Thomas Kopp, et al., v. Physician Group of Ariz., Inc., et al., No. CV-17-0222-PR (July 9, 2018) – Opinion

In a recent opinion, the Arizona Supreme Court ruled a dismissal with prejudice does not, on its own, trigger issue preclusion. Thomas Kopp v. Physician Group of Arizona, et. al. No. CV-17-0222-PR (July 9, 2018) – Opinion. In doing so, the Court overturned a 73 year old ruling in DeGraff v. Smith, 62 Ariz. 261, 269-70 (1945) that a dismissal with prejudice is a judgment on the merits that carries preclusive effect.

In Kopp, a group of plaintiffs underwent bariatric surgery performed by Dr. Eric Schlesinger, M.D., at Tempe St. Luke’s Hospital. After experiencing post-operative complications, the plaintiffs filed a medical malpractice actions against Physician Group of Arizona, Dr. Schlesinger, and other entities. The cases were later consolidated for discovery. The plaintiffs alleged Dr. Schlesinger was negligent in surgical care and the other entities were both vicariously liable for the doctor’s negligence and independently negligent in the administration of its bariatric surgery program, including the hiring, selection, and credentialing.

Plaintiffs reached a settlement agreement with Dr. Schlesinger. The settlement agreement required plaintiffs to dismiss with prejudice the pending claims against Dr. Schlesinger. The plaintiffs were also precluded from pursing claims against the entities based on the theory of vicarious liability and respondent superior. The settlement agreement additionally contained language about no past or present wrongdoing by Dr. Schlesinger would be implied or inferred. Plaintiffs were, however, allowed to bring independent claims against the entities.

The entities moved to dismiss the remaining claims arguing they were derivative of Dr. Schlesinger’s negligence. The trial court agreed and dismissed with prejudice plaintiffs’ negligent credentialing, hiring, and supervision claims. The trial court did rule any independent negligence claim against the entities survived the settlement agreement. The court of appeals upheld the ruling and stated dismissal of plaintiff’s negligence claims against Dr. Schlesinger precluded plaintiffs from litigating the entities’ alleged liability as vicariously derived from any alleged negligence of Dr. Schlesinger.

The Arizona Supreme Court vacated the court of appeals’ decision and reversed the trial court’s judgment. The Arizona Supreme Court found issue preclusion did not apply.

To reach its decision, the Arizona Supreme Court revisited its explanation in Chaney Building Co. v. City of Tucson. In that case, the Court ruled that a dismissal with prejudice does not, on its own, trigger issue preclusion. 148 Ariz. 571, 573 (1986) In Chaney Building Co., the Supreme Court ruled issue preclusion applies when the issue or fact to be litigated was actually litigated in a previous suit, a final judgment was entered, and the party against whom the doctrine is invoked had a full opportunity to litigate the matter and actually did litigate it, provided such issue or fact was essential to the prior judgment. Id. However, in those cases where judgment is entered by confession, consent or default, the issues are not actually litigated. Id. Hence, a judgment entered by stipulation is called a consent judgment, and may be conclusive, with respect to one or more issues, if the parties have entered an agreement manifesting such intention. Id. The ruling in Chaney Building Co., repealed the DeGraff decision that suggested a stipulated dismissal with prejudice is a judgment on the merits for purposes of issue preclusion. In this case, the parties’ agreement did not express an intent to conclusively establish Dr. Schlesinger’s negligence or lack thereof.

The Arizona Supreme Court also found in this matter plaintiffs’ claims for negligent credentialing, hiring, and supervision are based on the entities’ independent negligence which, according to the settlement agreement language, were preserved. The entities were only released from those claims based on vicarious liability. This finding was based on the case law from Torres v. Kennecott Copper Corp., in which it was ruled that “if there is an independent ground for finding the principal liable, judgment can be entered against him.” 15 Ariz. App. 272, 274 (1971).

Takeaway

In cases with claims arising under vicarious liability, dismissal of the agent does not automatically mean dismissal of all claims against the principal especially where independent negligence claims are presented. Be sure to review with your attorney the language contained in the agent’s release to determine if an argument of issue preclusion can be asserted.

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