Opinion
F083295
02-17-2023
DAVID ALMASY et al., Plaintiffs and Appellants, v. RIDGECREST REGIONAL HOSPITAL et al., Defendants and Respondents.
Law Offices of Scott E. Schutzman and Scott E. Schutzman for Plaintiffs and Appellants. Buchalter and Andrew H. Struve for Defendants and Respondents.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Kern County No. BCV-19-103257. Stephen D. Schuett, Judge.
Law Offices of Scott E. Schutzman and Scott E. Schutzman for Plaintiffs and Appellants.
Buchalter and Andrew H. Struve for Defendants and Respondents.
OPINION
SMITH, J.
Plaintiffs/appellants David Almasy, Ralph Luellen, and Randall Wilke (along with others) brought this civil action, centered on a contract dispute, against defendants/respondents Ridgecrest Regional Hospital and its CEO, James Suver. The trial court sustained defendants/respondents' demurrers to the claims asserted by plaintiffs/appellants. The latter appealed. We affirm.
FACTUAL AND PROCEDURAL OVERVIEW
The record in this case largely consists of successive complaints filed in this matter, the exhibits to the complaints, papers related to demurrers filed as to the complaints, and the trial court's rulings on the demurrers.
A. The Relevant Contracts: June 2018 Contracts and May 2019 Contracts
Ridgecrest Regional Hospital (Ridgecrest), defendant and respondent, is a general acute care hospital that provides safety net services to residents of Kern County. James Suver, co-defendant and co-respondent, is its longtime CEO. Plaintiffs/appellants David Almasy, Ralph Luellen, and Randall Wilke are certified registered nurse anesthetists (plaintiff/appellant CRNAs), who were under contract to perform medical services at Ridgecrest during the 2018-2019 period.
In June 2018, Almasy and Wilke, and in January 2019, Luellen, signed three-year contracts (June 2018 contracts) with Ridgecrest to provide anesthetist nursing services to Ridgecrest's patients. Around April 2019, a number of resignations occurred in Ridgecrest's Anesthesia Department. Among others, plaintiff/appellant Almasy presented a letter of resignation on April 8, 2019; Almasy stepped in as lead CRNA later that month (upon the resignation of the prior lead CRNA). James Suver, Ridgecrest's CEO, repeatedly met with the Anesthesia Department during the ensuing weeks to address staffing, compensation, and scheduling issues. At the same time, that is in April 2019, plaintiff/appellant CRNAs entered into discussions with James Suver about the "need or desire" to execute a new three-year contract between themselves and Ridgecrest.
Shortly thereafter, Plaintiff/appellant CRNAs and Ridgecrest executed new contracts effective May 13, 2019 (May 2019 contracts).
The May 2019 contracts provided, at the top, that the new contracts fully supplanted the June 2018 contracts: "This contract replaces in its entirety the contract dated June 26th, 2018." The May 2019 contracts (like the June 2018 contracts) also contained an express integration clause: "11.1 Entire Agreement. This Agreement contains the entire agreement between the Parties. Any and all verbal or written agreements made prior to the date of this Agreement are superseded by this Agreement and shall have no further effect." In addition, the May 2019 contracts (like the June 2018 contracts) specified: "11.2 Modification. No modification or change to the terms of this Agreement will be binding on a Party unless in writing and signed by an authorized representative of that Party." The May 2019 contracts (like the June 2018 contracts) also expressly permitted either party to terminate the contracts without cause upon giving 90 days' written notice: "Either party may terminate this Agreement at any time without cause and without penalty upon ninety (90) days' prior written notice to the other party."
The May 2019 contracts diverged significantly from the June 2018 contracts in one way that is highly relevant to the instant matter, namely the question of Ridgecrest's obligations, if any, when it sought to change the anesthesia provider(s) delivering anesthesia services to the hospital. The June 2018 contracts outlined specific steps that Ridgecrest had to follow if it were to request proposals from or negotiate with other anesthesia providers to deliver anesthesia services for the hospital. Specifically, the June 2018 contracts stated:
"3.3 Change of Anesthesia Provider. If Hospital decides to request proposals or enter into negotiations with another anesthesia provider who will assume overall responsibility for the Services provided by the CRNAs, Hospital will first notify the Chief CRNA and meet and confer with the CRNAs for a period of thirty (30) days from the date of the notice (as may be extended by mutual agreement). If no agreement is reached prior to the expiration of the meet and confer period, either party may terminate this
Agreement upon two hundred and ten (210) days' prior written notice to the other party. This Section 3.3 shall not apply to the discussions with or retention of one or more CRNAs to provide Services under the same terms of this Agreement."
