Avera St. Luke's Hospital v. Karamali

Filing 17

ORDER AND OPINION denying 9 Motion for Summary Judgment. Signed by Charles B. Kornmann on 01/24/2012. (SAT)

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JAN 2 ~201Z

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UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
NORTHERN DIVISION

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AVERA ST. LUKE'S HOSPITAL,

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Plaintiff,

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-vsADIL M. KARAMALI, M.D.,
Defendant.

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1: ll-CV-OI020
ORDER AND
OPINION

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Avera St. Luke's Hospital ("Avera") filed a complaint with South Dakota's Fifth Judicial
Circuit on July 15,2011, seeking indemnity or contribution from Adil M. Karamali, M.D.
("Karamali") on a theory of implied indemnity based on its allegation that the defendant
committed negligent acts or omissions that were the cause of damages incurred by the plaintiff in

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a prior case, Larry Alexander. M.D. v. Avera St. Luke's and Sanford USD Medical Center, Civ.

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09-5294 (2d Cir. Ct. S.D.), settled by Avera's monetary payment-ofwhich Karamali did not
contribute.

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Defendant served as a locum tenens cardiologist for Avera between March 28 and
April!, 2008, during which time the incident involving Dr. Alexander occurred. Karamali filed
a notice of removal with this court, citing diversity jurisdiction under 28 U.S.C. § 1332. Both

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Avera and Karamali sought and were granted a protective order on the contents of the Alexander

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lawsuit settlement. Karamali also filed an answer to pJaintiffs complaint.

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Karamali filed a motion for summary judgment with an accompanying memorandum and
a statement of material facts pursuant to D.S.D. Civ. LR 56.1 A. Avera filed four documents----a
response to Karamali's statement of material facts, a statement of disputed materiaJ facts, a

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memorandum opposing the motion, and an affidavit. Karamali filed a brief in reply.

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BACKGROUND
A.

Standard of Review

Fed. R. Civ. P. 56 requires that this court dismiss all claims for which the movant shows
there is no genuine issue as to any material fact and that the movant is entitled to judgment as a

matter oflaw. The movant must support its motion with evidence admissible at trial in order to
meet its initial burden showing the absence of a genuine issue of material fact. If the moving
party meets its initial burden, the nonmoving party cannot merely rest upon allegations or denials
in its pleadings to defeat the motion, Forrest v. Kraft Foods. Inc., 282 F.3d 688, 691 (8th Cir.
2002), but must "substantiate his allegations with enough probative evidence to support a
finding in his favor" by citing to particular materials in the record which support the assertion
that a fact is genuinely disputed, Roeben v. BO Excelsior Ltd. P'ship, 545 F.3d 639, 642 (8th
Cir.2008).
The court must view the admissible evidence in a light favorable to the nonmoving party
and give that party the benefit of all reasonable inferences drawn from the evidence. CountO'
Life Jns. Co. v. Mark§, 592 F.3d 896, 898 (8th Cir. 2010). However, the scope of admissible
evidence is quite finite: "Only disputes over facts that might affect the outcome ofthe suit under
the governing substantive law will properly preclude the entry of summary judgment." Anderson
v. Liberty Lobby. Inc" 477 U.S. 242,248 (1986). "[S]ummary judgment will not lie if the
dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party." Jd.
B.

Factual Background

The relevant facts in connection with the motion are mostly undisputed. Avera was
named as a co-defendant. along with Sanford USD Medical Center, in a prior state court action.
The prior plaintiff, Dr. Alexander, claimed that Avera was negligent and exacerbated damage to
Dr. Alexander's heart, resulting in pain, suffering, penn anent disability, and his need for a heart
transplant. Karamali was not named in Dr. Alexander's complaint. Instead, his name first arose
in the disclosures of Dr. Alexander's medical expert, who singled out Karamali in his analysis of
Dr. Alexander's medical records on the date of the treatment of his myocardial infarction, April
1, 2008-the same date when the alleged negligence occurred. Karamali admits he was still
serving as locum tenens cardiologist for the plaintiff on that date.
No claim was brought against defendant by Dr. Alexander within the two year statute of
limitations for medical malpractice, SDCL 15-2-14.1, and any claims by Dr. Alexander against
Kararnali are now barred. Avera settled this prior lawsuit by paying Dr. Alexander. Karamali
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disputes (1) Avera's mixed factual and legal contention that Karamali' s alleged negligence is
legally imputed to Avera and (2) that Avera and Karamali were joint tortfeasors for purposes of
the Alexander controversy.
II.

