Cardio Systems, Inc. v. Superior Court

• Decision Date: 21 August 1981
• Docket Number: No. 6260,6260
• Citation: 176 Cal.Rptr. 254,122 Cal.App.3d 880
• Court: California Court of Appeals Court of Appeals
• Parties: CARDIO SYSTEMS, INC., et al., Petitioners, v. The SUPERIOR COURT OF FRESNO COUNTY, Respondent; VALLEY CHILDREN'S HOSPITAL AND GUIDANCE CLINIC et al., Real Parties in Interest.

Page 254

176 Cal.Rptr. 254

122 Cal.App.3d 880

CARDIO SYSTEMS, INC., et al., Petitioners, v. The SUPERIOR COURT OF FRESNO COUNTY, Respondent;

VALLEY CHILDREN'S HOSPITAL AND GUIDANCE CLINIC et al., Real Parties in Interest.

No. 6260.

Court of Appeal, Fifth District, California.

Aug. 21, 1981.

Hearing Denied Oct. 28, 1981.

Foley, McIntosh & Foley and James D. Claytor, Albany, for petitioners.

Stammer, McKnight, Barnum & Bailey and Carey H. Johnson, Fresno, for real party in interest Valley Children's Hospital and Guidance Clinic.

No appearance for real party in interest Cardiovascular Instruments, Inc.

OPINION

PAULINE DAVIS HANSON, Associate Justice.

Petitioners seek a writ of mandate ordering the trial court to vacate an order of March 23, 1981, entered against them on their defense of a good-faith dismissal as a bar to cross-complainant Valley Children's Hospital and Guidance Clinic's (Hospital's) claim for equitable indemnity. (Code Civ.Proc., § 877.)

The trial court ruled that the dismissal, for costs, of petitioners in plaintiffs' action for wrongful death is not a bar, under Code of Civil Procedure section 877, to Hospital's continuing action on its cross-complaint for partial equitable indemnity.

Plaintiffs Shirley Kafai, Shaharm Kafai, Bahram Kafai, Bahman Kafai, Shahla Kafai, Roya Kafai, Rana Kafai and Ali Kafai, widow and seven children of Manoocher Kafai, on July 9, 1976, filed an action (No. 205038-3) for damages in Fresno County Superior Court (respondent) for Mr. Kafai's wrongful death naming as defendants real party in interest Hospital, several doctors and several Does. A first amended complaint filed by stipulation of counsel on January 14, 1977, added petitioners Dennis Bethke, doing business as Life Support Systems, and Cardio Systems, Inc. (all hereafter Cardio), and real party in interest Cardiovascular Instruments Corporation (CINCO) as parties defendant. On December 15, 1978, by leave of court, Hospital filed a cross-complaint for partial indemnity against both Cardio and CINCO. On February 8, 1979, CINCO also cross-complained against Cardio for partial indemnity. Cardio answered the cross-complaints.

On April 26, 1979, plaintiffs filed a dismissal without prejudice as to Cardio; the consideration for the dismissal was a waiver of costs by Cardio.

On or about May 26, 1979, Hospital entered into an agreement with plaintiffs for "release of all claims" in consideration of the payment of $1 million to the plaintiffs. Plaintiffs subsequently dismissed all other parties who had appeared. Hospital and CINCO pursued their cross-complaints against Cardio.

Cardio, pursuant to an order of the court, amended its answers to include as an affirmative defense and bar to recovery for partial equitable indemnity a dismissal in good faith by plaintiffs. (Code Civ.Proc., § 877.) The trial court also granted Cardio's motion (Code Civ.Proc., § 597) for a separate trial of the affirmative defense under section 877 to be held before trial of the main action on the cross-complaints.

Trial by the court was held November 25 and 26, 1980. After hearing testimony and arguments of counsel, the judge ruled from the bench that, although he found "no collusion as that term is ordinarily understood ..., to in any way injure the settling defendant (Hospital)," nor "bad faith in the usual concept of that term," he could not find the dismissal as to Cardio, which was without consideration other than the waiver of costs, a good faith dismissal as that concept is used in CODE OF CIVIL PROCEDURE SECTION 877¹. The court ordered plaintiffs' action as to defendant CINCO dismissed because, although named in plaintiffs' amended complaint, CINCO was never served. (Code Civ.Proc., § 581a, subd. (a).)

Findings of fact and conclusions of law were requested at the close of the judge's ruling; they were signed March 23, 1981, and lodged with this court April 2, 1981.

In the interim, on February 18, 1981, Cardio filed a petition for writ of mandate in this court seeking to have the ruling of the trial court set aside. After various pleadings and points and authorities were filed, copies of the court's findings were lodged, as well as a copy of plaintiffs' release of all claims against Hospital; an order to show cause issued April 20, 1981. CINCO remained in the action as a cross-defendant and cross-complainant, but is not a party to this writ proceeding.

