Theophelis v. Lansing General Hosp.

• Decision Date: 06 June 1988
• Docket Number: Docket No. 78166
• Citation: 430 Mich. 473,424 N.W.2d 478
• Parties: James THEOPHELIS, Personal Representative of the Estate of Gene Christopher Schneider, deceased, and Gene L. Schneider and Gloria Schneider, individually, Plaintiffs-Appellants, v. LANSING GENERAL HOSPITAL, a Michigan corporation, Capital Anesthesiologists, P.C., Kenneth J. Mahoney, D.O., Jack Gilmore, D.O., Gerald Gilroy, D.O., P.C., Robert Wirt, D.O., and David Sciamanna, D.O., Defendants, and Lansing General Hospital, Defendant-Appellee.
• Court: Michigan Supreme Court

Page 478

424 N.W.2d 478

430 Mich. 473

James THEOPHELIS, Personal Representative of the Estate of

Gene Christopher Schneider, deceased, and Gene L.

Schneider and Gloria Schneider, individually, Plaintiffs-Appellants, v. LANSING GENERAL HOSPITAL, a Michigan corporation, Capital

Anesthesiologists, P.C., Kenneth J. Mahoney, D.O., Jack

Gilmore, D.O., Gerald Gilroy, D.O., P.C., Robert Wirt, D.O.,

and David Sciamanna, D.O., Defendants,

and

Lansing General Hospital, Defendant-Appellee.

Docket No. 78166.

Supreme Court of Michigan.

Argued May 4, 1987.

Decided June 6, 1988.

[430 Mich. 475] Richard C. [430 Mich. 476] Kraus, [430 Mich. 475] Farhat, Story & Kraus, P.C., [430 Mich. 476] East Lansing, William N. Kritselis, Church, Wyble, Kritselis & Robinson, P.C., Lansing, for plaintiffs-appellants.

Kitch, Saurbier, Drutchas, Wagner & Kenney, P.C. by Ronald E. Wagner, Susan Healy Zitterman, Detroit, for defendant-appellee.

OPINION

GRIFFIN, Justice.

In this medical malpractice action we are required to determine whether a 1974 amendment ¹ of the Michigan contribution among tortfeasors act, M.C.L. Sec. 600.2925; M.S.A. Sec. 27A.2925, abrogated the common-law rule that settlement with, and release of, an agent operates to discharge the principal from vicarious liability for the agent's acts. We conclude that the amendment had no such effect.

We are asked also to decide whether releases executed by the plaintiffs in this case should be reformed as covenants not to sue as a means of avoiding the common-law rule. Our answer is in the negative.

I

Gene Christopher Schneider, a seven-year-old boy, was admitted to Lansing General Hospital for a tonsillectomy and bilateral tympanotomy. On June 16, 1978, following the tympanotomy and before the tonsillectomy, the child suffered a cardiac arrest. After half an hour of resuscitative effort, the child resumed a spontaneous heartbeat, and was taken to the intensive care unit where he was placed on a respirator and cardiac monitor. Several physicians on the hospital staff examined the child and directed treatment in the intensive care unit. On the following day, a second cardiac arrest occurred. The child's condition continued to deteriorate until his death six days later, on June 22, 1978.

Plaintiffs, the personal representative and parents of the decedent, filed this wrongful death action in the Ingham Circuit Court. Among defendants named were Jana Palmer, a certified nurse anesthetist who administered anesthesia for the surgery, and Jack Gilmore, D.O., the supervising anesthesiologist. Both were employed by Capital Anesthesiologists, P.C., which had a contract to perform anesthesia in the hospital. Additional defendants included the Lansing General Hospital; Gerald Gilroy, D.O., who performed the surgery; David Sciamanna, D.O., a resident pediatrician; and several other physicians.

Capital Anesthesiologists and physicians other than those named above were dismissed for reasons unrelated to this appeal. Prior to trial plaintiffs entered into a settlement and release agreement with Nurse Palmer in exchange for a payment of $85,000. Shortly after the trial began, plaintiffs also entered into a settlement and release agreement with Dr. Gilmore. The latter was a structured settlement providing for a cash payment of $72,000 and for installment payments over a period of twenty years or more, depending upon the life of the decedent's father, with a guaranteed total of at least $417,000. In both instances, a release was executed in consideration of the settlement payments and a provision was included in the release specifically reserving plaintiffs' claims against the remaining defendants. ²

Plaintiffs' complaint included allegations of independent negligence ³ on the part of the hospital. The complaint also charged the hospital with vicarious liability for negligence on the part of Palmer and Gilmore who, although not employees of the hospital, were alleged to be ostensible agents of the hospital under Grewe v. Mt. Clemens General Hosp., 404 Mich. 240, 273 N.W.2d 429 (1978). During the course of the trial the hospital moved to strike all allegations of negligence on the part of Palmer and Gilmore upon the theory that the settlements operated to release the hospital from vicarious liability for the torts of Palmer and Gilmore. Although the trial judge recognized the common rule that release of an agent discharges the principal, he nevertheless denied the motions to strike and admitted evidence of negligence on the part of Palmer and Gilmore on the ground that it was necessary to the jury's understanding of independent negligence claims against the remaining defendants, Lansing General, Dr. Sciamanna, and Dr. Gilroy. ⁴

After a two-week trial, the jury returned a verdict against the hospital of $1 million, and found no cause of action against Drs. Gilroy and Sciamanna. The trial court reduced the amount of the verdict to $742,261, allowing for a setoff of amounts received from the settlements with Palmer and Gilmore.

