~~------- 1 2 3 4 Michael J. Lampe #82199 Michael P. Smith #206927 LAW OFFICES OF MICHAEL J. LAMPE 108 West Center Avenue Visalia, California 93291 Telephone (559) 738-5975 Facsimile (559) 738-5644 mjl@lampe-law.com APR 24 2019 STEPHANIE C~,M.~la.ONPGLdiRK BY:--N~e\~ .R9nteda 5 Attorneys for Plaintiff Exempt from filing fees Government Code §6103 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 IN AND FOR THE COUNTY OF TULARE 10 11 12 TULARE LOCAL HEALTH CARE DISTRICT dba Tulare Regional Medical Center, a Public Agency 13 Plaintiff, vs. 15 BRUCE R. GREENE; BAKER & HOSTETLER LLP, a limited liability partnership; PARMOD KUMAR, M.D., LINDA WILBOURN, RICHARD TORREZ; and Does 1 through 50, inclusive, 17 3. Professional Negligence; and 4. Breach of Contract for Legal Services. Defendants. Plaintiff Tulare Local Health Care District dba Tulare Regional Medical Center alleges: GENERAL ALLEGATIONS 20 21 COMPLAINT FOR DAMAGES FOR: 2. Fraud; 18 19 278333- 1. Breach of Fiduciary Duty; 14 16 Case No. 1. At all times mentioned in this complaint, Tulare Local Health Care District dba Tulare 22 Regional Medical Center (the District) was a Health Care District operating under the laws of the 23 State of California. 24 25 2. At all times mentioned in this complaint, Defendant Bruce R. Greene was an attorney at law licensed to practice in the State of California. 26 28 ~s-\ 9 ~--..L____ CASE M/1:J'MGEMENT CONFERENCE 27 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES ~earing Date: lime: Department; ~, <:(; ) ~ 1 2 3 3. At all times mentioned in this complaint, Defendant Bruce R. Greene was a partner in the law firm of Defendant Baker & Hostetler LLP (Baker Hostetler). 4. The District, Greene, and Baker Hostetler have entered into a written tolling 4 agreement, tolling the statutes of limitation regarding the rights, claims, counterclaims, and other 5 defenses to causes of action and claims which may be asserted by or between the parties to April 6 30, 2019. 7 8 9 10 11 12 13 14 5. At all times mentioned in this complaint, the District was governed by a five person Board of Directors. 6. At all times mentioned in this complaint through July 20, 2017, Defendant Parmod Kumar (Kumar) served on the Board of Directors of the District. 7. At all times mentioned in this complaint through August 23, 2017, Defendant Linda Wilbourn (Wilbourn) served on the Board of Directors of the District. 8. At all times mentioned in this complaint through September 28, 2017, Defendant Richard Torrez (Torrez) served on the Board of Directors of the District. 15 9. Defendants Kumar, Wilbourn and Torrez are residents of Tulare County. 16 10. The District does not know the true n;:imes and capacities of the defendants named 17 herein as Does 1 through 50, and therefore sues these defendants by such fictitious names. The 18 District will amend this complaint to allege their true names and capacities when ascertained. The 19 District alleges on information and belief that each of the fictitiously named defendants are legally 20 responsible in some manner for the occurrences herein alleged, and that the violations alleged 21 herein were proximately caused by such wrongful acts. At all times herein mentioned, each of the 22 defendants was the agent of the remaining defendants, acting in concert with the remaining 23 defendants, and in doing the things alleged herein, was acting within the purpose, scope and 24 course of such relationship. 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -2- 1 FIRST CAUSE OF ACTION 2 Breach of Fiduciary Duty 3 (Against Defendants Greene, Baker Hostetler, and Does 1-50) 4 5 6 11. The District realleges and incorporates herein by reference each and every allegation contained in paragraphs 1 through 10 of this complaint. 12. In May of 2014, Bruce R. Greene and Baker Hostetler served as general counsel 7 to Healthcare Conglomerate Associates, LLC (HCCA). (Defendants Bruce R. Greene and Baker 8 & Hostetler LLP will hereafter collectively be referred to as Greene). 9 10 11 13. In May of 2014, Greene also acted as personal counsel to Dr. Benny Benzeevi (Benzeevi), who was the sole member of HCCA. 14. On May 29, 2014, the District entered into an Interim Joint Operating Agreement and 12 Management Services Agreement with HCCA (collectively the MSA), wherein HCCA was 13 appointed to exclusively provide day-to-day management services to and for the District with 14 respect to the hospital, clinics, and other facilities owned by the District. 15 15. The MSA was drafted and negotiated by Greene on behalf of HCCA. 16 16. Approximately one year later, on May 6, 2015, the District Directors unanimously 17 adopted Resolution 844, terminating the services of Herr, Pedersen & Berglund, general counsel 18 to the District, and authorizing HCCA to engage new legal counsel on behalf of the District. 19 20 21 22 23 24 17. On or before May 6, 2015, HCCA retained Greene to act as general counsel for the District. 18. Between May 6, 2015 and July of 2017, Greene acted as legal counsel for Benzeevi, HCCA, and the District. 19. Between May 6, 2015 and July of 2017, the interests of the District were not always aligned with the interests of Benzeevi or HCCA. 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -3- 1 20. Between May 6, 2015 and July of 2017, while acting as general counsel for the 2 District, Greene had a fiduciary duty to act in the bests interests of the District and the general public. 3 The Betre Lawsuit: 4 21. The District alleges on information and belief that during a closed session of the 5 District's Board conducted on March 29, 2016, Greene advised the Board to authorize the 6 initiation of legal action, using public funds to prosecute a lawsuit against Dr. Abraham Betre (the 7 Betre Lawsuit), not for the benefit of the District, but for the benefit of his other client, Benzeevi. 8 9 10 11 22. In advising the Board to initiate legal action on Benzeevi's behalf using public funds, Greene breached his fiduciary duty to the District by placing Benzeevi's interests above the interests of the District and the general public. 23. The District alleges on information and belief that during the March 29, 2016 closed 12 session, Greene further advised the Board to employ the Baker Hostetler law firm to prosecute 13 the Betre Lawsuit. 14 24. In advising the Board to employ Baker Hostetler to prosecute the Betre Lawsuit, 15 Greene breached his fiduciary duty to the District by placing his own financial interests above the 16 interests of the District and the general public. 17 18 19 20 21 22 25. The Board authorized the initiation of legal action against Dr. Betre pursuant to the advice given by Greene. 26. On May 4, 2016, Greene commenced the Betre Lawsuit on behalf of Benzeevi in the Tulare County Superior Court, case no. 265230. 27. The Betre Lawsuit seeks to recover monetary damages and injunctive relief for the benefit of Benzeevi. 23 28. The District has never been a party to the Betre Lawsuit. 24 29. On or about September 26, 2016, the Hon. David Mathias granted a Special Motion 25 to Strike the Betre Lawsuit under California's anti-SLAPP statute (CCP §425.15), and ordered that 26 the complaint filed by Benzeevi be dismissed. 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -4- 1 2 3 4 30. On or about November 23, 2016, Greene, on Benzeevi's behalf, appealed the trial court order dismissing the Betre Lawsuit. 31. On January 12, 2017, Benzeevi posted a cash appellate bond in the Betre Lawsuit with the Tulare County Superior Court (the Appellate Bond) in the amount of $78,306.78. 5 32. The Appellate Bond was posted using District funds. 6 33. The District's Directors were never asked to approve, and in fact did not approve, 7 8 9 10 11 the posting of the Appellate Bond. 34. The District alleges on information and belief that in using District funds to post the Appellate Bond, Benzeevi relied upon the advice of Greene, who was legal counsel for both Benzeevi and the District at the time. 35. In advising Benzeevi to use District funds to post the Appellate Bond, Greene 12 breached his fiduciary duty to the District by placing both his own financial interests, and the 13 interests of Benzeevi, above the interests of the District and the general public. Resolution 852: 14 15 36. In June of 2017, the District could not meet its financial obligations. 16 37. Among the financial obligations that the District could not meet was the payment of 17 over $500,000.00 for legal services charged by Greene to the District (the Baker Hostetler 18 Delinquent Legal Fees). 