Date: 08-25-2007

Case Style: Janice McDaniel and Patrick McDaniel v. Specturm Healthcare Resources, Inc. and Michael Sim

Case Number: 04-06-00185-CV

Judge: Phylis J. Speedlin

Court: Texas Court of Appeals for the 4th District of Texas on appeal from the 408th Judicial District Court, Bexar County

Plaintiff's Attorney:

Jeffrey C. Anderson and Jessica L. Lambert

Defendant's Attorney:

Robert R. Biechlin, Jr. and Richard C. Harrist

Description:

The controlling legal issue presented in this appeal is whether an Agreed Special Setting and Docket Control Order incorporated a written agreement extending the date for serving an expert report under section 74.351(a) of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 74.351(a) (Vernon Supp. 2006). Because we hold that the docket control order includes within it an unambiguous agreement that extended the date, we reverse the trial court's order and remand the cause to the trial court for further proceedings.

Background

Janice McDaniel was receiving physical therapy at Brooke Army Medical Center for a "frozen shoulder" when she attempted to step off a machine and fell, breaking her pelvis. Janice's physical therapist was Michael Sims, who was employed by Spectrum Healthcare Resources, Inc., which was apparently hired by Foundation Health Federal Services. Foundation was retained by the United States to employ medical personnel to work at Brooke Army Medical Center.

On April 15, 2004, Janice and Patrick McDaniel filed suit in federal court against Spectrum and Sims for negligence and medical negligence and against the United States of America for negligence. The federal court signed an agreed scheduling order on July 2, 2004, that required experts to be identified by April 22, 2005, under the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 26(a)(2)(B) (party must provide a written report of a witness who is retained or specifically employed to provide expert testimony in a case). Before experts were identified pursuant to the federal scheduling order, Spectrum and Sims filed a Motion to Dismiss the McDaniels' claims on August 30, 2004, asserting that the McDaniels failed to timely serve the expert report required by section 74.351 of the Texas Civil Practice and Remedies Code and that the agreed scheduling order entered by the federal court did not extend the deadline. See Tex. Civ. Prac. & Rem. Code Ann. § 74.351 (Vernon Supp. 2006). Also pending before the court was a motion for summary judgment filed by the United States asserting that it was not liable for the negligence, if any, of Spectrum and Sims because they were independent contractors.

On November 16, 2004, the federal court issued an opinion granting summary judgment in favor of the United States, but denying the motion to dismiss filed by Spectrum and Sims. Because granting summary judgment in favor of the United States "destroyed" the basis for the federal court's original jurisdiction, the federal court exercised its discretion to sua sponte dismiss the case without prejudice to refiling in state court.

The McDaniels refiled their claims against Spectrum and Sims in state court on May 25, 2005. Thereafter, on July 15, 2005, the parties entered into an Agreed Special Setting and Docket Control Order. Pursuant to the docket control deadlines, the McDaniels filed a Designation of Expert Witnesses and attached an expert report and curriculum vitae of their expert on January 11, 2006. On February 2, 2006, Spectrum and Sims filed a motion to dismiss asserting that the McDaniels failed to timely serve their section 74.351 expert report. (1) After a response was filed by the McDaniels and a reply was filed by Spectrum and Sims, the trial court conducted a hearing on the motion and entered an order dismissing the McDaniels' claims with prejudice.

Discussion

We review a trial court's order granting a motion to dismiss based on the failure to timely file a section 74.351 expert report under an abuse of discretion standard. See Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873, 875 (Tex. 2001); Lopez v. Montemayor, 131 S.W.3d 54, 58 (Tex. App.--San Antonio 2003, pet. denied). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles. Bowie Mem. Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002); Lopez, 131 S.W.3d at 58.

"In a health care liability claim, a claimant shall, not later than the 120th day after the date the claim was filed, serve on each party or the party's attorney one or more expert reports, with a curriculum vitae of each expert listed in the report for each physician or health care provider against whom a liability claim is asserted." (2)

Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 10.01, 2003 Tex. Gen. Laws 847, 875. The date for serving the report may be extended by written agreement of the affected parties. See Tex. Civ. Prac. & Rem. Code Ann. § 74.351(a) (Vernon Supp. 2006).

