Calaway Ex Rel. Calaway v. Schucker

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 10a0586n.06
No. 09-6097 FILED
Sep 02, 2010
UNITED STATES COURT OF APPEALS LEONARD GREEN, Clerk
FOR THE SIXTH CIRCUIT
KAITLYN CALAWAY, a Minor, by Natural Mother )
and Next Friend, Kathleen Calaway, )
)
Plaintiff-Appellant, )
)
v. ) On Appeal from the United States
) District Court for the Western
JODI SCHUCKER, ) District of Tennessee
)
Defendant-Appellee, )
)
and )
)
)
U.T. MEDICAL GROUP, INC., )
)
Defendant. )
Before: BOGGS, SILER, and MOORE, Circuit Judges.
BOGGS, Circuit Judge. Kathleen Calaway (Calaway), acting on behalf of her
daughter Kaitlyn, filed this diversity action against Dr. Jodi Schucker (Schucker). The district court
concluded that the action was barred by the doctrine of res judicata and granted summary judgment
to Schucker. Calaway now appeals the district court’s judgment, claiming that the evidence before
the district court did not establish that Calaway’s claims had been resolved previously on the merits.
We agree, and we therefore reverse the district court’s judgment and remand to the district court for
further proceedings.
No. 09-6097
Calaway v. Schucker
I
Calaway’s suit arises out of Schucker’s alleged negligence during the birth of Calaway’s
daughter, Kaitlyn. On February 20, 1996, Calaway went into labor and was admitted to the Regional
Medical Center at Memphis. At the time, U.T. Medical Group employed physicians and medical
personnel who staffed the Medical Center, including Schucker. Shucker specialized in obstetrics
and gynecology. At the time Calaway was admitted, Schucker was on duty as the University of
Tennessee “in house” faculty member supervising the resident physicians.
After Calaway was admitted to the Medical Center, she was placed under the care of resident
physicians and, eventually, Schucker. Allegedly as a result of negligent conduct by Schucker and
her subordinates, Calaway experienced complications during labor that led her newborn daughter,
Kaitlyn, to suffer severe and permanent injuries.
On January 31, 1997, Calaway filed suit, on behalf of her daughter, against the Medical
Center and U.T. Medical Group in Tennessee circuit court. She proceeded on the theory that U.T.
Medical Group and the Medical Center were vicariously liable for the negligence of their employees,
including Schucker. Schucker was not a party to the action.
On June 16, 2002, U.T. Medical Group and Calaway entered into a Settlement Agreement
and Release.1 Pursuant to that agreement, the circuit court issued an “ORDER OF DISMISSAL
WITH PREJUDICE AS TO THE DEFENDANT, UT MEDICAL GROUP, INC., ONLY,” to which
both parties consented. The order stated:
1
This agreement is under seal with the Tennessee circuit court and has not been placed on the
record in this case.
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Come now the Plaintiffs and Defendant UT Medical Group, Inc., only, upon
statements of counsel, and the entire record in this case, the Court finds that the
matter against UT Medical Group, Inc., only, shall be and is hereby dismissed with
prejudice, however, said dismissal specifically excludes any cause of action against
Dr. Jodi Schucker, individually . . . .
....
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that this
case is dismissed with prejudice as to UT Medical Group, Inc., only, and said
dismissal excludes Dr. Jodi Schucker, individually . . . .
On September 13, 2002, Calaway filed the present action, on behalf of her daughter, against
Schucker in the United States District Court for the Western District of Tennessee. Calaway sought
to recover for Schucker’s negligence in delivering Kaitlyn Calaway, which was some of the same
conduct that she previously alleged in the suit against U.T. Medical Group.
Shortly after Calaway filed the action, Schucker moved for summary judgment on the
grounds that the order of dismissal in Calaway’s action against U.T. Medical Group gave rise to res
judicata. The district court initially rejected this argument, concluding that the dismissal was not
a judgment on the merits and thus did not give rise to res judicata. However, when Schucker
renewed her motion for summary judgment in 2009, the district court changed its mind. The court
concluded that intervening changes in Tennessee law–in particular, the decision of the Tennessee
Court of Appeals in Gerber v. Holcomb, 219 S.W.3d 914 (Tenn. Ct. App. 2006)–had established that
an agreed judgment of dismissal operated as res judicata. As a result, the court found that the order
of dismissal in Calaway’s case against U.T. Medical Group gave rise to res judicata and barred
Calaway’s claim against Schucker. The court therefore granted summary judgment to Schucker.
