Schultheis v. Franke

• Decision Date: 05 December 1995
• Docket Number: No. 57A05-9401-CV-32,57A05-9401-CV-32
• Citation: 658 N.E.2d 932
• Parties: Richard L. SCHULTHEIS, M.D. and The Law Office of Richard L. Schultheis, P.C., Appellant-Defendant, v. Gene FRANKE, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 932

658 N.E.2d 932

Richard L. SCHULTHEIS, M.D. and The Law Office of Richard L.

Schultheis, P.C., Appellant-Defendant, v. Gene FRANKE, Appellee-Plaintiff.

No. 57A05-9401-CV-32.

Court of Appeals of Indiana.

Dec. 5, 1995.

Transfer Denied May 8, 1996.

Thomas W. Yoder, Mark E. Witmer, Ft. Wayne, for Appellant.

Dennis H. Geisleman, Christopher C. Myers, Myers & Geisleman, Ft. Wayne, for Appellee.

OPINION

RUCKER, Judge.

In this action based on attorney malpractice, Defendants-Appellants Richard L. Schultheis and The Law Office of Richard L. Schultheis, P.C. (collectively "Schultheis") contest the jury's verdict in favor of their former client, Plaintiff-Appellee Gene Franke. In so doing they raise six issues for our review which we consolidate and rephrase as:

1) Whether the trial court erroneously refused to allow Schultheis to amend his answer to include non-party defenses?

2) Whether the trial court erred in permitting Dr. Kenneth Borow to testify as an expert?

3) Whether the verdict is supported by sufficient evidence or is contrary to law?

4) Whether the damages award should be reduced by the amount of attorney's fees which would have been incurred by Franke in the underlying action?

We affirm in part and remand for further proceedings.

On June 21, 1983, Gene Franke suffered a stroke and was admitted to the Lutheran Hospital in Fort Wayne, Indiana for treatment. In order to determine the cause of the stroke, doctors performed a number of diagnostic tests including M-mode and two-dimensional echocardiograms. ¹ The M-mode echocardiogram revealed what appeared to be a dense mass located within the left atrium of the heart. Franke's cardiologist, Dr. Stanley Rich, determined the mass represented a possible blood clot or tumor, or in the alternative that it could be merely a false-positive. Another M-mode echocardiogram taken several weeks later also reflected either blood clot, tumor, or false-positive, as interpreted by Dr. Rich and by Dr. Robert Godley, an expert in the field of echocardiography. In accordance with a recommendation by Dr. Godley, a third echocardiogram was performed on August 18, 1983. Following that test, Dr. Godley reported that the mass likely represented a tumor.

In reliance on Dr. Godley's reading of the echocardiogram, Dr. Rich informed Franke that he was at increased risk of another stroke and recommended that he undergo open-heart surgery. Franke underwent surgery as recommended on August 24, 1983. However, the surgery revealed no presence of either blood clot or tumor. Instead, the mass appearing on the echocardiograms proved to be merely a false-positive.

Shortly after his release from the hospital, Franke retained his cousin, attorney Norbert Wyss, for purposes of pursuing a medical malpractice action against Dr. Rich, Dr. Godley, and Dr. Alan Peterson who performed the surgery. In turn, Wyss retained Schultheis as co-counsel. Schultheis is a physician whose law practice specializes in medical malpractice claims. He was thus charged with pursuing the medical malpractice claim, and Wyss's role was that of liaison between Schultheis and Franke. Franke entered into a contingency fee agreement with Schultheis and Wyss, agreeing to pay the attorneys fifty percent of any recovery obtained on his behalf.

In his investigation of the claim, Schultheis contacted cardiologists in Indianapolis and Fort Wayne seeking an opinion on the validity of Franke's negligence claim. With the exception of Dr. William Storer, an Indianapolis physician, none of the experts interviewed by Schultheis rendered a favorable opinion. Thereafter, Schultheis filed a complaint with the Indiana Department of Insurance alleging medical negligence. On December 18, 1987, a Medical Review Panel found no negligence on the part of the physicians. In spite of the Panel's finding, Schultheis filed a complaint against the physicians in the Allen Superior Court on February 18, 1988 alleging negligence in their diagnosis and treatment of Franke. However, when the deposition of Dr. Storer, taken during the pendency of the action, also failed to support Franke's claim of negligence, attorneys for the defendant doctors demanded that Schultheis dismiss the case or face a claim of malicious prosecution. In April 1989, before obtaining Franke's approval, Schultheis agreed to a mutual release of claims and dismissal of the action. The agreement was eventually communicated to Franke who refused to consent to the dismissal. In response, both Schultheis and Wyss notified Franke of their intention to withdraw from the case. On June 23, 1989, the defendant physicians moved to dismiss the action on grounds of the mutual release and dismissal and because no action had been taken on the case for a period of sixty days. The court scheduled the matter for hearing on August 25, 1989. In the meantime, on August 2, 1989, Franke filed a complaint against Wyss and Schultheis with the Indiana Supreme Court Disciplinary Commission alleging attorney misconduct in connection with the case. After an investigation, the Commission found no misconduct and dismissed the complaint. By the time of the hearing on the motion to dismiss, Franke had retained Dennis Geisleman as substitute counsel. Geisleman presented argument in opposition to the motion which the trial court granted.

