Title: Patel v. OMH Medical Center, Inc.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

Patel v. OMH Medical Center, Inc.  Patel v. OMH Medical Center, Inc. 1999 OK 33 987 P.2d 1185 70 OBJ 1353 Case Number: 90489, 89582 Decided: 04/27/1999 Mandate Issued: 10/25/1999 Supreme Court of Oklahoma URVASHI B. PATEL, Appellee, v. OMH MEDICAL CENTER, INC., an Oklahoma Corporation, SAINT FRANCIS HOSPITAL, INC., an Oklahoma corporation, and JOHN B. STEVENS, an individual, Appellants. URVASHI B. PATEL, Appellant, v. OMH MEDICAL CENTER, INC., an Oklahoma Corporation, SAINT FRANCIS HOSPITAL, INC., an Oklahoma corporation, LARRY D. HENRY, an individual, and ARRINGTON, KIHLE, GABERINO & DUNN, INC., Appellees. [987 P.2d 1188] ON APPEAL FROM THE DISTRICT COURT, TULSA COUNTY, JANE P. WISEMAN, TRIAL JUDGE, CAUSE NO. 90,489; ON APPEAL FROM THE DISTRICT COURT, TULSA COUNTY, DAVID L. PETERSON, TRIAL JUDGE, CAUSE NO. 89,582 ¶0 Two related appeals stand before us for review. Both arise out of an earlier case tried to a jury in the District Court, Tulsa County, Jane P. Wiseman, trial judge. In that action ("Patel I"), Urvashi B. Patel sought damages against OMH Medical Center, Inc., St. Francis Hospital, Inc., and John B. Stevens, an individual, for breach of contract and various torts. The jury returned a verdict for the plaintiff on the contract claim against defendant OMH Medical Center, Inc. only and for all defendants on the tort claims. The judgment, entered on the jury's verdict, was affirmed on appeal and the mandate issued. Shortly thereafter, Urvashi B. Patel filed an action ("Patel II") in the same court in which the Patel I judgment was rendered, seeking vacation of that portion of the Patel I judgment that rejected her tort claims on the ground that it had been secured by defendants' fraud. The trial court agreed and ordered the Patel I judgment vacated. In [987 P.2d 1189] today's first appeal, the defendants in Patel I and Patel II seek reversal of the vacation order. While the vacation proceeding was pending, Patel filed an action ("Patel III") in the District Court, Tulsa County, David L. Peterson, trial judge, against the two corporate defendants in Patel I and II, their lead attorney in those cases and his law firm, for damages from various acts of fraud and deceit that allegedly occurred during the Patel I trial. Today's second appeal, brought by Patel, is from an order dismissing that action for failure to state a claim. Both causes stand retained for this court's consideration and for their disposition by a single opinion. Clifford N. Ribner, Tulsa, Oklahoma, for Urvashi B. Patel, Appellee in Cause No. 90,489 and Appellant in Cause No. 89,582 Larry D. Henry, Vivian C. Hale, Patrick W. Cipolla, Gable Gotwals Mock Schwabe Kihle Gaberino, Tulsa, Oklahoma, for Appellants, OMH Medical Center, Inc., St. Francis Hospital, Inc., and John B. Stevens, in Cause No. 90,489 and for Appellees, OMH Medical Center, Inc. and St. Francis Hospital, Inc., in Cause No. 89,582. James M. Sturdivant, Vivian C. Hale, and Patrick Cipolla, Gable Gotwals Mock Schwabe Kihle Gaberino, Tulsa, Oklahoma, for Appellees, Larry D. Henry and Arrington, Kihle, Gaberino & Dunn, in Cause No. 89,582. OPALA, J. ¶1 The dispositive issues tendered in these appeals are (1) whether the trial judge abused her discretion in ordering the Patel I judgment vacated, and (2) whether the litigation-related misconduct alleged here may be redressed through a civil action in tort. We answer the first question in the affirmative and the second in the negative. I THE ANATOMY OF LITIGATION ¶2 Dr. Urvashi B. Patel ("Patel" or "plaintiff"), an anesthesiologist, entered into a contract in June 1992 with OMH Medical Center, Inc. ("OMH") to practice anesthesiology and serve as director of anesthesia at OMH's medical facility in Okmulgee, Oklahoma. The contract provided that, after Patel relocated to the Okmulgee area, either party could terminate the contract for any reason or for no reason at all by giving the other party one hundred and twenty days advance written notice and by paying to the other party a termination fee of $50,000. Patel moved to the Okmulgee area and worked at OMH for a little more than one