KATHERINE KELLER, as the surviving child of decedent Treva Stuck, and the ESTATE OF TREVA STUCK, through Katherine Keller as Administrator of the Estate, Plaintiffs, vs. DIVERSICARE OF COUNCIL GROVE, LLC and DIVERSICARE HEALTHCARE SERVICES, LLC, Defendants.
Case No. 23-2556-ADM
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS
March 11, 2025
Angel D. Mitchell, U.S. Magistrate Judge
This lawsuit arises from the fall and subsequent death of Treva Stuck while residing at a nursing home in Council Grove, Kansas. Ms. Stuck‘s daughter Katherine Keller (as Ms. Stuck‘s heir at law) and Ms. Stuck‘s Estate (through Keller as administrator) (together, “plaintiffs“) assert Kansas-law claims for wrongful death, negligence, and joint venture against Diversicare of Council Grove, LLC and Diversicare Healthcare Services, LLC (together, “defendants“). The case is before the court on plaintiffs’ motion for partial summary judgment. (ECF 70.) By way of the motion, plaintiffs seek a determination that defendants were engaged in a joint venture (such that they are vicariously liable for each other‘s actions) and that certain other facts are undisputed. For the reasons explained more fully below, this motion is denied.
I. BACKGROUND
For purposes of this motion, the facts set out below are either uncontroverted, stipulated, or set forth in the light most favorable to defendants as the nonmoving party. See Tolan v. Cotton, 572 U.S. 650, 651 (2014) (“In articulating the factual context of the case . . . [t]he evidence of the
In November 2021, Ms. Stuck was 83 years old and living at home with her husband, George Stuck. On November 9, she fell from her bed and fractured her hip. She entered the hospital and had hip surgery. From there, she was admitted to Diversicare of Council Grove, LLC (“Diversicare Council Grove“), a skilled nursing facility. She entered Diversicare Council Grove on November 23 for inpatient care and physical rehabilitation. At approximately 11:00 p.m. on December 31, Ms. Stuck fell from her bed at Diversicare Council Grove. She sustained injuries that ultimately led to her death on January 11, 2022.
During Ms. Stuck‘s stay at Diversicare Council Grove, an agreement was in effect between Diversicare Council Grove and Diversicare Health Services, LLC (“Diversicare Services“). The parties refer to this as “the Management Agreement.” As relevant to the issues in this case, the Management Agreement contains the following provisions:
3. Duties of Manager . . . [Diversicare Council Grove] hereby delegates to [Diversicare Services] the day to day responsibility of the management of the Facility and its operations in all respects and [Diversicare Services] hereby assumes, and agrees to use its best efforts to exercise such control and responsibility with a view towards professional management of the Facility in accordance with
customary industry standards. Such responsibility and control will include . . . (a) to have direct responsibility and authority for recruiting, negotiating with, hiring, training, supervising, promoting, assigning, setting the compensation level of (provided such amount is in compliance with applicable law), and discharging all operating and service personnel deemed by [Diversicare Services] to be necessary for the proper operation and maintenance of the facility. All such employees, except the Facility‘s Administrator (who shall be an employee of [Diversicare Services]), shall be employees of and shall be carried on the payroll of [Diversicare Council Grove] and shall not be employees of [Diversicare Services]; provided, however, that such employees shall be subject to the control of [Diversicare Services] on behalf of [Diversicare Council Grove]; . . .
. . . .
(e) to supervise the purchase of such inventories, food, beverages, provisions, supplies and equipment as may be required to properly maintain and operate the Facility and to contract for the purchase of same in the name of [Diversicare Council Grove] . . . .
It is understood that, within the scope of the authority granted by this Agreement, [Diversicare Services] is acting as agent of [Diversicare Council Grove], and as such incurs no liability as principal with respect to any obligations undertaken by [Diversicare Services] hereunder other than in connection with its duty to act in such capacity. [Diversicare Services] will not have the obligation of preparing any tax returns or annual audits of the Facility. . . .