DECISION

Karamali makes three claims in support of his motion. He asserts that the medical

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malpractice statute of limitations, constituting a statute of repose, not only prevents patients from

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filing malpractice claims over two years after the offending treatment and regardless of the time

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when the malpractice is discovered, but that the statute prevents any third party claims derivative

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of any malpractice claim from being fiJed two years after the offending treatment, including
claims of indemnity and contribution. Second, he argues that, on the claim of indemnity, there is
no vicarious or imputed liability between Avera and himself with regard to Dr. Alexander's

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claims because Karamali was an independent contractor and because Dr. Alexander claimed

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vicarious, or imputed Hability" necessary to assert indemnity. Finally, on the claim of

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Avera was independently negligent, preventing Avera from now claiming only the "passive,
contribution, Karamali contends that he and Avera are not joint tortfeasors according to South
Dakota law, and thus contribution would be improper.
A.

SDCL § 15-2-14.1 Does Not Bar Avera's Claims of Indemnity and
Contribution

Karamali asserts that the statute of limitations for medical malpractice in South Dakota is
a statute of repose-a point that Avera does not deny. Karamali contends that South Dakota case
law holds that statutes of repose can cut off longer statutes of limitations on claims of indemnity
and contribution. Karamali cites to three other state jurisdictions as persuasive
authority-Georgia, Illinois, and South Carolina-where statutes of repose were used by courts
to dismiss medical malpractice indemnity or contribution claims.
1. SDCL § 15-2-14.1 Does Not Cut Off the StaMe of Limitations on Claims of
Indemnity or Contribution
The right to contribution is codified in South Dakota law. SDCL 15-8-12. Similarly, the
right of indemnity is enshrined in state law. See Ebert v. Fort Pierre Moose Lodge No. 1813, 312
N.W.2d 119, 122-23 (S.D. 1981); see generally SDCL 56-3. Since both remedies are creatures

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of statute, both fall into the catch-all six-year statute of limitations. SDCL 15-2-13(2). Karamali
argues that if a statute of repose applies to the primary claims of Dr. Alexander underlying the
claims of indemnity and contribution, that statute of repose trumps the six-year period. Adopting
this construction in this case would require granting defendant's summary judgment motion.

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Karamali relies upon Sheehan v. Morris Irrigation, Inc. (Sheehan IID, 460 N.W.2d 413
(S.D. 1990), for the proposition that South Dakota courts recognize statutes of repose as
categorically cutting off claims of indemnity. This case arose out of a contract to provide center­
pivot irrigation systems to a South Dakota ranch. An irrigation dealer partnered with an
irrigation system design firm to assemble the system and contracted with a manufacturer to build
components. Soon after installation, the end guns on the pivots began to malfunction. The

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irrigation system design firm sued, seeking indemnification from the irrigation manufacturer.

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The S.D. Supreme Court affirmed the trial court's grant of summary judgment for the

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manufacturer based upon a "strict application view" ofU.C.C. § 2-725, the statute of limitations

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applicable to contracts for the sale of goods-in this case, sprinkler equipment. Sheehan III, 460

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N.W.2d at 416. The Court held the statute of repose barred the indemnity claim.
While Karamali's recitation of Sheehan's facts is accurate, his legal analysis is not. The
Supreme Court is clear about the selecti ve nature of its holding in Sheehan, restricting its scope
to the facts of the case. See id. at 418 ("We therefore hold that, in this case, the trial court,
although not so stating, correctly applied the strict application view." (emphasis added)). Further
evidence of this is shown by the Court's willingness to analyze and apply the holding of a
representative case adhering to the more relaxed view, specifically the Nebraska Supreme
Court's ruling in Wood River v. Geer-Melkus Constr. Co., 444 N.W.2d 305 (1989). The relaxed
view's first premise is that implied indemnity rests on principles of equity and should be used to
prevent unjust enrichment. Sheehan III. 460 N.W .2d at 417 (citing Wood River, 444 N.W.2d at
310). Sheehan, instead of arguing against the merits of the Wood River holding as it would in
adopting the strict view as the final standard, used an equity analysis to determine that no
equitable case could be made for the Sheehan plaintiff. See Sheehan III, 460 N.W .2d at 417.
The plaintiff in Sheehan sought indemnity alone, an "all or nothing" proposition that required the
plaintiff to prove it was free of any wrongdoing. Id. In order for the Sheehan plaintiff to succeed

