Opinion
No. COA15-832 No. COA15-833 No. COA15-834
08-02-2016
CANDIE L. WILLOUGHBY and JEROME WILLOUGHBY, Plaintiffs, v. JOHNSTON MEMORIAL HOSPITAL AUTHORITY; JOHNSTON MEMORIAL HOSPITAL AUTHORITY d/b/a JOHNSTON HEALTH; JOHNSTON MEMORIAL HOSPITAL AUTHORITY d/b/a JOHNSTON MEDICAL CENTER—SMITHFIELD, Defendants and Third-Party Plaintiffs, v. STERIS CORPORATION and GENERAL ELECTRIC COMPANY, Third-Party Defendants.
No brief for plaintiff-appellant. Womble, Carlyle, Sandridge & Rice, LLP, by Charles R. Holton, Jackson R. Price, and Amy C. Folk, for defendants and third-party plaintiff-appellants and cross-appellees (Johnston Health). Ellis & Winters LLP, by Jonathan A. Berkelhammer, Lenor Marquis Segal, and Lauren A. Golden; and Lightfoot, Franklin, & White, LLC, by M. Christian King, for third-party defendant-appellee and cross-appellant (General Electric Company). Bell, Davis, & Pitt, P.A., by William K. Davis, Alan M. Ruley, Kevin G. Williams, and Andrew A. Freeman, for third-party defendant-appellee (Steris Corporation).
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. Johnston County, No. 11 CVS 3008 Appeal by defendants from orders entered 15 January 2015 by Judge Robert C. Ervin in Johnston County Superior Court. Heard in the Court of Appeals 16 December 2015. No brief for plaintiff-appellant. Womble, Carlyle, Sandridge & Rice, LLP, by Charles R. Holton, Jackson R. Price, and Amy C. Folk, for defendants and third-party plaintiff-appellants and cross-appellees (Johnston Health). Ellis & Winters LLP, by Jonathan A. Berkelhammer, Lenor Marquis Segal, and Lauren A. Golden; and Lightfoot, Franklin, & White, LLC, by M. Christian King, for third-party defendant-appellee and cross-appellant (General Electric Company). Bell, Davis, & Pitt, P.A., by William K. Davis, Alan M. Ruley, Kevin G. Williams, and Andrew A. Freeman, for third-party defendant-appellee (Steris Corporation). CALABRIA, Judge.
Johnston Memorial Hospital ("Johnston Health") appeals from three orders: (1) an order granting summary judgment in favor of General Electric Company ("GE"), (2) an order granting summary judgment in favor of Steris Corporation ("STERIS"), and (3) an order denying Johnston Health's motion to amend its third-party complaint against GE and STERIS. We consolidated the appeals for hearing and decision. We affirm all three orders.
I. Background
In 2004, Johnston Health purchased a STERIS 3085 SP surgical table from STERIS. The top of the Table is divided into three individual panels—upper, middle, and lower—that can move independently, upward or downward, based on user input to a hand control device attached to the Table. This flexibility in movement allows a patient to be positioned for a variety of medical procedures.
The Table contained multiple warnings regarding its use. Located on the base of the Table was a label ("Base Warning Label") that warned:
CAUTION ATTENTION
POSSIBLE TABLE DAMAGE
DO NOT USE TABLE BASE FOR STORAGE
On the center column of the Table was another label ("Column Warning Label") that warned:
UNANTICIPATED TABLE MOVEMENT HAZARD
. . . .
TO REMOVE ALL POWER FROM PUMP MOTOR, DISCONNECT POWER CORD AND INTERRUPT CIRCUIT BREAKER (CB-2).
In addition, the Column Warning Label instructed Table users to "READ AND THOROUGHLY UNDERSTAND OPERATING MANUAL."
In 2005, GE and Healthtrust Purchasing Group, L.P., of which Johnston Health is a part, entered into a services agreement ("Services Agreement"), whereby GE agreed to evaluate, maintain, and monitor Johnston Health's medical equipment, including the Table. According to the Services Agreement, GE agreed to maintain medical equipment:
(i) timely, in a workman-like manner, consistent with the original manufacturers' specifications and industry standards and (ii) in compliance with applicable federal, state and local laws and regulations and in compliance with applicable accreditation organization standards (e.g. JCAHO).
Additionally, the record indicates that GE agreed periodically to inspect medical equipment based on risk levels, manufacturers' recommendations, and current experience, and agreed to notify Johnston Health when it discovered clinical device hazards.
On 28 August 2009, Mrs. Candie Willoughby ("Willoughby") arrived at Johnston Medical Center-Smithfield, one of Johnston Health's medical facilities, to undergo a hysterectomy. When Willoughby was placed on the Table for the procedure, the Table's upper and middle panels were parallel to the ground. The lower panel, for Willoughby's feet, was positioned perpendicular to the ground, and a surgical tray, parallel to the ground, was attached to the lower panel. After Willoughby was placed on the Table, her legs were separately secured to the middle panel by stirrups, bent at the knees and perpendicular to the ground.
The surgical team consisted of operating room technicians Jan Garner and Deborah Norris, nurse Kim Messer ("Nurse Messer"), and nurse Jennifer Crisson ("Nurse Crisson"). Since Willoughby was at risk for clotting, Nurse Messer hooked Willoughby's legs to a sequential compression device ("SCD"). The SCD is comprised of boots worn by the patient that are attached to a mechanical pump. The boots contain balloon-like sleeves that cause the mechanical pump to inflate and deflate periodically to compress and decompress a patient's limbs in order to improve blood flow. Nurse Messer stated that she placed the SCD on the floor in front of the Table.