year. ¶3 In October 1993, OMH invoked the termination provision of the contract with Patel, but tendered only a portion of the contractual termination fee, claiming an off-set for its payment of Patel's malpractice insurance. Conversations took place between Patel and one or more agents of OMH concerning the amount of money owed to her under the contract and the quality of the professional recommendations OMH would provide to Patel as she sought new employment. In Patel I, these conversations were characterized by OMH as contract renegotiations, but portrayed by Patel as attempts to coerce her to abandon her contractual termination fee. ¶4 Whatever their purpose, the conversations came to nought, and Patel sued OMH, Saint Francis Hospital, Inc., and John B. Stevens (collectively, "defendants") ¶5 Shortly after accepting payment in satisfaction of the judgment and after the mandate in Patel I issued, plaintiff filed the first proceeding under review today ("Patel II"), seeking to vacate, pursuant to the provisions of ¶6 Exhibit 1 was a negative evaluation of Patel's professional performance provided to OMH by Scotland Memorial Hospital ("SMH"), the medical facility at which Patel worked prior to joining the staff of OMH. It was prepared by Mark W. Matson, M.D., Chair, Department of Surgery, a colleague of Patel at SMH ¶7 Patel objected to the admission into evidence of Exhibit 1. At a bench conference held to discuss the objection, ¶8 The transcript of the bench conference shows that the court was clearly reluctant to admit Exhibit 1 into evidence. The OMH witness offering it had not been responsible for the file at the time it was created, and defendants had not brought to the trial the original file in its entirety. The court asked defendants' attorney several times in various ways whether there was anything in the file of the nature described by Patel's attorney. The answer was repeatedly that there was not and that Exhibit 1 was a complete document in itself. At one point, the court tried to pin down an answer by stating, ". . . The point is not that this document is incomplete but that there may be something in the file that references this document that explains it or further modifies it in some respect. . . . He is entitled to have that produced. . ." Defendants' attorney responded, "There is nothing in the file of that nature. There are contradictory references from that city." ¶9 The judge then stated that she thought she needed to look at the file, but after being informed that the file was in Okmulgee, she decided to admit Exhibit 1 into evidence and permit Patel to offer testimony in rebuttal. Patel's attorney responded to the court's decision by saying, "Okay. That is fine." ¶10 Exhibit 1 was admitted into evidence. Patel's rebuttal testimony contraposed her unsubstantiated belief about the contents of her credentialing file to defendants' documentary evidence. Patel argues that the admission of Exhibit 1 without the refuting document left the jury with the false impression that a negative reference would not be an impediment to a doctor's future employment. Exhibit 1, she asserts, would have had little or no probative value at all on that issue if the existence of the refuting document had been known. ¶11 In her petition to vacate, Patel alleged that defendants' representations to the court regarding the contents of Patel's OMH file were false, that they were relied upon by the court in admitting Exhibit 1, and that the admission of Exhibit 1 tainted the verdict both because its negative contents prejudiced the jury against Patel and because it falsely rebutted a central contention in Patel's case, i.e. that a negative reference would severely harm her medical career. ¶12 In response to the petition to vacate, defendants filed a motion to dismiss, which was denied. Patel filed a motion for summary judgment. Oral arguments on the motion for summary judgment were heard on 27 March 1997. At the conclusion of the hearing, the trial court stated that she was not prepared to rule on the motion at that time, but would review the parties' submissions and make a decision at a later date. ¶13 On 14 November 1997 the trial court issued a ruling