19 38. On June 20, 2017, Kumar, Wilbourn and Torrez, in their capacities as Directors of 20 the District, voted to adopt District Resolution 852, a true and correct copy of which is attached 21 hereto as Exhibit 1. 22 39. Resolution 852 purports to delegate to Benzeevi, as the "Authorized Representative" 23 of HCCA, the "absolute, full and complete power and authority" to borrow up to $22,000,000.00 24 in the name of the District (or execute other documents for the extension of credit to the District), 25 upon such terms and at such interest rate as Benzeevi determined to be fair, without seeking 26 board approval of the actual terms of the loans or extensions of credit. 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -5- 1 40. Resolution 852 further purports to delegate to Benzeevi the authority to use District 2 property, both real and personal, as security for such loans or extensions of credit, without 3 seeking further board approval. 4 41. The District alleges on information and belief that Greene prepared Resolution 852. 5 42. When Greene prepared Resolution 852, he knew that payment of the Baker 6 Hostetler Delinquent Legal Fees might be dependent upon the Board's adoption of the resolution, 7 and financing secured thereunder. 8 9 43. In preparing Resolution 852, Greene breached his fiduciary duty to the District by placing his own financial interests above the interests of the District and the general public. The Recall Election and its Aftermath: 10 11 12 13 14 15 16 17 18 44. On July 11, 2017, a special recall election was held to determine if Kumar should be removed as a District Director. 45. On July 18, 2017, the Tulare County Registrar of Voters certified that Kumar was recalled by 80.6% of registered voters who cast ballots at the special recall election. 46. Also on July 18, 2017, the Tulare County Registrar of Voters certified that Senovia Gutierrez (Gutierrez) had been elected to replace Kumar on the District Board of Directors. 47. On June 25, 2017, Gutierrez was sworn into office by Tulare County Superior Court Judge Walter Gorelick at a public ceremony. 19 48. On July 26, 2017, a regular meeting of the Board was scheduled to be held. 20 49. The agenda posted for the July 26 Board meeting contained the following entry: 21 "Chair Announcement - As a result of the recent special election on July 11, 2017, Senovia 22 Gutierrez will replace Dr. Parmod Kumar as a Board member." A true and correct copy of the July 23 26 agenda is attached hereto as Exhibit 2. 24 50. Contrary to the Chair Announcement, Gutierrez was not seated as a Board member 25 on July 26, 2017. 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -6- 1 2 3 51. The District alleges on information and belief that Greene instructed Wilbourn, as Board Chair, to refuse to seat Gutierrez as a Board member on July 26, 2017. 52. The District alleges on information and belief that on July 26, 2017, Greene knew 4 that Benzeevi was negotiating with Celtic Leasing Corporation to secure additional District 5 financing (the Celtic Financing), under the authority purportedly granted to Benzeevi under 6 Resolution 852. 7 53. The District alleges on information and belief that Greene instructed Wilbourn to 8 refuse to seat Gutierrez as a Board member knowing that Gutierrez, when seated, would vote with 9 two dissenting Directors to immediately rescind Resolution 852, thereby jeopardizing payment of 10 11 the Baker Hostetler Delinquent Legal Fees. 54. In instructing Wilbourn to refuse to seat Gutierrez as a Board member, Greene 12 breached his fiduciary duty to the District by placing his own financial interests above the interests 13 of the District and the general public. 14 55. On July 27, 2017, a special meeting of the board was held by Directors Kevin 15 Northcraft, Mike Jamaica, and Senovia Gutierrez, wherein action was taken to (1) terminate the 16 services of Greene and the Baker Hostetler law firm, and (2) rescind Resolution 852. 17 56. On multiple occasions thereafter, Greene refused to recognize the authority of 18 Directors Northcraft, Jamaica and Gutierrez, and continued to represent to the general public that 19 he was general counsel for the District, even though his services had been lawfully terminated. 20 57. As an example, on July 28, 2017, Greene attempted to intimidate Directors 21 Northcraft, Jamaica and Gutierrez by sending an email, a true and correct copy of which is 22 attached hereto as Exhibit 3, reading, in part, as follows: 23 24 "I must caution you that you, Mr. Jamaica, and Ms. Gutierrez are risking personal liability for taking these illegal actions, for which there will be no insurance coverage or indemnification rights under the District's Bylaws." 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -7- 58. 1 The District alleges on information and belief that Greene refused to recognize the 2 authority of Directors Northcraft, Jamaica and Gutierrez; continued to represent to the general 3 public that he was general counsel for the District after his services had been lawfully terminated; 4 and on multiple occasions attempted to intimidate Directors Northcraft, Jamaica and Gutierrez, 5 knowing that they would ratify the Board's prior rescission of Resolution 852, thereby jeopardizing 6 payment of the Baker Hostetler Delinquent Legal Fees. 59. 7 In taking the actions alleged above, Greene breached his fiduciary duty to the 8 District by placing his own financial interests above the interests of the District and the general 9 public. 60. 10 11 On August 23, 2017, a regular meeting of the Board was scheduled to be held, commencing at 4:00 p.m. 61. 12 On August 23 at 3:07 p.m. - a mere 53 minutes prior to the commencement of the 13 August Board meeting - Greene notified Board members by email that Chair Linda Wilbourn had 14 resigned effective noon that day. A true and correct copy of Greene's email with Wilbourn's 15 resignation is attached hereto as Exhibit 4. 62. 16 Based upon "word" received from fellow Board member Torrez that he would not be 17 attending the August 23 Board meeting, Greene wrongly concluded that, "there can be no quorum 18 of the Board at the scheduled meeting, and the meeting will be cancelled." (Exhibit 4.) 63. 19 Greene 's theory that Gutierrez had not been properly seated appears to account 20 for Greene's erroneous conclusion regarding a quorum. If Gutierrez was not a Board member, 21 and Wilbourn resigned prior to the scheduled meeting, the Board would only have three members. 22 A quorum of the Board would then be met by the appearance of two Directors. 64. 23 24 Both Northcraft and Jamaica were present for the Board meeting of August 23, 2017. 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -8- 65. 1 After declaring that the August 23, 2017 Board meeting would be cancelled for lack 2 of a quorum, Greene realized his error, and attempted via a second email, transmitted at 4:00 3 p.m., to move the effective date of the Wilbourn resignation to the following day. A true and 4 correct copy of Greene's second email is attached hereto as Exhibit 5. 5 66. 6 representations: In his second email to Board members on August 23, Greene made the following "I was just advised by Linda that she intended her resignation to be effective tomorrow at 8AM, not today. So as of today, she is still a Board Member. However, she is not able to attend the meeting this afternoon, and there is no quorum possible." (Exhibit 5) 7 8 9 67. 10 11 The District alleges on information and belief that the representations made by Greene in Exhibit 5 are false. 68. 12 The District alleges on information and belief that Greene orchestrated or 13 participated in the attempt to deny a quorum at the August Board meeting knowing that if the 14 meeting commenced with a quorum, the Board would ratify its prior rescission of Resolution 852, 15 thereby jeopardizing payment of the Baker Hostetler Delinquent Legal Fees. 69. 16 The District alleges on information and belief that Greene orchestrated or 17 participated in the attempt to deny a quorum at the August Board meeting knowing that the Celtic 18 Financing was only days away from funding, thereby guaranteeing payment of the Baker Hostetler 19 Delinquent Legal Fees. 70. 20 In taking the actions alleged above, Greene breached his fiduciary duty to the 21 District by placing his own financial interests above the interests of the District and the general 22 public. Greene's Opinion of Counsel Letter: 23 24 71. On August 28, 2017, Greene executed an Opinion of Counsel Letter, furnished to 25 to Celtic Leasing for the purpose of securing $3,000,000.00 in District financing. A true and 26 correct copy of Greene's letter is attached hereto as Exhibit 6. 