June 19, 2008
CENTRASTATE HEALTHCARE SYSTEM, AND CENTRASTATE HOSPITAL, PLAINTIFFS-APPELLANTS,
P. CANTON, M.D., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2517-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 27, 2008
Before Judges Parrillo, Gilroy and Baxter.
Plaintiffs CentraState Healthcare System and CentraState Hospital appeal from the October 25, 2007 order, which dismissed their complaint against defendant Panifilo Canton, M.D.*fn1 We affirm.
John T. Scully is a licensed medical physician and an associate of Central Jersey Ob-Gyn Associates, P.A., which engages in the practice of obstetrics and gynecology. Defendant is a retired licensed medical physician and a former associate of Central Jersey Emergency Medicine Associates, P.C. (CJEMA). Plaintiff CentraState Healthcare System (CentraState) operates and manages plaintiff CentraState Hospital in Freehold Township. On January 3, 1995, CentraState entered into an agreement with CJEMA, under which CJEMA was to provide doctors to render medical care to patients at CentraState Hospital.
On August 28, 2000, Scully performed an endometrial sampling, or biopsy, of Deborah Masia. On September 4, 2000, because of her continuing pain and discomfort, Masia presented herself for treatment at the CentraState Hospital emergency room where she was treated by defendant. In February 2001, defendant retired from his employment as an emergency room physician with CJEMA. Immediately after retirement, defendant traveled to the Philippines for three months, returning to his residence in Freehold in May 2001, where he has continued to reside, apart from his annual three-month visit to the Philippines.
On August 27, 2002, Masia filed a medical malpractice complaint against Scully, Central Jersey Ob-Gyn Associates, P.A., CentraState (incorrectly pled as CentraState Medical Center), and defendant, alleging that the defendants had failed to exercise reasonable care in rendering medical treatment, causing her to suffer personal injuries. On November 19, 2002, CentraState filed its answer to the medical malpractice complaint and did not assert a cross-claim against defendant because it was unknown whether defendant was a hospital employee or an independent contractor. In late 2002, although not personally served with Masia's summons and complaint, defendant was notified by CJEMA that he had been named a defendant in Masia's medical malpractice action. Defendant's malpractice insurance carrier advised him not to take any action, but to await service of the summons and complaint. In the interim, Masia, Scully, and CentraState proceeded with discovery in the medical malpractice action.
On March 15, 2003, Masia's complaint was dismissed as to defendant without prejudice for Masia's failure to effect service on him pursuant to Rule 1:13-7(a). On September 25, 2003, CentraState confirmed that defendant was not an employee of the hospital when he treated Masia, but was employed by CJEMA, "which is a contracted physician's group for the emergency room."
On October 1, 2003, counsel for CentraState sent a letter to counsel for Masia advising that defendant was not an employee of CentraState and that his law firm would not be filing an answer on behalf of defendant. On October 2, 2003, Masia's counsel replied that effective service could not be made on defendant because defendant was unable to be located, and that an inquiry was made of CentraState's counsel whether the hospital had a current personal or business address for him.
On May 3, 2004, Masia served a liability expert report authored by Richard L. Luciani, M.D., in which he opined that there was a failure by defendant, CentraState's emergency room physician, to obtain an accurate medical history from Masia, resulting in negligence. On May 3, 2005, Luciani was deposed. He testified that the issue of whether or not defendant was negligent was a question of fact, because there was an absence of any reference in the hospital records concerning Masia's biopsy by Dr. Scully. Luciani opined that if Masia had informed defendant that she had the biopsy only days before the emergency room visit, that defendant should have made a diagnosis of pelvic inflammatory disease and prescribed a broader spectrum antibiotic. If, however, Masia had failed to provide defendant with a history concerning her biopsy, defendant's diagnosis of urinary tract infection was reasonable, and the treatment rendered was proper.
On May 16, 2005, CentraState furnished Masia's attorney with the address of defendant. However, Masia never moved to reinstate the complaint against defendant, electing to proceed against CentraState on a theory that CentraState held defendant out as its agent; nor did CentraState move to file and serve a cross-claim against defendant.