entitled "Order on Plaintiff's Petition to Vacate in Part." Neither in the title nor in the body of the instrument did the court specifically state whether the order was responsive to Patel's motion for summary judgment, but it did state that the court had "reviewed and considered the parties' submissions on Plaintiff's Petition to Vacate Judgment in Part, including their briefs, affidavits, exhibits, oral arguments, and case authority." The court quoted extensively from the record of the bench conference and then concluded, "Mr. Henry made a specific representation to the Court that there was nothing in the file of the nature about which the Court was clearly concerned. This representation was, in fact, false, there being in the file a typed memorandum by Karen Legg, OMH's risk manager, who kept the credentialing files, regarding a call from Dr. Parkes at Scotland Memorial, a memorandum on this very point and falling squarely within the category sought by the Court. Dr. Parkes called specifically to refute Dr. Matson's negative reference and to explain the circumstances under which Dr. Matson criticized the Plaintiff's professional conduct, a negative evaluation which Dr. Parkes stated was 'strictly of a personal nature' and constituted a 'lack of professionalism on Dr. Matson's part.' . . . Mr. Henry [defendants' attorney] made the representation knowing that the Court was [987 P.2d 1192] relying on it as a true representation of the state of the file which was known to Mr. Henry but not to Mr. Ribner [Patel's attorney] or the Court. If Mr. Henry had responded that there was something in the file of that nature, the Court would have required it to be produced or would have excluded Defendant's Exhibit 1 on the basis that its admission, absent the additional file material, would mislead the jury on the exact point on which Mr. Henry offered it, that the presence of a negative reference in the file was no impediment to a doctor's future employment. Mr. Henry's misrepresentation to the Court and opposing counsel constitutes grounds under ¶14 The petition to vacate having been granted, defendants filed their petition in error, which is the first appeal under review today. This court ordered the appeal retained. ¶15 In February 1997 while the petition to vacate was pending, Patel filed a third action ("Patel III") ¶16 Defendants moved to dismiss the Patel III petition on the grounds that it failed to state a claim upon which relief can be granted. The trial court agreed, ruling that no basis exists under current Oklahoma case authority for Patel's claims. Patel's appeal from the dismissal order is the second case which we review today. It, too, was retained for this court's disposition. II STANDARD OF REVIEW A. A CORRECT CHARACTERIZATION OF THE TRIAL COURT PROCEEDINGS MUST PRECEDE THE COURT'S SELECTION OF THE STANDARD OF REVIEW. ¶17 This case presents a procedural imbroglio that makes the assignment of the appropriate standard of review somewhat difficult. Two motions were presented to the trial court. One was defendants' motion to dismiss. The other was Patel's motion for summary judgment. A motion to dismiss may be interposed against a petition to vacate. ¶18 Summary process is governed by District Court Rule 13. ¶19 Removing then, as we do, Rule 13 from the procedural arsenal available in a [987 P.2d 1194] vacation proceeding, we must treat both Patel's motion for summary judgment and defendants' motion to dismiss/motion for summary judgment as mere cross motions to enter matter for hearing. The trial court's order granting Patel's petition to vacate must hence be viewed as responding directly to Patel's quest for vacation. B. STANDARD FOR REVIEW OF AN ORDER GRANTING OR DENYING A PETITION TO VACATE ON THE GROUNDS OF FRAUD ¶20 The standard for review of a nisi prius order granting or denying a petition to vacate is whether the trial court abused its discretion. III THE TRIAL COURT ABUSED ITS DISCRETION IN GRANTING THE ORDER VACATING THE PATEL I JUDGMENT ¶21 Defendants urge four grounds for reversal of the trial court's order vacating the Patel I judgment: (1) the vacation proceeding is barred by settled-law-of-the-case doctrine, (2) Patel's allegations