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -9- 72. 1 2 In his August 28 Opinion of Counsel Letter, Greene affirmatively represented to Celtic Leasing that Benzeevi was authorized to execute lease documents on behalf of the District. 73. 3 In his August 28 Opinion of Counsel Letter, Greene attached a copy of Resolution 4 852, and affirmatively represented to Celtic Leasing that Resolution 852 was enforceable against 5 the District. 74. 6 In his August 28 Opinion of Counsel Letter, Greene failed to disclose to Celtic 7 Leasing that on July 27 Directors Northcraft, Jamaica and Gutierrez voted to rescind Resolution 8 852. 9 75. The District alleges on information and belief that Celtic Leasing would not have 10 entered into the lease transaction which generated $3,000,000.00 in new District financing without 11 an Opinion of Counsel letter from Greene upon which it could rely. 12 76. On or about August 31, 2017, the Celtic Leasing transaction closed, generating 13 $3,000,000.00 in new District financing through the sale of medical equipment owned by the 14 District. 15 16 77. account controlled by Benzeevi. Greene's Receipt of $509,727.23 in Delinquent Legal Fees 17 18 The $3,000,000.00 generated from the sale of District assets was deposited into an 78. On September 10, 2017, Greene was paid $499,727.93 from the proceeds of the 19 Celtic Leasing transaction. A true and correct copy of the check reflecting this payment is 20 attached hereto as Exhibit 7. 21 79. On September 14, 2017, Greene was paid an additional $10,000.00 from the 22 proceeds of the Celtic Leasing transaction. A true and correct copy of the check reflecting this 23 payment is attached hereto as Exhibit 8. 24 80. The District alleges on information and belief that Greene delivered his Opinion of 25 Counsel Letter to Celtic Leasing as a means of guaranteeing payment of Delinquent Legal Fees 26 in the total amount of $509,727.93. 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -10- 81. 1 In taking the actions alleged above, Greene breached his fiduciary duty to the 2 District by placing his own financial interests above the interests of the District and the general 3 public. 4 82. On September 27, 2017, Benzeevi executed a Deed of Trust, purporting to 5 encumber District real property for the purpose of securing preexisting notes payable to HCCA 6 totaling $10,233,950.05. A true and correct copy of this Deed of Trust is attached hereto as 7 Exhibit 9. 8 9 10 11 12 83. The District alleges on information and belief that Benzeevi executed and recorded the Deed of Trust attached hereto as Exhibit 9 on the advice and counsel of Greene. 84. On September 29, 2017, Greene terminated its attorney-client relationship with Benzeevi, HCCA, and all entities affiliated with Benzeevi and HCCA. 85. As a result of the multiple breaches of Greene's fiduciary duty to the District and the 13 general public described above, the District has been damaged in an amount exceeding 14 $4,800,000.00. 15 86. In committing the acts described herein, Greene and Baker Hostetler were guilty of 16 oppression, fraud, or malice, in that they intentionally placed their own financial interests above 17 those of their client, in violation of their duty of loyalty to the District and in violation of the 18 California Rules of Professional Conduct. As a result, the District is entitled to an award of 19 exemplary or punitive damages. 20 SECOND CAUSE OF ACTION 21 Breach of Fiduciary Duty 22 (Against Defendants Kumar, Wilbourn and Torrez) 23 24 87. The District realleges and incorporates herein by reference each and every allegation contained in paragraphs 1 through 86 of this complaint. 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -11- 1 88. At all times mentioned in this complaint, Kumar, Wilbourn and Torrez (the Former 2 Directors), as elected public officials, had a fiduciary duty to act in the bests interest of the District 3 and the general public. 4 5 6 89. On June 20, 2017, the Former Directors voted to adopt District Resolution 852. (Exhibit 1.) 90. Resolution 852 purports to delegate to Benzeevi, as the "Authorized Representative" 7 of HCCA, the "absolute, full and complete power and authority" to borrow up to $22,000,000.00 8 in the name of the District (or execute other documents for the extension of credit to the District), 9 upon such terms and at such interest rate as Benzeevi determined to be fair, without seeking 10 11 board approval of the actual terms of the loans or extensions of credit. 91. Resolution 852 further purports to delegate to Benzeevi the authority to use District 12 property, both real and personal, as security for such loans or extensions of credit, without 13 seeking further board approval. 14 92. In adopting Resolution 852, the Former Directors breached their fiduciary duty to the 15 District and the general public by attempting to invest such authority with Benzeevi, as Board 16 oversight of incurring up to $22,000,000.00 in public debt, and using District assets as security 17 for that debt, constituted a "non-delegable" duty of the District's Board. 18 93. In adopting Resolution 852, the Former Directors breached their fiduciary duty to the 19 general public by engaging in an "ultra vires" act, falling outside the powers that are vested in 20 public officials. 21 22 23 24 94. In adopting Resolution 852, the Former Directors were not acting within the scope of their authority as public officials. 95. In adopting Resolution 852, the Former Directors were not acting in good faith and in a manner they believed to be in the best interests of the District. 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DU FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -12- 1 96. As a consequence of the Former Directors' breach of their fiduciary duties to the 2 District and the general public, on or about August 31, 2017, District assets were sold to Celtic 3 Leasing Corporation for $3,000,000.00 and immediately leased back by the District under a 4 financing vehicle known as a "lease-back" arrangement. 5 97. As a consequence of the Former Directors' breach of their fiduciary duties to the 6 District and the general public, the entire $3,000,000.00 generated from the sale of District assets 7 was placed into an account controlled by Benzeevi and HCCA. 8 98. As a further consequence of the Former Directors' breach of their fiduciary duty to 9 the District and the general public, on September 27, 2017, Benzeevi executed a Deed of Trust, 10 purporting to encumber District real property for the purpose of securing preexisting notes payable 11 to HCCA totaling $10,233,950.05. 12 99. As a result of the Former Directors' breach of their fiduciary duty to the District and 13 the general public, the District has been damaged in an amount to be shown according to proof 14 exceeding the limited jurisdiction of this court. 15 THIRD CAUSE OF ACTION 16 Damages for Fraud 17 (Against Defendant Bruce R. Greene and Does 1-50) 18 19 20 21 22 23 100. The District realleges and incorporates herein by reference each and every allegation contained in paragraphs 1 through 99 of this complaint. 101. On August 23, 2017, Greene made the following representations to Board Members by email: "I was just advised by Linda that she intended her resignation to be effective tomorrow at 8AM, not today. So as of today, she is still a Board Member. However, she is not able to attend the meeting this afternoon, and there is no quorum possible." (Exhibit 5) 24 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -13- 1 102. The District alleges on information and belief that Greene's representation that, "I 2 was just advised by [Wilbourn] that she intended her resignation to be effective tomorrow at 8AM, 3 not today," was false, and Greene knew the representation to be false at the time he made it. 4 5 6 103. Greene's representation that, "So as of today, [Wilbourn] is still a Board Member," was false, and Greene knew the representation to be false at the time he made it. 104. The District alleges on information and belief that Greene's representation that, 7 "However, [Wilbourn] is not able to attend the meeting this afternoon," was false, and Greene 8 knew the representation to be false at the time he made it. 9 105. Greene's representation that, as a consequence of his previous misrepresentations, 10 "there is no quorum possible," was false, and Greene knew the representation to be false at the 11 time he made it. 12 13 14 15 16 17 18 106. At the time Greene made the representations set forth above, Greene intended that District management, including his other clients, Benzeevi and HCCA, rely on the representations. 