directed them

to provide the Plaintiff in this case relevant information as to the information relevant to any attempted transfers of operational control including but not limited to licenses, ownership and any other change in the status quo and to forthwith turn over to the Court and the attorneys for the Plaintiff any and all information dealing with the notice by James Santarsiero of the termination of operation of this nursing home and the issuance of any license for the operation of this nursing home by third parties and to disclose to the Plaintiff and the Court whether or not the permission of the State is necessary in order to transfer and/or issue a new license for the nursing home in Montieello, Drew County, Arkansas.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Crain v. Fulmer.403
2024 Ark. App. 485 (Court of Appeals of Arkansas, 2024)
Monsanto Company v. Cornelius Kilgore and Labommie Kilgore
2023 Ark. 94 (Supreme Court of Arkansas, 2023)
Wait v. Elmen
2017 Ark. App. 648 (Court of Appeals of Arkansas, 2017)
Arkansas Department of Human Services v. Ledgerwood
2017 Ark. 308 (Supreme Court of Arkansas, 2017)
City of Greenwood v. Shadow Lake Ass'n
2015 Ark. 143 (Supreme Court of Arkansas, 2015)
Moore v. Circuit Court of Phillips County
2013 Ark. 443 (Supreme Court of Arkansas, 2013)
McKenzie v. Pierce
2012 Ark. 190 (Supreme Court of Arkansas, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
2010 Ark. 339, 373 S.W.3d 256, 2010 Ark. LEXIS 432, Counsel Stack Legal Research, https://law.counselstack.com/opinion/monticello-healthcare-center-llc-v-goodman-ark-2010.