College Hospital Inc. v. Superior Court

• Citation: 882 P.2d 894,8 Cal.4th 704,34 Cal.Rptr.2d 898
• Decision Date: 31 October 1994
• Docket Number: No. S027255,S027255
• Court: United States State Supreme Court (California)
• Parties: , 882 P.2d 894 COLLEGE HOSPITAL, INC., Petitioner, v. SUPERIOR COURT of Orange County, Respondent, Laura Diane CROWELL et al., Real Parties in Interest.

Page 898

34 Cal.Rptr.2d 898

8 Cal.4th 704, 882 P.2d 894

COLLEGE HOSPITAL, INC., Petitioner, v. SUPERIOR COURT of Orange County, Respondent Laura Diane CROWELL et al., Real Parties in Interest.

No. S027255.

Supreme Court of California In Bank.

Oct. 31, 1994.

As Modified Nov. 23, 1994.

[882 P.2d 896] Madory, Booth, Zell & Pleiss, Madory, Zell & Pleiss, Larry T. Pleiss, Tustin, Horvitz & Levy, Ellis J. Horvitz, Daniel J. Gonzalez and S. Thomas Todd, Encino, for petitioner

Munger, Tolles & Olson, Allen M. Katz, Jeffrey L. Bleich, Los Angeles, Chapman, Popik & White, Susan M. Popik, Nance F. Becker, San Francisco, Thelen, Marrin, Johnson & Bridges, Curtis A. Cole, Michael D. Holtz, Los Angeles, and Fred J. Hiestand, Sacramento, as amici curiae on behalf of petitioner.

No appearance for respondent.

John A. Luetto, Orange, Murtaugh, Miller, Meyer & Nelson, Michael J. Murtaugh, Lana Feldman and Susan Westover, Costa Mesa, for real parties in interest.

Houck & Balisok, Russell S. Balisok, Los Angeles, Shernoff, Bidart & Darras, William M. Shernoff and Sharon J. Arkin, Claremont, as amici curiae on behalf of real parties in interest.

BAXTER, Justice.

We focus for the second time in two years on Code of Civil Procedure section 425.13, subdivision (a) (section 425.13(a)). ¹ This section bars inclusion of a punitive damages claim in certain actions against health care providers unless the plaintiff first demonstrates a "substantial probability" that he "will prevail" on the claim. In Central Pathology Service Medical Clinic, Inc. v. Superior Court (1992) 3 Cal.4th 181, 10 Cal.Rptr.2d 208, 832 P.2d 924 (Central Pathology ), we determined the actions to which the statute applies--those involving the quality and nature of health services. We now decide the legal standard to be applied in determining whether the statutory requirement has been met. We also determine whether the statute was correctly applied to the facts of this case.

Although the language of section 425.13(a) is uncertain, its prophylactic purpose is clear--to protect health care providers from the onerous burden of defending against meritless punitive damage claims. We hold that the statute achieves this goal by requiring the plaintiff to both state and substantiate a legitimate, triable punitive damages claim. On the other hand, contrary to defense arguments in this case, section 425.13(a) does not authorize the trial court to reject a well pled and factually supported punitive damages claim simply because the court believes the evidence is not strong enough for probable success before a jury.

The substantive requirements for recovering punitive damages are set forth in Civil Code section 3294. In determining whether the plaintiffs in this case have stated and substantiated a triable punitive damages claim, we will examine some of these requirements, including, in particular, the limits on an employer's liability for such damages based on the "malicious" acts of an employee.

Here, a hospital outpatient receiving treatment for certain mood disorders claims she was traumatized when her extramarital affair with a hospital employee ended. The employee was not involved in the patient's treatment. The patient and her spouse sued the hospital for breach of therapeutic duty and were allowed to plead a punitive damages claim in the trial court. The Court of Appeal upheld this ruling. We conclude the lower courts erred in allowing a punitive damages claim to be stated under the particular circumstances. The judgment will be reversed.

FACTS

Laura Crowell, an attorney, is married to Richard Crowell. In 1991, the Crowells filed a complaint stating various causes of action against College Hospital, a corporation The unverified complaint is no model of clarity. Distilled, it alleges the following facts as to all counts: In 1990, Laura sought outpatient treatment from the Hospital for agoraphobia and other panic disorders. She attended psychotherapy sessions during the day and returned home at night. Shortly after her treatment began, Laura met Robert Berry. Berry worked in the cardiopulmonary unit of the Hospital.

(Hospital). ² [882 P.2d 897] ² Certain administrators, psychotherapists, and other health professionals employed by the Hospital were also individually named as defendants. For procedural reasons that will become clear, only the Hospital is a party to proceedings in this court.

