Statute of Limitations for Claim Expired

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					Filed 9/2/98

                                              CERTIFIED FOR PUBLICATION


                         SECOND APPELLATE DISTRICT

                               DIVISION SIX

PREFERRED RISK MUTUAL INSURANCE                  2d Civil No. B116718
COMPANY,                                      (Super. Ct. No. SM102377)
                                               (Santa Barbara County)
      Plaintiff and Appellant,



       Defendants and Respondents.

               Here we hold that Code of Civil Procedure section 364,
which requires a plaintiff to give notice of intent to sue before
filing an action for medical malpractice, does not apply to a
complaint for equitable indemnity.
               This appeal is from a judgment of dismissal following
an order sustaining a demurrer without leave to amend.        We assume
the facts alleged in the complaint are true.         (See Winding Creek
v. McGlashan (1996) 44 Cal.App.4th 933, 936.)
               On April 4, 1993, Rebekka Pratte was injured when her
hand was slammed in the door of a van owned by the First Church of
God (Church).       She was treated by respondents Reo Reiswig, M.D.,
Karen Kolba, M.D. and C. Baring Farmer, M.D. (Drs. Reiswig, Kolba
and Farmer), but developed a serious condition known as complex
regional pain syndrome.
               Pratte filed suit against the Church, which was insured
by appellant Preferred Risk Mutual Insurance Company (Preferred
Risk).   On January 24, 1996, Preferred Risk paid the policy limits

of $1 million to Pratte in exchange for a release of all claims
against the Church.
         On January 16, 1997, less than one year after the
settlement with Pratte, Preferred Risk served Drs. Reiswig and
Kolba with notices of intent to sue a health care provider under
Code of Civil Procedure section 364.1       On February 19, 1997, more
than one year after the settlement with Pratte, it served a
similar notice on Dr. Farmer.
         On April 10, 1997, Preferred Risk filed a complaint in
subrogation naming all three doctors as defendants.      The complaint
alleged that the doctors were negligent in their medical treatment
of Pratte following the van door accident and sought recovery of
the $1 million paid on behalf of the Church.
         The doctors demurred to the complaint on the grounds
that it did not state a cause of action and had been filed after
the statute of limitations expired.    The trial court overruled
the demurrer on the first ground, but sustained it without leave
to amend as to the second.    It concluded that section 364 does
not require a plaintiff in an equitable indemnity action to file
a notice of intent to sue against a defendant health care
provider, and therefore, the section 364 notices in this case did
not toll the one-year statute of limitations which began to run
at the time Preferred Risk paid the settlement amount to Pratte.
         A judgment dismissing the action was entered, and this
appeal follows.
         Preferred Risk paid $1 million to Rebekka Pratte to
settle all of her claims against the Church.      An insurer who pays
damages to a third party is subrogated to the rights of the

     1 All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.

insured, and may pursue a claim of equitable indemnity against
joint or successive tortfeasors who are partially liable for the
claimant's injuries.   (Smith v. Parks Manor (1987) 197 Cal.App.3d
872, 878.)    In such cases the insurer stands in the shoes of its
insured with respect to the right to recover against other
culpable parties.   (Truck Ins. Exchange v. Superior Court (1997)
60 Cal.App.4th 342, 350; Allstate Ins. Co. v. Loo (1996) 46
Cal.App.4th 1794, 1799.)
          When a party's negligence causes injuries to another
which are then aggravated by a treating physician's malpractice,
that party may seek equitable indemnity from the physician as a
successive tortfeasor.    (Ash v. Mortensen (1944) 24 Cal.2d 654,
657; Blecker v. Wolbart (1985) 167 Cal.App.3d 1195, 1201.)
Having settled with Pratte on behalf of the Church, Preferred
Risk was entitled to seek equitable indemnity from physicians who
negligently treated her for the injuries arising from the van
door accident.   (See Smith v. Park Manor, supra, 197 Cal.App.3d
at p. 878.)
          The parties agree that a cause of action for equitable
indemnity does not accrue until the indemnitee suffers a loss
through payment of a claim.   (People ex rel. Dept. of
Transportation v. Superior Court (1980) 26 Cal.3d 744, 757; E.L.
White v. City of Huntington Beach (1978) 21 Cal.3d 497, 506; City
of San Diego v. U.S. Gypsum Co. (1994) 30 Cal.App.4th 575, 587-
588.)   Here the complaint alleged that Preferred Risk paid Pratte
the settlement amount on January 24, 1996, meaning that its cause
of action for equitable indemnity accrued on that date.
          The parties also agree the limitations period was one
year, although they disagree about its source.   (See Smith v.
Park Manor, supra, 197 Cal.App.3d at p. 882.)    Preferred Risk was
thus required to file its complaint for equitable indemnity by
January 24, 1997, absent a tolling or extension of the relevant
statute of limitations.    (See Kulesa v. Castleberry (1996) 47

