Opinion Number: 1998-NMCA-017
Filing Date: November 12, 1997
Docket No. 17,116
KATHLEEN ECKHARDT,
Plaintiff-Appellant/Cross-Appellee,
v.
CHARTER HOSPITAL OF ALBUQUERQUE,
INC., A NEW MEXICO CORPORATION,
Defendant-Appellee/Cross-Appellant,
WILLIAM KENT MCGREGOR,
Defendant,
AND COURTNEY COOK,
Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
Steve Herrera, District Judge
SUSAN WECKESSER
Santa Fe, NM
DANIEL W. SHAPIRO
Shapiro & Bettinger, P.C.
Albuquerque, NM
for Appellant
EARL NORRIS
Hinkle, Cox, Eaton, Coffield
& Hensley, L.L.P
Albuquerque, NM
for Appellees
ARMIJO, Judge.
This appeal and cross appeal arise out of a civil action filed by Kathleen Eckhardt (Plaintiff) against
Charter Hospital of Albuquerque (Charter), William Kent
McGregor (McGregor), and Courtney Cook (Cook) for damages
sustained as a result of a sexual assault on Plaintiff by
McGregor on July 16, 1987, in Santa Fe, New Mexico.
Plaintiff alleged that she was assaulted while she was
receiving counseling from McGregor, a certified social
worker, at the offices of the Charter Counseling Center of
Santa Fe (CCC). Cook was the director of the CCC, a
facility owned by Charter. The trial court entered a
default judgment against McGregor, and he is not a party to
this appeal.
The case was tried before a jury which awarded
Plaintiff the sum of $132,000 against Charter on her claim
of negligent selection and supervision of McGregor; the sum
of $70,000 against Charter on her claim of fraudulent
misrepresentation; and the sum of $80,000 against Charter on
her claim of negligent misrepresentation.
Plaintiff appeals from the trial court's order granting
a directed verdict on her claims for punitive damages,
wrongful disclosure, and violation of the Unfair Practices
Act. Plaintiff also challenges the trial court's disclosure
to the jury of a $1 million default judgment award entered
against McGregor. Charter cross-appeals from the trial
court's order denying its motion for a directed verdict and
the trial court's entry of judgment for separate damage
awards for fraudulent misrepresentation and negligent
misrepresentation based upon the same conduct. Charter also
challenges the trial court's failure to decide Defendant's
amended motion for summary judgment and rule on the legal
question of whether Charter owed a duty to Plaintiff as a
Charter patient.
For the reasons discussed below, we affirm the judgment
with respect to Plaintiff's claims against Charter for
negligent misrepresentation and negligent selection and
supervision of McGregor. We affirm the trial court's
rulings with respect to summary judgment motions filed by
the parties as they related to the claims set forth in the
Second Amended Complaint. We affirm the trial court's
rulings with respect to the directed verdicts on the claims
for punitive damages and violation of the Unfair Practices
Act. We reverse the judgment on Plaintiff's claim of
fraudulent misrepresentation, and reverse the trial court's
decision to grant a directed verdict dismissing Plaintiff's
claim against Cook for wrongful disclosure. We determine
that the trial court erred in disclosing to the jury the
nature and amount of the default judgment entered against
McGregor.
I. BACKGROUND
The procedural posture of this case is complex. The
initial complaint was filed on March 15, 1990. Plaintiff
sought compensatory and punitive damages from McGregor for
wanton and willful misconduct, battery, and intentional
infliction of emotional distress. She sought compensatory
and punitive damages from Charter under various theories,
not all of which are relevant to this appeal. Plaintiff
alleged that Cook divulged confidential information to a
third party (Plaintiff's husband) and that she suffered
damages as a result.
During the pendency of the present case, Charter filed
a separate declaratory judgment action to determine if
Charter had a duty to defend McGregor; the two actions were
consolidated. The present (tort) action was stayed pending
disposition of the declaratory judgment action which was
tried on August 12, 1991. A judgment was filed on December
17, 1991, which determined that McGregor was an independent
contractor. No appeal of that judgment followed.
Based on the declaratory judgment, Charter moved for
summary judgment on all counts against it in the tort
action. Plaintiff was granted leave to amend her complaint.
The trial court ultimately granted summary judgment in favor
of the Defendants on certain issues, and Plaintiff appealed
to the Supreme Court. On August 8, 1994, the Supreme Court
affirmed the district court's dismissal of Plaintiff's
claims that McGregor was an employee and apparent employee
of Charter and reversed the district court's dismissal of
Plaintiff's negligent selection and supervision claim.
On October 26, 1994, the trial court granted
Plaintiff's motion to file a Second Amended Complaint, in
which Plaintiff stated the claims which relate to the
present appeal. Counts I, II and III related to McGregor
and are not germane to this appeal because, during a
pretrial proceeding, the trial court entered a default
judgment against McGregor as to liability due to his failure
to appear at the proceedings. Determination of the amount
of damages to be assessed against him was left to a later
time.
The remaining claims, all relating to Charter and Cook,
can be summarized as follows. Count IV alleged that Charter
was negligent in its employment and supervision of McGregor
and in its failure to terminate him. Count V alleged that
Charter violated the Unfair Practices Act by engaging in
false advertising in its promotional materials with regard
to the quality of its services and its affiliation with
McGregor. Count VI alleged that Charter made fraudulent or,
alternatively, negligent misrepresentations in its
advertising and in other statements indicating that McGregor
was its employee. Count VII alleged that Charter and Cook
breached their duty of confidentiality by intentionally and
negligently disclosing confidential information to Plaintiff's husband. The information related to her history
of spousal abuse.