107. The District and others, including Celtic Leasing, reasonably relied upon Greene's representations. 108. As a result of the fraudulent conduct described above, the District has been damaged in an amount exceeding $4,800,000.00. 109. In committing the acts described herein, Greene and Baker Hostetler were guilty of 19 oppression, fraud, or malice, in that the representations were made to insure payment of 20 Delinquent Legal Fees in the amount of $509,727.93, with complete disregard for the interests 21 of their client, in violation of their duty of loyalty to the District and in violation of the California 22 Rules of Professional Conduct. As a result, the District is entitled to an award of exemplary or 23 punitive damages. 24 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -14- 1 FOURTH CAUSE OF ACTION 2 Professional Negligence 3 (Against Defendants Greene, Baker Hostetler, and Does 1-50) 4 5 6 7 8 110. The District realleges and incorporates herein by reference each and every allegation contained in paragraphs 1 through 109 of this complaint. 111. On or before May 6, 2015, Greene was retained to act as general counsel for the District. 112. Greene failed to use reasonable skill and care in the representation of the District 9 in that he failed to adequately disclose conflicts of interest that existed by virtue of his 10 simultaneous representation of the District, on the one hand, and Benzeevi, HCCA, and other 11 entities owned or controlled by Benzeevi, on the other hand. 12 113. Greene failed to use reasonable skill and care in the representation of the District 13 in that he continuously acted in a manner that placed the interests of Greene, Baker Hostetler, 14 Benzeevi, and HCCA above the interests of the District. 15 16 17 114. Greene failed to use reasonable skill and care in the representation of the District in that he misrepresented to the Board facts which he knew were false. 115. Greene failed to use reasonable skill and care in the representation of the District 18 in that he took a position adverse to the District in orchestrating or participating in an effort to 19 delay the seating of Gutierrez as a Director after she was duly elected to the Board. 20 116. Greene failed to use reasonable skill and care in the representation of the District 21 in that he executed and delivered his Opinion of Counsel letter to Celtic Leasing at a time when 22 he knew that Resolution 852 was no longer in effect. 23 117. As a direct and proximate result of the negligence and carelessness of Greene and 24 Baker Hostetler, the District has been damaged in an amount to be shown according to proof 25 exceeding the limited jurisdiction of this court. 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -15- 1 FIFTH CAUSE OF ACTION 2 Breach of Contract 3 (Against Defendants Greene, Baker Hostetler, and Does 1-50) 4 5 6 7 8 118. The District realleges and incorporates herein by reference each and every allegation contained in paragraphs 1 through 117 of this complaint. 119. The District alleges on information and belief that a written engagement letter exists between Greene and the District. 120. The District alleges on information and belief that this written engagement letter is 9 unenforceable because it violates Rule 3-31 0(C)(3) of the Rules of Professional Conduct, in effect 10 at the time, because Greene did not secure the informed written consent of the District to 11 represent the District while simultaneously representing Benzeevi, HCCA, and other entities 12 owned or controlled by Benzeevi, all of whom had interests adverse to the District. 13 14 15 121. The failure of Greene to comply with Rule 3-310(C)(3) renders the engagement agreement unenforceable in its entirety. 122. As a result of Greene's failure to comply with the terms of Rule 3-31 0(C)(3), all fees 16 for legal services paid by the District to Greene or Baker Hostetler, directly or indirectly, are 17 properly disgorged by Greene and Baker Hostetler, and recovered by the District. 18 123. The District has paid Greene and Baker Hostetler for legal services the District is 19 entitled to recover in an amount to be shown according to proof exceeding the limited jurisdiction 20 of this court. 21 WHEREFORE, plaintiff prays judgment as follows: 22 ON THE FIRST CAUSE OF ACTION: 23 1. 24 25 26 For general damages against Defendants Bruce R. Greene and Baker Hostetler in an amount exceeding $4,800,000.00; and 2. For exemplary or punitive damages against Defendant Bruce R. Greene and Baker Hostetler in an amount to be shown according to proof. 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -16- 1 ON THE SECOND CAUSE OF ACTION: 2 3. 3 For general damages against Defendants Kumar, Wilbourn and Torrez in an amount to be shown according to proof. 4 ON THE THIRD CAUSE OF ACTION: 5 4. 6 7 For general damages against Defendants Bruce R. Greene and Baker Hostetler in an amount exceeding $4,800,000.00; and 5. For exemplary or punitive damages against Defendant Bruce R. Greene and Baker 8 Hostetler in an amount to be shown according to proof. 9 ON THE FOURTH CAUSE OF ACTION: 10 11 6. For general damages against Defendants Bruce R. Greene and Baker Hostetler in an amount to be shown according to proof. 12 ON THE FIFTH CAUSE OF ACTION: 13 7. 14 For recovery of all fees paid by the District to Defendants Bruce R. Greene and Baker Hostetler for legal services rendered to the District from and after May 6, 2015. 15 ON ALL CAUSES OF ACTION: 16 8. For costs of suit incurred herein; and 17 2. For such other relief as the court may find necessary or appropriate. 18 19 20 21 22 Dated: April 24, 2019 LA OFFICES OF MICHAEL J. LAMPE Attorneys for Plaintiff By: Michael J. Lampe 23 24 25 26 27 28 COMPLAINT FOR BREACH OF FIDUCIARY DUTY; FRAUD; PROFESSIONAL NEGLIGENCE; AND BREACH OF CONTRACT FOR LEGAL SERVICES -17- RESOLUTION NO. 852 OF THE BO.ARD-OF D1RECTORS OF . TULA.ItE REGIONAL MEDICAL CENTER WHER.EA:S;. the Bm1rd of Directors (the "Board") 0f Tulare Local Healthcare Distdet qba 'I'hlar~ Regicmal 1v.fedi4af. Cl:lrite'i: (the '"Districe~) tias dl:ltetmiti'!:ld that it is necessary and appropria;te,. ·and ·in, the bl;lSt interes.ts of the Dfatl'ict to. b'oi:i;i:>w fl,!11d:s to. e'oye:r op.ei:ating cash flowi and · _ WHEREAS, the Board has determined thaUt is necessary and ·appropriate; anq in th~ .best 'interests ·of the Disti'ict, to· have its manager; Healthcai·e Conglomei:ate Associates, LLC ('·'HC.CA'·t aoting thrnugh - its Chiiil'm:~ti, Bertn)' B.enzeevi, M:b. ("'Authorized Representative") S!:)~k to obtai'n a loan for the· purp.oses· ,of payment of op~rat_!ng expenses of the:.Hospital, i·~p.ayii)eht of debt, pay.hieht -o;f ·ongqing costs. of eonstructi~n the Tower projeet1 and fornthet·_ Hospital purposes. of :NOW, THEREFORE., B:E IT R'ESOLWD· THA'J;' the .District's Autho1•iz~d Repi"esentative is authorized and -directed to prepare, execute and submit to potential lend~'rs appiications for a commitment to make a loa11, or other agreement for the extension of:creait- to the Distric't,. in an amount of up to $22;00.d;Od0; upon such terms \Ind at. such interest rate as the Dis'fi'k:t's Authorized. Representative determines to be fail' <1nd <;on/fi:ste.ntwith the n1ai"lcetj:llace. for the puipos~ statec!. above. .FURTHER RESOLVED, that if ff loii;h corn,mitmei:it .i.s of:itained, the Authm'ized Representative is authorized·.and .dh:ectee;I to t<1ke any fmther 11-ctions and to execute, ,ip the naine bf and on behalf of the District, :any insh:um:ents and doGuments. required ·by the !encl.er ·to obtairt such loa11, including, without lirpitation, px.01nis•sory notes, s.ecu,J'ity instruments and other c~stomary loan docum"©nts (whlc!i. includes s~le/lea,seback documents which are useQ for finruicing p\u=poses), it being th'e intention of the· Board that the Authorized Represen~ative shali have absolute, full and compJet!;l powei• and authority to ex:eC>ute and deliver to the lend.er any and all documents and instruments requited to· obtaii1 and consummate suph Joan,. and to take any fui.th!:)r actions requ:il'ed to 0.btain ancl consummate such -loan. FURTII:ERRESOLVED, that the Board acknowledges artd agl'ees t\,at except to the extent pt;0hibited by applicable law and: any existing·B0nd documents, all p1:qperty (teal and p·ersomii), equipment, rev:enues, depo.sit acoounts- and ·other, ass.eta of the District may be used as secul'ity for any loan obtained pul'suantto this Re:solutiori. 