Wayne County Hosp. Inc v. Jakobson

• Decision Date: 29 December 2010
• Docket Number: Civil No. 09-44-GFVT
• Parties: WAYNE COUNTY HOSPITAL, INC., ET AL., Plaintiffs, v. PEETER JAKOBSON, M.D., Defendant.
• Court: U.S. District Court — Eastern District of Kentucky

WAYNE COUNTY HOSPITAL, INC., ET AL., Plaintiffs,

v.PEETER JAKOBSON, M.D., Defendant.

Civil No. 09-44-GFVT

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

SOUTHERN DIVISION LONDON

Date: December 29, 2010

MEMORANDUM OPINION AND ORDER

This matter is before the Court upon several related motions. The Defendant, Dr. Jakobson, has filed a Motion to Foreclose Preclusion or To Compel Production. [R. 38.] And, in response, the Plaintiffs, Wayne County Hospital, Inc. ("Hospital" or "WCH") and Ohio Hospital Insurance Company ("OHIC"), have filed a Motion to Stay Consideration of the Defendant's motion [R. 40] as well as a Motion for Summary Judgment [R. 41]. All of these motions, at least in some way, relate to the contested applicability of claim and issue preclusion to this case. In a separate Order [R. 60], the Court previously granted Dr. Jakobson's Motion to Foreclose Preclusion and denied the Defendants' Motions to Stay Consideration and for Summary Judgment. This Memorandum Opinion sets forth the Court's reasoning.

I.

The relevant facts of this case are not in dispute. In August 2000, Linda Hardwick had a mammogram performed at Wayne County Hospital. Dr. Jakobson, who provided radiology services to the Hospital's patients and maintained his office in the Hospital's radiologydepartment, read the mammogram. Although that mammogram revealed a small mass in Mrs. Hardwick's right breast, Dr. Jakobson did not believe any additional follow up beyond her annual check up was necessary. The report of the mammogram stated that the results were "NORMAL/NEGATIVE" with "[n]o evidence of cancer" and noted that "[t]he breasts remain stable without evidence for malignancy." [R. 41, Ex. 1.] The report was signed by Dr. Jakobson and sent by the Hospital to Mrs. Hardwick along with a letter, also signed by Dr. Jakobson, printed on Wayne County Hospital letterhead. [See R. 41, Ex. 2.]

Mrs. Hardwick returned to Wayne County Hospital the following August for her yearly mammogram. Dr. Jakobson also signed this report. The August 2001 Report provided as follows:

FINDINGS: The nodule seen on the previous mammogram in the right breast in the upper outer quadrant has markedly enlarged and is suspicious for CA. Biopsy should be considered. The remaining breasts are stable without skin thickening, nipple retraction, pathologic calcifications, or new discreet masses. The nodule previously was approximately 8 mm in diameter and presently is 10 mm in diameter indicating significant increase in volume of the mass.

IMPRESSION: BI-RADS CATEGORY IV, SUSPICIOUS 10 MM MASS IN RIGHT BREAST, INCREASED IN SIZE FROM 8 MM IN 1 YEAR. BIOPSY SHOULD BE CONSIDERED FOR FURTHER EVALUATION.

[R. 41, Ex. 3.] This report was sent to Mrs. Hardwick in the same manner as the previous one. The letter accompanying this report, however, advised Mrs. Hardwick that the results were "ABNORMAL" and that she "should contact [her] physician or primary care provider as soon as possible." [R. 41, Ex. 4 (emphasis in original).]

Mrs. Hardwick subsequently had a biopsy of the mass, which was determined to be Stage 1 invasive carcinoma. She then had a mastectomy and reconstructive surgery and underwenthormonal oral therapy treatment. On August 1, 2002, Mrs. Hardwick and her husband filed suit against Wayne County Hospital¹ in Wayne Circuit Court. The Complaint alleged the Hospital, acting by and through its agents and ostensible agents, was negligent in performing and/or reading the mammogram performed on August 1, 2000. The Complaint also included a claim for loss of consortium on behalf of Mr. Hardwick.

The case proceeded to trial in February 2006. At the close of all the evidence, the court granted two motions for directed verdict. Granting the Hospital's motion, the court found insufficient evidence of negligence of any other employees or agents. Granting the Hardwicks' motion, the court found that Dr. Jakobson was an ostensible agent of Wayne County Hospital. The jury subsequently returned a verdict for the Hardwicks, awarding them $828,520.00 plus costs and interest on their claims, and judgment was entered consistent with that verdict.