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in its claim of indemnity, it would have had to show that there was a genuine issue of material
fact that its negligence did not contribute st all to the hann alleged in the primary case. See id. at
415,417. With such little space spent on the application of the relaxed view, it is understandable
to contend Sheehan was a wholesale endorsement of the strict view.
The ruling in Sheehan has two important implications here. First, the Court's
unwillingness to adopt the strict view shows that South Dakota will not categorically bar
equitable claims such as indemnity and contribution solely because the statute of repose for the
primary claim has already run. Second, applying the facts of this case to the Sheehan equitable
analysis framework produces a result favoring Avera. Sheehan's equitable analysis placed
emphasis upon the plaintiffs failure to earlier exercise a right under the contract to bring suit
against the third-party defendant. The third party plaintiff knew of the manufacturing faults well
before the statute of limitations passed. Id. at 417. In this case, Avera asserts, uncontroverted by
defendant, that it did not know of Karamali's alleged negligence until it was reported by Dr.
Alexander's medical expert on October 20,2010. Nine months later, Avera filed this suit. This
is a far different scenario than that in Sheehan, where the indemnity claim was filed
approximately five years after discovering that the irrigation system did not function properly,
Sheehan v. Morris Irrigation (Sheehan D. 410 N.W.2d 569, 570 (S.D. 1987), and the parties
knew of the manufacturer's (third party defendant's) warranty for much of that time, Sheehan III,
460 N.W.2d at 414.
Generally speaking, "[a] limitations period ordinarily does not begin to run until the
plaintiff has a 'complete and present cause of action.' A cause of action does not become
'complete and present' until the plaintiff can file suit and obtain relief." Strassburg v. Citizens
State Bank, 581 N.W.2d 510,514 (S.D. 1998) (citing Bay Area Laundry & Dry Cleaning Pension
Trust Fund v. Ferbar Corn. of Cal., 522 U.S. 192,201 (1997)). Thus, the date the statute of
limitations begins to run on contribution and indemnity claims is the date money is paid, cf Qm..
Elec. Co. v. United States, 792 F .2d 107, 108 (8th Cir. 1986) (noting contribution specifically),
since "[c]ontribution and indemnity are remedies to secure restitution." Degen v. Bayman (Degen

D, 200 N.W.2d 134, 136 (S.D.

1972), overruled on other grounds by First Premier Bank v.

Ko1craft Enters.. Inc., 686 N.W.2d 430 (S.D. 2004). Restitution is defined as the "[r]etum or
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restoration of some specific thing to its rightful owner or status," or "[ c]ompensation for loss."
BLACK'S LAW DICTIONARY 1428 (9th ed. 2009). In claims for indemnity or contribution, the
need to restore or compensate for loss only arises when money is paid. Thus, a complete and
present cause of action for indemnity or contribution generally arises only when money is paid by
the party seeking indemnity or contribution.
The one exception to the Strassburg-Bay Area Laundry doctrine, according to the U.S.
Supreme Court, is when "Congress has told us otherwise in the legislation at issue." Bay Area
Laundry. 522 U.S. at 201. In other words, Congress, or the state legislature, must explicitly state
its intent that a cause of action must be brought before it becomes a complete and present cause
ofaction, whether because of the operation of a statute of repose or otherwise. To al10w a statute
of limitations to run before a complete cause of action is present would be an "odd result."
Reiter v. Cooper, 507 U.S. 258, 267 (1993). That "odd result'" is best explained by the
commentary to the Restatement (Third) of Torts § 22:
An indemnitor may not escape its obligation to pay indemnity solely on the
ground that the plaintiff could not have recovered from the indemnitor because of
a statute of limitation. Otherwise, the indemnitee might be in an intolerable
position. If the plaintiff waited until the end of the limitation period to sue the
indemnitee, the indemnitee might not have time to sue the indemnitor. The
indemnitee cannot recover indemnity until he is obligated to the plaintiff, and he
cannot even sue until he is sued. Thus, special rules of limitation apply to
indemnity.
REsTATEMENT (THIRD) OF TORTS § 22, cmt. d (2000).
Thus, in order to read into the statute of repose what defendant contends, I must decide
whether the S.D. Legislature intended the statute of repose to apply to indemnity and contribution
claims. A court must ascertain the true intent of the legislature "primarily from the language of
the statute itself, without resort to extraneous devices." S.D. Educ. Ass'n v. Barnett, 582 N.W.2d
386,400 (S.D. 1998). "When construing a statute, the court determines the intent of the
Legislature from the words of the statute, giving them their plain meaning." Peterson. 635
N.W.2d at 564. In this matter, Sheehan is also instructive. Looking to the statutory language at
issue in that case, SDCL 57A-2-725, the statute pertains to "[a]n action for breach ofany
contract." It is well known that the remedy for the breach of contract rests in law, which is
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distinct from claims in equity. See, e.g., Sorum v. Sorenson, 187 N.W. 423, 425 (S.D. 1922).
Contribution and indemnity are both based in equity. Degen I, 200 N. W.2d at 136. Thus, it is

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plausible that the Court discussed equitable concerns in Sheehan because the statute of repose's

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plain language did not foreclose equitable or tort claims-only those claims based in contract.

