Shah v. Intermountain Healthcare, Inc.

• Citation: 314 P.3d 1079,746 Utah Adv. Rep. 20
• Decision Date: 31 October 2013
• Docket Number: No. 20120402–CA.,20120402–CA.
• Parties: Aruna G. SHAH and Ghanshyam B. Shah, Plaintiffs and Appellants, v. INTERMOUNTAIN HEALTHCARE, INC.; Kelly Myers; Thomas D. Bauman; George E. Thomsen; James Zebrack; and David S. Feuer, Defendants and Appellees.
• Court: Utah Court of Appeals

314 P.3d 1079

746 Utah Adv. Rep. 20

Aruna G. SHAH and Ghanshyam B. Shah, Plaintiffs and Appellants,

v.INTERMOUNTAIN HEALTHCARE, INC.; Kelly Myers; Thomas D. Bauman; George E. Thomsen; James Zebrack; and David S. Feuer, Defendants and Appellees.

No. 20120402–CA.

Court of Appeals of Utah.

Oct. 31, 2013.

Kevin Sheff and Katherine L. Brim, for Appellants.

Patrick L. Tanner, for Appellee, Intermountain Healthcare, Inc.

John D. Ference, for Appellee, Kelly Myers.

Larry R. White and Paul D. Van Komen, Salt Lake City, for Appellee, Thomas D. Bauman.

George T. Naegle and Zachary E. Peterson, Salt Lake City, for Appellee, George E. Thomsen.

Catherine M. Larson and Peter J. Baxter, Salt Lake City, for Appellee James Zebrack.

Shawn McGarry and Nan T. Bassett, Salt Lake City, for Appellee, David S. Feuer.

Judge JAMES Z. DAVIS authored this Opinion, in which Judges CAROLYN B. McHUGH and J. FREDERIC VOROS JR. concurred.

Opinion

DAVIS, Judge:

¶ 1 Aruna G. Shah and Ghanshyam B. Shah appeal the trial court's denial of their motion for leave to amend their complaint against Intermountain Healthcare, Inc. (LDS Hospital), Dr. Kelly Myers, Dr. Thomas D. Bauman, Dr. George E. Thomsen, Dr. James Zebrack, and Dr. David S. Feuer (collectively, the Defendants). We affirm.

BACKGROUND

¶ 2 The Shahs were involved in an automobile accident on August 2, 2003, and Aruna was airlifted to LDS Hospital in Salt Lake City for medical treatment. On the advice of Dr. Bauman, Aruna underwent spinal stabilization surgery on August 8, 2003. As a result of the accident, Aruna was suffering from a number of health conditions at the time of surgery and experienced several complications during the surgery, including heart failure. Following the surgery, Aruna suffered from extensive muscle and nerve dysfunction. On March 8, 2006, the Shahs filed a complaint against LDS Hospital and Dr. Feuer, the vascular surgeon who evaluated Aruna the day after her surgery, alleging medical negligence and negligent infliction of emotional distress arising from the treatment Aruna received at LDS Hospital following the accident. The Shahs filed their First Amended Complaint on June 22, 2006, adding Dr. Myers, Dr. Bauman, Dr. Thomsen, and Dr. Zebrack as defendants, and asserting claims of medical negligence and negligent infliction of emotional distress against them as well.

¶ 3 On August 22, 2007, the Shahs moved for leave to file another amended complaint and submitted a proposed Second Amended Complaint to the court. ¹ This proposed complaint added claims for racketeering against LDS Hospital and claims for breach of fiduciary duty/fraudulent concealment, ² fraud, negligent misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the Utah Consumer Sales Practices Act (UCSPA), intentional infliction of emotional distress, res ipsa loquitur, civil conspiracy, quantum meruit/unjust enrichment, and spoliation of evidence against all of the Defendants. The Defendants opposed the Shahs' motion to amend on the ground that the newly alleged causes of action were futile. The trial court heard oral argument on the Shahs' motion on November 30, 2007.

¶ 4 On December 11, 2007, the trial court denied the Shahs' motion for leave to amend. In its written decision, the trial court specifically rejected as futile the racketeering, quantum meruit, breach of contract, breach of the covenant of good faith and fair dealing, spoliation of evidence, “fraud-based,” and UCSPA claims. After completing its analysis of these claims, the court concluded that “at least ten (10) of [the Shahs'] proposed claims would not withstand a motion to dismiss” and that the court was “not inclined to cherry pick the remaining claims that are potentially adequately pled,” asserting that “presenting a proposed amended complaint ... is an all-or-nothing proposition.”

¶ 5 In July and August 2011, the Defendants moved for summary judgment on the negligence claims, asserting that the Shahs had failed to timely designate expert witnesses and that they could not successfully prove their medical negligence claims without expert testimony.³ The trial court granted summary judgment in favor of the Defendants on April 10, 2012. On appeal, the Shahs do not challenge the trial court's summary judgment ruling but assert only that the trial court erred in refusing to grant them leave to amend their complaint with respect to the following claims: “fraudulent concealment, fraud, negligent misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of the UCSPA.”

