Case Title: Creech v. Melnik

Citation: 347 N.C. 520

Docket Number: 539A96

State: north-carolina

Court: North Carolina Supreme Court

Date: 1998-02-06T00:00:00Z

Document:
IN THE SUPREME COURT OF NORTH CAROLINA
No. 539A96
FILED: 6 FEBRUARY 1998
SHARON CREECH and TRAVIS CREECH, Guardians ad Litem of Justin
Creech, Minor
v.
EVELYN H. MELNIK, M.D.
Appeal of right by plaintiffs pursuant to N.C.G.S. §
7A-30(2) from a decision of a divided panel of the Court of
Appeals, 124 N.C. App. 502, 477 S.E.2d 680 (1996), affirming the
order of summary judgment for defendant entered by Gore, J., on
8 June 1995 in Superior Court, Columbus County.  Heard in the
Supreme Court 13 October 1997.
Wade E. Byrd for plaintiff-appellants.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
L.L.P., by Samuel G. Thompson, William H. Moss, and
James Y. Kerr, II, for defendant-appellee.
MITCHELL, Chief Justice.
The questions presented for review are whether the
Court of Appeals erred in affirming the trial court’s order for
summary judgment in favor of defendant on the grounds of breach
of implied contract and equitable estoppel.  Since we find there
are genuine issues of material fact as to both issues, we reverse
the decision of the Court of Appeals.
The parties agree that plaintiffs’ minor son, Justin
Creech, was born at Southeastern General Hospital in Lumberton on
23 September 1980.  At birth, Justin’s vital signs were not
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stable, and he was transferred to the intensive care nursery.  As
a result of oxygen deprivation, Justin suffers from brain damage,
blindness, quadriplegia, cerebral palsy, profound mental
retardation, and microcephaly.
Although the forecasts of evidence of the parties are
in conflict on many points, they forecast substantial evidence
from which a jury could find, but would not be required to find,
the following facts.  Defendant, Dr. Evelyn H. Melnik, is a
neonatologist, a pediatrician specializing in the care of newborn
infants.  When Justin was born on 23 September 1980, Dr. Melnik
was the director of newborn nurseries at Southeastern General
Hospital.  Because Justin’s vital signs were not stable at the
time of his birth, Dr. Melnik was called to resuscitate him. 
Justin was then transferred to the intensive care nursery. 
Plaintiffs concede that Dr. Melnik’s resuscitation of Justin was
not a cause of his injuries.  Plaintiffs claim, however, that
Dr. Melnik failed to care for Justin properly for approximately
two hours--2:30 p.m. to 4:30 p.m. on 23 September 1980--following
Justin’s admission to the intensive care nursery.  Plaintiffs
allege that this failure resulted in Justin’s condition
significantly worsening.
In his initial investigation of the events surrounding
Justin’s birth and immediate aftercare, plaintiffs’ attorney,
Mr. W. Paul Pulley, focused on obstetrical negligence in the
delivery room.  He obtained hospital records that were unclear in
several respects concerning the circumstances surrounding
Justin’s birth.  The records did indicate, however, that
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Dr. Melnik had been present during Justin’s birth.  Because
Dr. Melnik had not participated in the obstetrical care that was
the subject of Mr. Pulley’s investigation but had been in the
delivery room and resuscitated Justin, Mr. Pulley contacted
Dr. Melnik by telephone to determine what she could remember
about the circumstances of Justin’s birth.  Mr. Pulley told
Dr. Melnik that he was investigating the circumstances of
Justin’s birth and was interested in the role performed by Linda
May, a nurse-midwife who, according to hospital records, had
performed the delivery.  Mr. Pulley asked Dr. Melnik if she would
help him understand the records.  She agreed to meet with
Mr. Pulley and asked him to bring the records with him. 
Thereafter, Mr. Pulley met with Dr. Melnik at her office.  He
went over the medical records with her and asked her questions
about the typical role of a nurse-midwife.  During that meeting,
he told Dr. Melnik that his focus was upon the obstetrical care
in the case and that he had no reason to consider her as a
potential defendant.