4. Management Fees. In consideration of, and as remuneration for, the services provided in this Agreement with respect to the Facility, [Diversicare Council Grove] agrees to pay to [Diversicare Services] a management fee equal to [a percentage] of monthly Net Operating Revenues for the Facility . . . .
5. Covenants. [Diversicare Council Grove] agrees with [Diversicare Services] as follows:
(a) [Diversicare Council Grove] will maintain at all times sufficient cash on hand or on deposit in a bank account in the name of [Diversicare Council Grove], with [Diversicare Services] as an authorized signatory, to meet all Operating Expenses and Management Fees of the Facility as such become due. [Diversicare Council Grove] will receive all interest earned on deposited cash. [Diversicare Council Grove] will give [Diversicare Services] prior written notice before writing checks on the bank account in which the deposited cash is held.
(b) [Diversicare Services] will be authorized, (i) to write checks and otherwise access the cash on deposit in the bank account
referenced in subparagraph 5(a) to pay Operating Expenses and Management Fees with respect to the Facility, (ii) to incur expenses and liabilities in the ordinary course of the operations and management of the Facility, and (iii) to receive revenues from the operation of the Facility and deposit the same in the appropriate bank accounts. At [Diversicare Services‘] election, [Diversicare Services] may open such bank accounts (“Manager‘s Accounts“) for the Facility to receive and deposit all revenues of the Facility. The Manager‘s Accounts shall be under the sole and exclusive control of [Diversicare Services]. . . . . . . .
10. Books and Records. All books, records and reports prepared by [Diversicare Services] for use of or in connection with the operation of the Facility will be the property of [Diversicare Council Grove], provided that [Diversicare Services] may make copies thereof for its own use as [Diversicare Services] may desire. . . .
. . . .
12. Right to Inspect; Audit. The parties hereto agree that at all reasonable times [Diversicare Services] will permit [Diversicare Council Grove] or its representatives to inspect the buildings, premises and records of the Facility and to perform such audits of [Diversicare Services]‘s financial books and records relating to the Facility as [Diversicare Council Grove] may request to confirm the financial results reported by [Diversicare Services]. . . .
. . . .
14. GENERAL . . . (i) Nothing contained in this Agreement is intended or is to be construed to create any association, partnership or joint venture between [Diversicare Council Grove] and [Diversicare Services]. [Diversicare Services] is an independent contractor retained by [Diversicare Council Grove].
(ECF 70-1.) The Management Agreement further states that either party may terminate the agreement due to material default with 30 days’ notice and time to cure the default or due to bankruptcy. And in the event of termination, Diversicare Services will tender a final accounting to Diversicare Council Grove and will surrender all contracts, records, files, and other information that may be pertinent to the facility‘s continuing operation.
At the time of Ms. Stuck‘s stay at Diversicare Council Grove, Brad Fischer was the facility Administrator. He was responsible for completing the annual facility assessment required by federal regulations. Betty Cox was the facility‘s Director of Nursing Cox. She was responsible
Diversicare Council Grove was one of 50 skilled nursing facilities that Diversicare Services supported. Diversicare Services operated a centralized service center in Brentwood, Tennessee (“the Brentwood Support Center“). The Brentwood Support Center assisted Diversicare Council Grove with payroll processing and billing for services provided to residents. Diversicare Services also managed an intranet, called “My Diversicare,” from which Diversicare Council Grove employees could access their paychecks, applications, policies and procedures, and interactive training. Employees at the Brentwood Support Center developed and revised uniform policies and procedures that Diversicare Services gave to facility administrators and directors of nursing to implement, enforce, and establish. The implementation of the policies and procedures might vary by facility.
Diversicare Services produced an employee handbook called “Team Member Handbook.” The opening sentence of the Team Member Handbook states: “Congratulations on joining our Diversicare team member family.” (ECF 70-2, at 3.) It then goes on to state, “we have been entrusted to care for over 5,000 patients and residents each day.” (Id.) The Introduction section of the Team Member Handbook states: “This Team Member Handbook (‘Handbook‘) contains information about Diversicare (collectively including our affiliates and subsidiaries).” (Id. at 5.) It notes that “[s]pecific policies and procedures are located on the company website, http://MyDiversicare, which is accessible to all team members without a password.” (Id.)