The Hospital appealed to the Kentucky Court of Appeals. That court affirmed the Wayne Circuit Court's Judgment, and the Kentucky Supreme Court denied the Hospital's motion for discretionary review. Pursuant to its obligations under the insurance policy issued to Wayne County Hospital, OHIC paid $1,052, 952.94 to the Hardwicks to satisfy the Judgment.

The Hospital and OHIC then filed the instant suit seeking indemnification and subrogation from Dr. Jakobson for the amount paid to the Hardwicks. The Plaintiffs allege that those damages were the direct and proximate result of Dr. Jakobson's negligent failure to meet the standard of care owed to Mrs. Hardwick. And, because the Hospital was only vicariously liable due to its ostensible agency relationship with Jakobson, the Hospital asserts that Jakobsonmust indemnify it.

The parties have filed several motions, including myriad responses, replies, and sur-replies. At their core, however, those motions require resolution of a single, yet complex, issue-the effect and impact of the underlying judgment on this case.

II.

The Hospital and OHIC argue that the doctrines of issue and claim preclusion prevent Dr. Jakobson from relitigating virtually any aspect of the Hardwick case. They maintain that the jury findings, including that Jakobson was the ostensible agent of the Hospital and that his negligence was proximate cause of the Hardwicks' injuries, should be given preclusive effect in this Court. Treating the Wayne Circuit Court's decisions and verdict as binding, the Plaintiffs argue, eliminates any genuine issue of material fact in this case and entitles them to summary judgment on their indemnity and subrogation claims against Jakobson.

Dr. Jakobson, on the other hand, contends that neither claim nor issue preclusion is applicable in this case, and he has filed a Motion to Foreclose Preclusion. [See R. 38.] His primary argument is that because he was not a party to the state court litigation he did not have a full and fair opportunity to litigate those issues for himself. Jakobson further asserts that, beyond his actual absence from that litigation, his interests were not adequately protected because he was not in privity with the Hospital and they did not share an absolute identity of interests. Absent such an identity of interests, he argues, the underlying verdict cannot be given preclusive effect here. Because claim and issue preclusion are not applicable, Jakobson argues that myriad factual issue remain, rendering summary judgment inappropriate. The Court agrees.

Generally speaking, "the doctrine of res judicata... provides that a final judgment on themerits of an action precludes the 'parties or their privies from relitigating issues that were or could have been raised' in a prior action." Kane v. Magna Mixer Co., 71 F.3d 555, 560 (6^th Cir. 1995) (quoting Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)). Application of res judicata to give preclusive effect to a prior state court judgment necessarily implicates the Full Faith and Credit Clause of Article IV, section I of the United States Constitution. It also implicates 28 U.S.C. § 1738 which requires "federal courts to give preclusive effect to the state-court judgments whenever the courts of the State from which the judgments emerged would do so." Haring v. Prosise, 462 U.S. 306, 313 (1983); see also Taylor v. Sturgell, 553 U.S. 880, 891 n.4 (2008) (for judgments in diversity cases, federal law incorporates the rules of preclusion applied by the States in which the rendering court sits); Evans v. Pearson Enters., Inc., 434 F.3d 839, 849 (6^th Cir. 2006) (quotation omitted).

Res judicata consists of two distinct components, claim preclusion and issue preclusion. Under the doctrine of claim preclusion, a final judgment forecloses "successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit." Taylor, 553 U.S. at 892 (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)). Issue preclusion, in contrast, bars "successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment, " even if the issue recurs in the context of a different claim. Id. (quoting New Hampshire v. Maine, 532 U.S. at 784-49)). "By precluding parties from contesting matters that they have had a full and fair opportunity to litigate, these two doctrines protect against the expense and vexation attending multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibility of inconsistent decisions." Id. (internal quotation marks and citationomitted).

Kentucky courts define these concepts in a similar fashion. See, e.g., City of Louisville v. Louisville Prof'lFirefighters Ass'n, 813 S.W.2d 804, 806 (Ky. 1991) (Res judicata is a doctrine that bars subsequent suits between the same parties and their privies on a cause of action that was previously decided upon its merits.); Buis v. Elliott, 142 S.W.3d 137, 139-40 (Ky. 2004) (describing claim preclusion and issue preclusion as two sub-parts of res judicata).

And in Kentucky, the following three requirements must be satisfied in order for claim preclusion to bar subsequent litigation: (1) there must be identity of parties; (2) there must be identity of the causes of action; and (3) the action must have been resolved on the merits.²Clemmer v. Rowan Water, Inc., 277 S.W.3d 633, 635 (Ky. Ct. App. 2009). Dr. Jakobson focuses his arguments on the first factor, claiming that there is no identity of parties. While he does not explicitly concede the other requirements, it appears that they are satisfied under these facts.

For instance, the second prong requires an identity of the causes of the action. In analyzing whether...