0937B4.000003 610927047.1 flJHCCA Tulare Regional Medic~I Center Tulare Local Health Care District Board of Directors Regular Meeting Agenda Wednesday, July 26, 2017 Board Convenes at 4:00 p.m. Evolutions Fitness & Wellness Center Conference Room 1425 E. Prosperity Ave. Tulare, CA 93274 I. CALL TO ORDER -Chair of the Board II. CHAIR ANNOUNCEMENT - As a result of the recent special election on July 11, 2017, Se novia Gutierrez will replace Dr.· Parmod Kumar as a Board member. Ill. CITIZEN REQUESTS/PUBLIC COMMENTS IV. APPROVAL OF MINUTES Regular Board Meeting Minutes of June 28, 2017 Proposed Action: Approval of Minutes for the June 28, 2017 Regular Board Meeting V. OPEN SESSION AGENDA A. Consent Agenda 1. Request to approve the following Medical Executive Committee Policies: None 2. Request to approve the following Tulare Local Health Care District (TLHCD) Hospital Policies: None B. - Report by Administration -HCCA Management 1. a. ,! Quarterly Financial Update Board of Directors: Linda Wilbourn Chairman and President Parmod Kumar, MD Vice Chairman . :; Finance Richard Torrez Treasurer l EXHIBIT d Michael Jamaica Secretary . Kevin Northcraft Board Member Tulare Reglonal Medical Cenler Is a Division olTUara Local Heallh Care Of&lrict Proposed Action: Aqceptance of Quarterly Financial Statement 2. Other a. Fiscal Year 2018 Budget Presentation Proposed Action: Approval of Fiscal Year 2018 Budget C. Board of Directors Discussion/Action Items 1. D. Board Member Reports Medical Staff Report - Ronald Ostrom, D.O., Chief of Medical Staff (or MEG representative) 1. MEC Recommendations to the Board and Report of Actions Proposed Action: Acceptance of MEC Recommendations VI. SUSPEND OPEN SESSION • ADJOURN TO CLOSED SESSION VII. CLOSED SESSION Location: Administration Office, 869 N. Cherry St., Tulare, CA 93274 A. Medical Executive Committee Report of Hospltai Medical Audit or Quality Assurance Activities - Ronald Ostrom, D.O., Chief of Medical Staff (or MEG representative) MEC Reports relating to Peer Review, Credentialing, and Quality Assurance, pursuant to Health and Safety Code section 32155. B. Conference With Legal Counsel Significant exposure to litigation pursuant to Subdivision (d)(2) of Government Code section 54956.9: - One (1) potential action C. Conference With Legal Counsel Existing Litigation pursuant to subdivision (d}(1) of Government Code section 54956.9: Discussion regarding Ibarra v. Tulare Regional Med Center, David Smith, Douglas Middleton, Family Health Care Network, David Larios, and DOES 1 to 10 United States District Court, Eastern District of California Case No.: 1: 16-cv-0039-LJO-BAM D. Conference With Legal Counsel Existing Litigation pursuant to subdivision {d)(1) of Government Code section 54956.9: Discussion regarding Opper v. Tulare Regional Medical Center, et al. Tulare County Superior Court Case No.: 263554 E. Conference With Legal Counsel Existing Litigation pursuant to subdivision (d)(1) of Government Code section 54956.9: Discussion regarding Lori Brooks v. Tulare Regional Medical Center Tulare County Superior Court Case No.: VCU266862 F. · Conference With Legal Counsel Existing Litigation pursuant to subdivision (d)(1) of Government Code section 54956.9: Discussion regarding Juanita Cabrera v. Tulare Regional Medical Center · Tulare County Superior Court Case No.: VCU268660 G. Conference With Legal Counsel Existing Litigation pursuant to subdivision (d)(1) of Government Code section 54956.9: Board of Directo'rs: Linda Wilbourn Chairman and President Parmod Kumar, MD Vice Chairman Richard Torrez Treasurer Michael Jamaica Secretary Kevin Northcraft Board Member 611069561.1 Discussion regarding Graham Prewett, Inc. v. Tulare Local Healthcare District Tulare County Superior Court Case No.: VCU269517 VIII. ADJOURN CLOSED SESSION/RECONVENE OPEN SESSION Location: Evolutions Fitness & Wellness Center, Conference Room 1425 E. Prosperity Ave., Tulare, CA 93274 - Public report of action taken in closed session, pursuant to Government Code section 54957 .1 IX. ADJOURNMENT NOTICE TO THE PUBLIC - Tulare Regional Medical Center does not discriminate against any person on the basis of gender, religion, race, color, national origin, disability, or age in admission, treatment, or participation in its programs, services and activities, or in employment. For further information about this policy, contact: Bruce Greene of Baker & Hostetler LLP at telephone nu_mber (310) 442-8834 or by e-mail at bgreene@bakerlaw.com. PUBLIC COMMENT PERIOD FOR REGULAR MEETINGS At this time, members of the public may comment on any item of interest to the public that is within the subject matter jurisdiction of the Board (Gov't Code, § 54954.3(a)). Provided, ho'Afever, the Board shall not take action on any item not appearing on the agenda unless the action is otherwise authorized by law. Any person addressing the Board will be limited to a maximum of three (3) minutes so that all interested parties have an opportunity to speak. If any individual causes disruption cif the meeting, the Chair of the Board, after warning the speaker, may declare that the speaker is disrupting, disturbing, or impeding the orderly conduct of the meeting and order the speaker to leave the meeting room. OPEN SESSION AGENDA ITEMS All writings, materials and information provided to the Board for their consideration relating to any Open Session Agenda item of the meeting are available for public inspection during regular business hours at the Administration Office of the District located at 869 Cherry Street, Tulare, California. CLOSED SESSION AGENDA ITEMS As provided in the Ralph M. Brown Act, Government Code §54950 et seq., the Board may meet in closed session with members of its staff, employees and its attorneys. These sessions are not open to the public and may not be attended by members of the public. The matters the Board will meet on in closed session are identified in the Regular Meeting agenda. Any public reports of action taken in the closed session will be made in accordance with Government Code § 54957 .1. COMPLIANCE WITH ADA The agenda shall be made available upon request in alternative formats to persons with a disability, as required by the Americans with Disabilities Act of 1990 (42 U.S.C. § 12132) and the Ralph M. Brown Act (Cal. Gov't Cod. § 54954.2). Persons requesting a disability related modification or accommodation in order to participate in the meeting should contact the Executive Office at (559) 685-3462, during regular business hours. Board of Directors: Linda Wilbourn Chairman and President Parmod Kumar, MD Vice Chairman Richard Torrez Treasurer Michael Jamaica Secretary Kevin Northcraft Board Member 611069561.1 ··From:· Greerie;Hri.tce. R. ,· ~Tornorthee .<11orthee@aol;com>:;' Cc: Linda WIibourn ; Richard Torrez ; benny ; Mike Jamaica ; sevonia ' ·sent Fri/Jul '28/2017 7:2:f.prti Subject: Purported Board Meeting of TRMC Mr Northcraft~ I am responding to your email today atA:48,pm addressed to LindaWilbourh and 8enriy Belizeevl MD. /'\s I have lnfo·rmed you 011 several prior oocasions; in my opinion, as couni:;fljJor theBoard ofDlreotors·of 0 the District, Ms ..Gutierrezis.nota member ottbe .l:loard, and therefore (a) she had no right to join In the call for the special meeting on July 27, 2017 (b) that meeting was not a lawful meeting of the Board and (c) any actions which you, Mr. Jamaica and Ms. Gutierrez purported to take at that meeting have no legal force or effect. I base my opinion on the very clear language in California Elections Code Sect. 15400, which provides that the winning candidate does not become a Board member until he or she Is declared as such by the current Board. This has been confirmed in writing to be the proper procedure to be followed by the Tulare County registrar of voters. And since it Is indisputable that the Board never even had an opportunity to declare Ms Gutierrez a member at the last general meeting, it is lil on behalf of Greene, Bruce R. Wednesday, August 23, 2017 3:07 PM Kevin Northcraft (northee@aol.com); Mike Jamaica (mikejamaica@sbcglobal.net); Richard Torrez (tacboxing@gmail.com) benny@healthcca.com TRMC Board Meeting Aug 23, 2017 TRMC Resignation Letter Signed.pdf Attached is a letter from Linda Wilbourn resigning from the Board effective as of noon today. I have also received word from Richard Torrez that he will not be attending the Board meeting which is scheduled for this afternoon. Accordingly, there can be no quorum of the Board at the scheduled meeting, and the meeting will be cancelled. Notice of cancellation will be duly posted. · Bruce Greene Partner BakerHostetler 11601 Wilshire Boulevard I Suite 1400 Los Angeles, CA 90025-0509 T +1.310.442.8834 M +1.310.308.1003 bgreene@bakerlaw.com bakerlaw.com 0® This email is intended only for the use of the party to which it is addressed and may contain information that is privileged. confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination. copying or distribution of 1his email or its contents is s1rictly prohibited. If you have received this message in error, please notify us immediately by replying to the me·ssage and deleting it from your computer. Any tax advice in this email is for information purposes only. The content of this email is limited to the matters specifically addressed herein and may not contain a full description of all relevant facts or a complete analysis of all relevant issues or authorities. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, we do not accept responsibility for any errors or omissions that are present in this email. or any attachment, that have arisen as a result of e-mail transmission. EXHIBIT ~1 Linda Wilbourn ·. 12499.Colony Ave Tulare, CA93274 August 23, 2017 12:00 noon Tulare Local Healthcare District Board of Directors Dr. Benny Benzeevi, CEO Healthcare Conglomerate Associates Bruce Greene, Baker & Hostetler LLP TRMC Legal Counsel Dear Bruce; As I now serve as the Chairman of the Tulare Local Healthcare District Board of Directors, and this letter would be normally sent to the Chairman of the Board, I am sending it to you as legal counsel for the board. As of this date, noon, I am resigning my position as Chairman and as Director of Zone 5 of the Tulare Local Healthcare District. When I was elected as Zone 5 Director, my only goal and agenda was to further the completion of the new tower project to bring our hospital into California state earthquake compliance before the 2030 state deadline. To my mind the every penny spent on or in the hospital hinges on the district finishing that tower. The very existence of the hospital is tied to the tower completion. Every day since I was elected to this board, I have worked towards that goal. Since November 2016, the board makeup has significantly changed their direction and agenda. My goals do not seem to mesh with theirs any longer. The completion of the Tower has now taken a back seat to personal agendas and egos. These agendas are not in the best interest of the District, the hospital, or the people who depend on our hospital for their healthcare, and I will not be a part of this takeover and I refuse to be caught in the quagmire of legal issues that I see coming very quickly. I will be moving out of Zone 5 by the end of this year and I think it would be best if I leave the Board at this time. Let it be known to all that EVERY and I repeat EVERY vote I have cast in both open and closed sessions have what I feel has been best for Tulare Regional Medical tenter, the employees of that hospital and for all the people ofTulare Local Healthcare District. My votes have never been influenced by others, but what I felt were the best for TRMC. I have always believed that the unique partnership between the District and HCCA was an innovative solution to the success of our hospital. This could be the model for collaboration between private and public entities to save many District hospitals in California and even the US, if everyone opens their minds and starts thinking out of the box. Please accept my resignation and pass it on to whoever is necessary to receive it. I give my sincere apologies to the folks in Zone 5 for not fulfilling my commitment. I have been their neighbor and friend for 41 years and I know there are some very good and bright people who can easily take my place. I wish everyone connected with TRMC the best, especially ttie dedicated employee who make TRMC the wonderful hospital that it is. My family and I will always be supporters of TRMC and Tulare Hospital Foundation. My best to you also. I know with your help and the firm of Baker & Hostetler's help, you have saved the District.millions of dollars, and I personally thank you. From: Sent: To: Cc: S,ubject: Attachments: Greene, Bruce R. on behalf of Greene, Bruce R. Wednesday, August 23, 2017 4:00 PM Kevin Northcraft (northee@aol.com); Mike Jamaica (mikejamaica@sbcglobal.net); Richard Torrez (tacboxing@gmail.com) benny@healthcca.com TRMC Board Meeting Aug 23, 2017 TRMC Resignation Letter Signed.pdf I was just advised by Linda that she intended her resignation to be effective tomorrow at 8AM, not today. So as of today, she is still a Board member. However, she is not able to attend the meeting this afternoon, and there is no quorum possible. I apologize for any misunderstanding . Attached is a letter from Linda Wilbourn resigning.from the Board effective as of noon today. I have also received word from Richard Torrez that he will not be attending the Board meeting which is scheduled for this afternoon. Accordingly, there can be no quorum of the Board at the scheduled meeting, and the meeting will be cancelled. Notice of cancellation will be duly posted. Bruce Greene Partner BakerHostetler 11601 Wilshire Boulevard I Suite 1400 Los Angeles, CA 90025-0509 T +1.310.442.8834 M +1 :310.308.1003 bgreene@bakerlaw.com bakerlaw.com A~ ~\iii This email is intended only for the use of the party to which it is addressed and may contain information that i~ privileged, confidential, or protected by law. If you are not the intended recipient you are hereby notified that any dissemination, copying or distribution of this email or its content:; is slriclly prohibit11d. If you have received this message in error, please notify us immediately by replying to the message and deleting ii from your computer. Any tax advice in this email is for information purposes only. The content of this email'is limited to the mailers specifically addressed herein and may not contain a full description of all relevant facts or a complete analysis of all relevant issues or authorities. Internet communications are not assured to be secure or clear of inaccuracies as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. Therefore, w(; do not accept responsibility for any errors or omissions that are present in this email, or any attachment, that have arisen as a result of e-mail transmission. EXHIBIT -s--- ·BakerHostetler Baker&Hostetler LLP I 1601 Wilshire Boulevard Suite 1400 Los Allgel11s, CA 90025-0609 T 310,820.8800 F 310.820.8859 www.bakerlaw.com August 28, 2017 Ce!Uc Leasing Corp. 4 Park Plaza, Suite 300 livlne, CA 92614 Re: Lease Schedule No. 3826A01 (the "Schedule") to Master Lease No. 3826A (the ''!&JJ§.!.") by and between Celtic L.easlng Corp. ("Lessor") and Tulare Local Healthcare District ("Lessee") Ladles and Gentlemen: We have acted as special California counsel to Healthcare Conglomerate Associates, LLC, the Manager of Lessee, in connection with the above-referenced Lease between LE~ssee and Lessor. In such capacity, we have reviewed the Lease and lease Schedule (Including Addendum A). In rendering our opinion, we have also examined such certificates of public officials, organizational documents or Lessee, and other certificates and Instruments as we have deemed necessary for the purposes of the opinions herein expressed. As to certain· questions of fact material to our opinion, we have relied upon the certlftcate of an officer of the Lessee (the •opinion Certificate") and the representations of the Lessee contained in the Lease. As to certain matters Involving California election law, we have relied upon the opinion of Michael L Allan, Esq, Allan Law Office, a copy of which Is attached hereto and made a part hereof by reference. We express no opinion with respect to the effect of any law other than the laws of the State California (the "State"), including, without limitation, the California Uniform Commercial Code (the "UCC"), and the federal law of the United States (together with the laws of the State, •Applicable Lav(). Whenever our opinion herein is qualified by the phrase •to the best of our knowledge· (or similar phrase), II Is Intended to indicate that the current, actual Atlanta Chicago Houston Los Ang&tes Cincinnati Naw York Cleveland Orlando Columbus Philadelphia Costa Mesa Denver $9a((le washlngron, DC ! I 093734.000003 611224182.2 IEXHIBIT <.o i I I I I I ' Celtic Leasing Corp. August28,2017_ Page 2 knowledge of the attorneys within the Los Angeles office of this finn engaged in the representation of Lessee In connection with the Lease transaction is not inconsistent with that portion of the opinion which such phrase qualifies. Except as expressed herein, we have made no Independent investigation of any such matters and we have not made any other examination of Lessee. Based on the foregoing, and subject to the qualifications and exceptions herein contained, we are of the opinion that: 1. Lessee Is a political subdivision of the State, to wit, a local healthcare district, duly organized and existing under the laws of the State, and specifically Secllon 32000 et seq of the California Health & Safety Code. 2. The UCC and no other statute of the State, governs the .creation, perfection. priority and enforcement of any security interest created by the Lease. 