The May 2019 contracts omitted this provision entirely. Rather, the May 2019 contracts simply and expressly provided: "This Agreement is not exclusive, and Hospital may contract with other CRNAs to provide similar Services as described in this Agreement."
In August 2019, Ridgecrest tendered 90-day termination-without-cause notices to plaintiff/appellant CRNAs, with their last day set for November 12, 2019. Ridgecrest had contracted with another anesthesia provider (Regional Anesthesia Associates or RAA) to begin providing anesthesia services at Ridgecrest as of November 12, 2019. Plaintiff/appellant CRNAs had the option of working with Regional Anesthesia Associates to continue to provide anesthesia services at Ridgecrest under new contracts. Plaintiff/appellant CRNAs instead filed the instant lawsuit.
B. Successive Complaints and Demurrers; Trial Court Rulings
(i) Plaintiff/Appellant CRNAs' Initial Complaint (November 19, 2019)
The initial (verified) complaint filed by plaintiff/appellant CRNAs contained, inter alia, the above-described factual allegations regarding the parties' relationship and contracts. It included three causes of action: (1) breach of contract; (2) fraud; and (3) declaratory relief.
The complaint noted that plaintiff/appellant CRNAs provided "inpatient and outpatient surgical services for the surgical team that was associated with Ridgecrest ... in addition to emergency services, outpatient pain control, and obstetric care." The complaint addressed the May 2019 contract. As noted above, the May 2019 contract stated at the top that the May 2019 contract replaced the June 2018 contract in its entirety. The May 2019 contract further stated at the top: "This contract is based on existing surgery volume at the present time. Should volumes materially change on a sustained basis, CRNA and Hospital will work together to determine staffing levels subject to mutual agreement." Based on the language in the new replacement May 2019 contracts to the effect the new contracts were premised on" 'existing surgical volume at the present time,'" plaintiff/appellant CRNAs alleged Ridgecrest had tricked them into entering these contracts. Plaintiff/appellant CRNAs alleged that, when inducing them to sign these new, replacement contracts, Ridgecrest "had in fact entered into negotiation with another anesthesia provider ... and had executed a contract with them ... which prompted the termination notices [later] sent to [plaintiff/appellant CRNAs]."
Plaintiff/appellant CRNAs further alleged Ridgecrest had breached the original contracts' change-of-provider notification provision because, while the original contracts were still in force, Ridgecrest purportedly had begun negotiations with a replacement provider; and by entering into the new, replacement contracts, Ridgecrest was able to reduce the applicable notice period for terminating plaintiff/appellant CRNAs from 210 days (plus an initial meet and confer period) as specified in the change-of-provider notification provision of the original contracts, to 90 days, the period applicable to termination without cause under the new contracts (as mentioned, the new contract omitted the change-of-provider notification provision of the original contract). Plaintiff/appellant CRNAs' first cause of action (breach of contract) and second cause of action (fraud) were based on the foregoing allegations.
Ridgecrest demurred to the initial complaint, on grounds that (1) the original June 2018 contracts were replaced and superseded in their entirety, as expressly stated in the May 2019 agreements (hence the change-of-provider notification provision of the original contract was inoperative and inapplicable); and (2) plaintiff/appellant CRNAs had not alleged any affirmative misrepresentation of fact by Ridgecrest, and therefore had not stated a legally sufficient cause of action for fraud. The trial court sustained, on the grounds propounded by Ridgecrest, the demurrers to all causes of action, but allowed leave to amend.
