Genesis Healthcare v. Delaware ( 2015 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
GENESIS HEALTHCARE, §
§ No. 214, 201 5
Appellant Below, §
Appellant, § Court Below: Superior Court
§ of the State of Delaware,
v. § in and for New Castle County
§
DELAWARE HEALTH § CA. No. N13A-1 1-007
RESOURCES BOARD, §
§
Appellee Below, §
Appellee. §
Submitted: December 2, 2015
Decided: December 8, 2015
Before HOLLAND, VALIHURA, and SEITZ, Justices.
O R D E R
This 8th day of December, 2015, it appears to the Court that:
(1) This is an appeal by Genesis Healthcare (“Genesis”) from a final judgment
of the Superior Court that affirmed the decision of the Delaware Health Resources
Board (the “Board”) granting a Certificate of Public Review (“CPR”) to the Center
at Eden 1 (“Eden Hill”) and denying Genesis’ Motion for Reconsideration of that
grant. Genesis is the operator of skilled nursing facilities with which the proposed
Eden Hill facility may compete. Genesis challenges the Board’s decision as legally
erroneous and asks for the judgment of the Superior Court affirming the Board’s
decision to be reversed. The Superior Court ruled that “because Genesis’ interests
may be adversely affected by the new facility, Genesis is an interested party and is
permitted to appeal to the Superior Court.”
(2) The only appellee is the Board. Although the Board granted the CPR to
Eden Hill to construct a new skilled care facility, Eden Hill was not joined by
Genesis as a party in either the Superior Court or in this Court. The Board, in its
answering brief, asserts for the first time, that Eden Hill is an indispensable party
and the failure to join Eden Hill as a party in the Superior Court deprived the
Superior Court of jurisdiction. The Board submits that this Court is also without
jurisdiction because Eden Hill is not a party to this appeal.
(3) The Board cites Sussex Medical Investors, L.P. v. Delaware Health
Resources Board,1 in support of its claim that the failure to join an indispensable
party is a jurisdictional defect.2 In Sussex Medical, the Superior Court found that
the appeal should be dismissed if an indispensable party cannot be joined, unless the
court in considering four factors outlined in Superior Court Rule 19(b) determines
that “equity and good conscience” allow for the appeal to proceed without the absent
party. In Sussex Medical, the Superior Court granted the motion to dismiss for
failure to join a successful Certificate of Need applicant when only the board had
been joined as a party in the Superior Court appeal from the board’s grant of the
1 1997 WL 524065 (Del. Super. June 25, 2007).
2 Id. at *6.
Certificate of Need. The Certificate of Need was at that time the equivalent of
today’s CPR. The holding of the Superior Court in Sussex Medical was subsequently
approved by this Court.3
(4) Conversely, based on the Superior Court’s decision in Yellow Cab
Delaware, Inc. v. Department of Transportation (“Yellow Cab”),4 Genesis argues
that the failure to join Eden Hill was not jurisdictional but rather a technical defect.
Genesis argues that this defect is only fatal if Eden Hill was substantially prejudiced
by the failure to be joined as a party. Genesis contends that Eden Hill was not
substantially prejudiced because its interests were represented by the Board. Genesis
also argues that the failure to join an indispensable party is a defense which the Board
waived and is now barred by Supreme Court Rule 8.5
(5) In Yellow Cab, the Superior Court held that While “failing to file an appeal
timely . . . is fatal because the time for taking an appeal is jurisdictional, modern
courts consistently treat defective filing differently.”6 It then found that, since the
issue of j oining the indispensable party was not one depriving the Superior Court of
jurisdiction, dismissal was not warranted and amendment to join the party should be
3 Hackett v. Bd. of Adjustment of City of Rehoboth, 794 A.2d 596, 598 (Del. 2002) (affirming “that
the failure to name an indispensable party to an appeal from an administrative agency to the
Superior Court is not an amendable defect”).
4 2006 WL 2567677 (Del. Super. Aug. 29, 2006).
5 Supreme Court Rule 8 provides that “[o]nly questions fairly presented to the trial court may be
presented for review [by this Court]; provided, however, that when the interests of justice so
require, the Court may consider and determine any question not so presented.”
6 Yellow Cab Delaware, Inc., 2006 WL 2567677, at *1.
allowed if “the appellant demonstrates that the appellee was not prejudiced by the
oversight” 7 thus applying the test established by this Court in State Personnel
Commission v. Howard.8 The Superior Court in Yellow Cab then found that the
failure to join, in the appeal before it, was not fatal and denied the motion to dismiss.
