Opinion
Civil No. 00-1262-KI
July 27, 2001
Stephen L. Griffith, Leta E. Gorman, William R. Long, Stoel Rives LLP, Portland, Oregon, Attorneys for Plaintiffs.
Gary V. Abbott, Annalie M. Herrmann, Abbott, Davis, Rothwell, Mullin Earle, P. C. Portland, Oregon, Attorneys for Defendants.
OPINION
Plaintiff Alfredo Julian-Ocampo hired the services of an air ambulance, operated by the corporate defendants, to transport him from Mexico City to Portland, Oregon, so that he could be screened for a heart transplant. After not receiving the services for which he believes he contracted, Julian-Ocampo sued the corporate defendants running the ambulance service and a few of their employees. Before the court is defendants Richard Hutner's and Barbara Hutner's motion for summary judgment (#39) and defendants' motion for summary judgment (#67). For the reasons below, I grant summary judgment against all but the breach of contract claim.
FACTS
Patrick Julian reviewed the web site of defendant Air Ambulance Network, Inc. ("Air Ambulance"), prior to selecting the company. The site provides the following information to potential customers:
Richard and Barbara Hutner founded Air Ambulance in 1971. Richard Hutner is the director and chairman of the board and provides the leadership of the company. Barbara Hutner is the president and is actively involved in the management and operation of the company. The site also explains the services the company provides and the equipment and medical personnel it uses.
As of April 2000, the Florida Division of Corporations lists Barbara Hutner as the president, secretary, treasurer and director of Total Marketing Technologies, Inc. ("Total Marketing"), and the Secretary of Air Ambulance. Likewise, Richard Hutner is listed as the director of Total Marketing and the president of Air Ambulance. Total Marketing is owned by the Hutners and their children. Air Ambulance was the predecessor corporation to Total Marketing.
Richard Hutner first testified that he gives final approval to advertisements, but then qualified the answer to explain that he does not view some advertising although he knows that it is being done. Examples given included yellow page ads, brochures, and flyers.
Barbara Hutner retired from Total Marketing on May 14, 1999. This information was conveyed to the Florida Secretary of State on April 26, 2000, when the corporation submitted the annual Uniform Business Reports.
Even after retiring, Barbara Hutner continued to go into the office about once a week to help with the clerical work. In October 1999, she would also attend the weekly meeting of the flight coordinators and staff to hear what they were doing and give a little advice. She reviewed the corporate brochure for spelling and grammar problems and probably critiqued the web site but does not remember.
There is no dispute that the Hutners did not communicate directly with any of the plaintiffs when they arranged the ambulance service.
Because of Julian-Ocampo's heart condition, any stress during the journey had potentially fatal consequences, according to his treating physician in Mexico. This fact was told to Air Ambulance. Air Ambulance was selected because it was going to use its own Learjet equipped with its own intensive and cardiac care equipment, flown by its own highly experienced pilots and staffed by two of its own physicians certified as advanced cardiac life support providers and trained in aviation physiology. When Air Ambulance made these representations, however, it intended to subcontract the transport to a California company. This possibility was not explained to plaintiffs.
The ground ambulance arrived at the Mexican hospital at 7:00 a.m. instead of the scheduled 9:00 a.m. This caused Julian-Ocampo to be awakened and readied for the transport in a hurry, causing chaos and stress. No doctor came with the ground ambulance, although the doctor from the airplane was supposed to come to the hospital.
After a normal two-hour drive to the airport, the ambulance drivers demanded $300 or they would not let the people leave None of the plaintiffs carried that much money. A third party finally paid the ransom. Air Ambulance admits that it often has this type of problem with ground ambulances. This caused Julian-Ocampo additional stress.
Awaiting at the airport was a Mexican Learjet with two Mexican pilots, little medical equipment, and two Mexicans with unknown medical training, all provided by a company called Global Life Flight. Because of the long ambulance ride and the fact that Julian-Ocampo did not know if his health would remain stable enough to reschedule the flight, he did not back out. Plaintiffs were informed of problems throughout the day by the son who accompanied the flight, Alfredo Julian. Plaintiffs were terrified and thought that Julian-Ocampo and Alfredo Julian would die during the flight.