Laura became involved in an extramarital affair with Berry. In the words of the complaint, Berry "manipulated" Laura into giving him sex, money, and gifts. Hospital therapists allegedly "encouraged" Laura to accept Berry's advances. When he ended the relationship, she suffered a "breakdown" and was admitted to another psychiatric institution. Therapists employed by the Hospital thereafter "abandoned" Laura as a patient. Richard purportedly suffered emotional distress when he learned of his wife's affair.

The Hospital is essentially charged with breach of a duty to provide competent therapeutic care. As to all counts, the complaint alleges that the Hospital knew about Berry's prior sexual relationship with another patient, knew about the relationship between Laura and Berry, and knew or should have known that Laura would suffer mental injury as a result. Aside from one instance in which the Hospital's administrator (Ken Westbrook) warned Berry against patient contact, the Hospital allegedly failed to discipline Berry or otherwise intervene in his relationship with Laura. Plaintiffs also claim they were not warned of Berry's "unfortunate propensities."

Based on the foregoing allegations, the complaint pleads a cause of action for professional negligence against all defendants, including the Hospital. Intentional and negligent infliction of emotional distress counts are also pled against the Hospital and Berry. As originally filed, the complaint prayed for punitive damages against the Hospital and Berry. These two defendants moved to strike the punitive damage allegations on the ground that plaintiffs had not complied with the requirements of section 425.13(a). The court granted the motion to strike.

Plaintiffs timely moved under section 425.13(a) for an order allowing them to amend the complaint to state a punitive damages claim against the Hospital and Berry. Attached to the motion was a declaration executed by Laura, as well as a proposed first amended complaint that is identical to the original complaint in most respects. In particular, the proposed amended complaint alleges that the Hospital and Berry acted with "oppression, fraud, and malice," and seeks punitive damages against them in conjunction with the intentional-infliction count. The Hospital and Berry formally opposed the section 425.13(a) motion, and plaintiffs filed a written reply. Additional evidence was submitted with the opposing and reply papers. ³

At the section 425.13(a) hearing, plaintiffs basically argued that the proposed punitive damages claim should be allowed against Berry under section 425.13(a) because his relationship with Laura was malicious and harmful. Plaintiffs also proposed three theories The trial court granted the section 425.13(a) motion and allowed plaintiffs to amend their complaint to state a punitive damages claim against the Hospital and Berry. The Hospital alone petitioned for a writ of mandate to set aside the ruling. The Court of Appeal summarily denied relief. We granted the Hospital's petition for review and transferred the matter to the Court of Appeal with directions to issue an alternative writ.

[882 P.2d 898] on which the Hospital could be held liable for punitive damages: (1) Berry was a management-level employee who committed malicious acts against Laura, (2) Westbrook, the highest ranking manager at the Hospital, investigated and otherwise handled the Laura-Berry relationship in a malicious way, and (3) Westbrook ratified Berry's malicious conduct towards Laura.

In its opinion, the Court of Appeal interpreted section 425.13(a) in a manner largely consistent with other courts considering the same or similar statutes. (See Aquino v. Superior Court (1993) 21 Cal.App.4th 847, 853-856, 26 Cal.Rptr.2d 477 [§ 425.13(a) ]; Looney v. Superior Court (1993) 16 Cal.App.4th 521, 537-539, 20 Cal.Rptr.2d 182 [same]; Rowe v. Superior Court (1993) 15 Cal.App.4th 1711, 1718-1724, 19 Cal.Rptr.2d 625 [§ 425.14]; Hung v. Wang (1992) 8 Cal.App.4th 908, 926-934, 11 Cal.Rptr.2d 113 [Civ.Code, § 1714.10].) The court concluded that a complaint governed by section 425.13(a) cannot be amended to seek punitive damages absent a competent "prima facie" showing of a viable punitive damages claim. Plaintiffs had satisfied this requirement, the court ruled, by presenting evidence supporting each theory of punitive damages liability proffered against the Hospital. The court denied the Hospital's writ petition and discharged the alternative writ. We granted review.

DISCUSSION

A. Punitive Damages Overview

The civil law is normally concerned with compensating victims for actual injuries sustained at the hands of a tortfeasor. Punitive damages are an exception to this rule. Since 1872, they have been statutorily authorized in actions "not arising from contract" where the tortious event involves an additional egregious component--"oppression, fraud, or malice." (Civ.Code, § 3294, subd. (a).) Punitive damages are to be assessed in an amount which, depending upon the defendant's financial worth and other factors, will deter him and others from committing similar misdeeds. (Adams v. Murakami (1991) 54 Cal.3d 105, 110-111, 284 Cal.Rptr. 318, 813 P.2d 1348.) Because compensatory damages are designed to make the plaintiff "whole," punitive damages are a "windfall" form of recovery. (Id., at p. 120, 284 Cal.Rptr. 318, 813 P.2d 1348.)

For more than a century, the punitive damages scheme remained unchanged. In recent years, however, the Legislature has made it more difficult for plaintiffs to...