During her initial meeting with Mr. Pulley, Dr. Melnik
reviewed the medical records he had brought and made statements
to the effect that negligent pediatric care during the hours
immediately following Justin’s birth could have contributed to
his condition.  In particular, she noted that no tests of blood
gases had been taken until 7:00 p.m.  As a result, Justin did not
receive enough oxygen, which caused him to suffer from neonatal
asphyxia.  To that point, Mr. Pulley had regarded Dr. Melnik as a
possible eyewitness to obstetrical negligence, but her comments
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during this initial meeting caused him to expand the scope of his
inquiry to include pediatric records.
During their initial meeting, Dr. Melnik told
Mr. Pulley that she had had nothing to do with Justin’s care on
23 September 1980 following her resuscitation of him in the
delivery room.  She stated that Dr. Edmund Coley had provided
Justin’s pediatric care until the day after his birth, when she
became involved.  The medical records in Mr. Pulley’s possession
tended to support her statement, as the only record in his
possession showing that she had been in the nursery was dated
24 September 1980, the day after Justin’s birth.  Dr. Melnik also
stated that had she been treating Justin, she would have ordered
tests of blood gases, which probably would have resulted in his
receiving a higher concentration of oxygen.  She stated that
Dr. Coley probably had not done this because he had not seen
Justin and had not realized his condition.  Dr. Melnik sent
Mr. Pulley a bill in the amount of $450.00 for three hours’
consultation time as a result of their first meeting, which was
paid in full.
As a result of his meeting with Dr. Melnik, Mr. Pulley
reexamined the medical records, which revealed that Dr. Coley had
signed the pediatric records immediately after delivery.  Based
on the records and Dr. Melnik’s statement that the pediatric care
had been inadequate, Mr. Pulley brought a suit on behalf of
plaintiffs against Dr. Coley and others, alleging that Dr. Coley
had failed to provide Justin with proper pediatric care from the
time immediately following his birth until approximately 7:30
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p.m.  Because Dr. Melnik had said she had nothing to do with
Justin’s care during that critical period of time, Mr. Pulley did
not consider joining her as a defendant in that lawsuit.
In his answers to interrogatories in plaintiffs’ action
against him, Dr. Coley stated that on 23 September 1980, the date
of Justin’s birth, Dr. Melnik had undertaken Justin’s pediatric
care from the time of his delivery until 4:30 p.m.  At that time,
Dr. Coley assumed responsibility until Dr. Melnik took over
Justin’s primary care.  In light of Dr. Coley’s contradiction of
Dr. Melnik’s earlier statement that she had not been involved in
Justin’s post-delivery pediatric care on 23 September 1980,
Mr. Pulley called her to ask her reaction.  She continued to
state that Dr. Coley had been in charge of Justin’s care from the
time of his delivery until 4:30 p.m. and that she had not been
involved.  Mr. Pulley continued to believe her statements and to
seek evidence that Dr. Coley had been involved in Justin’s care
during the hours immediately following his birth.  During a later
conversation, Dr. Melnik asked Mr. Pulley whether she was a
potential defendant.  Mr. Pulley responded that she had told him
that she had not had anything to do with Justin’s care in the
hours after his birth, and “I don’t know of any reason we can be
suing you.”
Sometime later, Thelma Jean Reeves, a nurse at
Southeastern General Hospital, gave a deposition in which she
testified that in those instances where Dr. Melnik had been
present at the delivery of a child who needed medical attention,
it had been Dr. Melnik’s customary practice to follow the child
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into the nursery.  Ms. Reeves further testified that, although
Dr. Coley’s signature was on an order written at 2:30 p.m. on
23 September 1980, Dr. Melnik could have given the order orally,
with Dr. Coley having signed it at some time after 4:30 p.m. 
Following Ms. Reeves’ deposition, Mr. Pulley contacted Dr. Melnik
and told her the substance of Ms. Reeves’ testimony.  At that
time, he advised Dr. Melnik that she had potential malpractice
exposure and recommended that she notify her malpractice carrier
and retain an attorney.  Thereafter, he sent her a copy of
Ms. Reeves’ deposition.
A few weeks later, Dr. Melnik’s deposition was taken. 
