St. Francis Regional Medical Center, Inc. v. Critical Care, Inc.

997 F. Supp. 1440, 1997 U.S. Dist. LEXIS 22056, 1997 WL 852234
Procedural entryThis page is a short order in St. Francis Regional Medical Center, Inc. v. Critical Care, Inc.. Read the opinion of the Court — 997 F. Supp. 1413
District Court, D. Kansas·Decided December 31, 1997·No. No. 94-1398-MLB·Published

Opinion

MEMORANDUM AND ORDER

BELOT, District Judge.

On December 17,1997, this court held oral arguments on the standard of proof applicable to St. Francis’ indemnity claim, specifically including whether St. Francis must prove that Mary Ann Foster was only potentially liable, versus actually liable, to Squier, and whether Foster may compare the fault of others. St. Francis appeared by Lee Woodard, Foster by Brian Wright, Flying Nurses, Inc. (“FNI”) by Eric Metz, and Critical Care, Inc. (“CCI”) and Sandra K. Sterling by Kathryn Gardner. In addition to oral arguments, this court has considered the relevant portions of prior pleadings, a December 12 letter filed by Lee Woodard on behalf of St. Francis, and a December 16 brief (Doc. 113) filed by Eric Metz on behalf of FNI. This matter is now ripe for decision.

As this opinion concerns purely legal questions and as the parties and court are already familiar -with the facts, they will not be repeated here. Instead, the court will move directly to the parties’ arguments and the court’s rulings.

Actual vs. Potential Liability

St. Francis argues that the two essential elements of its implied indemnity claim are [1442] (1) that it faced potential liability as the result of Foster’s negligence, and (2) that the amount of its settlement of that potential liability was reasonable. Each of the other parties insist that St. Francis must prove that it was actually liable because of Foster’s negligence. Primarily relying on Vitkus v. Beatrice Co., 127 F.3d 936 (10th Cir.1997), however, St. Francis insists that the potential liability standard applies to all implied indemnity claims in the Tenth Circuit.

Historically, proof of actual liability was required in every implied indemnity case.1 Illinois Cent. Gulf R.R. Co. v. Int’l Paper Co., 889 F.2d 536, 540 (5th Cir.1989). The modern trend has been to allow proof of potential liability to suffice under certain circumstances when the indemnitee has settled the ease. Id. In jurisdictions that have recognized it, the potential liability standard applies to implied indemnity contracts when the indemnitee has offered the indemnitor an opportunity either to approve the settlement, or to assume the defense of the action, prior to acceptance of the settlement. Weissman v. Boating Magazine, 946 F.2d 811, 813 (11th Cir.1991). The actual liability standard applies in all other cases. National Union Fire Ins. Co. v. Showa Shipping Co., 47 F.3d 316, 323 (9th Cir.1995); see also Kennedy v. City of Sawyer, 4 Kan.App.2d 545, 549-50, 608 P.2d 1379, 1383-84, aff'd, 228 Kan. 439, 461, 618 P.2d 788, 803 (1980); Philadelphia Elec. Co. v. Hercules, Inc., 762 F.2d 303, 316-17 (3d Cir.1985); 41 Am.Jur.2d, Indemnity § 46 (rev. ed.1995).

In Vitkus, cited by St. Francis, the Tenth Circuit did in fact validate proof of potential liability in an indemnity case. For three reasons, however, Vitkus lends no support to St. Francis’ argument. First, using Colorado choice of law rules, the court was applying Illinois’ substantive law of indemnity. 127 F.3d at 941. Second,, the court was, in essence, construing a written, not implied, indemnity agreement.2 Id. at 939-41. Finally, when the third party filed suit against him, the indemnitee in that case promptly requested that the indemnitor defend and indemnify him. Id. at 940. Thus, Vitkus falls squarely within the rules, stated above, for the application of the actual versus potential liability standards.

In this case, as counsel conceded at oral argument, St. Francis never demanded a defense and never requested indemnification from Foster’s insurer, Capital Indemnity. There was no written indemnity contract. Thus, there' is no basis for application of the potential liability standard.

To prevail, St. Francis must show that Foster actually would have been liable to Squier had Squier sued Foster. Comparative fault is irrelevant to the actual liability element of St. Francis’ indemnity action. Squier’s claim relating to Foster would have been that Foster was negligent. Under Kansas law on negligence and comparative fault, the fault of others is irrelevant to the question of whether a particular tortfeasor is at fault. Assuming the tortfeasor is at fault, the only time the fault of others absolves that tortfeasor of liability is when the plaintiff herself is fifty percent or more at fault. The court is aware of no allegation that Squier was in any way responsible for her injuries. Thus, even if Foster’s proportionate responsibility was, say, only one percent, she would have been actually liable to Squier, even if the doctors or other parties held ninety-nine percent of the responsibility.

[1443] Reasonableness of the Settlement

The parties agree that to meet the second element of its cause of action, St. Francis must prove that the settlement was reasonable. The reasonableness of the settlement must be based on all of the circumstances existing at the time the settlement was made and in light of what the involved parties knew or should have known at that time. See Associated Wholesale Grocers, Inc. v. Americold Corp., 261 Kan. 806, Syl. ¶ 9, 837, 934 P.2d 65, 69, 85 (1997) (concerning insurer’s refusal to settle). The parties disagree, however, over the interpretation and application of that requirement.

Foster interprets the reasonableness element to be directed at the global Squier settlement, not merely St. Francis’ $625,000 portion. She also believes that in order to determine reasonableness, the jury must first compare and apportion the fault of all persons whose fault contributed to Squier’s injuries, including the various treating physicians. Foster’s position appears to stem from a stubborn adherence to the notion that this case arises under the rubric of comparative implied indemnity.

The only Kansas authorities the court can find in support of Foster’s position are two cases construing classic comparative implied indemnity as originally conceived in Kennedy v. City of Sawyer, 4 Kan.App.2d 545, 608 P.2d 1379, aff'd, 228 Kan. 439, 618 P.2d 788 (1980). The cases are Kennedy v. City of Sawyer itself and Blackburn, Inc. v. Harnischfeger Corp., 773 F.Supp. 296 (D.Kan.1991). In Kennedy, the court said,

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St. Francis Regional Medical Center, Inc. v. Critical Care, Inc., 997 F. Supp. 1440, 1997 U.S. Dist. LEXIS 22056, 1997 WL 852234 (D. Kan. 1997).

997 F. Supp. 1440 (St. Francis Regional Medical Center, Inc. v. Critical Care, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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