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As to the statute of repose cited by Karamali, the plain language of the statute does not
cover indemnity or contribution. The pertinent part ofSDCL 15-2-14.1 reads: "An action against
a physician ... for malpractice, error, mistake or failure to cure, whether based upon contract or

tort, can be commenced only within two years after the alleged malpractice." (emphasis added).

Again, claims of indemnity and contribution are based in equity and are distinct from claims
based in contract or tort, which are based in law. Thus, it is unlikely that the legislature intended
to apply the medical malpractice statute of repose to indemnity and contribution claims in the
manner required by Strassburg and Bay Area Laundry.
Kararnali also cites Peterson ex rei. Peterson v. Burns, 635 N.W.2d 556, 565 (S.D. 2001)
as authority for the position that SDCL 15-2-14.1 snares other claims that, while they do not
constitute medical malpractice, are nevertheless derived from allegations of malpractice.
However, the Peterson Court justified its ruling that a wrongful death claim is bound by the
shorter statute of repose for medical malpractice by noting that "[i]fthe statute can limit personal
injury liability for malpractice to two years and contract liability to malpractice to two years, it
can also limit actions for wrongful death based on medical malpractice to two years." Id. The
Court, in other words, noted that claims based in contract or tort law are bound by the statute of
repose, as the statute's text clearly provides. Claims of indemnity and contribution, however, are
based in equity and thus exist outside the scope of SDCL 15-2-14.1. The holding in Peterson
does not support Kararnali' s argument here.
2. South Carolina. Illinois and Georgia Precedents Do Not Support Defendant's
Statute of Limitations Claims
Karamali contends that other states have decided the precise issue of indemnity and
contribution arising out of malpractice claims in favor of his position. These precedents are not
binding on me. A straightforward textual analysis might explain why a minority of states cited

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by Karamali-South Carolina, Illinois, and Georgia---enforce a statute of repose on medical
malpractice that covers claims in equity as well as claims in law.
Karamali cites ColumbialCSA-HS Greater Columbia Healthcare Sys. v. S.C. Med.
Malpractice Liab. Joint Underwriting Ass'n, 713 S.E.2d 639 (S.C. Ct. App. 2011), where the
Court analyzed this statute of repose: "[i]n any action ... to recover damages for injury ...
arising out ofany medical, surgical, or dental treatment ... by any licensed health care provider

... must be commenced within three years from the date of treatment." Id. at 641 (emphasis
added) (quoting S.C. CODE ANN. § 15-3-545(A)). The Court focused on the phrase "any action"
in construing the scope of the statute of repose. Id. The Court noticed that the legislature
provided instruction that any actions "arising out of' a medical malpractice claim fell under the
statute of repose, indicating all actions of law and equity were so bound. This broad language is
not used in SDCL 15-2-14.1.
The lllinois case cited by Karamali, Ashley v. Evangelical Hosps. Com., 594 N.E.2d
1269 (Ill. App. Ct. 1992), quotes from a statute of repose:
No action for damages for injury or death against any physician ...
whether based upon tort, or breach of contract, or otherwise, arising out of
patient care shall be brought more than 2 years after the date on which the
claimant knew, or through the use of reasonable diligence should have known, or
received notice in writing of the existence of the injury or death for which
damages are sought in the action, whichever of such date as occurs first.

Id. at 1271 (emphasis added) (quoting 110 ILL. COMPo STAT. ch. 83, ~ 22.1 (1977)). The Court
went on to describe this language as purposely "harsh" to convey the clear intention of the
General Assembly "to cut off liability regardless of the time of its accrual." Id. Here again, the
legislature uses unequivocal language to describe all claims "arising out of' a medical
malpractice claim. Similar language is not used in SDCL 15-2-14.1.
Finally, the Georgia case cited by defendant, Krasaeath v. Parker, 44] S.E.2d 868 (Ga.
Ct. App. 1994), uses similarly broadly-worded statutory language. To wit, subsection (b) read:
"[I]n no event mayan action for medical malpractice be brought more than five years after the
date on which the negligent ... act or omission occurred;" a passage which subsection (c) then
clarifies: "[s]ubsection (b) ... is intended to create a five-year statute of ultimate repose and
abrogation." Id. at 869 (emphasis added) (quoting G.A. CODE ANN. § 9-3-71(b), (c) (1985)).