Patrick Julian called Air Ambulance and asked for the qualifications of the people on the plane. Air Ambulance could only get their names after four hours and did not provide the qualifications until five days later. It apparently did not check them out before subcontracting and had never used Global Life Flight.
Plaintiffs bought a blanket from the ground ambulance. The pilots shared their water with them and gave them a small amount of food purchased at one of the refueling stops. There were no seatbelts. The medical personnel could not provide a sedative requested by Julian-Ocampo until they purchased one at the first stop. An extra refueling stop was added at Guadalajara where the pilots and medical personnel had an argument in plaintiffs' presence about who was paying for the fuel. Plaintiffs had to wait in Tucson because the INS was not notified the plane would be coming. A problem with the pilot's passport caused additional delay. The pilot was escorted inside, leaving the plaintiffs in more distress because they did not know if the flight would continue. The pilot was eventually released to resume flying.
On three occasions during the flight, Julian-Ocampo became gray, started sweating profusely, and became short of breath. The medical personnel consulted manuals to determine how to stabilize him. Being more experienced in cardiac care than the medical personnel, Julian-Ocampo told them what was wrong and how to ease his distress.
The plane was in good working order and flew without problems but with all the delays, the flight took eight hours instead of the expected five hours.
Plaintiffs concede that none of them suffered physical injury. They seek to recover the $23,900 paid for the transport and damages for their emotional distress.
LEGAL STANDARDS
Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). The initial burden is on the moving party to point out the absence of any genuine issue of material fact. Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On a motion for summary judgment, the evidence is viewed in the light most favorable to the nonmoving party. Robi v. Reed, 173 F.3d 736, 739 (9th Cir.), cert. denied, 120 S.Ct. 375 (1999).
DISCUSSION
I. The Hutners
Plaintiffs admit that they are not attempting to pierce the corporate veil. But they contend that there is a factual issue that the Hutners personally committed torts based on their involvement in the creation and dissemination of misleading or untrue information to plaintiffs. In their Complaint, plaintiffs do not direct any of the claims against the Hutners. The fraud claim is alleged against Air Ambulance and Gincel and the other claims are only alleged against Air Ambulance.
Gincel was dismissed for lack of personal jurisdiction.
It is true that corporate officers are not shielded from liability for their personal tortious acts. See Fields v. Jantec, Inc., 317 Or. 432, 438, 857 P.2d 95 (1993). But at most, the Hutners briefly read the advertising material. There is no evidence they wrote any of it or requested any changes. They had no personal contact with the plaintiffs. I conclude as a matter of law that no reasonable jury would find them liable for any tort. Summary judgment is granted against all claims against Barbara and Richard Hutner.
II. Intentional Infliction of Emotional Distress
Defendants contend that plaintiffs' claim for the intentional infliction of emotional distress fails for several reasons: (1) there is no evidence that defendants intended to inflict the distress or that they knew that the distress was substantially certain to result from their conduct; (2) any distress suffered was not severe; and (3) defendants' conduct was not extreme enough to support the claim.
The tort of intentional infliction of emotional distress contains the following elements:
I.(1) the defendant intended to inflict severe emotional distress on the plaintiff, (2) the defendant's acts were the cause of the plaintiff's severe emotional distress, and (3) the defendant's acts constituted an extraordinary transgression of the bounds of socially tolerable conduct.
McGanty v. Staudenraus, 321 Or. 532, 543, 901 P.2d 841 (1995). Intent is defined to mean "where the actor desires to inflict severe emotional distress, and also where he knows that such distress is certain, or substantially certain, to result from his conduct." Id. at 550 (emphasis omitted). The nature of the relationship between the parties affects the type of conduct that is considered actionable. Id. at 548.
In summary, defendants did not inform plaintiffs that they might subcontract the flight, did not check the qualifications of the subcontractor, and provided equipment and personnel of lesser quality than what had been represented to plaintiffs.
