AFFILIATED HOSPITAL PRODUCTS INC v. WARNER LAMBERT COMPANY

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Court of Appeal, Second District, Division 2, California.

AFFILIATED HOSPITAL PRODUCTS, INC., Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent. WARNER–LAMBERT COMPANY, Parke–Davis, a Division of Warner–Lambert Company, and Deseret Medical, Inc., Real Parties in Interest.

No. B033322.

Decided: June 07, 1988

Huss, Anderson & Bailey, William W. Huss, and Lisa M. Keefe, Los Angeles, for petitioner. No appearance for respondent. Haight, Brown & Bonesteel, Michael J. Bonesteel, Roy G. Weatherup, Thomas M. Moore, and Kenneth C. Byrne, Santa Monica, for real parties in interest.

OPINION AND ORDER FOR A PEREMPTORY WRIT OF MANDATE

This mandamus proceeding tenders the question whether the superior court may, when presented with a motion which is denominated as one seeking approval of the good faith of a settlement made two years earlier, correctly evaluate its proportionality in light of only those facts known to the parties at the time they entered into it, without considering significant new facts uncovered by the time the motion for approval was filed.

The action is one for medical malpractice.   The plaintiff claimed to have suffered serious post-operational harm as a result of the use of surgical gloves contaminated by powder applied to them during manufacture.   Three manufacturers of such gloves were named as defendants, along with the hospital and the participating physicians.

The complaint was filed in November 1984.   Early in discovery, the hospital produced accounting records which purported to indicate that during the nine months preceding the operation it had purchased surgical gloves manufactured by defendants Surgikos and Affiliated, but none manufactured by defendant Warner–Lambert.   In addition, an expert retained by Warner–Lambert examined tissue samples taken from plaintiff and reported—with now disputed accuracy—that the contaminating substance could not have been the type of powder used in its gloves.

Warner–Lambert presented these two pieces of information to plaintiff in August 1985, whereupon he agreed to dismiss it as a defendant in exchange for a waiver of costs.   The dismissal was filed in September 1985.

Continuing discovery by the remaining parties revealed evidence that Warner–Lambert surgical gloves were actually the primary ones in use at the hospital, and that its gloves indeed had been worn during the operation by one, and probably at least three, of the medical personnel involved.   Further, expert opinion now suggested the lubricant used on these gloves could have caused plaintiff's harm.   Consequently, certain of the defendants pressed cross-complaints for partial indemnity.

In September 1987 Warner–Lambert responded with a motion seeking court approval of the good faith of the “settlement” it had made with plaintiff two years earlier.  (See Code Civ.Proc., § 877.6.)   Most of the other defendants filed opposition, arguing the inappropriateness of exonerating Warner–Lambert from any liability for contribution.

The motion was heard December 1, 1987, and granted.   A motion for reconsideration was denied.   This petition followed.

Initially we note that it is far from clear that a dismissal for costs should be regarded as a “settlement,” or that the amount paid by the dismissed defendant, i.e., zero, could be regarded as based on an “approximation of ․ the settlor's proportionate liability” (Tech–Bilt, Inc. v. Woodward–Clyde & Associates (1985) 38 Cal.3d 488, 499, 213 Cal.Rptr. 256, 698 P.2d 159), unless he can establish his nonliability to the court's satisfaction.  (See id. at p. 500, fn. 7, 213 Cal.Rptr. 256, 698 P.2d 159, overruling Cardio Systems, Inc. v. Superior Court (1981) 122 Cal.App.3d 880, 176 Cal.Rptr. 254;  Commercial U. Ins. Co. v. Ford Motor Co. (9th Cir.1981) 640 F.2d 210.)   However, we need not rest our decision solely upon a resolution of that question.

The reporter's transcript of the hearing held on the motion for reconsideration shows the trial court evaluated the “settlement” in light of only those facts known at the time Warner–Lambert was dismissed, notwithstanding that two years later, when the agreement was placed before the court for approval, significant additional—and expressly contradictory—facts had been discovered.

