Jensen v. IHC Hospitals, Inc.

This opinion is subject to revision before final publication in the Pacific Reporter.

IN THE SUPREME COURT OF THE STATE OF UTAH

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Third District, Salt Lake Div. I

The Honorable Glenn Iwasaki

Attorneys: Richard D. Burbidge, Stephen B. Mitchell, Gary R.

Johnson, Salt Lake City, and Simon H. Forgette,

Kirkland, Wash., for plaintiffs

James W. Gilson, Kathy A. Lavitt, Salt Lake City, for IHC

Elliott J. Williams, Kurt M. Frankenburg, Salt Lake

City, for Dr. Healy

On Petition for Rehearing

ZIMMERMAN, Chief Justice:

This court now grants rehearing and issues this opinion without hearing oral argument. We

address whether we should uphold summary judgment in favor of defendant McKay-Dee

Hospital ("McKay-Dee") because plaintiffs Shayne Hipwell and Sherry Jensen's wrongful death

action against McKay-Dee was barred by the medical malpractice statute of limitations. See

Utah Code Ann. 78-14-4. In our prior opinion in this case, we reversed the trial court's grant

of summary judgment as to all defendants and remanded on the issue of whether defendant

Michael J. Healy's ("Dr. Healy") alleged fraud in collaborating with plaintiffs' original attorney

was sufficient to toll the statute of limitations on their medical malpractice claims once they had

retained an independent attorney. Jensen v. IHC Hosps., Inc., 314 Utah Adv. Rep. 24, 29 (Apr.

4, 1997). We further held that Jensen and Hipwell's attempt to recharacterize their medical

malpractice wrongful death claim as a claim for fraud was not sufficient to avoid the two-year

medical malpractice statute of limitations. Id. at 30. In its petition for rehearing, McKay-Dee

now claims that summary judgment in its favor should have been upheld because (i) Dr. Healy's

fraud does not toll the statute of limitations as to Jensen and Hipwell's claims against McKay-Dee; and (ii) Jensen and Hipwell's allegations of fraud on the part of McKay-Dee were properly

dismissed by the trial court.

We begin with a brief review of the facts relevant to our decision on rehearing. Because we are

reviewing a grant of summary judgment, we view the facts in the light most favorable to the

nonmoving parties, Jensen and Hipwell. Id. at 25. Jensen and Hipwell allege that Dr. Healy,

who had staff privileges at McKay-Dee but was not employed by McKay-Dee, committed

malpractice on Shelly Hipwell (Jensen's daughter and Hipwell's wife) while she was a patient at

McKay-Dee. They claim that, to cover his alleged malpractice, he and a McKay-Dee doctor

fraudulently transferred Shelly to University Hospital. Jensen and Hipwell further allege that

Dr. Healy then colluded with his brother, attorney Tim Healy, and attorney Roger Sharp to

prevent Jensen and Hipwell from learning of the malpractice Dr. Healy had allegedly committed.

Jensen and Hipwell made no allegation that McKay-Dee knew about Dr. Healy's collusion with

his brother and attorney Sharp.

In our prior opinion, we held that Jensen and Hipwell's allegations of fraud against Dr. Healy

were sufficient to toll the statute of limitations on their claims as long as they retained attorney

Sharp. Id. at 28. However, we remanded to the trial court on the issue of whether Dr. Healy's

alleged fraud was sufficient to toll the statute of limitations after Jensen and Hipwell retained

independent counsel but before that counsel had actual knowledge of the facts constituting

Dr. Healy's alleged fraud. Id. at 28-29. The issues we now address are (i) whether Dr. Healy's

alleged fraud can also act to toll the statute of limitations as to McKay-Dee; and (ii) whether

Jensen and Hipwell's allegations of fraud on the part of McKay-Dee are sufficient to toll the

statute of limitations as to McKay-Dee. These issues were not discussed in our initial opinion.

