Court Opinion

ID: 2668940
Source: CourtListenerOpinion
Date Created: 2014-04-04 19:27:00.921089+00
Date Added: 2024-06-11T09:17:54.016870
License: Public Domain

Not for Publication in West’s Federal Reporter

          United States Court of Appeals
                       For the First Circuit

No. 13-1245

               LIZBETH VARGAS-COLÓN; JAIME CEDEÑO;
                         L.C.V., a minor,

                      Plaintiffs, Appellants,

                                    v.

    HOSPITAL DAMAS, INC.; DR. NELSON VÉLEZ-MARTÍNEZ; JANE DOE;
 CONJUGAL PARTNERSHIP VÉLEZ-DOE; JOHN DOE 1-3; ABC CORPORATIONS;
                    INSURANCE COMPANIES A TO H,

                      Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

        [Hon. Jay A. García-Gregory, U.S. District Judge]

                                 Before

                 Torruella, Lipez, and Kayatta,
                         Circuit Judges.

     David Efron, with whom Joanne V. Gonzáles Varon and Law
Offices of David Efron, P.C., were on brief, for appellants.
     Roberto Ruiz Comas, with whom RC Legal & Litigation Services
PSC was on brief, for appellee.
     Freddie Pérez-González, with whom Freddie Pérez-González &
Assoc., P.S.C., was on brief, as intervenor, for Fundación Damas,
Inc.
April 4, 2014
             KAYATTA, Circuit Judge.    The plaintiffs in this medical

malpractice case entered into a settlement, enforceable by the

district court, with a corporation named Hospital Damas, Inc.

("HDI"). In the wake of HDI's bankruptcy, the plaintiffs wish that

they had sued and entered into a settlement agreement with HDI's

apparently solvent parent, Fundación Damas, Inc. ("Fundación").

Indeed, because Fundación held the license to operate the hospital

in which the injuries giving rise to this lawsuit occurred, and

owned the real property on and in which the hospital operated, the

plaintiffs argue that they actually meant to sue Fundación and

would have done so had HDI informed them that its parent held the

operating license.

             Rather than now suing Fundación, the plaintiffs sought a

shortcut, asking the district court to amend the judgment of

dismissal in order to add Fundación as a new party and to rewrite

the settlement agreement so that it can be enforced against

Fundación.     In pursuing this shortcut, the plaintiffs referred to

Rule 60(a) and to the district court's power to amend its judgments

nunc pro tunc as procedural mechanisms that might accommodate their

unusual request, but the district court denied their motion as a

procedurally inapt gambit to secure a substantive solution.       The

plaintiffs now appeal, but because they offer us no reason to

conclude that the district court was anything other than obviously

correct when it denied their motion, we affirm.

                                  -3-
                            I.   Background

            The findings made by the magistrate judge and adopted by

the district court remain largely unchallenged.      On January 12,

2007, Lizbeth Vargas-Colón and Jaime M. Cedeño, citizens of Ohio,

filed a complaint in the United States District Court for the

District of Puerto Rico, seeking compensation on behalf of their

infant daughter, L.C.V., for medical negligence alleged to have

taken place during Vargas-Colón's pregnancy, labor, and delivery at

Hospital Damas in Ponce, Puerto Rico.     The complaint and a later-

filed amended complaint named a number of defendants, including an

entity identified as "HOSPITAL DAMAS or, alternatively, John Doe

Corporation d/b/a Hospital Damas."       The complaint and amended

complaint also alleged that "Hospital Damas is the owner and

operator of a hospital of the same name, located in Ponce, Puerto

Rico."

            Lawyers then filed an answer to the amended complaint on

behalf of "Hospital Damas."      In that answer, they admitted that

Hospital Damas is a corporation and is "the owner and operator of

a hospital of the same name."      In August of 2009, on the eve of

trial, the suit settled.     The settlement agreement was signed by

the corporate defendant in its correct legal name, Hospital Damas,

Inc.     HDI agreed to pay damages in the amount of $1.5 million to

                                  -4-
the plaintiffs in installments over a period of eight years.1

Pursuant to the agreement, and at the parties' request, the

district         court   entered   judgment    dismissing    all   claims    with

prejudice.        In its dismissal order, the district court stated that

it retained jurisdiction to enforce the terms of the settlement

agreement.        No judgment was entered against any defendant.