The evidence produced at the trial showed Mr. Kafai died on the operating table during open-heart surgery at Hospital. An embolism of the brain was caused when the heart-lung machine pumped air into a sump-line tube which was inserted in a catheter in the left ventricle of the patient's heart; an incorrect assembly allowed the tube to inject air into the heart instead of creating a suction to remove blood from the patient.

Cardio was the distributor of the heart-lung machine; CINCO manufactured it; Bethke delivered it to Hospital and instructed the hospital staff as to its operation.

The perfusionist who operated the heart-lung machine during the Kafai surgery testified that she incorrectly attached the tubing that was designed to bring blood from the heart to be filtered, oxygenated and pumped back into the patient. It was her understanding that this error caused air to be pumped into Mr. Kafai's body.

Hospital's expert, Dr. Black, a product-safety and human-factors engineer, testified, as part of an offer of proof by counsel for Hospital, that in his opinion the CINCO heart-lung machine used in the Kafai operation was defective in several particulars. Dr. Black cited several safety factors which he felt were necessary to make the machine nondefective: a checklist for operating personnel; arrows on the tubing and the pump; a system of grommets which would mechanically prevent incorrect insertion of the tubing into the pump; and a one-way valve that would prevent air from being forced into a patient.

Hospital's counsel made a further offer of proof that his experts, if called, would testify that the machine was also defective in that it had an inadequate forward-reverse switch.

Plaintiffs' former counsel, Mr. Brazier, testified that the complaint was amended, immediately before the running of the one-year statute of limitations, to name Cardio and CINCO, distributor and manufacturer of the heart-lung machine. He recalled that prior to the dismissal, he felt there was a substantial case against the manufacturer and distributor. Mr. Brazier explained the reasons for the dismissal of Cardio by plaintiffs:

"..., it's basically a matter of trial tactics. I think the way the case was discovered, we found that one of two things had happened in the operating room as best we could determine, one, that the pump winding for the ..., sump pump had either been put in backwards and the machine was started, because the pump winding was in backwards, a vacuum was not created, but there was air at the end of the sump that was injected into the heart.

"The other theory was that there was a switch on the base of the pump that would be put in a forward or a reverse position, and the switch was in the reverse position at the time the pump was started. I thought that on either one of these theories, it would be a relatively simple task to explain how the pump was put together and how it worked and what negligent act or ommission (sic) was done by the employee of the hospital. And I had no desire assuming sufficient assets and sufficient insurance to complicate a clear liability, relatively simple medical malpractice case by bringing in a products case. I didn't need it. I didn't want it. It would complicate my case, and I had no desire to do so. I thought it was in the best interest of my client not to have the manufacturer in the case.

"Q And is that why you gave Mr. Bethke a dismissal, Mr. Bethke and his company a dismissal?

"A Yes, in exchange of waiver of costs."

Mr. Pugh, the accountant for Cardio at the time of the dismissal, was permitted to testify concerning discussion of the suit at a board meeting in March 1979. It was felt that Cardio had very little exposure, and it was determined to approach plaintiffs regarding dismissal, citing the need for a continuance, and "(b)luff(ing) them out" about the complexity of the case. The book value of the corporation in March 1979 was $250,000; the corporation had liability insurance coverage.

Based on the evidence presented at the hearing, the trial court found:

"...

"5. On April 26, 1979 plaintiffs filed a dismissal without prejudice as to DENNIS H. BETHKE, individually, and doing business as LIFE SUPPORT SYSTEMS, and CARDIO SYSTEMS, INC.

"6. Both as of April 15, 1979, when the aforesaid request for a dismissal was signed, and April 26, 1979, when it was filed, DENNIS H. BETHKE, individually, and doing business as LIFE SUPPORT SYSTEMS, and CARDIO SYSTEMS, INC., knew or should have known that plaintiffs' damages would be substantial.

"7. On April 15 and 26, 1979, the net worth of CARDIO SYSTEMS, INC. was approximately $250,000.00. On said dates, DENNIS BETHKE, individually and doing business as LIFE SUPPORT SYSTEMS, and CARDIO SYSTEMS, INC., knew or should have known that there was some potential liability as to them to plaintiffs.

"8. There was no consideration for the dismissal filed April 26, 1979 other than a waiver of costs.

"9. The overriding and primary purpose for plaintiffs dismissing defendants DENNIS H. BETHKE, individually, and doing business as LIFE SUPPORT SYSTEMS, and CARDIO SYSTEMS, INC. was the tactical decision on the part of plaintiffs' counsel to eliminate said parties from his clients' lawsuit to simplify the issues and obtain a prompt disposition of his clients' claims. Plaintiffs' counsel had reasonably concluded that he would be able to prove negligence on the part of defendant VALLEY CHILDREN'S HOSPITAL AND GUIDANCE CLINIC, and that defendant VALLEY CHILDREN'S HOSPITAL AND GUIDANCE CLINIC would be able...