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Calaway filed a Rule 59(e) motion to alter or amend the district court’s judgment. On
August 18, 2009, the district court issued an order denying that motion. The court acknowledged
that it had been incorrect when it asserted that Gerber changed prior Tennessee law. Nevertheless,
the court concluded that the order of dismissal in Calaway’s case against U.T. Medical Group gave
rise to res judicata because, according to the court, the record reflected the parties’ intent to conclude
that case on the merits. Calaway filed a timely appeal.
II
On appeal, Calaway argues that the district court erred when it granted summary judgment
in favor of Schucker. This court reviews a district court’s order granting summary judgment de
novo. Havensure, L.L.C. v. Prudential Ins. Co. of Am., 595 F.3d 312, 315 (6th Cir. 2010). Summary
judgment is appropriate where “the pleadings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material fact and that the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). The party moving for summary judgment
bears the initial burden of identifying those parts of the record that demonstrate the absence of any
genuine issue of material fact. Havensure, 595 F.3d at 315. Once the moving party has satisfied its
burden, the nonmoving party must set forth specific facts showing that there is a genuine issue for
trial. Moldowan v. City of Warren, 578 F.3d 351, 374 (6th Cir. 2009). A genuine issue of material
fact exists if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict
for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In determining whether
a genuine issue of material fact exists, “this court draws all inferences in the light most favorable to
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Calaway v. Schucker
the nonmoving party.” Havensure, 595 F.3d at 315 (citing Matsushita Elec. Indus v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)).
Federal courts sitting in diversity must afford state-court judgments the same preclusive
effect that they would have under the law of the state in which they were rendered. Evans v. Pearson
Enters., 434 F.3d 839, 849 (6th Cir. 2006). Tennessee recognizes the traditional doctrine of res
judicata, which is “a claim preclusion doctrine that promotes finality in litigation.” Lien v. Couch,
993 S.W.2d 53, 55 (Tenn. Ct. App. 1998). The doctrine bars “a second suit between the same parties
or their privies on the same cause of action with respect to all the issues which were or could have
been litigated in the former suit.” Creech v. Addington, 281 S.W.3d 363, 376 (Tenn. 2009). A party
asserting res judicata must show that “(1) a court of competent jurisdiction rendered the prior
judgment, (2) the prior judgment was final and on the merits, (3) the same parties or their privies
were involved in both proceedings, and (4) both proceedings involved the same cause of action.”
Lien, 993 S.W.2d at 56 (citing Lee v. Hall, 790 S.W.2d 293, 294 (Tenn. Ct. App. 1990)). In this
case, the parties dispute only whether Shucker has satisfied her burden with respect to the second
element–that is, whether Shucker has provided sufficient evidence to establish that the judgment of
dismissal in Calaway’s action against U.T. Medical Group was a judgment “on the merits.”
Tennessee law limits the extent to which a voluntary dismissal entered by consent of the
parties is “on the merits” and gives rise to res judicata. Under Tennessee law, a voluntary dismissal
normally does not prejudice the plaintiff’s right to re-file the same action. See Tenn. R. Civ. P.
41.01; Garrett v. Corry Foam Prods, Inc., 596 S.W.2d 808, 810-11 (Tenn. 1980). Further, the mere
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fact that a court of law2 grants such a dismissal “with prejudice” is insufficient to give the judgment
of dismissal claim-preclusive effect–in fact, “an order of dismissal ‘with prejudice’ should be treated
as a mere nonsuit and the words ‘with full prejudice’ disregarded as surplusage.” Garrett, 596
S.W.2d at 809-10; see also Agrolinz, Inc. v. Micro Flo Co., 202 F.3d 858, 861 (6th Cir. 2000)
(noting that Tennessee law provides that the “words ‘with prejudice’ incorporated into the stipulation
of dismissal are without legal significance and will not bar a subsequent suit.’”). This is so because
Tennessee has rejected the common-law rule of retraxit, Garrett, 596 S.W.2d at 809-10; Patrick v.
Dickinson, 526 S.W.2d 449, 452 (Tenn. 1975), under which “a dismissal by agreement of the parties
is equivalent to, and is treated as, a public renunciation on the part of the complainant of the claim
asserted by him in his pleading against the defendant, and he is thereafter estopped to bring it
forward again,”3 Lindsay v. Allen, 82 S.W. 171, 174 (Tenn. 1904).
This does not mean, however, that a voluntary dismissal can never give rise to res judicata.
Rather, the “[t]he decisive test [for whether such a dismissal gives rise to res judicata] is whether
the judgment of dismissal was on the merits.” Garrett, 596 S.W.2d at 810 (quoting Long v. Kirby-
Smith, 292 S.W.2d 216, 221 (Tenn. Ct. App. 1956)). This turns on the intent of the parties:
2
Tennessee has preserved the distinction between courts of law and courts of equity, and
courts of equity generally enjoy broad power to dismiss actions with or without prejudice. Long v.