According to Nurse Crisson's deposition testimony, to prepare Willoughby for surgery, anesthesia was administered, and Nurse Crisson raised the Table to properly position Willoughby for the first part of the procedure. After the surgeon successfully completed the first part of the procedure, he briefly stepped away from the Table. Then Nurse Crisson started to lower the Table to position Willoughby for the next part of the procedure. After she began lowering the Table, Nurse Crisson heard a "boom sound," a "loud noise" and then the head and foot panels of the Table began uncontrollably to fold upward, into a "U" shape, while Willoughby remained secured to the Table.
The surgical team attempted to stop the lower panel of the Table from moving upward. The nurses repeatedly pressed the "OFF" button on the hand control, they unplugged the Table, unplugged the hand control, and they attempted to activate the override switch in the control panel, but the lower panel kept folding upward into a "U" shape. The Table continued to move until Ross Wonderly, GE's on-site biomedical technician, cut several wires located inside the Table. Although the nurses were eventually able to remove Willoughby from the Table, she sustained permanent injuries as a result of the incident. After the incident, the SCD was found wedged under the base of the Table, lodged under the column shrouds.
On 12 September 2011, Willoughby and her husband ("the Willoughbys") filed a complaint against Johnston Health and STERIS for injuries that the Willoughbys sustained as a result of the Table malfunctioning. Specifically, against Johnston Health, the Willoughbys alleged (1) common law corporate negligence and (2) medical negligence. Against STERIS, the Willoughbys alleged (1) negligence; (2) breach of the implied warranty of merchantability and breach of warranty of fitness for a particular purpose; and (3) breach of express warranty. In addition, the Willoughbys asserted claims of res ipsa loquitur against Johnston Health and STERIS. Finally, Mr. Willoughby asserted a claim for loss of consortium. On 28 December 2011, the Willoughby's voluntarily dismissed their action against STERIS.
On 18 April 2012, Johnston Health filed a third-party complaint against STERIS and GE, seeking indemnity. Against GE, Johnston Health sought relief under claims for (1) indemnity; (2) negligence and gross negligence; and (3) breach of contract. Against STERIS, Johnston Health brought claims for (1) indemnity; (2) failure to warn; (3) sale of defective products; and (4) breach of the implied warranty of merchantability. On 27 December 2012, the trial court granted the Willoughby's motion to add STERIS as a defendant in its amended complaint. On 5 June 2013, the parties entered into a stipulated protective order concerning the disclosure and handling of certain confidential information.
During two years of contested discovery, over 65 depositions were taken from 55 witnesses, comprising nearly 12,000 pages of deposition testimony, not including exhibits. Johnston Health, GE, STERIS, and the Willoughbys filed numerous motions to compel production of documents. The trial court granted the motions in part and denied them in part. Of significant import, the trial court denied the Willoughbys' and GE's motions to compel documents generated by Johnston Health in the course of investigating the incident, including witness statements and a "Root Cause Analysis Report" generated by Johnston Health's Medical Review Committee in order to analyze the incident, identify and implement improvements to reduce the risk of reoccurrence, and monitor the effectiveness of those quality improvements.
The four members of the medical staff who were present during the incident were deposed. Although three of them testified that they did not put the SCD machine on the base of the Table, Nurse Crisson stated that she could not recall whether she placed or stored anything on the base of the Table. When Nurse Crisson was asked about training, she testified that she did not attend any training sessions led by STERIS on operating the Table, nor was she advised by anyone at Johnston Health regarding how to operate the Table.
Depositions were taken of several experts: Matthew F. Baretich, Ph.D; Mark E. Bruley; and David Darnel. According to the experts, the Table malfunctioning was caused by damage to the override switches, which resulted from the Table being lowered onto the SCD machine on the base of the Table. In their opinions, when the Table was lowered, it jammed into the SCD machine, which separated the shrouds. These shrouds were then forced into the override switches, causing the unanticipated movement of multiple sections of the Table. Bruley described the incident to a reasonable degree of engineering certainty:
As [the Table] was coming down, there was a loud pop heard. The foot section started to rise. Questions were raised about who was doing it. The back section started to rise and the overall cause of that activation was jamming of the shrouds against the [SCD] which somehow unbeknownst to me had been placed or came to be placed
on the base of the table. As the shrouds contacted it, they damaged the bracket that the auxiliary control switches were on and those control switches also jammed against the hose guard resulting in unanticipated activation of the table where it basically folded up and tilted to the side.
On 16 September 2014, Johnston Health filed a motion for leave to file its first amended third-party complaint against STERIS and GE. In this motion, Johnston Health sought to (1) add claims against STERIS for fraud and unfair and deceptive trade practices; (2) include factual support for those new claims; and (3) clarify that Johnston Health was seeking contractual indemnity from GE. On 31 October 2014, both STERIS and GE filed motions for summary judgment in their favor. These three motions were consolidated and heard before Judge Robert C. Ervin of Johnston County Superior Court.
On 15 January 2015, the trial court entered the following orders, which: (1) granted summary judgment in favor of STERIS and dismissed Johnston Health's and the Willoughbys' claims with prejudice, (2) granted summary judgment in favor of GE and dismissed Johnston Health's claims with prejudice, and (3) denied Johnston Health's motion to amend its pleadings. On 21 January 2015, Johnston Health filed three separate notices of appeal from each order.
