Woodrum v. Johnson

• Decision Date: 12 December 2001
• Docket Number: No. 28857.,28857.
• Court: West Virginia Supreme Court
• Parties: Timothy T. WOODRUM and Gina M. Woodrum, individually and as husband and wife, Plaintiffs Below, v. Jerome G. JOHNSON, M.D., Morgantown Surgical Associates, Inc., Defendants Below, and Monongalia Health System, Inc., and Monongalia County General Hospital Company, d/b/a Monongalia General Hospital, Defendants Below.

559 S.E.2d 908

210 W.Va. 762

Timothy T. WOODRUM and Gina M. Woodrum, individually and as husband and wife, Plaintiffs Below, v. Jerome G. JOHNSON, M.D., Morgantown Surgical Associates, Inc., Defendants Below, and Monongalia Health System, Inc., and Monongalia County General Hospital Company, d/b/a Monongalia General Hospital, Defendants Below.

No. 28857.

Supreme Court of Appeals of West Virginia.

Submitted October 3, 2001.

Decided December 12, 2001.

Beth A. Raffle, Esq., Susan S. Brewer, Esq., Ancil G. Ramey, Esq., Steptoe & Johnson, PLLC, Morgantown, for Defendants Monongalia Health Systems, Inc., and Monogalia County General Hospital Company, Inc.

Wesley W. Metheney, Esq., Paul T. Farrell, Jr., Esq., Wilson, Frame, Benninger & Metheney, PLLC, Morgantown, Barry Hill, Esq., Wheeling, for West Virginia Trial Lawyers Association, Amicus Curiae.

Curtis G. Power III, Esq., Robert W. Dinsmore, Esq., Bowles Rice McDavid Graff & Love, PLLC, Winchester, for Plaintiffs.

McGRAW, Chief Justice.

This case comes to the Court on certified question from the Circuit Court of Monongalia County, and requires that we resolve the question of whether a plaintiff's release of a primarily liable tortfeasor necessarily releases other parties defendant who may be derivatively or vicariously liable based upon their relationship with the tortfeasor. Specifically, the circuit court has posed the following question of law:

Does the settlement with and release of a physician, who is an alleged ostensible agent of a hospital, necessarily release the hospital from further liability for the alleged malpractice of the physician where: (1) the physician is not an employee of the hospital; (2) the only negligence alleged is that of the physician; and (3) there is no allegation of negligence against the hospital?

The circuit court answered this question in the negative. We agree with this conclusion, and determine that a plaintiff's release of a primarily liable defendant should not be permitted to have the potentially unintended effect of releasing other liable parties.

I. BACKGROUND

In April 1999, Timothy Woodrum, together with his wife, instituted an action in the Circuit Court of Monongalia County, alleging that Dr. Jerome Johnson¹ was negligent in failing to properly diagnose and treat an infection-related empyema of his left chest cavity. Monongalia General Hospital² was also named as a party defendant, based upon an allegation that Dr. Johnson was an ostensible agent of it, thus exposing it to vicarious liability under Torrence v. Kusminsky, 185 W.Va. 734, 408 S.E.2d 684 (1991) (holding that a hospital is estopped from denying the agency status of physicians practicing in its emergency room).³

Plaintiffs settled with Dr. Johnson and his practice group on June 13, 2000, after extensive discovery had already been completed. The "Release and Settlement Agreement" executed by the settling parties contained the following reservation of rights:⁴

It is understood by the parties to this Release and Settlement Agreement that [plaintiffs] specifically reserve[ ] their right to prosecute their claims or causes of action against the remaining defendants in Civil Action No. 99-C-157, including without limitation, the cause of action alleging that Dr. Johnson was an agent and/or employee of the remaining defendants, Monongalia Health Systems, Inc., Monogalia County General Hospital, d/b/a Monongalia General Hospital, at the times that Dr. Johnson provided health care services to Timothy T. Woodrum.

The settlement amount remains undisclosed under the terms of the settlement agreement, although it is undisputed that plaintiffs accepted an amount less than the maximum amount payable under the defendant physician's malpractice insurance policy.

Upon being informed of the settlement between plaintiffs and the defendant physician, the Hospital moved for summary judgment, arguing that the release executed by plaintiffs inured to their benefit by operation of law. Citing the common-law rule applicable in several other jurisdictions, the Hospital argued that the release of an agent should also release the principal, where the plaintiff's claim against the principal is based solely upon ostensible agency. Upon determining that courts in other jurisdictions are split on this issue, and finding no West Virginia authority on point, the circuit court denied the Hospital's summary judgment motion, and certified the question to this Court pursuant to W. Va.Code ? 58-5-2 (1998) (Repl. Vol. Supp. 2001).