(ii) First Amended Complaint (August 13, 2020)
Plaintiff/appellant CRNAs filed a first amended complaint (FAC), in which they dropped their prior claim that Ridgecrest had breached the original contracts' change-of-provider advance notification provision. In the FAC, plaintiff/appellant CRNAs repled the same facts but did so with respect to a new claim for breach of the implied covenant of good faith and fair dealing. Plaintiff/appellant CRNAs also dropped their fraud cause of action and replaced it with a fraudulent concealment claim. The fraudulent concealment claim was premised on two distinct theories: (1) that the prior, June 2018 contracts gave rise to a legal duty of disclosure on Ridgecrest's part as to any negotiations or agreement with alternative anesthesia providers, and (2) the language in the new May 2019 contracts to the effect the new contracts were" 'based on existing surgical volume at the present time,'" was incorrect or misleading. The FAC alleged these facts constituted fraudulent concealment, as a result of which plaintiff/appellant CRNAs "suffered damages including 120 days loss of employment [90 days' notice instead of 210 days]." Finally, the FAC contained, as to plaintiff/appellant CRNAs, a claim under Business and Professions Code section 17200, et seq. (the Unfair Competition Law or UCL), which claim was factually derivative of the fraudulent concealment cause of action.
There were five plaintiffs on the FAC. In addition to the three plaintiff/appellant CRNAs, Eva Csillag and Adam Toyama were named plaintiffs. The FAC raised an additional claim on behalf of only Csillag and Toyama; the additional claim alleged a violation of Labor Code section 970. This cause of action alleged that Csillag and Toyama relocated to the Ridgecrest area based on a belief that their contracts would be in effect for a reasonable time. This cause of action survived demurrer. Csillag and Toyama's case remains before the trial court and they are not parties to the instant appeal.
Ridgecrest demurred to the FAC. The trial court sustained, without leave to amend, the demurrer as to the contract-based claim alleging breach of the implied covenant of good faith and fair dealing. The court noted that the cause of action failed because finding a breach of the "implied covenant" would require one to "essentially rewrite the contract and insert terms that don't exist in the contract that supposedly has been breached." The trial court also sustained, with leave to amend, Ridgecrest's demurrer to the fraudulent concealment and UCL causes of action. As to the fraudulent concealment cause of action, the court observed: "The second cause of action for concealment fraud, the Court would sustain that demurrer with leave to amend. Plaintiff[s'] allegations are essentially that defendants failed to disclose two facts; [one,] that they had already contracted with the other provider, and two, [whether] the new contracts were [in fact] needed due to surgical volume." The court ruled that plaintiff/appellant CRNAs had not pled facts establishing a duty of disclosure on the part of Ridgecrest and that the allegations were insufficient to state a cause of action for fraudulent concealment. Finally, with regard to the UCL cause of action, the court stated: "As to Plaintiffs, Almasy, Luellen, and Wilke, since the demurrers in the f irst and second causes of action are sustained and there are no other allegations as to any act or practice which is forbidden by law, the demurrer as to this cause of action would be sustained with leave to amend as to those three plaintiffs."
(iii) Second Amended Complaint (October 29, 2020)
Plaintiff/appellant CRNAs filed a second amended complaint (SAC) that dropped the claim for breach of the implied covenant of good faith and fair dealing (in light of the trial court's dismissal of that claim in the FAC without leave to amend), but otherwise essentially mirrored the allegations and claims of the FAC. Thus, the SAC contained a claim for concealment fraud and a UCL claim (under Business and Professions Code section 17200 et seq.). The trial court sustained Ridgecrest's demurrers to the SAC but granted leave to amend.
(iv) Third Amended Complaint (April 16, 2021)
Plaintiff/appellant CRNAs filed a third amended complaint (TAC) that, like the SAC, contained a claim for concealment fraud and a derivative UCL claim (under Business and Professions Code section 17200 et seq.). The fraudulent concealment cause of action, once again, was premised on the twin theories that (1) the statement in the new May 2019 replacement contracts to the effect the latter were" 'based on existing surgical volume at the present time,'" amounted to a misrepresentation, and (2) the change-of-provider provision in the original June 2018 contracts requiring 210 days' notice of any negotiation or agreement with alternative providers gave rise to a duty to disclose on Ridgecrest's part in connection with negotiating the replacement May 2019 contracts.