The issue in this appeal is whether the July 15, 2005 Agreed Special Setting and Docket Control Order incorporated a written agreement of the parties that extended the date for serving the expert report. See id. We apply contract principles in determining whether the parties entered into an agreement to extend the deadline. See Emeritus Corp. v. Highsmith, 211 S.W.3d 321, 329 (Tex. App.--San Antonio 2006, pet. denied). When a contract is not ambiguous, the construction of the written instrument is a question of law for the court that is reviewed de novo. MCI Telecommunications Corp. v. Texas Utilities Elec. Co., 995 S.W.2d 647, 650-51 (Tex. 1999); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Whether a contract is ambiguous is a question of law that must be decided by examining the contract as a whole in light of the circumstances present when the contract was entered. See Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995); Sanchez v. Duke Energy Field Services, Inc., No. 04-05-00926-CV, 2006 WL 2546365, at *2 (Tex. App.--San Antonio Sept. 6, 2006, pet. denied); see also Wagner & Brown v. E.W. Moran Drilling Co., 702 S.W.2d 760, 769 (Tex. App.--Fort Worth 1986, no writ) (court must determine from expressions used in a written contract whether there has been a meeting of the minds). If a written contract is worded so that it can be given a definite or certain legal meaning, then it is unambiguous. Nat'l Union Fire Ins. Co., 907 S.W.2d at 520; Coker, 650 S.W.2d at 393. An ambiguity does not arise simply because the parties offer forceful and diametrically opposing interpretations. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000); Sanchez, 2006 WL 2546365, at *2. Rather, a contract is ambiguous only if two or more reasonable interpretations are genuinely possible after application of the pertinent rules of interpretation to the face of the instrument. Sanchez, 2006 WL 2546365, at *2.

In this case, the parties' written agreement, as reflected in the docket control order, can be given a definite and certain meaning as a matter of law. The Agreed Special Setting and Docket Control Order provides in pertinent part:

On this the 6th day of July, 2005, came to be heard, all parties to this cause of action who have agreed that the following dates of the Docket Control Order should be entered. It is therefore, ORDERED, ADJUDGED, AND DECREED as follows:

1. Plaintiffs will designate all expert witnesses that they intend to call at the trial of this case, live or by deposition, and shall provide a written report and curriculum vitae of all retained experts in this case on or before January 11, 2006;

2. Defendant is to designate all expert witnesses it intends to call at the trial of this case, live or by deposition, and shall provide a written report and curriculum vitae of all retained experts in this case on or before February 24, 2006;

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It is further ORDERED to the extent these deadlines may be in conflict with deadlines set by rule or statute, the deadlines established by this Docket Control Order shall take precedence.

It is further ORDERED that the parties shall conduct discovery as soon as practicable, notwithstanding the limiting provisions found in Chapter 74 of the Texas Civil Practice and Remedies Code.

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Based on the language in the agreed order, the parties initially agreed in paragraph one that January 11, 2006, would be the deadline for the McDaniels to: (1) "designate all expert witnesses that they intended to call at trial" and (2) "provide a written report and curriculum vitae of all retained experts in this case." We read this as imposing two separate requirements. The first requirement mandates disclosure of "all expert witnesses" that may be called to testify at trial which includes both retained and non-retained experts such as treating physicians. See Baylor Med. Plaza Servs. Corp. v. Kidd, 834 S.W.2d 69, 73 (Tex. App.--Texarkana 1992, writ denied) (retained expert is an expert who is compensated for his services); see also In re Harvest Communities of Houston, Inc., 88 S.W.3d 343, 348 (Tex. App.--San Antonio 2002, orig. proceeding) (noting treating physicians are non-retained experts). The crux of this case deals with the second requirement contained within paragraph one, the requirement of providing "a written report and curriculum vitae of all retained experts in this case." Since an expert who prepares a section 74.351 report is generally a retained expert, we must determine whether the parties intended for the January 11, 2006, deadline to apply to the section 74.351 expert report. In order to make this determination, we consider and give effect to each part of the agreed docket control order. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133-34 (Tex. 1994). (3)