Her testimony was consistent with the statements she had given
Mr. Pulley since their first meeting.  She continued to deny any
responsibility for Justin’s care between 2:30 p.m. and 4:30 p.m.
on 23 September 1980.  She also indicated that Justin had been
taken off oxygen support at 2:45 p.m. without blood gases having
been taken and that this was contrary to sound medical practice. 
She stated that had adequate ventilator support been provided at
2:30 p.m., it would have improved Justin’s condition.
Dr. Coley was deposed and denied any involvement in
Justin’s care before 4:20 p.m. on 23 September 1980.  He said
that although his signature was on an order written at 2:30 p.m.,
he had merely countersigned the order, which appeared to have
originated in the delivery room.  Dr. Coley testified that
Dr. Melnik had been in charge of Justin’s care from 2:30 p.m.
until 4:30 p.m.  He also testified that he had found an order in
the records of another child in the nursery that had been signed
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by Dr. Melnik at 3:25 p.m. on 23 September 1980, which tended to
confirm her presence in the nursery during the critical period in
Justin’s care.
In light of Dr. Coley’s testimony and other evidence,
plaintiffs moved to amend their complaint in the action against
Dr. Coley to add Dr. Melnik as a party-defendant.  That motion
was denied, and the case against Dr. Coley and others was
eventually settled.
We repeat that the foregoing is a statement of facts
that a jury could reasonably find from the evidence forecast by
the parties.  We reemphasize, however, that a jury would not be
required to make such findings and that, in many instances,
substantial evidence to the contrary was also forecast.
Plaintiffs subsequently commenced the present action
against Dr. Melnik on 12 October 1990.  Dr. Melnik then filed her
answer raising numerous defenses, including breach of an implied
contract not to sue and equitable estoppel.  Both of these
defenses were based on her contention that Mr. Pulley had
promised that plaintiffs would not sue her.  On 18 November 1994,
Dr. Melnik filed a motion for summary judgment.  By order entered
on 8 June 1995, the trial court granted summary judgment in favor
of defendant, Dr. Melnik, based on two of her defenses--breach of
an implied contract not to sue and equitable estoppel.  The Court
of Appeals, with Judge Johnson dissenting, affirmed the order of
the trial court.
Plaintiffs contend that the Court of Appeals erred in
affirming the trial court’s order entering summary judgment for
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defendant on each of the affirmative defenses because the
parties’ forecasts of evidence raised a genuine issue of material
fact as to each defense.  We agree.
The party moving for summary judgment is entitled to
judgment as a matter of law only when there is no genuine issue
of material fact.  Koontz v. City of Winston-Salem, 280 N.C. 513,
518, 186 S.E.2d 897, 901 (1972).  The party moving for summary
judgment bears the burden of bringing forth a forecast of
evidence which tends to establish that there is no triable issue
of material fact.  Caldwell v. Deese, 288 N.C. 375, 378, 218
S.E.2d 379, 381 (1975).  To overcome a motion for summary
judgment, the nonmoving party must then “produce a forecast of
evidence demonstrating that the [nonmoving party] will be able to
make out at least a prima facie case at trial.”  Collingwood v.
G.E. Real Estate Equities, 324 N.C. 63, 66, 376 S.E.2d 425, 427
(1989).
Before summary judgment may be entered, it must be
clearly established by the record before the trial court that
there is a lack of any triable issue of fact.  Page v. Sloan, 281
N.C. 697, 704, 190 S.E.2d 189, 193 (1972).  In making this
determination, the evidence forecast by the party against whom
summary judgment is contemplated is to be indulgently regarded,
while that of the party to benefit from summary judgment must be
carefully scrutinized.  Id.  Further, any doubt as to the
existence of an issue of triable fact must be resolved in favor
of the party against whom summary judgment is contemplated.
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I.  Breach of Contract
Plaintiffs first argue that the trial court erroneously
entered summary judgment in favor of defendant based on her
defense of an implied contract not to sue her.  This Court has
noted that a contract implied in fact arises where the intent of
the parties is not expressed, but an agreement in fact, creating
an obligation, is implied or presumed from their acts.  Snyder v.