Kirby-Smith, 292 S.W.2d 216, 220-21 (Tenn. Ct. App. 1956).
3
Additionally, under the rule of retraxit, “a judgment of dismissal, when based upon and
entered in pursuance of the agreement of the parties, must be understood, in the absence of anything
to the contrary, expressed in the agreement and contained in the judgment itself, to amount to such
an adjustment of the merits of the controversy by the parties themselves through the judgment of the
courts as will constitute a defense to another action afterwards brought upon the same cause of
action.” Lindsay v. Allen, 82 S.W. 171, 173 (Tenn. 1904) (quoting United States v. Parker, 120 U.S.
89, 95 (1887)).
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The extent to which a judgment or decree entered by consent is conclusive in a
subsequent action should be governed by the intention of the parties as expressed in
the agreement which is the basis of the judgment and gathered from all the
circumstances, rather than by a mechanical application of the general rules governing
the scope of estoppel by judgment.
Long, 292 S.W.2d at 220; see also Agrolinz, 202 F.3d at 861 (quoting Long, 292 S.W.2d at 220);
Lindsay, 82 S.W. at 174 (“In some States, a dismissal by agreement is regarded as a bar to a
subsequent suit on the same issues. [B]ut the better rule is that it must be affirmatively shown either
that the dismissal or nonsuit was upon examination of the merits, or that the intention of the parties
was to finally settle the controversy by the agreement, or to merge the cause of action in the
judgment . . . .” (quotation marks and citations omitted)). Thus, under Tennessee law, a voluntary
dismissal by consent of the parties may bar reassertion of a claim, but only to the extent that the
parties intended the dismissal to resolve the merits of the claim and establish res judicata. See
Garrett, 596 S.W.2d at 809 (“The subject order, in itself, and the remainder of the court record in
which that order was entered demonstrate that it was not a determination of the plaintiff’s right of
action on the merits, unless the words ‘with prejudice’ can be held to have that effect.”).
In this case, the district court relied on two pieces of evidence to conclude that Calaway
intended the order of dismissal in her action against U.T. Medical Group to resolve Calaway’s
negligence claims on the merits. First, the court noted that Calaway and U.T. Medical Group
requested the order of dismissal pursuant to a “Settlement Agreement and Release,” though the
district court did not actually review that agreement. Second, the district court focused on the
language of the order of dismissal itself, noting that Calaway’s “intention to renounce” her claims
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Calaway v. Schucker
against U.T. Medical Group was manifested by “the fact that certain parties including [Schucker]
were excepted from the order of dismissal.”
This constituted error. First, without knowing the contents of the Settlement Agreement and
Release–which has never been placed on the record–it is impossible to determine if that agreement
expressed an intent to resolve Calaway’s negligence claims on the merits. See Long, 292 S.W.2d
at 220 (indicating that the claim-preclusive effect of a judgment depends on the intent of the parties
as expressed in the agreement that is the basis of the judgment). Settlement agreements frequently
specify that the parties are not addressing the merits of the claims asserted. Further, in general, a
release is merely the relinquishment of a claim, rather than a resolution of the merits of the claim.
See 76 C.J.S. Release § 1 (2010); cf. Richland Country Club, Inc. v. CRC Equities, Inc., 832 S.W.2d
554, 557 (Tenn. Ct. App. 1991) (“[A] release is a contract and rules of construction applied to
contracts are used in construing a release. The cardinal rule is to ascertain the intention of the
parties.” (citations omitted)). Thus, the bare fact that Calaway and U.T. Medical Group requested
the order of dismissal pursuant to a Settlement Agreement and Release does not show that Calaway
and U.T. Medical Group intended the order of dismissal to resolve Calaway’s claims on the merits.
See Long, 292 S.W.2d at 218, 220-22 (finding that a voluntary dismissal “with full prejudice”
entered pursuant to an agreement between the parties did not give rise to res judicata because the
agreement preserved the plaintiff’s right to reassert his claims).