Plaintiff moved for summary judgment as to Count IV on
April 6, 1995, and Charter filed an amended motion for
summary judgment on all outstanding claims. The trial court
heard the motions for summary judgment on June 5, 1995, and
denied both motions. Voir dire began on June 20, 1995, with
the trial commencing on July 25, 1995.
During the trial, Plaintiff requested that the trial
court assess damages against McGregor. The trial court
entered an award of $500,000 in compensatory damages and
$500,000 in punitive damages against McGregor. The trial
court disclosed both the nature and the amount of this award
to the jury, over Plaintiff's objection.
At the close of Plaintiff's case, Charter moved for a
directed verdict on the remaining counts in Plaintiff's
Second Amended Complaint. This motion was granted in part
and denied in part with respect to Count IV (negligent
selection and supervision) and Count VI (fraudulent or
negligent misrepresentation). The trial court also granted
Charter's motion with respect to Count V (Unfair Practices
Act) and Count VII (wrongful disclosure).
Plaintiff's request for jury instructions on punitive
damages was refused. The trial court instructed the jury on
Plaintiff's claims for negligent selection and supervision,
and both fraudulent and negligent misrepresentation. The
instructions did not indicate that the misrepresentation
claims were pled in the alternative. The jury returned a
verdict awarding Plaintiff damages on each of these claims.
These appeals followed.
II. DISCUSSION
For the sake of clarity, our discussion departs from
the order in which the issues arose in the trial court or
were briefed by the parties on appeal. Instead, we address
the parties' claims on appeal in the following order: (A)
Plaintiff's wrongful disclosure claim against Cook; (B) the
trial court's disclosure of the default judgment against
McGregor; (C) Plaintiff's negligence claims against Charter;
(D) Plaintiff's claim against Charter for fraudulent
misrepresentation; (E) Plaintiff's claims against Charter
for punitive damages; and (F) Plaintiff's claim against
Charter for violation of the Unfair Practices Act.
A. Wrongful Disclosure of Confidential Communication
In her capacity as director of the CCC, Cook disclosed
to Plaintiff's husband (Mr. Eckhardt) that she knew (from
talking to Plaintiff, McGregor, or both) that Mr. Eckhardt
was an "abusive alcoholic" whose spousal abuse was related
to his drinking. On appeal, Cook contends that this
information was not privileged or confidential, and therefore its disclosure to Mr. Eckhardt was not wrongful.
The trial court granted Defendant's motion for directed
verdict on this issue, reasoning that Cook did not intend to
harm Plaintiff by disclosing this information, and that the
evidence was insufficient to establish that the disclosure
was a proximate cause of Plaintiff's damages.
We determine that: (1) the information which Plaintiff
shared with Cook or McGregor concerning Mr. Eckhardt's
alcohol problem and spousal abuse was confidential; (2)
Plaintiff was not required to prove that Cook's disclosure
of this information was intended to harm her; and (3) the
evidence was sufficient to establish a jury question as to
whether the disclosure was a proximate cause of Plaintiff's
damages. We reverse the trial court's ruling and remand for
a jury trial on Plaintiff's wrongful disclosure claim. See
Sunwest Bank v. Garrett, 113 N.M. 112, 115, 823 P.2d 912,
915 (1992) ("A directed verdict is appropriate only when
there are no true issues of fact to be presented to a
jury.").
We first address whether Plaintiff's wrongful
disclosure claim is precluded by the trial court's finding
that Cook did not intend to harm Plaintiff by making the
disclosure to Mr. Eckhardt. We note that under some
theories of recovery, a plaintiff may be required to prove
that the disclosure was made with a malicious or harmful
intent. See, e.g., Clark v. Geraci, 208 N.Y.S.2d 564, 568-69 (Sup. Ct. 1960) (claim under prima facie tort theory
required intent to harm). In addition, the fact that the
disclosure was made in good faith may constitute one element
of an affirmative defense to a wrongful disclosure claim.
See, e.g., NMSA 1978, § 32A-4-5(B) (1995) (persons reporting
child neglect or abuse "shall be immune from liability . . .
unless the person acted in bad faith or with malicious
purpose"); Simonsen v. Swenson, 177 N.W. 831, 832 (Neb.
1920) (qualified physician reporting diagnosis necessary to
halt spread of highly contagious disease is immune from
liability if acting in good faith, with reasonable grounds
for diagnosis, and without malice). In the present case,
however, Plaintiff does not bring her wrongful disclosure
claim under a theory that requires an intent to harm, and we
determine that the absence of such an intent, standing
alone, is insufficient to establish a justification or
excuse that would warrant a directed verdict.
To support her claim that Cook owed her a duty of
confidentiality, Plaintiff relies on MacDonald v. Clinger,
446 N.Y.S.2d 801 (App. Div. 1982). In Clinger, 446 N.Y.S.2d
at 802, a New York court held that a psychiatrist's wrongful
disclosure to a patient's spouse of personal information
learned during the course of treatment "is a breach of the
fiduciary duty of confidentiality and gives rise to a cause
of action sounding in tort." The essence of the claim
recognized in Clinger is that the relationship between a
provider of mental health care and his or her patient is one
of trust and confidence, and out of this special relationship springs a fiduciary duty not to disclose. See
id. at 805. In other contexts, New Mexico courts also have
recognized that the confidential relationship between a
health-care provider and his or her patient may give rise to
a fiduciary duty. See Keithley v. St. Joseph's Hosp., 102
N.M. 565, 569, 698 P.2d 435, 439 (Ct. App. 1984) (duty to
disclose all material information regarding treatment to
patient); Garcia v. Presbyterian Hosp. Ctr., 92 N.M. 652,
654-55, 593 P.2d 487, 489-90 (Ct. App. 1979) (same).