This time, the court sustained the demurrers to the fraudulent concealment and UCL causes of action without leave to amend. Judgment was entered in favor of Ridgecrest and Suver. This appeal followed.
DISCUSSION
I. Standard of Review as to Trial Court's Sustaining of a Demurrer
An order sustaining a demurrer is reviewed de novo to determine whether the complaint states a cause of action. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.) On appeal, we" 'treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.'" (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "We will affirm if there is any ground on which the demurrer can properly be sustained, whether or not the trial court relied on proper grounds or the defendant asserted a proper ground in the trial court proceedings." (Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.)
II. Trial Court Properly Dismissed Claim for Breach of Implied Covenant of Good Faith and Fair Dealing in First Amended Complaint
Plaintiff/appellant CRNAs contend the trial court erroneously sustained Ridgecrest and Suver's demurrer to the claim for breach of the covenant of good faith and fair dealing in the FAC. We disagree.
The implied covenant claim in the FAC alleged that plaintiff/appellant CRNAs were entitled to notification under the original June 2018 contracts of Ridgecrest's negotiations with any alternative anesthesia provider and to 210 days of notice before any resulting termination of plaintiff/appellant CRNAs' employment. The FAC alleged that plaintiff/appellant CRNAs instead got only 90 days' notice of termination. The FAC alleged that plaintiff/appellant CRNAs were therefore "damaged for the loss of employment of 120 days."
The implied covenant claim in the FAC suffered from a fatal defect in that it relied on a provision of the prior June 2018 contracts. However, the June 2018 contracts were entirely superseded by the May 2019 contracts, which stated: "This contract replaces in its entirety the contract dated June 26th 2018." The May 2019 contracts also contained an integration clause: "This Agreement contains the entire agreement between the Parties. Any and all verbal or written agreements made prior to the date of this Agreement are superseded by this Agreement and shall have no further effect." Critically, the May 2019 contracts did not contain the change-of-provider provision requiring 210 days of notice prior to termination that was part of the June 2018 contracts. Not only did the May 2019 contracts not contain any change-of-provider notification provision, but they expressly stated the contracts were "not exclusive," and, more importantly, provided for termination without cause on 90 days' notice.
Our Supreme Court has explained:
"We are aware of no reported case in which a court has held the covenant of good faith may be read to prohibit a party from doing that which is expressly permitted by an agreement. On the contrary, as a general matter, implied terms should never be read to vary express terms. [Citations.] 'The general rule [regarding the covenant of good faith] is plainly subject to the exception that the parties may, by express provisions of the contract, grant the right to engage in the very acts and conduct which would otherwise have been forbidden by an implied covenant of good faith and fair dealing.. This is in accord with the general principle that, in interpreting a contract "an implication . should not be made when the contrary is indicated in clear and express words." [Citation.] . As to acts and conduct authorized by the express provisions of the contract, no covenant of good faith and fair dealing can be implied which forbids such acts and conduct. And if [a party] were given the right to do what they did by the express provisions of the contract there can be no breach. '" (Carma Developers (Cal.), Inc. v. Marathon Development Califonria, Inc. (1992) 2 Cal.4th 342, 373-374 (Carma Developers).)
The import of Carma Developers for the present situation is clear: plaintiff/appellant CRNAs cannot harness the implied covenant of good faith and fair dealing to override the express termination rights contained in the May 2019 contracts. In other words, given the terms of the May 2019 contracts, "it was certainly within the reasonable expectations of the parties" that Ridgecrest might terminate the contracts without cause, as upon settling on an alternative provider of anesthesia services. (Carma Developers, supra, 2 Cal.4th at p. 374.)
