JOSEPH STAMPLIS V ST JOHN HEALTH SYSTEM
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STATE OF MICHIGAN
COURT OF APPEALS
UNPUBLISHED
June 1, 2004
JOSEPH STAMPLIS and THEODORA
STAMPLIS,
Plaintiffs-Appellants,
No. 241801
St. Clair Circuit Court
LC No. 01-001051-NH
v
ST. JOHN HEALTH SYSTEM, d/b/a RIVER
DISTRICT HOSPITAL and G. PHILLIP
DOUGLASS,
Defendants-Appellees.
and
HENRY FORD HEALTH SYSTEM, d/b/a
HENRY FORD HOSPITAL, PORT HURON
MERCY HOSPITAL, SHAWN T. JENKINS, D.O.,
DANIEL P. MAKANDE, M.D., JAMES F.
GERRITTS, M.D., HURON FAMILY PRACTICE
CENTER, RICHARD KOVAR, M.D., PAUL A.
BUDNICK, M.D., JERROLD R. FISHER, M.D.,
K. BATOOL SHAIKH, M.D., PETER J. CLIVE,
M.D., JON L. KONZEN, JAY GORELL, M.D.,
ROBERT HYZY, M.D., and H. MICHAEL
MARSH, M.D.,
Defendants.
Before: Murray, P.J., and Gage and Kelly, JJ.
PER CURIAM.
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In this medical malpractice action, plaintiffs appeal as of right the trial court’s order
dismissing defendants St. John Health System, d/b/a River District Hospital.1 We reverse.
I. Factual and Procedural History
This case involves pure procedural issues. Unfortunately, the incident giving rise to
plaintiffs’ cause of action is of little concern to the issues on appeal. What is of most import is
the procedural history and the attorneys’ conduct before the trial court.
Plaintiff Joseph Stamplis suffered from a thoracic epidural abscess and eventually
required a laminectomy with evacuation of the epidural abscess. Plaintiffs allege that, as a result
of the delay in diagnosis of a progressive myelopathy, Mr. Stamplis was rendered a paraplegic
from the thoracic line down.2
On the day trial was set to begin in this matter, Jane Garrett, counsel for defendant Dr. G.
Phillip Douglass, indicated on the record that she was approached by plaintiffs’ counsel,
Jeremiah Kenney, regarding an agreement to dismiss Dr. Douglass with prejudice. Plaintiffs’
counsel indicated that he intended to dismiss Dr. Douglass as a defendant and proceed against
River District Hospital as Dr. Douglass’ principal. The following discussion transpired with
respect to this agreement:
Ms. Garrett. Right. I am Jane Garrett, and I represent Doctor Phil Douglass in
this case, and I would like to state my understanding of our agreement here. I
had some discussions with Mr. Kenney this morning, and for the first time
there was discussion of dismissal of Doctor Douglass without payment, and it
is my understanding and belief we have confirmed in chambers already that
we have agreed that Doctor Douglass who has come up from Texas where he
now resides for this trial, he will agree to remain here until he takes the stand
to testify, which Mr. Kenney has assured me will be some time before the
close of business on Friday; that Plaintiff will then be dismissed with
prejudice, the individual claims against Doctor Douglass as a Defendant. And
that is why I will not be offering anything on his behalf.
The Court.
Okay.
Mr. Kenney. I intend to dismiss Doctor Douglass as a Defendant and proceed
against what I presumed to be his principal, the hospital. That’s my
agreement.
The Court.
Okay.
1
For purposes of this opinion, the collective term “defendants” refers only to River District
Hospital and Dr. G. Phillip Douglass.
2
Plaintiff Theodora Stamplis seeks relief based on a claim of loss of consortium.
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Mr. Kenney. And the other terms he will remain until the close of business
Friday so that I can put him on the stand, that’s part of the agreement, as well.
Ms. Garrett. Well, I believe that it was agreed in chambers that it would be a
dismissal with prejudice.
Mr. Kenney. With prejudice, but what I don’t want to face, Judge, obviously is
that I have dismissed the claims against the hospital for the actions of Doctor
Douglass. I’m not doing that. He was the actor.