However, the fiduciary duty of confidentiality is not
absolute. "The contours of the asserted duty of
confidentiality are determined by a legal source external to
the tort claim itself[,]" Humphers v. First Interstate
Bank, 696 P.2d 527, 534 (Or. 1985) (en banc); and "its
breach is actionable only if it is wrongful, that is to say,
without justification or excuse." Clinger, 446 N.Y.S.2d at
805.
In the present case, we determine the contours of the
asserted duty of confidentiality as well as any affirmative
defenses of justification or excuse, by reference to
expressions of public policy stated in New Mexico's
professional licensing statutes, rules of evidence, and our
state constitution. The New Mexico legislature has
recognized that the duty to safeguard patient confidences
extends to psychologists, social workers, mental health
counselors and therapists, and their staffs. See NMSA 1978,
§§ 61-9-18 (1989) (psychologists and psychologist
associates); 61-9A-27 (1993) (mental health counselors and
therapists); 61-31-24 (1989) (social workers); cf. Jaffee v.
Redmond, 116 S. Ct. 1923, 1930-32 (1996) (recognizing that
it serves no discernible public purpose to draw distinctions
between clinical social work and other mental health
professions with regard to the need for confidentiality).
In addition, the New Mexico Rules of Evidence recognize a
psychotherapist-patient privilege under which a patient may
"prevent any other person from disclosing confidential
communications, made for the purposes of diagnosis or
treatment of the patient's physical, mental or emotional
condition . . . among the patient, the patient's physician
or psychotherapist, or persons who are participating in the
diagnosis or treatment under the direction of the physician
or psychotherapist . . . ." Rule 11-504(B), NMRA 1997; see
also Jaffee, 116 S. Ct. at 1931 (recognizing privilege under
federal rules). In the context of the criminal justice
process, Article II, Section 24(A)(1) of the New Mexico
Constitution recognizes that victims of crimes such as
criminal sexual penetration and aggravated assault have "the
right to be treated with fairness and respect for the
victim's dignity and privacy . . . ." See also NMSA 1978, §
31-26-4(A) (1995).
The expressions of public policy embodied in these
authorities are consistent with the duty of confidentiality
that health-care professions impose on their own members.
Section 4 of the American Medical Association's Principles of Medical Ethics provides that: "A physician shall respect
the rights of patients . . . and shall safeguard patient
confidences within the constraints of the law." American
Psychiatric Ass'n, The Principles of Medical Ethics with
Annotations Especially Applicable to Psychiatry § IV (1984).
The National Association of Social Workers, of which
McGregor was a member, also requires that a "social worker
should respect the privacy of clients and hold in confidence
all information obtained in the course of professional
service." Code of Ethics of the National Association of
Social Workers 2(H) (rev. 1993).
By her own admission at trial, as the director of CCC,
Cook had a relationship of trust and confidence with Charter
patients that gave rise to a duty to maintain patient
confidences. See Garcia, 92 N.M. at 655, 593 P.2d at 490
(hospital and its employees stand in confidential
relationship with patient). This duty does not depend on
whether Cook and McGregor were employees of the same
company; it is sufficient that they both were participating
in Plaintiff's diagnosis and treatment. Cf. Rule 11-504(A)(4), NMRA 1997; State v. Gonzales, 1996 NMCA 026, ¶
15, 121 N.M. 421, 912 P.2d 297 ("confidentiality of a
communication is preserved when disclosure is made as part
of another confidential relationship"). Cook acknowledged
in her testimony that her duty to maintain patient
confidences generally applied to patients at the CCC, and
specifically applied to the information that Cook obtained
from her meeting with Plaintiff. Plaintiff's intent that
both McGregor and Cook maintain confidentiality can be
inferred from her consent to undergo diagnosis or treatment.
See State v. Roper, 1996 NMCA 073, ¶¶ 12-13, 122 N.M. 126,
921 P.2d 322. We find Cook's claim on appeal that the
information was not privileged or confidential to be
inconsistent with both New Mexico law and her own testimony
at trial. We conclude that Cook owed Plaintiff a duty to
maintain confidentiality.
We next address whether Cook's good faith and absence
of intent to harm Plaintiff in making the disclosure,
provide a justification or excuse that bars Plaintiff's
claim of wrongful disclosure as a matter of law. New
Mexico's statutes and rules of evidence provide for specific
exceptions in which the public interest may outweigh the
duty of confidentiality and allow or require a health-care
provider to make a disclosure. Health-care providers must
report actual or suspected cases of child neglect or abuse.
See NMSA 1978, § 32A-4-3(A) (1997). Such reports are not
subject to the psychotherapist-patient privilege insofar as
they are communications that the therapist is "required by
statute to report to a public employee or state agency."
See Rule 11-504(D)(4), NMRA 1997. There is an exception for
disclosures which are necessary to protect against dangers
that patients may pose to themselves or others. See §§ 61-9A-27(B), 61-31-24(B) (allowing for disclosure of
confidential information that reveals contemplation of crime
or harmful act or indicates that person was victim of crime required to be reported by law); Clinger, 446 N.Y.S.2d at
805 (recognizing that necessity of disclosing information to
protect against danger that patient poses to himself or
others may provide affirmative defense to wrongful
disclosure claim). Rule 11-504(D) also lists specific
exceptions to the psychotherapist-patient privilege for
certain communications that involve parties in litigation.
Finally, a crime victim may waive this privilege by signing
a written release allowing a district attorney to access her
medical records. See Gonzales, 1996 NMCA 026, ¶ 16.
