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Mazer v. Security Insurance Group and Medical Protective Co.

decided: January 23, 1975.

MILTON MAZER, ADMINISTRATOR OF THE ESTATE OF ISRAEL ABRAMS, ASSIGNEE OF HATTIE LIPSHUTZ, EXECUTRIX OF THE ESTATE OF BENJAMIN LIPSHUTZ, DECEASED, APPELLANT,
v.
SECURITY INSURANCE GROUP AND THE MEDICAL PROTECTIVE COMPANY OF FORT WAYNE, INDIANA, APPELLEES



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil Action No. 69-1353).

Seitz, Chief Judge, Gibbons and Garth, Circuit Judges. Seitz, Chief Judge, and Van Dusen, Aldisert, Adams, Gibbons, Rosenn, Hunter, Weis and Garth, Circuit Judges.

Author: Gibbons

Opinion OF THE COURT

GIBBONS, Circuit Judge

The plaintiff Mazer, Administrator of the Estate of Israel Abrams, in this diversity contract action, is the assignee of Hattie Lipshutz, Executrix of the Estate of Benjamin Lipshutz, who was the insured on two policies of liability insurance issued by the defendants Security Insurance Group and The Medical Protective Company of Fort Wayne, Indiana (hereinafter collectively the insurers). In December 1957 Israel Abrams was admitted to the Albert Einstein Medical Center in Philadelphia for elective surgery during the course of which a transfusion of incompatible blood was administered which resulted in kidney failure. Abrams died as a result of kidney failure in January 1958. Mazer procured from Albert Einstein Medical Center a settlement of $60,000, and on December 31, 1958 executed a release in its favor of any claim for bodily injury or death of Abrams. On December 30, 1958 Mazer instituted suit against Dr. Benjamin Lipshutz, the surgeon who performed the elective surgery.*fn1 The insurance carriers, whose indemnity undertakings totaled $50,000, undertook his defense, and counsel selected by them entered an appearance on January 28, 1959. On January 30, 1959 that attorney filed an answer which admitted that Dr. Lipshutz performed the surgery but denied the allegations of the complaint that those assisting in the operation were agents, servants or employees of his. The answer alleged:

"On the contrary, it is averred that those assisting in the operation were agents, servants or employees of Albert Einstein Medical Center, Southern Division."

Those assisting in the operation included Dr. Peter Chodoff, anesthesiologist and Albert Kohn, the chief blood bank technician employed by the hospital who had handled the selection of the blood delivered to the operating room. On March 9, 1960 counsel employed by the insurance carriers successfully moved for leave to join Dr. Chodoff as a third-party defendant. Dr. Chodoff was not served with process in this action. On November 21, 1961 counsel employed by the insurance carriers successfully moved for leave to join Albert Kohn as a third-party defendant. Neither at the time of filing the answer nor within the time permitted by Rule 19(a) of the Local Rules of the Eastern District of Pennsylvania was a motion made on Dr. Lipshutz's behalf to join the hospital as a third-party defendant.

Mazer had, in December 1959, instituted a separate action against Dr. Chodoff. In that action counsel for Dr. Chodoff filed a motion to join Dr. Lipshutz as a third-party defendant. This motion was granted on March 30, 1960. On July 11, 1960 counsel for Dr. Chodoff filed a motion to join the hospital as a third-party defendant and this motion was granted by an order dated August 17, 1960. By an order dated March 30, 1960 both of Mazer's suits were consolidated for trial.

On November 29, 1961 counsel on behalf of Dr. Lipshutz made a motion to join the hospital as a third-party defendant which, on January 3, 1962, was denied as untimely under Local Rule 19(a).

The consolidated cases were tried commencing on January 8, 1962, the court having on January 5, 1962 severed the third-party action of Lipshutz v. Kohn. The trial resulted in verdicts on interrogatories which found no negligence on the part of Dr. Chodoff, no negligence on the part of Dr. Lipshutz, but negligence on the part of Kohn, the employee of the hospital. Interrogatory No. 3 was framed: "Was there negligence on the part of any employee of [the hospital] which was a contributing cause of the death of Israel Abrams", and it was answered "Yes." Mazer v. Lipschutz, 327 F.2d 42, 46 (3d Cir. 1963) (Mazer I). The jury assessed damages at $89,318 but no money judgment was entered since the settlement and release precluded any direct action against Kohn or the hospital. Judgments were entered by the district court in favor of Lipshutz and Chodoff, and these were appealed. This court affirmed the judgment in favor of Dr. Chodoff, but reversed the judgment in favor of Dr. Lipshutz on the ground that the district court's charge erroneously took from the jury consideration of the vicarious liability of Dr. Lipshutz as "captain of the ship" in the operating room for the negligence of Kohn. We ordered a new trial. 327 F.2d at 55.

On the retrial the amount of damages was established at $89,318 by the prior verdict. The third-party action by Dr. Lipshutz against Kohn was tried together with the issue of Dr. Lipshutz's vicarious liability. The jury found that under the Pennsylvania "captain of the ship" doctrine, Dr. Lipshutz was vicariously liable for Kohn's negligence.*fn2 There was no dispute that Kohn was an employee of the hospital since his status had been established by verdict in the first trial. Judgment was entered for Mazer against Dr. Lipshutz for $89,318 and for Dr. Lipshutz against Kohn, the active wrongdoer, for the same amount.

The result of the jury findings was that Kohn's negligence was attributable vicariously both to his employer, the hospital, and to Dr. Lipshutz. On April 30, 1965 the district court granted the motion of counsel for the insurance carriers, made on the authority of 12 P.S. § 2085,*fn3 to amend both judgments by reducing them by $60,000 each to $29,318 respectively. The reduction was equal to the amount paid by the hospital in settlement.

Once again Mazer appealed, contending that the district court erred in reducing the judgment by the $60,000 paid by the hospital. Once again we reversed, holding that 12 P.S. § 2085 was inapplicable to payments made by a joint tortfeasor in the absence of a judicial determination as to the alleged joint tortfeasor status as such. Mazer v. Lipshutz, 360 F.2d 275 (3d Cir. 1966), cert. denied, 385 U.S. 833, 17 L. Ed. 2d 68, 87 S. Ct. 72 (1966) (Mazer II). We relied on what we thought to be the proper reading of Davis v. Miller, 385 Pa. 348, 123 A.2d 422 (1956). The effect of Mazer II was to deprive Dr. Lipshutz's Estate, as well as his liability insurance carriers, of a $60,000 reduction in judgment liability. We remanded with directions to reinstate the full judgment. The insurance carriers paid $50,000 plus interest and costs, leaving ...


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