Doe, J. v. The Woods Schools ( 2016 )

J-A15037-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JANE DOE, AS PARENT AND NATURAL IN THE SUPERIOR COURT OF
GUARDIAN OF JOHN DOE, A MINOR PENNSYLVANIA
Appellant
v.
THE WOODS SCHOOLS, CRESTWOOD
SERVICES, INC., WOODS SERVICES,
INC. AND WOODS SERVICES
FOUNDATION
Appellee No. 2700 EDA 2015
Appeal from the Order Entered July 21, 2015
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): February Term, 2015 No. 1586
BEFORE: FORD ELLIOTT, P.J.E., DUBOW, J., and JENKINS, J.
MEMORANDUM BY JENKINS, J.: FILED AUGUST 09, 2016
Jane Doe, the parent and natural guardian of John Doe, a minor,
appeals an order sustaining appellees’1 preliminary objections and
transferring venue to the Court of Common Pleas of Bucks County. We
affirm.
On February 12, 2015, Jane Doe filed this civil action in the Court of
Common Pleas of Philadelphia County. Her complaint alleged that she is the
parent of John Doe, a blind and mentally retarded minor who lives at the
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1
Appellees include the Woods Schools, Crestwood Services, Inc., Woods
Services, Inc. (“WSI”) and Woods Services Foundation (collectively “the
Woods entities”).
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Woods Schools, a full time residential care and treatment center in
Langhorne, Bucks County.
The complaint alleged that on July 14, 2013, a Woods Schools
employee raped John Doe on school premises. Based on this incident, Jane
Doe sought damages against the Woods entities for negligent supervision
and other torts. All defendants filed preliminary objections alleging improper
venue under Pa.R.Civ.P. 1006. The court ordered discovery on the issue of
venue and subsequently entered an order transferring venue to Bucks
County. Doe filed a timely appeal, and both Doe and the court complied
with Pa.R.A.P. 1925.
Doe raises one argument in this appeal:
Whether the Trial Court erred in sustaining the [Woods Entities’]
Preliminary Objection and Memorandum of Law in support
thereof and transferring venue to the Bucks County Court of
Common Pleas when [Doe’s] Complaint and limited discovery,
including deposition testimony, educe that [the Woods Entities]
regularly conduct business in Philadelphia County?
Brief For Appellant, at 3. This argument consists of two subarguments: (1)
the Woods entities’ contacts with Philadelphia are sufficient to establish
venue in Philadelphia; and (2) Tabor Children’s Services, Inc.’s contacts with
WSI are attributable to the Woods Entities for purposes of determining
venue. We address each subargument separately.
Parties who file preliminary objections to venue bear the burden of
proving that a change of venue is necessary. Zampana-Barry v.
Donaghue, 921 A.2d 500, 503 (Pa.Super.2007). We review the trial court’s
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decision to transfer venue for abuse of discretion. Schultz v. MMI
Products, Inc., 30 A.3d 1224, 1230 (Pa.Super.2011). Each case turns on
its individual facts. Id. at 1227.
Doe’s first subargument is that the Woods entities’ contacts with
Philadelphia are sufficient to establish venue in Philadelphia County.
Pennsylvania Rule of Civil Procedure 1006 provides in pertinent part:
Rule 1006. Venue. Change of Venue
(a) Except as otherwise provided by subdivisions (a.1), (b) and
(c) of this rule, an action against an individual may be brought in
and only in a county in which
(1) the individual may be served or in which the cause of action
arose or where a transaction or occurrence took place out of
which the cause of action arose or in any other county
authorized by law, or
***
(b) Actions against the following defendants, except as otherwise
provided in subdivision (c), may be brought in and only in the
counties designated by the following rules: political subdivisions,
Rule 2103; partnerships, Rule 2130; unincorporated
associations, Rule 2156; corporations and similar entities,
Rule 2179.
(c)(1) Except as otherwise provided by paragraph (2), an action
to enforce a joint or joint and several liability against two or
more defendants, except actions in which the Commonwealth is
a party defendant, may be brought against all defendants in any
county in which the venue may be laid against any one of the
defendants under the general rules of subdivisions (a) or (b) …
(e) Improper venue shall be raised by preliminary objection and
if not so raised shall be waived. If a preliminary objection to
venue is sustained and there is a county of proper venue within
the State the action shall not be dismissed but shall be
transferred to the appropriate court of that county. The costs
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and fees for transfer and removal of the record shall be paid by
the plaintiff.
In turn, Pennsylvania Rule of Civil Procedure 2179 provides, with exceptions
not relevant here, that a personal action against a corporation or similar
entity may be brought in and only in:
(1) the county where its registered office or principal place of
business is located;
(2) a county where it regularly conducts business;
(3) the county where the cause of action arose; or
(4) a county where a transaction or occurrence took place out of
which the cause of action arose.
Pa.R.C.P. 2179(a).