As to the first issue, whether Dr. Healy's fraudulent collusion with Jensen and Hipwell's original

attorney can toll the statute of limitations as to McKay-Dee, the general rule is that fraud

committed by a third party in concealing a cause of action against another defendant will not toll

the statute of limitations as to that defendant. See 51 Am. Jur. 2d Limitation of Actions 150

(1970). Where, however, there is an agency or privity relationship between the third party

committing the fraud and the defendant, our cases indicate that liability for the agent's negligent

or intentional tort can be imputed to the principal if the agent acts in whole or in part to carry out

the purposes of the principal. See Hodges v. Gibson Prods. Co., 811 P.2d 151, 156 (Utah 1991);

Birkner v. Salt Lake County, 771 P.2d 1053, 1057 (Utah 1989).⁽¹⁾ On the record before us, we

cannot determine whether Dr. Healy's fraud in colluding with attorney Sharp and attorney Healy

should be imputed to McKay-Dee absent two factual findings: (i) that Dr. Healy was McKay-Dee's agent; and (ii) that Dr. Healy acted in whole or in part to further the aims of McKay-Dee.

The complaint makes no allegations regarding these issues. We remand to the trial court for

further proceedings.

If the trial court finds that Dr. Healy was McKay-Dee's agent and that he acted at least in part to

further McKay-Dee's aims, it should impute liability for Dr. Healy's fraud to McKay-Dee and

toll the statute of limitations as to McKay-Dee to the same extent it is tolled as to Dr. Healy.⁽²⁾ If,

on the other hand, the trial court finds either that Dr. Healy was not McKay-Dee's agent or that

Dr. Healy acted "entirely on personal motives unrelated to [McKay-Dee's] interests," Hodges,

811 P.2d at 157, then Dr. Healy's fraud does not toll the statute of limitations as to McKay-Dee

and Jensen and Hipwell's claims against McKay-Dee are barred.

Moving to the second issue raised on rehearing, Jensen and Hipwell argue that the statute of

limitations as to McKay-Dee should be tolled because of fraud allegedly committed by McKay-Dee, through one of its doctors, in participating in an allegedly fraudulent transfer of Shelly

Hipwell from McKay-Dee to University Hospital. Jensen and Hipwell did not originally argue

that McKay-Dee had committed fraud that would toll the statute of limitations. Their complaint

did, however, include a count of constructive fraud against McKay-Dee. The trial court held first

that the medical malpractice statute of limitations, section 78-14-4 of the Code, barred Jensen

and Hipwell's claim of constructive fraud against McKay-Dee. In the alternative, the trial court

ruled that the claim was "unsupported by the facts" and that there was "insufficient evidence to

submit this matter to a jury as the fact finder." In our original opinion, we upheld the trial court's

finding that Jensen and Hipwell's claim for constructive fraud amounted to nothing more than a

claim for medical malpractice, which would be barred by the medical malpractice statute of

limitations. Jensen, 314 Utah Adv. Rep. at 30. We did not address, however, the contention that

Jensen and Hipwell's allegations of constructive fraud on the part of McKay-Dee would be

sufficient to toll the statute of limitations on Jensen and Hipwell's medical malpractice claims

against McKay-Dee. We find that the trial court properly granted summary judgment to McKay-Dee, ruling that Jensen and Hipwell's constructive fraud claim was insufficiently supported by

the evidence and therefore could not be used to toll the statute of limitations.

Addressing the merits of this claim requires a careful analysis of the relative burdens of proof and

production involved in making and opposing a motion for summary judgment. As noted above,

when reviewing a motion for summary judgment, we view all facts in the light most favorable to

the nonmoving party. Id. at 25. On a motion for summary judgment, the moving party bears the

burden of proof for its motion, namely, the burden of proving that there is no genuine issue as to

any material fact and that the moving party is entitled to judgment as a matter of law. However,

in opposing a motion for summary judgment, the plaintiff still has the ultimate burden of proving

all the elements of his or her cause of action. Thayne v. Beneficial Utah, Inc., 874 P.2d 120, 124

(Utah 1994). Further, once challenged, the party who opposes such a motion must come forward

with sufficient proof to support his or her claim, particularly when that party has had an

opportunity to conduct discovery. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The

party opposing a properly supported motion for summary judgment "may not rest upon the mere

allegations or denials of his [or her] pleading, but his [or her] response, by affidavits or as

otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue

for trial." Utah R. Civ. P. 56(e) (emphasis added). Put another way, once the moving party has

brought forth evidence either tending to prove a lack of genuine issue of material fact or

challenging the existence of one of the elements of the cause of action, the nonmoving party then

bears the burden of "provid[ing] some evidence, by affidavit or otherwise, in support of the

essential elements of his [or her] claim." Thayne, 874 P.2d at 124.

