from the Superior Court in Maricopa County The Honorable
David M. Talamante, Judge Nos. CV2011-098899; CV2012-092733;
Decision of the Court of Appeals, Division One Nos. 1 CA-CV
16-0227; 1 CA-CV 16-0228; 1 CA-CV 16-0232 (Consolidated)
Filed June 8, 2017
Michael Wright, Lincoln M. Wright, Udall Shumway, P.L.C.,
Mesa; and J. Robert Tolman (argued), Tolman Law Firm, Tempe,
Attorneys for Thomas Kopp, et al.
J. Checkett (argued), James G. Bennett, The Checkett Law
Firm, PLLC, Scottsdale; and Kevin R. Myer, Campbell, Yost,
Clare & Norell, P.C., Phoenix, Attorneys for IASIS
Healthcare Corporation, IASIS Healthcare Holdings, Inc., and
IASIS Finance, Inc.
Stanley G. Feldman, Miller, Pitt, Feldman & McAnally,
P.C., Tucson; and David L. Abney (argued), Ahwatukee Legal
Office, P.C., Phoenix, Attorneys for Amicus Curiae Arizona
Association for Justice/Arizona Trial Lawyers Association
JUSTICE BALES authored the opinion of the Court, in which
VICE CHIEF JUSTICE BRUTINEL and JUSTICES PELANDER, TIMMER,
BOLICK, GOULD, and LOPEZ joined.
Nearly seventy-five years ago, we held in DeGraff v.
Smith that a dismissal with prejudice is a judgment on
the merits that carries preclusive effect. 62 Ariz. 261,
269-70 (1945). We today hold that a stipulated dismissal with
prejudice of an agent-surgeon does not preclude a party from
asserting a claim against the surgeon's principal for its
own independent negligence. This is true even when the
independent negligence claim requires proof of the
surgeon's negligence. This conclusion comports with our
more recent holding in Chaney Building Co. v. City of
Tucson that a stipulated dismissal does not trigger
issue preclusion because only issues that have been
"actually litigated" may be precluded. 148 Ariz.
571, 573 (1986). Thus, we disavow our holding in
DeGraff insofar as that case and its progeny
conclude that a stipulated dismissal with prejudice
"operate[s] as an adjudication that [the dismissed
party] was not negligent in the treatment of [the]
plaintiff." Torres v. Kennecott Copper Corp.,
15 Ariz.App. 272, 274 (1971).
Thomas Kopp, Melissa Ornelas, and Maria Judith Gonzalez
(collectively, "Plaintiffs") underwent bariatric
surgery performed by Dr. Eric Schlesinger, M.D., at Tempe St.
Luke's Hospital. After experiencing post-operative
complications, Plaintiffs filed medical malpractice actions
against Physician Group of Arizona, IASIS Healthcare Corp.,
IASIS Healthcare Holdings, Inc., IASIS Finance, Inc., and St.
Luke's Medical Center (collectively, the
"Hospital") and Dr. Schlesinger. Plaintiffs'
cases were later consolidated for discovery. Plaintiffs
alleged Dr. Schlesinger was negligent in his surgical care
and the Hospital was both vicariously liable for the
doctor's negligence and independently negligent in the
administration of its bariatric surgery program, including
its hiring, selection, and credentialing.
Plaintiffs entered into a settlement agreement with Dr.
Schlesinger, which required Plaintiffs to "dismiss with
prejudice the pending claims against" him and further
"preclude[d] the [Plaintiffs] from pursuing claims
against the [H]ospital . . . based on a theory of vicarious
liability or respondeat superior," although Plaintiffs
could bring "independent claims" against the
Hospital. Additionally, the agreement stated that "no
past or present wrongdoing on the part of [Dr. Schlesinger]
is implied or should be inferred" from the settlement
agreement. Pursuant to the agreement, Plaintiffs dismissed
with prejudice all claims against Dr. Schlesinger and
"any claims against any co-defendants for vicarious
liability," but in their stipulation specifically
reserved independent claims against the Hospital.
The Hospital moved to dismiss most of the remaining claims,
arguing they were derivative of Dr. Schlesinger's
negligence. The trial court agreed and dismissed with
prejudice Plaintiffs' negligent credentialing, hiring,
and supervision claims, although it noted that "[a]ny
independent negligence claims alleged against [the Hospital]
survive the settlement with Dr. Schlesinger."
Affirming, the court of appeals stated that" [p]ursuant
to both the plain terms of the settlement agreement and
Torres, the dismissal of Plaintiffs' negligence
claims against Dr. Schlesinger preclude[s] Plaintiffs from
litigating [the Hospital's] alleged liability as
vicariously derived from any alleged negligence of Dr.
Schlesinger." Kopp v. Physician ...