On May 23, 2007, plaintiffs filed the present action, seeking contribution, common law indemnification, or contractual indemnification from defendant on Masia's medical malpractice claim. In August 2007, defendant filed a motion for summary judgment, seeking to dismiss plaintiffs' complaint on the ground that the complaint was barred by the entire controversy doctrine (ECD), because plaintiffs had failed to file a cross-claim against defendant in the underlying medical malpractice action. Defendant also moved to dismiss the complaint on the grounds that it was barred by the doctrines of laches, waiver, and equitable estopppel, asserting that he was prejudiced by his exclusion from the discovery proceedings conducted in the medical malpractice action, and he had no recollection of events surrounding Masia's claim, which occurred seven years prior. Plaintiffs cross-moved to consolidate the present action with Masia's medical malpractice action.
The motions were argued on October 5, 2007, with the trial judge rejecting defendant's argument seeking dismissal of the complaint based on the ECD, "because the actions are still pending simultaneously and I think the case law is clear that simultaneously pending actions can't invoke the entire controversy doctrine . . . as long as any judge can make a decision as to whether to consolidate them or not, the entire controversy doctrine doesn't apply." "And here, since there is a motion to consolidate, whether I grant it or deny it, it renders the entire controversy doctrine inapplicable." However, the judge found merit in defendant's argument to dismiss the complaint based on the doctrine of equitable estoppel:
I am very concerned though about the issue of equitable estoppel. And the things I would need to know in order to decide whether equitable estoppel applies or not don't necessarily seem to be in the moving papers. I don't have certifications from the plaintiff[s'] attorney in this action, defense attorney in the original action as to exactly what decisions were made with respect to the filing of cross[-]claims.
. . . [I]n the statement of facts in the brief, it is stated that at the time the complaint came into the then defendant's office they were not sure whether this co[-]defendant was insured under their policy or not. And . . . that being the case, they weren't even sure whether they should file an answer on his behalf.
That was five years ago and they've long since been aware that he is not insured under their policy and was not their employee and yet they never made an effort to join him by cross[-]claim. And now, five years later with the trial date rapidly approaching, they file a collateral action against him for contribution.
I'm aware that if he were never in, if this Dr. Canton was never in the case in the first place, there's case law that says you could join him in the collateral action even after the judgment is paid, because a cause of action for contribution or indemnification doesn't even accrue until the other defendant pays the judgment, not even when the judgment is entered.
But it's a different situation where Dr. Canton is a party to the original action and the decision is made not to file a cross[-]claim against him and they decide to file a cross[-]claim five years later -- not a cross[-]claim, a collateral action five years later while the original action is still pending.
I've often heard the summary of the equitable estoppel doctrine to be he who remains silent when he has a duty to speak will not be permitted to speak when he has a duty to remain silent. And I'm wondering if there was a duty to file a cross[-]claim five years ago, does that prohibit the filing of a collateral complaint right now?
Although the judge determined that defendant's argument to dismiss the complaint on the basis of equitable estoppel had merit, the judge concluded that he did not have sufficient information from the parties to rule on the motion on the day of oral argument. The judge requested that CentraState's counsel submit a certification supporting plaintiffs' position that CentraState had experienced confusion concerning defendant's employment status with its Hospital when CentraState had filed its answer to Masia's complaint.
Specifically, the judge requested CentraState to submit additional information concerning: 1) when CentraState first learned that defendant was not its employee at the time he rendered treatment to Masia, and why it took CentraState five years from filing its answer in the Masia action to initiate the claim for contribution or indemnification against defendant; 2) when CentraState first learned that defendant was not covered by its malpractice insurance policy; 3) whether, after learning that defendant was not covered by its medical malpractice insurance policy, CentraState made a decision not to file a cross-claim against defendant; 4) if so, why; 5) when the decision was made to file a separate action against defendant; and 6) why a decision was made to file a separate action, rather than file an amended answer in the Masia action to include a cross-claim against defendant.