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Not only did the legislature specify that this statute constituted "ultimate repose and abrogation,"
but the Court keyed in upon the phrase "in no event" as indicative of the legislature's intent to
include within the statute all claims "arising out of' or "predicated" upon medical malpractice,

See id. at 870, No such language is found in SDCL 15-2-] 4.1.
Following the tenets of Bay Area Laundry, each case cited by Karamali focused upon the
unique language of the statutes of repose. Each found that the statute in question had general
language indicating the intention of the legislature to create a broad scope of repose, SDCL 15­
2-14.1 has no such language. The cited cases provide insufficient support for Karamali's statute
of limitations claim.
3. While Avera's Contribution Claims May "Derive" from Medical Malpractice,
Derivation Does Not Mean SDCL 15-2-]4.1 Applies to Avera's Claims

Karamali also argues that South Dakota law recognizes that contribution and indemnity
claims are a "derivative right" from a primary claim, citing Burmeister v, Youngstrom, 139
N.W.2d226 (S.D, 1966):
We think these provisions make it clear that the [Joint Tortfeasors Act] is only
applicable to a situation where there is a common liability to an injured person in
tort. Such liability may be joint or several. but there can be no contribution where
the injured person has no right of action against the third-party defendant. The
right ofcontribution is a derivative right and not a new cause of action.
Id. at 231. He contends that since Avera's claims derive from the primary malpractice claim (and
that primary claim is clearly foreclosed by the running of the statute of repose) the A vera
contribution claim must also be foreclosed.
In Burmeister, the plaintiff brought a claim of wrongful death as administrator of his
wife's estate, the wife having died in a two-vehicle collision. Defendants filed a third party
complaint against Burmeister personally, requesting judgment against him for all sums the court
might fmd in his favor in a representative capacity. Id. at 230, Defendants appealed the trial
court's refusal to submit this third party proceeding to thejury. Id. The Supreme Court affirmed,
holding that the third party complaint was never viable because a provision of South Dakota law
"bar[red] recovery by a guest without compensation unless the accident was caused by the willful
and wanton misconduct of the owner" of the vehicle. See id. The dispositive issue was "whether

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there is joint or several liability" between plaintiff and defendant third parties, and whether there
was 44a possible remedy against two or more persons." Id. at 231. The Court held that this claim
Hcould not be asserted against [the plaintiff] in a direct action," and thus provided no possible

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remedy. Id. The "guest statute" was then (but is no longer) the law in South Dakota. SDCL 32­

34-1, repealed by 1978 SD Sess. Laws ch. 240, § 2. Bunneister faiJs the defendant's case. In

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Bunneisler, the plaintiff had statutory immunity from defendants' third party claim at all times

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during the proceedings for the primary claim. In Alexander, however, Karamali had no statutory

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immunity to suit from Dr. Alexander at the outset of the primary proceeding. Dr. Alexander

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simply chose not to sue Karamali. This is a clear example of the Hodd result" of a primary
plaintiff dictating the fortunes of third party claims that do not impact them. As noted above, this
"odd result" is pennitted only by clear legislative directive pennitting the claims to be brought
before they are complete and present, but such a directive is not found in SDCL 15-2-14.1. Thus,
Karamali's reliance on Bunneister should be rejected.
Karamali also cites Jones v. Weverhaeuser, 741 P.2d 75 (Wash. Ct. App. 1987). to
support his proposition that contribution claims are not pennitted when the statute of repose for
the primary claim has already run. In Weyerhaeuser, the plaintiff brought an action for injuries
he sustained when a dock upon which he was working collapsed. Id. at 76. The suit was against
the owner, the builder, and the designer ofthe dock. The dock owner filed a cross-claim for
contribution against the other co-defendants. The third party defendants moved for summary
judgment, contending that more than six years had elapsed between the completion of the dock
and the collapse. Id. The court agreed with the third party defendants, citing WASH. REv. CODE

4.16.300 et seq., or what the court tenned the "builder-limitation statutes." Id. The court held
that "[iJfthe party from whom contribution is sought is not liable to the plaintiff for his injury, no
joint and several liability exists, and therefore no right to seek contribution exists." The court
derived authority for this holding from a case that mirrors Bunneister: Glass v. Stahl Specialty
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P.2d 948 (Wash. 1982). In that case, as noted by Weyerhaeuser, the Supreme Court

ruled that an action for contribution could not be maintained against the employer because the
employer was immunized from liability at the outset of the primary proceeding by virtue of the
Industrial Insurance Act. Weyerhaeuser. 741 P.2d at 76. Thus, it was never possible for the third