ISSUE AND STANDARDS OF REVIEW

¶ 6 The Shahs assert that the trial court erred in denying them leave to amend their complaint because it failed to individually analyze the legal sufficiency of each of the Shahs' claims and because the claims were sufficient to withstand a motion to dismiss. “The granting or denial of leave to amend a pleading is within the broad discretion of the trial court, and we will not disturb such a ruling absent a showing of an abuse of that discretion.” Smith v. Grand Canyon Expeditions Co., 2003 UT 57, ¶ 31, 84 P.3d 1154. However, in this case, the trial court denied leave to amend on grounds of futility because it determined that the “proposed amendment would not withstand a motion to dismiss.” See Jensen v. IHC Hosps., Inc. (Jensen II), 2003 UT 51, ¶ 139, 82 P.3d 1076 (citation and internal quotation marks omitted). Whether a claim can withstand a motion to dismiss is a question of law, and we therefore review the trial court's underlying determination regarding the legal sufficiency of the claim for correctness. See Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1236 (11th Cir.2008) (holding that the trial court's denial of a motion for leave to amend based on futility is a legal conclusion reviewed de novo); Salt Lake City Corp. v. Big Ditch Irrigation Corp., 2011 UT 33, ¶ 19, 258 P.3d 539 (“Whether a court properly granted a 12(b)(6) motion to dismiss is a question of law, which we review for correctness.”).

ANALYSIS

I. Sufficiency of the Trial Court's Analysis

¶ 7 The Shahs first assert that the trial court erred in determining that leave to amend was “an all-or-nothing proposition” and rejecting their proposed Second Amended Complaint in its entirety despite having analyzed the legal sufficiency of only some of their claims. While it appears that we have previously approved a trial court's decision to deny a motion for leave to amend in its entirety where one of three claims was “potentially viable,” Francisconi v. Hall, 2008 UT App 166U, para. 15, 2008 WL 1971336 (mem.), the trial court in that case had based its denial primarily on its determination that the motion for leave to amend was untimely, id. paras. 10–11. The likely futility of the claims was merely an additional factor supporting the court's decision. Id. para. 12.Rule 15 of the Utah Rules of Civil Procedure directs that “leave [to amend] shall be freely given when justice so requires.” Utah R. Civ. P. 15(a). Given that “[t]he purpose of [rule 15] is to provide litigants the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties,” Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir.2006) (emphasis added) (citation and internal quotation marks omitted) (interpreting the analogous rule 15 of the Federal Rules of Civil Procedure), we are not convinced that the trial court's all-or-nothing approach was appropriate. Rather, in the absence of some other justification for denying leave to amend, the trial court should have analyzed the futility of each individual claim and then, if there were no other grounds for precluding an amendment, granted leave to amend as to those claims that were legally viable, if any. Cf. Bartronics, Inc. v. Power–One, Inc., 245 F.R.D. 532, 535–37, 539 (S.D.Ala.2007) (denying the defendants' motion to amend their answer and counterclaim in part on grounds of futility, but rejecting the plaintiff's argument that other claims were futile and permitting amendment with respect to those claims); Plumley v. Southern Container, Inc., 125 F.Supp.2d 556, 560 n. 2 (D.Me.2000) (suggesting that the best method for handling a situation where only some claims asserted in a motion for leave to amend are legally viable is “to allow amendment only of those claims for which the proposed amendment would not be futile” and “for counsel for a plaintiff [to] simply ... file an appropriate amended complaint after final disposition of the motion for leave to amend”).

¶ 8 However, on appeal, the Shahs challenge the trial court's decision only with respect to their claims for “fraudulent concealment, fraud, negligent misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of the UCSPA.” ⁴ The trial court explicitly addressed the futility of each of these claims. Specifically, the trial court explained that the “breach of contract and breach of implied covenant of good faith and fair dealing claims fail to identify an underlying contract (be it implied or express)”; that the Shahs' “fraud-based claims ... are lacking in specificity, including connecting specific Defendants to specific fraudulent misconduct or misrepresentations”; and that the UCSPA claim “is displaced by the more specific malpractice act.” Thus, the trial court's error in declining to address the futility of the remaining claims does not affect the outcome of this appeal. We therefore turn to the question of whether the trial court correctly determined that the six claims that are the subject of this appeal were legally insufficient and therefore futile.

II. Legal Sufficiency of the Shahs' Claims

¶ 9 “It is well settled that a court may deny a motion to amend as futile if the proposed amendment would not withstand a motion to dismiss....” Jensen II, 2003 UT 51, ¶ 139, 82 P.3d 1076 ...