The Court.
I understand. I understand that. I am sure they do, too. Next.
Mr. Valitutti. Your Honor, for the record, Ralph Valitutti on behalf of River
District Hospital. We’ve met with you in chambers. We’ve discussed the
matter thoroughly, and on behalf of the hospital, for purposes of settlement of
the case, we’re willing to offer Mr. and Mrs. Stamplis $300,000.
On the same day, Ms. Garrett presented a stipulation and proposed order of dismissal to
the trial court indicating that the stipulation had been executed by all counsel. The written
stipulation for dismissal stated merely, “IT IS HEREBY STIPULATED by and between counsel
for the above-named parties, that the above-captioned matter be dismissed as to G. PHILLIP
DOUGLASS, D.O., voluntarily with prejudice and without costs to any party.” The order of
dismissal read
UPON READING AND FILING of the above stipulation, and the court
being fully advised in the premises;
IT IS HEREBY ORDERED that this matter be dismissed as to G.
PHILLIP DOUGLASS, D.O., voluntarily with prejudice and without costs to any
party.
Shortly after entry of the stipulation, counsel for River District Hospital indicated to the court
that he wanted to bring a motion for summary disposition; but the trial court indicated that
counsel would have to wait until after the selection of the jury.
The following day, River District Hospital brought its motion for summary disposition of
plaintiffs’ claims of vicarious liability against the hospital with respect to the actions or
omissions of Dr. Douglass. River District Hospital argued that it was entitled to summary
disposition under MCR 2.116(C)(7) because the stipulation to dismiss Dr. Douglass with
prejudice barred any claims brought against River District Hospital as the principal. In response,
plaintiffs argued that River District’s argument had no merit because plaintiffs did not intend for
the dismissal of Dr. Douglass to act as a dismissal of River District Hospital. Alternatively,
plaintiffs requested relief from judgment pursuant to MCR 2.612 or amendment of the order of
dismissal to reflect a dismissal of Dr. Douglass without prejudice. In sum, plaintiffs argued that
the dismissal was more of a covenant not to sue Dr. Douglass, as opposed to a dismissal with
prejudice that would have res judicata effect.
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Following oral arguments, the trial court provided its ruling on the record. The court
determined that further proceedings against River District Hospital were barred by operation of
law, and that the decision to dismiss Dr. Douglass with prejudice had res judicata effect on any
claim for vicarious liability against River District Hospital. The court further found no credible
evidence indicating that the dismissal was understood by Dr. Douglass as a covenant not to sue.
The court found that plaintiffs were not entitled to relief from judgment pursuant to MCR 2.612,
indicating that such relief was not justified under the facts of the case. Accordingly, the trial
court granted River District Hospital’s motion for summary disposition.
Plaintiffs thereafter brought a motion for reconsideration and to reverse the orders of
judgment pursuant to MCR 2.614(A) and MCR 2.612(C). Plaintiffs argued that summary
disposition was improper because they did not intend to dismiss their case against River District
Hospital when they stipulated to dismiss Dr. Douglass. Plaintiffs further contended that they
were entitled to relief from judgment on the basis of fraud, misrepresentation, misconduct,
mistake, inadvertence, surprise, excusable neglect, or other equitable grounds. In all, plaintiffs
requested the trial court vacate the order dismissing River District, or alternatively, revise or
rescind the order dismissing Dr. Douglass to establish that the stipulation was actually a
covenant not to sue rather than a release of River District Hospital. River District Hospital
responded that plaintiffs’ motion was in actuality a motion for rehearing and that plaintiffs failed
to present any new grounds for which relief could be granted. Dr. Douglass similarly responded
that plaintiffs had previously raised the issue and that plaintiffs’ motion should be denied. The
trial court, finding that plaintiffs had previously raised the issues, determined that plaintiffs’
motion was actually one for reconsideration, and thus, the court denied plaintiffs’ motion.