On 1 April 2015, the Willoughbys voluntarily dismissed with prejudice their claims against Johnston Health. On 15 April 2015, Johnston Health filed an amended notice of appeal from the order granting summary judgment in favor of GE, acknowledging that the Willoughbys' dismissal of claims against it rendered moot any issue as to the interlocutory nature of the appeal. On 20 April 2015, the Willoughbys filed their notice of appeal from the order entered 15 January 2015, granting summary judgment in favor of GE.
On 6 August 2015, this Court allowed GE and STERIS's motion to consolidate the multiple records on appeal for hearing and briefing as follows: COA15-832 (order granting GE's summary judgment motion), COA15-833 (order denying Johnston Health's motion to amend), and COA15-834 (order granting STERIS's summary judgment motion). On 21 October 2015, this Court allowed the Willoughbys' motion to withdraw their appeal from the order granting summary judgment in favor of GE. Johnston Health appeals.
II. Motion to Amend (COA15-833)
Johnston Health contends that the trial court erred in denying its motion for leave to amend its third-party complaint to add additional allegations supporting direct claims against STERIS, to add direct claims of fraud and unfair trade practices against STERIS, and to add a claim of contractual indemnity against GE. We disagree.
Rule 15(a) of the North Carolina Rules of Civil Procedure states:
[A] party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.N.C. Gen. Stat. § 1A-1, Rule 15(a)(2013). " 'A motion to amend is addressed to the [sound] discretion of the trial court. Its decision will not be disturbed on appeal absent a showing of abuse of discretion.' " Isenhour v. Universal Underwriters Ins. Co., 345 N.C. 151, 154, 478 S.E.2d 197, 199 (1996) (quoting Henry v. Deen, 310 N.C. 75, 82, 310 S.E.2d 326, 331 (1984)). Under the abuse-of-discretion standard, we review to determine whether the trial court's decision "is 'manifestly unsupported by reason' and is 'so arbitrary that it could not have been the result of a reasoned decision.' " State v. Cummings, 361 N.C. 438, 447, 648 S.E.2d 788, 794 (2007) (citations omitted).
" 'If the trial court articulates a clear reason for denying the motion to amend, then our review ends.' " JPMorgan Chase Bank, Nat'l Ass'n v. Browning, 230 N.C. App. 537, 541, 750 S.E.2d 555, 559 (2013) (quoting NationsBank of N.C., N.A. v. Baines, 116 N.C. App. 263, 268, 447 S.E.2d 812, 815 (1994)). However, where, as here, " 'the trial court states no reason for its ruling on a motion to amend, this Court may examine any apparent reasons for the ruling.' " Williams v. Owens, 211 N.C. App. 393, 394, 712 S.E.2d 359, 360 (2011) (quoting Delta Envtl. Consultants of N.C. v. Wysong & Miles Co., 132 N.C. App. 160, 166, 510 S.E.2d 690, 694 (1999)). " 'Reasons justifying denial of an amendment are (a) undue delay, (b) bad faith, (c) undue prejudice, (d) futility of amendment, and (e) repeated failure to cure defects by previous amendments.' " Carter v. Rockingham Cnty. Bd. of Educ., 158 N.C. App. 687, 690, 582 S.E.2d 69, 72 (2003) (quoting Martin v. Hare, 78 N.C. App. 358, 361, 337 S.E.2d 632, 634 (1985)).
In the instant case, Johnston Health filed its third-party complaint against STERIS and GE on 18 April 2012. In its motion for leave to file an amended third-party complaint, filed on 16 September 2014, Johnston Health sought to:
a. Include a claim for fraud against [STERIS];
b. Include a claim for unfair and deceptive acts or practices against [STERIS];
c. Include a request for punitive damages against [STERIS];
d. Add allegations directly supported by evidence developed in discovery to support and precisely plead its claims for fraud and unfair and deceptive acts or practices, and its request for punitive damages;
e. Add allegations to more precisely plead its breach of contract, indemnity, and negligence claims against GE.
A. Amendments regarding GE
Johnston Health contends that the trial court abused its discretion on the bases that it did not unduly delay filing its motion and that GE would not suffer any undue prejudice from granting its motion to amend. We disagree.
1. Undue Delay
As to undue delay, "[t]his Court has held that a trial court may appropriately deny a motion for leave to amend on the basis of undue delay where a party seeks to amend its pleading after a significant period of time has passed since filing the pleading and where the record or party offers no explanation for the delay." Micro Capital Inv'rs, Inc. v. Broyhill Furniture Indus., Inc., 221 N.C. App. 94, 102, 728 S.E.2d 376, 382 (2012) (citation and quotation marks omitted), aff'd, 366 N.C. 371, 736 S.E.2d 172 (2013). "In deciding if there was undue delay, the trial court may consider the relative timing of the proposed amendment in relation to the progress of the lawsuit." Draughon v. Harnett Cty. Bd. of Educ., 166 N.C. App. 464, 467, 602 S.E.2d 721, 724 (2004) (citation omitted).
Johnston Health's third-party complaint filed on 18 April 2012 against GE did not contain any allegation of a contractual indemnity claim. Rather, the complaint sought relief for indemnity "[u]nder common law principles of indemnity[.]" In July 2012, GE produced the Services Agreement that formed the basis for Johnston Health's contractual indemnity claim, which Johnston Health sought to include in its amended third-party complaint. Johnston Health's motion for leave to amend its third-party complaint was filed on 16 September 2014, over two years after it received the Services Agreement that contained the indemnity provision.