3. Within the meaning of the UCC, Lessee is an unregistered organizatron, having its sole place of business or its chief executive office In the State. Lessee's true and correct legal name is stated above. 4. Lessee is authorized and has power under State law to own its properties and incur and pay .Its obligations, to enter into the Lease, to lease the property described in the Lease and to carry out Its obligations thereunder and the transactions contemplated thereby, Including, without limitation, payment of all rental payments set forth in the Lease. 5. Benny Benzeevi, M.D. is qualified and authorized to execute, on behalf of Lessee, any and all documents related to the Lease and Lease Schedule. 6. Based upon Resolution No. 852 of the Lessee, which was adopted by the Board of Directors of the Lessee on June 20, 2017 (a copy of which is attached hereto), the Lease, Including the lease of the property subject thereto and Lessee's obligations thereunder, has been duly authorized, approved, executed and delivered by and an behalf of the Lessee and is a valid and binding contract of Lessee, enforceable against lessee in accordance with its tenns. 7. To the best of our knowledge, the authorization, approval and execution of the Lease and all other proceedings of Lessee relating to the transactions contemplated thereby have been performed In accordance with all open meeting, public bidding and other applicable laws, rules and regulations of the State. 8. The execution of the Lease and the appropriation of moneys to pay the payments coming due under the Lease do not result in the violation or any constitutional, statutory or other governmental limitation rela1lng to the manner, form or amount of indebtedness which inay be incurred by Lessee. 9. The accrual and payment by Lessee, and collection from Lessee, of the charges provided for In the Lease, including rental, interest, late fees, attorney's fees and other charges, do not and will not violate the constitution or any law of the State. 093734.000003 811224192.2 Celtic Leasing Corp. August 28, 2017 'Page 3 We express no opinion with respect to any documents other than the Lease ttnd the Lease Schedule. The foregoing opinions are subject to the following qualifications, limitations and exceptions: (a) The effect of bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights, powers, privileges, remedies and interests of creditors, obligees or sureties including, without limitation, the effect of Sections 547 and 548 of the Federal Bankruptcy Code and comparable provisions of the laws of the State; (b) The effect of the limitations imposed by Applicable Law or rules or principles {of equity, public policy or otherwise} affecting the enforcement of obligations generally, whether considered at law, In equity or otherwise, Including (without limitation) those pertaining to spi,cific perfonnance, injunctive relief, materiality, good faith, fair deaRng, diligence, reasonableness, unconscionabinty, impossibiflty of performance, redemption or other cure, suretyship rights or defenses, waiver, !aches, estoppel, or judicial deference or other equitable remedies; (c) The enforceability of any term or provision of 1he Lease that purportedly grants to a party or authorizes or permits a party or other peraon · to exercise or otheiwlse enforce or pursue specific rights, powers, prlvlleges, remedies or interests in a manner Impermissible under or otherwise inconsistent with Applicable Law or public policy of the State from time to time in effect; {d) The unenforceabllity under certain circumstances or provisions In the Lease to the effect that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised In addition to or with any other right or remedy, that election of a particular remedy or remedies does not preclude recourse to one or more other remedies, and that any right or remedy may be exercised without notice or an opportunity to cure; (e) The unenforceability under certain circumstances of any tenn or provision in the Lease Indemnifying a party against liability for its own wrongful or negli9ent acts or where such Indemnification Is contrary to public policy or prohibited by Applicable Law; (f) The enforceability of any term or provision in the Lease purporting to assign contractual rights, to the extent such provisions are limited by requirements of notice to and consent of any third parties to such· contracts or other interested parties, or any other restrictions as to the assignabillty of such contractual rights; (g) The effect of the provisions of the UCC which require a secured party, in any disposition of personal property collateral, to act In good faith or in a commercially reasonable manner; 093134.000003 a, 1224192.2 Celtic Leasing Corp. August 28, 2017 Page4 (h) Any rights under the lease which are governed by the UCC are subject to the limitations and restrictions of the UCC which such statute provides cannot be waived; (i) We express no cp,mon as to the existence, validity, binding effect, enforceability, attachment, perfection or priority of any security interest or lien created or purported to be created under the Lease; (j) There may be limitations on the exercise of the Lessor's remedies arising out of any failure by the Lessor to comply with statutory requirements or judicial decisions thereunder in the actual exercise of its rights in connection with the foreclosure, sale or other enforcement of its security Interests in any of the Equipment; (k) We express no opinion as to whether or not the Lease transaction will be treated for federal and state income tax purposes as a true lease, or as a financing transaction. (I) Our opinions in Paragraphs 5 and 6 above are based solely upon the Opinion Certificate and the Allan Law Office opinion. In our opinion, the foregoing qualifications, limitations and exceptions do not render the Lease invalid as a whole, and there exist, In the Lease or pursuant to Applicable Law, legally adequate remedies for a realization of the principal benefits and/or security intended to be provided by the Lease. We advise Lessor that circumstances can occur aft.er the perfection of a security interest In personal property which could cause the security interest to become unperfected, including, without limitation, the fact that a financing statement lapses after five years; the UCC creates certain limitaUons on the rights to proceeds; a change In the name of the debtor or the location of the debtor will result in the security interest In certain property to become unperfected unless appropriate steps are taken; and a secured party's rights are subject to the rights of certain purchasers of the collateral to acquire the collateral free of the security interest. To the extent that the obllgatlons of Lessee may be dependent upon such matters, we assume that: Lessor is duly formed, validly existing and In good standing under the laws of its jurisdiction of formation; Lessor has the requisite power and authority to execute and deliver the Lease and lo perform Its obligations under the Lease; the Lease has been duly executed and delivered by Lessor, and constitutes the legally valid and binding obligation of Lessor, enforceable against Lessor In accordance with its terms; there are no other documents, understandings, or agreements (whether written or oral) between or among the parties which would expand, modify or otherwise affect the obligations of the parties under the Lease, the documents submitted to us contain therein all the terms intended by the parties. We have also assumed that: (1) The Lease transaction is not being entered into for any personal, family or household purposes. 