Diversicare Services employed Kevin Crowley as Regional Vice President for the Midwest Region and assigned him to assist Diversicare Council Grove. Crowley‘s job duties included “overall operations” for his region and providing extra support to facility administrators. (ECF
Plaintiffs bring three claims in this lawsuit: (1) Keller (as Ms. Stuck‘s heir at law) brings a wrongful death claim against both defendants; (2) Ms. Stuck‘s estate brings a negligence claim against both defendants; and (3) both plaintiffs assert the defendants are engaged in a joint venture, such that one is vicariously liable for the other‘s actions. Plaintiffs now seek a summary determination of the joint-venture claim, as well as a determination that certain facts material to the wrongful-death and negligence claims are “not genuinely in dispute” and are treated as established in the case. See
II. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.”
The court views the facts “in the light most favorable to the non-moving party” and draws all reasonable inferences in its favor. Leone v. Owsley, 810 F.3d 1149, 1153 (10th Cir. 2015). A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.” Becker v. Bateman, 709 F.3d 1019, 1022 (10th Cir. 2013) (quoting Adler, 144 F.3d at 670). A dispute of material fact is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.” Id. (quoting Adler, 144 F.3d at 670).
“Significantly for the instant case, where the moving party has the burden of proof—the plaintiff on a claim for relief or the defendant on an affirmative defense—his showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.” Leone, 810 F.3d at 1153 (internal citations and modifications omitted). “In other words, the evidence in the movant‘s favor must be so powerful that no reasonable jury would be free to disbelieve it. Anything less should result in denial of summary judgment.” Id. at 1154 (quoting 11 MOORE‘S FED. PRACTICE § 56.40[1][c] (Matthew Bender 3d ed. 2015)).
III. ANALYSIS
A. Plaintiffs Have Not Demonstrated That Undisputed Material Facts Entitle Them to Summary Judgment on their Joint-Venture Claim
Plaintiffs’ motion first asks the court to find that defendants were in a joint venture with respect to the nursing facility where Ms. Stuck fell from her bed and sustained the injuries that led to her death. Because plaintiffs bear the burden of proof on this claim, they must show, as stated above, that “no reasonable trier of fact could find other than for [plaintiffs]” by demonstrating that the evidence in their favor is “so powerful that no reasonable jury would be free to disbelieve it.” Leone, 810 F.3d at 1153-54. Although the question of whether a joint venture exists presents a close call, the court ultimately finds that disputes of material fact prevent a holding that no reasonable juror could answer the question in the negative.
Under Kansas law, a joint venture is “an association of two or more persons or corporations to carry out a single enterprise for profit.” George v. Capital South Mortgage Invs., Inc., 961 P.2d 32, 44 (Kan. 1998); see also Modern Air Conditioning, Inc. v. Cinderella Homes, Inc., 596 P.2d 816, 823 (Kan. 1979). A joint venture may only exist by agreement of the parties, and where its existence is controverted, can be found through the parties’ mutual acts and conduct. See Cargill Meat Sols. Corp. v. Premium Beef Feeders, LLC, 168 F. Supp. 3d 1334, 1340 (D. Kan. 2016);
Plaintiffs correctly note that defendants cannot preclude the existence of a joint venture “simply by disclaiming it in writing.” Cargill, 168 F. Supp. 3d at 1340. Thus, the disclaimer in Paragraph 14(i) of the Management Agreement of the parties’ intent not to create a joint venture “does not bar the existence of a joint venture as a matter of law.” Id. Rather, the court considers the entire agreement, as well as the “mutual acts and conduct of the parties.” Id. The court proceeds to do so now by considering the identified indices of joint ventures.