II. Standard of Review
This Court reviews de novo the trial court’s grant or denial of a motion for summary
disposition brought under MCR 2.116(C)(7). Amburgey v Sauder, 238 Mich App 228, 231; 605
NW2d 84 (1999). The nonmovant’s well-pleaded allegations must be accepted as true and
construed in the nonmovant’s favor, and the motion should not be granted unless no factual
development could provide a basis for recovery. Id. “The court must consider not only the
pleadings, but also any affidavits, depositions, admissions, or documentary evidence that has
been filed or submitted by the parties.” Id., quoting Horace v City of Pontiac, 456 Mich 744,
749; 575 NW2d 762 (1998).
A trial court’s decision to grant relief under MCR 2.612 is reviewed for an abuse of
discretion. Driver v Hanley (After Remand), 226 Mich App 558, 564-565; 575 NW2d 31 (1997).
III. Analysis
A
We must first address plaintiffs’ argument that the trial court erred in dismissing River
District Hospital by failing to follow the law set forth in Larkin v Otsego Memorial Hosp Ass’n,
207 Mich App 391; 525 NW2d 475 (1994).
Plaintiffs’ complaint alleges that River District Hospital is liable for the acts of Dr.
Douglass and thus seeks relief on the basis of vicarious liability. At common law, “a valid
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release of an agent for tortious conduct operates to bar recovery against the principal on the
theory of vicarious liability, even though the release specifically reserves claims against the
principal.” Theopolis v Lansing General Hosp, 430 Mich 473, 480; 424 NW2d 478 (1988)
(opinion of Griffin, J.), and at 493 (opinion of Boyle, J.). Plaintiff however argues that the
voluntary dismissal in this case comprised “an agreement not to sue on the existing claim” rather
than effecting “a present abandonment or relinquishment of the right or claim,” or in other
words, a release. See id. at 492 n 14.
In Limbach v Oakland Co Bd of Co Rd Comm’rs, 226 Mich App 389, 395; 573 NW2d
336 (1997), this Court held that “a voluntary dismissal with prejudice acts as an adjudication on
the merits for res judicata.” Id. Michigan courts have also long held that where a suit against an
agent is unsuccessful, the plaintiff cannot maintain a suit against the agent’s principal. See
DePolo v Greig, 338 Mich 703, 709; 62 NW2d 441 (1954), quoting Krolik v Curry, 148 Mich
214, 221-222; 111 NW 761 (1907).
In light of these principles, defendants argue that it is clear that the voluntary dismissal
with prejudice constituted an adjudication on the merits of plaintiffs’ claims against Dr.
Douglass, and that because it is an adverse adjudication on the merits of plaintiffs’ cause of
action against Dr. Douglass, plaintiffs cannot now proceed against River District Hospital as the
principal. However, plaintiffs argue that the dismissal of Dr. Douglass did not constitute an
adjudication of the merits of the claims against River District Hospital, but instead constituted a
covenant not to sue. In support of their argument, plaintiffs rely heavily on Larkin.
In Larkin, the Court held that a stipulation and order to dismiss the defendant doctor was
actually a covenant not to sue the doctor and, thus, the dismissal did not relinquish the plaintiffs’
claim and did not operate as a release of the hospital or as a consent judgment. While the
stipulation to dismiss did not expressly reserve the plaintiffs’ claims against the hospital, the
stipulation specifically stated that the hospital was legally responsible for the actions of the
defendant doctor and that the doctor’s dismissal was based on the hospital’s acknowledgment
that the doctor was the hospital’s agent for purposes of the case. Id. at 396. The Court
concluded that nothing in the stipulation suggested that by dismissing the doctor, the plaintiffs
intended to dismiss the hospital; instead, the Court concluded that “the implication is that the
plaintiffs recognized that the codefendant hospital was the principal that could be held
responsible for the negligent acts of the agent and they would proceed against the hospital on that
basis after the dismissal of [the doctor].” Id.
In arriving at its conclusion, the Larkin Court relied heavily on the Supreme Court’s
decision in Boucher v Thomsen, 328 Mich 312; 43 NW2d 866 (1950). In Boucher, the parties
agreed in a written stipulation that the plaintiff, “notwithstanding this covenant not to sue . . .,
reserves wholly and unimpaired her cause of action against [the principal].” Id. at 315.