During a deposition on the venue question, Scott Spreat, WSI’s chief
executive officer, testified that the Woods Schools are located in Bucks
County and are operated by WSI. The schools accept residents from across
the Commonwealth and beyond, but Philadelphia is the largest provider of
residents. Approximately 23% of the residents come from Philadelphia, and
5% of WSI’s total income comes from contracts with Philadelphia agencies.
WSI has a contract with the Philadelphia School District under which the
School District transports students to the Woods Schools for classes. Spreat
admitted that the contracts with Philadelphia agencies are a necessary
component to WSI’s business. WSI also accepts residents from the
Philadelphia Department of Human Services and CBH, which handles mental
health issues for children in Philadelphia. When deciding whether to accept
an applicant, WSI sends a representative to his home, whether it be in
Philadelphia or elsewhere, to evaluate him and determine if he is a good fit.
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A business entity must perform acts in a county of sufficient quality
and quantity to establish venue in that county. Zampana-Barry, 921 A.2d
at 503. In this case, there is a sufficient quantity of acts to establish venue
in Philadelphia in this case, but the quality of acts is insufficient.
The quality of a business entity’s acts is sufficient
if [it] performs acts in a county that directly further or are
essential to [its] business objective; incidental acts in the county
are not sufficient to meet the quality aspect of the test.
[Purcell v. Bryn Mawr Hospital, 579 A.2d 1282, 1284 (1990)]
Acts that aid a main purpose are collateral and incidental while
those necessary to an entity’s existence are direct. Id.
(incidental acts include advertising, solicitation of business from
a county, education programs for personnel in county, hiring of
personnel from the county, and purchase of supplies from
county); see also Krosnowski v. Ward, 836 A.2d 143, 147
(Pa.Super.2003) (en banc) (business referrals to and from an
independently operated business entity in another county do not
establish venue in that county as referrals were in aid of main
business purpose and not actual conduct of business in that
county).
Zampana-Barry, 921 A.2d at 503-04.2
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2
For decisions in which contacts were sufficient in quality, see Zampana-
Barry, 921 A.2d at 505 (in legal malpractice action against law firm, firm’s
acts in Philadelphia were of sufficient quality to show that firm regularly
conducted business in Philadelphia; firm’s sole objective was to represent
clients in legal actions, such representation was essential to firm’s existence,
and firm did work in Philadelphia to further this sole business objective);
Monaco v. Montgomery Cab Co., 208 A.2d 252, 256 (Pa.1965) (taxi
company regularly conducted business in Philadelphia County by dropping
off customers there, since “acts of driving into Philadelphia County at the
request of customers and collecting fares there were … directly essential to
and in furtherance of corporate objects and, therefore, were of sufficient
quality”). For cases holding that contacts were insufficient in quality, see
Fritz v. Glen Mills Schools, 840 A.2d 1021, 1024 (Pa.Super.2003) (fact
that students from Philadelphia County attended school in Delaware County
(Footnote Continued Next Page)
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Acts are sufficient in quantity when they are sufficiently continuous so
as to be considered habitual. Purcell, 579 A.2d at 1284. For example, we
held in Zampana-Barry that a law firm’s acts were of sufficient quantity for
purposes of establishing venue in Philadelphia County where the firm
conducted 3-5% of its legal services in Philadelphia for many years.3
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(Footnote Continued)
did not mean that school performed acts in furtherance of its main purpose
in Philadelphia); Masel v. Glassman, 689 A.2d 314, 318 (Pa.Super.1997)
(venue not proper in Philadelphia where hospital provided all of its medical
services in Bucks County, and patients from Philadelphia traveled to hospital
facilities in Bucks County).
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For other decisions that acts were sufficient in quantity, see Canter v.
American Honda Motor Corp., 231 A.2d 140 (Pa.1967) (venue proper in
Philadelphia where Delaware County car dealership regularly conducted 1-
2% of business in Philadelphia by traveling into Philadelphia to demonstrate
cars and complete sales); Monaco, supra (although taxi company was
prohibited from picking up customers in Philadelphia, venue was proper in
Philadelphia because it obtained 5-10% of gross revenue from picking
customers up in Montgomery County and dropping them off in Philadelphia).
For decisions that the quantity of acts were insufficient, see Singley v.
Flier, 851 A.2d 200, 203 (Pa.Super.2004) (quantity of Villanova University’s
acts insufficient to establish venue in Philadelphia, even though it held three
courses in Philadelphia and many Philadelphia residents attend Villanova,
because Villanova did not have Philadelphia campus or own or operate real
estate there); Mathues v. Tim-Bar Corp., 652 A.2d 349, 351
(Pa.Super.1994) (venue improper in employee’s action against employer in
Montgomery County, where employer’s offices were in York and Adams
Counties, and employer had “isolated and limited” acts in Montgomery
County and only 2-3 sales transactions there); Battuello v. Camelback Ski
Corp., 598 A.2d 1027, 1029-30 (Pa.Super.1991) (venue in Philadelphia
improper in personal injury action against Monroe County ski resort, despite
plaintiff’s claim that Philadelphia-based tour company regularly sent
customers to ski resort, where only 5% of resort’s customers were from
Philadelphia, less than 1% of resort’s business came from tour company,
(Footnote Continued Next Page)
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Here, 23% of the residents at the Woods Schools come from
Philadelphia, and 5% of WSI’s total income comes from contracts with
Philadelphia agencies. Thus, the quantity of acts in Philadelphia is sufficient
to establish venue there. On the other hand, the quality of the Woods
entities’ contacts with Philadelphia is insufficient. The purpose of the schools
is to provide residential care and educational opportunities to individuals
with disabilities. This core function takes place in Bucks County, where
school residents receive the full panoply of services, including housing,
education and healthcare, such as doctors’ visits and mental health
treatment. Similar to Fritz and Masel, the fact that many individuals from
Philadelphia obtain services from the Woods Schools in Bucks County is not
sufficient to establish venue in Philadelphia.