                 On September 24, 2010, approximately one year after the

dismissal, HDI filed for bankruptcy.             In the hopes of preserving

their interest in the full amount owed under the settlement, the

plaintiffs joined a number of other malpractice judgment creditors

in moving to dismiss HDI's bankruptcy petition on the grounds of

fraud and bad faith, arguing that HDI had operated Hospital Damas

without a license (and that Fundación had been the properly-

licensed entity), had falsely represented that it was licensed, and

had misled creditors and the court by using the facility's name--

that       is,   "Hospital   Damas"--as   if   that   name   referred   to   the

corporation itself.          The bankruptcy court explicitly rejected both

       1
         As the plaintiffs tell it, the fact that they were
litigating against HDI, rather than some other entity that might
have been liable for the hospital's wrongdoing, did not (and could
not have) become clear to them until the execution of the
settlement agreement. Though we do not so decide, we assume for
the purposes of this appeal that the plaintiffs' surprise was
justified.

                                        -5-
licensing arguments,2 finding that any licensing problem was beyond

HDI's control and thus insufficient to show bad faith. It declined

to address the third argument, instead holding that even if HDI

could be shown to have acted in bad faith by using the hospital's

name rather than its own, unusual circumstances present in the case

counseled against dismissal.          One such circumstance, according to

the bankruptcy court, was that "[s]everal of the movants have

already filed suit in the district court against Fundación Damas."

               The bankruptcy court filed its order denying the motion

to dismiss on April 9, 2012.                 On June 5 of that year, the

plaintiffs returned to the district court and filed the motion

that, as evolved, is now the subject of this appeal.               Relying in

part on the district court's earlier statement that it "retain[ed]

jurisdiction to enforce the terms of the settlement agreement," the

plaintiffs asked for relief as follows: "[M]inor plaintiff LCV very

respectfully requests this Honorable Court to correct the Judgment

in this case nunc pro tunc to include Fundación Damas, Inc. as a

party       defendant   responsible   for     the   obligations   incurred   by

        2
        The two arguments seem to have been premised on the idea
that if Fundación, rather than HDI, was the party properly
responsible for owning and operating the hospital, it was
Fundación, rather than HDI, that should have volunteered to accept
service (which was not made on it) and appeared as a defendant when
Hospital Damas was first sued for malpractice.

                                       -6-
Hospital Damas toward plaintiff in the settlement agreement entered

in this case."3

            The district court referred the motion to a United States

magistrate judge.       See Fed. R. Civ. P. 72.         The magistrate judge

initially   concluded     that,   as    worded,   the   plaintiffs'    request

"ma[de] little sense, and . . . would not give Plaintiff the result

she wants."      After all, nothing in the judgment itself made anyone

responsible for the obligations incurred by Hospital Damas.

Rather,     it    was   the     settlement     agreement     that     assigned

responsibility.      The magistrate judge therefore concluded that the

motion was simply a request for "an order or judgment requiring

Fundacion Damas, Inc., to pay under the settlement agreement."              So

construing the motion, the magistrate judge noted that "nunc pro

tunc judgments are usually concerned with correcting simple errors

in order to properly reflect an action actually taken by the court;

they are not meant to alter the judgment." (emphasis in original).

The   magistrate     judge    further    concluded   that   the   motion,   if

construed as a prayer for relief under Rule 60(b)(6), must be

denied both as untimely and as a request for a form of relief lying

      3
        Elsewhere in the motion appears the following assertion:
"Pursuant to Federal Rule of Civil Procedure 60(b)[(6)] the Court
may relieve a party from a final judgment, order, or proceeding for
any reason that justifies relief. Minor plaintiff LCV respectfully
submits that the circumstances in this case warrant the requested
nunc pro [tunc] amendment of the judgment entered in this case to
include Fundación Damas, Inc. as a party defendant."

                                        -7-
"far beyond" the sort granted in the cases on which the plaintiffs

relied.