Had the parties in the instant case put their full verbal agreement into the written
stipulation, there would likely be no question that this case would fall under the ambit of Larkin.
But the parties did not put their full oral agreement in writing; instead, in the written stipulation,
plaintiffs dismissed Dr. Douglass with prejudice and nothing was explicitly stated concerning the
hospital. Further, the parties did not explicitly agree that Dr. Douglass was the agent of the
hospital. Again, had the parties explicitly made such an agreement, this case would likely fall
under Larkin.
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Under a narrow reading of Larkin as defendants propose, only the written stipulation can
be looked at to discern the intent of the parties. In this case, plaintiffs’ actual intent cannot be
discerned from only the written language in the stipulation and order. However, the transcript of
the parties’ oral agreement clearly reflects the parties’ intentions and understandings. From the
transcript, it is clear that by stipulating to dismiss Dr. Douglass, plaintiffs did not intend to
dismiss their claims against River District Hospital. Thus, while we are reluctant to broaden the
scope of Larkin to include the situation in this case, we find that Larkin would be applicable but
for the conduct of the parties’ attorneys before the trial court. Regardless of the applicability of
Larkin, in the interest of averting a serious injustice, we find plaintiffs are entitled to relief from
judgment based on the conduct of the parties before the trial court.
B
Plaintiffs argue they are entitled to relief from judgment pursuant to MCR
2.612(C)(1)(a),(c),(d), on the basis of mistake, fraud, and grounds of equity. We agree that
plaintiffs are entitled to relief from judgment.
It is a longstanding rule that parties are bound by their stipulations. See Thompson v
Continental Motors Corp, 320 Mich 219, 224-225; 30 NW2d 844 (1948). However, this does
not mean that a party to a stipulation is forever without a defense. Because a stipulation is a type
of contract, a party seeking to avoid a stipulation may use contract defenses. Limbach, supra at
394. Accordingly, a stipulation may be set aside where there is evidence of mistake, fraud, or
unconscionable advantage. Id.
Ordinarily, a party cannot successfully seek affirmative relief on the ground that he was
either ignorant of the law or mistaken as to what the law prescribed. Carpenter v Detroit
Forging Co, 191 Mich 45, 53; 157 NW 374 (1916). But this is not always the case. “In many
cases where injustice would be done by its enforcement, this has been avoided by declaring that
a mistake as to the existence of a particular right, though caused by an erroneous idea as to the
legal effect of an instrument . . . was really a mistake of fact, and not strictly one of law, and so
did not constitute an insuperable bar to relief.” Id., citing Reggio v Warren, 207 Mass 525; 93
NE805 (1911). For example, in the context of the rescission of a release, the Court in Carpenter
stated that “[w]hether placed upon the ground of constructive fraud, or mistake of fact as well as
of law, the law forbids that a party who, with full knowledge of the ignorance of the other
contracting party, has not only encouraged that ignorance, but has knowingly deceived and led
that other into a mistaken conception of his legal rights, should shield himself behind the
doctrine that a mere mistake of law affords no ground for relief.” Carpenter, supra at 54.
Further, in the context of reformation, the law is established that an instrument can be reformed
to reflect the parties’ actual intent if there is clear evidence that both parties reached an
agreement but that, as a result of mutual mistake or mistake on the part of one and fraud on the
part of the other, the instrument does not express the true intent of the parties. See Mate v
Wolverine Mut Ins Co, 233 Mich App 14; 592 NW2d 379 (2000).
There is no question that the case before us would result in a serious injustice if there was
strict adherence to the stipulation. The most crucial part of this case is that the written stipulation
did not conform to the oral stipulation made on the record in front of all the parties. Parties
should be able to rely on their oral stipulations made on the record in open court. Here,
plaintiffs’ counsel was not mistaken as to the effect of the law. Plaintiffs’ counsel was fully
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aware of the state of the law, but he was mistaken with respect to the effect of the written
stipulation. But counsel’s mistake was not completely the result of his own ignorance,
defendants contributed to it. The most likely scenario, as we see it, is that the trial court hurried
counsel along during the oral stipulation when plaintiffs’ counsel attempted to make sure that his
position was completely clear, and then plaintiffs’ counsel trusted that counsel for defendants
would accurately prepare the written stipulation and order. While plaintiffs’ counsel should have
put his full intentions in the written stipulation, under the circumstances, the fact that he did not,
should not bar recovery all together.