However, our statutes and rules recognize no general
exception covering all disclosures that are made in good
faith, and we conclude that Cook's good faith (or lack of
bad motive), standing alone, is insufficient to establish a
justification or excuse that bars Plaintiff's claim of
wrongful disclosure as a matter of law.
We next address the trial court's finding that the
evidence was insufficient to create a jury question
regarding whether Cook's disclosure was a proximate cause of
Plaintiff's damages. The trial court questioned whether
Plaintiff had met her burden of proving which damages were
caused by Cook's disclosure as opposed to McGregor's
assault. We disagree with the trial court that Plaintiff's
damages stemming from the assault preclude a finding that
she sustained damages as a result of the disclosure. As
noted in our Uniform Jury Instructions, a proximate cause of
an injury "need not be the only cause, nor the last nor
nearest cause. It is sufficient if it occurs with some
other cause acting at the same time, which in combination
with it, causes the injury." UJI 13-305, NMRA 1997.
Plaintiff testified that the last thing she wanted was
to have someone at Charter tell her husband that Plaintiff
had told Charter that her husband was abusing her. She was
afraid that the abuse would get worse if he found out.
Plaintiff told her therapist, Dr. Fineman, that Mr. Eckhardt
had been very angry about Cook's disclosure and increasingly
angry at Plaintiff. Plaintiff became more fearful of him,
the hitting increased, and the marital relationship became
"exceedingly difficult." Plaintiff claimed that the
disclosure undermined her trust in therapy to such an extent
that she did not seek further therapy at that point. This
evidence was sufficient to create a jury question on the
issue of whether Cook's disclosure was a proximate cause of
Plaintiff's damages. See Calkins v. Cox Estates, 110 N.M.
59, 61, 66, 792 P.2d 36, 38, 43 (1990) (proximate cause is a
question of fact for the jury to answer); Garrett, 113 N.M.
at 115, 823 P.2d at 915 (directed verdict is not appropriate
where there are true issues of fact to be presented to
jury).
We reverse the trial court's order granting a directed
verdict on Plaintiff's claim of wrongful disclosure and
remand for a jury trial on this claim.
B. Disclosure to Jury of Default Judgment Against
McGregor
Plaintiff asserts that she was unfairly prejudiced by
the trial court's disclosure to the jury of the $1 million
default judgment against McGregor in that the jurors
substantially reduced their award against Charter because
the disclosure led them to believe that Plaintiff already
had been adequately compensated by McGregor. Over
Plaintiff's objection, the trial court addressed the jury as
follows:
The court has entered a judgment against
Mr. McGregor, again as a default matter,
in the amount of $1,000,000.00; $500,000
in compensatory damages and $500,000 in
punitive damages . . . again that is the
matter of a default matter which was the
amount requested by the plaintiff.
Plaintiff does not seek a new trial on the claims for
which she prevailed. However, because the issue could recur
on remand of the wrongful disclosure claim, we take this
opportunity to examine the circumstances, if any, under
which a trial court can disclose to a jury the nature and
amount of a default judgment entered against an absent co-defendant.
This disclosure presents an issue of first impression
in New Mexico. Plaintiff argues that the prejudice
resulting from the disclosure of the amount of the default
judgment can be likened to the prejudice that a defendant
suffers when jurors are informed of the existence of a
defendant's insurance coverage. We agree that such
disclosures may unfairly prejudice a party by prompting
jurors to base their decision on that party's apparent
wealth rather than on facts which are material to the issues
tried. See Rule 11-411, NMRA 1997; Cardoza v. Town of
Silver City, 96 N.M. 130, 136-37, 628 P.2d 1126, 1132-33
(Ct. App. 1981). However, the amount of a judgment against
a co-defendant differs significantly from evidence of a
defendant's insurance coverage because the former could, by
implication, attribute wealth to the plaintiff, and the
latter could, by implication, attribute wealth to a
defendant. We discern potential damage to both parties in
the former circumstance.
We believe that our Supreme Court's recent opinion in
Fahrbach v. Diamond Shamrock, Inc., 122 N.M. 543, 546-50,
928 P.2d 269, 272-76 (1996), and Rule 11-408, NMRA 1997, as
interpreted in Fahrbach, provide a more appropriate analogy
and basis for analysis. Rule 11-408 states that neither
party may introduce evidence of a settlement for the purpose
of proving "liability for or invalidity of the claim or its
amount." (Emphasis added.) We believe that this rule, and
its underlying policy as expressed in Fahrbach, strongly
suggest that disclosure of the amount of money that a
plaintiff is awarded from an absent co-defendant is unfairly prejudicial and does not serve a valid purpose. In
Fahrbach, the trial court informed jurors that there were
additional defendants who had settled the plaintiff's claims
against them and would not be participating in the trial,
although jurors would hear evidence concerning their conduct
and would be given an opportunity to assess their fault in
causing the plaintiff's injuries. Id. at 545, 928 P.2d at
271. Our Supreme Court concluded that the trial court did
not abuse its discretion in informing the jury of the fact
of settlement because in doing so the trial court was
attempting "to eliminate what it reasonably perceived as
unnecessary confusion" regarding the status of the absent
co-defendants. Id. at 549-550, 928 P.2d at 275-76.
In the present case, the trial court's decision to
disclose the fact of default judgment fell within its
authority to manage the trial and rule on evidentiary
matters, and we review that action for abuse of discretion.