          Continuing on, the magistrate judge further observed that

amendment of the judgment would do little, because "the judgment in

this case merely approved the parties' settlement agreement and

dismissed the case with prejudice; it did not enter judgment

against any party."      (emphasis in original).    Rather, noted the

magistrate judge, "Hospital Damas, Inc.'s liability to Plaintiff

arises from a settlement agreement--essentially, a contract--that

it voluntarily signed."       (footnote omitted).     Observing that

"Plaintiff wants us to 'substitute' an entity that did not sign a

contract for the entity that did, thereby making the non-signatory

responsible for the obligations to which the signatory bound

itself," the magistrate judge concluded that "[s]uch a harsh result

presents serious due process problems, and Plaintiff has not even

come close to justifying such relief."     (emphasis in original).

          Though   the     magistrate   judge   concluded   that   the

aforementioned procedural problems alone "doom[ed] Plaintiff's

motion," the report and recommendation went on to address the

merits of the claim that Fundación should be held responsible.       In

particular, the magistrate judge "clarif[ied] that the relevant

question here," as a matter of substantive law, was "that of who

was operating Hospital Damas at the time Plaintiff was injured,"

and concluded that the answer to that question had been settled by

                                  -8-
the bankruptcy court in a decision with res judicata effect.4    On

the basis of both procedural and substantive failings, the report

and recommendation concluded as follows: "Because this motion was

improperly filed, and because the relief it requests is precluded

by a prior judgment of the Bankruptcy Court, we RECOMMEND that

Plaintiff's motion to amend judgment nunc pro tunc be DENIED."

          The plaintiffs timely filed in the district court their

objections to the magistrate judge's report. In doing so, however,

the plaintiffs seem to have abandoned entirely any argument based

on Rule 60(b), instead citing Gagnon v. United States, 193 U.S. 451

(1904), for the proposition that a different provision, Rule 60(a)

of the Federal Rules of Civil Procedure, reflects the "axiomatic"

principle that "courts have the power and the duty to correct

judgments which contain clerical errors o[r] judgments which have

issued due to inadvertence or mistake."   They argued that relief

was indeed appropriate because "an obvious error, intentional or

otherwise, took place and nunc pro tunc orders are applicable in

situations where there is a clear error that needs correction

     4
          The magistrate judge added: "The relevance of the
Bankruptcy Court's findings is obvious. If Hospital Damas, Inc.,
was the operator-in-fact of Hospital Damas when Plaintiff was
injured, it, not Fundación Damas, Inc., was the proper party to
answer the suit on Hospital Damas's behalf. By the same token, if
Fundación Damas, Inc., was, at the time of Plaintiff's injury,
merely the owner of the real property on which the hospital
operated, as well as the shareholder of Hospital Damas, Inc., it
could not be said to be 'Hospital Damas' in the relevant sense[,
because] nothing in Plaintiff's motion convinces us that anyone but
the actual operator of Hospital Damas should be liable for its
negligence." (emphasis in original).

                               -9-
and/or where it is necessary to conform the order to the court's

original intent."     After asserting that "[the] error, a misnomer,

was that the owner/operator was, at the time of the medical

incident at issue, Fundacion Damas, Inc.," they proceeded to

challenge the magistrate judge's substantive analysis of the merits

of their claim that Fundación was liable for acts of the hospital,

arguing that the magistrate judge was incorrect to conclude that

their claim was barred by res judicata.

           The district court rejected both of the plaintiffs'

objections.    Reviewing de novo, it adopted the magistrate judge's

report in its entirety, adding brief commentary to both the

procedural    and   the   substantive     concerns    the   magistrate       judge

voiced.   First, it reiterated that "the action taken by the court

was [not] the result of a clerical mistake and, thus, cannot be

altered by simply amending the judgment."              It further concluded

that "Fundaci[ó]n had no part in the negotiations of the settlement

agreement between Plaintiff and Hospital Damas, Inc.," so "[t]o

assign liability to Fundaci[ó]n by amending the judgment would be

to   circumvent     the     contractual     requisites      of   a   settlement

agreement."

           Adding    belt    to   suspenders,   the    district      court    also

declared that it was "not persuaded by Plaintiff's argument that

Fundaci[ó]n Damas, Inc. was and is the only lawful owner and

operator of the Hospital Damas and, as such, liable for the

                                     -10-
settlement agreement that led to a judgment from this court."

Rather, the district court determined, the bankruptcy court had

conclusively adjudicated the fact that "[HDI] was . . . the

hospital's operator . . . , and, thus, liable for the negligence

that caused Plaintiff's injuries."         Though it made clear that it

was "not making a determination on the validity of any claims

Plaintiff [might] have against Fundación Damas, Inc.," it concluded

that on the basis of its procedural concerns and principles of res

judicata, "to amend the judgment nunc pro tunc by adding another

entity not sued is not the appropriate vehicle."