Cal.App.4th 103, 106.)   It did not file its complaint until
almost three months after this date.
           Preferred Risk contends the notices of intent to sue
served on Drs. Reiswig and Kolba on January 16, 1997, tolled the
one-year limitations period for ninety days.   It acknowledges the
notice of intent to sue Dr. Farmer was served after the one-year
period had expired, but argues the trial court should have granted
leave to amend the complaint to allege that the action was
commenced within a year of discovering Dr. Farmer's negligence, as
allowed by section 340.5.   (See Jolly v. Eli Lily & Co. (1988) 44
Cal.3d 1103, 1109; Henry v. Clifford (1995) 32 Cal.App.4th 315,
           In this appeal, we must therefore determine (1) the
applicable statute of limitations; and (2) whether the notices of
intent to sue under section 364 tolled this statute.
            Section 340, Subdivision (3) Establishes the
        Limitations Period Applicable to Equitable Indemnity
         Actions, Even When Professional Negligence is the
                   Underlying Theory of Liability
           The parties agree that Preferred Risk's indemnity
action is subject to a one-year limitations period.    Preferred
Risk argues that this one-year period arises from section 340.5,
which establishes the limitations periods generally applicable to
medical malpractice actions.   Respondent doctors urge us to
instead apply section 340, subdivision (3), which prescribes a
one-year limitations period for most torts.2

     2 In relevant part, section 340.5 provides, "In an action
for injury or death against a health care provider based upon
such person's alleged professional negligence, the time for the
commencement of action shall be three years after the date of
injury or one year after the plaintiff discovers, or through the
use of reasonable diligence should have discovered, the injury,
whichever occurs first. . . . [¶] (2)'Professional negligence'
means a negligent act or omission to act by a health care
                                                    (Fn. cont'd.)

          We conclude that section 340, subdivision (3) governs
equitable indemnity claims.   The statutory language of section
340.5 does not apply to such actions, even when the underlying
theory of liability is medical malpractice.
A.   Section 340.5 Does Not Apply to An Equitable Indemnity Action.
          The Legislature amended section 340.5 as part of the
Medical Injury Comprehensive Reform Act (MICRA), which contains "a
variety of provisions all of which are calculated to reduce the
cost of insurance by limiting the amount and timing of recovery in
cases of [medical malpractice]."       (Western Steamship Lines, Inc.
v. San Pedro Peninsula Hospital (1994) 8 Cal.4th 100, 111.)
Section 340.5 provides that "In an action for injury or death
against a health care provider based upon such person's alleged
professional negligence, the time for the commencement of action
shall be three years after the date of injury or one year after
the plaintiff discovers . . . the injury."       The statute defines
professional negligence as "a negligent act or omission to act by
a health care provider in the rendering of professional services,
which act . . . is the proximate cause of a personal injury or
wrongful death . . . ."   (§ 340.5, italics added.)     The "injury"
referred to in section 340.5 is thus the personal injury or death
which results from an act of medical malpractice.      (See Gutierrez
v. Mofid (1985) 39 Cal.3d 892, 896 ["injury" triggering § 340.5 is
a person's physical condition and its negligent cause].)
          The "injury" in an action for equitable indemnity, by
contrast, consists of the indemnitee's payment to the injured
 (Fn. cont'd.)
provider in the rendering of professional services, which act or
omission is the proximate cause of a personal injury or wrongful
death . . . ."
     Section 340, subdivision (3) establishes a one-year period
of limitations for "An action for libel, slander, assault,
battery, false imprisonment, seduction of a person below the age
of legal consent, or for injury to or for the death of one caused
by the wrongful act or neglect of another . . . ."

