Andrew C. Smith, Plaintiff, v. American Medical Systems, Inc., Defendant-appellee, v. Humana Hospital Corporation, Inc., Defendant-appellant, 876 F.2d 434 (5th Cir. 1989)

Richard Francis, Jerry A. Gibson, and Plunkett, Gibson & Allen, San Antonio, Tex., for defendant-appellant.

John Milano, Jr. and Thornton, Summers, Biechlin, Dunham & Brown, San Antonio, Tex., for defendant-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before WILLIAMS and GARWOOD, Circuit Judges, and POLOZOLA,^*  District Judge.

POLOZOLA, District Judge:

Humana Hospital Corporation, Inc. appeals a decision of the district court which denied its motion for indemnity for attorney's fees from American Medical Systems, Inc. following an out-of-court settlement between the plaintiff and American Medical Systems, Inc. on plaintiff's damage claim against American Medical Systems, Inc. and Humana Hospital Corporation, Inc.

It appears to the United States Court of Appeals for the Fifth Circuit that this case involves questions of Texas law for which we find neither a dispositive statutory provision nor controlling precedent in the decisions of the Supreme Court of Texas. The answer to the question posed will be determinative of the issue presented on this appeal. Therefore, in accordance with Art. 5 Sec. 3-c of the Texas Constitution and Texas Rule of Appellate Procedure 114, we certify to the Texas Supreme Court question of Texas law stated below.

CERTIFICATE FROM THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

TO THE SUPREME COURT OF TEXAS

TO THE HONORABLE,

THE SUPREME COURT OF THE STATE OF TEXAS, AND

THE HONORABLE, THE CHIEF JUSTICE

AND ASSOCIATE JUSTICES THEREOF:

Andrew Smith versus American Medical Systems, Inc. versus Humana Hospital Corporation, Inc., Docket Number 88-5527 on the docket of this Court and SA-84-837 on the docket of the United States District Court for the Western District of Texas, where this appeal originates.

Andrew Smith filed this tort suit to recover damages arising from the rupture of a prosthetic penile device. Named as defendants in the suit were Humana Hospital and American Medical Systems. The device was designed, manufactured, and sold by American Medical Systems to Humana Hospital. Humana Hospital then supplied the device to Smith's physician for the surgical implant. Humana made no changes or alterations in the device, nor was the hospital alerted to any alleged defects in its design or manufacture.

Humana Hospital filed a motion for partial summary judgment seeking indemnity and attorney's fees from American Medical Systems. The trial court granted Humana Hospital's unopposed motion for summary judgment which would have entitled the hospital to be indemnified by American Medical Systems in the event of a recovery by plaintiff against Humana Hospital. However, the court's order did not refer to the hospital's request for attorney's fees and costs.

Subsequently, American Medical Systems settled with the plaintiff without a judicial determination of the liability of the parties. Humana Hospital objected to the court's order of May 28, 1987 which disposed of the case because the court did not award Humana Hospital attorney's fees it had incurred in defending this case. In an order filed on February 4, 1988, the district court denied Humana Hospital's claim for indemnification from American Medical Systems of attorney's fees incurred during the course of this action. This appeal followed.

Under Texas law, is a seller of a product entitled to indemnification from the manufacturer for attorney's fees incurred by seller during the litigation where the manufacturer settles the case with the plaintiff before a judicial determination of the liability of the parties is made?

The names, addresses and telephone numbers of the attorneys for the parties are:

Attorneys for Humana Hospital Corporation, Inc.: Richard N. Francis, Jr. and Jerry A. Gibson, Plunkett, Gibson & Allen, Inc., InterFirst Financial Center NW, 6243 N.W. Expressway, Post Office Box BH002, San Antonio, Texas 78201. Telephone: (512) 734-7092.

Attorneys for American Medical Systems, Inc.: John Milano, Jr., Thornton, Summers, Biechlin, Dunham & Brown, 1900 Tower Life Building, San Antonio, Texas 78205. Telephone: (512) 224-5406.

We disclaim any intention or desire that the Texas Supreme Court confine its reply to the precise form or scope of the question certified.

The record in this case, together with the parties' briefs, is transmitted herewith.

QUESTION CERTIFIED.