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party plaintiff in Glass to bring a contribution claim against the employer at any stage of the

proceedings, which mirrors the facts and holding in Burmeister. The Weyerhaeuser court found
that it was never possible for the third party plaintiff to bring a contribution claim against the
builder and designer of the dock because the statute of repose barred the primary claim at the
outset. This fact constitutes the distinction between Weyerhaeuser, et al.. and the instant case.
As noted above, Avera had the possibility of bringing its claims earlier. Dr. Alexander's

decision not to bring or failure to bring his claims against Karamali prevented Avera from
advancing cross claims.
A more viable theory for the importance, if any, of contribution being "derivative" claims
comes from Henry v. Cons!. Stores Int'l Corp., 624 N.E.2d 796. 800 (Ohio Ct. App. 1993),
which held that "[w]hile an action for contribution may be derivative of the plaintiff's claim, it is
not dependent upon the plaintiffs legal prosecution of that claim." Applying this concept to the
language in Burmeister. such a theory makes more sense. This concept holds that a "possible
remedy" need not now be a viable remedy, but it must have been a viable remedy at some point
during the span of the primary proceeding and its derivatives, including third party claims. See
WEBSTER'S II NEW RIVERSIDE UNIV. DICTIONARY 918 (l994)(defining "possible" as "[c]apable
of existing, happening, or being true without contradicting proven facts, laws, or
circumstances"). By law, the claim made against Mr. Burmeister was never viable because the
"guest statute" existed at the outset of the primary proceeding-there could be no joint and
several liability, initially or ever. The derivative claim in Burmeister was not dependent upon the
plaintiffs prosecution as it was foreclosed from the start. By contrast, Avera could have brought
this derivative claim at some point in the primary proceeding had it known sooner that
Karamali' s actions allegedly imputed negligence to Avera. Instead, by adopting Karamali' s
interpretation, Avera would be subject to the whims of the primary plaintiff, Dr. Alexander. This
result creates unfairness so fundamental that the presumption against it is only overcome by clear
legislative fiat. For these reasons, KaramaWs argument that "derivation" binds Avera's
contribution claim to the primary claim's statute of repose must be rejected.
The motion for summary judgment as to the claims for contribution should be denied.

II

4. Legislative Policy Does Not SUJ?Port Karamali's Claim
Karamali contends that construing SDCL 15-2-14.1 to cover indemnity and contribution
claims is required because, as noted in Peterson, "[t]he legislature's policy of protecting medical
practitioners is clear." 635 N.W.2d at 571. To put the argument in another way, while the plain
language of the statute may not require the statute of repose to cover claims of indemnity and
contribution, the intent of the legislature to protect practitioners imbues the statute with such a
scope. Courts may look to other considerations beyond the language of the statute to ascertain
legislative intent. These considerations include "the language of the act, including its title, the
history ofits enactment, and the state of the law already in existence bearing on the subject"
since the legislature was likely aware of these aspects when it crafted the law. In re Sales Tax
Refund API'S. of Black Hills Power & Light Co., 298 N.W.2d 799,802 (S.D. 1980). While
Peterson's description ofprior laws protecting doctors provides a glimpse of the "state of the
law" at the time SDCL 15-2-14.1 was adopted, and is thus valid to consider, it is still unavailing.
The Supreme Court noted that these statutes "protected doctors from lawsuits by their patients,"
Peterson, 635 N.W.2d at 571. This is far removed from a case where one practitioner sues
another. Practitioners are the only parties to share possible joint and several liability arising out
of medical malpractice claims as required for indemnity and contribution. See SDCL 15-2-14.1
(applying to "actions against a physician, surgeon, dentist, hospital, sanitarium, registered nurse,
licensed practical nurse, chiropractor, or other practitioner of the healing arts for malpractice").
The legislative policy of protecting practitioners from suits by their patients does not apply to this
case.
B.