Several cases contain remarks that the proportionality of a settlement is to be evaluated as of the time it was effectuated.  (Abbott Ford, Inc. v. Superior Court (1987) 43 Cal.3d 858, 874, 239 Cal.Rptr. 626, 741 P.2d 124;  Tech–Bilt, Inc. v. Woodward–Clyde & Associates (1985) 38 Cal.3d 488, 499, 213 Cal.Rptr. 256, 698 P.2d 159;  Barajas v. USA Petroleum Corp. (1986) 184 Cal.App.3d 974, 987, 229 Cal.Rptr. 513;  Barth–Wittmore Ins. v. H.R. Murphy Enterprises, Inc. (1985) 169 Cal.App.3d 124, 132–133, 214 Cal.Rptr. 894;  Torres v. Union Pacific R.R. Co. (1984) 157 Cal.App.3d 499, 509, 203 Cal.Rptr. 825;  Fisher v. Superior Court (1980) 103 Cal.App.3d 434, 444, 163 Cal.Rptr. 47;  River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 997, 103 Cal.Rptr. 498.)   These dicta do not control the disposition here.   In none of the cited cases was the court concerned with the issue that arises when important facts are revealed during a lengthy delay between the settlement and its submission to the trial court for approval.   Indeed, only in Fisher had there been such a delay, and there the court contemplated the use of inculpatory post-settlement information which the settling defendant “should have” known.  (103 Cal.App.3d at p. 444, 163 Cal.Rptr. 47.)

 The remarks in all the cited cases except Fisher flowed from the observation in River Garden Farms that “If the good faith clause demands equitable sharing as fixed by a jury verdict which has not yet taken place, the parties cannot negotiate safely, cannot accomplish settlement with a fair assurance of finality․  In advance of a jury verdict, most cases permit only a rough assessment of value.”  (26 Cal.App.3d at p. 997, 103 Cal.Rptr. 498.)   With this proposition we unequivocally agree.   Nonsettling defendants cannot use a jury's verdict to demonstrate by hindsight the disproportionality of a pretrial settlement by another defendant.

It does not follow, however, that a party who, early in the discovery phase of the case, gains an advantageous settlement, even one of the classic variety, can ignore the statutory procedure for court approval until additional evidence shows his culpability, then ask the court to approve the agreement on the basis of only those facts known at the time it was made.

 A prompt motion by Warner–Lambert for approval of its dismissal would have afforded the remaining defendants an opportunity to persuade the court further discovery was needed before an informed evaluation could be made of its claim that its expert's report and hospital purchase records demonstrated that it should be released of all liability in exchange for nothing more than a waiver of costs.   In truth, in an action with multiple solvent defendants, the voluntary dismissal of one of them has far more impact on the codefendants than on the plaintiff.   The required good faith runs chiefly to the codefendants.  (See Southern Cal. Gas Co. v. Superior Court (1986) 187 Cal.App.3d 1030, 1036, 232 Cal.Rptr. 320.)

 What Warner–Lambert was not entitled to do was wait two years—by which time discovery indicated its exposure to have been substantial—before seeking court approval and then contend its “settlement” had to be judged by only those facts the parties, apparently mistakenly, earlier had believed to be true.

It may be that the question whether the plaintiff or Warner–Lambert entertained a subjective intention to inflict unfair injury on the other defendants 1 could properly be judged only as of the time they acted.   Nonetheless, the trial court should not have blinded itself to the evidence of disproportionality available at the time it heard the instant motion for approval of that action.  (See Singer Co. v. Superior Court (1986) 179 Cal.App.3d 875, 895–896, 225 Cal.Rptr. 159.)   A primary public objective in personal injury cases is the equitable sharing of losses among the parties.   (E.g., Abbott Ford, Inc. v. Superior Court, supra, 43 Cal.3d 858, 872, 239 Cal.Rptr. 626, 741 P.2d 124.)   If any settlement appears, at the time it is submitted for the court's consideration, to do violence to this principle, it should be disapproved.   This rule will not discourage parties from reaching honorable settlements.   It will but encourage them to seek prompt court approval of their good faith.

The alternative writ is discharged.   Let a peremptory writ of mandate issue, directing respondent to vacate its orders approving the good faith of real parties' agreement, and to conduct further proceedings consistent with the views expressed herein.

FOOTNOTES

1.   On this point the trial court's remarks are revealing:The Court:  “This still seems to me to be a situation where ․ Warner–Lambert was successful either in hoodwinking or convincing the plaintiff early on in the litigation to let him out for nothing․  I find no bad faith in that․ [The agreement] was made at a time when perhaps the full facts were not known ․ but they were lucky and got out.”Counsel for Petitioner:  “․ The only identifiable [surgical] glove which we know was present ․ at the time of the operation was the [Warner–Lambert] glove.”The Court:  “To which I interject a hardy ‘So what?’ If you still have a situation occurring nearly two years ago, whether through guile, trickery, deceit, or good advocacy, or disingenuity on the part of the plaintiff, Warner–Lambert was let out․  [¶] If the plaintiff was misinformed and the plaintiff was the dupe of misinformation, then as much fault lies with plaintiff as it does with Warner–Lambert.”

GATES, Associate Justice.

COMPTON, Acting P.J., and FUKUTO, J., concur.