In deciding whether the agreed docket control order in the instant case incorporated an agreement to extend the deadline for the 74.351 expert report, we first note that the statute allows such an agreement but does not mandate a specific format other than the agreement must be in writing. Tex. Civ. Prac. & Rem. Code Ann. § 74.351(a) (Vernon Supp. 2006) ("The date for serving the report may be extended by written agreement of the affected parties."). The dissent states that in order to be valid the written agreement must contain a "clear reference" to section 74.351. We respectfully disagree. Certainly, an express mention of the statute would remove all doubt about the parties' intent but the statute does not require it. Accordingly, we must look to the agreement as a whole to ascertain the parties' intent.

Here the parties expressly agreed that a written report and curriculum vitae of all of Plaintiff's retained experts would be due on or before January 11, 2006. Then, in a separate paragraph, the parties agreed the deadlines established within the agreed order would trump any other rule or statute that was in conflict with the order, stating,"to the extent these deadlines may be in conflict with the deadlines set by rule or statute, the deadlines established by this Docket Control Order shall take precedence." (emphasis added). Spectrum and Sims have not cited this court to any "statute" this section of the agreement could possibly have intended to reference other than section 74.351. The dissenting opinion contends that the reference to "statute" may have been a reference to section 74.352 of the Texas Civil Practice and Remedies Code, asserting that the deadlines in that section would conflict with the deadlines contained in the docket control order. We disagree. The deadlines in section 74.352 govern the service of responses to the standard set of interrogatories and standard set of requests for production of documents and things promulgated by the Health Care Liability Discovery Panel. See Tex. Civ. Prac. & Rem. Code Ann. § 74.352 (Vernon 2005). The dissenting opinion does not explain how these deadlines could be in conflict with the docket control order deadlines, especially considering that the standard sets of discovery referenced in section 74.352 have never been promulgated by the Health Care Liability Discovery Panel. If this court were to decide that the docket control order did not incorporate an agreement to extend the section 74.351 deadline, we would render an entire provision within the agreed order meaningless which would ignore a pertinent rule of contract interpretation. See Sanchez, 2006 WL 2546365, at *2 (noting court must apply pertinent rules of interpretation in determining whether contract is ambiguous).

Furthermore, the docket control order expressly permitted the parties to conduct discovery "notwithstanding the limiting provisions found in Chapter 74 of the Texas Civil Practice and Remedies Code" which would otherwise have limited discovery until the section 74.351 expert report was filed. Having expressly referenced chapter 74, the parties were cognizant of the limitations and deadlines established by that statutory provision. By expressly stating that the deadlines in the docket control order prevailed over deadlines set by statute, the language chosen further reflects the parties' understanding that the deadline for the section 74.351 expert report would be extended to January 11, 2006.

Spectrum and Sims argue that the docket control order did not extend the section 74.351 deadline because the purpose for requiring service of the section 74.351 expert report is different than the purpose for designating an expert during discovery. Although the different purposes served by the chapter 74 report and discovery may generally lead to the conclusion that a defendant would not typically extend the chapter 74 deadline, as we have already noted the statute itself envisions situations where a defendant could be willing to enter into such an agreement. See Tex. Civ. Prac. & Rem. Code Ann. § 74.351(a) (Vernon Supp. 2006) (providing date can be extended by written agreement).

The circumstances present at the time the docket control order was entered in this case were unique and very distinct from those present in a typical case that is first filed in state court where the defendant is anticipating receipt of the chapter 74 report to evaluate whether the claim is frivolous. See Palacios, 46 S.W.3d at 878 (noting one purpose of the expert report requirement is to deter frivolous claims). Here, before the docket control order was entered in state court, the parties had been engaged in federal litigation for approximately seven months until the federal lawsuit was dismissed. Given the length of time the federal litigation had been pending, the defendants already had information from which they could determine whether the McDaniels' claim was frivolous. See Fed. R. Civ. P. 26(a)(1), 26(f) (requiring parties to file initial disclosures and to have a conference of the parties to consider the nature and basis of their claims and defenses); McDaniel v. U.S., No. CIV.A.SA-04-CA-0314, 2004 WL 2616305, at *5, *10 (W.D. Tex. Nov. 16, 2004) (indicating some discovery had been undertaken during pendency of federal litigation). Therefore, extending the deadline for filing the section 74.351 expert report is a reasonable quid pro quo for the McDaniels' agreement to allow immediate discovery.

