Baker v. Sadick

• Decision Date: 12 December 1984
• Citation: 162 Cal.App.3d 618,208 Cal.Rptr. 676
• Court: California Court of Appeals Court of Appeals
• Parties: Diana S. BAKER, Respondent, v. S. Paul SADICK, Appellant. D000598. Civ. 28225.

Page 676

208 Cal.Rptr. 676

162 Cal.App.3d 618

Diana S. BAKER, Respondent, v. S. Paul SADICK, Appellant.

D000598.

Civ. 28225.

Court of Appeal, Fourth District, Division 1, California.

Dec. 12, 1984.

Hearing Denied Feb. 20, 1985.

Donald B. Caffray, Ball, Hunt, Hart, Brown & Baerwitz, Clarence S. Hunt and Joseph D. Mullender, Jr., Long Beach, for appellant.

Daniel T. Broderick, III, San Diego, for respondent.

STANIFORTH, Acting Presiding Justice.

Dr. S. Paul Sadick appeals a judgment confirming an award of punitive damages following arbitration of Diana S. Baker's medical malpractice claims against Sadick. The sole question presented for this court's determination is whether an agreement providing for arbitration of "any" issue of medical malpractice authorizes the arbitrator to award punitive damages in arbitration of a medical malpractice claim. We affirm the award.

FACTS

The facts giving rise to Baker's medical malpractice claim are essentially not in dispute. In February 1980, Baker employed Sadick to perform breast reduction surgery. Upon admission to Mt. Helix Hospital, Baker signed an arbitration agreement.

Sadick performed the breast reduction surgery upon Baker in March 1980. Immediately following surgery, Baker began suffering serious post-surgery infection. Baker was ineffectually treated and released from the hospital. The infections became so serious that tissue necrosis resulted and scarring of Baker's breasts required extensive, corrective plastic surgery.

In August 1980, Baker's attorney notified Sadick of her intention to pursue a medical malpractice claim pursuant to the arbitration agreement. Without objection by either party, the issues of liability for malpractice and compensatory and punitive damages were submitted. In May 1982, following arbitration by a panel of three arbitrators, Sadick was ordered to pay Baker the following sums:

"1. For medical expenses incurred to date: $8,769.11

"2. For future medical expenses: $1,200.00

"3. Compensatory damages: $275,000.00

"4. Punitive damages: $300,000.00

"5. Attorney's fees: $100,163.40

"6. For costs of suit upon proper application."

On petition by Baker for confirmation of the arbitration award, the superior court corrected the award for compensatory damages, pursuant to Civil Code section 3333.2, ¹ reducing it to $250,000. The trial court however, rejected Sadick's contention the arbitrators were without power or authority to award punitive damages. The court ruled the language of the arbitration agreement was susceptible to interpretation to include claims or issues relating to punitive damages. To construe the agreement otherwise would "[give] a license to a doctor to do the kind of things as to which punitive damages are intended to act as a deterrent to the community ...."

DISCUSSION

I

The arbitration agreement at issue provides in pertinent part:

"It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this Contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. Both parties to this Contract, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration.

"...

"Whenever the word ARBITRATION is used, it means the settlement of disputes by negotiation and NOT by law suit.

"...

"NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL. SEE FIRST PARAGRAPH OF THIS CONTRACT." (Italics added.)

Sadick contends the arbitration agreement does not authorize an award of punitive damages because the agreement was tailored after Code of Civil Procedure section 1295 which "only permits the parties to agree to arbitrate claims of professional negligence." He argues "professional negligence" claims do not include intentional tort claims. Sadick further contends Civil Code section 3294, the statutory basis for punitive damages, does not authorize punitive damages in arbitration proceedings. Sadick's contentions necessitate consideration of the specific language of the arbitration agreement at issue here against the backdrop of the overall nature of arbitration agreements, the scope of an arbitrator's powers, the public policy favoring arbitration and the policy considerations attending punitive damage awards.