1. Joint Ownership and Control of Property
Plaintiffs contend that, pursuant to the Management Agreement, Diversicare Services asserted control over the Diversicare Council Grove facility in a number of respects. First, the Management Agreement gave Diversicare Services “direct responsibility and authority for
On the other side of the coin, defendants point to provisions in the Management Agreement that support a finding that defendants did not assert joint ownership and/or control over Diversicare Council Grove property. First, as noted above, the Management Agreement explicitly states that nothing therein “is intended or is to be construed to create any association, partnership or joint venture” between defendants, and that Diversicare Services “is an independent contractor retained by” Diversicare Council Grove. (ECF 70-1 ¶ 14(i).) While this statement is not dispositive of the issue, other provisions of the Management Agreement support this arrangement. With respect to property ownership, the Management Agreement makes Diversicare Council Grove the owner of “[a]ll books, records and reports prepared by [Diversicare Services] for use of or in connection with the operation of the Facility.” (Id. ¶ 10.) Defendants also assert that the provision of the Management Agreement in which Diversicare Services agreed to permit Diversicare Council Grove to inspect the facility buildings, premises, and records at all reasonable times (id. ¶ 12) indicates that Diversicare Council Grove owns such property and emphasizes Diversicare
Third, defendants suggest that the Management Agreement includes provisions delegating certain roles and responsibilities to Diversicare Services “to allow Diversicare [] Services the ability to engage in their duties as the agent of Diversicare [] Council Grove.” (ECF 75, at 26.) Through the Management Agreement, Diversicare Council Grove delegated to Diversicare Services “the day to day responsibility of the management of the Facility and its operations in all respects.” (ECF 70-1 ¶ 3.) The Management Agreement states, “[i]t is understood that, within the scope of the authority granted by this Agreement, [Diversicare Services] is acting as agent of [Diversicare Council Grove], and as such incurs no liability as principal with respect to any obligations undertaken by [Diversicare Services] hereunder other than in connection with its duty to act in such capacity.” (Id.) The Management Agreement further provides that “[Diversicare Services] will not have the obligation of preparing any tax returns or annual audits of the Facility.” (Id.) Finally, defendants characterize the provisions of the Management Agreement that give Diversicare Services financial rights as simply necessary to effectuate Diversicare Services’ role as the manager of the facility and “do not show joint ownership and control of the property.” (ECF 75, at 26.)
“Ownership does not necessarily mean absolute dominion over the subject property . . . the owner can be enmeshed in the direction and control of the business without being involved in the actual management.” State ex rel. Six v. Kan. Lottery, 186 P.3d 183, 190 (Kan. 2008) (internal quotations and citation omitted). The court finds that the evidence could be read to support either
2. Sharing of Expenses, Profits, and Loses
Under the second consideration, the court considers whether Diversicare Council Grove and Diversicare Services had a common pecuniary interest. Plaintiffs first assert that they did because Diversicare Services was entitled to share in Diversicare Council Grove‘s profits. Plaintiffs point to language in Paragraph 4 of the Management Agreement, which states that, as remuneration of the management services Diversicare Services provided with respect to the facility, Diversicare Council Grove “agrees to pay to [Diversicare Services] a management fee equal to [a percentage] of monthly Net Operating Revenues for the Facility.” (ECF 70-1 ¶ 4.)
But defendants disagree that the reference to “Net Operating Revenues” refers to “profits.” Defendants note that the Management Agreement defines “Net Operating Revenues” as “the revenue of the Facility from all sources during the term of this Agreement, including ancillary revenues, less adjustments necessary to reduce the stated revenue to the net contractual amount to be collected.” (ECF 70-1 ¶ 1(b).) Thus, according to defendants, Diversicare Services is compensated by a percentage of the payment Diversicare Council Grove received for services that Diversicare Council Grove provided, prior to any deduction for operating expenses (i.e., prior to a calculation of profit). Plaintiffs argue that defendants are mis-comprehending the definition of “Net Operating Revenue,” which should refer to the money Diversicare Council Grove made after subtracting operating expenses (i.e., to profits). Neither party has presented evidence indicating how the defendants actually behaved in carrying out Paragraph 4. In other words, the summary-
Second, the Management Agreement provides that Diversicare Council Grove “will receive all interest earned on deposited cash” in the bank account Paragraph 5(a) requires it maintain. (ECF 70-1 ¶ 5(a).) This provision, allocating interest earned to Diversicare Council Grove only, weighs against finding a joint share of profits.