Id. at 548, 928 P.2d at 274. A trial court may inform
jurors about the reason for a co-defendant's absence if this
absence presents a source of confusion, especially when the
parties suggest no alternative means of clearing up the
confusion. Id. at 549, 928 P.2d at 275. In the present
case, however, no state of confusion was evident and we find
no discernible reason for the court to have made the
disclosure. The trial court did not only inform the jury of
the fact that a default judgment was entered, it went on to
state both the amount of the default judgment ($1 million)
and that this judgment included the sum of $500,000 in
punitive damages. Moreover, the court refused to allow
Plaintiff to present evidence to the jury regarding
McGregor's insolvency and the uncollectibility of the award.
Under these circumstances, we conclude that the trial court
abused its discretion in disclosing the amount of the
default judgment against McGregor.
We further determine that disclosure of the punitive
nature of the default judgment was impermissible. Punitive
damages are personal to the wrongdoer, and imply nothing
with regard to the liability of or damages owed by other
defendants. "Punitive damages do not measure a loss to the
plaintiff, but rather punish the tortfeasor for wrongdoing
and serve as a deterrent." Sanchez v. Clayton, 117 N.M.
761, 766, 877 P.2d 567, 572 (1994); see also Clay v.
Ferrellgas, Inc., 118 N.M. 266, 269, 881 P.2d 11, 14 (1994)
("The purpose of punitive damages is to punish a
wrongdoer."). Hence, "[i]n determining whether a punitive
award is justified, the focus is directed at the nature or
character of the conduct of the defendant. It is not
directed at the nature or extent of the harm sustained by
the plaintiff." 1 James D. Ghiardi & John J. Kircher,
Punitive Damages Law and Practice § 5.01 (1996). For this
reason, "punitive damages against two or more defendants
must be separately determined." Sanchez, 117 N.M. at 766,
877 P.2d at 572 (citation omitted); see also Henry Woods &
Beth Deeve, Comparative Fault § 7.5 (3d. ed. 1996) (majority
of jurisdictions will not apportion punitive damages award according to comparative fault principles).
We discern no valid purpose for disclosing to the jury
the fact that punitive damages were awarded against McGregor
and the amount of such award. We also reject the
proposition that such a disclosure is harmless. In addition
to the concern noted above regarding the unfair prejudice
caused by attributing wealth to Plaintiff, this disclosure
could prejudice other defendants by implying that they, too,
deserve to be punished as McGregor was, or by associating
the bad actions of one defendant with another. The
disclosure of the punitive nature and amount of the default
judgment against McGregor was improper.
C. Negligence
Charter contends that the judgment on Plaintiff's
negligence claims must be reversed because it is premised on
an error by the trial court in failing to rule on the legal
question of whether Charter owed a duty to Plaintiff as one
of its patients. The trial court gave the jury a special-verdict form requiring it to make an initial determination
of whether Plaintiff was a Charter patient. If the jury did
not find that Plaintiff was a Charter patient, the jury was
instructed not to answer any further questions. The jury
determined that Plaintiff was Charter's patient.
We agree with Charter that Plaintiff's negligence
claims must be premised on a duty that Charter owed to
Plaintiff, see Lopez v. Maez, 98 N.M. 625, 630, 651 P.2d
1269, 1274 (1982), and it is for the court to determine as a
matter of law whether such a duty exists. See Calkins, 110
N.M. at 61, 792 P.2d at 38; Sarracino v. Martinez, 117 N.M.
193, 194, 870 P.2d 155, 156 (Ct. App. 1994). However,
Plaintiff's case presents circumstances in which the
question of whether Charter owed her a duty depends on the
existence of particular facts. See Sarracino, 117 N.M. at
194, 870 P.2d at 156. We determine that the trial court
correctly held that the existence of a duty owed by Charter
to Plaintiff depended on whether Plaintiff was a Charter
patient, and that Plaintiff's status as a Charter patient
presents a mixed question of fact and law for the jury to
answer by means of a special interrogatory. We find no
error in submitting this question to the jury.
The parties agree to the legal definition of "patient"
taken from the Medical Malpractice Act. A patient is
defined as "a natural person who received or should have
received health care from a licensed health care provider,
under a contract, express or implied."NMSA 1978, § 41-5-3E
(1977). However, they disagree as to the existence of a
contract, either express or implied, under which Plaintiff
received (or should have received) health care from Charter.
To establish the existence of an implied contract with
Charter, Plaintiff points to evidence that she responded to
Charter's advertisements, attended Charter's workshop given at Charter's counseling center, and filled-out an evaluation
form given to her by Cook, a Charter employee, who then
delegated the task of "following up" with Plaintiff to
McGregor, a contract therapist whom Cook identified as "our
therapist" and who was given "temporary privileges" by
Charter, including an office in Charter's counseling center,
clerical support from Charter employees, Charter business
cards listing his name and title next to the Charter logo,
and the use of Charter letterhead on which McGregor wrote a
letter to request funding for Plaintiff's therapy. Charter
contends that this evidence only shows that Plaintiff went
to Charter for services, not that Charter (as opposed to
McGregor) agreed to provide her with any services.
We disagree with Charter's assessment. The question of
whether Plaintiff was a patient of Charter involves
conflicting evidence for the trier of fact to resolve.
"[W]here the facts and circumstances of the relationship
between the parties are at issue, [the] existence of a duty
may become a mixed question of law and fact under which the
fact issue must be submitted to the jury for resolution."
R.A. Peck, Inc. v. Liberty Fed. Sav. Bank, 108 N.M. 84, 89,
766 P.2d 928, 933 (Ct. App. 1988). "[W]hen the existence of
a contract is at issue and the evidence is conflicting or
permits more than one inference, it is for the finder of
fact to determine whether the contract did in fact exist."