An agreement to arbitrate is a contract and an arbitrator may consider only such disputes as are covered by the arbitration agreement. (Mansdorf v. California Physicians' Service, Inc., 87 Cal.App.3d 412, 151 Cal.Rptr. 388; Pacific Inv. Co. v. Townsend, 58 Cal.App.3d 1, 129 Cal.Rptr. 489.) Although awards may be vacated if the arbitrator has exceeded his power, any ambiguities in the scope of arbitration are resolved in favor of coverage. (Taylor v. Crane, 24 Cal.3d 442, 450, 155 Cal.Rptr. 695, 595 P.2d 129.) Because arbitration is a favored method of dispute resolution, arbitration agreements should be liberally construed. (Cf., Weeks v. Crow, 113 Cal.App.3d 350, 353, 169 Cal.Rptr. 830.)

In determining whether a particular dispute falls within the purview of an arbitration agreement, effect must be given to the parties' intentions in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made. (Weeks v. Crow, supra, 113 Cal.App.3d 350, 353, 169 Cal.Rptr. 830.) "There is a strong judicial policy in this state favoring arbitration over litigation as a means of settling disputes, including disputes arising out of medical malpractice claims, because arbitration is less expensive and more expeditious than litigation and, moreover, relieves court congestion. (Madden v. Kaiser Foundation Hospitals, supra, 17 Cal.3d 699 [131 Cal.Rptr. 882, 552 P.2d 1178]; Wheeler v. St. Joseph Hospital, supra, 63 Cal.App.3d 345, 355-356 .)" (Hawkins v. Superior Court, 89 Cal.App.3d 413, 416, 152 Cal.Rptr. 491.)

The arbitration agreement at issue here expressly provides, without limitation, "any dispute as to medical malpractice" (italics added) will be determined by submission to arbitration. By this agreement it may be reasonably argued the parties agreed to relinquish their respective constitutional rights to have any medical malpractice claim decided in a court of law before a jury and instead accepted use of arbitration.

II

Sadick, however, contends the agreement does not extend to disputes involving punitive damages because the agreement is tailored after Code of Civil Procedure section 1295 ² and that section applies only to disputes involving "professional negligence."

Focusing upon the statutory definition of "professional negligence," Sadick contends section 1295 does not encompass intentional tort claims which would support an award of punitive damages. He contends "section 1295 is a legislative declaration" which limits arbitration of "any dispute which may arise" to "a negligent act or omission to act." Code of Civil Procedure section 1295, subdivision (g)(2), provides:

"(g) For the purposes of this section:

"...

"(2) 'Professional negligence' means a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital."

III

Does this language compel arbitration of claims of damages for fraud, wilful malicious torts, batteries occurring in the course of or in connection with medical treatment when such arbitration is requested by either party? Punitive damages are recoverable in medical malpractice actions at law where claims are asserted on intentional tort theories of liability. (Nelson v. Gaunt, 125 Cal.App.3d 623, 178 Cal.Rptr. 167; Blegen v. Superior Court, 125 Cal.App.3d 959, 178 Cal.Rptr. 470; Ebaugh v. Rabkin, 22 Cal.App.3d 891, 99 Cal.Rptr. 706; see also Herrera v. Superior Court, 158 Cal.App.3d 255, 204 Cal.Rptr. 553, hg. den.)

Baker's medical malpractice claim was bottomed on intentional tort principles. The surgery was unnecessary; she was fraudulently induced to submit to surgery; Sadick falsified Baker's medical records; Sadick's surgical techniques were negligent; Baker received negligent post-operative management; and her consent to surgery was uninformed. Clearly, the claim Sadick performed unnecessary surgery upon Baker and that he fraudulently induced her consent to the surgery and failed to administer any post-operative treatment asserts wilful wrongs--more than mere negligence--appropriate factual bases for recovering punitive damages.

The agreement in question is a standard form arbitration agreement. The general rule respecting standard form agreements is any ambiguities are to be resolved against the draftsman. (Steven v. Fidelity & Casualty Co., 58 Cal.2d 862, 883, 27 Cal.Rptr. 172, 377 P.2d 284.) The rationale of such a rule rests upon consideration a provision which limits the liabilities of the stronger party will not be enforced absent plain and clear notification of the terms of the agreement and an understanding consent. (Wheeler v. St. Joseph Hospital, 63 Cal.App.3d 345, 357, 133 Cal.Rptr. 775.) If the arbitration agreement presents ambiguities, we must construe the agreement in favor of Baker.

The provisions of the scrutinized arbitration agreement defines disputes as to medical malpractice to include medical services which were "unnecessary or unauthorized or were improperly,...