of intrinsic fraud are not sufficient to vacate a judgment, (3) Patel has failed to show that defendants' misrepresentations, if any, were made with the scienter necessary for securing the vacation of a judgment, and (4) an evidentiary hearing is required prior to the vacation of a judgment for fraud and none was afforded to defendants. We hold that the nisi prius order vacating the Patel I judgment must be reversed and the cause remanded, though we do so for reasons other than those raised in defendants' first three arguments. We reverse the nisi prius order in this case both because we agree with defendants' fourth ground for reversal -- that an evidentiary hearing was indeed the defendants' due -- as well as because of the need to explore below the prudential issues newly unveiled in Part III D. A. A PETITION TO VACATE IS NOT BARRED BY SETTLED-LAW-OF-THE-CASE DOCTRINE ¶22 Defendants first argue that Patel's petition to vacate is barred by settled-law-of-the-case doctrine. B. INTRINSIC FRAUD WILL SUPPORT THE VACATION OF A JUDGMENT WHERE RELIEF FROM THE JUDGMENT IS SOUGHT IN THE MANNER AND WITHIN THE TIME SPECIFIED BY STATUTE ¶23 Defendants next argue this court's extant jurisprudence requires that relief from a judgment under the provisions of §1031(4) be predicated upon fraud which is "extrinsic" or which amounts to "fraud on the court." "Intrinsic fraud," they assert, will not support the vacation of a judgment where relief is sought under the provisions of §1031. Defendants maintain that the trial court erred in granting Patel's vacation quest because her petition to vacate alleges acts of intrinsic fraud only. We disagree. Defendants are incorrect in their contention that a §1031 vacation quest must rest upon extrinsic fraud. To the contrary, relief from a judgment in a statutory proceeding brought pursuant to §1031 may be predicated upon intrinsic as well as extrinsic fraud. Only where vacation is sought in an independent action pressed after the lapse of the statutory period for bringing a §1031 proceeding is the petitioner circumscribed by the extrinsic-fraud requirement. ¶24 The distinction between intrinsic and extrinsic fraud in proceedings to set aside a judgment for fraud is usually traced back to the case of United States v. Throckmorton, ¶25 This court has adopted the essence of the Throckmorton definitions of extrinsic and intrinsic fraud. We have defined extrinsic fraud as "(a) any fraudulent conduct of a successful party, (b) perpetrated outside of an actual adversary trial or process and (c) practiced directly and affirmatively on the defeated party, (d) whereby he was prevented from presenting fully and fairly his side of the case." ". . . any fraudulent conduct of the successful party which was practiced during the course of an actual adversary trial of the issues joined and which had no effect directly and affirmatively to mislead the defeated party to his injury after he announced that he was ready to proceed with the trial. If during the trial the successful party urges forged instruments, or perjured testimony or fails to introduce witnesses of whom he has knowledge and whose testimony would help his adversary and impair his own case, he is guilty of fraud; but it is intrinsic fraud, for relief from which application must be made to the court having jurisdiction of the issues joined and tried." ¶26 While the definitions are fairly simple and straightforward, their application has often been somewhat hazy, leaving the erroneous impression that vacation proceedings brought under §1031 are restricted to extrinsic fraud. Defendants cite a number of cases in support of their contention that intrinsic fraud will not support relief from a judgment under the provisions of §1031 (4). In Chapman v. Chapman, ¶27 Defendants also cite In re Forfeiture of a 1974 Mercury Cougar, ¶28 Other cases cited by defendants are also distinguishable. Byrd v. Marlin, ¶29 In Pippin v. Jones, ¶30 Two other appellate decisions cited by defendants appear at first blush to support their contention that only extrinsic fraud will support the vacation of a judgment, but each of these contains a qualification that in essence consumes the rule it purports to