CALCRA Joins Amicus Brief for Vi at Palo Alto Class Action Suit
On July 26, 2019, CALCRA joined with California Advocates for Nursing Home Reform (CANHR) in filing an amici curiae brief in support of the residents of the Vi at Palo Alto who are appealing the dismissal of their class action law suit. This suit was initially filed in U.S. District Court on February 19, 2014. It languished in pre-trial motions until February 4, 2019 when the judge issued an order granting the defendant’s request and denying the plaintiff’s request for summary judgement, essentially dismissing the residents’ claims.
The original class action law suit filed by residents alleged that the Vi at Palo Alto’s parent corporation (CC-Development Group, Inc) "up-streamed" funds from the Vi to the corporation, leaving no cash reserves for future care and services, and jeopardizing the financial security of residents. It also alleged overcharging in the calculation of monthly fees. The law suit was filed after a request for private negotiation was rejected and subsequent mediation failed. As noted above, several years passed as the court considered various motions, documented in a series of orders.
In its order of November 25, 2014, the Court said that if Continuing Care Retirement Community (CCRC) contracts are refundable then there must be a reserve. This was followed by the March 31, 2016 order finding the contracts are refundable and need a reserve, but deferring to the Continuing Care Branch of the Department of Social Services, and holding that residents don’t have standing to enforce the statute. This led to the case proceeding, not as a putative class action, but as a creditor derivative case (creditors of an insolvent company have standing to sue for fraudulent transfers and other claims). However, in its final ruling of February 14, 2019, the Court decided that plaintiffs were unable to demonstrate that CC-Palo Alto (the Vi at Palo Alto) is insolvent. The orders reflecting the progress of the case to date follow:
Order Granting Defendants’ Motions to Dismiss (November 25, 2014)
Amended Order Granting Defendants’ Motions to Dismiss (March 31, 2016)
Order Granting Corporate Defendants’ Motion to Strike; Denying Director Defendants’ Motion to Dismiss; and Granting in Part and Denying in Part Corporate Defendants’ Motion to Strike (September 25, 2017)
At some point in the future (there is no deadline or schedule), the court will issue an order stating whether it is granting our request to be heard as a friend of the court. The defendants will file a brief stating their arguments, and then the court will issue a notification that it is setting the case for argument/trial. A final decision and opinion from the court is certainly months, if not years into the future.