Spectrum and Sims rely on four cases that have previously addressed whether a docket control order incorporated a written agreement extending the date for serving a section 74.351 expert report; however, each of these prior decisions is distinguishable based on the language used or the timing of the entry of the orders. Most noteworthy, the instant docket control order contains a specific paragraph we cannot ignore, "[i]t is further ORDERED to the extent these deadlines may be in conflict with deadlines set by role or statute, the deadlines established by this Docket Control Order shall take precedence." None of the four cases cited by Spectrum and Sims involved a docket control order containing a similar provision. Cf., Rugama v. Escobar, No. 04-05-00764-CV, 2006 WL 923701, at *2 (Tex. App.--San Antonio Apr. 5, 2006, no pet.); Hall v. Mieler, 177 S.W.3d 278, 280 (Tex. App.--Houston [1st Dist.] 2005, no pet.); Olveda v. Sepulveda, 141 S.W.3d 679, 683 (Tex. App.--San Antonio 2004), pet. denied, 189 S.W.3d 740 (Tex. 2006); Finley v. Steenkamp, 19 S.W.3d 533, 540 n.2 (Tex. App.--Fort Worth 2000, no pet.). Further, in both Rugama and Hall, the orders at issue did not expressly mention any expert report. Rugama, 2006 WL 923701, at *2; Hall, 177 S.W.3d at 280. In the instant case, by contrast, the agreed docket control order provides a specific date for "a written report and curriculum vitae of all retained experts" and further sets forth the parties intent for that deadline to take "precedence" over "deadlines set by rule or statute." Finally, the decisions in Finley and Olveda are readily distinguishable because the orders in those cases were not entered until after the section 74.351 deadline had passed. Finley, 19 S.W.3d at 540 n.2; Olveda, 141 S.W.3d at 683. After the deadline had passed, the defendant would have no incentive for extending a deadline already missed.

Finally, Spectrum and Sims argue that the use of identical language in the docket control order for both the plaintiffs and the defendants shows that the parties did not intend to extend the section 74.351 deadline because the defendants were not required to file such a report. Although under article 4590i, an expert report could not be admitted into evidence or used in a deposition, trial, or other proceeding, section 74.351(t) permits a section 74.351expert report to be admitted and used if the claimant uses the report for any purpose other than to meet the service requirement of subsection (a). Compare Act of May 1, 1995, 74th Leg. R.S., ch. 140, §1, 1995 Tex. Gen. Laws. 985, 986-87 (former article 4590i), repealed by Act of June 2, 2005, 78th Leg., R.S., ch. 204, §10.09, 2003 Tex. Gen. Laws 847, 884, with Tex. Civ. Prac. & Rem. Code Ann. § 74.351(t) (Vernon Supp. 2006). Accordingly, no statutory support currently exists for the notion that the expert who provides the chapter 74 report is necessarily distinct from any other retained expert. See McDaniel, 2004 WL 2616305, at *8 (rejecting the argument that a section 74.351 report is "somehow a different species of expert report than that required under the general rules of discovery").

Conclusion

We hold the parties' written agreement, as reflected in the docket control order as a whole, can be given a definite and certain meaning as a matter of law and includes within it an unambiguous agreement that extended the date for serving the section 74.351 expert report. Accordingly, we reverse the trial court's order granting the defendants' motion to dismiss, and remand the cause to the trial court for further proceedings.

Outcome: We hold the parties' written agreement, as reflected in the docket control order as a whole, can be given a definite and certain meaning as a matter of law and includes within it an unambiguous agreement that extended the date for serving the section 74.351 expert report. Accordingly, we reverse the trial court's order granting the defendants' motion to dismiss, and remand the cause to the trial court for further proceedings.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None