Freeman, 300 N.C. 204, 217, 266 S.E.2d 593, 602 (1980).  Such an
implied contract is as valid and enforceable as an express
contract.  Id.  Except for the method of proving the fact of
mutual assent, there is no difference in the legal effect of
express contracts and contracts implied in fact.  Id.  “Whether
mutual assent is established and whether a contract was intended
between parties are questions for the trier of fact.”  Id.  It is
essential to the formation of any contract that there be “mutual
assent of both parties to the terms of the agreement so as to
establish a meeting of the minds.”  Id. at 218, 266 S.E.2d at
602.  Mutual assent is normally established by an offer by one
party and an acceptance by the other, which offer and acceptance
are essential elements of a contract.  Id.  With regard to
contracts implied in fact, however, “one looks not to some
express agreement, but to the actions of the parties showing an
implied offer and acceptance.”  Id.
An implied contract, like any other contract, is
“subject to avoidance by a showing that its execution resulted
from fraud or mutual mistake of fact.”  Cunningham v. Brown, 51
N.C. App. 264, 269, 276 S.E.2d 718, 723 (1981).  “This rule of
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contract law is founded on the proposition that there can be no
contract without a meeting of the minds . . . .”  Id. at 270, 276
S.E.2d at 723.  In circumstances where there is mutual mistake,
the requisite “meeting of the minds” does not occur.  Cheek v.
Southern Ry. Co., 214 N.C. 152, 156, 198 S.E. 626, 628 (1938). 
When there has been no meeting of the minds on the essentials of
an agreement, no contract results.  Id.  Therefore, a contract
may be avoided on the ground of mutual mistake of fact when there
is a mutual mistake of the parties as to an existing or past fact
that is material and enters into and forms the basis of the
contract or is “of the essence of the agreement.”  MacKay v.
McIntosh, 270 N.C. 69, 73, 153 S.E.2d 800, 804 (1967).
As previously discussed in this opinion, the parties
have forecast evidence from which a reasonable jury could find
that Mr. Pulley’s disinterest in Dr. Melnik as a party-defendant
was the result of his reliance on her repeated representations
denying her involvement in Justin’s care during the crucial
period immediately following the child’s birth.  The parties also
forecast evidence from which a reasonable jury could find that
Dr. Melnik’s representations were false but were the result of an
honest mistake on her part caused by a lapse of memory due to the
large number of children she treated on a daily basis at the
hospital.  The evidence forecast by the parties would then permit
a jury also to reasonably find that the mistake was common to
both parties and was material and formed the basis of any
representation by Mr. Pulley that defendant, Dr. Melnik, would
not be considered as a potential party-defendant.  Should a jury
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make such findings, it would be required to find that any implied
contract not to sue was avoided on the ground of a mutual mistake
of fact.  Therefore, summary judgment for defendant was not
proper.
The evidence forecast by the parties would also support
a reasonable finding that Dr. Melnik knew that her
representations that she had not been involved in Justin’s care
at any critical time were false and that, as a result,
Mr. Pulley’s mistake was a unilateral mistake.  We have at times
indicated that there can be no relief from a unilateral mistake. 
See, e.g., Tarlton v. Keith, 250 N.C. 298, 305, 108 S.E.2d 621,
625 (1959).  More recently, however, we have pointed out that the
requirement that the mistake be mutual is not without exceptions. 
Marriott Fin. Servs., Inc. v. Capitol Funds, Inc., 288 N.C. 122,
136, 217 S.E.2d 551, 560 (1975).  “The mistake of one party is
sufficient to avoid a contract when the other party had reason to
know of the mistake or caused the mistake.”  Howell v. Waters, 82
N.C. App. 481, 487-88, 347 S.E.2d 65, 69 (1986), disc. rev.
denied, 318 N.C. 694, 351 S.E.2d 747 (1987).  If a jury should
find from the substantial evidence forecast by the parties that
Dr. Melnik knew she had treated Justin at the critical time in
question but had falsely assured Mr. Pulley to the contrary, the
jury could also find that she had reason to know that his belief
that she was not involved was a mistake or that she caused that
mistake.  In that event, any implied contract not to sue her
would be avoided.  For this reason also, summary judgment for
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defendant on the ground of an implied contract not to sue was
improper.