Finally, plaintiff has not presented much evidence demonstrating that Diversicare Services and Diversicare Council Grove shared expenses or losses. Plaintiffs assert that Diversicare Services is “responsible for” providing an influx of cash to Diversicare Council Grove should Diversicare Counsel Grove need it, but this assertion goes further than the Diversicare Services testimony on which it relies. Crowley testified on behalf of Diversicare Services that if a facility like Diversicare Council Grove needs an influx of cash, Crowley is “not aware of how the transactions happen” but that Diversicare Services “one way or the other is going to ensure [that] happens.” (ECF 70-3, at 10.) Crowley did not testify that Diversicare Services was required to provide (or was responsible for providing) an influx of cash, only that it would ensure that the facility got such cash somehow. Although such involvement is certainly a consideration that weighs in favor of finding a joint venture, it is not as weighty a consideration as it would be if Diversicare Services was required to so do.
Plaintiffs also note that the Management Agreement gives Diversicare Services authority to “incur expenses and liabilities in the ordinary course of the operations and management of the
Overall, the undisputed facts do not clearly indicate that this factor favors either party.
3. Control Over and Active Participation in the Management and Direction of the Business Enterprise
The parties also dispute the extent to which Diversicare Services asserted control over and actively participated in the management and direction of Diversicare Council Grove. The evidence could be viewed to support a number of conclusions.
First, the Management Agreement gave Diversicare Services responsibility for hiring, training, and supervising personnel necessary to operate and maintain the facility. Diversicare Services created an employee handbook with policies, which was distributed to Diversicare Council Grove employees. The policies were also accessible on a website that Diversicare Services maintained for the many facilities it managed (“MyDiversicare“). Plaintiffs note that the employee handbook used “Diversicare” in the singular by referring to it as a “Company,” but defendants counter that the introduction defines “Diversicare” as “collectively including our affiliates and subsidiaries.” (ECF 70-2, at 5.) And it is undisputed that the implementation of the various employee policies may differ in the facilities that Diversicare Services manages. Moreover, the Management Agreement directed that Diversicare Services’ control over facility employees was “on behalf of” Diversicare Council Grove. (ECF 70-1 ¶ 3(a).)
Second, plaintiffs note that the Diversicare Council Grove annual budget, which set the number of nursing staff at the facility, required the approval of Crowley as an employee of
Third, the day-to-day management of the facility likewise presents a mixed bag. Fisher, the facility administrator, was employed by Diversicare Council Grove, but he reported to Crowley, a regional vice president of Diversicare Services. Fisher “ran” the facility, but Crowley provided support in navigating operational issues. Cox, a Diversicare Council Grove employee, was responsible for setting the facility‘s daily staffing schedule. But Diversicare Services employee Turner supported Cox by providing guidance about medical care. Fisher was responsible for completing an annual facility assessment required by federal regulations.
Fourth, plaintiffs ask the court to recognize that Diversicare Services “exerted financial control over [Diversicare Council Grove] by requiring that it provide the Facility permission of capital expenditure more than $500” (ECF 70), but this fact is in dispute. Although Crowley so testified in the Diversicare Services Rule 30(b)(6) deposition (ECF 70-3, at 6), Fischer testified that he could make purchases above $500 without prior authorization from Diversicare Services and has done so in the past (ECF 70-4, at 8). Fisher testified that the capital expenditure form for dollar amounts more than $500 was “typically for accounting purposes only.” (Id.) He also testified that, “general supplies, for example, we process orders for nursing supplies that may be anywhere from a thousand to $2,500 a week, and there‘s no approval other than myself.” (Id.)
The court finds that the undisputed facts could lead reasonable fact finders to disagree about whether this factor weighs in plaintiffs’ or defendants’ favor.