Turning to the text of the order of dismissal, without knowing the contents of the Settlement
Agreement and Release, that order provides little insight into the intent of the parties. The order
merely provides that the dismissal is “with prejudice” as to U.T. Medical Group but “without
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Calaway v. Schucker
prejudice” as to several other parties, including Schucker. Indeed, this language suggests that
Calaway and U.T. Medical Group did not intend the dismissal to resolve the merits of Calaway’s
claims or to establish res judicata, as it specifically provides that the dismissal does not prejudice
Calaway’s claims against Schucker (a privy of U.T. Medical Group). Moreover, without any
evidence regarding the contents of the Settlement Agreement and Release, treating the dismissal
order as a bar to Calaway’s action would effectively look upon “dismissal by agreement of the
parties [as] equivalent to . . . a public renunciation on the part of [Calaway] of the claim asserted
by [her] in [her] pleading against the defendant.” Lindsay, 82 S.W. at 174. In other words, it would
convert the Tennessee circuit court’s order into an impermissible retraxit. See Garrett, 596 S.W.2d
at 808-10 (holding that a consent order of dismissal “with prejudice” did not give rise to res judicata
because nothing in the record demonstrated that the dismissal was a determination of the plaintiff’s
rights “on the merits,” and allowing the words “with prejudice” alone to render the decision “on the
merits” would give the trial court the power to issue a retraxit).
As she did below, however, Shucker argues that Gerber v. Holcomb, 219 S.W.3d 914,
“clarified” Tennessee law and “affirmatively resolved the issue of whether consent judgments are
‘final judgments on the merits’ for the purposes of applying res judicata.” Appellee’s Brief at 23.
In Gerber, the Tennessee Court of Appeals held:
Much like a judgment on the merits, an agreed judgment of dismissal in settlement
of a controversy is “conclusive, not only on the matters actually raised and litigated,
but it is also conclusive on every other matter that could have been litigated and
decided as an incident to or essentially connected with the subject matter of the prior
litigation.”
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219 S.W.3d at 917-18 (quoting Freeman v. Cherokee Water Co., 11 S.W.3d 480, 483 (Tex. App.
2000)).
Gerber does not control the present case. Contrary to Schucker’s contention, the term
“agreed judgment of dismissal” in Gerber does not refer to the type of dismissal at issue in this case.
Rather, Tennessee courts use the terms “agreed judgment” and “consent judgment” to refer to “a
contract of record made by the parties to the agreement.” Tenn. Envtl. Council v. Water Quality
Control Bd., 250 S.W.3d 44, 50-51 (Tenn. Ct. App. 2007). Such a contract is “entered on the
records of the court as part of the decree” and establishes full res judicata. Third Nat. Bank v.
Scribner, 370 S.W.2d 482, 486 (Tenn. 1963). The “agreed judgment of dismissal” addressed in
Gerber was just this type of order: it provided that “the parties announced that Plaintiff may take a
judgment for past due installments upon the Note which the Complaint is based each in the amount
of Five Thousand [dollars] ($5,000.00) [and] that fourteen (14) installments [are] past due as of the
date of the hearing September 20, 2001.” Gerber, 219 S.W.3d at 916.4 In contrast, the order in this
case did not incorporate the terms of the agreement between U.T. Medical Group and Calaway, nor
did it even reference that agreement.
Further, if Gerber did apply to the type of dismissal order at issue here, the decision would
conflict with the Tennessee Supreme Court’s ruling in Garrett v. Corry Foam Prods, Inc., 596
4
A second case cited by Schucker, Patton v. Estate of Upchurch, 242 S.W.3d 781 (Tenn. Ct.
App. 2007), likewise dealt with a consent judgment that memorialized the parties’ agreement on the
record. In that case, the judgment provided that the parties “announced in open court that all issues
and controversies had been settled,” and that “the defendant had agreed to allow judgment to be
entered against her in the amount of . . . ($251,000), which was accepted by the plaintiffs.” Id. at
785.
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S.W.2d 808. In Garrett, the Tennessee Supreme Court held that the “decisive test” for determining
whether a judgment of dismissal gives rise to res judicata is whether “the judgment of dismissal was
on the merits.” Id. at 810 (quoting Long, 292 S.W.2d at 221) (emphasis added). In contrast, Gerber
held that an agreed judgment of dismissal is “much like a judgment on the merits” in that it
establishes res judicata. Gerber, 219 S.W.3d at 917 (emphasis added). This clashes with Garrett’s
“decisive test” because it suggests that an order of dismissal should have claim-preclusive effect
even though it does not resolve the merits of a claim. Accordingly, because “we must follow the
decisions of the state’s highest court when that court has addressed the relevant issue,” Savedoff v.
Access Group, Inc., 524 F.3d 754, 762 (6th Cir. 2008) (internal quotation marks and citation
omitted), we would not consider Gerber authoritative even if it applied to the type of order at issue
here.
We therefore conclude that Schucker did not produce sufficient evidence to show that
Calaway and U.T. Medical Group intended the order of dismissal in Calaway’s action against U.T.
Medical Group to resolve the merits of Calaway’s negligence claims. As a result, Schucker did not
establish that she was entitled to summary judgment on res judicata grounds.
III
For these reasons, we REVERSE the judgment of the district court and REMAND to the
district court for further proceedings.
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