This is a case of mistake or misconception on the part of plaintiffs’ counsel that was
wholly contributed to and encouraged by defendants’ counsel. “‘A fraud is perpetrated on the
court when some material fact is concealed from the court or some material misrepresentation is
made to the court.’” Matley v Matley (On Remand), 242 Mich App 100, 101; 617 NW2d 718
(2000)(citations omitted). With respect to a silent fraud, “a legal duty to make a disclosure will
arise most commonly in a situation where inquiries are made by the plaintiff, to which the
defendant makes incomplete replies that are truthful in themselves but omit material
information.” Hord v Environmental Research Institute of Michigan (After Remand), 463 Mich
399, 412; 617 NW2d 543 (2000).
Plaintiffs’ counsel and Dr. Douglass’ counsel made their oral stipulation on the record in
front of the court and counsel for River District Hospital. Plaintiffs’ counsel specifically stated,
“but what I don’t want to face, Judge, obviously is that I have dismissed the claims against the
hospital for the actions of Doctor Douglass. I’m not doing that. He was the actor.” After this
statement by plaintiffs’ counsel, the trial court stated, “I understand” and “I am sure they do,
too.” At this point in time, in response, if defendants did not understand or agree with the court,
they had an obligation to say so. Instead, counsel for River District Hospital, as well as counsel
for Dr. Douglass, sat mute and said nothing, thereby encouraging plaintiffs’ counsel to agree to
the stipulation. Plaintiffs’ counsel was then presented with a written stipulation, drafted by
defendants’ counsel, that omitted the entire oral agreement. Under these circumstances,
defendants’ counsel had a duty of disclosure in light of the remarks made by plaintiffs’ counsel
and the trial court. Counsel for River District Hospital and counsel for Dr. Douglass both knew
what plaintiffs’ intentions were and by not responding to the trial court, they led plaintiffs’
counsel to believe that in stipulating to dismiss Dr. Douglass with prejudice plaintiffs were not
forfeiting their legal rights against the hospital. But defendants nonetheless turned right around
and moved for summary disposition.3
The record clearly reflects that all parties were aware that Dr. Douglass would be staying
after his dismissal to testify in the case. The trial court was fully aware of this, as well as of the
entire goings on throughout this case. It was fully aware of plaintiffs’ counsel’s intentions, as it
stated so on the record. The order signed by the court stated that the court was “fully advised in
3
In addition, while we hesitate to suggest a conspiracy, it is worthy to note that after River
District Hospital moved for summary disposition, counsel for Dr. Douglass made an appearance
as co-counsel for River District Hospital.
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the premises.” This lends further support to the focus of the spirit of the agreement that was
placed on the record.
In sum, the record is clear that while plaintiffs’ counsel was mistaken as to the effect of
the written stipulation and order, counsel’s mistake, whether viewed as a mistake of law or of
fact, was contributed to by defendants’ counsel’s actions. Even though counsel for River District
Hospital did not verbally take part in the stipulation on the record, we cannot wholly omit their
actions from our discussion. The written stipulation did not reflect what was agreed to by
plaintiffs or Dr. Douglass. While we strongly believe in adherence to the rule of law, at the end
of the day, those rules, as well as the spirit of the law, must be applied in such a manner as to
keep justice alive. To deny plaintiffs a trial under this scenario would be an injustice. Plaintiffs
are entitled to relief from judgment and the stipulation and order should be vacated.
We reverse the trial court’s order granting summary disposition. We remand to the trial
court for entry of an order vacating the stipulation and order dismissing Dr. Douglass with
prejudice.
Reversed and remanded for further proceedings not inconsistent with this opinion. We
do not retain jurisdiction.
/s/ Hilda R. Gage
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