To the extent the FAC further alleged that Ridgecrest and Suver were only "pretending to act in good faith" in the context of the May 2019 contracts, that does not change the outcome. The applicable case law makes clear that even allegations of bad intent do not trump the rule that the implied covenant cannot be employed to override an express provision of a contract. In Sherman v. Mutual Benefit Life Insurance Co. (9th Cir. 1980) 633 F.2d 782, an insurance agent sued for breach of the implied covenant of good faith and fair dealing, after he was terminated under the termination clause of his employment agreement. In affirming the dismissal of his claim, the Ninth Circuit, applying California law, explained: "[Employee] maintains that even if the agency agreement was intended to be terminable without cause, California law nonetheless creates an implied covenant of good faith and fair dealing in the performance of contracts. However, under an 'at will' employment contract, '(California) courts have consistently held that in such a confidential relationship, the privilege (of termination) is absolute, and the presence of ill will or improper motive will not destroy it." (Id. at pp. 784, 786; see Bernstein v. Financial Indemnity Co. (1968) 263 Cal.App.2d 324, 328 [when contract is" 'at will,'" employee" 'could quit at any time'" and employer " 'could discharge [him] at any time with or without cause,'" with any bad motive on the part of the employer rendered irrelevant].)
The trial court's ruling sustaining the demurrer as to the implied covenant of goo d faith and fair dealing cause of action in the FAC is affirmed.
III. Trial Court Properly Dismissed the Fraudulent Concealment Claim in the TAC
Plaintiff/appellant CRNAs challenge the trial court's dismissal of the TAC's claim for fraudulent concealment. We affirm.
A fraud claim based upon the suppression or concealment of a material fact generally requires a showing that the defendant had a legal duty to disclose the fact in question. (Civ. Code, § 1710, subd. (3) [a deceit includes "[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact"]; see CACI No. 1901 [setting forth elements of tort of concealment in accordance with Civ. Code, § 1710, subd. (3)].)
Here, the fraudulent concealment claim advanced in successive complaints was based on the same core facts. First, the complaints alleged that Ridgecrest and its CEO made, at best, a partial disclosure, as reflected in the proposed May 2019 contracts, to the effect the latter were" 'based on existing surgical volume at the present time. '" Second, the complaints alleged that Ridgecrest and its CEO intentionally concealed that they were negotiating with or had contracted with another anesthesia provider at the time Ridgecrest and plaintiff/appellant CRNAs entered into the replacement May 2019 contracts. (See TAC.)
"As noted, under Civil Code section 1710, subdivision (3), fraud may consist of a suppression of a material fact in circumstances under which the defendant has a legal duty of disclosure." (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1187 (Hoffman).)" 'There are "four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts." '" (Ibid.) Here, the first disjunctive circumstance triggering a duty of disclosure is clearly not applicable as there is no allegation that Ridgecrest and plaintiff/appellant CRNAs were in a fiduciary relationship.
Similarly, the third disjunctive circumstance is also not applicable as there is no allegation of active concealment, such as when a home seller paints over mold before selling the house. To the extent plaintiff/appellant CRNAs allege Ridgecrest and Suver "actively" concealed the fact they were negotiating with another provider inasmuch as they were required to disclose any such negotiations under the replaced and superseded June 2018 contracts, that allegation does not suffice because a contractual duty of disclosure is distinct from a tort duty of disclosure. The breach of a contractual duty does not give rise to a fraudulent concealment cause of action in tort (even more so here as the trial court determined the underlying breach of contract claim failed). (See, e.g., Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 693 [precluding recovery of tort damages against employers for breach of contractual obligations to employee; relying upon "the traditional separation of tort and contract law"].)
In ruling on the demurrer to the initial complaint, the trial court dismissed the breach of contract claim-that was based on this same theory (i.e., the June 2018 contractual language)-in that complaint.
As for the second disjunctive basis for a disclosure duty, namely "when the defendant had exclusive knowledge of material facts not known to the plaintiff," plaintiff/appellant CRNAs appear to have relied upon this basis for their fraudulent concealment claim. They did so by alleging that Ridgecrest and Suver failed to disclose that Ridgecrest was negotiating with or had contracted with a replacement CRNA provider at the time the May 2019 contracts were executed. However, the May 2019 contract, which was attached as an exhibit to the complaints, expressly states that Ridgecrest had the right to terminate the contract regardless of cause or reason upon 90 days' notice (which was admittedly given). More critically, the May 2019 contract expressly provides-reflecting the parties' agreement-that Ridgecrest was free to contract with other CRNA providers at any time: "6.2 Exclusivity. ... This Agreement is not exclusive, and Hospital may contract with other CRNAs to provide similar Services as described in this Agreement."