Avera's Indemnity Claim Survives Summary Judgment

Karamali makes two arguments in support of his contention that Avera, as a matter of
law, is not entitled to indemnity. He asserts that, as an independent contrator, even if negligent,
he does not impute negJigence to A vera. Second, he argues that because A vera is also negligent
by virtue of Dr. Alexander's assertions in his Complaint, it is not entitled to indemnity, since
indemnity is an "all-or-nothing" proposition in South Dakota.
Besides being an "all-or-nothing" proposition, where the indemnitee must assert that it is
not actively liable for the primary claim, see Parker y. Stetson-Ross Mach. Co., 427 F. Supp.
12

249,251 (D.S.D. 1977) (citation omitted), indemnity is only recoverable by ajoint tortfeasor
"where he has only an imputed or vicarious liability for damage caused by the other tortfeasor."
Degen I, 200 N.W.2d at 136, overruled on other grounds by First Premier Bank, 686 N.W.2d at
442.
Kararnali's first contention proceeds from the general rule that an employer has no
liability for the acts of an independent contractor, which itself stems from the concept that ~~the
employer has no power of control over the manner in which the work is to be done by the
contractor." Clausen v. Aberdeen Grain Inspection. Inc., 594 N.W.2d 718, 722 (S.D. 1999). He
cites Mahan v. Avera S1. Luke's, 621 N.W.2d 150, 160-61 (S.D. 2001), which held that "the
negligent act of a doctor can impute liability to a hospital under a theory of respondeat superior
wlless it can be shown that the doctor was acting as an independent contractor," Avera does not
argue that the nature of Kararnali's locum tenens position was not that of an independent
contractor. Instead, Avera argues that even as an independent contractor, a relationship of
ostensible agency existed between itself and Karamali at the time of the alleged malpractice. See
SDCL 59-1-5.
Karamali notes that Avera is unable to cite any South Dakota case law equating a locum

tenens physician with an ostensible agent. However, there is nothing in South Dakota statute or
case law prohibiting an independent contractor from being considered an ostensible agent. As
made explicit in Clausen, the rule that an employer has no liability for the acts of an independent
contractor is only a "general" one and is, therefore, subject to exceptions. Moreover, while the
negligent act of a doctor, standing alone, can only be imputed to a hospital ifthe party is not an
independent contractor (per Mahan), in this case, the doctor's act may not have stood alone.
Instead, A vera may have committed the act necessary to trigger the imputed liability-it may
have held out Kararnali as an agent of itself to Dr. Alexander.
HAn agency relationship is defined by SDCL 59-1-1 as 'the representation of one called

the principal by another called the agent in dealing with third persons.'" Kasselder v.
KimPerman, 316 N.W.2d 628,630 (S.D. 1982). "An agency relationship is either actual or
ostensible. It is actual when the principal appoints the agent."

14:. (citing SDCL § 59-1-4).

The

defining characteristic of an "ostensible agent" is "when by conduct or want of ordinary care the

13

principal causes a third person to believe another, who is not actually appointed, to be his agent."
SDCL 59~ I ~5. In other words, an ostensible agent has apparent authority derived from the
principal in the eyes ofa third party. Dahl v. Sittner, 429 N.W.2d 458, 462 (S.D. 1988). The
theory of respondeat superior is defined in South Dakota as "provid[ing] that the employer is
responsible for want of care on an employee's part toward those to whom the employer owes a
duty to use care, provided that the failure of the employee to exercise such care occurred in the
course of employment." Hansen v. S.D. Dep't of Transp., 584 N.W.2d 881,891 n.16 (S.D.
I 998)(citing BLACK'S LAW DICfIONARY 1311-12 (6th ed. 1990». Thus, while it is true that an

independent contractor is, by definition, distinct from an employee, see BLACK'S LAW
DICfIONARY 839 (9th ed. 2009), and thereby outside the scope of the respondeat superior theory
of liability per Mahan, there is no definitional distinction between independent contractors and
ostensible agents. Indeed, "[0]ne who contracts to act on behalf of another and subject to the
other's control except with respect to his physical conduct is an agent and also an independent
contractor." RESTATEMENT (SECOND) OF AGENCY § 14N (2004). Moreover, while South Dakota
case law is silent on the issue, a nwnber of other jurisdictions find that an independent contractor
may be both an independent contractor and an agent for another based upon a theory of apparent
authority or otherwise. See, e.g., West v. Atkins, 487 U.S. 42, 49, 54 (1988) (finding a private
physician under contract with the state to provide services at a state prison hospital was "clothed
with the authority of state law" and his actions were attributable to the state); Eyerman v. Mru::y
Kay Cosmetics. Inc., 967 F.2d 213,219 (6th Cir. 1992); Such v. Vincent, No. 06-85J, 2007 WL
906170, at *5 (W.O. Pa. Mar. 22, 2007); Bak v. MCL Fin. Om.. Inc., 88 Cal. Rptr. 3d 800,
805-06 (Cal. Ct. App. 2009); Royal

Mort~.

Com. v.