invoke. In Copeland v. Anderson, "is restricted to a narrow range of malfeasance extrinsic and collateral to the issues tried . . . . Allegations that a judgment was obtained on evidence known by plaintiff to be false are not sufficient to permit disturbance of the judgment when such party was not prevented from fully and fairly presenting his side of the case." [987 P.2d 1198] The appellate court then discussed at some length the fact that the petitioner in Copeland had reason to be suspicious of her husband's actions even before the divorce action was filed and that she apparently could have, and should have, "garnered the evidence in advance of trial and presented it in court." ¶31 A similar case is Sadberry v. Hope. ¶32 The provisions of §1031 (4) make no distinction between intrinsic and extrinsic fraud. To the extent that Copeland, Sadberry, or any other decisions of this court have applied the intrinsic/extrinsic dichotomy to vacation proceedings under §1031(4) brought in the same court in which the judgment sought to be vacated was rendered, their expressions are disapproved and withdrawn. More recent decisions have made clear that the intrinsic/extrinsic polarity is not applicable to vacation proceedings brought pursuant to §1031. C. PROOF OF ACTUAL FRAUD IS NOT NECESSARY TO OBTAIN §1031 RELIEF FROM A JUDGMENT ¶33 Defendants next contend that in order for a vacation quest to succeed, all of the elements of actual fraud must be established, including an intent to deceive. They argue that Patel has failed to prove that defendants' misrepresentations, if any, were made with the requisite scienter. Moreover, the [987 P.2d 1199] order granting Patel's petition to vacate failed to make any finding that defendants intended to deceive either the trial court or Patel. We reject the contention that proof of actual fraud is required in order to obtain relief from a judgment under §1031. ¶34 Fraud, a generic term with multiple meanings ¶35 In some older decisions of this court, it was held that only actual fraud would support the vacation of a judgment. D. IT IS AN ABUSE OF DISCRETION TO GRANT A VACATION QUEST ON THE GROUNDS OF FRAUD WITHOUT FIRST EVALUATING THE PETITION IN LIGHT OF EQUITABLE LIMITATIONS ON OBTAINING THE RELIEF REQUESTED ¶36 Patel seeks relief from a judgment on the basis of acts of fraud allegedly occurring during the course of a trial at which she was present and participated. Her petition to vacate and other pleadings in the vacation quest show that at the time of the Patel I trial, Patel had what she believed to be reliable information that defendants' representations to the court about her credentialing file were false and misleading. Patel objected to the admission of Exhibit 1 and informed the court of her belief that the file contained another document which would contradict the document being offered into evidence by defendants. Although Patel never withdrew the objection, she did not ask for a delay or continuance in the trial to review the file for the document she believed it contained, nor did she stand on her objection when the court arrived at its compromise permitting Patel to testify about Exhibit 1. In fact, the record reflects that the court would have been justified in interpreting her response as acquiescence in the granted compromise. ¶37 A vacation quest must be evaluated in light of the principle of the finality of judgments. ¶38 We accordingly hold that in a proceeding under §1031 to vacate an earlier judgment on the grounds of fraud, the petitioner must: (1) show that he (or she) acted without delay in asserting his (or her) rights after discovering the fraud, (2) establish that he (or she) used diligence in the original action in trying to discover and expose the fraud, (3) provide clear and convincing evidence of the fraud, and (4) demonstrate that there is a substantial likelihood that a new trial will have a different result. The prudential requirements we impose today on one who initiates a §1031 attack will ensure that the complaining party has not in some way helped to create, or invited, the need for a new trial and that granting a new trial will not be a useless exercise. The absence from the record of