Summary judgment for HCLA defendants affirmed based on statute of limitations and lack of duty.

Where one defendant in an HCLA case was not the owner or operator of the facility at which plaintiff alleged he received negligent medical treatment, and that defendant did not employee, train or control the employees who allegedly provided negligent care, summary judgment for that defendant was affirmed. Further, where the other defendant was added as a party after the statute of limitations had run, summary judgment for that defendant was also affirmed. In Waller v. Varangon Corporation d/b/a Varangon Academy, No. W2019-02211-COA-R3-CV (Tenn. Ct. App. Jan. 29, 2021), plaintiff was a resident at a juvenile treatment facility when he reported to the medical personnel at the facility that he was having stomach pain and nausea. Nurses at the facility gave plaintiff over-the-counter treatment, but his condition worsened, and plaintiff was taken to a local emergency room several days later and diagnosed with bowel obstruction, which required surgery. At the time of this incident in 2016, plaintiff was seventeen.

The facility where plaintiff had been residing was owned by Varangon Corporation (“Varangon”) and known as Varangon Academy from 2010-2013. In January 2014, Omni Visions, Inc. (“OVI”) purchased the facility and the business from Varangon, and OVI retained the trade name Varangon Academy. As part of the purchase, Varangon and OVI entered into a management services agreement whereby OVI “agreed to continue to provide residential treatment and other services to juveniles at the facility,” and Varangon agreed to license to OVI a treatment model it had developed. Varangon also agreed to make recommendations on personnel issues, but OVI “retained final decision-making authority over personnel issues.” Under the agreement, “OVI retained ultimate legal responsibility, authority, and responsibility over the rendition of all residential treatment services at the facility.”

After plaintiff turned eighteen, and after providing the required pre-suit notice to the registered agent for Varangon, plaintiff brought an HCLA suit against “Varangon Corporation or Varangon Academy” based on the allegedly negligent treatment he received at the facility. In its answer filed on February 14, 2018, Varangon stated that it was not the owner or operator of the facility at which plaintiff was injured, and it asserted that OVI actually owned and operated the facility at the relevant time. Varangon moved for summary judgment on the basis that plaintiff could not show “the essential elements of duty and causation.” On July 17, 2018, plaintiff filed a motion to amend seeking to add OVI as a defendant, and his complaint was amended on July 30, 2018. OVI answered the complaint then filed a motion for summary judgment, arguing that the claim against it was time-barred. After a hearing, the trial court granted summary judgment to both defendants, and the Court of Appeals affirmed.

Looking first to defendant Varangon, the Court noted that although this was an HCLA case, “Tennessee courts have previously stated that [Tenn. Code Ann. § 29-26-115(a)] is a codification of the common law of negligence,” so while the statute does not explicitly mention the elements of negligence, an HCLA plaintiff “must prove that the defendant owed him or her a duty of care.” (internal citation omitted). Plaintiff’s claim was based on vicarious liability, as he alleged that “Varangon [was] responsible for the alleged negligent actions of the nurses who provided care to Plaintiff.”

To succeed on a vicarious liability claim, a plaintiff must show “(1) that the person who caused the injury was an employee, (2) that the employee was on the employer’s business, and (3) that the employee was acting within the scope of his employment when the injury occurred.” (internal citation omitted). The evidence showed that Varangon “did not own the business at the time Plaintiff was a resident of the Facility, nor did it control the medical personnel who provided Plaintiff care.” Varangon’s only involvement at the facility “related to OVI’s use of [Varangon’s] model at the facility.” OVI had full control over personnel issues, and OVI was the entity who “employed, trained, or controlled” the nurses involved. The Court therefore agreed that Varangon could not be held liable for the nurses’ actions and that it owed no duty to plaintiff in this case. Summary judgment was therefore affirmed.

Moving to OVI, the Court noted that HCLA claims are subject to a one-year statute of limitations, which is extended 120 days if the plaintiff gives proper pre-suit notice at least sixty days before suit is filed. Because plaintiff was a minor when the incident occurred, the statute of limitations was tolled until he turned eighteen. (citing Tenn. Code Ann. § 28-1-106). In this case, plaintiff turned eighteen on March 30, 2017, but he did not add OVI as a party until July 30, 2018. The claim against OVI was thus time-barred “unless Plaintiff [was] entitled to an extension of time.”

Plaintiff asserted that the pre-suit notice he sent Varangon in June 2016 “imputed notice to OVI and thereby extended the applicable statute of limitations for 120 days.” The Court rejected this argument, pointing out that Varangon and OVI were two separate entities, that they did not “share corporate affiliations,” and that they did not have “common owners, officers, directors, or board members.” The Court also noted that plaintiff waived any argument that he properly added OVI under Tenn. Code Ann. § 20-1-119(a) based on Varangon’s comparative fault allegation, as he did not include an argument under that statute in his brief. Because the record of ownership was clear and timely notice was only sent to Varangon, summary judgment for OVI was affirmed.

Finally, the Court affirmed denial of plaintiff’s Rule 59.04 post-judgment motion, noting that plaintiff simply used “this portion of his brief as an opportunity to re-litigate the issues in this case,” which was “not a proper use of Rule 59.04.” The trial court’s ruling granting summary judgment to both defendants was therefore affirmed in whole.

This case illustrates the importance of identifying the correct corporate entities as defendants, as well as how vital it is to timely consider any allegation of comparative fault by a named party. Due to OVI being added as a party to this suit too late, plaintiff lost his chance to argue the merits of his case.

NOTE: This opinion was released 2.5 months after oral arguments in this case.

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