Monta~ue,

41 S.W.3d 721, 733 (Tex. App.

2001), overruled on other grounds by Michiana Easy Livin~ Country. Inc. v. HolteD, 168 S.W.3d
777, 789-90 (Tex. 2005); Letsos v. Century 21-New W. Realty, 675 N.E.2d 217, 224 (Ill. App.
Cl. 1996).
Taken in a light favorable to Avera, the facts indicate that Karamali served as a locum

tenens physician for Avera and was the doctor providing care to Dr. Alexander at the time the
alleged malpractice occurred. There is no indication that Avera represented to Dr. Alexander that
Karamali was not its agent for the purpose of caring for Dr. Alexander within its hospital. One

14

can infer that the fact Karamali's name did not come out until well into the primary proceeding,
after Dr. Alexander's expert scrutinized his records, indicates that Dr. Alexander may not have
been aware of any legal distinction between Avera and KaramaJi. Indeed, it is highly unlikely
that, in an acute care situation, the distinction between an employed physician and an
independently contracted physician could ever be made apparent to a patient. For this reason,
Avera is able to assert that a proper theory of imputed liability-ostensible or apparent
authority-may have existed based upon the facts. Accordingly, this theory survives KaramaWs
motion for swrunary judgment.
Karamali articulates a "correlative" argument that Avera is not entitled to indemnity
because Dr. Alexander's complaint alleged that Avera was "actively" negligent. In other words,
Kammali believes Dr. Alexander needed to assert in his complaint that Avera was liable to him
on the basis of "passive, vicarious, or imputed liability" in order for Avera to now assert an
indemnity claim requiring such a form ofliabiJity. Defendant cites Degen v. Bayman (Degen In,
241 N.W.2d 703 (S.D. 1976), among other cases, in support of this proposition. Not only does
this proposition seem to only be a corollary to the "odd result" referenced above-where the
primary plaintiff dictates the fortunes of a party possibly entitled to contribution or
indemnity-the only case remotely applicable to this case, Degen II, does not support Karamali's
argument.
Degen II arose out of a boating accident in which plaintiff broUght suit against both the
driver of the motorboat for negligent operation of the boat and its manufacturer for negligent
design, failure to give adequate warning and breach ofimplied warranties. Id. at 704. Karamali
says this case shows that "where there has been no other clear determination as to whether two
parties are joint tortfeasors, the plaintiffs pleadings should control." Id. at 707. Since Dr.
Alexander's pleadings only mentioned that Avera was negligent, KaramaH argues that this
language forecloses this court's ability to consider Avera's actions as anything other than active
negligence, which would eviscerate Avera's current theory of imputed liability as the basis for its
implied indemnity claim. The plaintiff in Degen II was seeking to prevent a

co~defendant

(who

did not settle and was later found liable) from offsetting his liability with the payment plaintiff
received from the co·defendant who did settle. SDCL 15-8-17 provides that such liability may

15

be offset if the co-defendants are joint tortfeasors. The plaintiff argued that the co-defendants
were not joint tortfeasors. The Court determined that the plaintiffs amended pleading, which
alleged that the co-defendants were joint tortfeasors, was controlling on the Court's decision. In
making this determination, the Court adopted the quotation Karamali cites, but clearly applied it
only to the unique facts in Degen II. See ~ at 707 ("Where the plaintiff charges several
defendants with tort, and one of the defendants buys its way out of the suit ... the court will not
go into the question of liability of such defendant. The test in such case is: Was the defendant
sued as a tort-feasor?"). Indeed, the Degen Court attributes this quotation to a North Dakota case
with a similar set of facts that are far removed from the facts at issue in this case. See id.; Levi v.
Montgomery, 120 N. W.2d 383, 388-89 (N.D. 1976). As a result, Degen II does not support
Kararnali's argument.
Avera's claims ofindemnity and contribution survive Kararnali's summary judgment
motion. Based upon an analysis of its text, the statute of repose for medical malpractice in South
Dakota does not apply to cut short the statute of limitations on indemnity and contribution
claims. Ostensible agency is at least a viable theory with the facts taken in a light favorable to
Avera. Even though indemnity is an "all-or-nothing" proposition. "passive, vicarious, and
imputed" indemnity through an ostensible agency theory permits Avera to maintain an indemnity
claim after the settlement in Alexander. There are genuine issues of fact as to who did what.
01.

ORDER

IT IS ORDERED that defendant's motion, Doc. # 9, to dismiss plaintiff's complaint is
denied.
Dated

thi~y of January, 2012.
BY THE COURT:

ATTEST:
JOSEPH HAAS, CLERK

~~

CHARLES B. KORNMANN
United States District Judge

~()~
EPUTY
(SEAL)

16