In this case, Jensen and Hipwell failed to provide any such evidence to support their claim of

constructive fraud. Constructive fraud requires two elements: (i) a confidential relationship

between the parties; and (ii) a failure to disclose material facts. See Blodgett v. Martsch, 590

P.2d 298, 301-02 (Utah 1978); 37 Am. Jur. 2d Fraud and Deceit 4, 15 (1968). Jensen and

Hipwell's complaint alleges both (i) that McKay-Dee's employee, Dr. Baughman, had a

confidential relationship with Shelly and her family as one of her treating physicians, and (ii) that

Dr. Baughman failed to disclose that he had committed medical malpractice in treating Shelly.

McKay-Dee's motion for summary judgment did not challenge Jensen and Hipwell's assertion

that Dr. Baughman had a confidential relationship with Shelly and her family. McKay-Dee's

motion, however, did dispute Jensen and Hipwell's allegation that Dr. Baughman failed to

disclose his alleged malpractice. McKay-Dee produced the deposition of Dr. Baughman,

wherein he states, "I have no question at all that [Shelly] received care that's exemplary, that

could be used as an example of the management of a good operation." Dr. Baughman further

indicated that he held that belief at the time he provided Shelly's care. McKay-Dee properly

challenged Jensen and Hipwell's allegation that Dr. Baughman had failed to discharge his duty to

disclose material facts to them, namely, the fact that he had committed malpractice, by producing

Dr. Baughman's deposition in which he states that he did not believe and does not believe that he

committed malpractice.

Jensen and Hipwell, however, as the nonmoving parties, utterly failed to meet their burden of

coming forward with evidence to contradict Dr. Baughman's deposition testimony. In their

opposition to McKay-Dee's motion for summary judgment, Jensen and Hipwell simply reiterate

the allegations of their complaint and provide no support for their claim that Dr. Baughman

failed to tell them that Shelly had been "left to bleed internally for several hours before accurately

diagnosing her illness." Dr. Baughman's deposition testimony specifically and directly

challenges Jensen and Hipwell's assertion, and they failed to provide any evidence to support

their claim. Thus, the trial court correctly ruled that there was insufficient evidence to submit the

matter to a jury. Because Jensen and Hipwell's claim of constructive fraud against McKay-Dee

was insufficiently supported by the evidence, such a claim cannot be used to toll the statute of

limitations on their medical malpractice claims against McKay-Dee.

We remand to the trial court for further proceedings consistent with this opinion.

Justice Howe, Justice Russon, Judge Eves, and Judge Halliday concur in Chief Justice

Zimmerman's opinion.

Having disqualified themselves, Associate Chief Justice Stewart and Justice Durham do not

participate herein; District Judge J. Philip Eves and District Judge Bruce K. Halliday sat.

Opinion Endnotes:

1. The cases cited also include two other factors to consider in determining whether an agent's

conduct will be imputed to the principal in the employment context: (i) whether the employee's

conduct is of the general kind the employee is expected to perform; and (ii) whether the

employee's conduct occurred within the hours of the employee's work and ordinary spatial

boundaries. Hodges, 811 P.2d at 156; Birkner, 771 P.2d at 1056-57. As Dr. Healy was not

McKay-Dee's employee, these criteria would not seem to apply to the question of whether

Dr. Healy's acts fall within the scope of any agency relationship he may have had with McKay-Dee.

2. We note, however, that this issue will be moot if the fact finder determines, pursuant to our

prior opinion, that Jensen and Hipwell's complaint was not timely filed because Dr. Healy's

fraud did not toll the statute of limitations long enough. See Jensen, 314 Utah Adv. Rep. at 29.