Eads v. Borman

• Decision Date: 26 April 2012
• Docket Number: CA A137410,SC S058445).,(CC 05C18610
• Parties: David EADS and Diane Eads, individually and as husband and wife, Petitioners on Review, v. Timothy R. BORMAN, D.O.; Salem Hospital, a registered Oregon non-profit corporation; Michael J. George, M.D.; and Salem Radiology Consultants, P.C., an Oregon Professional Corporation, Defendants, and Willamette Spine Center, LLC, an Oregon corporation, Respondent on Review.
• Court: Oregon Supreme Court

351 Or. 729

277 P.3d 503

David EADS and Diane Eads, individually and as husband and wife, Petitioners on Review,

v.Timothy R. BORMAN, D.O.; Salem Hospital, a registered Oregon non-profit corporation; Michael J. George, M.D.; and Salem Radiology Consultants, P.C., an Oregon Professional Corporation, Defendants,andWillamette Spine Center, LLC, an Oregon corporation, Respondent on Review.

(CC 05C18610; CA A137410; SC S058445).

Supreme Court of Oregon,

En Banc.

Argued and Submitted March 1, 2011.

Decided April 26, 2012.

On review from the Court of Appeals.^*

Maureen Leonard, Portland, argued the cause for petitioners on review. With her on the brief was David K. Miller.

Richard A. Lee, Bodyfelt Mount LLP, Portland, argued the cause for respondent on review. On the brief was Pamela A. Stendahl.

Thomas M. Christ, Cosgrave Vergeer Kester LLP, argued the cause and filed a brief on behalf of amicus curiae Oregon Association of Defense Counsel.

Kathryn H. Clarke, Portland, filed a brief on behalf of amicus curiae Oregon Trial Lawyers Association.

LINDER, J.

Plaintiff underwent surgery performed by a physician whose office was in a building that defendant, a limited liability company (LLC), leased to medical providers.¹ The surgeon performed the surgery negligently, causing plaintiff permanent and disabling injuries. Plaintiff brought this malpractice action against the LLC landlord, as well as against the surgeon and others involved in his medical treatment. Plaintiff pursued the action against the LLC on a theory of apparent agency. Specifically, plaintiff's theory was that, through the signage on the building and other representations, the LLC created the appearance that the building housed a group medical entity of which plaintiff's surgeon was an agent. The trial court granted summary judgment for the LLC, concluding that the evidence was legally insufficient to hold the LLC vicariously liable for the surgeon's negligence on an apparent agency theory. The Court of Appeals agreed, and affirmed. Eads v. Borman, 234 Or.App. 324, 227 P.3d 826 (2010).

We granted plaintiff's petition for review to resolve when a nonnegligent person or entity may be held vicariously liable on an apparent agency theory for physical injuries negligently inflicted by a medical professional. We conclude that, for such liability to arise, the injured party must have dealt with the negligent medical professional based on a reasonable belief, traceable to the putative principal's conduct or representations, that the medical professional was the principal's employee or was otherwise subject to the principal's right of control in providing the medical services that caused the injured party's injury. As we will explain, the record in this case was insufficient to permit a jury to find the LLC vicariously liable for the surgeon's negligence on that basis. We therefore affirm the judgment of the trial court and the decision of the Court of Appeals.

BACKGROUND

We review the record in the light most favorable to plaintiff, as the party opposing the motion for summary judgment. Bergmann v. Hutton, 337 Or. 596, 599, 101 P.3d 353 (2004). The LLC involved in this case—Willamette Spine Center, LLC—is in the business of commercially leasing real property. In furtherance of its business, the LLC leased two buildings under terms that permitted it to sublease offices in the buildings to medical professionals. The LLC denominated one of those buildings—the building involved in this case—as “Willamette Spine Center” and leased offices in it to medical professionals with specialties related to spinal care and treatment. The LLC placed a sign on the building's exterior identifying it as “Willamette Spine Center.” A second sign in front of the building similarly read “Willamette Spine Center” and also displayed a logo consisting of the stylized initials “WSC.”

The names of the various medical provider tenants were listed near the door into the office building. Some of the providers were themselves limited liability companies, held themselves out as such, and incorporated the words “Willamette Spine Center” into their professional names ( i.e., “Willamette Spine Center Ambulatory Surgery, LLC” and “Willamette Spine Center Physical Therapy and Rehabilitation, LLC”). Other medical providers used their individual names only, without any reference to Willamette Spine Center. Although the LLC landlord did not require it, all or many of the tenants used business cards that included “Willamette Spine Center” and the WSC logo on them, either at the top of the card or as part of their office address. Their business cards then listed their names, professional credentials and specialty areas, and contact information. The contact information, such as phone numbers and e-mail addresses, differed among the various providers in the building.