Because Johnston Health possessed the information which formed its contractual indemnity claim for over two years before it sought to amend its complaint, Johnston Health has failed to demonstrate that the trial court abused its discretion in denying its motion to amend for undue delay. See Wilkerson v. Duke Univ., 229 N.C. App. 670, 679, 748 S.E.2d 154, 161 (2013) (holding that trial court did not abuse its discretion in denying motion to amend for undue delay and undue prejudice when the plaintiff sought to amend complaint thirteen months after filing initial complaint and five days before a hearing on the defendant's motion for summary judgment). Moreover, Johnston Health provided no explanation for its delay in seeking to amend the third-party complaint as it relates to GE. Micro Capital Investors, 221 N.C. App. at 102, 728 S.E.2d at 382 (holding trial court did not abuse its discretion in denying motion to amend filed over eleven months after initial complaint and without providing sufficient explanation for delay).
Johnston Health has failed to demonstrate that the trial court abused its discretion by denying its motion to amend for undue delay.
2. Undue Prejudice
As to undue prejudice, GE contends that allowing this amendment would materially prejudice its defense. We agree.
"[A] party's rights to indemnity can rest on three bases: (1) an express contract; (2) a contract implied-in-fact; or (3) equitable concepts arising from the tort theory of indemnity, often referred to as a contract implied-in-law." Kaleel Builders, Inc. v. Ashby, 161 N.C. App. 34, 38, 587 S.E.2d 470, 474 (2003). These two latter claims, implied indemnity, have been explained as follows:
A right of indemnity implied-in-fact stems from the existence of a binding contract between two parties that
necessarily implies the right. The implication is derived from the relationship between the parties, circumstances of the parties' conduct, and that the creation of the indemnitor/indemnitee relationship is derivative of the contracting parties' intended agreement. . . .Id. at 38-39, 587 S.E.2d at 474.
While contractual indemnity implied-in-law is a rather discrete legal fiction, North Carolina appellate courts have been consistent as to the elements required which warrant a right of indemnity on this theory. Specifically, the indemnity implied-in-law arises from an underlying tort, where a passive tort-feasor pays the judgment owed by an active tort-feasor to the injured third party.
In its initial complaint, Johnston Health asserted a claim for indemnity "[u]nder common law principles of indemnity" based on the "negligence and gross negligence of GE," which were underlying tort claims. In its amended complaint, Johnston Health seeks to add a cause of action for contractual indemnity. Implied indemnity is an equitable, tort-based claim arising out of the relationship of joint tortfeasers, and exists "as a matter of fairness, [where] the actively negligent tortfeaseor may be found to have made an implied promise to indemnify the passively negligent tortfeasor." Charlotte Motor Speedway, Inc. v. Tindall Corp., 195 N.C. App. 296, 303, 672 S.E.2d 691, 695 (2009). Contractual indemnity requires reference to the language of the indemnification clause. In this case, the indemnification clause of the Services Agreement (filed under seal) provides in pertinent part (emphasis added):
[GE] agrees to and does hereby defend, indemnify and hold harmless [Johnston Health] . . . from and against any and all liabilities, . . . resulting from (i) any . . . cause of action for personal injury . . . arising out of or in connection with the Services performed by [GE], . . . except to the extent Damages result from the actions of a party other than [GE][.]
Adding a contractual indemnification claim against GE at this stage would result in material prejudice, because GE would be required to address and defend the language in the indemnification clause specifying that GE would not indemnify if the damages "result from the actions of a party other than [GE]." "We cannot write in allegations that are not there under the guise of the rule of liberal construction." Reliance Ins. Co. v. Morrison, 59 N.C. App. 524, 526, 297 S.E.2d 187, 188 (1982). Because Johnston Health has failed to show that the trial court abused its discretion in denying this motion to amend based on undue prejudice, we affirm the trial court's order.
B. Amendments regarding STERIS
Johnston Health next argues the trial court abused its discretion in denying its motion to amend its complaint to add certain factual allegations pertaining to STERIS and to add direct claims against STERIS for fraud and unfair trade practices. Specifically, Johnston Health contends that the trial court "abused its discretion by denying [the motion to amend] without any justification for doing so." We note that "[w]hen the trial court states no reason for its ruling on a motion to amend, this Court may examine any apparent reasons for the ruling." Williams v. Owens, 211 N.C. App. at 394, 712 S.E.2d at 360 (quoting Delta Envtl. Consultants, 135 N.C. App. at 166, 510 S.E.2d at 694). STERIS contends that the amendment was properly denied on the basis of undue delay and undue prejudice. We agree.
1. Undue Delay
Although Johnston Health contends STERIS' "belated[] produc[tion]" of documents required to support its direct claims were the cause of the delay and that, therefore, the motion was not unduly delayed, we are not persuaded.
In its brief, Johnston Health points to two internal documents that STERIS failed to produce until 19 May 2014 and the names of seven STERIS employees with information about STERIS' knowledge of the Table's defects. However, as STERIS points out in its brief, five of those STERIS employees were identified in STERIS' first set of interrogatories and requests for production of documents filed on 3 December 2012. In addition, the documents Johnston Health highlights add no more to its claim that STERIS knew of the risks posed by the Table than does the documentation of numerous unanticipated movement reports that was produced by STERIS on 3 December 2012.
Moreover, as STERIS points out and Johnston Health does not refute, the majority of allegations supporting Johnston Health's new direct claims were produced by STERIS in December 2012. Although Johnston Health filed a reply brief to address other allegations raised by STERIS's appellee brief, Johnston Health failed to address STERIS' arguments of undue delay, undue prejudice, and futility in support of the trial court's denial of the motion to amend. As these are valid grounds from which a court may deny a motion to amend and as Johnston Health has failed to persuade us that the trial court's decision was "manifestly unsupported by reason" or "so arbitrary that it could not have been the result of a reasoned decision," we overrule this challenge.