The judge also requested that defendant submit a certification explaining how he was prejudiced by the filing of plaintiffs' complaint seven years post-treatment of Masia and five years post-filing of her complaint. Accordingly, the judge adjourned the matter to October 25, 2007, directing the parties to file supplemental certifications.
In lieu of filing a certification answering the questions raised by the trial judge, plaintiffs submitted a brief, arguing that their claims for contribution or indemnification were not barred by the statute of limitations; there was no prejudice to defendants by plaintiffs either asserting a cross-claim for contribution or indemnification in the underlying medical malpractice action, or by the filing of a separate action for the same relief; plaintiffs would be harmed if they were barred from asserting their cross-claims against defendant; and defendant's argument was meritless because claims for contribution or indemnification do not accrue until a judgment has been entered against a plaintiff in an underlying action.
However, defendant did submit an affidavit dated October 17, 2007, addressing the issues raised by the judge. In his affidavit, defendant stated the following. Prior to February 2001, defendant was an employee of CJEMA, and in connection with that employment, he had rendered emergency medical care at CentraState Hospital. In February 2001, defendant retired from CJEMA as an emergency medicine physician. Defendant has resided in Freehold at the same residence since 1974, except for three months each year when he visits the Philippines. In 2002, defendant was informed by the chairman of CJEMA that a lawsuit had been filed against CentraState and himself. After he reviewed a copy of the complaint, defendant notified his insurance carrier and was instructed not to take any affirmative action, but to await personal service of the summons and complaint. Moreover, from the date he retired from CJEMA, CentraState has been aware of his address in Freehold because he has continued to receive correspondence from CentraState, "regarding fundraisers, invitations to events, correspondence regarding [his] status as [an] Emeritus staff member." Presently, defendant does not have any independent recollection "of Deborah Masia, nor the care rendered to her in the Emergency Department of CentraState Medical Center in September 2000."
As to the prejudice that he would suffer by becoming involved in litigation concerning Masia's medical malpractice claim after all other parties in the action have proceeded with discovery over the last five years, defendant stated in his affidavit:
4. Counsel has advised me that CentraState alleges that the only issue that bears on the determination of whether I deviated from accepted standards of medical care is whether or not Deborah Masia informed me that she underwent an endometrial biopsy several days prior to her E.R. visit. As I have no independent recollection of the patient or her care, I cannot say one way or the other based on my recollection, that Ms. Masia informed me of the endometrial biopsy. Counsel has informed me that CentraState is not making any separate allegations and will not provide any proofs beyond the allegations and proofs set forth by Plaintiff Masia. My ability to address the allegation that I deviated from accepted standards of medical care if I was informed of the endrometrial biopsy, is extremely limited as I do not have any recollection of the care rendered to the patient seven years ago. Thus, I cannot respond to the allegations made in Plaintiff Masia's expert report regarding whether or not I was informed of the endometrial biopsy.
5. On the basis of the medical chart documenting the care rendered to Deborah Masia in September 2000, I was not informed of Ms. Masia's recent endometrial biopsy. Had I been so informed of such a significant event, it was my custom and practice to make a notation of this under significant past medical history. However, due to the significant passage of time, I cannot specifically recall that Ms. Masia did or did not inform me of the endometrial biopsy.
On October 25, 2007, the trial court granted the motion dismissing the complaint with prejudice, based on equitable estoppel, rendering plaintiffs' motion to consolidate the two actions moot.*fn2
On appeal, plaintiffs argue:
THE DISMISSAL OF CENTRASTATE'S COMPLAINT BEFORE THE CONCLUSION OF THE INITIAL LITIGATION BY MS. MASIA IS WITHOUT PRECEDENT AND IS INEQUITABLE.