In Rockhill v. Pollard, 259 Or. 54, 485 P.2d 28 (1971), an automobile accident resulted in an unconscious, blue infant and her mother and grandmother, both cut, bruised, and limping. A local doctor was called to his office at 9:00 p.m. to treat them. Without making any examination, the doctor told them that there was nothing wrong with any of them. After pleas from the mother, the doctor listened to the infant's heart and checked her reflexes, which were nonexistent. The infant then vomited a considerable amount of material. Without further examination, the doctor again said that there was nothing wrong and that the vomiting was from overfeeding. He did not examine either adult. He then required the three, including the infant who was soaked from the vomit, to wait outside in freezing weather for a ride so he would not have to stay any later at the office. The infant required a week hospital stay and surgery to elevate a depressed skull fracture. Id. at 56-59. The court held that, although the case was close, there was sufficient evidence for a jury to decide if defendant's conduct was outrageous enough. Id. at 64.
Here, defendants' conduct was not nearly as outrageous as the doctor's conduct in Rockhill. It is more in the nature of poor business practices which could have caused disastrous results. None of the plaintiffs here claim physical injury. Plaintiffs were truly frightened and angered by what defendants subjected them to and believed that Julian-Ocampo's and Alfredo Ocampo's lives were at risk. But defendants' conduct was not an extraordinary transgression of the bounds of socially tolerable conduct. Summary judgment is granted against the intentional infliction of emotional distress claim.
III. Fraud
Defendants contend that the court should not extend a fraud claim to cover emotional distress damages. Plaintiffs note that the damages awarded in a fraud claim must be flexible.
Typically, fraud damages are the out-of-pocket loss or, if the misrepresentation was a warranty of value, the benefit of the bargain. Staley v. Taylor, 165 Or. App. 256, 264, 994 P.2d 1220 (2000). If the fraud does not involve the sale of property, however, the proper measure of damages must be flexible to compensate the plaintiff for whatever loss he has suffered. Dizick v. Umpqua Community College, 287 Or. 303, 312, 599 P.2d 444 (1979) (damages include the wages not earned because of college enrollment which was fraudulently induced by promises of certain types of training which never became available). Oregon appellate courts have never held that emotional distress damages can be recovered for a fraud claim. Staley, 165 Or. App. at 265 (expressing no opinion on the issue because plaintiff presented no evidence from which emotional distress damages could have been determined). Plaintiffs have cited no cases awarding them.
I am unwilling to expand the tort of fraud to cover emotional distress damages. Summary judgment is granted against the fraud claim.
IV. Breach of Fiduciary Duty
Defendants contend that this tort claim must be dismissed because no special relationship exists between the parties since their relationship was a contractual one. Plaintiffs argue that a physician-patient relationship existed during the flight and that plaintiffs relied on defendants.
No fiduciary relationship exists without a special relationship between the parties. Gangnes v. Lang, 104 Or. App. 135, 140, 799 P.2d 670 (1990). Special relationships are typically formed with physicians, lawyers, real estate brokers, architects, engineers, landlords, agents, and insurers, namely cases in which the party is subject to a standard of care independent of the terms in a contract. Georgetown Realty v. The Home Insurance Co., 313 Or. 97, 103, 106, 110-11, 831 P.2d 7 (1992).
Plaintiffs rely on a statement in Conway v. Pacific University, 324 Or. 231, 240, 924 P.2d 818 (1996):
II.Another way to characterize the types of relationships in which a heightened duty of care exists is that the party who owes the duty has a special responsibility toward the other party. This is so because the party who is owed the duty effectively has authorized the party who owes the duty to exercise independent judgment in the former party's behalf and in the former party's interests. In doing so, the party who is owed the duty is placed in a position of reliance upon the party who owes the duty; that is, because the former has given responsibility and control over the situation at issue to the latter, the former has a right to rely upon the latter to achieve a desired outcome or resolution.
In Conway, a professor and a university already in a contractual employment relationship and were negotiating renewal of the contract. The court held that although they were not fully in an arm's length relationship, each party was acting for its own benefit. Thus, the university had no special responsibility toward the professor to exercise independent judgment and no special relationship arose. Id. at 241-42.
Plaintiffs have provided no case law which found a special relationship between an ambulance company and the patient being transported. I conclude that the relationship is more similar to that between a commercial driver and passenger than it is between a physician and patient. Summary judgment is granted against the breach of fiduciary duty claim.
