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Badrudin Kurwa v. Mark B. Kislinger et al

March 5, 2012


(Los Angeles County Super. Ct. No. KC045216) APPEAL from a judgment of the Superior Court of Los Angeles County.

The opinion of the court was delivered by: Armstrong, Acting P. J.


Plaintiff Badrudin Kurwa ("Dr. Kurwa"), on behalf of himself and derivatively on behalf of Trans Valley Eye Associates, Inc. ("Trans Valley"), sued defendant Mark B. Kislinger and his professional corporations (together, "Dr. Kislinger") for breach of fiduciary duty and defamation, and sought an accounting.*fn1 Dr. Kislinger cross-complained for defamation.

The trial court determined that Dr. Kislinger owed no fiduciary duty to Dr. Kurwa or to the corporation, and that Dr. Kurwa had no standing to sue Dr. Kislinger for breach of fiduciary duty or an accounting, and so dismissed those causes of action. After the parties voluntary dismissed without prejudice their causes of action for defamation, the trial court entered judgment in favor of Dr. Kislinger, from which Dr. Kurwa appeals.

We first determine that the judgment entered was final, notwithstanding that the defamation claims had been dismissed without prejudice. We then conclude that the court erred in ruling that Dr. Kurwa could not establish a fiduciary duty on the part of Dr. Kislinger, and that he lacked standing to prosecute this action. Consequently, we reverse the judgment.


Prior to 1992, Drs. Kurwa and Kislinger each maintained his own ophthalmology/ optometry medical practice in the San Gabriel Valley and were not affiliated in any way. In 1992, a third party, Dr. Reginald Friesen, introduced the doctors and proposed that they create a joint venture in order to enter into and perform "capitation agreements." That is to say, the HMOs would pay the joint venture a monthly per capita fee, based on the number of participating members of the HMO, in consideration for the joint venture's agreement to provide the HMOs' members ophthalmology and optometry services. At the time, this was a novel arrangement for the provision of medical services through HMOs.

Drs. Kurwa and Kislinger agreed that they would together pursue this new business model. They signed a handwritten "Agreement between Bud and Mark" in which they outlined the structure within which they would jointly solicit the capitation business and share its profits. They agreed to incorporate a professional medical corporation to operate their joint venture business. Thus, Trans Valley was formed. Unfortunately, the Articles of Incorporation of Trans Valley did not "contain a specific statement that the corporation is a professional corporation" as required by Corporations Code section 13404. Consequently, Trans Valley was in fact not a professional medical corporation, but simply a general, for-profit corporation. (See Corp. Code, § 200.)

The joint venture entered into several capitation agreements, which served approximately 200,000 participating patients in three health maintenance organizations in the San Gabriel Valley and environs (the "HMOs"). From 1992 through 2003, Trans Valley provided ophthalmology services through three HMOs, earning revenues in the neighborhood of $2 million in the year prior to the joint venture's demise.

By an order of the California Medical Board, Dr. Kurwa was suspended from the practice of medicine for 60 days beginning on September 26, 2003, and was placed on five years' probation. Shortly thereafter, Dr. Kislinger effectively ended the joint venture. After consulting with his attorney, the latter wrote a letter on Dr. Kislinger's behalf (the "Solicitation Letter"), addressed to the president of Physician Associates of the Greater San Gabriel Valley ("Physician Associates"), the largest of the HMOs to contract with Trans Valley. We quote the letter in full:

"This office represents Mark Kislinger, M.D. We are writing to you on his behalf on a matter that involves the continuity of patient care.

"At the present time, there exists a provider agreement between Physician Associates and Trans Valle[y] Eye Associates. As you know, one of the two co-owners of Trans Valley, Dr. Badrudin Kurwa has had his license to practice medicine suspended in the State of California. Pursuant to the agreement between you and that entity, his participation in the provider agreement is automatically terminated. Moreover, we believe the corporate status of Trans Valley is inappropriate for the practice of medicine.

"To solve these problems, we have formed a new appropriate medical corporation for Dr. Kislinger. This new corporation will hire substantially all of the employees and will contract physicians of the previous entity, so there will be no interruption of services to patients or any noticeable change to anyone. To facilitate this transfer, we would request that PA transfer its provider agreement from Trans Valley to Mark Kislinger, M.D., Inc. Dr. Kurwa, because of his suspension, will not be a part of the new corporation.

"We would appreciate having the transfer take place as soon as possible to maintain continuity and quality of patient care, and to avoid any improper entanglement with Dr. Kurwa, whose license is suspended at the present time.

"I would appreciate discussing this matter with you to effectuate this change as smoothly as possible. Your ...

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