Franke filed the present action against Schultheis on April 2, 1991. Schultheis answered the complaint on May 22, 1991. On May 7, 1992, Schultheis filed a motion to amend the answer in order to include a non-party defense. The motion alleged that negligence by Wyss and Geisleman contributed to the injury suffered by Franke and sought to add them as non-parties. After considering the arguments of counsel, the trial court determined that the statute of limitations had expired as to any claims against Wyss and Geisleman. The court concluded that Franke would therefore be unable to add them as additional defendants to the action and thus allowing Schultheis to name them as non-parties would be prejudicial to Franke. The court denied the motion to amend, and the case proceeded to trial by jury. At the conclusion of the evidence, the jury found in favor of Franke and awarded him damages in the amount of $95,040.00. This appeal ensued.

I.

Schultheis contends the trial court erred in denying his motion to amend on the ground that the statute of limitations had expired as to Norbert Wyss and Dennis Geisleman. According to Schultheis, Wyss and Geisleman were still subject to suit by Franke at the time the motion to amend was filed and therefore no prejudice could have resulted to Franke by the amendment.

Amendment of a pleading to assert a non-party defense is governed by Ind.Code § 34-4-33-10(c). The statute provides that a non-party defense known by the defendant when he files his first answer shall be pleaded as part of the first answer. Id. If a defendant gains actual knowledge of a non-party defense after the filing of an answer, he may plead the defense with reasonable promptness. Id. The court may refuse to allow a defendant to plead a non-party defense where such would not allow the claimant a reasonable opportunity to add the non-party as an additional defendant to the action before expiration of the applicable period of limitation. See I.C. § 34-4-33-10(c)(2). The decision whether to grant or deny a motion to amend is within the discretion of the trial court and may be reversed only upon a showing of abuse of discretion. United of Omaha v. Hieber (1995), Ind.App., 653 N.E.2d 83, 87.

Schultheis spends considerable time discussing the applicable statute of limitations and why the trial court erred in applying it to the facts of this case. According to Schultheis, holding the statute expired as to Wyss is contrary to the intention of I.C. § 34-4-33-10 because Franke had actual knowledge of Wyss's negligence prior to the filing of the motion to amend and thus could have named Wyss as an additional defendant at any time. As to Geisleman, Schultheis claims that the limitations period was tolled due to the attorney-client relationship existing between Geisleman and Franke.

We need not determine whether the statute of limitations had expired as to any claims against Wyss and Geisleman because Schultheis's argument fails for a different reason. The complaint in this case was filed April 2, 1991, and Schultheis's answer was filed May 22, 1991. However Schultheis's motion to amend the answer to add a non-party defense was not filed until May 7, 1992, nearly a year after his original answer had been filed. Schultheis did not apprise the trial court, nor does Schultheis direct this court to any portion of the record explaining when he first gained knowledge of the non-party defense. The record suggests however that Schultheis knew of any negligence committed by Wyss as early as August of 1989 when the disciplinary proceeding was filed. Also, Schultheis claims Geisleman was negligent in representing Franke at the hearing on the motion to dismiss and in failing to appeal the order of dismissal. Both the hearing and ruling on the motion to dismiss took place on August 25, 1989. Thus, Schultheis knew or should have known of the dismissal and of any accompanying negligence by Geisleman shortly after that date. Schultheis therefore failed to satisfy the threshold requirement of I.C. § 34-4-33-10(c), namely: asserting any non-party defense in his first answer. Further, even taking as true Schultheis's assertion that he was unaware of the defense until sometime after the answer was filed, Schultheis has failed to show that he pled the defense with reasonable promptness. See I.C. § 34-4-33-10(c). Accordingly we find no abuse of discretion in the trial court's denial of Schultheis's motion to amend the pleadings.

II.

Schultheis next challenges the trial court's admission into evidence the testimony by Dr. Kenneth Borow, a cardiologist and expert in the field of...