Filed: Apr. 04, 2014
Latest Update: Mar. 02, 2020
Summary: Plaintiff's motion to amend judgment nunc pro tunc be DENIED.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.-10-, settlement agreement that led to a judgment from this court.
Not for Publication in West’s Federal Reporter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.
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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
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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.
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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.
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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."
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"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
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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).
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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
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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
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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
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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.
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