One of the professionals who leased office space in the building was Dr. Freeman, a chiropractor who was also one of three members ( i.e., owners) of the LLC landlord. Plaintiff had become acquainted with Freeman through plaintiff's work as a manager at a Starbucks coffee shop. From their conversations at the coffee shop, plaintiff knew that Freeman was a chiropractor and knew that he was “affiliated” with the Willamette Spine Center. Freeman, in turn, knew that plaintiff suffered from back pain. Freeman suggested that plaintiff, to address his back pain, seek care “from practitioners at his clinic, the Willamette Spine Center.” Based on his acquaintance with Freeman, plaintiff relied on Freeman's recommendation and treated with Freeman at his office in the Willamette Spine Center building. At some point, Freeman referred plaintiff to a physical therapist in that building, and plaintiff consulted with and received treatment from that physical therapist. Eventually, Freeman determined that plaintiff should be evaluated for possible surgery. Telling plaintiff that he “would set [plaintiff] up with ‘one of the Willamette Spine Center surgeons,’ ” Freeman referred plaintiff to Dr. Borman, a physician and surgeon who specialized in spinal surgery.

Borman was a tenant in the Willamette Spine Center building pursuant to an “association agreement” with Dr. Tiley, a physician who leased office space directly from the LLC. Through that association agreement, and with the LLC's knowledge and approval, Borman subleased space from Tiley. The two shared common areas ( e.g., exam rooms, patient waiting rooms), while maintaining separate staff and separate professional offices. Borman's business cards had “Willamette Spine Center” and the WSC logo printed at the top. Printed below those words and logo was Borman's name, his credentials and specialty, and his individual email and phone contact information. Borman's letterhead did not have “Willamette Spine Center” or the WSC logo printed on it. All charges to Borman's patients were billed to Borman's individual professional accounts and processed through Borman's own office staff.

Plaintiff saw Borman at his office in the Willamette Spine Center building in August 2003. As part of his consultation with Borman, plaintiff filled out an “Initial Patient Health History” on a form that had only Borman's name printed on it, without any reference to Willamette Spine Center. Plaintiff, however, thought that all the tenants in the building where Freeman and Borman had their offices were “affiliated” with “the Willamette Spine Center.” In particular, based on the fact that Borman's office was in the Willamette Spine Center building, plaintiff thought that Borman was “a Willamette Spine Center surgeon.” Plaintiff was not aware of anything that suggested to him that Borman was “independent of the Willamette Spine Center.”

Borman determined that surgery was appropriate for plaintiff, and plaintiff decided to have that surgery. In September 2003, Borman performed two surgeries on plaintiff that caused him permanent and disabling injuries. Both surgeries were performed in a local hospital, not in the Willamette Spine Center building.

Plaintiff brought this malpractice action against the LLC,² alleging that the LLC did business as Willamette Spine Center, or held itself out to the public as doing so. Plaintiff further alleged that Borman “practiced at and did business under the name of Willamette Spine Center,” and was therefore an apparent agent of the LLC. Plaintiff's theory, in essence, was that the LLC was vicariously liable for Borman's negligence because the LLC held itself out as a medical entity called Willamette Spine Center and held Borman out—or permitted Borman to hold himself out—as acting on behalf of and for the benefit of that entity.

The LLC moved for summary judgment, arguing that its activities and representations provided no basis for it to be held vicariously liable for Borman's negligence. In particular, the LLC urged that the evidence did not permit a jury to find that the LLC had promoted itself as some form of group medical entity or held out Willamette Spine Center to be such an entity, as opposed to a professional office building for which the LLC was the landlord. The LLC also urged that no evidence established that the LLC had held Borman out as its agent. According to the LLC, to whatever extent plaintiff had relied on representations made by anyone other than the LLC that Borman was an agent of the LLC, those representations could not serve as a basis on which the LLC could be vicariously liable for Borman's negligence.

In response, plaintiff argued that a jury could conclude that the LLC, through its direct representations as well as acquiescence in representations made by the building tenants, held out Willamette Spine Center as a group medical entity and Borman as its authorized surgeon. Among other facts, plaintiff relied on the signage on the building, the tenants' (including Borman's) use of the building name and logo on their business cards, and Freeman's representations...