COLLEGE HOSPITAL INC v. LAURA (1993)

OPINION

Laura and Richard C. moved to amend their complaint for professional negligence of a health care provider to add punitive damages claims against College Hospital and its employee, Robert B.   As required by Code of Civil Procedure section 425.13, the plaintiffs submitted declarations and deposition testimony to establish “a substantial probability” that they would prevail on the claims, and the trial court granted the motion.   College Hospital petitions for writ relief, claiming the trial court failed to apply the proper standard in reviewing the evidence, and under the proper standard the evidence is insufficient to establish a substantial probability of success.   We deny the petition.¹

The plaintiffs filed their unverified complaint against College Hospital, Robert B. and others, stating causes of action for professional negligence and intentional and negligent infliction of emotional distress.   The complaint alleged that Robert, director of cardiopulmonary services at the hospital, entered into a romantic relationship with Laura, who was a psychiatric inpatient;  it included a claim for punitive damages.   College Hospital moved to strike the punitive damages claim based on Code of Civil Procedure section 425.13,² which prohibits a claim for punitive damages arising out of the professional negligence of a health care provider unless the trial court first determines there is a substantial probability that the plaintiff will prevail on that claim.   The trial court granted the motion to strike, and the plaintiffs filed a motion to amend under section 425.13.

The evidence presented to the trial court in support of the motion included Laura's declaration.   She stated that in June 1990 she sought treatment for her “panic disorder with agoraphobia” and her “deteriorating marriage”;  her therapist referred her to College Hospital's anxiety and mood disorder unit, where she was admitted as an inpatient.   Shortly after Laura's admittance, Robert introduced himself to her and said he had read her chart and although he was not a psychotherapist, he could help her with her problems.   Robert subsequently became unofficially involved in Laura's therapy, assisting her with the same relaxation and desensitizing exercises that she was taught in her treatment unit.   Just like the behavioral specialists who performed “fieldwork” with Laura, Robert accompanied her to shopping malls to practice riding elevators and escalators.   During these trips Robert solicited gifts from Laura.   By the end of the relationship, she had given Robert over $6,500 in gifts and $1,500 in cash.

The relationship between Robert and Laura became romantic and sexual, and they made plans to marry.   Laura told her psychiatrist and other therapists at College Hospital about the relationship;  at least one therapist encouraged her to continue it.   Robert, however, terminated the relationship in December 1990;  Laura subsequently became suicidal and required institutionalization.

The plaintiffs also submitted a declaration from Laura's treating psychiatrist, Dr. Elizabeth Swann, who stated the abrupt termination of the relationship between Laura and Robert caused Laura's multiple personality disorder to surface.   Swann said her review of the records in the case revealed that Robert knew Laura was a psychiatric patient at the hospital and had a duty to refrain from becoming sexually and financially involved with her.   Likewise, she opined the administrators and therapists knew about the relationship and should have taken action to protect Laura from psychological harm.

Ken Westbrook, College Hospital's administrator, testified in his deposition that after Laura had been a patient for a few months he was told about Robert's relationship with her by Mary Flores, the associate administrator, who had been told by a member of Laura's treatment team.   Westbrook called Robert into his office and advised him that as a manager in the organization, certain behavior was expected of him and any relationship between him and Laura “more than two people passing in a hallway” was inappropriate.   Robert denied anything other than an “extremely casual” relationship, and Westbrook did not look into the matter again.

In opposition to the motion, College Hospital presented the declaration of its designated expert, Dr. Martin Brenner.   Brenner detailed the medical records, depositions and declarations he had reviewed in this case and opined “that the conduct in question of defendants ․ comply [sic] with the applicable standard of practice in the Southern California area under the circumstances of this case.”

During oral argument on the motion, the court stated, “It seems to the court that if ․ all these allegations were taken as true ․, if ․ the trier of fact believes them, that [the] requirement of CCP section 425.13 would be met.  [¶] [A]ll plaintiff is asking for is a chance to prove those allegations.   This is not the final word on them.   Why shouldn't plaintiff have an opportunity to go to trial on those allegations?”   The court granted the motion.

I

 We first discuss the proper standard to be used by the trial court when reviewing the evidence presented to support the allegations of punitive damages.  Section 425.13 requires a plaintiff to establish a “substantial probability” that she will prevail on the punitive damages claim under Civil Code section 3294, which requires proof “by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice․”

There are no cases interpreting the substantial probability standard under section 425.13.³  However, Civil Code section 1714.10 imposes a comparable evidentiary burden as a prerequisite to filing a complaint against an attorney for civil conspiracy with his or her client, requiring the trial court to determine, based on supporting and opposing affidavits, that there is a “reasonable probability” the potential plaintiff will prevail in the action.

In Hung v. Wang (1992) 8 Cal.App.4th 908, 11 Cal.Rptr.2d 113, the plaintiff argued section 1714.10 was unconstitutional because it required the trial court to weigh the evidence on both sides, resulting in the deprivation of his state constitutional right to a jury trial.   The court agreed that if the section did require trial judges to weigh and adjudicate factual disputes, it would violate the jury clause of the California Constitution.   It concluded, however, that the phrase “reasonable probability” was ambiguous and resolved the ambiguity in favor of constitutionality.  “[T]he legislative purpose of section 1714.10 was to eliminate frivolous allegations that attorneys have conspired with their clients.   This statutory purpose is served by a construction that requires a prefiling procedure to determine whether the proposed conspiracy pleading is legally sufficient, and whether it is supported by a sufficient prima facie showing of facts to sustain a favorable decision if the evidence submitted by the petitioner is credited.   If either of these requirements is not met, the petition must be denied;  if both are satisfied, it must be granted.   This is a determination of law, not of fact.”  (Id. at p. 931, 11 Cal.Rptr.2d 113.)   The court found the procedure constitutional because the trial court could not weigh competing declarations.  “Whether or not the evidence is in conflict, if the petitioner has presented a sufficient pleading and has presented evidence showing that a prima facie case will be established at trial, the trial court must grant the petition.”  (Id. at pp. 933–934, 11 Cal.Rptr.2d 113.)