          The plaintiffs appealed.         We have jurisdiction pursuant

to 28 U.S.C. § 1291.

                       II.   Standard of Review

          "The district court's denial of a Rule 60(a) motion on

the merits is reviewed for an abuse of discretion."        Bowen Inv.,

Inc. v. Carneiro Donuts, Inc., 490 F.3d 27, 29 (1st Cir. 2007).

                             III.   Analysis

          The district court was plainly correct in finding that

the "error" that the plaintiffs seek to correct, even assuming it

was an error, was certainly not the type of "clerical mistake or a

mistake arising from oversight or omission" for which Rule 60(a)

provides a corrective measure.       Fed. R. Civ. P. 60(a); see, e.g.,

Bowen Inv., Inc. v. Carneiro Donuts, Inc., 490 F.3d 27, 29 (1st

Cir. 2007) ("A motion under [Rule 60(a)] is appropriate where the

                                    -11-
judgment failed to reflect the court's intention; [the Rule] does

not, however, provide for the correction of the deliberate choice

of the district judge." (citation and internal quotation marks

omitted)); In re Frigitemp Corp., 781 F.2d 324, 327 (2d Cir. 1986);

Dura-Wood Treating Co. v. Century Forest Indus., 694 F.2d 112, 114

(5th Cir. 1982).       The actual judgment read exactly as the court

intended.       The mistake here was not about the effect of the

settlement agreement (HDI bound itself to pay).               Rather, if there

was any mistake at all, it was about the effectiveness of the

agreement (did it include the right entity).             Cf. OneBeacon Am.

Ins. Co. v. Travelers Indem. Co. of Ill., 465 F.3d 38, 42 (1st Cir.

2006) ("Reformation is not available to correct mistaken factual

assumptions about the parties' bargain, but may be used to correct

misrepresentations of the parties' contractual intent.").                    And

correcting that mistake would require both adding Fundación as a

party   and    declaring   that   it,   too,   would   have    agreed   to   the

settlement.      Rewriting history to this effect is far beyond the

reach of Rule 60(a).       See In re W. Tex. Mktg. Corp., 12 F.3d 497,

504-05 (5th Cir. 1994) ("If . . . cerebration or research into the

law or planetary excursions into the facts is required, Rule 60(a)

will not be available . . . .").

              More could be said about why a Rule 60(a) motion provides

no occasion to litigate whether the path not taken would have led

where the plaintiffs claim.         The plaintiffs, though, expend no

                                    -12-
effort arguing that Rule 60(a) is an appropriate vehicle for

reaching their desired outcome.         Rather, they devote the entirety

of   their   brief   on   appeal   to   the   question   of   whether   issue

preclusion might provide Fundación a defense and to the unpreserved

suggestion that the settlement agreement might (according to its

terms, if not to common sense) have created rights enforceable

against Fundación and a number of other non-signatories.                These

issues are, at best, for another day in another case.5          And however

they might eventually be addressed and resolved, a Rule 60(a)

motion in this case clearly provides no proper shortcut to their

adjudication in some other action.

                             IV.    Conclusion

             For the foregoing reasons, the judgment of the district

court is affirmed.6

      5
       Counsel for the plaintiffs advised us at oral argument that
the statute of limitations on any claim that L.C.V. might have
against Fundación has not run because L.C.V. is a minor. Whether
the plaintiffs actually have any viable claim against Fundación is
an issue we need not and do not reach in order to affirm the
judgment in this case.
      6
        During the course of this appeal, we granted provisional
leave to Fundación to intervene.         The plaintiffs opposed
Fundación's motion for leave and moved to strike an exhibit that
Fundación attached to its tentatively-accepted brief. Fundación
not only opposed the motion to strike, but also requested fees on
the ground that motion was frivolous. Because we now affirm the
district court--thus providing precisely the relief Fundación
requested--but do so without relying on any argument contained in
Fundación's brief, we deny Fundación's motion to intervene, thus
rendering moot the plaintiffs' motion to strike the exhibit.
Fundación's motion for fees is likewise denied.

                                    -13-