2. Undue Prejudice
" '[A]lthough the spirit of the North Carolina Rules of Civil Procedure is to permit parties to proceed on the merits without the strict and technical pleadings rules of the past, the rules still provide some protection for parties who may be prejudiced by liberal amendments.' " NationsBank of N.C., 116 N.C. App. at 268, 447 S.E.2d at 815 (quoting Henry, 310 N.C. at 82, 310 S.E.2d at 331). In this case, permitting Johnston Health's motion to amend so late into the proceedings would unduly prejudice STERIS by requiring it to defend against direct claims for the first time, almost two years after the third-party complaint was initiated, based substantially on information that Johnston Health possessed since December 2012. Johnston Health has failed to show that the trial court abused its discretion in denying its motion to amend based on undue prejudice.
III. Summary Judgment
A trial court must grant summary judgment on a party's motion when "there is no genuine issue as to any material fact and . . . any party is entitled to a judgment as a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2015). In making this determination, all evidence must be construed in the light most favorable to the non-moving party. Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707 (2001). We review appeals from orders granting summary judgment de novo. See, e.g., Piraino Bros., LLC v. Atl. Fin. Grp., Inc., 211 N.C. App. 343, 347, 712 S.E.2d 328, 332 (2011).
A party moving for summary judgment may prevail if it meets the burden (1) of proving an essential element of the opposing party's claim is nonexistent, or (2) of showing through discovery that the opposing party cannot produce evidence to support an essential element of his or her claim. Generally this means that on undisputed aspects of the opposing evidential forecast, where there is no genuine issue of fact, the moving party is entitled to judgment as a matter of law. If the moving party meets this burden, the non-moving party must in turn either show that a genuine issue of material fact exists for trial or must provide an excuse for not doing so.Lowe v. Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982) (citations and internal quotation marks omitted). If summary judgment can be sustained on any grounds, it should be affirmed on appeal. See, e.g., Cobb v. Pa. Life Ins. Co., 215 N.C. App. 268, 273, 715 S.E.2d 541, 547 (2011).
A. Summary Judgment in Favor of GE (COA15-832)
Johnston Health contends that the trial court erred by granting summary judgment in favor of third-party defendant GE and by dismissing with prejudice its indemnity claims based on theories of negligence and gross negligence, breach of contract, and common law indemnity. We disagree.
1. Negligence and Gross Negligence Claims
Johnston Health contends that the trial court erred by granting summary judgment in favor of GE on its negligence and gross negligence claims asserting that GE's alleged failure to warn Johnston Health that placing objects on the base of the Table posed a threat to patient safety and that GE's alleged failure to properly inspect and maintain the Table proximately caused Willoughby's injuries. We disagree.
In order to establish actionable negligence, plaintiff must show that there has been a failure to exercise proper care in the performance of some legal duty which the defendant owed to the plaintiff under the circumstances in which they were placed, and that such negligence was the proximate cause of the injury—a cause that produced the result in continuous sequence and without which it would not have occurred, and one from which any man of ordinary prudence could have foreseen that such result was probable under all the facts as they existed.Jackson v. Neill McKay Gin Co., 255 N.C. 194, 196, 120 S.E.2d 540, 542 (1961). Although "it is only in exceptional negligence cases that summary judgment is appropriate, since the standard of reasonable care should ordinarily be applied by the jury under appropriate instructions from the court[,]" Ragland v. Moore, 299 N.C. 360, 363, 261 S.E.2d 666, 668 (1980), summary judgment is appropriate when the plaintiff fails to produce evidence of proximate cause beyond "mere speculation or conjecture." See Jackson, 255 N.C. at 196, 120 S.E.2d at 542. Furthermore, "when the plaintiff relies upon circumstantial evidence, he must establish . . . proximate cause as a reasonable inference from the facts proved and not circumstances which raise a mere conjecture or surmise." Id.
Johnston Health's failure to warn claim against GE is premised on the assumption that placement of the SCD device onto the Table base caused the malfunction which injured Willoughby. According to the evidence presented, Johnston Health's employees knew or should have known that placing items on the Table could result in injury. Indeed, according to the deposition testimony of Ross Wonderly, GE's service technician, he informed both the Johnston Health's Operating Room Head of Purchasing and Johnston Health's Director of Surgical Services, Sondra Daggett, in one-on-one meetings, on multiple occasions, not to place things on the base of the Table. Additionally, Daggett, responsible for twenty-two of Johnston Health's operating room employees, testified that a representative of STERIS told her during her training not to place items on the base of the Table. Nurse Messer, an operating nurse present during the incident, testified that she knew she was "not supposed to put anything on the base of the bed." Moreover, the evidence shows that Johnston Health told its employees during orientation not to place items on the base of the Table and that operating room employees were expected to read and follow warnings on medical equipment. Located at the base of the Table was the Base Warning Label that warned, "DO NOT USE TABLE BASE FOR STORAGE." Additionally, a newer version of the Table Johnston Health purchased from STERIS in 2007 warned:
PERSONAL INJURY HAZARD/EQUIPMENT DAMAGE Storing items on table base may result in equipment damage causing inadvertent tabletop movement placing the patient and/or user at risk of personal injury.
DO NOT use the table base for storage!