4. Parties’ Intent
The next consideration is whether the parties expressed or implied an intent to carry out a single enterprise for profit. Defendants assert that the parties expressly stated their intention not to form a joint venture in Paragraph 14(i) of the Management Agreement: “Nothing contained in this Agreement is intended or is to be construed to create any association, partnership or joint venture” between defendants. (ECF 70-1 ¶ 14(i).) But as noted above, this provision is not dispositive of the parties’ intent. See Cargill, 168 F. Supp. 3d at 1340-41. So the finder of fact must consider all the facts and circumstances in the case to determine intent. Id. at 1340.
Plaintiffs assert that defendants’ actions and agreements discussed above, as well as the fact that Diversicare Services’ Brentwood Support Center was responsible for administering Diversicare Council Grove‘s payroll, billing, and email servers, “are indicative of an intent to form a joint enterprise.” (ECF 70, at 29.) Defendants assert that their actions and agreements discussed above, as well as the fact that they do not share the same location, indicate that they had no intention to create a joint enterprise. Defendants further assert that, instead, they are in a principal-agent relationship, with Diversicare Services serving as Diversicare Council Grove‘s agent.
Again, this factor is open to reasonable interpretation under the undisputed facts.
5. Conclusion
After reviewing the parties’ arguments and the exhibits provided in support of the facts asserted by each, and considering the non-controlling factors that are indicative of a joint venture, the court is unable to conclude that the undisputed facts could lead a reasonable juror only to find for plaintiffs on their joint-venture claim. Both parties dispute sufficient facts relating to the factors. The undisputed material facts, viewed in the light most favorable to defendants, do not clearly tip the scale in favor of finding a joint venture. As noted above, plaintiffs are only entitled to summary judgment on their joint-venture claim if they demonstrate that, in light of the undisputed facts, no reasonable trier of fact could find anything other than that a joint venture exists. See Leone, 810 F.3d at 1153. Plaintiffs have not met that burden. Thus, the fact question of whether a joint venture existed between Diversicare Council Grove and Diversicare Services is one for the jury to decide. Accordingly, the court denies summary judgment with respect to plaintiffs’ joint-venture claim (Count III).
The second portion of plaintiffs’ motion asks the court to determine that certain facts material to plaintiffs’ other two claims—the wrongful-death and negligence claims—are “not genuinely in dispute” and treated as established in the case. (ECF 70, at 29-40.) The court declines this request.
Federal Rule of Civil Procedure 56(g) provides that “[i]f the court does not grant all the relief requested by the motion [for summary judgment], it may enter an order stating any material fact—including an item of damages or other relief—that is not genuinely in dispute and treating the fact as established in the case.” Whether to undertake a Rule 56(g) analysis lies in the court‘s sound discretion. See Watchous Enters., LLC v. Mournes, 87 F.4th 1170, 1178 (10th Cir. 2023) (reviewing Rule 56(g) decision for abuse of discretion); In re Holguin, 609 B.R. 878, 881 (Bankr. D.N.M. 2019) (“Whether to grant a request to establish facts falls within the Court‘s sound discretion.“); 10B CHARLES ALAN WRIGHT ET AL., FED. PRAC. & PROC. CIV. § 2737 (4th ed.) (“The question whether to exercise [its] authority [to establish undisputed material facts under Rule 56(g)] is within the court‘s discretion.“). The Advisory Committee notes to Rule 56(g) direct:
[A court] may properly decide that the cost of determining whether some potential fact disputes may be eliminated by summary disposition is greater than the cost of resolving those disputes by other means, including trial. Even if the court believes that a fact is not genuinely in dispute it may refrain from ordering that the fact be treated as established. The court may conclude that it is better to leave open for trial facts and issues that may be better illuminated by the trial of related facts that must be tried in any event.
Here, the court declines to determine whether certain facts not material to resolution of plaintiffs’ summary judgment motion on the joint-venture claim should be deemed established. The primary purpose of Rule 56(g) is “to salvage some constructive result from the judicial effort
Dated March 11, 2025, at Kansas City, Kansas.
s/ Angel D. Mitchell
Angel D. Mitchell
U.S. Magistrate Judge