Article: Pennsylvania Supreme Court Reinforces Public Policy Favoring Voluntary Compromise of Claims

   Search: Go
 

Legal News

Pennsylvania Supreme Court Reinforces Public Policy Favoring Voluntary Compromise of Claims

The Supreme Court recently issued an opinion in Maloney v. Valley Medical Facilities, Inc., et al., _ A.2d _, 2009 WL 4043537 (Pa. Nov. 24, 2009), which reinforced the Commonwealth’s strong public policy favoring the voluntary compromise of claims according to the parties’ intentions. In reaching its decision, the Supreme Court effectively limited the scope of its earlier holding in Mamalis v. Atlas Van Lines, Inc., 522 Pa. 214, 560 A.2d 1380 (1989), and expressly disapproved of the Superior Court’s holding in Pallante v. Harcourt Brace Jovanovich, Inc., 427 Pa. Super. 371, 629 A.2d 146 (1993).

In Maloney, the Supreme Court of Pennsylvania held that a plaintiff’s release of principals whose potential liability was vicarious did not discharge the plaintiff’s claims against the agent when the plaintiff expressly preserved his claims against the agent in the release. The plaintiff commenced a medical malpractice action against two physicians, Dr. Prendergast and Dr. Brennan, and several institutional defendants alleging that the physicians failed to timely diagnose and treat his wife for osteosarcoma, resulting in her untimely death. The plaintiff’s only claims against the institutional defendants were that they were vicariously liable for the alleged negligence of the two physicians. After engaging in settlement negotiations, the plaintiff reached a settlement with Dr. Brennan and executed a joint tortfeasor release.

The release provided that the plaintiff was surrendering all claims “in any way connected with all medical professional health care services rendered by the above-named Health Care Providers.” The release further indicated that “the above-named Health Care Providers” included the institutional defendants associated with Dr. Prendergast. However, the release expressly reserved the plaintiff’s claims against Dr. Prendergast. Moreover, the release stated that any verdict against Dr. Prendergast would be reduced by the sum of the pro rata share of legal responsibility for the plaintiff’s damages for which the settling defendants were found to be liable.

Thereafter, Dr. Prendergast filed a motion for summary judgment arguing that the release discharged all direct and vicarious liability claims arising from his conduct. To support his argument, Dr. Prendergast cited the Supreme Court’s earlier decision in Mamalis v. Atlas Van Lines, Inc., 522 Pa. 214, 560 A.2d 1380 (1989), wherein the court held that the release of an agent effectively releases the principal from any vicarious liability claims, notwithstanding any attempt to preserve such claims. Dr. Prendergast further relied on the Superior Court’s decision in Pallante v. Harcourt Brace Jovanovich, Inc., 427 Pa. Super. 371, 629 A.2d 146 (1993), which held that the release of a principal also releases an agent as a matter of law. The trial court determined that these decisions were controlling and entered summary judgment in Dr. Prendergast’s favor.

On appeal, the Superior Court concluded that the trial court erred in entering summary judgment in Dr. Prendergast’s favor. In reaching this decision, the court noted that traditional contract principles favor effectuating the intention of the parties through enforcing the ordinary meaning of release terms. The Superior Court then distinguished the holding in Pallante from the matter before it by noting that Pallante only involved payment for a single injurious act whereas a jury might conclude that Dr. Prendergast committed multiple acts of negligence while treating the plaintiff’s wife. Pursuant to this reasoning, the Superior Court vacated the judgment entered in Dr. Prendergast’s favor and remanded the matter to the trial court for further proceedings. Dr. Prendergast then petitioned the Supreme Court for allowance of appeal.

On appeal to the Supreme Court, Dr. Prendergast argued that the Superior Court erred in vacating the judgment entered in his favor since the court’s decision conflicted with the Supreme Court’s holding in Mamalis and the Superior Court’s holding in Pallante. However, the Supreme Court held that, in the scenario where a plaintiff surrenders his vicarious liability claims only and expressly preserves his claims against an agent, the settling parties should be afforded latitude to effectuate their express intentions. In reaching this holding, the Supreme Court specifically disapproved of the Superior Court’s decision in Pallante.

Moreover, the Supreme Court concluded that Mamalis was distinguishable on its facts since Mamalis involved a single principal, a single agent, a single event, and the consequences of the release of the party who bore primary responsibility upon the settlement. The court reasoned that the interests of justice would not be advanced by extending Mamalis’s holding to medical malpractice cases involving multiple caregivers, an insurance scheme incorporating private and governmental elements, and oftentimes claims of serious bodily injury or death. According to the court, it is substantially likely that extending Mamalis’s holding to such cases would impede settlements, thereby undermining the Commonwealth’s strong public policy favoring the voluntary compromise of claims. Therefore, since Mamalis was not controlling, the Supreme Court concluded that the release should be interpreted to effectuate the parties’ intent, including the preservation of the plaintiff’s claims against Dr. Prendergast. Consequently, the Supreme Court affirmed the Superior Court’s order which vacated the entry of judgment in Dr. Prendergast’s favor.

 

 
 

© 2005 | Privacy Policy | Legal

Pennsylvania: Hickory Pointe, 2250 Hickory Rd, Suite 300 | Plymouth Meeting, PA 19462 | (610) 834-8800 | 610-834-1749 (fax)