Assuming, arguendo, that placement of the SCD device caused the Table to malfunction, Johnston Health presented no evidence that tends to establish that GE's failure to provide a more robust warning actually or proximately caused Willoughby's injuries. Because the evidence undisputedly shows that Johnston Health's employees knew or should have known not to place items on the base of the Table, Johnston Health has failed to present evidence, even when taken in the light most favorable to it, beyond a "mere speculation or conjecture[,]" Ragland, 299 N.C. at 363, 261 S.E.2d at 668, that if GE provided a more robust warning, Willoughby's injuries would not have occurred. Therefore, the trial court properly granted summary judgment in favor of GE on Johnston Health's negligence claims.
2. Breach of Contract and Warranty Claims
Johnston Health contends that the trial court erred by granting summary judgment in favor of GE on its breach of contract and warranty claims based on GE's alleged failure to properly maintain and inspect the Table, which Johnston Health contends proximately caused Willoughby's injuries. GE contends that, assuming, arguendo, it breached the Services Agreement by failing to maintain the Table in strict accordance with the manufacturer's recommendations, Johnston Health failed to present evidence tending to show that GE's alleged failure to do so proximately caused Willoughby's injuries. We agree.
According to the Services Agreement, GE agreed to service the table "consistent with the original manufacturers' specifications and industry standards" and "in compliance with applicable federal, state and local laws and regulations." The Table's operator's manual required that GE perform maintenance on the Table at least six times each year. According to the manual, while maintaining the Table, the technician should complete every item on STERIS' checklist, which should take between 60-90 minutes. As part of the inspection, the operator's manual recommended that the inspector remove the Table's shrouds and check all of the circuit board connectors and cable plugs during each maintenance session.
In the instant case, the evidence tends to show that GE only performed maintenance on the Table once each year, each time only spending 10-15 minutes checking the Table. The evidence also tends to show that GE did not follow STERIS' maintenance checklist nor discuss the Table with Johnston Heath's operators as frequently as recommended.
Thus, Johnston Health contends that within the 10-15 minutes that Wonderly recorded for his annual maintenance, GE could not have performed this thorough of a check. Johnston Health contends that if Wonderly had checked the circuit board connectors and cable plugs every month, he would have been able to determine whether the mounting bracket, the hose plate, or the hose plate guard were bent or damaged in a way that would risk short-circuiting the Table's controls and cause a malfunction. We disagree.
The manufacturer's manual makes no recommendation specifically for an inspector to check the bracket or hose guard to see if they are damaged. Additionally, Johnston Health has presented no evidence of the condition of the Table prior to its malfunctioning. Moreover, expert evidence was presented, which was not disputed, indicating that the incident would have occurred on a brand new table, irrespective of GE's alleged maintenance failures. Johnston Health's contention that GE's alleged breach of its Services Agreement contract proximately caused Willoughby's injuries is not founded in proven facts but is purely speculative. Such speculation is insufficient evidence of proximate cause to survive a motion for summary judgment. See, e.g., Herring v. Food Lion, LLC, 175 N.C. App. 22, 27, 623 S.E.2d 281, 285 (2005) (stating that evidence of proximate cause must provide a reasonable inference from proven facts, rather than mere conjecture).
Because Johnston Health has failed to provide sufficient evidence with which to reasonably infer that GE's alleged failure to provide proper maintenance was a proximate cause of the incident, the trial court did not err in granting summary judgment in favor of GE on this claim.
3. Implied Indemnity Claim
As stated above, "a party's rights to indemnity can rest on three bases: (1) an express contract; (2) a contract implied-in-fact; or (3) equitable concepts arising from the tort theory of indemnity, often referred to as a contract implied-in-law." Kaleel Builders, 161 N.C. App. at 38, 587 S.E.2d at 474. In Johnston Health's third-party complaint, it asserted that "any negligence attributed to Johnston Health . . . is secondary to that of GE[,]" and sought relief "under common law principles of indemnity" based on GE's alleged negligence and gross negligence. Although the Services Agreement, which contained an express indemnity provision, was referenced elsewhere in the complaint, Johnston Health neither referenced this indemnity provision in its claim for a right of indemnity nor alleged that the parties were bound by an express indemnity agreement. Therefore, we conclude that Johnston Health pled an implied indemnity claim arising from a tort theory, or a contract implied-in-law.
"[T]o successfully assert a right to indemnity based on a contract implied-in-law, a party must be able to prove each of the elements of an underlying tort such as negligence." Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., 180 N.C. App. 257, 268, 636 S.E.2d 835, 843 (2006), aff'd, 362 N.C. 269, 658 S.E.2d 918 (2008). However, because we have concluded that Johnston Health's underlying negligence claims fail as a matter of law, it follows that Johnston Health's indemnity claim based on that negligence also fails.
Moreover, " '[t]here can be no implied contract where there is an express contract between the parties in reference to the same subject matter.' " Charlotte Motor Speedway, 195 N.C. App. at 303, 672 S.E.2d at 695 (quoting Greene v. Charlotte Chem. Labs., Inc., 254 N.C. 680, 691, 120 S.E.2d 82, 89 (1961)) (affirming trial court's order dismissing implied-in-law indemnification claim when there was an express indemnification agreement between the parties that did not cover the losses sought). Because the Services Agreement between Johnston Health and GE contains an express indemnity provision in reference to the same subject matter, Johnston Health is precluded from asserting a claim for indemnity implied-in-law. Id. Therefore, we affirm the trial court's order granting summary judgment in favor of GE.
B. Summary Judgment in Favor of STERIS (COA15-834)
Johnston Health contends that the trial court erred by granting summary judgment in favor of STERIS. We disagree.