The express provisions of the May 2019 contract provided ample notice that the contracts could be terminated for any reason, without cause, and that Ridgecrest had the right to negotiate and enter into contracts with other CRNA providers. Given the express provisions of the May 2019 contracts, there were no grounds for an additional disclosure obligation on the part of Ridgecrest. (See Lewis v. Google LLC (N.D. Cal. 2020) 461 F.Supp.3d 938, 950, 960 [applying California law, and holding "[a] plaintiff cannot demonstrate reasonable reliance on an alleged omission when the purportedly omitted fact is disclosed in the contract"], citing Davis v. HSBC Bank Nevada, N.A. (9th Cir. 2012) 691 F.3d 1152, 1163-1164 [holding the plaintiff could not demonstrate justifiable reliance on purported failure to disclose annual fee because fee was disclosed in terms of contract to which the plaintiff had agreed]; also see Hoffman, supra, 228 Cal.App.4th at p. 1185 [justifiable reliance is an element of a concealment fraud claim].)
As for the fourth disjunctive circumstance in which a disclosure duty arises, i.e., "when the defendant makes partial representations but also suppresses some material facts," plaintiff/appellant CRNAs alleged that Ridgecrest and Suver made a partial disclosure, as reflected in the May 2019 contracts, that these contracts were "based on existing surgical volume at the present time." Plaintiff/appellant CRNAs have focused on one phrase in a longer statement at the top of the May 2019 contracts. The May 2019 contracts stated, at the top: "This contract is based on existing surgery volume at the present time. Should volumes materially change on a sustained basis, CRNA and Hospital will work together to determine staffing levels subject to mutual agreement." This statement encapsulated a recognition that while patient volume dictated CRNA pay and staffing levels, patient volume was variable over time and therefore periodic adjustments to related variables, such as pay and staffing levels, might reasonably be necessary. Ridgecrest and Suver note in their brief: "Much less than being a representation of fact to [plaintiff/appellant CRNAs], this inoffensive contractual [language] patently is nothing more than a cautionary caveat-for the benefit of, and caution of-both [plaintiff/appellant CRNAs] and Ridgecrest to the effect that, if business circumstances change with respect to patient volume, the parties' deal might need renegotiation. Nothing more." We agree that the contractual language pinpointed by plaintiff/appellant CRNAs is merely cautionary verbiage and its veracity is a nonissue. The inclusion of this language in the May 2019 contracts did not trigger a disclosure duty on the part of Ridgecrest as to its negotiations with a different CRNA provider; nor could it have been material to plaintiff/appellant CRNAs' decision to sign the contracts. (See Hoffman, supra, 228 Cal.App.4th at p. 1185 [justifiable reliance is an element of a concealment fraud claim].)
This contractual language, in turn, does not support plaintiff/appellant CRNAs' fraudulent concealment claim.
We conclude the trial court properly dismissed plaintiff/appellant CRNAs' fraudulent concealment cause of action.
IV. Trial Court Properly Dismissed the UCL Claim in the TAC
Plaintiff/appellant CRNAs raised a claim alleging a violation of the UCL (Bus. &Prof. Code, § 17200 et seq.) in the FAC, SAC, and TAC. The trial court sustained Ridgecrest's demurrers to the UCL claim in each of the successive complaints, the final time without leave to amend. Plaintiff/appellant CRNAs challenge the trial court's ruling. We affirm.
Plaintiff/appellant CRNAs' UCL claim was entirely derivative of, and dependent on, their fraudulent concealment claim. The sole factual allegation as to the UCL claim in the TAC was that Ridgecrest "engaged in deceptive, unfair, and fraudulent business practices by falsely claiming ... that it wanted to replace the [June] 2018 Contract[s] 'based on existing surgical volume at the present time.'" Since plaintiff/appellant CRNAs' fraudulent concealment claim failed, so too does their UCL claim.
DISPOSITION
The judgment is affirmed. Defendants/respondents are awarded their costs on appeal.
WE CONCUR: PENA, Acting P. J., DESANTOS, J.