(6) However, in Yellow Cab, the failure to join an indispensable party was
timely raised in the Superior Court and the defect could be cured through an
amendment. That option is not possible in the present proceeding. The record does
not reflect why Genesis did not join Eden Hill as a party in the Superior Court. The
record also does not reflect why the Board did not bring the absence of Eden Hill to
the Superior Court’s attention. In the Superior Court, when there is a timely motion
to dismiss for failure to join an indispensable party, the Superior Court must apply
its own Rules 15 and 19, in the context whether the proceeding is an appeal or a writ
of certiorari.
(7) Over thirty-five years ago this Court held “that all parties to the litigation
who would be directly affected by a ruling on the merits of an appeal, should be
made party to the appellate proceedings.” This Court recently reaffirmed that a
party who would be directly affected by a ruling should be made a party in further
7 Id at *2.
8 420 A.2d 135 (Del. 1980). In Yellow Cab, the Superior Court applied the Howard test to
determine whether the appeal should be dismissed for failure to join an indispensable party. The
Howard test is limited to dismissals by the Supreme Court. Superior Court Rules 15 and 19 should
be applied to determine motions to dismiss indispensable parties in the Superior Court.
9 Id. at 137 (noting that this rule serves to prevent piecemeal litigation).
appellate proceedings.10 The reason for that policy is reflected in Superior Court
Civil Rule 19 stating a person
[s]hall be joined as a party in the action if . . . (2) the person claims an
interest relating to the subject of the action and is so situated that the
disposition of the action in the person’s absence may (i) as a practical
matter impair or impede the person’s ability to protect that interest . . .
. If the person has not been so joined, the Court shall order that the
person be made a party . . . . If [the] person . . . cannot be made a party,
the Court shall determine whether in equity and good conscience the
action should proceed among the parties before it, or should be
dismissed, the absent person being thus regarded as indispensable.11
(8) The appeal in this Court is controlled by our holding in Howard. As in
Howard, Genesis properly invoked the jurisdiction of this Court by filing a timely
notice of appeal against the Board. Accordingly, as in Howard, “[t]he determinative
question is whether the appeal should be dismissed because sufficient prejudice
flows to the unjoined parties [Eden Hill] to prevent their joinder at this stage of the
appeal.”12
(9) In Howard, in the absence of rules corresponding to Superior Court Rules
15 and 19, this Court adopted the following guidelines to “govern cases involving
omissions in the notice of appeal such as occurred in this case”:
(1) Such omission in the notice of appeal will not cause the appeal to
be dismissed unless the omission is substantially prejudicial to a party
in interest; and
10 CCS Investors, LLC v. Brown, 977 A.2d 301, 322 (Del. 2009).
11 Super. Ct. Civ. R. 19(a), (b).
12 Howard, 420 A.2d at 138.
(2) The burden rests upon the appellant to establish the absence of such
substantial prejudice. 13
(10) We must decide what the failure by Genesis to join Eden Hill as a party
means for purposes of continuing this appeal. Genesis contends that Eden Hill is
not substantially prejudiced because its interests can be protected by the Board. That
argument was rejected by this Court more than a decade ago.14 “While jurisdiction
over the Board must be asserted in order to enforce any subsequent judicial ruling,
the Board has no ‘interest’ in the outcome of judicial review. The Board, like a court
from which an appeal is taken, is simply another tribunal, albeit an administrative
one, operating at a lower level in the adjudicatory process.” 15 The successful
applicant of a CPR, on the other hand, does have a substantial vested interest in the
outcome of the litigation and must be joined as a party to provide for complete and
proper adjudication of an appeal.16
(1 1) Genesis had a right to appeal under 16 Del. C. § 9305(8). It met the
requirements to perfect a timely appeal as to the Board. However, as we held in
Howard, the purpose served by the “notice of appeal, is to provide notice of the
appeal to all litigants who may be directly affected thereby, and to afford them an
opportunity to come in and adequately protect their interests in the appellate court.”17
13 Id. at 137.
14 Hackett, 794 A.2d at 598—99.
15 Id. at 599.
16 Id. at 598; Sussex Med. Inv., LR, 1997 WL 524065, at *5—6.
17 Howard, 420 A.2d at 138.
The purpose of Genesis’ appeal to the Superior Court and this Court is to overturn
the Board’s grant of a CPR to Eden Hill. Eden Hill, as the successful recipient of
the CPR, is an indispensable party and its interests are substantially prejudiced by
the failure of Genesis to join it as a party in the Superior Court and in this Court.18
Applying the guidelines in Howard, we hold that this appeal must be dismissed.
NOW, THEREFORE, it is ORDERED that this appeal is
DISMISSED, the Superior Court’s judgment is VACATED, and the Board’s
decision is FINAL.
BY THE COURT:
/s/ Randy J. Holland
Justice
18 See id. at 137—38; Sussex Med. Inv., LR, 1997 WL 524065, at *8, *12.