IN ORDER TO INVOKE THE DOCTRINE OF EQUITABLE ESTOPPEL IT MUST BE ESTABLISHED THAT THE LITIGANT WHO IS CLAIMED TO BE ESTOPPED HAS COMMITTED CONDUCT THAT AMOUNTS TO A MISREPRESENTATION OR CONCEALMENT OF FACTS KNOWN TO HIM BUT NOT TO THE OTHER PARTY, WITH PREJUDICIAL RELIANCE BY THE OTHER ON SUCH MISREPRESENTATION OR CONCEALMENT. NO SUCH CONDUCT HAS BEEN SHOWN IN THE PRESENT CASE TO GIVE RISE TO AN EQUITABLE ESTOPPEL.
THERE IS A PROPER FOUNDATION FOR THE DETERMINATION THAT THE PLAINTIFF MASIA HAS WAIVED HER RIGHT TO ASSERT LIABILITY ON THE PART OF DR. CANTON.
Initially, we note that plaintiffs' action against defendant for contribution or indemnification is not barred by the two-year statute of limitations governing Masia's claim. N.J.S.A. 2A:14-2. Mettinger v. Globe Slicing Mach. Co., Inc., 153 N.J. 371, 387 (1998). "Rather, the statute of limitations pertaining to a defendant's claim for contribution or indemnification begins to accrue when the plaintiff recovers a judgment against it." Ibid. See Bd. of Educ. of Florham Park v. Utica Mut. Ins. Co., 172 N.J. 300, 307 (2002) ("Indemnification obligations generally accrue only on an event fixing liability, rather than on preliminary events that eventually may lead to liability but have not yet occurred."). See also McGlone v. Corbi, 59 N.J. 86, 94-95 (1971) (holding that causes of action for indemnification or contribution accrue at time judgment is rendered against the defendant in the underlying claim).
Plaintiffs argue in Point II that "[t]here is no factual basis for the dismissal of the suit by CentraState against Dr. Canton predicated on equitable estoppel." Plaintiffs contend that "they did not commit an act of misrepresentation or concealment in either of the two litigations that arose from the events surrounding the biopsy performed upon Ms. Masia and the medical treatment sought by her thereafter." Plaintiffs assert that "even if there were a basis to find an act of misrepresentation or concealment by [them], it cannot be said that Dr. Canton relied thereon." On this issue, we agree.
"Estoppel is 'an equitable doctrine, founded in the fundamental duty of fair dealing imposed by law.'" Casamasino v. City of Jersey City, 158 N.J. 333, 354 (1999) (quoting State v. Kouvatas, 292 N.J. Super. 427, 425 (App. Div. 1996). The doctrine is designed to prevent injustice by not permitting a party to repudiate a course of action on which another party has relied to his or her detriment. Mattia v. N. Ins. Co. of N.Y., 35 N.J. Super. 503, 510 (App. Div. 1955). The principle is invoked in "'the interests of justice, morality and common fairness.'" Palatine I v. Planning Bd., 133 N.J. 546, 560 (1993) (quoting Gruber v. Mayor of Raritan Twp., 39 N.J. 1, 13 (1962)), overruled on other grounds, by D.L. Real Estate Holdings, L.L.C. v. Point Pleasant Beach Planning Bd., 176 N.J. 126, 135 (2003).
Estoppel, unlike waiver, requires the reliance of one party on another. Country Chevrolet, Inc. v. N. Brunswick Planning Bd., 190 N.J. Super. 376, 380 (App. Div. 1983). To prove a claim of equitable estoppel, the proponent of the doctrine must establish that: "the alleged conduct was done, or representation was made, intentionally or under such circumstances that it was both natural and probable that it would induce action. Further the conduct must be relied on, and the relying party must act so as to change his or her position to his or her detriment." Miller v. Miller, 97 N.J. 154, 163 (1984).
We are satisfied from our review of the record that the trial judge mistakenly relied on the principle of equitable estoppel in granting defendant's motion. There is no proof that defendant acted on or changed his position to his detriment, relying on plaintiffs' failure to file the cross-claim for contribution or indemnification in the underlying medical malpractice action. Defendant did not change his position concerning Masia's claim; he simply waited, hoping that the case had already been, or would eventually be resolved without him participating in the action.