As an initial matter, we note that evidence was presented indicating that the purchasing agreement entered into between STERIS and Johnston Health may have been subject to the laws of the State of Ohio. Although neither party could find the purchasing agreement for the Table, a copy of another purchasing agreement was introduced into evidence, and a representative from STERIS testified that their standard procedure was for any purchasing party to be bound to this same purchasing agreement. In granting summary judgment in favor of STERIS, the trial court did not determine whether Ohio or North Carolina law applied but concluded that (1) if North Carolina law applies, its claims are barred by N.C. Gen. Stat. § 1-50(a)(6), North Carolina's products liability statute of repose then in effect, and (2) if Ohio law applies, its claims are barred by Ohio's economic loss rule. Although this determination typically presents a genuine issue of fact appropriate for a fact-finder, if Johnston Health's claims are barred under either law, determining which law applies is of no consequence.
1. North Carolina's Statute of Repose
Johnston Health contends that the trial court erred by granting summary judgment in favor of STERIS based upon North Carolina's statute of repose. We disagree.
A statute of repose " 'set[s] a fixed limit after the time of the product's manufacture, sale or delivery beyond which the product seller will not be held liable.' " Bolick v. Am. Barmag Corp., 306 N.C. 364, 366, 293 S.E.2d 415, 417 (1982) (quoting McNeill Smith, Statutes of Limitations and Statutes of Repose, Paper Presented at the American Bar Ass'n Section of Litigation 30 (Aug. 4, 1980)). Pursuant to N.C. Gen. Stat. § 1-50 (a)(6) (2003),
No action for the recovery of damages for personal injury, death or damage to property based upon or arising out of any alleged defect or any failure in relation to a product shall be brought more than six years after the date of initial purchase for use or consumption.
Our Supreme Court has interpreted N.C. Gen. Stat. § 1-50(a)(6) to "exclude[] all actions brought after six years, whether these actions are first-party actions, cross-claims or counterclaims." Tetterton v. Long Mfg. Co., 314 N.C. 44, 52, 332 S.E.2d 67, 72 (1985).
In 2009, our General Assembly repealed and replaced N.C. Gen. Stat. § 1-50(a)(6) with N.C. Gen. Stat. § 1-46.1(a)(1) (2009), identical in language except for extending the repose period to twelve years. This amendment was intended to be "appli[ed] to causes of action that accrue[d] on or after ." Id. Generally, causes of action based on a right of indemnity accrue when the indemnitee suffers an actual loss. See, e.g., Schenkel & Shultz, Inc., 180 N.C. App. at 267, 636 S.E.2d at 842 ("North Carolina follows the general rule that a cause of action on an obligation to indemnify normally accrues when the indemnitee suffers actual loss.").
"Whether a statute of repose has run is a question of law." Mitchell v. Mitchell's Formal Wear, Inc., 168 N.C. App. 212, 215, 606 S.E.2d 704, 706 (2005). "Summary judgment is proper if the pleadings or proof show without contradiction that the statute of repose has expired." Bryant v. Don Galloway Homes, Inc., 147 N.C. App. 655, 657, 556 S.E.2d 597, 600 (2001).
In the instant case, Johnston Health initially purchased the Table from STERIS in 2004, triggering the running of the six-year repose period then in effect for actions based on STERIS's alleged defective manufacture of the Table. The Willoughbys' claims against STERIS accrued on 28 August 2009, the date Willoughby was injured, which was prior to 1 October 2009, the effective date of N.C. Gen. Stat. § 1-46.1. Therefore, the Willoughbys' claims against STERIS are subject to N.C. Gen. Stat. § 1-50(a)(6)'s six-year repose period, which expired in 2010, prior to the Willoughbys' initiating their actions against STERIS in 2011. In 2012, Johnston Health filed its third-party claims for indemnity against STERIS and suffered an actual loss on 26 February 2015, the date on which Johnston Health paid a settlement to the Willoughbys. Accordingly, Johnston Health contends that its indemnity actions accrued after the 1 October 2009 enactment of N.C. Gen. Stat. § 1-46.1 and, therefore, its claims are subject to its twelve-year repose period. Johnston Health is mistaken.
In New Bern Assocs. v. Celotex Corp., 87 N.C. App. 65, 70, 359 S.E.2d 481, 484 (1987), this Court interpreted N.C. Gen. Stat. § 1-50(5) (1983) and held that "the accrual date of the original plaintiff's claim determines which version of the statute of repose is applicable to the defendant's claim for indemnification or contribution against a third party." This Court reasoned that because "[t]he function of a statute of repose is to give a defendant a vested right not to be sued if the plaintiff fails to file within the prescribed period," id. at 69, 359 S.E.2d at 484, "it would undermine the function of the statute of repose if a defendant who had a vested right not to be sued by the original plaintiff lost that right in an action for indemnification or contribution by operation of different accrual dates and, thus, different versions of the statute." Id. Accordingly, the Court held that the third-party plaintiff's actions were governed by the statute of repose in effect when the original plaintiff's claims accrued. We find the reasoning behind the Court's holding in New Bern compelling.
In the instant case, although the amendment to the repose statute was enacted for "causes of action that accrue" on or after 1 October 2009, and causes of action for indemnity and contribution typically accrue when an indemnitee suffers an actual loss, repose statutes vest defendants and third-party defendants with substantive rights, and repose periods run automatically, regardless of when an action accrues. Black v. Littlejohn, 312 N.C. 626, 633, 325 S.E.2d 469, 475 (1985) ("[T]he repose serves as an unyielding and absolute barrier that prevents a plaintiff's right of action even before his cause of action may accrue[.]").