party and is independent of the underlying claim.    (Western
Steamship Lines, Inc. v. San Pedro Peninsula Hospital, supra, 8
Cal.4th at pp. 114-115; Fleck v. Bollinger Home Corp. (1997) 54
Cal.App.4th 926, 931.)    "The basis for the remedy of equitable
indemnity is restitution.    '"[O]ne person is unjustly enriched at
the expense of another when the other discharges liability that
it should be his responsibility to pay."'"    (Children's Hospital
v. Sedgwick (1996) 45 Cal.App.4th 1780, 1786.)    The injury
allegedly suffered by Preferred Risk in paying the settlement is
an economic harm rather than the type of personal injury which
triggers section 340.5.    (See Hensler v. City of Glendale (1994)
8 Cal.4th 1, 22-23 [statute of limitations is determined by
"gravamen" of cause of action].)
B.   Section 340, subdivision (3) is the Relevant Statute of
           Section 340.5 is limited to medical malpractice actions
brought by the injured patient or the patient's representative.
Indemnity claims against a physician as a successive tortfeasor
must therefore be governed by the statute of limitations generally
applicable to equitable indemnity actions.    Although the parties
agree that the limitations period for such actions is one year,
they cite no case which identifies the statute establishing this
one-year period.
           The law in this area is murky.   Published cases
addressing the timeliness of equitable indemnity suits have
generally been concerned with when the cause of action accrues,
rather than which statute of limitations applies.    Smith v. Parks
Manor, supra, 197 Cal.App.3d at page 882, appears to be the only
case directly holding that an equitable indemnity claim is
governed by a one-year limitations period.    Smith relied on De La
Forest v. Yandle (1959) 171 Cal.App.2d 59, 62, for this
proposition, but De La Forest simply determined that because the
parties seeking indemnification had filed suit within one year of
a settlement, their indemnity action was "not barred by any

statute of limitations pleaded."       (De La Forest, supra, at p. 62;
see also General Brewing Corp. v. Clark (1968) 264 Cal.App.2d
518, 519-520 [argument that indemnity claim was barred by one-
year period in § 340, subd. (3) was rejected because cause of
action had not yet accrued].)
           Section 340, subdivision (3) imposes a one-year
limitations period for "[a]n action . . . for injury to or for
the death of one caused by the wrongful act or neglect of another
. . . ."   A party is injured by the wrongful conduct of its
fellow tortfeasors when it pays more than its share of a
settlement to an injured plaintiff.      An action for equitable
indemnity is thus an action for "injury . . . caused by the
wrongful act or neglect of another," as defined by section 340,
subdivision (3).   (Compare County of San Diego v. Sanfax Corp.
(1977) 19 Cal.3d 862, 871-879 [§ 340, subd. (3) applies to action
by employer against negligent third party to recover amount of
workers' compensation benefits paid to employee injured by the
third party's negligence].)   We conclude that section 340,
subdivision (3) is the relevant statute of limitations for causes
of action based on equitable indemnity, at least when there is no
more specific statute governing a particular type of indemnity
claim.   (See, e.g., § 337.15, subd. (c) [indemnity claims in
construction defect case].)
  Section 364 Does Not Apply to Claims for Equitable Indemnity
           The one-year limitations period of section 340,
subdivision (3) began to run on January 24, 1996, when Preferred
Risk settled Pratte's claim against the Church.      It expired on
January 24, 1997, absent some intervening event which tolled or
extended the one-year period.   Preferred Risk claims the one-year
period was tolled for ninety days when it served respondent

doctors with notices of intent to sue under section 364.3        We
conclude that neither the statutory language of section 364 nor
the underlying purpose of that statute requires us to extend its
provisions to an action for equitable indemnity.
           Section 364 provides, "(a) No action based upon the
health care provider's professional negligence may be commenced
unless the defendant has been given at least 90 days' prior
notice of the intention to commence the action.    [¶]   (d) If the
notice is served within 90 days of the expiration of the
applicable statute of limitations, the time for the commencement
of the action shall be extended 90 days from the service of the
           Respondent doctors argue that section 364 is a MICRA
provision and affects only the limitations period listed in
section 340.5.   They claim that because the limitations period in
this case is defined by the non-MICRA provision of section 340,
subdivision (3), section 364 does not apply.   (See Mero v. Sadoff
(1995) 31 Cal.App.4th 1466, 1478-1479 [if action is one of
ordinary negligence governed by § 340 rather than medical
malpractice under § 340.5, 90-day tolling provision of § 364 is
not applicable].)
           It is true that most published decisions which address
the tolling provision of section 364 have done so in cases where
section 340.5 is the relevant statute of limitation.     But a
properly filed section 364 notice tolls the "applicable statute
of limitations" (§ 364, subd. (d), italics added), and courts
have construed this language to extend to the non-MICRA
limitations period for medical malpractice claims against
government entities under the Tort Claims Act.    (Anson v. County
of Merced (1988) 202 Cal.App.3d 1195, 1204 [notice under § 364