Garcia v. Middle Rio Grande Conservancy Dist., 99 N.M. 802,
807, 664 P.2d 1000, 1005 (Ct. App. 1983), overruled on other
grounds by Montoya v. AKAL Sec., Inc., 114 N.M. 354, 357,
838 P.2d 971, 974 (1992).
Charter next contends that even if the jury properly
determined whether Plaintiff was a Charter patient, that
finding is insufficient to establish the scope of the duty
that it owed to her without further legal determinations by
the trial court. Again, we disagree. The trial court's
instructions adequately conveyed to the jury that, if
Plaintiff was a Charter patient, then Charter had a duty to
act with reasonable care in furnishing services to her. The
trial court did not err by instructing the jury to resolve
the factual disputes concerning whether Charter breached its
duties and whether such breaches were the proximate cause of
the damages sustained by Plaintiff.
1. Negligent Selection and Supervision
In order to establish that Charter was negligent in its
selection and supervision of McGregor, the jury was
instructed that it had to find that Plaintiff met its burden
of proving at least one of the following contentions:
1. [Charter] negligently selected
William Kent McGregor as a contract
therapist by failing to adequately
investigate McGregor's current clinical
competency;
2. [Charter] negligently selected
William Kent McGregor as a contract
therapist by failing to adequately
investigate McGregor's drug and alcohol
addiction;
3. [Charter] negligently selected
William Kent McGregor as a contract
therapist by negligently granting him
temporary staff privileges with an
incomplete application;
4. [Charter] negligently failed to
supervise William Kent McGregor;
5. [Charter] negligently selected
William Kent McGregor to treat
Plaintiff.
These instructions are consistent with New Mexico law which
recognizes that the doctrine of corporate negligence may
impose liability on a hospital for the negligent granting of
staff privileges or the negligent supervision of treatment.
See Diaz v. Feil, 118 N.M. 385, 389, 881 P.2d 745, 749 (Ct.
App. 1994).
In order to make a prima facie showing that Charter
negligently retained or granted staff privileges to
McGregor, Plaintiff had to establish that Charter
negligently failed to screen McGregor's competency, or that
it negligently retained him after it knew or should have
known of matters involving his general competency. See id.
at 390, 881 P.2d at 750. Charter would have to have had
prior notice of McGregor's lack of competency before it
could be held liable for either granting or continuing staff
privileges. Id.
Plaintiff presented evidence that members of Charter's
staff, including Cook, knew of McGregor's past substance
abuse problem and his lack of recent clinical experience
following his treatment for substance abuse. Plaintiff also
presented evidence that under the required standard of care,
Charter's Credentials Committee should have obtained more
objective information about McGregor's substance abuse
history, and that Charter obtained only two of twelve items
required for McGregor's credentials. There is evidence that
Charter did not provide clinical supervision, peer review,
or quality assurance regarding McGregor's services at the
Counseling Center. Before the credential review process was
complete, Charter issued business cards to McGregor, failed
to supervise his use of the cards, and instructed McGregor
to "follow up" with Plaintiff after she attended one of
Charter's free workshops.
Charter disputes these facts. However, in reviewing
the evidence supporting the jury's verdict, this Court
resolves all disputed facts in favor of the successful party, indulges all reasonable inferences in support of the
verdict, and disregards all evidence and inferences to the
contrary. See Clovis Nat'l Bank v. Harmon, 102 N.M. 166,
168-69, 692 P.2d 1315, 1317-18 (1984). We therefore affirm
the judgment with respect to Plaintiff's claim of negligent
selection and supervision.
2. Negligent Misrepresentation
Plaintiff alleged two separate categories of statements
as the basis for her misrepresentation claims: (1)
misrepresentations about the nature and quality of Charter
programs in its advertisements and brochures; and (2)
misrepresentations that McGregor was an employee. Defendant
moved for a directed verdict with respect to both of these
categories and asserted that Plaintiff lacked standing to
make such a challenge with respect to Charter's
advertisements and brochures. The trial court granted
Charter's motion for a direct verdict with respect to the
advertisements and brochures because the court found that
these items fairly characterized the services available
either through the CCC or the Charter Hospital in
Albuquerque. Consequently, only one category of
misrepresentation was presented to the jury--Charter's
alleged misrepresentation that McGregor was a Charter
employee.
On appeal, Plaintiff attempts to resurrect her claim
that Charter's advertising contained misrepresentations
about the nature and quality of its programs. This attempt
fails. We agree with the trial court that Charter's
advertising and promotional materials, in and of themselves,
are not false or misleading. Plaintiff presented no
evidence that Charter failed to provide her with the free
seminars or other programs that it advertised, or that the
quality of such seminars or programs fell below the industry
standard. On the contrary, Plaintiff testified that she
attended one of Charter's free seminars and found it
helpful. However, we agree with Plaintiff that Charter's
advertising was relevant to her claim that Charter
misrepresented McGregor's status as a Charter employee.
Charter's advertisements could have contributed to
Plaintiff's belief that, as a Charter employee, McGregor was
qualified to conduct therapy or other programs that Charter
advertised. The advertisements also specifically
represented that McGregor "has been in private practice for
seven years" and "has extensive experience as a
psychotherapist in private practice as well as leading
numerous groups and workshops." Thus, we will consider
Charter's advertising in the context of Plaintiff's claim
that Charter misrepresented McGregor's employment status.
The trial court gave the following instruction on
negligent misrepresentation:
To establish a claim of negligent
misrepresentation, Plaintiff has the burden of proving that Charter Hospital
of Albuquerque, Inc. made the following
false misrepresentation:
1. Charter Hospital of
Albuquerque, Inc. negligently
misrepresented to plaintiff that
McGregor was its employee at the Charter
Counseling Center of Santa Fe when he
was not its employee;
Plaintiff has the burden of showing
that Charter Hospital of Albuquerque,
Inc. intended that plaintiff would rely
on the false representation and that she
did, in fact, rely on the false
representation.