II. STANDARD OF REVIEW

As stated in syllabus point one of Gallapoo v. Wal-Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996), "[t]he appellate standard of review of questions of law answered and certified by a circuit court is de novo." Accord, syl. pt. 2, Keplinger v. Virginia Elec. and Power Co., 208 W.Va. 11, 537 S.E.2d 632 (2000); Potesta v. United States Fid. & Guar. Co., 202 W.Va. 308, 314, 504 S.E.2d 135, 141 (1998); Griffis v. Griffis, 202 W.Va. 203, 208, 503 S.E.2d 516, 521 (1998).

III. DISCUSSION

The Hospital urges this Court to recognize "the well-settled maxim of common law that when a plaintiff's only claim against a principal is under the theory of . . . agency, a release of the agent from the suit also releases the principal." We note at the outset that although this common-law rule has been in force for some time in other states, it has never before been expressly adopted in this jurisdiction.⁵

The issue was recently recognized, but not resolved, in Dunn v. Kanawha County Bd. of Educ., 194 W.Va. 40, 459 S.E.2d 151 (1995), where we said in the context of a product liability suit that

it is arguable that basic fairness and sound public policy dictate that a settlement by a plaintiff with the manufacturing defendant solely responsible for the defective product covers all damages caused by that product and extinguishes any right of the plaintiff to pursue others in the chain of distribution who did not make the product, contribute in any way to the defect, or commit any independent acts of negligence or fault. However, this issue was not raised by this certified question, and we leave its resolution for a later time.

Id. at 47, 459 S.E.2d at 158.

The only other reference to this issue in our past cases came in State ex rel. Bumgarner v. Sims, 139 W.Va. 92, 79 S.E.2d 277 (1953), where the Court went so far as to indicate that W. Va.Code ? 55-7-12 (1931) (Repl. Vol. 2000) abrogates the common-law rule that the releases of an agent necessarily releases the agent's principal:

In this jurisdiction the common-law rule. . . that `Where both master and servant are liable to a third party for a tort of the servant, a valid release of either master or servant from liability for the tort operates to release the other,' has been abrogated, in part, by [W.Va.] Code, 55-7-12. Section 12 reads: `A release to, or an accord and satisfaction with, one or more joint trespassers, or tort-feasors, shall not [inure] to the benefit of another such trespasser, or tort-feasor, and shall be no bar to an action or suit against such other joint trespasser, or tort-feasor, for the same cause of action to which the release or accord and satisfaction relates.'

139 W.Va. at 112-13, 79 S.E.2d at 290 (citation omitted). This construction apparently stemmed from the Court's observation that "[t]he relation of master and servant in those cases, in which the doctrine of respondent superior applies, is joint, and the parties should be regarded as though they were joint tort-feasors." Id. at 111, 79 S.E.2d at 289 (citing Wills v. Montfair Gas Coal Co., 97 W.Va. 476, 125 S.E. 367 (1924)).⁶ In Bumgarner, the plaintiff had been accidentally shot by Coiner, a prison guard, while the latter was searching for an escaped convict. The plaintiff later brought a successful negligence action against Coiner, which resulted in a $3,000 judgment. A later attempt to collect on the judgment through execution proved unsuccessful, however, and Coiner's liability was later discharged in bankruptcy. The plaintiff subsequently sought relief from the Court of Claims, which awarded the plaintiff $2,000. Yet, the Auditor refused to honor the resulting legislative appropriation, asserting that it was unconstitutional insofar as the State was not morally obligated to compensate the plaintiff.

In determining whether the plaintiff in Bumgarner was entitled to payment of the award made by the Court of Claims, the Court addressed the "question whether the unsatisfied judgment in [plaintiff's] favor and against Coiner alone, entered by the Circuit Court of Roane County in the action at law instituted by the [plaintiff] against Coiner, and whether Coiner's bankruptcy and his discharge in the bankruptcy proceeding, without any satisfaction of [plaintiff's] claim, either in whole or in part, would serve to release Coiner's employer, if such employer were a private person and not the State of West Virginia." Bumgarner, 139 W.Va. at 111, 79 S.E.2d at 289. In answering this question, the Court held that "[a]s the [plaintiff's] judgment against Coiner . . . was not satisfied, either in whole or in part, under the executions issued on the judgment or in the bankruptcy proceeding, the judgment, in our opinion, would not serve to bar [plaintiff's] claim against the State of West Virginia based on a moral obligation; and we so hold under the provisions of [W.Va.] Code, 55-7-12, and under the authority of Griffie v. McClung, [5 W.Va. 131 (1872)]. Bumgarner, 139 W.Va. at 116, 79 S.E.2d at 292.⁷

The holding in Bumgarner was predicated at least in part upon the Court's conclusion regarding the abrogation of the common-law rule concerning the effect that the release of a primarily liable agent or employee has on the continued liability of a vicariously responsible principal or employer. As it was already accepted law that a judgment against one tortfeasor did not bar suit against another who was jointly...