     3 As we have already noted, Dr. Farmer was not served with a
notice of intent to sue until the one-year limitations period had

extends limitations period under Gov. Code, § 945.6]; see also
Wurts v. County of Fresno (1996) 44 Cal.App.4th 380.)     The
question is not whether section 364 tolls only the statutory
period of section 340.5, but whether it applies in a case which
does not involve a claim for medical malpractice by an injured
           Section 364 applies to an "action based upon the health
care provider's professional negligence."     (§ 364, subd. (a).)
"Professional negligence" is defined as a "negligent act or
omission to act by a health care provider in the rendering of
professional services, which . . . is the proximate cause of a
personal injury or wrongful death . . . ."     (§ 364, subd.
(f)(2).)   In other words, section 364 applies to claims by a
patient who has been injured by a practitioner's medical
malpractice, or that patient's heirs in a wrongful death case.
           Preferred Risk argues that such an interpretation
defeats the purpose of section 364, which is to "decrease the
number of medical malpractice actions filed by establishing a
procedure that encourages parties to negotiate 'outside the
structure and atmosphere of the formal litigation process.'"
(Woods v. Young (1991) 53 Cal.3d 315, 320.)    The drafters of
MICRA believed that a 90-day notice period would give doctors
accused of professional negligence and their insurers an
opportunity to negotiate with prospective plaintiffs and settle
claims without costly litigation.     (Id. at pp. 320-326.)
           These goals will not be met by extending the tolling
provisions of section 364 to joint tortfeasors who file a claim
for equitable indemnity against an allegedly negligent physician.
Medical malpractice claims typically involve complex factual
issues.    If the 90-day period is effective in reducing the number
of malpractice lawsuits, it will only be in those rare cases
where liability is relatively clear one way or another.       An
indemnity action which involves multiple tortfeasors and requires
the apportionment of fault between a negligent actor and a

physician who treats the injuries flowing from that negligence is
unlikely to be resolved in 90 days.
         Moreover, it will be a rare situation in which the
party injured by medical malpractice will not file a direct claim
against a negligent physician.   In this case, for example, Pratte
filed a lawsuit against the respondent doctors on July 2, 1995,
more than six months before Preferred Risk settled the case on
behalf of the Church.4   Notices under section 364 are filed by
the injured party in such cases, making further notice by joint
tortfeasors both unnecessary and ineffective in promoting early
         Preferred Risk points out that the MICRA provision
limiting noneconomic damages to $250,000 in a medical malpractice
case has been held applicable to equitable indemnity claims.
(Civ. Code, § 3333.2; Western Steamship Lines, Inc. v. San Pedro
Peninsula Hospital, supra, 8 Cal.4th 100.)     Civil Code section
3333.2 operates as a substantive limitation on liability which
would be circumvented if it did not apply to third party claims.
"'The Legislature could reasonably have determined that an
across-the-board limit would provide a more stable base on which
to calculate insurance rates.'   [Citation.]   Exempting indemnity
actions from the $250,000 limit would threaten not only this goal
but also the broader purpose of MICRA by resurrecting the pre-
MICRA instability associated with unlimited noneconomic damages
and increasing the overall cost of malpractice insurance to
account for these larger recoveries.   [Citations.]"   (Id. at p.
         The Supreme Court in Western Steamship, supra, was
careful to distinguish between the substantive and procedural
aspects of MICRA.   "[F]or certain procedural purposes, such as
statutes of limitations, an indemnity claim is an independent

     4 We have taken judicial notice of Pratte v. Reiswig (Super.
Ct. San Luis Obispo County, 1995, No. CV079278).

action. . . .   As to matters of substantive law, however, it is
wholly derivative and subject to whatever immunities or other
limitations on liability would otherwise be available."
(8 Cal.4th at pp. 114-115.)
         Section 364, unlike Civil Code section 3333.2, is a
procedural statute.    It does not thwart the stated goals of MICRA
to limit its tolling provision to direct claims of medical
malpractice by an injured patient or that patient's heir.    The
Legislature specifically reduced the limitations period for
medical malpractice actions when it enacted MICRA.   To extend the
applicable limitations period in an action for equitable
indemnity which seeks apportionment based on a party's alleged
medical malpractice "is inconsistent with the spirit" of that
statutory scheme.    (Noble v. Superior Court (1987) 191 Cal.App.3d
1189, 1193.)
         The judgment is affirmed.    Costs are awarded to

                                COFFEE, J.

We concur:

         STONE, P.J.

         YEGAN, J.

                        Zel Canter, Judge

             Superior Court County of Santa Barbara

         Lori B. Feldman for Plaintiff and Appellant.

         Bonne, Bridges, Mueller, O'Keefe & Nichols and Mark B.
Connely, for Defendants and Respondents.


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