The Hung court noted that Civil Code section 1714.10 was patterned on Code of Civil Procedure section 425.13, but expressly declined to address the validity of the limitation on punitive damages.⁴  (Id. at p. 934, fn. 6, 11 Cal.Rptr.2d 113.)   We think, however, that Hung's reasoning applies to the prefiling procedure under section 425.13, notwithstanding the slight difference in language.   Accordingly, we construe the phrase “substantial probability” to require a prima facie showing of a successful claim for punitive damages.

II

 We agree with the trial court that the evidence submitted by the plaintiffs was sufficient to make a prima facie case for the award of punitive damages against the hospital.  Civil Code section 3294, subdivision (b) provides:  “An employer shall not be liable for [punitive damages], based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.   With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.”

The amendment to allege punitive damages against Robert was not challenged on appeal;  there is more than sufficient evidence presented to make a prima facie showing that he acted with fraud, oppression or malice toward Laura.  (Civ.Code, § 3294, subd. (a).)  Rather, the hospital claims there is no evidence to establish it either was personally guilty of malice or authorized or ratified Robert's relationship with Laura.   We disagree.

 A trier of fact could find that Westbrook's failure to properly investigate what he had been told about the relationship constitutes both the hospital's ratification of Robert's acts and malicious behavior on its own part.   There is no doubt that Westbrook, as the hospital's administrator, was its managing agent.  (See Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 822–823, 169 Cal.Rptr. 691, 620 P.2d 141.)   And although he confronted Robert with the rumor, he quickly accepted Robert's denial without question.   A trier of fact could find that in the face of such a serious allegation, Westbrook should have interviewed the members of Laura's treatment team, her fellow patients and Laura herself.   The failure to conduct a more thorough investigation could support a finding that the hospital ignored a duty to investigate and should have known the probable dangerous consequences of doing so.   Such a finding would justify the imposition of punitive damages.   (Bell v. Sharp Cabrillo Hospital (1989) 212 Cal.App.3d 1034, 1047, 260 Cal.Rptr. 886.)

 Furthermore, a trier of fact could find Robert's malicious acts should be imputed to the hospital so as to render it personally guilty of malice.   Robert's position as the director of cardiopulmonary services implies he was a managing agent of the hospital, and in his deposition Westbrook referred to Robert as “a manager in [the] organization.” ⁵

We conclude the trial court properly allowed the amendment alleging punitive damages against College Hospital.   Accordingly, the alternative writ of mandate is discharged and the hospital's petition for a writ of mandamus is denied.

I concur in the result, but I disagree with the majority's decision to omit the plaintiffs' last names and that of the alleged seducer.   None of the parties asked for privacy.   Our role as a reviewing court is to make legal judgments, not presumptive-parentalistic pronouncements, on behalf of the litigants.

FOOTNOTES

1.   This court summarily denied the original writ petition, and College Hospital petitioned for review in the Supreme Court.   Review was granted and the case was transferred to us with directions “to consider whether the evidence submitted under Code of Civil Procedure section 425.13, subdivision (a), shows a substantial probability that punitive damages will be awarded against petitioner under Civil Code section 3294, subdivision (b).”*   *   *   *   *   *

2.   All statutory references are to the Code of Civil Procedure unless otherwise specified.

3.   Civil Code section 3295, subdivision (c) prohibits discovery of a defendant's financial condition unless the plaintiff demonstrates in a prefiling procedure identical to the one under section 425.13 that there is a “substantial probability” he will prevail on a punitive damages claim.   Although there are no cases interpreting this statute either, a practice guide opines it “probably requires plaintiff to produce at least enough evidence to get by a motion for nonsuit․”  (Weil & Brown, Cal. Practice Guide, Civil Procedure Before Trial (TRG 1992) § 8:339.4, p. 8C–55.)

4.   The jury trial issue under section 425.13 was noted but not decided in Central Pathology Service Medical Clinic, Inc. v. Superior Court (Hull) (1992) 3 Cal.4th 181, 185, 10 Cal.Rptr.2d 208, 832 P.2d 924, footnote 2.

5.   In Egan v. Mutual of Omaha Ins. Co., supra, 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141, the Supreme Court stated that punitive damages would be assessed against a principal for an act of an agent only if the principal ratified or authorized the act, the principal recklessly employed an unfit agent, or the agent was employed in a managerial capacity and was acting in the scope of employment.  (Id. at p. 822, 169 Cal.Rptr. 691, 620 P.2d 141, emphasis added.)   Subdivision (b) of Civil Code section 3294 was added to the statute by the Legislature in 1980, the year after Egan was decided, and does not include the scope of employment requirement.   The omission appears to have been intentional:  The legislative history reveals the Egan language was inserted by amendment in the Assembly, but subsequently removed by Conference Committee amendment.  (Conf.Com.Rep. (1979–1980 Reg.Sess.) No. 015025, Sen. Bill 1989.)We need not decide here, however, whether the scope of employment requirement still exists under section 3294, subdivision (b) because Laura's declaration contains a prima facie showing that Robert was within the scope of his employment when interacting with her.   We emphasize this question is a factual one, but a jury could find that Robert's managerial position and his concomitant access to information about Laura's condition and treatment techniques put him in a unique position of influence over her, thus justifying the imposition of liability on the hospital.  (See Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 217–221.)

WALLIN, Associate Justice.

CROSBY, Acting P.J., concurs.