Plaintiff also contends and has the
burden of proving that such negligent
misrepresentation was a proximate cause
of her injuries and damages.
The court further instructed the jury that "[a] material
misrepresentation is an untrue statement which a party
intends the other party to rely on and upon which the other
party did in fact rely."
In this case, the falsity of any representation that
McGregor was a Charter employee is not in dispute, as the
trial court instructed the jury that McGregor was an
independent contractor, not a Charter employee. Rather, the
dispute concerns whether Charter made such a representation
to Plaintiff with the intent that she rely upon it, whether
Plaintiff did in fact rely upon such a representation, and
whether such reliance was a proximate cause of her damages.
Plaintiff testified that she was not informed of
McGregor's status as an independent contractor either by CCC
employees, or by CCC's signs, advertisements, or promotional
materials. She presented evidence that Charter allowed
McGregor to use business cards and stationery with the
Charter logo, referred to him as "our therapist" at
Charter's free seminars, listed him by name in Charter
advertisements, and provided him with an office and clerical
support in a building that was identified as a Charter
facility. Cook acknowledged in her testimony that persons
such as Plaintiff might believe that McGregor was a Charter
employee under these circumstances, and there was evidence
that Charter intended McGregor to facilitate Charter's
contact with patients, and thereby generate revenue for
Charter, under this arrangement. Plaintiff testified that
she relied on these representations as a basis for selecting
McGregor as her therapist. As an employee on Charter's
clinical staff, McGregor could be expected to have the
credentials and supervision required under Charter's
Clinical Staff Bylaws. Plaintiff's expert, Dr. Fineman,
testified that Charter should have foreseen that a therapist
who lacked such credentials or supervision could encounter
problems with the transference or counter-transference of sexual feelings between therapist and patient.
We determine that the evidence presented at trial was
sufficient to support the jury's verdict in this case with
respect to the claims for negligent misrepresentation and
negligent selection and supervision. See Harmon, 102 N.M.
at 168-69, 692 P.2d at 1317-18. The judgment as to these
claims is affirmed.
D. Fraudulent Misrepresentation
Charter raises several challenges to the judgment
regarding Plaintiff's claim of fraudulent misrepresentation.
We initially address Charter's contention that the trial
court failed to rule on Charter's Amended Motion for Summary
Judgment. This issue lacks merit. A review of the record
discloses that the trial court heard all motions for summary
judgment on June 5, 1995 and denied both the plaintiff's and
defendant's motions.
Charter next contends that the trial court erroneously
permitted the jury to consider the claim of fraudulent
misrepresentation and that the Plaintiff was impermissibly
allowed a double recovery for both negligence and fraud
pertaining to the same misrepresentation. We determine that
the trial court erred in submitting the claim of fraudulent
misrepresentation to the jury and reverse the judgment with
respect to the damages awarded on that claim. Our
disposition of Plaintiff's fraud claim makes it unnecessary
for us to address the issue of double recovery.
As noted in our discussion of negligent
misrepresentation, on appeal Plaintiff attempts to resurrect
her claim that Charter made misrepresentations about the
nature and quality of Charter programs in its advertisements
and brochures. Since we agree with the trial court's
determination that the advertisements were not false, these
advertisements do not provide an independent basis for
Plaintiff's claim of fraudulent misrepresentation. We limit
our discussion of this issue to Charter's misrepresentations
concerning McGregor's status as a Charter employee.
The court gave the jury the following instruction on
fraudulent misrepresentation:
To establish a claim of fraudulent
misrepresentation, Plaintiff has the
burden of proving that Charter Hospital
of Albuquerque, Inc. made the following
false representation:
1. Charter Hospital of
Albuquerque, Inc. intentionally gave the
impression to Kathleen Eckhardt that
McGregor was its employee at the Charter
Counseling Center of Santa Fe when it
knew that he was not its employee;
Plaintiff has the burden of showing
that Charter Hospital of Albuquerque,
Inc. intentionally made this
representation with the intent to
deceive plaintiff or with reckless
disregard for its truthfulness and to
induce plaintiff to rely on the
representations;
Plaintiff also has the burden of
proving that the plaintiff reasonably
relied on the representations made by
Charter Hospital of Albuquerque, Inc.
The Plaintiff also contends and has
the burden of proving that such
fraudulent misrepresentation was a
proximate cause of her injuries and
damages.
We distinguish the elements of negligence and fraud as
follows: (1) fraudulent misrepresentation requires an
untrue statement, while negligent misrepresentation may
involve a statement that is "literally true" but misleading;
(2) fraudulent misrepresentation requires the defendant to
make the statement recklessly or with knowledge that it is
false, while negligent misrepresentation only requires a
failure to exercise ordinary care in obtaining or
communicating the statement; (3) fraudulent
misrepresentation requires an intent to deceive, while
negligent misrepresentation only requires an intent that the
plaintiff receive and be influenced by the statement where
it is reasonably foreseeable that the plaintiff would be
harmed if the information conveyed was incorrect or
misleading. See UJI 13-1632, NMRA 1997 (negligent
misrepresentation); UJI 13-1633, NMRA 1997 (fraud); State ex
rel. Nichols v. Safeco Ins. Co., 100 N.M. 440, 443 n.1, 671
P.2d 1151, 1154 n.1 (Ct. App. 1983) (citing Restatement
(Second) of Torts § 552 cmt. (a) (1977)).