V. Negligent Misrepresentation
As plaintiffs acknowledge, the tort of negligent misrepresentation also requires a special relationship. Onita Pacific Corp. v. Trustees of Bronson, 315 Or. 149, 159-162, 843 P.2d 890 (1992). Summary judgment is granted against the negligent misrepresentation claim.
VI. Negligence
Plaintiffs' Complaint does not specify which acts of Air Ambulance they allege are negligent. In their response memorandum, plaintiffs argue that defendants negligently withheld the fact that they were going to contract out the work and negligently failed to investigate Global Life Flight's qualifications.
Defendants contend that no negligence claim lies in the absence of personal injury or property damage.
III.Oregon adheres to the traditional rule that one ordinarily is not liable for negligently causing a stranger's purely economic loss without injuring his person or property, on the theory that people generally do not have a duty to protect others from such losses. As a consequence, to recover purely economic losses, a plaintiff must plead some source of duty outside of the common law of negligence.
Roberts v. Fearey, 162 Or. App. 546, 549, 986 P.2d 690 (1999) (internal quotation and citation omitted).
Plaintiffs rely on Curtis v. MRI Imaging Services II, 327 Or. 9, 956 P.2d 960 (1998), in which the plaintiff allegedly received psychological injuries during a negligently performed diagnostic test in an MRI machine. The court held that plaintiff stated a claim by alleging that the medical professionals owed a duty to guard against predictable psychological consequences to the MRI procedure and that they breached the duty. Curtis does not assist the plaintiffs before me, however, because the court expressly analyzed it as a medical malpractice claim, which raises another source of duty. Id. at 13, 16. Plaintiffs' negligence claim here is not for malpractice.
Summary judgment is granted against the negligence claim.
VII. Breach of Contract
Defendants move against the recovery of punitive or emotional distress damages under the breach of contract claim. Plaintiffs contend that they can recover for emotional distress because defendants knew that their breach would cause extreme distress.
Contract damages "will not be awarded for mental suffering only, not attendant to or followed by an injury to the plaintiff." Keltner v. Washington County, 310 Or. 499, 504, 800 P.2d 752 (1990); Farris v. U.S. Fidelity and Guaranty Co., 284 Or. 453, 456, 587 P.2d 1015 (1978).
Summary judgment is granted to the extent that the breach of contract claim will be limited to economic damages.
VIII. Unlawful Trade Practices Act
Plaintiffs allege several violations of Oregon's Unlawful Trade Practices Act ("UTPA"), ORS 646.605 et seq. Defendants contend that the act does not apply because the only nexus to Oregon is that the flight terminated here. They contend that the UTPA was intended to resolve Oregon consumer complaints, not complaints by citizens of other states and foreign countries against corporations principally doing business elsewhere.
The UTPA has a venue provision defining an appropriate court to file an action as a county's circuit court where one or more of defendants reside or maintain a principal place of business, where one or more of the defendants are alleged to have committed an act prohibited by the UTPA, or with defendant's consent, where the prosecuting attorney maintains an office. ORS 646.605(1). Plaintiffs argue that this is a venue provision and not a standing provision. The statute further provides that "any person who suffers any ascertainable loss of money or property, real or personal, as a result of the willful use or employment by another person of a method, act or practice declared unlawful" may bring an action in an appropriate court to recover actual damages and punitive damages. ORS 646.638(1).
Plaintiffs note that the plane traveled in Oregon airspace, that Julian-Ocampo was transported to an Oregon hospital in an Oregon ambulance, and that Oregonians may also rely on defendants' advertisement on the web site.
I agree with defendants that no claim lies under the UTPA because no unlawful trade practices occurred in Oregon. Plaintiffs' allegations concern the advertisements and representations which caused them to contract with defendants. There was no connection to this state when that conduct occurred. Summary judgment is granted against the UTPA claim.
CONCLUSION
Defendants Richard Hutner's and Barbara Hutner's motion for summary judgment (#39) is granted. Defendants' motion for summary judgment (#67) is granted in part. The breach of contract claim, with damages limited as discussed above, remains for trial.