Doe’s second subargument is that the contacts of Tabor Children’s
Services, Inc. with WSI should be attributable to the Woods Entities for
purposes of establishing venue in Philadelphia. We disagree.
Doe argues: (1) Tabor Children’s Services, Inc. (“Tabor”), a non-party
which operates in Philadelphia, is a subsidiary of Woods Resources, another
non-party; (2) Woods Resources and WSI are “essentially the same entity”
(i.e., alter egos); (3) therefore, Tabor is effectively a subsidiary of WSI; and
(4) Tabor’s activities establish venue in Philadelphia.
_______________________
(Footnote Continued)
and number of Philadelphia season pass holders was extremely small in
relation to total number of season passes).
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To elaborate, Woods Resources, a non-party, is a corporation affiliated
with WSI. Woods Resources and WSI each have their own boards of
directors, which nominally operate independently of one another. In reality,
there is more than a little overlap, because Woods Resources’ board
members are also members of WSI’s board, and WSI and Woods Resources
share the same office complex. Doe also contends that WSI and Woods
Resources share the same bank account.4 As recently as February 2015,
Woods Resources’ and WSI’s boards had identical membership. On at least
one occasion, Woods Resources’ board adjourned and then immediately
convened as WSI’s board, substituting one hat for another.
Woods Resources has an affiliate agreement with Tabor, which
operates Tabor House in the Germantown section of Philadelphia. Although
Tabor has a separate board of directors and separate employees from Woods
Resources, Doe claims that Woods Resources pays Tabor’s operation costs
from a bank account that Woods Resources shares with WSI. Thus, Doe
concludes, Tabor is a subsidiary of Woods Resources, which makes Tabor a
subsidiary of Woods Resources’ alter ego, WSI.
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4
Doe’s claim that that Woods Resources and WSI share a bank account is
questionable. As support for this claim, Doe cites to page 24 of the
transcript of oral argument on the Woods entities’ preliminary objections. In
this excerpt, counsel for the Woods entities described the overall structure of
the Woods entities, but she did not explicitly state that Woods Resources
and WSI share a bank account. Nevertheless, for purposes of this appeal
only, we will assume that WSI and Woods Resources share a bank account.
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Although Doe’s argument has some intuitive appeal, it is not in
harmony with the law. Corporations and their subsidiaries are separate and
distinct legal entities. Shared Communication Services of 1800 JFK
Boulevard, Inc. v. Bell Atlantic Properties, Inc., 692 A.2d 570, 573
(Pa.Super.1997). The subsidiary’s acts are not imputed to the parent
corporation for the purpose of establishing venue against the parent.
Wimble v. Parx Casino and Greenwood Gaming & Entertainment,
Inc., 40 A.3d 174, 178-79 (Pa.Super.2012). In Wimble, a personal injury
action against a Bucks County casino (Greenwood Gaming), we affirmed the
transfer of venue from Philadelphia to Bucks County despite evidence of acts
in Philadelphia by the casino’s sister corporations. We reasoned:
The entirety of Greenwood Gaming’s corporate activities occur in
Bucks County. The underlying incident happened in Bucks
County on the premises of Greenwood Gaming’s only business
location. Greenwood Gaming’s advertising activities in
Philadelphia do not amount to conducting business in that county
…
Like the trial court, we reject [the plaintiff’s] argument that the
Philadelphia operations of Greenwood Gaming’s sister
corporations should be attributed to Greenwood Gaming itself for
purposes of determining venue. Although a parent and a wholly-
owned subsidiary share common goals, they are still recognized
as separate and distinct legal entities. [Shared
Communication, supra] [The plaintiff] does not cite, and we
have not found, any case law supporting the notion that a
corporation may be subject to venue based solely upon the
business activities of a sister corporation in the jurisdiction in
question.
Id. at 178-79. The same state of affairs exists today. Doe cites no caselaw,
state or federal, which subjects a corporation to venue based on the
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activities of its subsidiary. Nor can we find any. Thus, we decline to
attribute Tabor’s activities in Philadelphia to the Woods entities for the
purpose of deciding venue.
For these reasons, we affirm the order sustaining the Woods entities’
preliminary objections and transferring venue to Bucks County.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/9/2016
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