II.  Equitable Estoppel
Plaintiffs next contend that the trial court
erroneously entered summary judgment in favor of defendant on the
ground of equitable estoppel.  For the reasons discussed herein,
we conclude that the parties have forecast evidence raising
genuine issues of material fact as to whether the doctrine of
equitable estoppel may be applied in favor of defendant in this
case.
Where there is but one inference that can be drawn from
the undisputed facts of a case, the doctrine of equitable
estoppel is to be applied by the court.  Hawkins v. M&J Fin.
Corp., 238 N.C. 174, 185, 77 S.E.2d 669, 677 (1953).  However, in
a case such as this, where the evidence raises a permissible
inference that the elements of equitable estoppel are present,
but where other inferences may be drawn from contrary evidence,
estoppel is a question of fact for the jury, upon proper
instructions from the trial court.  Meachan v. Montgomery County
Bd. of Educ., 47 N.C. App. 271, 278, 267 S.E.2d 349, 353 (1980).
One who seeks equity must do equity.  Gaston-Lincoln
Transit, Inc. v. Maryland Cas. Co., 285 N.C. 541, 546-47, 206
S.E.2d 155, 159 (1974).  The fundamental maxim, “He who comes
into equity must come with clean hands,” is a well-established
foundation principle upon which the equity powers of the courts
of North Carolina rest.  The maxim applies to the conduct of a
party with regard to the specific matter before the court as to
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which the party seeks equitable relief and does not extend to
that party’s general character.  See Tobacco Growers Co-op. Ass’n
v. Bland, 187 N.C. 356, 360, 121 S.E. 636, 638 (1924).  The
conduct of both parties must be weighed in the balance of equity,
and the party claiming estoppel, no less than the party sought to
be estopped, must have conformed to strict standards of equity
with regard to the matter at issue.  In re Will of Covington, 252
N.C. 546, 549, 114 S.E.2d 257, 260 (1960) (quoting Hawkins, 238
N.C. at 177, 77 S.E.2d at 672).
From the evidence forecast by the parties, a jury could
reasonably find that defendant knew Mr. Pulley’s assurances to
her were premised upon her lack of involvement in Justin’s care. 
The evidence as forecast by the parties would also support a
reasonable jury finding that defendant knew or should have known
that her denials of involvement had created a false impression in
Mr. Pulley’s mind and that she had caused and encouraged it by
reassuring him that she played no role in Justin’s care.  Since
the parties have forecast evidence that would permit a jury to
conclude that defendant knowingly misrepresented her involvement
and knew that Mr. Pulley relied on this misrepresentation in
making his assurances to her, then a jury could also find that
defendant is not entitled to the protection afforded by the
doctrine of equitable estoppel.  Should a jury find that
defendant knowingly created such a false impression in
Mr. Pulley’s mind, the doctrine of equitable estoppel could not
be applied in her favor.  See Hawkins, 238 N.C. at 179, 77 S.E.2d
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at 673.  Thus, the order of summary judgment for defendant based
on equitable estoppel was improper.
We emphasize that our opinion in this case should in no
way be taken as an expression of opinion as to what the evidence
actually introduced at any future trial of this case will tend to
show or the weight or credibility any such evidence should be
given.  Also, we have discussed only one set of facts a jury
could find to exist if evidence as forecast by the parties at
this summary judgment stage of the proceedings is in fact
forthcoming at trial.  We recognize that the evidence actually
introduced at the trial of this case may well support other or
contrary reasonable findings of fact by a jury.  However, summary
judgment is particularly inappropriate where issues such as
motive, intent, and other subjective feelings and reactions are
material and where the evidence is subject to conflicting
interpretations.  Smith v. Currie, 40 N.C. App. 739, 742, 253
S.E.2d 645, 647, disc. rev. denied, 297 N.C. 612, 257 S.E.2d 219
(1979).
For the foregoing reasons, we conclude that the trial
court erred in ordering summary judgment for defendant on the
grounds of an implied contract not to sue and equitable estoppel. 
Therefore, the decision of the Court of Appeals is reversed, and
this case is remanded to the Court of Appeals for further remand
to the Superior Court, Columbus County, for proceedings not
inconsistent with this opinion.
REVERSED AND REMANDED.