However, we conclude that the judge's dismissal of the complaint on the basis of equitable estoppel is harmless, because we are satisfied that the complaint should have been dismissed for another reason, that is, laches. See Glaser v. Downes, 126 N.J. Super. 10, 16 (App. Div. 1973) (holding that appeals are taken from judgments, not from oral or written decisions), certif. denied, 64 N.J. 513 (1974). An order of judgment will be affirmed on appeal if it is correct, even though the judge gave the wrong reasons for it. Isko v. Plan. Bd. of Livingston, 51 N.J. 162, 175 (1968), abrogated on other grounds, Commercial Realty & Res. Corp. v. First Atl. Properties Co., 122 N.J. 546 (1991); State v. Maples. 346 N.J. Super. 408, 417 (App. Div. 2001).
Laches is invoked to deny a party's enforcement of a known right when the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party. In re Kietur, 332 N.J. Super. 18, 28 (App. Div. 2000) (citing County of Morris v. Fauver, 153 N.J. 80, 105 (1998)). "Laches may only be enforced when the delaying party had sufficient opportunity to assert the right in the proper forum and the prejudiced party acted in good faith believing that the right had been abandoned." Knorr v. Smeal, 178 N.J. 169, 181 (2003). The time constraints for the application of laches "are not fixed but are characteristically flexible." Lavin v. Bd. of Educ. of Hackensack, 90 N.J. 145, 151 (1982). Factors to be considered in deciding whether to apply the doctrine are "[t]he length of delay, reasons for delay, and [the] changing conditions of either or both parties during the delay." Id. at 152. The core equitable concern in applying laches is whether a party has been harmed by the delay. Id. at 152-53.
Here, equity compels the application of the doctrine of laches because plaintiffs slept on their rights, and defendant was harmed by the delay in filing the second complaint. CentraState did not cross-claim against defendant in its answer to Masia's complaint, which was filed in 2002, arguing that at the time it was unaware that defendant was an employee of the hospital. While it may have been reasonable for CentraState not to have filed a cross-claim against defendant at that time, CentraState was aware in October 2003, that defendant was not its employee.
By October 2003, Masia's complaint had already been administratively dismissed without prejudice pursuant to Rule 1:13-7(a). Although Masia had not taken any affirmative action at that time to reinstate the complaint because CentraState had not provided her counsel with defendant's current address for purpose of service, nothing had prevented CentraState from moving to file an amended answer asserting a cross-claim for contribution or indemnification against defendant and to serve the cross-claim on him. In October 2003, the discovery end date was approximately one-and-one-half years away and no trial date had been set in the malpractice action; nevertheless, plaintiffs did not elect to file the present complaint against defendant until three-and-one-half years later in May 2007.
Plaintiffs offer no plausible justification for the unreasonable delay in filing its complaint. Plaintiffs, by their inexcusable delay, led defendant to believe that the Masia action had been resolved without his involvement. There has been significant harm caused to defendant by plaintiffs' delay in filing the claim for contribution or indemnification. Defendant does not have a present recollection of treating Masia at the CentraState Hospital, and defendant has been excluded from the ongoing pre-trial discovery proceedings in the Masia malpractice action for over four years. We conclude that the delay in instituting the claims against defendant has been considerable, for reasons not justifiable, and defendant has been harmed by the delay. Id. at 151-53.
We also note that, although the complaint was not dismissed under the ECD because the trial judge could have consolidated the two pending actions, we are satisfied under the facts that CentraState's claim for contribution or indemnification against defendant should have been asserted in the underlying medical malpractice action, not via a separate complaint. R. 4:7-5(b). See Buck v. MacDonald, 300 N.J. Super. 158, 160-62 (App. Div. 1997) (holding that a defendant's claim for indemnification against a party who was also a co-defendant in a prior lawsuit cannot be raised in a separate action after the first lawsuit settles). See also Bendar v. Rosen, 247 N.J. Super. 219, 237 (App. Div. 1991) (holding that the ECD and judicial economy militate in favor of requiring assertion of cross-claims for contribution under Rule 4:7-5(b) even though "technically a right of contribution does not arise until a tortfeasor has paid more than his pro rata share").