Statutes of repose function as "unyielding and absolute barrier[s]" to litigation, [Black, 312 N.C. at 633, 325 S.E.2d at 475], are substantive in nature, see [Boudreau, 322 N.C. at 341, 368 S.E.2d at 857] ("If the action is not brought within the specified period, the plaintiff 'literally has no cause of action. The harm that has been done is damnum absque injuria—a wrong for which the law affords no redress.' " (citation omitted)), and are not subject to equitable doctrines, see, e.g., Monson v. Paramount Homes, Inc., 133 N.C. App. 235, 240, 515 S.E.2d 445, 449 (1999)
("While equitable doctrines may toll statutes of limitation, they do not toll substantive rights created by statutes of repose." (citations omitted)).Christie v. Hartley Constr., Inc., 367 N.C. 534, 539, 766 S.E.2d 283, 287 (2014).
Based on the purpose behind repose statutes, New Bern's holding, the prohibition of substantive rights being deprived by subsequent legislation, and the dependent nature of third-party actions for indemnity and contribution, we hold that when the accrual date of a third-party claim deprives a third-party defendant of vested, substantive rights, the accrual date of import for determining whether a specific repose statute applies to a third-party claim is the date on which the original plaintiff's claim accrued. Although Johnston Health's third-party indemnity actions accrued on 26 February 2015, when they paid a settlement to the Willoughbys, because the Willoughbys' action against STERIS accrued before the enactment of N.C. Gen. Stat. § 1-46.1, STERIS' substantive right to a six-year repose period regarding the Willoughby incident had vested and expired in 2010. The accrual date of Johnston Health's third-party claims cannot deprive STERIS of this right, or "the chief virtue of the statute, its certainty, would be destroyed." Tetterton, 314 N.C. at 52, 332 S.E.2d at 72. Accordingly, the trial court properly concluded that North Carolina's six-year statute of repose barred Johnston Health's indemnity claims.
As a secondary matter, we have considered Johnston Health's remaining argument that even if the six-year statute of repose applies, the repose period renewed when Johnston Health purchased a replacement hand control on 16 October 2007, and conclude it is without merit. Johnston Health neither presented evidence that the 2007 hand control was defective, nor found or applied any North Carolina case law holding that a statute of repose resets under similar factual circumstances.
2. Ohio's Statute of Repose
Johnston Health next contends that the trial court erred by granting summary judgment in favor of STERIS based upon Ohio's economic loss rule. Because we conclude summary judgment can be affirmed on another ground, see, e.g., Cobb, 215 N.C. App. at 273, 715 S.E.2d at 547, we need not address Johnston Health's challenge.
Ohio's products liability statute of repose, Ohio Rev. Code Ann. § 2305.10(C)(1) (West 2015) (emphasis added), provides in pertinent part:
[N]o cause of action based on a product liability claim shall accrue against the manufacturer or supplier of a product later than ten years from the date that the product was delivered to its first purchaser[.]
As the United States Supreme Court has recently explained, a statute of repose
is not related to the accrual of any cause of action. Rather, it mandates that there shall be no cause of action beyond a certain point, even if no cause of action has yet accrued. Thus a statute of repose can prohibit a cause of action from coming into existence. See, e.g., N.C. Gen. Stat. Ann. § 1-52(16) ("[N]o cause of action shall accrue more than 10 years from the last act or omission of the defendant giving rise to the cause of action")[.] A statute of repose can be said to define the scope of the cause of action, and therefore the liability of the defendant.CTS Corp. v. Waldburger, ___ U.S. ___, ___, 189 L. Ed. 2d 62, 77-78, 134 S. Ct. 2175, 2187, (citations and internal quotation marks omitted), reh'g denied, ___ U.S. ___, 189 L. Ed. 2d 874, 135 S. Ct. 23 (2014).
Similar to North Carolina law, the general rule under Ohio law is that "an action based on an implied right of indemnity does not accrue until the party seeking indemnity actually suffers a loss." Stengel v. City of Columbus, 74 Ohio App. 3d 608, 613, 600 N.E.2d 248, 251 (1991) (emphasis omitted).
In the instant case, STERIS delivered the Table to Johnston Health in 2004, which triggered the running of Ohio's products liability statute of repose, subjecting Johnston Health's implied indemnity claims to its ten-year repose period, which expired in 2014. Because Johnston Health's indemnity claims accrued on 25 February 2015, the date on which it paid a settlement to the Willoughbys, its actions are barred by Ohio's statute of repose. Therefore, the trial court correctly affirmed summary judgment in favor of STERIS under Ohio law.
IV. Conclusion
Johnston Health's motion for leave to amend its third-party complaint for purposes of adding new allegations and claims would have caused undue delay and unduly prejudiced GE and STERIS. Johnston Health failed to demonstrate that the trial court abused its discretion by its motion to amend.
GE is entitled to judgment as a matter of law regarding Johnston Health's third-party indemnity claims based on theories of negligence and breach of contract and warranty, because Johnston Health failed to demonstrate beyond "mere speculation" that GE's alleged failures proximately caused Willoughby's injury. Additionally, because the tort theories underlying Johnston Health's claim for implied indemnity fail as a matter of law, its implied indemnity actions also fail. Therefore, the trial court properly granted summary judgment in favor of GE. In light of our disposition, we need not address GE's cross-appellant arguments, which were asserted only if we reversed the summary judgment order in its favor.
STERIS is entitled to judgment as a matter of law regarding Johnston Health's third-party indemnity claims based on theories of products liability, because both North Carolina's and Ohio's applicable products liability statute of repose had expired. Therefore, the trial court properly granted summary judgment in favor of STERIS.
AFFIRMED.
Judges ELMORE and ZACHARY concur.
Report per Rule 30(e).