Finally, while negligent misrepresentation may be
proven by a preponderance of the evidence, common-law fraud
must be proven by clear and convincing evidence. See UJI
13-1633; Safeco, 100 N.M. at 443, 671 P.2d at 1154; Eoff v.
Forrest, 109 N.M. 695, 699, 789 P.2d 1262, 1266 (1990). We
agree with Charter that there is no direct evidence that
Charter or its employees intended to deceive or harm
Plaintiff by misrepresenting McGregor's employment status or
qualifications. Charter never affirmatively stated to
Plaintiff that McGregor was a Charter employee. Rather, the
evidence showed that Charter was negligent in failing to
clarify McGregor's status during the period when his
application for clinical staff privileges was pending.
Although the jury was permitted to infer the requisite
intent from circumstantial evidence, the inference must be
reasonable. See UJI 13-308, NMRA 1997; Cf. Landavazo v.
Sanchez, 111 N.M. 137, 138, 802 P.2d 1283, 1284 (1990)
("Substantial evidence is such relevant evidence that a
reasonable mind would find adequate to support a conclusion."). In this case, the evidence does not support
a reasonable inference that Charter had the intent to
deceive Plaintiff regarding McGregor's employment status.
We reverse the judgment with respect to Plaintiff's claim of
fraudulent misrepresentation.
E. Punitive Damages
Plaintiff contends that the trial court erred by
failing to instruct the jury that it may award punitive
damages on Plaintiff's claims for negligent or fraudulent
misrepresentation and negligent selection and supervision.
"To be liable for punitive damages, a wrongdoer must have
some culpable mental state, and the wrongdoer's conduct must
rise to a willful, wanton, malicious, reckless, oppressive,
or fraudulent level." Ferrellgas, 118 N.M. at 269, 881 P.2d
at 14 (citations omitted). We review the trial court's
findings regarding punitive damages for abuse of discretion.
See New Mexico Hosp. Ass'n v. A.T. & S.F. Mem. Hosps. Inc.,
105 N.M. 508, 513, 734 P.2d 748, 753 (1987). Because an
appellate court does not reweigh the evidence, we only
examine whether substantial evidence supports the trial
court's ruling after viewing the facts and all reasonable
inferences in the light most favorable to the party
resisting the motion. Gonzales v. Surgidev Corp., 120 N.M.
133, 145, 899 P.2d 576, 588 (1995).
We determine that the trial court did not abuse its
discretion in finding that Charter's negligence did not rise
to the level of culpability required for imposition of
punitive damages. There is no evidence of Charter's intent
to defraud or harm Plaintiff by deceiving her regarding
McGregor's employment status. While we recognize that a
breach of duty is more likely to demonstrate a culpable
mental state as the risk of danger increases, Ferrellgas,
118 N.M. at 269, 881 P.2d at 14, this principle is not
dispositive in the present case because there was no
evidence that Charter knew prior to the assault on Plaintiff
that McGregor presented an especially high risk of danger to
its patients. We affirm the trial court's decision to
strike the claims for punitive damages as to negligent
selection, supervision, and misrepresentation.
F. Violation of Unfair Practices Act
Plaintiff contends that the trial court erred by
granting a directed verdict dismissing her claim that
Charter violated the Unfair Practices Act, NMSA 1978, §§ 57-12-1 through -22 (1967, as amended through 1995), by issuing
false and misleading advertisements concerning its goods and
services on which Plaintiff relied to her detriment.
"Generally, the Unfair Practices Act is intended to
provide a private remedy for individuals who suffer
pecuniary harm for conduct involving either misleading
identification of a business or goods, or false or deceptive
advertising." Parker v. E.I. Du Pont de Nemours & Co., 121 N.M. 120, 132, 909 P.2d 1, 13 (Ct. App. 1995). Thus, an
essential element of Plaintiff's claim regarding an "unfair
or deceptive trade practice" under the Act is that a "false
or misleading oral or written statement, visual description
or other representation of any kind [was] knowingly made [by
Charter] in connection with the sale, lease, rental or loan
of goods or services . . . ." Section 57-12-2(D); Ashlock
v. Sunwest Bank, 107 N.M. 100, 101, 753 P.2d 346, 347
(1988), overruled on other grounds by Surgidev, 120 N.M. at
140, 899 P.2d at 583. The subjective belief of the party
receiving the information is not sufficient to establish a
violation of the Act. See Page & Wirtz Constr. Co. v.
Solomon, 110 N.M. 206, 210, 794 P.2d 349, 353 (1990).
Since Plaintiff failed to show that Charter's
advertising was false or misleading in connection with the
sale of its goods and services, she failed to establish a
claim under the Unfair Practices Act. See Ashlock, 107 N.M.
at 101, 753 P.2d at 347. Therefore, we affirm the trial
court's decision to dismiss Plaintiff's claim for violation
of the Unfair Practices Act.
III. CONCLUSION
We affirm the judgment with respect to Plaintiff's
claims for negligent misrepresentation and negligent
selection and supervision. We affirm the trial court's
decision to grant a directed verdict dismissing Plaintiff's
claims for violation of the Unfair Practices Act and
punitive damages. We reverse the judgment with respect to
Plaintiff's claims for fraudulent misrepresentation, and we
reverse the trial court's decision to grant a directed
verdict dismissing Plaintiff's claim for wrongful
disclosure. We remand to the trial court for trial on
Plaintiff's wrongful disclosure claim.
IT IS SO ORDERED.
_______________________________
M.
CHRISTINA ARMIJO, Judge
WE CONCUR:
________________________________
A. JOSEPH ALARID, Judge
________________________________
BENNY E. FLORES, Judge