0937J4.000003 611224192.2 Celtic Leasing Corp. August 28, 2017 Page 5 (2) Lessee has "rights" (within the meaning of Section 9203 of the UCC) in the Equipment, and value has been given by the Lessor to Lessee in connection with the transactions contemplated by the Lease. This opinion Is intended solely for the benefit of the Lessor and its successors and assigns in conrtection with the Lease transaction. No part of this opinion may be relied upon by any other person or for any other purpose, be Incorporated, quqted or otherwise referred to In any other document or communication or be filed with or otherwise furnished to any governmental authority or other person without our prior written consent, except that our prior written consent Is not needed to furnish a copy of this opinion: (a) in connection with any proceedings relating to the Lease or the enforcement thereof; and (b) to accountants and legal counsel for the Lessor (each of whom may rely upon this opinion as though it had been addressed and delivered to them as of the date of this opinion). In all cases, reliance upon this opinion is conditioned upon acceptance of all or the qualifications, exceptions, assumptions, definitions, exclusions and other Umttatlons sat forth herein. This opinion speaks only as of the date hereof, and to its addressees and their successors and assigns, and we have no responsibility or obligatlon to update this opinion, to consider its applicability or correctness to anyone other than Its addressees, and their successors and assigns, or to take Into account changes in law, facts or any other developments of which we may later become aware. ly yo~·J/4Jdl--t wP & HOSTETLER LLP 093734.000003 611224192.2 RESOLUTION NO. 852 OF THE BOARD OF DIRECTORS OF TULARE REGIONAL MEDICAL CENTER WHEREAS, the Boat·d of Directors (the "Board") of Tulare !,ocal Healthcare District dba Tulare Regional Medical Center (the "District") has determined that it is necessary and appropriate; and in the best interests of the District to bou·ow funds to cover op·erating cash flow; and WHEREAS, the Aoard has detc1mincd that it is necessary and appropriate, and in the best interest~ of the District, to have its manager, Healthcare Conglomerate Associates, LLC ("HCCA"), acting throL1gh · its Cha11man, Benny Benzeevi, M.D ("Authorized Representative") seek to obtain a loan for the pt1rposcs of payment of operating expenses of the. Hospital, repayment of debt, payment of ongoing costs of constmction of the Towe1· project, and for other Hospital purposes. NOW1 THEREFORE, BE IT RESOLVED· THAT the District's Authorized Representative is 11uthorized and directed to prepare, execute and submit to potential lenders applications for a commitment to make a loan, or other agreement for the extension of credit to the District, in an amount of up to $22,000,000, upon such tenns and al such interest rate as the District's Authol'!zed Reprcsen1atlvo determines to be fair and consistent with the marketplace fo1· the purposes stated above . .FURTHER RESOL~D, that if a loan commitment is obtained, the Authorized Representative is authorized and directed to t~k.e any further actions and lo execute, i11 the name of and on behalf of the District, any instruments and documents required by lhc IcndeL' ·to obtain such loan, including, wilhout limitation, promissory notes, security instruments and other customary loan documents (which includes sale/leaseback documents which-nre used for financi.ng purposes), it being the intention of the Board that the Authorized Repre:ic.mtative shall have absolute, full and complete power and authority to execute and deliver to the lender any and all documents and instruments required to obtain and consummate such loAn, and to take any further actions required to ob1ain and consummate such loan. FURTHER RESOLVED, that the Board acknowledges and agrees that except to tlic extent pmhibited by appliCHble law and any existing Bond documents, all property (real anA 000J,t!HJ90P237 X,hx _00,11119 CU: an.tell 0670.511 SeO«'l1S493\00G23'1C:C't.£ p d II I E Teller Sequence Number: Mlselng Image: s PE lncfica tor: N Appllcation Code: t rrancode: 000000 08/CFI: DB llem Type: P Procas$lf19 Date; C pYngh1 C 2010 J.P. Morgan Chase & Co. Afl Rlghls Reserved EXHIBIT ~ lflllll llHI 111111111111111H II Ill R CORDING REQUESTeo BY: R!corded : RO:C r8: CoU.11ty of 1' i:uvv Official Records C blgo Tille Company 0 erNo.: Jul.are ~NOP. HILL Clerk Recorder 1 - ilLca;;o;: '-· ~- J I I i JO ~:e>1A,I! 28-S.ip-2017 I Paf?e · of lthcare Conglomerate Associates, LLC 0 WIishire Boulevard ~ le 1600 Angeles, CA 90024 SPACE ABOVE THIS LINE FOR RlaCOROER'S use: SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS DEED OF TRUST, is made a6 or September 27, 2017 by Tulare Local Healthcare □ lstrlct. d/b/a Tulare Re Iona! Medlcal Center, herein called TRUSTOR, whose address Is 869 N. Cherry Straet, Tulare, Callfomla 9 .4 to hicago Title Company, a Callfornla corporation, herein called TRUSTEE. for the benefit of Healthcare Co glomerate Associates, LLC, herein called BENEFICIARY, WI NESSETH: Thal Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS lo TRUSTEE IN TR' ST, WITH POWER OF SALE, that property In the County of Tulare, Stale of California, commonly known as 25 East Prosperity Avenue, Tutare, Callfomla, 93274, as more partfcularty described as: SEE EXHIBIT"A" ATTACHED HERETO AND MADE A PART HEREOF ETHER WITH the renls, Issues and profits thereof, SUBJECT, HOWEVER, to the right, power and rity given to and conferred upon Beneficiary by paragraph ten (10) or the provisions Incorporated herein by ence to collect and apply such renla, iasues and profits. For he Purpose of Securing: 1. erformance of each agreement of Trustor Incorporated by reference or contained herein. 2. ayment of the Indebtedness evidenced by those certain Promissory Notes dated as of 7!3112015; /31/2016; 12/21/2016; 12/2812016; 12129/2016; 12/30/2016; 12/30/2016 B; 3/31/2017, 7/21/2017, and /31/2017, In the total original principal sum of Ten Milllon Two Hundred Thirty-Three Thousand Nine undred and Fifty Oollara And 05/100 Oollars ($10,233,950.05) executed by Truster in favor of Beneficiary r crcler. 3. ayrnent of such further sums as the then record owner of said property hereafter may borrow from eneflciary, when evidenced by another note (or notes) reciting ft Is so secureu 011S A:767◄ 24224.2 EXHIBIT er ' SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS .(continued) 7i Protect Iha Security of this Daed of Trust, Trustor Agrees: By the exacullon and delivery of this Deed of C st and the note secured hereby, that provisions one (1) to fOCJrlsen (14), inclusive, of the llctiilous deed of t recorded In Senta Bsrbara County end ~onoma County October 18, 1961, and In all other counUes lober 23, 1961, In the book and Bl the page of Official Records in the office of the county recorder of the nty where said properly Is located, noted below opposite the name of such county, viz: BOOK PAGE COUf\fTY . eiw SOOK m PAGE COUNTY BOOK 8116 PAGE COUNTY SOOK. PAGf 301 ~ml 29 151 5 S&lrJyou Solano 468 523 335 ftU 82 SIJ/IOIIII 383 stenWaus f 250 ~ L,M 362 39 t04 348 Lauen 111 471 ~ ~ 1145 1 12055 89P SIICllllMnio 1◄5 152 LO$An~•s M«krP 810 110 33SI 2P2 530 SMBMlto 3006 4331 271 San Senwdtno Ssn Fram:Jst:D Satl.Jr»quln 5567 IS1 suttar 572 A332 2470 9~ Tell&IM Trfn/ly 53/J 861 S.n Lib Ob/$po 1151 311 12 S/fnMalao 407(1 401 93 i294 436 295 rst7 3978 ◄7 n 414 6aS 456 4626 572 '64 422 657 10111 147 3427 527 SD1 698 60 M,rln MMiposa 1li08 77 ~ndoelno Mercad (irg 1541 Modoi; 164 Mono Mon/oroy Nap, 52 2194 1139 305 5889 Nevada 0nfl{J6 133 P#BRr 4211 Santa Sar~ra Slln/8 Clara 6336 1120 860 341 86 Sente Ctla t4J1 494 320 Shaffa 68,t 528 611 SalrD{ogo 538 $8711 Tulare Tuo/Umne v,ntura Yolo YUIii 1105 1851 1715 .,,275 201J2 653 245 334 486 Sltrlu 2 Book 1961, Page 183887 ThEJ undersigned Trustar requests that a copy of any Notice of Defsutt and of any Nolice of Sale hereunder be to him at his address llerelnbafora set forlh. 'fTNESS WHEREOF, the undersigned has executed this document an the data set forth below. Lo~I Huallhc re District, d/b/e Tulare Regional Medical Center Dal OHS 9, Jl, b(t:. 76742◄ 220 289 3/lti 136 h provisions, /dent/cal In all counties, (printed on lhe attached unrecorded pages) sro hereby adopted and raltld hef8/n ancf made B part hereof as fully as though set forth herein at leng{h; lhal Trostar wilt e end perform said provisions; and that the raferences lo property, obligations end parties in said pro sfons shell be construed lo refer to the property, obligations, and parties set forlh in this Dead of Trust. IN 182 68SI 455 297 396 SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS (continued) A notary public or other officer complellng thl& certmcste verifies cnly the ldentRy of .the lodlvldual who sfgned the document to which this certificate Is attached, · and not the truthfulness, ac:curacy or valldffy of thal c!Ocument S teofC~f\la unty of LI.A a.Ve. S. ~-\::e,M,be..- l J\ , J ~m~~ o· ~7 I o-0 I I befqre me, ~dlSS IA • , N~tary Public (here Insert e andltle of the officer), personally appeare~Q