Initially, the judgment below was affirmed by the Court of Appeals, 141 Mich.App. 199, 366 N.W.2d 249 (1985), however, on rehearing it was reversed, 148 Mich.App. 564, 384 N.W.2d 823 (1986). While holding that the release of Palmer and Gilmore discharged the hospital from liability on a theory of respondeat superior, the Court recognized that such a release provided no protection from liability for independent acts of negligence. However, after noting that the trial court had granted the hospital a directed verdict on all but one of plaintiffs' claims of independent negligence against the hospital, the panel's majority concluded on rehearing that as to the single remaining claim ⁵ there was "no competent evidence or expert testimony" to support it. Finding the evidence insufficient to submit a question of the hospital's independent negligence to the jury, the Court of Appeals set aside the verdict and remanded the case for a new trial. ⁶

We granted leave to appeal, limited to two issues: (1) whether the settlements reached with Palmer and Gilmore released the hospital from vicarious liability for their actions under M.C.L. Sec. 600.2925d; M.S.A. Sec. 27A.2925(4); and (2) whether the releases, if not so protected, should be reformed as covenants not to sue. 426 Mich. 864 (1986).

II

Since it was determined below that the hospital was not guilty of any independent act of negligence--an issue that is not before us on appeal--recovery against the hospital is precluded except on a theory of vicarious liability.

Although plaintiffs alleged that Palmer and Gilmore were agents of the hospital, they were actually employees of Capital Anesthesiologists, P.C. However, since Capital had an exclusive contract to perform anesthesia within the hospital, and the choice of an anesthetist or anesthesiologist was made without consultation with the decedent's parents, it is contended that Palmer and Gilmore were ostensible agents, or agents by estoppel, under Grewe, supra. We proceed with our analysis on that basis.

At common law a valid release of an agent for tortious conduct operates to bar recovery against the principal on a theory of vicarious liability, even though the release specifically reserves claims against the principal. 53 Am.Jur.2d, Master and Servant, Sec. 408, pp 416-418; 126 A.L.R. 1199; 76 C.J.S., Release, Sec. 50, p. 689. See Bacon v. United States, 321 F.2d 880 (CA 8, 1963); Max v. Spaeth, 349 S.W.2d 1 (Mo., 1961). Michigan courts have adhered to this common-law rule. Geib v. Slater, 320 Mich. 316, 31 N.W.2d 65 (1948), overruled on other grounds Moore v. Palmer, 350 Mich. 363, 86 N.W.2d 585 (1957); Lincoln v. Gupta, 142 Mich.App. 615, 370 N.W.2d 312 (1985); Willis v. Total Health Care, 125 Mich.App. 612, 337 N.W.2d 20 (1983); Drinkard v. William J. Pulte, Inc., 48 Mich.App. 67, 210 N.W.2d 137 (1973).

Plaintiffs argue that this common-law rule is inapplicable in the instant case by reason of the Michigan contribution act, M.C.L. Sec. 600.2925; M.S.A. Sec. 27A.2925. In particular they point to Sec. 2925d which, as amended in 1974, reads in pertinent part:

"When a release or a covenant not to sue or not to enforce judgment is given in good faith to 1 of 2 or more persons liable in tort for the same injury or the same wrongful death:

"(a) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide." (Emphasis supplied).

Plaintiffs argue that the word "tortfeasors" in the statute includes persons whose liability is based solely upon the theory of respondeat superior, as in the case of principal and agent. We disagree.

The Michigan contribution act does not include a definition of the terms "1 of 2 or more persons liable in tort," or "other tort-feasors," as used in the above-quoted Sec. 2925d. The Uniform Contribution Among Tortfeasors Act, 12 ULA 63, Sec. 4 (1955 rev), upon which the Michigan act is based, likewise fails to define the term "tortfeasor." ⁷ Hence, the present question has arisen, and a split has developed among the jurisdictions ⁸ as to whether a vicariously liable principal is a "tortfeasor" for purposes of Sec. 2925d.

At common law and prior to enactment in 1941 of the Michigan contribution statute, ⁹ 1941 PA 303, contribution was not recoverable among or between tortfeasors. O'Dowd v. General Motors Corp., 419 Mich. 597, 603, 358 N.W.2d 553 (1984). Also, at common law the release of one joint tortfeasor automatically released other joint tortfeasors, although the release of a concurrent tortfeasor did not release other concurrent tortfeasors. See Witucke v. Presque Isle Bank, 68 Mich.App. 599, 243 N.W.2d 907 (1976); McBride v. Scott, 132 Mich. 176, 93 N.W. 243 (1903). In MacDonald v. Hornblower & Weeks, 268 Mich. 626, 628-629, 256 N.W. 572 (1934), this Court explained:

"The law of joint tortfeasors has been the subject of many refinements of reasoning and much conflict...