any judicial inquiry into these prudential factors requires that the postjudgment order of vacation be reversed and the cause remanded for further proceedings. ¶39 One of the dissenters would reverse the trial court's order and direct that vacation relief be denied. It is unclear whether that dissenter considers the petition (for vacation) facially insufficient or whether he deems the defendant entitled to victory by summary relief. If it be the latter, today's withdrawal of the Rule 13 regime from the procedural arsenal the parties may invoke in a vacation proceeding makes summary disposition unavailable in this case. E. ALL PARTIES MUST BE AFFORDED AN OPPORTUNITY TO PRESENT EVIDENCE ON DISPUTED FACT ISSUES BEFORE A JUDGMENT MAY BE VACATED IN A PROCEEDING BROUGHT PURSUANT TO THE PROVISIONS OF §1031. ¶40 Defendants complain that error was committed in the nisi prius order vacating the Patel I judgment because they [987 P.2d 1201] were not afforded an evidentiary hearing. Instead, only oral arguments were presented on the single misconceived motion for summary judgment. Defendants assert that the provisions of ¶41 Nevertheless and apart from §1034, where the dispositive issues in a vacation quest call upon the trial court to resolve one or more fact controversies, an opportunity to adduce proof must be provided. The Constitution inexorably commands that no one's rights are to be adversely affected by judicial process that takes place in the absence of notice and a full and fair opportunity to be heard. ¶42 An appellate court cannot make first-instance decisions. IV NO CIVIL REMEDY IS AVAILABLE FOR LITIGATION-RELATED MISCONDUCT ¶43 In the second case under review today, we are asked to reverse the [987 P.2d 1202] dismissal of Patel's tort action for failure to state a claim. In that action damages were sought for defendants' alleged fraud, deceit, perjury, and spoliation of evidence in the Patel I trial. In reviewing a nisi prius disposition by dismissal, the issues stand before this court for de novo review. The purpose of a motion to dismiss is to test the legal sufficiency of the pleadings, not to evaluate the underlying facts. ¶44 In Cooper v. Parker-Hughey, ¶45 Patel also claims damages for spoliation of evidence, denominating her claim either spoliation of evidence or prima facie tort. Neither spoliation of evidence nor prima facie tort (for acts constituting spoliation of evidence) has ever been recognized by this court as actionable. Because the conduct complained of in this action does not present a case of spoliation of evidence, we need not consider today whether that tort should be recognized as a viable cause of action in this state. ¶46 Spoliation is defined as "[t]he destruction of evidence. . . . The destruction, or the significant and meaningful alteration of a document or instrument." ¶47 No destruction or alteration of a document or instrument took place in this [987 P.2d 1203] case. The allegedly wrongful conduct here consists of defendants' failure to respond fully in the course of discovery and of the oral misrepresentation at trial by defendants' attorney as to the existence of a document in Patel's credentialing file. Adequate remedies for this conduct exist. One such remedy, a vacation quest, Patel is currently pursuing. If she is successful in vacating the Patel I judgment, discovery or other sanctions for the defendants' litigation-related misconduct in the original case may, if warranted, be imposed in the reopened case. Apart from remedies available within the existing case, a party aggrieved by litigation-related misconduct may seek to invoke sanctions available under the criminal law and, in the case of attorney misconduct, by bar disciplinary measures. V SUMMARY ¶48 The provisions of ¶49 THE TRIAL COURT'S POSTJUDGMENT ORDER IN CAUSE NO. 90,489 VACATING THE PATEL I JUDGMENT IS REVERSED AND THE CAUSE REMANDED FOR FURTHER PROCEEDINGS TO BE CONSISTENT WITH TODAY'S PRONOUNCEMENT; THE TRIAL COURT'S ORDER OF DISMISSAL IN CAUSE NO. 89, 582 IS AFFIRMED. ¶50 HODGES, LAVENDER, OPALA, WILSON, KAUGER and WATT, JJ., concur; ¶51HARGRAVE, V.C.J., concurs in result; ¶52 SUMMERS, C.J. and SIMMS, J., concur in part and dissent in part. FOOT